>> this is quite a challenge. mr. barosky? >> congressman, we got the t.a.r.p. to look after. we haven't looked into the funding of the congressional oversight. our funding -- >> inspector general's office is appropriations, yes. mr. mccool, in terms of your panel meetings -- >> i'm sorry, miss warren. >> i thought you said miss mccool. i lost who you were@@@@@@@@k @> >> are those publicly disclosed? >> the fact that we have the meetings? yes. >> no, actually the meetings. >> had business working meetings that are not public meetings. >> so, you have a panel of how many members? >> we had a five member panel. we now have the four member panel. >> so, when you meet in session for the purpose of doing

business, is that open to the public? >> we do have working meetings that are not open to the public. >> should you have transcripts? >> i do not have transcripts. >> it is recorded by the senate. no, congressman, i have not seen transcript. >> is a transcript available for meetings but no congressman, i have not seen a transcript. >> is a transcript available of your meetings >> publicly? >> for members of congress. is that available for your meetings? >> it's not available publicly, no, congressman. >> i'm a member of congress. >> i'm sorry. >> am i able to get a copy of your transcript of your meeting? >> i believe our transcripts are held in our office and if you wanted to send someone over to read them. >> is that available? >> i believe you would be able to read them if you wish to do that. >> you would make that available -- >> if you wish to come to our

offices. >> why are transcripts not available to the public? >> these working meetings of the panel. and we discuss a great deal of confidential information. and so they were never public from the beginning. we do hold -- i should remind you congressman, we do hold public hearings. >> is there an executive session? this is what's interesting to me, you're an oversight panel yet you don't disclose your meetings and what happens and what transpires in these meetings and the decisions you make, the votes you take, are there votes taken at these meetings? >> sometimes. >> we don't even know what the votes are much less how this report was created with this panel. so there is no disclosure from the oversight committee. do you think that's perplexing or strange? >> we have working meetings where we discuss confidential information. we issue you a public report every 30 days and the report on

that vote is made public every 30 days and each of the members is intended as part of that process to add additional views if they wish to do so. >> i think it's quite perplexing that an oversight panel wouldn't disclose their meetings, even you can redact confidential information that's certainly in your capacity, which is done throughout government but it seems like this is a very removed from the public and pretty nontransparent for a board that's demanding transparency from t.a.r.p. funds and the treasury in general. do you find that problematic? >> i would find it quite problematic if we discussed sensitive information about t.a.r.p. recipients, about the inquiries and lines of inquiries that we were pursuing, and that

were a matter of public speculation as soon as we finished saying it. my sense is we need an opportunity to work together and that's what we try to do. but we issue public reports every 30 days and hold public hearings at least once a month. >> thank you for the questions, mr. mchenry. next the chair will recognize mr. christopher lee for five minutes. >> thank you, mr. chairman. mr. barosky i would like to ask a question. i'll yield some of my time. to follow up on some of the discussion we had on the first panel with mr. alison, some companies have been getting mixed signals, mixed answers on what's coming out of treasury on the requirements of paying back the warrants or what the stipulations might be. the work your office has done or

seen have you found the government or treasury has been very clear in terms of what it actually has demanded for repayment much those funds or has it been foggy? just curious what your perspective might be on that? >> with respect to the warrants, our audit is pending and ongoing so i'm not prepared at this time to give a, you know, sort of a conclusion that would come out of that audit. it's a little premature for me to answer that question. >> also heard from some in the small business community about the way the stimulus or t.a.r.p. funds have been distributed or handled. the committee had a hearing yesterday on the whole issue of too big to fail, and one of the things we think we missed is the whole too small to save or concept of small community banks or small businesses what the impacts are on them where the majority of those funds have gone to larger institutions. we've seen the administration has started finally to talk about actually looking at the small business angle and focusing more in that direction which i think is smart and prudent and as you know i think the first go around earlier this

year we had an amendment before this committee that would have added authorized legislation which required to you report on small business activity and the inspector general's obligation on the next report. is that something you could look at in including that in your next report, including small business participation? >> think it would be -- what we could do is with the information that we already have, perhaps from the survey and what banks are doing with respect to small lending, what they are saying. we don't have the resources or mechanism to do what you're saying that really falls on treasury. that is a basic part of treasury's obligations under the concept of transparency. they should be doing that assessment and making that information available. it really goes to the heart of our transparency recommendation about use of fund, how are the institutions using the funds with respect to small businesses and reporting on, in their

transaction reports what their steps they are taking for small businesses. i'll be happy to work with you and your staff and have my staff talk to you if we can pick out other ways where we can contribute to that transparency. we're open to suggestions and look forward to following up on that. >> i want to commend you on your work and you've been very helpful. i would like to yield the balance of my time, mr. chair, if i could to mr. mchenry. >> i thank my colleague. miss warren to follow up on this again. the fact that there's an unknown budget that hasn't been allocated and to my knowledge from a legislative branch appropriations there wasn't a line item for that. and i would ask the gao and i ask sig-t.a.r.p. if you could take a look at that and perhaps answer how that works if the chair doesn't know. i know you don't have purview, my apologies.

>> i'm prohibited from statute of doing that. >> well it's late in the day so obviously we're missing a few things here. but miss warren, you've testified before this committee about the consumer financial protection agency last month, right? >> yes, congressman. >> i also saw a youtube video and a few thousand others saw it as well and your advocacy for cfpa? >> yes. >> that your official role? >> no part of my role as professor at harvard law school. >> that's done through your official resources at ha and th personal resources, i should say. i wrote a check for it. >> youtube is actually pretty cheap so thankfully -- >>, no i mean i wrote a check for the out of pocket expenses to be able to produce the video.

>> okay. got a producer. that's good. i understand. it's youtube. i understand. but, there's a lot of conjecture that you would be the head of the cfpa if congress does pass that but no official resources under the congressional oversight panel or staff has been used in advocacy? >> no. >> thank you. good to know. >> next the chair recognizes mr. lee for five minutes. >> thank you. before i start i do want to thank everybody for, all three of you for your support and what you're trying to do to protect the taxpayers and oversight. it's very commendable. i'll start out with mr. barosky. we've had a chance to meet in the past. i appreciate what you've been doing. one thing that scares me, however, is under your oversight at risk i heard numbers between 2.3 to $2.8 trillion and that

the total potential support government wide response to the crisis since '07 could reach to close to 24 trillion. those numbers fairly accurate? >> yes. to explain the 24 trillion, though, to put it in context, what we did in our report is in section 3 we gave a summary of about 50 different support programs outside of the t.a.r.p. and for each of those programs we calculated how much is currently outstanding, what the high watermark was since the inception and then what the maximum amount the government has said it would commit to each of those programs. so the amount outstanding about 3 trillion, high watermark was about 4.7 and the 23.7 trillion that represents if everything w was maxed out at once. >> not likely but a scary number all together. >> but it's absolutely an accurate number of what the

government is committed to do to support the financial system. >> in june the congressional budget office scored the loss of t.a.r.p. to roughly 60.5 billion. we're writing loans to gm and chrysler. it's unclear what we're doing with funds being repaid by the t.a.r.p. recipients. in letters to the secretary of the treasury and the president, which to my knowledge at this point have been gone unanswered many of us on this panel led by my colleague mr. mccarthy out of california advocated for those repayments to be used specifically to reduce the national debt. yet others want to recycle these funds and use them for other programs, some of which are brand new. i'm curious from your perspective do you believe it's in the best interest of the taxpayer to take t.a.r.p. repayments to pay down the debt? >> our perspective is a legal one and legally treasury's treatment of taking the interest or dividend and/or profit and

direct them to the national debt is compelled by national law under eesa. they have the option to relet that money out up to a maximum of $700 billion as long as t.a.r.p. is in existence. as long as eesa permits them to do so which right now is through the end the year. >> the part that i keep hearing from people, taxpayers that take the money back and throw it out there and keep adding more risk and eventually the debt obligation that we have is staggering. miss warren, from your point you also have been an advocate on behalf of consumers, i.e. the taxpayers. i'm curious whether you think taxpayers are better served by paying down the debt or spending t.a.r.p. for other purposes? >> i think, congressman, this is really a policy choice that congress should be making. and the legislation is ambiguous

on this point and treasury has made its position clear that it's going to use the head room analogy that mr. alison talked about, so if congress wants something different, then congress is going to have to have legislation, i think, to change that. >> with that i'm going to yield back. thank you. >> you're up for questions, please. >> mr. chairman, thank you and i agree, thank you all for being here. i agree it's a long day but you've all been very responsive and we appreciate the great information that you've made available to us. i was curious, i was listening to the previous line of questioning on meetings, and help me, did i understand correctly and i guess this would be miss warren, you had mentioned if a member of congress requested a transcript of one of these meetings of the panel we could get it? was that true or maybe i didn't

understand. >> congresswoman, i was surprised by the question so let me articulate more clearly. we don't have official transcripts. unlike your circumstances where there are published transcripts, members go back, correct tlang, we identify who spoke, who didn't speak, we have no verified transcripts, no official transcripts. we have typing that comes back from someone who listened to our tapes who was not part of our panel, not part of this process, and no one has verified the accuracy of any part of it. >> the meetings that you have that are not the field hearings, the four members now, was five members, when the five members meet or when the four members meet, are those meetings recorded? >> we have working meetings that have been recorded. >> so those meetings are recorded. so are these transcribed or just

in recorded form >> they are in recorded form and as i understand, there is a transcription service. >> so we can get those transcribed, it's possible for us to have the transcription of those meetings? >> i actually -- i have not considered this question because no one had asked and i am a little@@@@@@@@@ @ @ >> i think that's something i would want to know as a member of congress if the panel is meeting as a panel, whether it's the five or the four, and if the meetings are recorded it seems to me that they could be transcribed. and i don't know what the verification process is. the reason why i'm asking is because i have learned yesterday that two requests were made to access those transcriptions, and that those requests were not honored.

and i have no reason to doubt the calls for transparency and that treasury department wants to be transparent. i have no reason to doubt that at all. but it seems to me that that's in conflict if on one hand the treasury department is saying they want to be transparent, on the other hand, why can't we as members of congress at least receive transcribed copies -- or even if we members of congress can't receive the copies, couldn't the members of the panel that sit on the panel receive the copies of the transcribed -- of the recorded meetings? >> congresswoman, you may be aware, this is a matter of some discussion within the panel. and the panelists themselves have different views on this. and those views are currently under discussion. we have been trying to work out something that is congenial to all of the panelists. but i have to emphasize, these are working meetings where we discuss lines of inquiry that we

are taking in oversight. >> i understand. and i understand congressman mchenry said it's possible to redact material. one thing i had wondered, does the congressional oversight panel have a phone number? >> i believe we do. >> you do. ok. very good. and can we get it? >> certainly. >> ok. so then we would be able to call and make that request for the recording or the transcription? potentially? >> as i said to congressman mchenry, i believe it world be the case. and i really must add the qualification, as i said before, i am not the entire panel. case, and i really must add the qualification, i'm not the entire panel. >> no decision has been made about the transparency of those hearings? we know that they aren't put up on the public for record but no decision has been made.

it seems to me odd that if the commitment is transparency that we wouldn't be able to actually receive those hearings because votes are made in those meetings. >> as i said congresswoman, these are working meetings. >> what's the difference between working meetings and like any other meeting? what would be the difference. >> public meetings where we do not discuss matters that should not be in the public domain. >> aren't these public meetings >> no, they are not. >> they are meetings of the committee. they are formal meeting of the committee members, though, right? >> these are working meetings. i don't know about formal meetings. >> the gentle woman's time has expired and i will advise the members that if they have additional questions or other questions, you have a right to submit that in writing. >> are mr. chairman. >> without objection the hearing record will remain open for 0 days for all members to submit written questions and have their response and questions put in the record. >> mr. chairman, if i may just

to clarify with the witness, what she said in answer to my question as opposed to the congresswoman. >> sir, we have another meeting scheduled for 5:30. >> an inquiry. >> you have a right to submit written questions and they will be answered within 30 days. >> an inquiry. >> yes, sir. >> at what point will a transcript of this meeting be available? >> i don't know that we have a transcript of this meeting. >> yeah, there will be one. i don't know how long. we have a pretty hard-working staff here. i would say this rather than wait for the whole transcript, if there's a particular piece that the gentleman i concerned about we could

stenographers prepare that piece. so if you can tell us what you want we can get that to you by tomorrow. >> i want to thank the witnesses for the testimony this afternoon. it gives us a better understanding of how the t.a.r.p. process works. we need to continue pursuing for taxpayer participation and i look forward to work with democrats and repuican

>> this is the committee on appropriations. we have moved into a period where we're at the point where we would like to occasionally have a hearing to just kind of check the box and see how things are going and address any concerns that have cropped up since the last hearing. we've had about 1.6 million voice

>> members of the subcommittee,

thank you for your opportunity to testify. i also want to thank you for your support and guidance through this exciting period in the history of the capitol visitors' center. much of the success is the result of the guidance we have

received from you and your staff and we personally thank dave ma roany for his guidance.

-- since its opening, no constituent, no visitor, no

family has been turned away by the capitol visitors' center. while there has been a bump in the road, the efficiency of operation is a testament to the guidance of this committee and to the authorizers and the dedication and responsiveness of my team. responsiveness is critical as we demonstrated last spring when tours were booked solid weeks in advance. as the season approached, we began receiving close to 400 cals a day from members' office seeking to restaff-led or guide-led tours for constituents, many of whom were arriving at members' offices at the last minute. we knew we immediately needed to review in cons uptation with the committee some of the procedures that had been established prior to the opening of the capitol visitor's center. first we established a separate line at our information desk in emancipation hall for handling staff requests. we assigned staff to serve as congressional ambassadors on the floor of the emancipation hall >> we have instituted monthly listening sessions. but the congressional staff then raised questions and concerns about any aspect of our operation. our two gift shops and restaurants are enjoying robust sales comparable to other -- are being well-used by members of congress as of july 900 events have been booked by members in these spaces. finally we are providing a variety of educational programs including a series of events and lectors in september. i am proud be a to be able to testify to the members of the congressional -- here's what one staffer working for a member from arkansas wrote. "just want to thank you for an excellent job. lately we've been calling for the last minute constituent that is want to visit the capitol in july. we were able to accommodate that." from the senator in maryland "thank you for providing an excellent experience for my

constituents." madam chair, this concludes my statement and ail be happy to answer any questions. >> good morning, madam chair and moments of the committee, mr. aderholt, thank you for the opportunity to be here today to discuss capitol police's role in securing the c.v. c. i'd i'd like to start by thanking the committee for its leadership in this process and the architect of the cap follow and his staff for developing and implementing an overall program for the operation of the visitors center that i believe balances security of the complex with desire for visitor accessibility. together we have processed more than 1.6 million visitors into the u.s. capitol and the capitol visitors center since it opened. a very safe and controlled and monitored environment. we've made every effort to move visitors into the facility in an expeditious manner while maintaining the highest level of

security. overall we believe the security operations at the capitol visitors center and the capitol are working well. in order to focus our sworn resources we recently reabehind the -- to meet the influxes in traffic into the various entrances for the capitol and the capitol visitors center. likewise, we are continuing to work with our stakeholders to find ways to efficiently screen members, staff visitors and staff-led tours through the tunnels into the capitol and the c.v. c. in addition, we are continuing to work with the architect's office to monitor the established transportation plan in order to balance the access of mobility and challenge visitors with the security needs of the complex. before i close i would like to thank all the men and women of the u.s. capitol police for their work every day to maintain the security of the capitol complex in order to protect our legislative process.

i'm extremely proud of each one of them. again, i would like to thank the members of the committee for inviting me here to testify before you today. and i'd be happy to answer any questions that you have. >> thank you very much. >> thank you, madam chair. mr. aderholt, members of the subcommittee. it's predicted at the last subcommittee hearing the c.v.c. did open on december 2nd. sense then a.o.c. has continued to work with -- reduced their number to about 300 today. they also orders to about 100. expect most of these items to be corrected by the end of september with a few items such as signage and -- to be complete by the end of september. while the remaining work is important to having a complete and usable facility, affected.

