we are pleased that he has been released. and in general, we support the rule of law and a fair and open judicial system in iraq that allows all iraqis to express their opinions freely. >> by throwing shoes at the president of the united states? >> well, actually i think that probably would go beyond the bounds of admissible free speech. >> why are you pleased he has been released? >> as i say, this was done pursuant to iraqi law. he has served out the time as prescribed under the iraqi judicial system. >> so you don't feel he should have been incarcerated longer? >> we're pleased he was released in consultation with iraqi law. >> the secretary talked about

it being some time before the administration reaches a decision on how to proceed in afghanistan. can you be more explicit about how long it's going to be before this policy review is done. >> she was referring to general mcchrystal's report on the implementation of the president's strategy. and i think that this is a process or review that is going to have to be done across the u.s. government, lots of interagency coordination that has to take place. and we also want to be sure that we're consulting closely with congress as well. there's going to be a couple hearings in the days to come. .

>> and about an hour, a speech on the economy from ben bernanke. first, today's house debate on a resolution admonishing joe wilson for his cult percent president obama speech before a joint session of congress. -- first, today's house debate on a resolution at monsanto wilson's -- joe wilson's outburst against president obama speech before a joint sensession

of congress. colleagues, what is at issue here is of importance to this house and to our country. and that issue is whether we are able to proceed with a degree of civility and decorum that our rules and our democracy contemplate and require. the house code of conduct requires that each member, every one of us, each and every one of us conduct himself, and i'm quoting from the rule, at all times in a manner which shall reflect creditably on the house of representatives. there seems to be little or no disagreement that mr. wilson did not so conduct himself on the evening of september 9.

senator john mccain was quoted as saying mr. wilson's behavior, and i quote, totally disrespectful. he went on to say, quote, there is no place for it in that setting or any other and he should apologize for it immediately. mr. wilson did in fact apologize to the president through mr. emanuel, the president's chief of staff. however, it was the house itself whose rules were offended and as mr. inglis, mr. wilson's colleague, a report colleague from south carolina, observed and again i quote, he should apologize to the house, to the house.

for the rule violation. mr. inglis went on to add, that would end the matter. i have made a similar representation to the republican leader. and i believe that would have ended the matter. i know that is what the republican leaders of the house thought would be appropriate and what the republican leader talked to mr. wilson about doing. he said so to the press. indeed last thursday based upon what a republican leader told me, not mr. boehner, that morning it was what i expected mr. wilson to do. as a result i held open the last vote last week, or the time between the last vote and the very last vote, to give mr. wilson an opportunity to express an apology to the house.

as all of us know, many members have done that in the past. reflecting upon conduct they thought was not appropriate. and as a result they came to this floor. that's happened on both sides of the aisle. where members have done things that they thought brought discredit to the house and they came to this floor, to that rot lot of rum and to this and to say -- to that and to think and to say, i apologize. mr. inglis is correct. that would have ended the matter. however, for whatever reason, mr. wilson has decided not to take any further action. in light of that, this resolution simply states the house's disapproval of mr. wilson's words and actions. his republican whip cantor is quoted as saying, obviously the president of the united states

is always wull come -- welcome on capitol hill and he deserves respect and decorum. surely all of us believe that's correct. surely all of us, hopefully all of us, believe that when we invite a president of either party to come to this house and address a joint session of congress that he ought to expect and we ought to expect that we will accord to him the decorum and courtesy of which mr. cantor spoke. the republican leader of the senate added, i think we ought to treat the president with -- with respect and anything other than that is not appropriate. that's what this resolution is about. it's a resolution of disapproval. this resolution is not about the substance of an issue but about the conduct we expect of one

another. in the course of doing our business. senator john core unanimous, the chairman of the -- cornyn, the senate campaign committee stated this, quote, there's a time and a place for everything and that was not the time or the place for that kind of comment. in the absence of mr. wilson's expressing his regret for acting in a manner that almost all agree, and every republican that i've talked to as well as every democrat that i've talked to, was inappropriate, contrary to the spirit of the rules of the house and the common courtesy that we should extend to all and particularly to the president of the united states of america, our president. i expected to extend that same courtesy to every president with