consider rent estimate remains at 621 and we're also confident as the a.o.c. is that the project should complete under that price. and also i would just like to say we're glad to invite dave maloney back to us. hope we can keep him for a little while. >> thank you all very much. i want to start off with staff-led tours. since the meeting that we had a couple of months ago in my office with mr. aderholt and mr. lundgren, there have been a number of improvements made to staff-led tours and the complaints have dropped. i don't get as many members stopping me in the chamber and griping that they have been restricted. but that having been said, we kid make sure that we put language in the fiscal year 2010 appropriations bill to ensure

that you are prohibited from restricting staff-led tours except for security reasons. can you describe for us whether you are currently restricting staff-led tours and in what way? and have you made it clear to your staff, particularly the the capitol police, not the c.v.c. guides, that are responsible for making sure that staff-led tours follow security restrictions? >> i can safely say that we're not restricting staff-led tours. we make it very clear to or guides, visitor assistants, anybody that's hosting them to the public, that we're not restricting them. we do have our listening sessions so we can give feedback. >> how often do you have those? >> we've had them about every month or so sense the springtime. and we take constant telephone calls from folks. i think it's greatly improved. >> i have seen memos from you to

member offices on tour operations that are pretty directed. and the way you word those memos don't appear to be recommending guidelines. they appear to be mandates. and for example, the current restriction that tours are to go in a clockwise motion around the capitol. but staff-led tours, that's not applicable to staff-led tours if they want to go counter clockwise, diagonal or up to one floor and down to another, that's perfectly acceptable. but your memos appear to be far more directive and that is the feedback that i'm getting from members and staff that they've been told to turn around and got other way. so perhaps you could make your memos less directive -- or more specific as it relates to

staff-led tours. and then with the old supreme court, i know it's open every day. but it's not officially on the non-staff-led tours. but are you still making sure that staff that give tours understand that during the training that they can bring constituents into the old supreme court? >> staff can take their tours anywhere they want to go. and the two chambers, the old supreme court, are places that people often go. they are usually someone there. the routeing through there for the regular tourists is something that we look at every day depending upon the number of reservations we have. because it's sort of a gently used build. >> you have to be careful in that room. but in the chip train something it made clear to staff that on a staff-led tours they do have the flexibility to go where they want and in the direction that they want? >> it should be the case.

and i will make sure that it is the case going forward. >> that will be great. i did his it to -- listen to you describe some of the things you've been doing to improve staff-led tours. i want to move over to shuttle buses. and then my time are expire. we've received communication from the tour bus companies as well as from the gild of professional tour guides that are very concerned about the difficulty that frail elderly visitors are having getting up the hill from the west front. and i know we have the six shuttles that are available. and i also know that they can be made available in advance with advance notice if they have a particularly large group and basically all six can take 30 people at a time. but 30 people at a time if you

have 90 people then you've got 60 people who are waiting 20 or 30 minutes for you all to do the loop and come back to get them. so that's a concern. one of the main things i want to ask you is, has it been explored or would it make any sense to buy one of those mini buses like they use at the kennedy center so that we could -- >> to go back and forth? >> you wouldn't use it every day but you would use it for a large group. and i mean, if we did, that is that something that could be screened? i mean, it's our bus. so we would probably need to screen it. >> absolutely. >> but republicanning a constituency in south florida -- but representativing a constituency in south florida that has a large percentage after frail elderly, that is a hill that for a healthy person or someone who isn't frail a good bit of exercise. to someone frail it's extremely difficult. i know you've urged the tour

companies to communicate with you in advance. and i absolutely think they need to do that. but if you have a big bus load of seniors, a good chunk of them are going to be frail. and i just don't know that the shuttle is -- that those shuttles are an ongoing, viable option. so can you share both of your thoughts about that? >> well, on the mini bus? you know, i think we can of course look into any scenario. it would be of course the choice of the chief of police what would be appropriate. we have so far been able to accommodate people who are coming in on that end when they give us enough notice. and even when they don't have notice we can always call for additional support. so thus far we've been able to accommodate it but i think it could be worth while of exploring the idea of something else that may be used? i'm just a little concerned

because the communication that i've gotten from the companies is that they're not fully -- there's not a regular enough communication with them about you needing to know in advance. is it on the web site when they book a tour? >> it's on our web site. it's on -- >> in a prominent place? >> yes. we can take a look at where it is. but it's in a prominent place. when they call us in the call center we do tell. they we also even in a couple of cases with the tour companies who we actually work with quite a bit have had things in their newsletter. so we made a pretty strong appeal with the guides, tour companies, we have made an effort with them. however, we can make additional effort. what we did do last year with some of the tour companies, we had them come in and back them through the whole process. and that made them feel better. >> on a regular basis that would be -- >> not a problem. >> but i also think it is

absolutely incumbent upon the tour guide association here today and the bus companies might be here as well, it is a two-way street. and it is incumbent upon them to know this process and know the guidelines and they need to make sure that they let you know in advance and prepare you. i mean, we're never going to have a perfect system because dropping off at the west front for someone frail is going to be inconvenient and a little more difficult than the ideal situation in front of the east front would be. so my time has expired. thank you. mr. aderholt? >> again, let me just say as far as the concerns for senior groups, and thank you for your paying attention to this issue. because we are hearing things from the senior groups. and certainly that is an obstacle to get up the hill and therefore trying to find a way to better facilitate visitors in

any way. we know that that's what you want to do and what we want to do and have us facilitate that. so we thank you for paying attention to that and just encourage you to continue to do what you can to make sure that that message gets out to the tour groups, especially that cater to senior groups. one thing that i wanted to address to mr. ayers is the issue about the signage in the c.v. c. and one of the concern that is after the c.v.c. was opened was the lack of interior and exterior signage. and just want to check what the status of the implementation of the signage is, and what need to be done to improve that? and what feedback you're getting from other people that have --

that work in -- that are in the c.v.c. on a daily basis? >> we've certainly gotten feedback that it's difficult to navigate, difficult to find where you are. and we've gotten that feedback from members, staff, our own employees and guide as well as the capitol police officers that staff that on a daily basis. and we have implemented a temporary signage program. and we've gone in and put room numbers and "you are here" signs and directional signs throughout the facility as an interim measure until the permanent signs are fabricated and installed. and we think that will be several months from now before they're actually installed so. that's why we went ahead with a temporary measure on the inside. on the outside we're also looking at temporary signage as well. and just last week i saw the design for that. and i would suspect within the

next two to four weeks that exterior signage will be in place to help people navigate around capitol square to get to the appropriate entrance of the building. >> very good. concerning the utility costs for running the c.v.c., are they running higher than expected, lower, pretty much what was expected for the overall utility cost of running the c.v.c.? could you give a little status report on that? >> i can give you that for the record. i don't have that information with me but i'd be happy to give i you an update on electrical, steam, chilled water and domestic water. >> that's all i have, madam chair. >> mr. ungar? >> thank you for being here. thank you for the work you're

doing. the same kind of questions, i hear a lot of constituents come by and ask the policemen where to go. i think it's personally a [indiscernible] so as many times and guidance as you can provide help. >> we do believe it's really important that we put in a system that enables police officers to do police and security work versus way-finding on a continual basis. we've heard that loud and clear from the officers that work outside the capitol building. and we are working to address that with new exterior signage. >> thank you. >> mr. latourette? >> that's okay, madam chairman.

ways going to compliment you on continuing to be a trend setter. your footwear is some of the best i've seen on the hill in a very long time. >> in ohio we call those nice kicks. [laughter] >> i want to just echo the signage thing. and that it's not just the visitors. we had two republican conferences in some room over there. and we were all wandering around for a very long time. and we couldn't figure out where we were going. so anything you can do to -- >> [indiscernible] [laughter] >> anything you can do to help the visitors and members find their way would be greatly appreciated. and i was sort of marveling at the frail people who apparently lived in florida and alabama. one praise you don't want to be in ohio is when a group of blue-haired ladies get off a casino and just come charging through. so i guess we're heartier stock

up in ohio. [laughter] >> i do want to ask about a coordination. and i don't like asking questions by anecdote but i got one. and i think it illustrates the point. that's the coordination between your forces chief and ms. rouse and it was on art competition day. art competition day is a big day. there were two lines apparently to get into the tunnel, one for the tours and one for the artists and their families. in our specific case, we apparently broke a rule and we had artists and family and then we had a couple of people just wanted to see the capitol. and i asked the red coats which line to get in and the red coats said doesn't matter. either one. i thought that was a good answer. but when they got up to security, the security at the tunnel said, oh, no, you can't. the artists and his family can go down and look at the picture and leave but the other people have to go back into another line. and that's ok.

but because of the length of the line it was like a half hour. so we got half a hour here and half a hour there. we cheat. we took artist and the family into the tunnel anyway and nobody caught us. but it raises some concerns just in terms of -- can you just sort of discuss for the subcommittee how you all are talking to each other to make sure that red coat answer is the same as the checkpoint answer? >> well, i can say i don't know the total number. but ms. rouse gave it to me the other day when we were down in the c.v. c. there had been some 800 types of events that had taken place related to the c.v. c. and she had conveyed that to our division that handles the c.v. c. and they were handled very well. so the communication between her office and the division office i think goes very well. instances like that, yes, poor

communication. but certainly we can prioritize or facilitate any special needs of the members related to any special events. and at the same time still expeditiously move people into the c. v.c. from the main entrance to the cannon tunnel. so we'll improve upon that, and that communication. especially since the cannon tunnel is handled by our house division and the capitol division is primarily responsible for the c.v. c. we'll improve upon that communication with ms. rouse. >> ok. >> but we do work very well together in that respect. >> ms. rouse? >> we actually do work very well. we have a weekly partners meeting with everyone who has anything to do with the c.v.c. down to the attending physician's office. and it's a great debriefing hour where everything that can be

said and we work through the issues. and of course every time something new happens then we debrief on. that so that communication i think has led a lot to what often is a very smooth operation. when there are hiccups we acknowledge them and we don't brush them under the table. we kind of go right after them. >> thank you very much. i just want to commend all of you. bass my notes indicate the average wait time is down from two to four hours to six minutes. that's really outstanding with all the demand in security and people you have to see. and the only thing i have left is i've been racking my brain since you asked questions to whether the lead my tours clockwise or counter clockwise and i can't figure it out. but thank you very much. [laughter] >> thank you. mr. honda? >> thank you very much. and let me add my thanks to mr. ma roany. -- maroney. i knew that name sounded familiar and it was a song. do you remember that?

i got a gallon named pony maroney? -- a gal named pony maroney? it shows you how old i am. and to our staff also thank you very much. and it just happens my question has to do with lines also. and when i enter the capitol visitors center, sometimes it's a very hot and humid day. others i'm anticipating the cold winters. how are we going to be shortening that line so that we can one, make sure that if it is a long line that the seniors and the older folks, those who need to be sheltered from the humid and -- harry martin and the cold -- the humidity and the cold are accommodated as quickly as possible? the lines are out there. i know that you had some fans out there that help. but it doesn't reach always down

sometimes to the end of the line. and i'm not sure how long the wait time is. but it seems to me that there might be other mechanisms like those little spray hoses that reduces the temperature and hose people off. but still a lot of folks are older and standing around is really saps their strength. and i'm getting to that age, too. so, you know, i'd like to know if there's any thoughts being put into that in terms of entering the building. >> well, let me -- i'll begin by answering that. one thing that i do is i go work the lines on occasion. i go over to the c.v. c. and i've spent several weeks over there actually helping screenings, seeing how screening's done, going outside. what i have noticed -- and it isn't a policy or procedure or anything of that sort, it's just

human nature, especially with our officers who know that these types of things are occurring. we work very closely with the visitors services who stand out there with us. and frankly anytime we see anyone who needs, you know, special care or can't stand or sit, we simply expedite them into the facility. and we hope and explain to everybody who is still waiting that this is something good for people. and this is what we're going to do. and i've never seen an issue or problem with it. as far as anything that we could do with regard to making the environment in that area better when it's hot or cold, we could certainly get together and look at that, whether it be fans or

heaters or mist or water or whatever. but our officers know that when there's people in need, and that things aren't working out very well for them in the environment that they're standing, they expedite them into the building. >> and to follow up on what the chief is saying, visitor assist ants are out there. what we have done thanks to our visitor service division, we've put more people out there at the lines who can identify and help direct way finding. then they're able to identify someone who's in need. we have umbrellas that we're now going to have out there that will allow us to address need for not only rain but if someone can't deal with the heat. i'm like you. i don't like the heat at this point in my life. so we're trying to accommodate. and we have time to learn from our colleagues around the country. what are they doing with the crowds that they have and the environments that they have. then we'll take those best practices, run them through our

partners and see what would make sense so as we appreciate this season next year we have better solutions. >> madam chair, i know that when 9/11 first happened and we closed down our airports, and then the onslaught of long lines started to come up, they've contracted with disneyland because similar folks down there used to looking at how to con figure lines and control lines in bringing people through expeditiously. but it seems to me that there would be issues around communication if you're having bus loads you know who's going to be there that could be accommodated. but those who just arrive to different tours, it seems to me that there should be some sort of protocol to follow rather than just, you know, leaving it up to individual officers and persons to check the lines and

see if something's going on. it should be a matter of course that we check that line and see if we can help people get through. and i think that would go a long way in terms of their affection for what's happened while they're visiting here at the center. so if we could just pay a little bit more attention to that and see what we can do, then i think our goal is to be the nordstrom's of the world, so that center around our clients. .

both had not a very good experience. i want to try to address the issue of tour guides.

we want to make this very positive experience for families. we can do all the things we talked about. if we don't have a positive tour guide situation, it will not be very positive. i am not sure what the hiring stages are. i am not sure what the training is. it has -- management has to look at the people doing the training to see where we are. a lot of people want to ask questions. i don't know the we are giving our guides a time. -- then my sister had to go to the white house and had a totally different experience. one of the issues might be that

we want to put together everyone on the tour, an evaluation sheets. what did you think of this? and then give an evaluation on the tour guide. so all the guides know they are held accountable. i think this is an issue. all the good that we do, same thing as elected officials. if we have a staffer -- we would be happy to put the language in the report directly. >> i think that is positive. it has to be managed on a regular basis. you might want to -- maybe some people would be better with seniors, some people might be better with children. this is an issue that we need to discuss with the committee, and get a report back on a regular basis to make sure if it is a management issue in the end.

the other thing i want to talk about is the issue of cell phones and the ability for members to be able -- if your cell phone doesn't work and the bells are going off, sometimes you cannot get a phone call and sometimes there is a vote there. it is something i think, when members are over there with some visitors from the district, i don't know what the system is. could you respond to the tour guide think? >> if someone is having a bad experience, that is not good. we will look into that. that is an ongoing concern. we do a lot of training.

as for evaluation, we are in the process of developing a mechanism to do full-scale evaluation. we will hopefully have that launch in the fall. i am pleased to be able to have solid information for this committee. >> who is doing the hiring? do you have personal the standards? >> yes, we do have standards, and we do evaluate people on the commons that we get from people services are using. >> one or two bad individuals can't hurt everybody. -- one or two bad individuals can't hu hurt. >> on cell phone coverage in the cvc, we have covered fully the

cvc public areas on the senate side as of a few months ago, there was a problem on the house side. there was a funny office with the office. as of a few months ago, they have not installed a system in the house portion of the cvc for cell phone coverage for the coverage that is being received at that point was forwarded to the cvc. >> how about the bell system? >> that i am not aware of. >> just to correct mr. it under, it is not the funding issue. for some reason on the house side, prior to the big ministration made a decision not -- they weren't expecting to use the house extention space.

there is a significant demand and a lot of members use it now. we are in the process of doing it now. the only concern and what is taking longer is that our expansion space is --. >> we have an issue on the intelligence committee also. >> this problem is being addressed. it is very important to make sure that they guides are sensitive to children. just by way of example, not standing at full height and talking down to a child who is

much lower to the ground. just training them to -- on little things that help in interaction to the children, getting down to their level and listening to their questions. some people are good at dealing with kids, and other people are not. if your children don't have a good experience on the tour, it can impact your trip. for the rest of the day. i want to shift to the paper, which does not use --. we can all say the papers going on the plaza. there are some heavily damaged, some not damage as heavily. where are we in terms of the paper replacement process, and

how are we dealing with the normal wear and tear and the design flaw that existed because we always had --. >> we are making very good process -- progress and are 3 away -- weeks away from finishing it on the house side. we have started to work on the senate side. we are a bit ahead of schedule at this point, hoping to finish around mid september with the complete project. in terms of maintenance, once we finish the --, they will not require a great deal of meanness. they will have to be inspected. we don't anticipate any where near the kind of shipping that we have experienced with the old

system, on door -- those portion of the plaza we are replacing. >> there is some shift and discoloring -- are those parts of the replacement process? >> they will be replaced. there are a few that are chipped and have some stains in the areas that we are not replacing. we will replace those that were stained individually. >> just another suggestion. as we go forward, we can make sure that the gaps that developed in between these, women who walk across these in heels -- i can tell you on many occasions, on these papers -- pavers, you can hurt yourself.

if we can be mindful of this. i am not sure how much you can answer this at a public hearing, but do we have an issue with the company that originally designed the pavers and laid down all those damaged ones? how are we resolving the issue of paying for the replacements? >> we are not in a good place to talk about it. we are having some correspondence with the design. >> if we could get some information about where we are on that.

i had an opportunity to voice be to assistant chief nichols last month about the length of the lines in the can and tunnel -- in the canon tunnel. it gets back to an hour and a half-two hours. you have a six minute wait time outside the entrance to the cvc. we were getting a lot of members -- complains about the length of time. the chief was very helpful. we were able to achieve a balance between how many verses making sure we can open the tunnel. i appreciate the adjusted being made to that.

six minutes is a great time, but it could be 10 minutes. do you have a plan going forward to keep the to magnetometers open? >> we continue to monitor the lines and make sure we have supervisors on the scene, the appropriate number of magnetometers, and our expeditious in a professional screening that we can do in that location. >> we have had very long lines outside the house office buildings. >> we have assembled response teams because these lines come and go. we cannot sort of guess. we simply monitor the input at the doors and whenever we have

long lines at locations, we send additional officers to that location to help alleviate the winds. we do that on a rotating basis. >> the line seems to have been getting a lot shorter recently. >> they have. we have also noticed that the staff has increased and people are still coming from different modes of transport and visiting their members before they go to the cvc or the capital. we are screening significant numbers of people this year into the buildings. >> let me follow up, chief marrs -- morris. we want all of our constituents to have a very positive

experience when they come to the capital. i tell people that if they are only going to see one people, i tell them to stay on to see the capital because of what it stands for, the symbolism. when you see that capital don't you can recognize it around the world. -- capitol dome. whether it be a staffer, or someone working with capitol police, i think it is important that they show the respect while they are in the capital. sometimes i will walk by some of the capitol police and parts of the capital, not just the visitors' center. sometimes they are -- seems like it is not their top priority to -- i understand safety is their top priority.

but sometimes the way they communicate to some of the visitors and some of the staff is pretty condescending. i know that safety is first and foremost for their job. it is important that young people have a positive experience in the nation's capital. i would appreciate if you would look into that.

it is not anything i had planned to say, it's just that we were talking about that issue. it is important that we see a public face on it. i just wanted to put it on your radar screen. i have worked for the capitol police for 25 years.

it is one of the reasons i go out and i stand in lines. and some of these other lines that we have been seeing in the buildings to emulate and to lead by example. as put capitol police officers appreciate the fact that people come here from around the world to visit. it is my intention that when they react -- interact with capitol police officers face a professional police officers who are courteous, with the core values. we will go back and make sure that we will reiterate that, and

hopefully correct any issues that don't follow those core values. let me just say that you all do a great job. we have some of the finest officers anywhere in the country serving as collette -- capitol police, and they do a great job. it is as with any profession or job, you even have members of congress that would probably get a bad impression, make us look bad as well. that is certainly no occupation or profession is immune from that. i think it is important that people who come here to the capital, and maybe the officer is having a bad day. it is important they do

everything they can to show courtesy and that safety is their number-one concern. >> i just have a couple more questions. chief morris, it was brought to my attention recently and without asking questions and drawing conclusions by an adult -- by anecdote, on the gallery visitation project. it was described to me, people who wanted to go through the gallery, they had a whole bunch of stuff with them, bags and things like that.

they came upstairs, said they were doing the gallery first and back to the cvc later. we were in the middle of a series of votes po. they wanted to watch the debate and they were urged to go see it. i guess the officers they dealt with told them, no, they were told they had to go back to the cvc and register. and also leave their belongings there. then they could come back up and sit and the gallery. -- in the gallery. there was a little bit of back and forth. they were still told they had to go back to the cvc. when they did get to the gallery, there was only a handful of people on line, yet

there were restricted to being in the gallery for 15 minutes, and then shuffled out. what is the process for gallery visitation? is it made clear? also, isn't there any necessity when the gallery is empty and we are not that full and the line is not that long, do we have to adhere to the 15-minute rule? >> there was flexibility there as you describe it. there is a process for the gallery. there are gallery tickets. there is a line from the cvc from the capitol building itself to get there. but once a staff person has brought someone to the gallery, i don't understand why it could not have been facilitated.

>> they just wanted to put their stuff in the cubby and go in the gallery for a little while and come back out. >> i am sure it happens often where the process is not followed for what ever reason. perhaps that impact on the decision the officer made -- in my view, if they were there, you were staffed and had a group, we should be able to be flexible enough to facilitate that. >> obviously, we have rules and if there are long lines we have to get people through their visitation process. the officers are there to staff it. >> i think we should be able to facilitate those things. >> they have to stick -- do they

have to keep their stock back to the cvc? they are not allowed in the galleries. it stays in a cubbyhole. as people come up the staircase, that is the first thing they do. we can facilitate that. if there is some problem, everybody does it, we will communicate that and go back through. i think in that instance we could have been a little more flexible. >> my last question is unrelated to this. as you might imagine having a broken leg in a little more sensitive than i normally would be to sensibility issues in the capital. it has been helpful given that

we have had the expanded accessibility. there are quite a lot of gaps in our accessibility and the whole capitol complex. one of them that is glaring is the canon office building, the interior doors that are enclosed with the elevator on all the corners of all the floors -- the elevator bank and then the doors open to get out into the hallway. none of those are wheelchair or disability assessment. i have been going around on crutches or a scooter for the last 10 days. a disabled individual cannot be by themselves and get through those doors coming off the

elevator. do you have a timetable for when those doors -- i will be done in 12 weeks. but it is a real issue that i was not aware of. it did not occur to me until i have the problem. >> no, i was not aware of that issue. i will look at that right away and get it corrected. >> a button could be put on all of those so that someone in a wheelchair could get it open themselves. the other place is the door on the south front of the capital where the ramp is.

you come in the main door -- it has a button, then there is a door to the left. there is a door you are supposed to go through. there is no button on that door either, and no button coming out. it is an issue. that was one of the issues i wanted to raise. >> we talked about -- where the subway is. all the way through? >> is. -- yes.

i appreciate it. we are all very cognizant that there are too many places that are accessible. i am more clearly aware of it now. i hope we can clear up these efforts. we would not be the appropriations subcommittee without a homer. now that the cvc has been opened, it is time to assess how well systems develop before we opened are working now that the center is operating in the real world. whenever you open a facility of this magnitude, some things will go well and other things will not go well. the key is being able to identify where problems exist. one of the main areas we are taking a second look at is the

current transportation plan. we said with would revisit it after we saw how it was going with the shuttle. it is clearly a problem that i think needs evaluation. it sounds like the overall system is working well, but there are definitely adjustments that need to be looked at in order for us to take care of senior citizens and the frail. in line with that, i would like the staff in coordination with capitol hill police to review the existing plan from getting visitors from their tour buses to the cvc. please explain the pros and cons of these adjustments, identify whether it is viable and provide a general estimate of the cost and on an annual basis. we will come back a month from now on august 24th.

with that, thank you all for your presentation. the subcommittee stands adjourned. thank you. >> next president obama followed by house republican conference vice chairman rogers on health care legislation. then a house hearing with treasury secretary tim geithner

on regulating large financial firms. later, virginia gov. tim kane on the importance of activism. -- tim kaine. >> health care legislation continues to be the focus of the weekly online addresses. you'll hear two perspectives of what democratic proposals would me to small business. first, president obama followed by cathy rodgers. >> i recently heard from a small business owner from new jersey who wrote that he employs eight people and provides health insurance for all of them. this policy goes up 20% each year, and today it costs $1,400 a family per month. his ties business expense beside

seller. he has already had to let two of them go and be forced to eliminate health insurance. he wrote, i am not looking for free health care. i would just like to get my premiums reduced enough to be able to afford it. day after day, i hear from people just like him. workers worried they may lose coverage if they become too sick or lose their job or change jobs. tennis to fear they may not be able to get insurance or change insurance. and small business owners trying to make a living and do right by the people they employ. these are the mom and pop stores, restaurants, beauty shops, construction companies that support families and assisting communities. they are the start ups, hoping to become the next apple or google. in a report released today by what house council of economic divisors, right now they are getting crushed by skyrocketing

health-care costs. because they lack the bargaining power that large businesses have come a small businesses pay up to 80% more for the very same health insurance. these costs eat into their profits and get passed on to their employees. small businesses are much less likely to offer health insurance. those that do tend to have less generous plans. in a recent survey of one-third of small businesses reported cutting benefits. many have drop coverage altogether. many have shed jobs or shut their doors entirely. this is unsustainable, unacceptable. this will change when i signed health insurance into law. you'll be able to purchase health insurance from an exchange, a marketplace where they compare the price, " services of a wide variety of planes, many will provide better

service and lower cost than they now have. small businesses that choose to insure their employees will also receive a tax credit to help them pay for it. if a small business chooses not to provide coverage, its employees can purchase high quality affordable coverage through the insurance exchange on their own. low-income workers, folks are more likely to be working in small businesses will qualify for a subsidy to help them cover the cost. no matter how you get your insurance, insurance companies will no longer be allowed to deny your coverage because of a pre-existing condition. they will not be able to deny your coverage if you lose your job. to view the new report and learn more about health insurance reform for small businesses, go to white house.gov. send you -- send us your

questions and comments. over the past few months, i have been pushing hard to make sure we find the address the need for health insurance reform, which has been deferred year after year, decade after decade. today, after a lot of hard work in congress, we are closer than ever before to finally passing reform that will reduce costs, expand coverage and provide more choices to our families and businesses. it has taken months to reach this point. once this legislation passes, we will move deliberately to implement these reforms over a period of several years. that is why i feel such a sense of urgency in moving this process forward. i know there are those who are urging us to delay reform. some admit that this is a tactic designed to stop any reform at all. some suggested that regardless of any merit, health care reform should be stopped as a way to inflict political damage on my

administration. i will lead -- leaving them to explain that. what i am talking about right now is the health of our families, the success of our businesses and the long term fiscal stability of our economy. people want the security of knowing they can get the care they need when they need it. i am concerned about small business owners who are asking for nothing more than a chance to use their piece of the american dream. i am concerned about our children and grandchildren who will be saddled with deficits year after year unless we pass reform. this debate is not a political game for americans. they cannot afford to keep waiting for reform. it is time to get it done, and to get it done their share. thanks. >> i am vice chair of the house republican congress. like millions of parents, the

health of my young son is our family's top party. when he is sick, my husband and i take him to the doctor and expect the doctor not just to do something, but to do the right thing to help our son get better. this is the same philosophy i've brought to the ongoing health care debate in washington. some politicians, including the president and democratic leaders in congress are demanding that we do something to change our system. i believe it is much more important to do the right thing, reducing skyrocketing health-care costs while protecting patients' ability to write -- get the right treatment. the democrats' health care plan, crafted largely behind closed doors isn't the right thing. it is a prescription for disaster. one that will put washington bureaucrats in charge of your family's personal medical decisions. medical decisions that are some of the personal decision she will ever make.

as a mother, i want to make those decisions with a doctor we choose. anything else is unacceptable. also unacceptable is how much it will cost you and your family. according to a nonpartisan budget office, democrats proposal will drive health care task -- health-care costs higher than ever. even though they continue making discredited claim that if you like your plan, you can keep it. millions of seniors will lose their health care choices also. the democrats' plan cuts medicare, making it more difficult in rural areas across the country, like mine in eastern washington for seniors to obtain the coverage they need. the house democrats' plan also will add two hundred $39 billion to our deficit. this we are passing along to our

children and grandchildren. future generations will struggle with this cost. america's small businesses will pay a steep price as well. the democrats' plan is bankrolled by a tax, more job this will evaporate. americans have every right to ask, where are the jobs? according to the national federation of independent business, the democrats' plan would destroy a million more small business jobs. according to the methodology developed by the president's own senior economic adviser, the democrats government takeover of health care will cost at least 4.7 million jobs over the next 10 years. because of these extraordinary costs, families, small businesses and future generations, alarm bells are sounding across the country. one democratic governor recently expressed concern with the bill's cost at one trillion

dollars or more. another calls it, the mother of all unfunded mandate. republicans have offered to make a truly bipartisan attempt that will make -- improve the health of americans. the democrats have not wanted our help. republicans want to seize the opportunity to make health care more affordable. we have outlined an alternative that reduces costs by reaching out waste, fraud and abuse and reining in a lawsuit that cost millions each year in premiums. for those who are uninsured now, it offers affordable choices. it reforms regulations to insure companies compete for your business. you can shop around for the best coverage. under our plan, if you like your current health care coverage, you can keep it, and no questions asked. finally, our plan encourages

americans to take advantage of preventative medicine. our real goal isn't just to have medical coverage, but to have healthy families. our reforms will lower health- care costs for you and your family. there will not increase taxes on small businesses and do not saddle future generations with hundreds of billions more in debt. it is time to do the right thing. that starts with scrapping the democrats' plan and work and a bipartisan way to make health care more affordable and available. >> next the house hearing with treasury secretary tim geithner on regulating large financial firms that threaten the entire economy. barney frank chairs the financial services committee.

the hearing will convene. >> we will be doing hearings today and some next week. we will be returning in september with a some action. we will be marking up the consumer financial protection and to the, then we will continue marking up other aspects of this. our expectation is that it will

go to the floor as one bill, because that has been the senate's a preference. i am committed to a structure which will give us time to debate them title by title on the floor. it is clearly more than one day even. >> mr. chairman? you are saying next week we will be addressing the executive compensation, not the consumer -- >> i said september. probably on the floor on friday. with that, we will have our opening statements. the gentleman from pennsylvania for two minutes and 40 seconds. the gentleman from pennsylvania for two minutes and 40 seconds.

for more than 70 years, mr. chairman, the regulatory reforms of the 1930s brought about and then enacted because of the unbridled aspects and dangerous expectations of an earlier era steered our financial markets through the rocky seas of capitalism. but all good things must come to the en. created for the last century, these ant kuwaited rules fail to respond to today's realities in which financial engineering and innovation ser passed effective oversight. for our economy to flourish once again, we must fix this problem. the administration's diligent efforts to help the flawed regulatory system have resulted in a white paper and legislative propose amazon. i -- proposals. an idea first originated for which i strongly advocated for some time. also, i commend efforts to regulate the advisers of hedge funds and other private pools of

capital. similarly, derivatives and swaps markets will finally face a level of scrutiny under the administration's plan. these reforms are long overdue. while the administration's propose always for credit agencies represent a good start, we must do more, much more, in this field. by sprinkling their magic dust on toxic assets, raiding agencies turned horsem manure into fool's gold. we must consider radical reforms aimed at improving accountability, reliability, transparency and independence. we could, for example, promote beratings quality by establishing a fee on securities transactio transactions, forcing a government quality assessment, rating agency methodologies, changing liability standards for rating agencies and altering business structures. additionally, i must reiterate

my deep and profound concerns about the selection of the federal reserve, as the primary entity in charge of systemic risk. i believe that we need someone with real political accountability in this role, like the treasury secretary. on the whole, however, the administration has produced a very thoughtful approach to financial services regulatory reform. i applaud the administration for its hard work. congress has now begun its hard work using the administration's promising foundation as our guide for enacting new laws that put in place a regulatory system that will last a very long time and help to ensure american prosperity for many years to come. yield back my time. >> the gentleman from texas, three minutes. thank you, mr. chairman. when you have the wrong diagnosis, you will in turn off the wrong remedy, and that is exactly the case with the administration's proposal before us. our economic turmoil has not arisen from deregulation but more so from dumb regulation.