whom i've served. be they republican or democrat. we consider this resolution as a result of mr. wilson's failure to follow the advice of his leadership and a number of his republican and democratic colleagues who have told me that they've talked to him. i want to say personally that i know mr. wilson. we've had a good relationship. i expect to continue to have a good relationship. i found him a man of measured conduct. i was surprised. i think he was probably surprised as well. a simple apology to this house would have ended the matter. but this house ought not to stand silent in the face of conduct almost universally and by mr. wilson himself that was felt to be inappropriate. it is an expression of the

people's house that presidents nor any of us ought to expect to be subjected to such conduct in the course of our business in this, the people's house. the resolution says simply what hopefully all of us feel, that we disapprove of the conduct cited and let others know that such conduct is neither welcome nor approved by the house of representatives. at this time, mr. speaker, i ask unanimous consent that mr. clyburn of south carolina be recognized to manage the balance of the time on our side. the speaker pro tempore: without objection, so ordered. the gentleman from ohio. >> mr. speaker, i'm pleased to yield to the gentleman from south carolina, mr. wilson, for

as much time as he may consume. the speaker pro tempore: the gentleman from south carolina is recognized. mr. wilson: thank you, mr. leader. i appreciate your service for america and i further expect the majority leader, mr. hoyer. mr. speaker, i'm humbled and grateful for the support and prayers of my wife, rocks anne, my four sons, my staff, the people of south carolina, my colleagues and the american people. mr. speaker, i think it is clear to the american people that there are far more important issues facing this nation than what we're addressing right now. the president said the time for games is over. i agree with the president. he graciously accepted my apology and the issue is over. however, this action today will have done nothing for the taxpayers to rein in the growing cost and size of the federal government. it will not help more americans secure a job -- secure jobs, promote better education, ensure retirement or reform health insurance. it is the democrat leadership

and their rush to pass a very bad government health care plan that is bad medicine for america. it is -- it has muzzled the voices we represent and provoked partisanship. when we are done here today, we'll not have taken any steps closer to helping more american families afford health insurance or helping small businesses create new jobs. the challenges our nation faces are far bigger than any one member of this house. it is time that we move forward and get to work for the american people. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from south carolina. mr. clyburn: thank you very much, mr. speaker. mr. speaker, this resolution addresses an issue of great importance to current and future members of this august body. the proper conduct of its

members. despite statements made by various leaders of the other party, this is not about partisan politics or inappropriate comments. to the contrary, this is about the rules of this house and reprehensible conduct. i stand here as a former school teacher and the proud father of a current public school teacher who teaches in the congressional district represented by congressman wilson. my grandchildren attend schools in that district. but, mr. speaker, this hall is the most prominent classroom in this great country. and all of us are teachers.

we're bound by duty and the offices we hold to conduct ourselves as such. classroom teachers and schoolchildren across the country and around the world looking in on our proceedings should see proper decorum and hear civil discourse. our teachers are expected to teach our children to learn proper behavior. all of us are expected to give appropriate support and deference to the institutions that help us develop and maintain a civil and orderly society. our three separate branches of government have defined roles to play in this process.

and those of us who hold positions within these branches are expected and are duty bound to treat each other with proper dignity and respect. whether we like it or not, teachers and students see us as role models. but none of us is perfect. we all make mistakes. and sometimes fall short of expectations. but when we to proper contrition is expected. when one of us while seated in a formal session severely violation of the rules of this body shamelessly hurling accusations towards the president of these united states, our commander in chief

and refuses to formally express remorse, we at a minimum are duty-bound to express our disapproval. our teachers, our students and constituents deserve no less. with that, mr. speaker, i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from ohio. mr. boehner: mr. speaker, i'll recognize myself myself. -- for as much time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. boehner: i think this is a sad day for the house of representatives. this is nothing more than a partisan stunt aimed at trying to divert people's attention from the real issue that the american people want to talk and that's talk about health care. the gentleman from south carolina made it clear the other night when he told the president's chief of staff that his behavior was inappropriate.