that and regulators who did not lack regulartory authority but may have lacked adequate judgment. although i have a number of concerns about the plan, i'm simply taken aback by the lack of reform of fannie mae and freddie mac, the epicenter of the financial crisis, not to mention the suggested creation of an agency to bridge consumer rights. rather than taking on the current status quo, the the administration's plan institutionalizes the problem. when president obama referenced sweeping reform, i didn't know he meant sweeping fannie and freddie under the rug. worse yet, his plan gives the federal reserve power to establish tier one holding companies which can simply create more fannies and freddies and signals to the market that the biggest institutions among us will always have a safety net. in other words, the proposal enshrines us as a perpetual bailout nation. one. more troubling components of the

plan is the creation of a new consumer financial product agency ruled by five unelected bureaucrats. based upon their subjective determination of quote, unquote, fairness, they will be empowered to decide which credit cards we can receive, which home mortgages we are permitted to possess, and even whether we can access an atm machine. it proposes one of the greatest assaults on consumer rights i have witnessed. the legislation will stifle innovation, perhaps the next online banking service or the next frequent flyer offering, and worse yet, will contract credit to our small bidsusiness a time of historic unemploichlt. the republican plan under rankirank i ing member is large nonbank financial independence ti institutions and puts an end to too big to fail. it will be established and tasked of monitoring all aspects

of the financial system and identify risks. the republican plan focuses the federal reserve on its core mission of conducting monetary policy. although we preserve the 13 exigent powers we do not leave them. in the current model, the privatized -- empower consumers with effective disclosure and enhance penalties for fraud. there are choices between more bailouts and no bailouts. market discipline or government control, consumer empowerment or the loss of consumer rights, let's hope this committee and this congress chooses wisely. i yield back the balance of my time. >> recognize myself for two minutes and 40 seconds. i want to address a startling misconception that somehow we are ignoring fannie mae and

freddie mac. the charge that fannie mae and freddie mac were being ignored was accurate up until 2007. that is before 2007 while there were some efforts to legislate, one which came from this committee under president bush, nothing happened. in 2007 we did pass in march of that year the bill to reform fannie mae and freddie mac and included every power requested by the bush administration. it passed the house that summer and did not pass the summer until the following year because the senate was divided but the fact is the proposal of the bush administration, particularly secretary paulson, for increased powers over fannie mae did become law. the notion there was ab unbridled fannie mae is mythic. going forward we will need to change the model but it is not the case that they are now the way they were. they are under conservativeship, they are in fact serving as not

what they used to be, but as almost a public utility in terms of trying to deal with the mortgage crisis. and their main role now is to try help with the foreclosure crisis and with refinancing. so they have in fact been -- the first step was taken at the request of the bush administration, and everything that was done regarding fannie and freddie in 2008 was done at their request. we do have on the agenda going forward a look at what the future role should be, but they were not what they were. we will be proceeding finally with other aspects of this, and i do want to say with regard to the consumer protection agency, it is not called the consumer product approval agency, it won't be called that except by people trying to caricature it, and it w't have that function. the notion that we should leave exactly as we have consumer protection when it has been so badly done, frankly that is a debate i am glad to have before the american people.

the notion that the existing institutional structure protects consumers adequately i think is a mistake. yes, i was very pleased, for instance accident when the national federation of independent business supported our credit card bill. because as credit card users, small businesses wanted that kind of protection. that's what we will be doing going forward. the gentleman from texas for one minute. >> thank you, mr. chairman. based on the principles of ending taxpayer bailouts, getting the government out of picking winners and losers and restoring market discipline, our republican plan calls for simplification for consumers not dupre case. adding new bureaucracy does not create reform, designating firms as too big to fail and creating bailout authority does not reform the system and does not protect taxpayers. adding more regulations when original ones -- regulators when the original ones weren't getting the job done doesn't fix the problems f there are regulatory holes, we should fill them f we can streamline the

number of agencies and reduce the overlap, we should do so. we need reform that tightens the regulatory structure and protects the taxpayers. rather than more bailouts and more bureaucracy, we need to make more taxpayer protection available. i yield back. >> the gentleman from north carolina for two minutes and 40 seconds. >> thank you, mr. chairman, and want to women come secretary geithner and i want to particularly welcome my good friend joe smith, the commissioner of banks from my home state, the state of north carolina who will be testifying on the second panel. in the 22 years that i practiced law before i came to this institution, i came to realize that most often, the definition of a good compromise is one that leaves everybody unsatisfied. and measured against that

criteria, the administration's proposal for restructuring is a resounding success, because, i haven't heard anybody who has completely satisfied with what has been proposed. that probably suggests that we have hit the right balance, if we do what the administration has proposed with some minor modifications, which we have to get involved in. the area in which i think we have received the most pushback has been the consumer products agency, and i understand the natural resistance to change, but i would just say to my friends in the industry with whom i've worked over the 18 years that i've been in this body now, that if we reach the end of this process, having

given to the regulators and to the industry, both of whom succeeded in really allowing a meltdown to take place in this country, the same kind of structure and authorities without a focus on the consumer, the public will be outraged, and they should be outraged. so i want to welcome, encourage my friends to come to the table and sit down and talk about how we structure this new consumer protection agency in a way that does robustly what we intend for it to do, protection of consumers, and does not have the disadvantages that have been spelled out and in my opinion grossly overstated i think some

of the concerns raised have been legitimate. we can address those, but we need to roll up our sleeves and work together tore do so. >> i think getting to the cause of what caused the housing bubble should be -- came to the senate committee and said that because of the size of portfolios of fannie and freddie and because of the leverage ratios of 101, 100-1 in leverage, because of the direction for them to have purchased $1 trillion in subprime mortgages, for their affordable housing goals and so forth, that they had to be regulated for systemic risk. in 2003 i put in a bill to do that, working with the fed. in 25 we in fact had a -- my amendment on the floor to try to give the regulators the ability to regulate for systemic risk.

fannie and freddie opposed it, it was opposed by most of the members of this house. but in 2006 in the senate, they actually got it out of committee, but again, the democratic members on the senate side opposed that regulation to give the regulatorers the ability to handle fannie and freddie for systemic risk. >> gentleman from illinois for one minute. gentleman from illinois for one minute. sorry, mr. chairman. mr. chairman, the administration's plan endorses the too big to fail mantra of putting taxpayers on the hook for future bailouts caused by the behavior of a few and dysfunctional federal regulations and enforcement. it also allows the federal government to continue to pick winners and losers in the marketplace. that's not fair to taxpayers and it's not fair to the little guys in my district. speaking of picking win skperz losers, t.a.r.p. has left many

community banks out to dry. those local banks are denied access to cpp and cap assistance. by the time it is extended it may be too late. illinois banks have private equity at the door but waiting for something not available. $250 million capital infusion in total, 200 community banks could be saved. i want to hear from today's witnesses. for less than 3% of the $700 billion authorized, why can't you help our community banks. c. >> the gentleman from california for one minute. >> after listening to the regulators for the last two weeks, i'm very concerned about the lack of communication between financial regulators overseeing our economy and recovery. financial accounting standard board may change the fair value of accounting only after serious market turmoil. yet when asked, the scht e krechlt chairman was unaware how

they were applying the new accounting rules. while it's not their job to oversee recovery efforts, financial policy makers should be clab collaborating on major issues that have impacts on our economy. the sec had a study on accounting standards. i'm glad to hear they're hear to discuss regulatory reform, but we need to have a hearing on on both sides. major changes will be enacted and the market will be proactive in exam examining the changes instead of responding reactively. >> let me just say after this, i believe we'll have time for the secretary's opening state and secretary's opening state and then we'll break and come back. >> thank you, mr. secretary. chairman frank has been critical of the banking industry for opposing the administration's

plan for the -- i don't think anybody believes that we don't need some reform, but the industry is not going to be the only one who expresses concern. we'll have a panel of all the regulators and i think every one of them has expressed some doubts or concerns with the proel. bernanke ways here the "day and he expressed his concern with the proposal, as well. i know there's somebody on the other side will say it will create a whole new federal about your rock accuracy. i'll disagree. some will say that it's a good thing to go forward, but i'm glad that we will postpone this debate a little bit longer. the chairman just said this is an area that is worthy of an actual debate. i completely agree. the more we hear about it, the more problems we see, the more we realize that the bad ideas that will limit consumer choice, it will increase costs, and the most important thing, most ironic thing, is potentially decreases safety and soundness for our banking system. thank you. >> we will have the secretary's

statement. >> thank you for giving me the chance to come for you today. let me commend you for the important work you have undertaken to build consensus on financial reform. we have an opportunity to bring about financial change to the system and bring about financial change to consumers and businesses. we share a responsibility to get this right and get this done. on june 17, the president outlined a plan for comprehensive change for the basic rules of the road. these proposals laid a foundation for a safer, more stable financial system, less vulnerable to booms and busts, fraud and manipulation. the president said we need to move quickly what the memories still fresh and the impetus for reform faded. these proposals have led to an important debate about how best to reform the system, about how to obtain a balance. we welcome this debate and we

will work closely with congress to help shape a comprehensive and strong package of legislative changes. my written testimony outlines the full proposals. i want to focus on two central areas of reform. the first is a consumer financial protection agency. we can all agree in the years leading up to the current crisis, our consumer protection at regime fundamentally it failed because they allow institutions to escape effective supervision. it failed because the system was fragmenting responsibility for consumer protection over numerous regulators, creating opportunities for innovation. and it failed because all of the financial services regulators have higher priorities than consumer protection. the result left millions of americans at risk, and for the first time in modern history of financial crises in our history, we face an acute crises which brought the financial system to the edge of collapse in a

significant part because of the failures of consumer protection. this system allowed the extreme excesses' of the subprime mortgage lending boom that reset to 1 affordable rates that consumers cannot understand and have contributed to millions of americans losing their homes. those practices built up over a long time, peaking in 2006. it took federal agencies until june, 2007, after the peak, to reach consensus on supervisory guidance that would impose even general standards on the sale and underwriting of subprime mortgages. it took another year for them to settle on disclosure. these actions came too late to help consumers and homeowners. the basic standards of protection were too weak, not effectively enforced, and accountability was defused. we believe the only viable solution is to provide a single

entity with a clear mandate for consumer protection would clear up 42 right roles and enforce those rules. -- with clear authority to write rules and enforce those rules. this will provide a level playing field where it is extended for the first time to all financial firms. this means that would send examiners into banks and non- banks, revealing the loan files and salespeople. consumers would be less vulnerable for institutions without effective supervision to compete alongside banks. we believed effective protection act requires consolidated of 42 both -- consolidated authority to both right and enforce the rules. roll writing authority without enforcement authority creates an agency that is too weak, dominated by those with

enforcement and 40 authority -- authority. our proposals are designed to preserve the incentives and opportunities for innovation. many of the practices of consumer lending that led to this crisis gave innovation a bad name. with the claim was innovation was often just. asian. we want to make it possible for future innovation to come with less risk of damage. we need to create an agency that restores confidence to consumers and confidence of financial investors with a 40 to prevent -- with the authority to prevent abusive practices while at the same time promoting consumer access to financial products. the second critical imperative is to create a more stable system. our regulatory framework permit it and excess build up of leverage both outside the banking system and within.

the shock absorbers that are critical to preserving the stability of the system in the form of capital requirement, margin requirements, or not adequate to withstand the force of the global recession and left the system to week to withstand the failure of a major financial institution. addressing this challenge will require very substantial changes and stronger constraints on risk taking with stronger constraints on leverage, more conservative standards for funding and management. they need to be enforced more broadly across the financial system overall, covering not just all banks but institutions that present a potential risk to the stability of the financial system. institutions that prevent potential risks to the stability of the financial system. this will require bringing markets that are critical to the provision of credit and capital. the securitization markets and the credit agencies with an broad framework of oversight.

this will require much stronger cushions or shock absorbers in the critical centralized financial infrastructure so that the system as a whole is less vulnerable to contagion and better able to withstand the pressures. and this will require strong authority to manage the failure of these institutions. resolution authority is essential to any credible plan to make it possible to limit moral hazard risk in the future and to limit the need for future bailouts. alongside these changes, we need to put in place some important changes to the broader oversight framework. our patch work antiquated structure of overitem responsibility created large ghaps in coverage, allowing institutions to shop for the weakest regulator, left authorities without the capacity to understand and stay abreast of the changing nature of risks in our financial system. to address this, we propose establishing a council responsible for looking at the financial system as a whole. no single entity can fully

discharge this responsibility. our proposed financial services oversight council will bring together the heads of all financial regulatory agencies including the federal reserve, sec, et cetera. they would be accountable to the congress for make sure that we have in place strong protections for the stability of the financial system that policy is closely coordinated across responsible agencies, that weed a dam the safe guards and protections as the system changes in the future and new sources of risk emerge. that we are effectively cooperating with countries around the world in enforcing strong standards. had council will have have the power to gather information from any firm or market to help identify emerging risks and will have the responsibility to recommend changes and reduce financial opportunities and to help ensure we put in place and minute taken over time strong safe guards against future crises crises. it will be responsible for

consolidated supervision of all interconnected firms who would could threaten the stanlt of the system. the fed in our judgment is the only regulatory body with the experience, the institutional knowledge and capacity to do this. this a role the fed largely already plays today. and while our plan does clarify this basic responsibility and gives clear accountability to the fed for this responsibility, it also takes away substantial authority. we propose to take away from the fed today responsibility for setting, writing rules for consumer protection and for enforcing those rules and we provide to require the fed to receive written approval from the secretary of the treasury before exercising its emergency lending authority. we look forward to refining these recommendations through the legislative process. we've already die tailed draft ledges lalt difference language

to the hill on every part of the reform package. >> if could you wind it up and then we'll come back. >> just 30 seconds. despite this crisis, united states remains in many ways the most proceed duck difference, the most rononogçgogogçgkgologkñ -- >> thank you, and we will return to questioning. 7ñ [captions copyright national cable satellite corp. 2009] [captioning performed by national captioning institute]

>> the hearing will re-convened. mr. secretary, i will get to a question, but i wanted to use part of my five minutes to continue the history. i did want to use my five minutes to continue this. i think the distortion of history that we've seen particularly by fannie mae and freddie mac needs to be addressed. the gentleman from california mentioned that in 2005, he offered apamendment that he said would have resolved the problem.

and he obviously strongly believes that. he mentioned that it was opposed. he then went on to say that in the senate, there was version that was better for the democrats. he did not characterize the party positions in the house, so i thought he would check to see if my mem noer this one case held up, and it did. the vote on the amendment offered by jat from california, 153 republicans voted no. 70 voted yes. the current ranking member of the committee voted no along with me and the chairman of the committee. so it is true that the amendment was offered, but it was defeated overwhelmingly and by more than 2/3 of the republican members. so if the history is relevant, it seems to me that is a relevant part of it. the gentleman from texas did vote yes and spoke for it.

the republican senate passed a different version that did not take the bill up and nothing happened. the secretary of the treasury at the time said he thought the bill that was brought forward was a good bill. he was overruled by the administration. the gentleman from ohio who is troubled by what the administration did, i joined him writing a letter -- i voted against the bill on the floor -- not the fannie and freddie, but the house aging, but i wrote cynne joined him. the senate through the bill out. they fell it was not worth trying. there are some republican opposition. but then in 2007, as it was clear there was a crisis, as i believe in 2005, the committee

organized after 2006 and i was the chairman, the first major piece of legislation was to reform fannie and freddie. the first main piece of legislation to reform fannie and freddie and worked completely with the administration including the powers of receiver ship, et cetera pep the big didn't pass the senate because of that same partisan division. 51-49 senates are hard to make function. but i did want to say that that was the history and as i said, the bill did pass in 2008. so we're not dealing with the fannie mae and freddie mac of the past. clearly we have to do something before they can resume their role, but they are now playing a different role than before. and mr. secretary, i was struck to note that there's been a debate on whether on have a consumer protection agency and who should be the systemic risk

regulator. and it was interesting to note that your critics on this seem to be aligned with the social li ist government in london while the conservative government in london is on the other side. dy note that the conservative party lines just came out for consumer regulator and for the bank of england being a single systemic risk regulator which does appear to be close to your position where the soeblist government has taken the off sit side. so apparently when things cross the atlantic, they get aversed. i had not realize that had that was the ideological effect. i think the important thing is these are practical and pragmatic decisions to be made. the only thing i would add is while i strongly support the

rationale of the consumer protection agency, one of the members on the other side noted that all the regulators are against it. now, those regulators should be happy they are getting support from some corners that they don't normally get, so maybe they should cherish it. i am more skeptical when people suddenly find great wisdom in their individual when they happen to agree. but the fact is that what we're talking about are agencies that will lose powers. and they object to losing their powers. and evening they have the right to make the argument, they can argue that taking the powers away from them may not make sense because the powers that will be taken away from them are in very good shape because they have rarely been used. yes, it is true that they are pristine powers. they have sat largely undrawn upon, but time to put them into hands to someone who will use them. gentleman from texas.

>> secretary geithner, before we move on regulatory reform, i hope you'll at least avail yourself of coming back one more time so we can talk about that issue, because it is of extreme importance and clearly as the gentleman just said about the new agency which will design and determine appropriateness of all financial products, so -- >> come back and talk about that or gses? >> that, gchlt ses. i think it would be extremely helpful. my first question, the chairman reminded me about fannie mae, which also, one of the big things on the table is how much money is the government or the taxpayers ultimately going to lose from everything that happened over the last year. and you see some figures of $20

trillion which that would just take -- i forget. i don i don't even use that figure. but we have seen $3 trillion is the amount outstanding. but i've looked at those and i think there are three big areas of loss. and i want to see if you sort of follow how much does it look like we'll ultimately going to lose. the biggest loss of all, $85 billion that we extended to fredd freddie and fannie, i see no prospect of getting that money back and would like your views on that. now, the second biggest one looks to be the car companies. we extended $80 billion and it looks like we've gotten $2 billion back and we do have an equity share, which is going to be very problematic. i see those as the biggest losses. normally people say aig is the biggest loss. but i know the property you took on board is diminished in value

about $15 billion. so i do see maybe right thousand a $15 billion or $20 billion loss. but by far fannie is the big companies and the chrysler finance and maybe the next one, i know that bank of america, citi, there's lot of money there. and of course bear stearns and cit, we probably lost $5 billion there. but would you go over that? i see some of the programs is making money, but i see those two big ones, fan any on fannie big one, and autos. >> i think that some of the numbers don't capture exposure and they don't represent any reasonable estimate of risk of loss to the taxpayer. you're doing it the right way, which is to look at the areas of our system which were most damaged. most at risk. and try to build up from that. but i don't believe we're in a position today really to give you even this month or maybe

then year give you a realistic estimate yet of those losses. that's an important thing for us to do. one of the strengths of our system is when we make these commitments, we're to set aside an estimate of the potential risk of loss to the taxpayer. let me take the positive side of this for just a minute. as you said, some of these are making firm. we've had i think in the range of $80 billion in capital come back to the treasury just over the last two months. >> the capital purchase plan. >> right. >> and some of the lending programs. >> and if you look at the value of the investment the government made at goldman sachs after the warrant, the government did realize a 22% annual return. and that is a a measure of the effectiveness of the policies that congress helped put in place to ring more stability to the financial system. with the effect of those actions, the ultimate cost of this crisis could prove to be very modest relative to the

scale of the risk we confronted, but we won't know that until -- >> i would just -- let me ask another question, but i think you've got fannie and the car companies are our biggest loss looking to me. maybe aig. you know, you're talking about the capital purchase plan. the idea there was we put the money in the banks, they will lend it, you get a multiplier effect, and then it will pass through the economy and i think velocity is the economic term there. of course, they're holding onto it but that's because of the capital requirements and they're restocking their capital. a lot of them are lending it, but tell me about why we didn't really see that multiplier effect -- >> i think you did. >> did we? okay. >> remember a dollar of capital is equivalent to between $8 and $12 of lending capacity. so if you're short a dollar of capital, you have to reduce lending by $8 to $12. so on the scale of our financial system, just think of this, so

without that initial $200 billion of capital the previous administration put into the financial system, you would have seen overall lending capacity decline by well over $1 trillion, $1 trillion to $2 trillion, so you did see the benefits of that. >> the gentleman from pennsylvania. >> thank you very much, mr. chairman. again, welcome. we're sort of wearing that seat out, mr. secretary, with your presence, but we do appreciate it. in my opening remarks i referred to the rating agencies, and we paid some particular attention to the white paper and the suggestions of the treasury. i'm not necessarily overwhelmed with a strong position. >> i had that sense. >> running through some of the alternatives we have, could you give me your arguments pro or con, use or pay, whether or not if we take user pay away that will have a positive effect for

straightening out some of the problem, and if we do, where could we allocate that pay? >> i think you're right that many people say that the fundamental problem is in the issuer pay model, but having looked at that question over a long period of time and listen to the experts on it, i don't see a practical viable alternative. there have been some models that don't have that structure tested. they didn't seem to work that well. but i agree with you this is an important area of reform. we don't believe we have a mon nop l noply of wisdom in this area and we're happy to look at any area, including the ones you listed in your opening statement. >> how soon do you think we should try to get the package of the items we're talking about, how soon should they be finished, would you be comfortable we've responded to -- >> you mean when do we want to have the reforms in place? >> yes. >> i think they need to be done as a package. you have made that point yourself many times. you know, you can't fix this by going just looking at capital

over here and looking at consumer protection over here. on the systemic stuff, including on the rating agencies, you have to look at the comprehensive set of reforms together as a package. as i said, i think it's important we move this year. as you have already heard given the scale of interest affected by these reforms, given the amount of authority we're proposing to take away from people who have it today, there's a lot of resistance and opposition f opposition. if we wait it will be much harder for this committee to find consensus on something sufficiently strong. >> we are working on something on insurance, and i know treasury is sending something up. if we don't get a national jurs dicti jurisdiction over the insurance industry of some l how will this systemic risk regulator work? won't that leave it very deficient and over a very large portion of our financial industry? >> i agree that as you saw in

the monoline insurance companies and in aig, one of the things at the center of the crisis was you had agencies that were nomally insurance companies writing dramatic large commitments for credit protection. that's something we can't afford to allow to happen in the future. so i think the framework that we propose, which largely is modeled on something you proposed, to begin the process of putting in place federal level oversight, it will be very important. it will be very important. but, of course, our job is not just to deal with the last war, but to make sure we're putting in place something that's going to capture those weaknesses, vulnerabilities, more quickly in the future. but i think you're hiding one particular example of the weakness of our current framework. >> i appreciate and look forward to working with you and we

shouldn't be any more than one telephone call away, mr. secretary. i yield back my time. >> the gentleman from texas. >> thank you, mr. chairman. welcome, mr. secretary. it's always good to see you. if i had more than five minutes, we'd actually talk about a few of the things that we agree on, but given limited time i must admit -- >> i could use my time to describe those. >> on your time, yes. on my time, no. let's continue on with our gse history lesson if we can beginning in 1990. fannie and freddie's investment portfolios grew tenfold. in 1995 hud first authorized fannie and freddie to purchase subprime securities, including loans to low-income borrowers. in 2004 freddie and frannie purchased $175 billion in subprime mortgages accounting for 44% of the market. from '05 to '07 fannie and freddie purchased approximately a trillion, a number that's all too common in this congress, a

trillion dollars in subprime and alt "a" loans and the list goes on. that's the history. where do we find ourselves today? we know fannie and freddie share, the origination market has increased from roughly half to 75%. at last look the taxpayers have paid out, i believe, $85 billion that none of us expect to get back. they're on the hook for an additional $315 billion principally for helping securitize loans to people who couldn't afford to pay them back in the first place. now, mr. secretary, you have said in, i believe, in rolling out the white paper before the senate banking committee on june 18th, quote, we wanted to make sure we were focusing on central issues of this crisis. i know you're concerned about fannie and freddie but as a logical conclusion, since there is not a proposal beyond a study of the gses and the administration's proposal that

the administration has concluded that fannie and freddie were not a central cause of the crisis. >> no. >> congress in its wisdom passed a 44 modern oversight of the institutions. that was done in the summer of 2008. >> i do have limited time. it is a central cause, but you believe is already been eliminated? >> no, can i just finish this one thing? i agree with you on this, as a government, we will have to figure out the future. what they are today is not their future. it is not in their future. >> why not included in the legislative proposal? >> because we are rarely accused of insufficient ambition. we are taking on a lot of things, trying to solve a lot of problems, and we think we want to do that, do not need to do that right now, cannot credibly begin to think about that right

now because they are the entire mortgage market in the country because of the deep villiers' across the banking system. -- because of the deep failures across the banking system. >> let speak about another ambition of the administration. administration. again, i'm not going to adhere to your terminology or the chairman's terminology. what i see is a new government agency being proposed to approve consumer financial products, the cfpa. apart from subprime mortgages, can you point to any other consumer financial product that you believe was a but-for cause of this credit crisis? >> i want to just agree with one thing you said in your opening statement first which is to say there is a lot of dumb regulation in our country and part of the challenge is smarter regulation, not just more regulation. but i think if you look at credit products marketed to consumers, not just subprime,

broader array of mortgage products and in the credit card area, beyond credit cards, too, there were a lot of examples of practices that we should not -- >> i agree with you, mr. secretary. but the question is besides subprime mortgages, was it viewed as a central cause since you know the fed has already issued their final home mortgage disclosure rules under regulation "z," and so either, one, it's inadequate -- i guess i'm asking this question, why come up with an agency that has the power to ban or modify mortgages, ban or modify credit cards, ban or modify remittances, and i respectfully disagree with the chairman,. i mean, if credit cards and remittances were not a part of the central cause, why are they

included in this legislation -- >> this is actually -- this is not an agency we're proposing to give excessively broad scope. we're proposing to focus on the credit area particularly. it's a commission. a set of five commissioners appointed by the president, confirmed by the senate. not unelected bureaucrats and with authority that now exists in a bunch of other agencies. we want to put it in one place. >> the gentlewoman from new york is recognized for five minutes. >> welcome, mr. secretary, and thank you for your service. a ticking time bomb is the commercial mortgage loans, roughly $1 trillion will become due in the next couple of years, and the credit markets are totally frozen. i'm told they can't get refinancing anywhere. so we will be looking at bankruptcies and defaults that will have a terrible effect on

the regional banks that have invested in commercial -- heavily in commercial mortgage loans and community banks, not to mention the loss of jobs and commercial activity, and my question is that i'd like to know if you're putting some of your creative attention to this problem. i know that treasury came forward with a proposed guidance on residential-backed security, mortgage-backed securities that allowed them to restructure. as you know under current law the parties have to wait until a default is imminent before borrowers would put up new capital, and so -- and there has been some indication that treasury is looking at issuing administrative guidance that would temporarily ease these rules so that borrowers can proactively discuss possible loan modifications with those who service their loans in order to deal with these issues while there is still time to deal with them. and my question is are you looking at this?

are you intending to put forward guidance? when can we expect this guidance, and what other steps are you taking for this to prevent this ticking time bomb to our economy? >> we have not made a judgment on whether a guidance in that particular area is necessary or appropriate or possible, but someone would be happy to talk to you and your staff about in more detail. this is still a significant challenge for the u.s. financial system. we do have in place today though relatively creative, carefully designed programs to mitigate the effects. those pins pally are the program that allows us to give capital to community banks, a program we expanded and extended roughlily two or three months ago, and that's a very important thing to do. the second is a program we designed with the fed to provide financing to the markets that are central and important to commercial real estate financing. now, those are important programs. we think they could be helpful in this, but i think you're

right to say this is still going to be a challenge for our economy, our financial system to work through. >> what is the problem with giving the same treatment to commercial-backed securities that you gave to residential mortgage-backed securities? if this will help them refinance, we're -- and we're not talking about forcing them to modify or extend loans but simply allowing them to begin the dialogue to see if they n work this out. >> i understand why you're drawing attention to this issue and i commend you for doing it, but this is an enormously complicated set of issues, and it's something we have to work through very carefully. we'd be happy to talk to you and your staff about this in more deta detail. >> then secondly, when we talk about the consumer protection agency, which i totally and completely support, but i also support letting the agencies maintain these protections for consumers in these agencies.

a great deal of how well an agency performs is who's in charge, who's appointed, and often times there's a political agenda. we've seen very infective chairmen or commissions or whatever and others that really protected consumers. so i believe consumer protection is so important that we should have a check and balance and to give the example of the federal reserve that was so helpful to this congress in the passage of the credit cardholder's bill of rights, i truly believe momentum did not come to this effort until they came forward with a very well thought out rule that helped move the process forward. so it seems to me it would be counter active and put in jeopardy consumer protections to take away the right for other agencies that have the depth -- in depth understanding that it would take years for a new agency to learn to take that away from them and to also

counter a situation where you may have an agency head who is not performing the way they should or carries a political agenda. we've certainly seen that at the fda time and time again. >> i understand that concern. we thought about that a lot carefully. let me make the other case. if you give this agency only rule writing authority and no enforcement authority, it will be too weak and the rules won't be well-designed as i said because they're not responsible for enforcing. they won't have the incentive to design the rules carefully to meet the needs of both consumers and the basic realities of the way these businesses work. that's one reason. second reason is that right now -- what you have been proposing is you're leaving in place with a bunch of different people now enforcement authority that, frankly, was not well-used or deployed. it's in a bunch of different places now, and i think it's very hard to look at that system and say that it did anything close to an adequate job of what it was designed to do, so i think it's a hard case to make

that enforcement will be as effective as it needs to be in the future if you leave it where it has been. >> i would move the enforcement to the protection agency but allow the others to continue with their rule-making and their input into protecting consumers. >> you'd move enforcement and leave rule writing authority where it is? >> as a backup. as a backup. >> well, again, you know, as i say, we want to have a strong agency with the right balance between innovation and protection, and we'd be happy to work with you and your colleagues on how best to achieve that. >> the gentle lady's time has expired. >> thank you, mr. childreairman. mr. secretary, thank you for coming. earlier in the week chairman bernanke was here and we entered into a dialogue and he at the end stated when it comes to separating the financial products regulator from the primary regulator, he was oppo e

opposed to that because he thought it bifurcated the regulatory process. i guess the first question, i'm not trying to pit you two each against each other, why is he wrong and why are you right? >> well, as the chairman said, i think it's perfectly reasonable and understandable that the institution who is have this authority and have teams of dedicated, motivated, experienced people with that responsibility today, they are notthusiastic with giving up that authority. they are doing what they should. they are defending the traditional prerogatives of their agencies, and i think frankly all arguments need to be fuse e viewed through that basic prism. on the substance though these are very different types of responsibilities. prudential supervision is different from consumer protection, and i don't think -- again, we have had a running

national experiment as a country living with them being done together in their existing basic framework, and that did not turb o turn out so well for us. i don't think there is a plausible defense of maintaining that current system in place today, although i understand why people who still preside over those authorities are trying to make the case to preserve them. >> i think the question then, if you're going to have two different agencies, then what is the size of an agency that has to basically audit or oversee every financial institution in this country for their compliance and what does that cost and who is going to pay for that? >> important question, but let's just step back right now from where you began. as you said at the beginning, there are existing teams of examiners spread across bank supervisor agencies and in the

ftc today with responsibility for consumer protection. so we'd like to take that expertise and put it in a single place, less defuiffused, and ha that entity be responsible for this important function. since i think overall supervision was inadequate, particularly over the nonbank sector. i'm not sure i can tell what you're going to need in terms of the overall resource envelope, but we can take advantage of the fact there are substantial existing resources today. they're just spread out in a place where they have not been optimally deployed. >> does it concern you though that -- when i read your legislation, i see the charge of that, and you spend a lot of time talking about this particular area in your recommendation. other areas are pretty short, but this area, and i think what begins to look like to me is

that these products that could be approved that are going to be, quote, the optimum product begins to look like government trying to limit the choices of the american people. in other words, this is kind of the optimum credit card, this is the optimum mortgage, this is the optimum car loan, and to me i don't see that as a role of the federal government, and so, you know, i think there's a difference between consumer protection and i think all of us are for that, and then there's the other piece of it which is product -- the government determining what products the american people get toook at. i'm going to be on the no category of the government telling us what kind of financial products we should have. >> generally i agree with you on that, and if we were proposing that, i would agree with your criticism and i would share it. but we're not proposing that. we're suggesting as part of a broad range of reforms, there should be a set of standardized,

simple to understand, clear disclosured set of products that are available to consumers that they can choose it avail themselves of or choose not to. make it very clear and explicit that we want banks and other institutions to have the ability to market other products to consumers. even as your colleagues said, there needs to be stronger protections in place against fraud in those types of products. we've got a relatively pro-choice proposal here, and by suggesting that firms should be marketing standardized, more simple with clear disclosure products we're not maturely limited choice. >> i think we all agree with the disclosure piece, but there's a lot of difference between good disclosure and the government picking the products and i think we have to be very careful of if this becomes an endorsement of the federal government of certain productings. . >> the gentlewoman from california. >> thank you very much, mr. chairman.