and that's why he was calling to apologize to the president. the president graciously accepted his apology. and last friday, none other than the speaker of the house herself said it is time for us to talk about health care and not mr. wilson. now, the speaker and i don't see eye to eye on every issue, but on this issue i think that i am in full agreement with her. joe wilson is a decent human being. he did the right thing. he called the president and apologized. and the president was gracious enough to accept it. and i just believe that a man who spent 25 years of his life in public service in the state senate and here in congress who has four sons, all of whom are in the military, three of whom served in iraq. we all know joe wilson. he is a decent man. and to put him through this on

the floor of the house i think is unacceptable and it is a partisan stunt. there's been behavior that's gone on around here for more serious than this. that didn't -- that didn't bring a resolution to the floor to condemn someone's behavior. yes, people are made mistakes. some have come down to the floor and apologized. others have not. but none of it, none of it required a resolution. and to think that the president that is -- precedent that's being set here today, the precedent. think about it. never has this happened before. that we're going to bring a resolution of disapproving of his behavior. my goodness, we could be doing this every day of the week. the american people sent us here to work together to solve the problems of our country. they didn't come here to talk about our behavior. they didn't send us here to do that.

what they wanted us to do is deal with the issue of health care. the president said we ought to work in a bipartisan fashion to get health care reform accomplished. i agree with the president. i'm here. i'm willing. i'm able. set the time and a place and we'll be there with our solutions to the health care problems in the country. but to divert the nation's attention from the issues that they care about, health care, trying to make sure that we get jobs back into our economy, trying to do something about record deficits and record debt, no, no, no. we're not doing any of that. we're here on some witch-hunt, some partisan stunt that the american people are not going to respect. and with that i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from south carolina. the gentleman will suspend for the second. the chair will remind all persons of the gallery that they are here as guests of the house and any manifestations of disapproval or approval is in violation of the rules of the

house. with that, the gentleman from south carolina is recognized. mr. clyburn: thank you, mr. speaker. mr. speaker, i want to first of all say to my friend, the leader, that before coming to this congress i spent 18 years running state agencies -- a state agency in south carolina. in those 18 years i worked for four governors, two democrats and two republicans. many of you remember one of those republicans for whom i worked for eight years was carol kramer, a former member of this body. we were good friends. we often consulted with each other in the evenings. but we always respected each other. even though we were polls apart politically. this is not a partisan stunt. i do not participate in

partisan stunts. and i think every member here knows that. this is about the proper decorum that should take place on the floor of the united states house of representatives. and i'd like to say to the leader, and i think he knows that he has not represented the facts correctly. on october 23, 2007, a member of this body, representative stark, came to this floor and apologized for a behavior, as i would read, "i want to apologize to first of all, my colleagues. and then many of whom have been offended." and then he went on to say to the president, to his family, to the troops.

that took place on this floor in 2007, october 23. then, i will remind the leader on july 23, which incidentally, happens to be carol's birthday, on july 23, chairman thomas came to this floor, and he offered an apology. "because of my poor judgment, the stewardship of my party as the majority party in the house has been unfairly criticized." and he went on to apologize. and so all we've ever asked is that this body, this house receive from mr. wilson a similar statement of contrition. it's all about the decorum of this house.

and i will reiterate, i have never stood on the floor of this house in my 17 years and participated in any kind of partisan stunt. and i think the other side knows that. and i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from ohio. mr. boehner: mr. speaker, i yield as much time as he may consume to the republican whip, mr. cantor. the speaker pro tempore: the gentleman is recognized. mr. cantor: i thank the speaker. i thank the leader. mr. speaker, i'm having some difficulty understanding how it is that we're on the floor today debating this resolution. and i'd like to first speak to the claims made by my colleague on the other side of the aisle, the majority whip, in pointing out what are alleged to be precedence for this resolution. and as he knows, those

instances that he referred to, whether it be the gentleman from california, mr. stark, or the gentleman from california, mr. thomas, when they came to the well of this body to speak to our colleagues, it was as a result of conduct displayed, number one, in the case of mr. stark, during debate on the floor of this house. and number two, on the part of mr. thomas, conduct that took place among members in a committee on which i sit, the ways and means. two very distinct situations from the one we have here at hand. again, i don't understand how it is a priority that we're here on this -- on this particular piece of the resolution. the resolution, as has been pointed out, creates no job. the resolution does nothing to do anything to increase access

to quality health care. the resolution does nothing to address the issues of national security. plain and simple, this resolution does not reflect the priority of the american people. now, president obama came to this chamber last week, and he admonished us, mr. speaker. he admonished us to stop with the partisan bickering. and in fact, he echoed his sentiments that he expressed during his inaugural address when he said, "we may still be a young nation but it is time to set aside childish things." now, as the leader said, as the gentleman from south carolina himself said, he admits that what he did was inappropriate. he was on national television indicating he shouldn't have done it.

he wouldn't do it again. he also said to the nation he called the president. as the leader indicated, the president graciously accepted his apology. i'm told that the vice president also accepted the apology. what more does the gentleman want? that's why i am at a loss as to what this is if it's not a partisan stunt. so i believe we ought to accept what the president and the speaker and others have said, let's get on with the business of the people. let's try and get over the divide and stick to the course of trying to work on things we agree on or things we have a potential to do away with the disagreements, not the partisanship. now, this is the bill, this is h.r. -- the famed h.r. 3200, mr. speaker.

and there are several issues in here the american people have spoken out on. the first is the claim that we ought to be able to keep what we have if we're talking about health insurance. on page 16 of the bill, there is a section entitled "protecting the choice to keep current coverage." that's what we are all trying to do for the 85 or some percent of this country who has health insurance. now, you know what, our science says despite that title, there are provisions in there which begin to require -- require individuals and their insurers to do certain things which make it somewhat difficult if not impossible to allow for folks to keep what they have. the next issue that is of import, certainly, to the american people and to this body is the question of access to federal benefits by those who are here illegally.

now, the president stood on this floor in this body, mr. speaker, and said that he did not believe that there was any access for those here individually -- individuals to get benefits. in fact, on page 143, there is a section which speaks to the issue that there should be no federal benefit for those here illegally. the problem that we have on this side is there's no requirement of verification of legal status. and in fact, the white house, in fact, senator baucus and others have sense come out and said, you know what, you're right. these are the kind of things we could be doing right now to try and accomplish what it is the american people have sent us here to do. and they expect us to do that in a deliberate manner that produces a positive result.

which means we all have got to do that living within our means and to ensure that we do not break the bank in passing this health care reform measure. so i implore this house, mr. speaker, let's try and get t good addendum in yields back this time. balance of his time. the gentleman from south carolina. mr. clyburn: mr. speaker, i continue to reserve. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from ohio. mr. boehner: mr. speaker, i'm pleased to yield to the gentlelady from washington state, mrs. mcmorris rodgers. the speaker pro tempore: the gentlewoman from washington is recognized for four minutes. mrs. mcmorris rodgers: mr. speaker, i thank the gentleman for yielding and i rise in opposition to this resolution. i think the facts are clear. congressman joe wilson admitted himself that his actions were wrong and that he shouldn't have done it and that he won't do it again. mr. wilson apologized to the president and that was the right thing to do. mr. speaker, how much longer

does this -- does if this go on? what are we really accomplishing here today? the president accepted mr. wilson's apology and both the president and mr. wilson agreed it was time to move on. just late last week the speaker of this house said, and quote, it's time for us to talk about health care and not mr. wilson. i couldn't agree more. americans expect their elected officials to put aside partisan differences and work to solve the problems that are facing american families. and just last week we were told, let's put aside the partisan bickering. instead of pursuing this petty partisanship, now is the time to work together on behalf of the american people. hardworking families back home are worried about the economy. they're worried about losing their jobs. hardworking american families all across this country want us to stop a government takeover of health care. let's stop wasting time, let's focus on tackling the challenges that face our country.