mr. geithner, we certainly appreciate your presence here today, and i'd like to congratulate you on the strong leadership that you're already providing for the consumer financial protection agency. i think i think it is very important. we let a press conference just yesterday. when we are on recess, we will be on this issue, and i will plug it in to stop that i will be making for speaking engagements in it new jersey, tennessee, and georgia, and some other places. i believe this is very important, and again i appreciate the work you are doing. many of our members are very appreciative of that and will be joining you in the efforts. i will not talk about that anymore in my limited time, because i have to focus on what i can do for job creation. i do not have to tell you that the unemployment rate in minority communities and poor

communities are double digit, have been for a long time. poor communities are double digit, have been for a long time, and when we see 14% and 15%, like in new york, you're really talking in some areas 35%, 40% around this country, and so i'm very interested in doing everything that i can do to help create jobs. to that end, you know, i have been a real advocate and pushing for minority participation with the treasury on a number of your programs that have been developed under the t.a.r.p., the ppip, minority and women-owned programs. well, the ppip program in particular is your latest effort. let me thank you for paying attention and including some minority firms in cooperation with some of the majority firms. i'm very pleased we got at least

one firm that will be a main participant in the effort, and i'm very pleased that we have identified and you have help to select through your work minority firms that can participate with majority firms. but in examining what the minority firms are doing, i'm finding that they are getting more fee-based work -- rather flat-fee work american percentages. we want our participation with our minority firms to make sure that they are earning, you know, credible amounts of money because this money goes back into these minority communities. if you would take a look at magic johnson, for example, and what he's been able to do showing people that you can go into minority communities, you can do business, you can make a profit, and you can create jobs. so we need a lot more of that,

and i would like to commend to you our database, which we have been, i think, trying to share with you so that you will have access to those firms that are very, very capable of providing mainstream services and not have to rely on small amounts that are allocated by some of these firms that they have joined up with. having said that, have you given more consideration to how you can involve women and minority-owned firms in this really, really lifetime opportunity that's been afforded through all the work that's going on with t.a.r.p.? >> we are giving more consideration to it. we haven't made a judgment yet whether we're going to allocate or appoint additional managers under this program but we will be reflecting on that as the program gets under way. i understand how important this is to you. thanks for highlighting the things we have already done. >> as i understand it, you will

be involved very soon in another aspect of this work. are you putting something out within the next few weeks relative to the ppip program still? >> well, we are not fully operational yet, so i think the next stage in particular is as these firms we have appointed go out and try to raise cap fal for the program -- i'd be happy to come up and spend time and talk to you and your staff about more details that are ahead. as i said, we're committed to trying to find ways to increase participation of small women, minority-owned businesses in these programs. we will look for ways to do more. >> i think we're referring to valuation agents my staff just said. that is something that i think is available now, and i don't know what has been done in making sure that you do the kind of acceptable outreach to

include these firms. they're very capable, they're very competent. this sector of the minority community is more prepared, more developed than a lot of our other sectors. that's why it's so important for them to participate so that they can help create these jobs and lead the communities. i thank you and i yield back the balance of my time. >> the gentleman from south carolina. then next the gentleman from west virginia. >> thank you, mr. chairman, thank you, mr. secretary, for being here and for your service to our nation. i'm from a small state and we have a lot of community bankers, a lot of the commerce and residential business is conducted by the community bankers in a very personal way. in a hearing last week we had a community banker who talked about a woman who had run into a bit of bad luck because her husband was very ill and she was able to go to her community banker and reshape temporarily her mortgage so that it could meet her needs.

naturally, with the prospect of this consumer financial products commission and other regulations, the community bankers and those of us living in states who are served principally by community bankers are very concerned that this flexibility this bank was able to show this individual would not be there for them. not only the flexibility, but the timeliness of this. what is your response to this kind of situation? >> i think you're right. what you described is one of the great strengths of your system. very important we preserve that. i don't think there's any credible risk, but this is in the hands of this committee in the congress. but i don't think there's any credible risk that in putting in place strong protection for consumers we'd be limiting credit or materially interfering with banks to work out those kind of things. and that is something we can achieve together. there's no risk as this takes shape that we reduce that kind of flexibility. >> but if we're going to talk about -- and i'd like to get an

explanation of this and i appreciate your answer on this vanilla loan concept where everything has to have a plain vanilla sort of look to it, mortgage products are one of the things that was talked about. it seems to me we could be limiting some flexibility for our community bankers and then you get into things like car loans where they're 5% or 6% or 0% down or $1,500 incentives s this product safety commission going to be able to move fast enough to oversee in and is this the kind of thing they will be overseeing? >> i'm glad you raised this again because it's very important. again, what we're proposing is that banks be required to offer the standardized, simple, easily understood, clear disclosure product. but they can also offer a range of other existing products that can be tailored to meet specific needs of families and businesses and -- >> but the regulation of those products does fall within that consumer product -- >> again, we're pretty clear in

the language we put out in our draft proposal. obviously, we were happy to look for ways to make that clear and better, but we're largely going to rely on disclosure and penalties against fraud to provide the protections against the risk that future innovation in these areas imperils the system, but i think that in this area we very much share your objective in trying to make sure we're preserving the ka pass car competition and products and innovation and products. that's one of our great strengths of our system, we just let it get too far from any basic sense of gravity. we need to bring that balance back a little bit. i very much share the objective of preserving competition. >> i think naturally and you mentioned this in your opening statement, that a lot of the problems is really not in the bank sector. it was in the nonbank sector and the community bankers and other bankers of this ilk are getting

the broad brush painted against them not only in negative publicity associated with what's happened, but also as we come in to regulate, overregulate and make it a one size fits all sort of policy that it ends up gutting i think a lot of what goes on in a day-to-day life of a community banker and other small bankers. >> i think you're absolutely right. let me say for the record, we have a system which has 8,000 small community banks as a core part of our system. it's a great strength of our system. many of those institutions were dramatically more prudent than their larger competitors. that's a good thing about our system, but -- and you're also right to point out one of the challenges they faced was we had a system that allow nonbanks to compete with them without the same standards. that was not so good for them, required many of them if they wanted to compete to lower they're standards. that's something we have to

prevent. that's why we need a level playing field and single point of accountability. i think the thrust of this will be very helpful for banks reducing the risk in the future they're going to be faced with that kind of competitive pressure solely produced by the ability to evade the kind of protections congress legislates. >> the gentleman from north carolina. >> thank you, mr. chairman. secretary geithner, in my opening statement i unequivocally made it clear to everybody that i am a strong supporter of the consumer protection agency, one with equally robust mission and authority as the safety and soundness and prudential regulation authority that other agencies have, and no less subject to being second guessed or having their actions vetoed. so i'm starting from that

proposition. i'm not debating that philosophical thing anymore, but i'm not closing my mind to concerns that are raised and i want to say that to my committee members and to the industry and to the other regulators. three things i want to ask you about which i think have some merit that have been raised and ask you and others if they care to to work with me on. one of those you addressed in your opening statement, which was the examination authority, and the question i want to ask is will you work with me and us and whoever else wants to work on it to make sure that the consumer protection examinations are coordinated with the

prudential examination so that we don't end up with duplicative examiners in there at different times and overburden the regulated institutions, the ones that are already regulated. if you can tell me that yes or no, that would be helpful. >> absolutely, and i think we can do better than that. we're proposing to put the prudential supervisor on the board of -- >> that's the second -- that's actually the second part of it here. the resolution of potential conflicts when, although i have asked multiple people to tell me what those conflicts are and i have yet to find any real credible one that is don't either fall into consumer protection or clearly into safety and soundness in which case a clear articulation of the authorities would suffice, but my question is will you work

with me to make sure that when there is some kind of conflict, there is an appeal or review mechanism. i thought it was going to be in the financial services oversight council, but i have reviewed what you all sent over in the last few days and i don't see it particularly addressed there, and i want to make sure that we get that clearly articulated somewhere that everybody gets coordinated or reviewed if there is a real conflict, not a contrived one. will you work with me on that? >> absolutely, and what we propose to do is to have two levels. one is at the level of the board of this new agency where we have representatives of the supervisors there on the board. that would help, but also at the level of this broader financial services oversight council. >> third question that i think is a legitimate question, although i think it's a red

herring, and i think we ought to completely eliminate it as an issue, will you work with me to make sure that there is no presumption of liability for products that are issued that are not the so-called plain vanilla products? the argument i've heard, which i keep hearing over and over again, is if you have a plain vanilla product and we issue something else, somebody is going to sue us because we issued something. will you work with me to make sure that there is no presumption against nonplain vanilla products that would create any kind of legal liability just because you created or offered some other product. that's i think the same question that was raised in a different form. >> yes. >> okay.

all right. now that i have those three clarified, i am sure there are multiple others, but those seem to me to have at least some degree of agreement, and i think we can agree to do all of those three things without compromising the authority or subjugating this new agency to somebody else. i yield back, and i think the chairman. >> the gentleman speaks for me and the great majority of our side. >> i was going to go back to an issue where the chairman said he was going to correct the record. i do not think there is anything in the record to correct. the chairman said that the majority of the members had voted against my legislation, that the federal reserve wanted, and that is true, most of the members voted against that in

the house. the chairman said the bill did not go out of the senate. that is true. the chairman said the bill did not go out of the senate. that's true. in a straight party-line vote in the senate, it did go out of committee, but it couldn't get off of the floor on a 55-45 split in the senate, although i do remember at the time the speeches given by chuck hagel who was the author on the senate side of the fed's bill and the speech given by john mccain in speech given by john mccain in support and the speech on floor given by chris dodd in opposition to it. so i just want to again confirm that, yes, indeed, the federal reserve and the treasury as a matter of fact supported that legislation and the reason it's important is because we are back to debating that again. if we go back to where hud was in terms of its position, we basically have a position where

the safety and soundness regulator is being trumped, is being prevented, just as with the case of fannie and freddie. hud had in its mission these affordable housing goals. and as a result hud came out with the idea of zero down payment loans. that would be an anathema to safety and soundness, but no skin in the game, zero down payment loans. hud came up with the idea of allowing them to arbitrage. it was allowed to happen and the amendment to try to do something about it and allow the regulator to step in and regulate for a systemic risk was blocked. when it came to the idea of meeting those affordable housing goals by doing $1 trillion in subprime, that was encouraged, not by the safety and soundness regulators. for them they saw in 2004, 2005,

2006, as they came up here and advised us against this, they saw where this was headed, and so did treasury. so now we're in the process of trying to look at the problems that are in the past but not repeating those problems in the future, and that is why i think it is important at the end of the day that the regulator for safety and soundness be able to trump these other missions. fannie and freddie became the most powerful influence or lobby up here, and as you know, i have supported a federal insurance charter for some time, and i would like to talk about another issue here. i was concerned about the aig problem and not being able to get our hands around the information, and i think you were, too. we've talked about that. as you have laid out your regulatory reform proposal, there are several problems with

the current balkanized state-based system. it hampers u.s. competitiveness. it lacks a centralized regulator with the ability to look at the entire u.s. market. as we are working to streamline and consolidate regulatory authority in the insurance portion of our financial system, it appears we may be taking a step back in the banking sector, especially with respect to the consumer financial protection agency. within your cfpa proposal, you call for creating a floor for consumer protection which would allow state consumer laws to go over the top of the national standard. bearing in mind what has happened in our insurance market where we have 50 different sets of rules, 50 different regulatory approaches, are you concerned the negative consequences that have arisen in the insurance market could be replicated in the banking sector with this approach and would it not make sense to set a ceiling

as well as a floor so there is some consistency nationwide? >> i understand the concern you're rayiising, and it's difficult to get the balance perfect. what we laid out was our best judgment, again how to make sure you have stronger more uniform protections at the national level without depriving states of the ability to go beyond that, but i understand that concern. again, we thought we got the balance right, but this is an issue, a very complicated issue. this committee spent a lot of time on these issues in the past on the preemption area and we're happy to work with you and think how best to get a better balance. >> i appreciate it, and one last point before my time expires, would you concur on the thought about fannie and freddie, some of the points that i made in terms of the systemic risk that they pose to the system. >> there's no doubt we as a country let fannie and freddie pose a huge risk t would have been good if we figured out a

way to avoid that earlier, and that mistake should underpin much of what we do in think being how to create a more stable system. >> thank you. >> we have a couple more. we'll start a 1:00 with the next panel. what i plan to do is with regard to the questioning, pick up where we left off for the second panel. member who have already asked of the secretary will go to members who haven't asked. plus, and i talked to the ranking member, we did have a time for the secretary -- we would have had more time but 56 procedural votes preempted him. they weren't all procedural, but they were all silly. what we will do is in september when we come back, one of the first things we will have is a full session of several hours with the secretary, and so we can -- so we will get back to that because we're going to lose him. >> thank you, mr. chairman. >> and i will now recognize five minutes the gentleman of north carolina, mr. miller, if you would like to take the time or

wait. let me take the gentleman from texas, the gentleman from california is right, but again let's be clear, we are not at the old hud situation. in 2007 this committee passed a bill that included some of the things that had been not in the previous bill approved by secretary paulson, president bush, mr. lockhart, so we are not now in a situation where the old rules apply. the new rules do apply. there still have to be further changes but we're not in the old situation. gentleman from texas. >> thank you, mr. chairman, and thank you for the clarification as well. mr. secretary, welcome again. it's always a treat to hear you. i was very impressed with your opening statement. i have been visited by many community bankers, as has been the case with many colleagues, and one of the concerns expressed is a desire not to pay

for the sins of others. they can clearly say this in a literal sense. they don't want their premiums to escalate because of those who engaged in 327s, 228s, prepayment penalty coincided with teaser rates and many others, products that they were not purveying. can you give a word please such that they will be comforted in knowing they won't way for tpay sins of others. i thi >> i think they have a point. i think as commissioner bair has laid out and we are supportive of this, i think we have to move to a point where the basic cost of the failures of the system in the future are shared a bit more fairly. i think that's an important thing, but, yes, i share that commitment. >> i would dearly like to work with you on making sure that

they have the level of comfort that i think they richly deserve given they were not a part of the concerns that we're trying to address today. next point, you indicated that penalties against fraud would be one of the means by which going forward hopefully we would deter some of the products or the behavior that we saw. if you would, give a bit of clarity to that phrase, penalties against fraud. will there be civil as well as penal actions or are we talking civil only? >> i probably can't do that justice today, but again happy to spend some time working through those issues. again, i think the basic principle is it's not enough to have standards. it's not enough to have rules. it's not enough to state protections. they have to be enforced, and

fraud, there has to be consequences and we need to make sure the framework in place today provides enough deterrence against those kind of practices re-emerging. that's the objective we're working towards. lots of ways to do that. happy to spend time talking about how best to do it. >> thank you. and i would like to share a thought with you as i complete my moment. i understand that we have two classes of consumers. we have those who actually consume or deal with the products that are being purveyed and then you have another class, the folk who work at minimum wage which just went up today to i think $7.25 an hour, but who suffer because others make unwise choices. they end up losing jobs. we have seen how connected the economy is, how interconnected the world is, and by virtue of this, i care about those consumers who make $7.25 an

hour. i care about not only fannie mae and freddie mac that we've su s discussed today, but our fannie and uncle freddie mac, people who have real lives that are being impacted by those who made bad choices. so i'm here to let you know that i want to work with you, but my fannie mae and freddie mac including at least two classes of fannies and freddies. thank you and i'll yield back, mr. chairman. mr. chairman, i did an unusual thing, i yield back time. >> i appreciate that. i recognize the gentleman from new jersey. >> thank you. before i begin, will you work with mr. watt on all these issues? >> i will work with the chairman, the committee -- >> i was being emphatic about it. it was an attempt at humor.

thank you. >> translator: nev >> never mind. go ahead. >> thanks. who do we trust, who do we believe with regard to the fed and your position here -- >> you can believe him and believe me. we have a difference. it doesn't mean that -- >> right, right. one of your comments though was sort of intriguing. you stayed you understood what they were saying and doing and one of your comments was what they were doing was the right thick. they are defending the prerogatives of their agency basically and you're nodding your head and she can't write that down but that's a yes, right? >> they're defending the people who have worked on these issues over time and speaking in favor of preserving the traditional prerogatives of their agency. it happens all the time. >> my concern there is it really puts us in a hard situation when agencies come before us if that's the understanding that the agencies are going to come from as president-elects from defending the prerogatives of their agencies whether it's the fed or one of the regulators or whether it's the treasury. if they're doing it not for the

good necessarily of the economy, but defending their prerogatives, you can understand where that raised a red flag when i heard that. >> i think inherent in your job is to think about how to make those choices. >> and to consider the source. >> no doubt about it. absolutely. >> going to mr. watts' question, you said you would work with him with regard to three issues. one of the issue is his example of someone coming in for a vanilla product and getting a more complicated product and his concern is if that more complicated product isn't right for me, do i have the right to sue the bank that gave me this more complicated are du ed prod. he said he opened you would work with him. >> can i say how i thought about this? in trying to make sure we have better protections against fraud and in trying to make sure it's possible that people can be able to see, for example, a 30-year

fiked rate mortgage alongside a suite of other mortgage practice ducts, we want to make sure they have the ability to choose a five-year adjustable rate mortgage, too, without presumption as he said it that they would be vulnerable to challenge for offering products other than the vanilla product. that i agree with. >> what about the flip side? what if an individual comes into the bank and the bank has these more esoteric practice duct and they don't offer it to the client. does that client have a right to go back to the bank and saying this bank is profiling me -- >> that doesn't worry me that mu much. in our business that consumer can go to another institution and say i like that -- >> it should trouble you. we have heard a lot of discussion about

all they are offered is these much higher rate products that puts them in a bad situation. >> it is possible, but i think it is unlikely. >> in my time remaining, on the wind down authority, i have heard different stories. let me go to the source. first of all, the chairman metacomet and i agree with him completely. he said if we identify who the tier 1 companies are, and we should not have a pre-existing list, because if we do, he said it will only exacerbate the problem of too big to fail. i agree with that. it seems as though you are beginning to identify them by certain parameters. so it would not call a problem because you are basically telling us to they are, i have heard different stories of where the assessments will be. will they only be on the tier 1 companies, and if the answer is yes, will that be potentially

harmful to those companies reduced to the remaining companies if the assessment is too large, because you only have a small group? large because you only have a small group. respond to the question if you can. >> let me do the first part of the question. on the first part, here is our basic challenge. we believe, and i think there's a strong case for this, that the largest institutions that present these unique risks to the stability of our system, they need to have more conservative constraints on capital and leverage. they need to be holding more resources against the risk of loss so that we are less vulnerable to the few tower to t the mistakes they made. you have to be able to apply differentially different charges. we, of course, deeply understand the moral hazard risks that we live with today and that come

with variance in this stuff. we will work with -- >> if i'm going to do two more. the gentleman from georgia. >> thank you, mr. chairman. mr. geithner, welcome again. i want to ask you specifically in terms of would you not commit to at least having someone on your staff that is dedicated to increasing the participation of african-american owned firms, management asset firms, other firms so that they can get business in the financial sector as we move in this area? >> i think i can do better than that in the sense that i'd be happy to designate to you the principle senate confirm ed person in the treasury.

part of whose responsibility will be to continue to make sure we're looking for opportunities to increase participation of again small women-owned, minority-owned businesses this these programs. again, we have been pretty careful and pretty effective in expanding those opportunities. happy to work with you on ways we can do better. jo because there are many, many well-qualified minority-owned firms who if we don't make a special effort, a special effort to make sure they have the opportunity to compete and if it doesn't come from the top, it just doesn't get done. so i would appreciate it and i know this committee would appreciate your work on that area. now, another area that i'm vitally concerned about, and that is many or shall we say some in the banking industry it cements to me are reverting back to some of the very practices that got us into this mess.

i'm sure you're familiar with the reports that have come out of now the huge multimillion dollar, billion dollar compensation packages, bonuses that really got us into some of this. and they're going right back to it. what can you do about that? >> we did not believe we can go back to the set of practices and compensation that prevailed over the last decade and that's why we proposed well-designed but very important reforms in the compensation area, and that's why it's very important you're moving very quickly as a committee to consider those reforms, just next week, i believe, but it's important that we do this in the con tech text broader regulatory reform. it's not going to be enough to bring about better incentives for compensation. we have to put more restraints on risk taking, require firms to

hold greater cushions against loss. >> we continue to get complaints from some in the banking industry with certain practices. we have the consumer protection agency, which we are pushing, which unfortunately some are fighting very hard, and yet they're not doing the basic things that need to be done. they're not lending. what can you do to increase pressure on our banks to lend? >> let me just say two things in response to that. one is the most -- there's basically two core strategies you can do that would be helpful. one is to make sure that banks who need capital have access to capital. that is critical. without that you will have further reduction in lending

capacity. the second is to make sure our broader credit markets are working better. we have done a lot of things in both those areas, but i think those are the most important things we can do. i think it's important given what is a cumulative effect by a bunch of judgments by bank is s a -- across the country, that they earn back the trust of the american people. i think it's important to them they earn back that basic trust and confidence. >> there's another growing practice that is happening in our financial sector and some banks, not all, but we've gotten reports where banks will in our rush to allow banks to do a multiplicity of services and products in which they've encouraged individuals to open up their savings account at this

bank, open up their checking account at this banken and if ty need a loan that they would take that at the bank, but what happens is that often times, and it's particularly now when there's pressure on consumers out there to -- and they're on the margins where that's banks would go in and if they are a week or two late on their payment for a loan, they would go in and take that individual's savings without our knowledge and apply it to that. >> the gentleman's time is expired. the gentleman from delaware. >> thank you, mr. chairman. mr. secretary, it has been stated perhaps by you but i know by others that various financial entities in this country seem to be country seem to be relatively free or flexibility in selecting their regulators, if you will. it's a little beyond the purview of us here. but i mean, you're talking about everything from state regulators to the fed, occ, fdic, ots or

whatever. and i would think that the -- that the regulator would be dictated by how they're structured. what are they doing that allows them to be able to select their regulator. how great a problem is that in terms of the force mechanisms we're concerned about? >> let me give you some of the examples of that. countrywide and wamu were banks found the strictures of booegs being banks inconvenient, shifted their charter to a thrift charter and were able to take advantage of what in retrospect could only be judged as lower standards of enforcement. and they grew dramatically at a more rapid pace after they made that more basic switch. that's one example. but there are others in our

system, too. >> should we be looking at legislation to change that? we proposed at the centerpiece of our legislation that we eliminate the thrift charter and combine federal responsibility for these bank-like entities into one place. >> and you think that will solve not all the problems, but a lot of the problems? >> not all, but in the banking area, that difference between the thrift and the bank charter as it was enforced -- now, you know, there's hundreds of well run thrifts across the country. but there were, unfortunately, a few very big examples that caused a lot of damage where effectively people would go from one system to a stronger to a weaker system, grow market share, took themselves to the edge of the abyss because of that and that's something we have to prevent. >> changing subjects, on the consumer financial protection agency, and this may be in some of your writing, you're submitting a lot of writing, sometimes i think in your spare time you wrote the health care and energy bill and a few

things. i haven't had a chance to read it all, but -- >> i would have to rule that out due to the witness' character. >> my question is, how do you view how this would be structured? how big would it be? would there be all sets of reductions in employment in the various agencies that are now regulating if it were to occur? how do you foresee that? maybe that's not thought out carefully yet, but -- >> there's a whole range of design questions we have to work through. but again, there is a substantial body of existing examiners who now do the consumer protection spread across our multitude of bank regulator. and idealy what we do is take advantage of that expertise in shaping the workforce of this new agency. that would be the ideal thing. it would not be sensible not to do that. and i think that as a result,

the amount of employment in what will be bank supervisors with a narrow responsibility for safety and soundness would be reduced. >> is it your view that every new product that a bank would issue, a change in a credit card, whatever, maybe would have to go through an approval process for this consumer protection agency? >> absolutely not. >> and how will they determine whether they have to go through it or not? in your view, what is going to be the methodology for determining what needs to be submitted and what doesn't? >> we don't envision that process. the core of our proposal is to say we put our broad standards and principals that should govern broad practices that should happen in this the area. there's a lot of stuff that happened both in the mortgage area and credit card business. we build on that basic model. what we really want to do is, just to make sure that consumers have the ability to take

advantage of a more standardized easier to understand product even as they contemplate a range of other different sets of choices, that's the basic thrust of our proposal. >> as you know, some of the existing regulators are not totally happy with this change, shall we say. what is -- in my judgment, they're starting to do a lot better than they did before and i'll be the first to agree with you, that there were serious problems, but the credit card business in the fed is starting to do a much better job. but what is your response to them? i wonder about giving up the expertise. >> we worry about taking advantage of that. it didn't service well enough. da============yy==secretary.

>> we expect debate on several bills next week that include defense department spending. the measure includes $128 billion for war operations in africa and the stand and iraq. is the last inning measure that needs to be considered by the house for fiscal year 2010. also on the agenda, food safety programs and executive compensation. live coverage of the house on c- span. the senate also returns monday at 2:00 eastern and plans to begin consideration of fiscal year 2010. no roll call votes are expected. in the next two weeks, the chamber is expected to debate the supreme court nomination of judge sonia sotomayor are. a final vote on her nomination could come before centers began their august recess. the senate is live on c-span2.

>> health-care legislation continues to be the focus of the weekly online addresses. you'll hear to perspectives of what democratic proposals would mean to small businesses. first, president obama, followed by house republican conference vice chairman kathy mcmorris rogers. >> i recently heard from a small business are from new jersey wrote that he employs eight people and provides health insurance for all of them. his policy goes up at least 20% each year. today it costs almost $1,400 per family per month. it is his highest business expense besides employee salaries. he has already had to let two of them go. he may be forced to eliminate health insurance go altogether. , i am not looking for free health care. i would just like to give my premiums reduced enough to be able to afford it. day after day, i hear from people just like him. workers worry that may lose their coverage if they become

too sick or lose their job or change jobs. families who fear they may not be able to get insurance or change insurance if someone in their family has a pre-existing content of the condition. small-business owners trying to make a living and do right by the people they employ. these are the mom-and-pop stores and restaurants, beauty shops and construction companies, that support families and sustain communities. they are the tiny start-ups with big ideas, hoping to become the next global -- google our apple or hp. right now, they are being crushed by skyrocketing health- care costs. because unlike the bargaining power that large businesses have and face hiring administrative cost per person, small businesses pay up to 18% more for the basic same health- insurance plans, cost that eat into their profits and get passed on to the employees. as a result, they are much less likely to offer health

insurance. those that do tend to have less generous plans. in a recent survey, one-third of small businesses reported cutting benefits. many have drop coverage altogether. many have shed jobs or shut their doors entirely. this is unsustainable and unacceptable. it's going to change when i sign health insurance reform into law. under reform plans in congress, small-business is will be able to purchase health insurance through an insurance exchange, a marketplace where they can compare the price, quality, and services of a wide variety of plants, many of which will provide better coverage at lower costs than the plans they have now. they can then pick the one that works best for them and their employees. small businesses that choose to insure their employees will also seek redress receive its tax credit to help them pay for it. if a small business chooses not to provide coverage, its employees can purchase high- quality, affordable coverage through the insurance exchange on their own.

low-income workers, folks who are more likely to work in small businesses, will qualify for a subsidy to help them cover the costs. the matter how you get your insurance, insurance companies will no longer be allowed to deny you coverage because of a pre-existing condition. there will not be able to draw your coverage if you get too sick or lose your job or change jobs, and will limit the amount your insurance company can force you to pay out of your own pocket. to view the new report and learn more about how health insurance reform will help small businesses, go to whitehouse.gov, and send us your questions and comments. over the past few months, i have been pushing hard to make sure we finally addressed the need for health insurance reform, which has been deferred year after year, decade after decade. today, after a lot of hard work in congress, we are closer than ever before to finally passing reform that will reduce costs, expand coverage, and provide

more choices for our families and businesses. it has taken months to reach this point. once this legislation passes, we will need to move thoughtfully and deliberately to implement these reforms over a period of several years. that is why i feel such a sense of urgency about moving this process forward. i know there are those who are urging us to delay, and some of them have actually admitted that this is a tactic designed to stop any reform at all. some have even suggested that regardless of its merits, health care reform should be stopped as a way to inflict political damage on my administration. i will leave it to them to explain that to the american people. what i am concerned about is the damage that is being done right now to the help of our families, the success of our businesses, and the long-term fiscal stability of our government. i am concerned about hard- working folks who want nothing more than the security that comes with knowing they can get the care they need when they needed. i am concerned about the small

business owners who are asking for nothing more than a chance to seize their piece of the american dream. i am concerned about our children and our grandchildren, who will be saddled with deficits that will continue piling up year after year unless we pass reform. this debate is not a political game for these americans. they cannot afford to keep waiting for reform. we owe it to them to finally get it done, and to get it done this year. thanks. >> this is congresswoman kathy mcmorris rogers from washington state, vice chair of the house republican conference. like millions of parents, the help of my young son is our family's top priority. when he is sick, has denied taking to the doctor and expect the doctor not just to do something but to do the right thing to help our son get better. this is the same philosophy i brought to the ongoing health care debate in washington d.c.. some politicians, including the president and democratic leaders in congress, are demanding that

we do something to change our system. i believe is much more important to do the right thing, which means reducing skyrocketing health-care costs while protecting patients' ability to choose the right treatment. unfortunately, the democrats' health care plan, crafted largely behind closed doors, is not the right thing. it is a prescription for disaster, one that will put washington bureaucrats in charge of your family's personal medical decisions, medical decisions that are some of the most personal decision you will ever make. as a mother, i want to make those decisions for my son with a doctor we choose. anything else is unacceptable. also unacceptable is how much this will cost you and your family. according to the nonpartisan congressional budget office, the democrats' proposal will drive health care costs higher than ever. the agency also warns that millions will be forced off their current coverage under the

democrats' plan, even though they continue making the discredited claim that if you like your plan, you can keep it. millions of seniors will lose their health care choices, too, because the democrats plan cuts medicare, making it more difficult in rural areas across the country like mine in eastern washington for seniors to obtain the coverage they need. the house democrats' plan will add $239 billion to our deficit, attacked on to the tab we are passing along to our children and grandchildren. families, seniors, and future generations will not be alone in struggling with these costs. america's small businesses will pay a steep price as well, because the democrats plan is bankrolled by small business tax. more jobs will evaporate. we have lost more than 3 million jobs since the beginning of the year, and americans have every right to ask, where are the

jobs? according to the national federation of independent business, the democrats' plan will destroy 1 million more small-business jobs. according to the methodology developed by the president's own senior economic adviser, the democrats government takeover of health care will cost at least 4.7 million jobs over the next 10 years. because of these extraordinary costs to families, small- business is, and future generations, alarm bells are sounding across the country. one democratic governor recently expressed concern with the bill's costs at one trillion dollars or more. another called it "the mother of all unfunded mandates." republicans have offered to help make a truly bipartisan plan that will improve the health of americans. the democrats have not want our help. republicans want to seize this opportunity to make health care more affordable in the house represented, we have outlined an alternative that reduces costs

by rooting out waste, fraud, abuse, and reining in junk lawsuits the cost families millionths of a year in higher premiums. for those who are uninsured now, it offers affordable choices. reforms of regulation so insurance companies compete for business, and you can shop around for the best coverage and price. under our plan, if you like your current health care coverage, you can keep it, no questions asked. finally, our plan encourages americans to take advantage of preventive medicine and will this programs. in the end, our real goal is not just to have medical coverage, but to have healthy families. our reforms will lower health- care costs for you and your family. there will not increase taxes on small businesses, and they will not saddle future generations with hundreds of billions more in debt. it is time to do the right

thing, and that starts with scrapping the democrats costly plan for government bureaucracy and working in a bipartisan way to make health care more affordable and available. thank you for listening. >> now, virginia governor and democratic national committee chairman tim kane. he talks about the importance of grass-roots activism by young people in the democratic party and other issues. his remarks came in this year's national convention of the college democrats of america. is about 40 minutes. >> i want to welcome everyone to washington d.c. last year at this time i in turn to, -- i interned, and i am happy to introduce a man who preserves the environment and strives for excellence. he began his career of public service when he took a year off

of law school to volunteer with missionaries in honduras. there he was a principle to a small catholic school for teenagers. upon graduating from harvard, his service continued when he practiced law in richmond for 17 years, representing people who had been denied housing opportunities. he has won numerous precedent- setting cases and was recognized by local, state, and national organizations for his fair housing advocacy. during his tenure, virginia has been recognized as the most business for only state in the state where a child is most likely to have a successful life. virginia has one of the highest median incomes and one of the lowest unemployment rates in the nation. he has dedicated the last year of his administration to a renewed virginia initiative that will focus on reducing greenhouse gases, protecting the

environment, and developing green energy and green jobs in virginia. he he has held virginia democrats regain two u.s. senate seats and control of the state senate. he is a husband, father of three teenagers, a role model and an inspiration to students, lawyers, and politicians everywhere. i am sure he will be an inspiration to all of you. please join me in welcoming the 70th governor of the commonwealth of virginia, governor kaine. [applause] >> have a seat. this is wonderful. the only problem is, i cannot really see you, the way to have this set up.

i am assuming this crowd is about 85,000 people. is that about what we have come from all that noise and excitement and enthusiasm? it's great to be here at your annual meeting. i want to thank emma for her nice introduction. i have been reading a little bit about the program in the last few days. another risk in community service and all kind of policy dialogue, as well as political training. it is wonderful to see you from all over the united states. i had a chance to visit with the officers, so it is great to come and share a vision and thank you for your work and talk about what is to come. we are in the midst of a historic moment of our making, and we will be held accountable for what we do. a few thank you's before i

began. i want to acknowledgeemma again for her nice introduction. the president of george washington university is here. why don't you give him a round of applause? [applause] i am trying to stay in his good graces, because my son will be a sophomore next year. my son was a freshman last year, and with the young democrats were heavily on the obama campaign, especially canvassing in the northern virginia never said or easy to get to by public transit from here. he has really enjoyed gw and i am very happy he is here. cady and alex are officers who are doing a really good job. [applause] both are real dynamos and have done great work on campaigns in

their respective states. we have to in termterns who reay worked hard to pull this together. so give them around of applause. [applause] corey is our host. i met him earlier. frank has also worked on the technical side of pulling this altogether. he is a good guy, too. [applause] those are some thank you's in particular, but i will begin with thank you to all of you. you all worked so very hard this past november, and it was a truly transformative election. it is one of the two or three most important and historic presidential elections in our nation's history. i do not know that we fully grasp how historical it is. we were in the trenches.

i worked very hard for the president in 15 states, but especially in my own state, trying to get the electoral votes of virginia behind a democrat for the first time since 1964. we were aware of how historic it was, but i still find myself startled in thinking about the amazing amount of work that we did, and so much of the work was done by cda, by a new voters and young voters in amazing, record numbers. we saw it in virginia and all over the country. i know how deeply the president bills committed to the young people of america who supported his campaign. if you just look at the number of young people in the voter turnout in 2008. it was a spike from previous years, but we will make sure it is not a spy compared to subsequent years. -- not a spike compared to subsequent years. we appreciate the good work you

have done. let me tell you a little about me. i was a civil rights lawyer for 17 years. i started off in public service working as a missionary in honduras when i was a law school. i never thought i would be in politics. if you had told me that when i was in law school, i would have said you were crazy. i would have asked why you were smoking. i was really into helping others and did that as a civil rights lawyer. one day i got mad at my city council. this was in 1993. i was working as a civil rights lawyer. i thought it was to racially divided, in a community where i thought the rank-and-file worked together, i thought leadership was divided. i thought i could help people work together, and that is how i got into it, to try to help folks out. here i am six elections in nearly 16 years later, still doing it, and now doing it in this great way at the dnc.

i had gotten to meet the president when he was senator obama. he had been a senator for four or five months. he came to virginia. i don't know if any of you have been to the clarendon ballroom, right across the river. he came there to do a fund- raiser for me. his office had reached out and said they knew i was running for governor, and they came over. the night before the fund- raiser, i got a copy of his book, which i had not read. i read it as quickly as i could. i realized that he and i have some things in common. when i met senator obama at the fund-raiser, i said we had four things in common. we are both harvard law school graduates. you are the editor of the law review, and i went to a lot red sox games.