thank you, mr. speaker, and i yield back the balance of my time. the speaker pro tempore: the gentlewoman yields back the balance of her time. the gentleman from south carolina. mr. clyburn: mr. speaker, i continue to reserve. the speaker pro tempore: continues to reserve his time. the gentleman from ohio. mr. boehner: mr. speaker, i'm pleased to yield to the gentlelady from florida, ms. brown-waite. the speaker pro tempore: the gentlewoman from florida is recognized for four minutes. ms. brown: thank you very much. thank you, mr. speaker. i know joe wilson, i've worked with him in the halls of this congress in committees and i've traveled with him to iraq. a retired army colonel, all four of his sons followed joe into the military service. in the seven years that i have known him i have never known joe wilson to say an unkind word about anyone. joe is a good and honest man. he's the kind of person who, if he disagrees with you, does it without being disagreeable. just as it was wrong for my democrat colleagues to boo former president bush in this chamber, it was wrong for joe wilson to speak out of turn.

the difference is that joe wilson apologized and the president very graciously accepted his apology. every member in this chamber has uttered words they wish they could have said differently. i know joe made this comment out of frustration because there seems to be a large gap between health care rhetoric and reality. what the president said did not match up with the bill that came before the house. this is the same bill that was discussed last month in many town hall meetings across our country. his comments provided americans with an opportunity to discuss the differences between the bill they've seen and the ideas that the president mentioned on wednesday's speech. on the issue of illegal immigrants in health care reform, in three committees here in this very house, republicans offered up amendments to clarify, to ensure that illegal aliens would not be included in

the health care reform bill. in all three committees those amendments were resoundingly defeated by my democrat colleagues. all americans heard the president say, if you like your plan, you can keep it. but those words directly -- directly conflict with the c.b.o.'s findings that cuts to medicare advantage plans in h.r. 3200 would result in millions of seniors losing their current plan. that's not keeping the plan that they like. further still we heard the president say that his plan would not add one dime to our deficits. again, that's contrary to c.b.o.'s findings that say that h.r. 3200 would increase deficits by $239 billion over 10 years. mr. speaker, there's a lot of frustration in our districts and throughout america about h.r. 3200. we need to stop wasting time and

get down to the business of drafting a bipartisan health care bill that addresses the needs of all americans. think of how many americans lost their jobs and lost their health care coverage during this one hour of debate that we're having today. we need to get down to the serious business that our constituents sent us here for. that's the very least that we can do. that's our job. i yield back the balance of my time. the speaker pro tempore: the gentlewoman yields back the balance of her time. the gentleman from south carolina. mr. clyburn: mr. speaker, i continue to reserve. the speaker pro tempore: continues to reserve. the gentleman from ohio. mr. boehner: mr. speaker, i'm pleased to yield to the gentlelady from michigan, mrs. miller. four minutes. the speaker pro tempore: the gentlewoman from michigan voiced for four minutes. mrs. miller: mr. speaker, last week the president came to this house for a joint session of congress to discuss how we as a nation will reform health care. and the debate over health care has made clear that the american

people are actually paying attention to what is happening here. during the president's speech our colleague, joe wilson, made a mistake. a mistake that i believe was drisk be by both the substance and the -- driven by both the substance and emotion in this debate. immediately after he made that mistake, congressman wilson did the appropriate thing, he immediately apologized to the president and president obama very graciously accepted his apology. mr. speaker, recently president obama made a mistake when referring to actions of the cambridge police while acknowledging that he did not have all the facts and in the national uproar that ensued, he called it a teachable moment. and i thought that was a very human response to an incident that was blown totally out of proportion, in my opinion. and some actually infered that it had racial overtones. i think what we have here today, mr. speaker, is a teachable moment. and it has nothing to do with race. joe wilson is a patriotic american who has defended our freedom in uniform as well as here in the united states congress. he is a father of four sons who