[laughter] but our diplomas look exactly the same. the second thing we have in common is we are both civil rights lawyers. he did voting rights work in chicago and i did fair housing work in richmond for 17 years. the third thing is that we both informative time abroad. his time and indonesia, and my time in honduras were both pivotal experience is in the way we directed our lives actor. the most important thing we have in common is this. when you give a speech and you say your dad is from kenya and your mom is from kansas, my mom and my maternal grandparents are from the same tiny town that your mom is run. the old radio, kansas is right on the kansas-oklahoma border -- el dorado, kansas. but came to appreciate his talents and thought they would be the right mix for what the

country would need in 2008. i campaigned in 15 states and helped virginia is electoral votes go blue for the first time since 1964. then i made a critical strategic mistake. a month after the presidential election, i wrote him a letter and said that howard dean had announced he would not run for dnc share. he was probably the most successful chair in history. if you look at who was in office when he came in and when he left, at every level, here is a person who would be a great person to do that job. i made an extremely persuasive case about this person. then the president had david plouffe call me 10 days later and say that is a good person, but the president says you have to do this job. so i was not at all persuasive. i said is a challenging time to the governor right now.

i have plenty to do. but the president reached out and really shared what it was that he wanted to see the dnc do. i have not been a washington guy. i have been deeply involved in state presidents -- i got very excited. i said yes, because you are supposed to say yes to the president. i said yes with enthusiasm, because as we talked about what the dnc could do, i knew it could be really exciting. the dnc is doing three things right now. two of them are unique to this president and this moment. let me just tell you about them. first, presidential success is our number one goal. i have a different job than howard dean had. he was the loyal opposition. he did not have a white house, so he had to be the loyal

opposition and build up the party. i have a different job. it is about the success of the president. the world needs a successful american president right now, right? [applause] our nation needs it, and a successful presidency makes it easy for anybody running as a democrat in any office in any community, and a challenge presidency creates a head wind or lease a crosswind for democrats. we have organized around presidential success to be the political arm of the white house. i tell all the staffers, you walk in that building every day, you ask yourself, what can i do in my corner of the world to help the president succeed today? i think you all agree that in the toughest economy since the 1930's, what we have seen in this president has been the seeds of a very transformed a presidency.

health insurance for poor kids -- president bush vetoed the s- chip. within two weeks of coming in, this bill had passed and been signed by the president. 11 million children in this country have health insurance who would not have had it if that had not happened. for governors it was hugely important. equal pay for women. the lilly ledbetter act which had been getting tripped up in congress has been passed. now women are guaranteed by law and equal pay for equal work. it was way overdue, but that has been done. that is in the rearview mirror, and that is the law. [applause] here is one that i love that hardly got any notice, because there have been so many issues. the president brokered adrial --

a deal to dramatically increase the standards for vehicles so that there would be lower emissions and use less oil. that one got celebrated for five minutes. that is a huge environmental win, but for the economy and good for the workers. we have shown that we are turning a new face to the world. this is one of the ones that matters most to me, having spent time abroad and having watched our relations with the world get torn, even nations we are friend with. it is so good to see america back, understanding that strength is a function of three things, military strength -- i have a son who is training to be a marine officer. we also have to have diplomatic strength, which we had let atrophy. most importantly, you have to have the strength of a moral example. president obama is restoring strength and a balanced way that will make our nation strong,

but an example for others. in virginia, i am wrestling with a tough budget. the recovery act that the president passed and signed with congress meant that as i was completing my state budget, i did not have to lay off an additional 7000 state workers. i have had to lay off people because the economy has been tough. [applause] that meant that teachers, public safety professionals, and others who are serving people in a tough time are not out hitting the bread line, trying to find work in the toughest job market in the last 25 years, because of the stimulus package. with $1 billion of the stimulus in virginia already being invested in infrastructure projects, we are seeing people being put back to work. that is happening in virginia and all over the place. we see the transformative seeds of an amazing presidency in this challenging time of national

emergency, so we are going to keep pushing at the dnc to make president obama's tenure as notable as his election. the second goal is grass-roots politics. this is the one that really is fun. this is the one that made me say yes with enthusiasm to the president. i was a civil-rights lawyer. i come at this from a grass- roots anger. i was a local official. you did not have to raise money to win in richmond. you just had to knock on everyone's door. i knocked on everyone's first -- i knock on every person's door in my district. i like grass-roots politics. wasn't it a great thing, when you think about it, of all the great things about the obama campaign, wasn't it a great thing that big donors or fine, but the donations of small donors really matter? campaign professionals and staffers were great, but even

now, the volunteers had a place, and they really matter. ph.d.'s and people with great policy ideas were fine, but regular people with their own ideas really mattered. that was something about this campaign that i know you felt wrapped up in, that it was a community, that it really matter, and everyone has something to offer. it was not a big democracy work people's voices were not important, but you really mattered. what we decided at that dnc is, we want to do that same thing, that communal sense that everyone has a role to play. we want to organize it not just around an election, but around policy, around changing the health care system in this country to bring costs down for families and businesses, and make sure that all can find coverage. we want to organize a around tackling climate change and a better energy future for this

country so that we could be leaders in the world and alternative energy and do the right thing by the economy and the environment in doing so. we want to organize people around and education system that is the best in the world. 20 years ago, the united states was the undisputed leader in the world in the percentage of our population getting college degrees. there was not a close second. now eight or nine nations have passed us, and another 10 or 15 are on a pass to pass us. we have to do something different to reclaim best in the world. that is what organizing for america is about. the largest department at that dnc did not exist when i walked in the door six months ago. we are putting grassroots organizers in every state. we have them in 38 states now and the rest within the next month or so.

we are charging these organizers to energize and engage american citizens around policy, to help the president achieve what campaign on the what he campaigned on. this is very, very exciting. as i travel around the country, i talked to a neighborhood activist who are doing neighborhood canvases or house parties are public-service events around health care. i find this to be a very compelling model. it is an experiment. it has not been done before. it's kind of audacious to think that we can run a grass-roots movement from inside the beltway. it is not as audacious as a guy like barack obama thinking he could be president of the united states. if we can do it the way that the

campaign was conducted, we can change policy, and the way policy is done, by giving regular american citizens of voice and a confidence that they have a voice. the goal is to build up a grass- roots movement, energize millions of americans, keep people engaged as volunteers, keep people engaged as donors, and do it organized around not just an election but around making important change in taking the nation forward. i could not be more excited about this. howard dean was a great chairman of the dnc. he came up with something remarkable. he said we cannot be a regional party. we have to be a 50-day party. this ofa is like the next debt beyond. howard dean took us to a 50-

state strategy. i think it will be good for us on the policy side, and if we do, it will also have great benefits for all our candidates. i would encourage all of you as you go back to communities and colleges, engage with organizing for america where you are. organizing for america is doing events and campuses and town of all over the country every weekend. there will be a chapter where you are. get engaged in it. make social change through grass-roots policies. the third goal is the goal of every dnc share, work with the state parties to make them strong. at the end of the day, we will not be measured by how well things are doing inside the dnc office. it will be held strong the 50 state parties are.

we are doing it in a collaborative way, working in tandem with the state parties, investing dollars, sharing best practices. that is the third week. that is what the dnc does, presidential success, a grassroots politics, state party policies. let me talk to you about the thing we are most focused on right now, which is health care and health insurance reform. . .

>> the bus became a winnebago. people started to appear about the sister and the help wagon. a few years ago, a group of doctors, physicians, and students set up a camp at the virginia-ky fairgrounds. they said they would provide premedical and dental care to people who did not have health care access. they did not know what they would see when they opened it up. they would open it wants for a three-day weekend. this has now grown over 10 years to the point where there are now thousands of people from seniors to infants who come. they do not have health insurance. they do not have coverage. they are in difficult health. they drive from all over the

east coast of the united states to camp for a few days in a parking lot and wait in line in the hot sun for hours to get their teeth pulled. they have never been able to get dental care. they may need to get a mammogram or have work done on their vision. they may need to get a pair of eyeglasses for the first time in their life. i went down there yesterday. i sat at the registration desk. i was interviewing people as they came in. people started coming into camp on tuesday. by the time i was there two or three hours into it, i was talking to people who were 900 th in line. they had been there 12 or 18 hours before they got in. at the same time, is one of the most inspirational thing i have seen, but it is also one of the most challenging things i have seen. we are a better nation than

this. every industrialized nation in the world has a health care system that provides some basic level of health care to all of their citizens. they are not better than us. they are not smarter than us. they are not more compassionate than us. we can do this. every president since harry truman has said it weakened a major health care reform. and yet, it has not happened. it has not happened because the system is set up in a way where the people inside the beltway like it. but the people outside the beltway without health insurance or have it and cannot afford the deductibles, we know we can do better. this is what we're working very hard about in the dnc. we are working with a passion about results. that is the only reason to do this thing.

elections are great. they are a means to an end. they are not an end. the end is results for american people. it is solving problems for people. that is why this health care reform debate is so important and critical. in virginia, 1.1 million virginians do not have health insurance. that is out of a 7.5 million population. i tell people i love being in elected office. there's only one thing that makes me ashamed of it. it is this. i meet people every day in virginia who pay taxes to buy me insurance and they do not have insurance themselves. they are paying sales taxes or income taxes. they are buying insurance for me and my family, every state employee, alleges lake forest redid the legislators and their families, but they do not have

health insurance for themselves. they do not know what will happen if they are injured or something happens to their kids. even if they are healthy, the anxiety is always in the back of their minds. i know we can do better. of the 1.1 million in virginia who do not have insurance, it is about one in seven people in the country that do not have health care insurance. most of them work. 70% in virginia, it is workers and their children. i had a stereotype about people who were not insured. i thought maybe they were not the people pulling themselves up by their bootstraps. no, this is a problem of working people primarily. it is a problem of children. just 15 years ago in this country, most of these workers without insurance is work for small businesses. big businesses tended to be able to buy insurance. 15 years ago, over 60% of small

businesses offer health insurance to their employees. today, it is 38%. it is dropping like a stone. the idea that we cannot change it or experiment with it, the status quo is not working. just in the last few months, hundreds of thousands of americans have lost health care insurance. that is just in the last five or six months. that is why the president has such a sense of urgency about it. that is why we have a sense of urgency at the dnc. that is why so many in congress feel a strong obligation to do this for the right reasons, for the strength of our economy. it connects directly to our economic competitiveness. we are working hard on it. it is challenging. the debate is tough. we have another side that just wants to say no to everything and poke holes in it. if they can find anything they do not like or make up something they do not like, they will do

that to slow down. but we will not be denied this. the american public overwhelmingly supports reform of health insurance and the health-care system. they overwhelmingly support a public auction that would inject meaningful competition into the market. we will stay on this as the dnc. we will stay on in working with members of congress until we make it happen. the president has said it will happen. i believe it. i fundamentally believe that at the end of the day, it is what the american people want. we are smart enough and compassionate enough and innovative enough to figure out how to do it. so many other nations have figured it out. we can figure it out and make it happen. i have asked you to get involved with ofa when you go back to your community. both sides have to pass bills, both houses. then there will be reconciliation. that will play out over some time. we need to keep a sense of

urgency about this. you can do that in your communities in amazing ways. i encourage you as you go back to make that happen. we are also interested in politics. let me talk about politics in conclusion. every november is a bit of a greeting card for the president. every november puts new partners in place for the president and congress. we are starting this year with two races i cared deeply about. to be biased about governors' races, and partial to them having been a governor. governors are the employment is. they are the ones that hold depends on redistricting -- told the uppens on redistricting and are out there making it work every day. this year, there are two.

will hear about them later. one of them is the race to succeed me. we are the only state where you could only serve once. it is only the only state. it is also the only state where the title is "your excellency." [laughter] that is kind of nice. i think they thought that eight years of it would make it too hard to live with. a dear friend of mine who is a longtime member of our state legislature and senate, who was my running mate running for attorney general for years ago, lost in the closest statewide election in virginia by 300 votes. he is running to continue to a great tradition of democratic leadership in virginia. he brings his own unique set of skills and abilities to the table. it is a very close race. it is a dead heat right now. his republican opponent and he are debating at the virginia bar association today. i feel good about the race.

it is a dead heat. four years ago when i was running for governor, i was down in the race. i had both u.s. senators campaigning against me. i had a strong majority of the house delegation campaigning against me. both of the state houses of the legislature were republican. they were campaigning against me. the white house was campaigning against me. but i waon. this time, he is in a dead heat. he has to u.s. senators campaigning for him. he has a majority of the house delegation campaigning for him. he has a state senate campaigning for him. the state house has gone from a 30-seat republican margin down to five. that is pretty much a drop. more importantly, he has what he has always been. he is an up front, honest public

servant. he grew up in rural virginia and a family of limited means, but they believed deeply in public service and education. he has combined those passions to put together a wonderful public service career. the democrats have now been in the executive mansion for eight years in virginia. we are strong. we have been named the best managed state in america. this week, cnbc named virginia the best state to do business in america. education week call this the best states for a child to be raised to have a successful life. this is stuff that deeds has worked with. he will bring his own focus on green jobs and higher education to take it farther. i feel good about the race. it is close. virginia has gone from a reliably red state to a

competitive state. both sides are competitive. we have won a lot of races recently, but not by a landslide. we win them because we're smart. we get the field activity together. we will do everything we can from the dnc and the white house. we hope that all of the chapters will help as well. this will be a competitive race. we have the right guy. i believe i will be putting the keys to the governor's mansion in friendly hands when i walked out. do we have some new jersey folks here? that is another challenging race. it is tough being a governor right now. any governor running for reelection has a challenge. it is the toughest economy since the 1930's. every governor has to make tough choices. governor corzine is not afraid of making tough choices. he has made the choices he needs to make a new jersey.

he is in a race that has him down in the single digits. he is a guide who knows how to make things happen. he knows how to figure it out. he is a diligent, common sens ical person. despite his amazing business background, he has never let his head overcome his heart. he has a big heart. we will do everything we can to work with him. the president and vice president have been up. this is also a very important race. we would love your help as well. that goes into 2010. let me just be honest. let me be candid about the challenges we face in 2010. some of you are such political junkies that you know the answer to this question. you all know that a president normally loses house seats in the midterm election. since 1900, what is the average since 1900, what is the average house seats that the president