also serve this nation in uniform to defend our liberty, our freedom, our democracy. and we have all heard joe wilson speak on this floor and he ends every floor statement with the same following words, god bless our troops and we will never forget september 11. joe wilson simply made a mistake and was forgiven by the person who was harmed by that mistake, case closed. so why are we here? what can we be taught by forcing a vote on this resolution? well, i believe what is going on here, mr. speaker, today, is a reflection of the unease among the american people as they have watched this congress enact a $700 billion wall street bailout, a $787 billion economic stimulus bill, a $1.8 trillion deficit this year alone placed on the backs of their children and their grandchildren. they have been watching as congress works on health care legislation that would fundamentally alter one of the most personal factors in their lives and that is how to care

for themselves and their families. during the august recess we saw the frustrations of the american people when they came out in large numbers to exercise their rights guaranteed under the first amendment. the right to free speech, the right to peaceably assemble and the right to redress their grievances before government. and how were they treated when they did this? some leaders of this house called them unamerican or an angry mob. all of this for simply making their voices heard. i understand that democracy is sometimes difficult and it can instill passion. that passion, that love for our nation and the belief in the idea that every american deserves to be heard, is what makes america great. and we who are honored to serve here have a duty to listen. the ac ro moan that has developed here is what needs to be stopped. we need to stop and we need to listen to one another. we need to focus on the needs of the people and do the work that

they sent us here to do, most importantly, get our economy moving. i come from michigan where countless of my fellow citizens have lost their jobs and many have also lost their health care. and the resolution that we are considering today will not create one job. it will not help one pepper get health care for their family. it will do nothing to allay the concerns of seniors who are worried about their medicare. it will do nothing to get our economy moving again. it will simply inflame a debate that should have been over when president obama accepted joe wilson's apology. we can do better, the american people can do better and hopefully in this teachable moment we will learn. i yield back. the speaker pro tempore: the gentlewoman yields back the balance of her time. the gentleman from south carolina. mr. clyburn: mr. speaker, i continue to reserve. the speaker pro tempore: continues to reserve his time. the gentleman from ohio. mr. boehner: mr. speaker, i'm pleased to yield to the republican conference chairman, the gentleman from indiana, mr.

pence, four minutes. the speaker pro tempore: the gentleman from indiana is recognized for four minutes. mr. pence: unanimousen to con -- consent to revise and extend. the speaker pro tempore: without objection. mr. pence: thank you, mr. speaker. i rise today in opposition of the resolution in disapproval of mr. wilson. a friend of mine back in indiana likes to say that washington, d.c., is 100 square miles surrounded by reality. never felt truer than it does today. think about it. our economy is struggling, families are hurting and congress is poised to demand an apology from a man who has already apologized. extraordinary. first let me stipulate that joe wilson is a good man. and a man of integrity. he's a devoted husband to his beloved rocks anne, a proud father of four -- roxanne, a proud father of four american servicemen. i've traveled with joe into some pretty tight spots like many of my democratic colleagues have.

i've seen his devotion to our soldiers. i've never failed to be inspired by his love for the men and women of this country in uniform, his love of his country and his constituents. you know the old book tells us a harsh word stirs up anger. but we might have seen a little bit of that last week. in the midst of a highly partisan speech by the president of the united states, joe made a mistake. immediately after the speech was over, joe recognized his mistake and he offered his sincere apology to the president and the president's staff. and he was right to apologize. but it's important to note that despite his admitted error the broader national interest was actually served. the american people didn't send us here just to get along.

they sent us here to get it right. and ironically because of joe wilson's outburst we've been engaged in nearly a weeklong debate about what's really in h.r. 3200. in fact, now the american people know there's nothing in the democrats' bill in the house that requires an individual to verify their identity or citizenship, leaving open the very he possibility of undocumented workers receiving health care benefits. this was confirmed by the congressional research service, the note -- noted in the absence quote of a provision in the bill specifying the verification procedure on documented immigrants could receive taxpayer subsidized health benefits. if you need any further proof, the white house clarified their position last friday stating their support for verification expressly of an individual's citizenship. so despite the controversy,

congress has a shot to get it a little more right. than they would have otherwise. but let me speak as i close about the broader issue of bringing this resolution to the floor of the congress today. i was home in indiana yesterday. hoosiers were shocked with the news that one of our most storied companies, eli lily&co. was announcing lay justifies. i was in indiana on the day that whirl pool announced they were closing a factory and sending more than 1,000 jobs out that have city and out of this country forever. more than two million jobs have been lost since the so-called stimulus bill was passed. 15 million americans were out of work and yet here we are taking time in the people's house to demand an apology from a man who has already apologized. the american people want better.

the american people want less politics and more jobs. they want congress to set aside petty partisan politics and come together to take action to get this economy moving again. the speaker pro tempore: the gentleman's time has expired. the gentleman from south carolina. mr. pence: i urge my colleagues to vote no. mr. boehner: i yield the gentleman one additional minute. the speaker pro tempore: the gentleman is recognized for one additional minute. mr. pence: last wednesday was not a good day in the house. but today is worse. today we see politics overwhelming this institution. the american people are tired of it. so let me say again, without the didn't of the gavel, i urge my colleagues to vote no on this resolution, put attention back on the work that the american people sent us here to perform and that is to serve the interests of their families and the interests of this nation with everything we've got. i'm with joe.

vote no. i yield. the speaker pro tempore: the gentleman's time has expired. the gentleman from south carolina. mr. clyburn: mr. speaker, i continue to reserve. the speaker pro tempore: the gentleman continues to reserve. the gentleman from ohio. mr. boehner: we're prepared to close if the gentleman's prepared to close. mr. clyburn: i am. mr. boehner: mr. speaker, i yield myself the balance of the time. the speaker pro tempore: the gentleman from ohio. mr. boehner: mr. speaker, over the month of august when members were home in their districts, the american people were speaking loudly. and both democrats and republicans heard the message i think loud and clear. but as we stand here today, i would think the american people are probably looking at us wondering, do they really understand? the american people are saying enough is enough. enough of the politics here in washington, enough of the spending, enough of the big government takeover, and yet

here we are on the floor of the house today debating a resolution that should not be here. putting a man's name in the record books of disapproving of his behavior. the gentleman from south carolina admitted that he made a mistake. he called the president and apologized. and yet here we are on the floor of the house of representatives debating a resolution describing his behavior. i think it's wrong. and i think we will rule the day that we set this precedent and brought this resolution to the floor. i would just ask all my colleagues, all my colleagues to remember what it is we are doing here and the precedent that's being set. it's wrong. so i'd ask all my colleagues to do the right thing, to stand up and to vote no on this

resolution. let's all respect our colleague who admitted his mistake and apologized. let's all respect him. and the way we do that is to vote no on this resolution. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from south carolina. mr. clyburn: mr. speaker, i would like to close this discussion today using the balance of the time. mr. speaker, the leader, the republican leader earlier referenced the great preacher. his reference can be found in the third chapter of the book who says there's a time and a place for everything. i agree with that. i believe very seriously that there is going to be a time for us to discuss health care, a

time for us to discuss energy policies and education and the economy. but, mr. speaker, the rules of this house provide the vehicle by which we carry out those discussions. if the rules are not honored, if the rules of this house are not their to maintain order we can never get to these discussions and do so in a way that would make the people of our great country proud. the gentlelady from michigan indicated that this is a teachable moment. yes, it is. this is a time for us to teach not just by percept but by example that which we say to

our children, that which we say to our constituents that there are certain things that you do and certain things that you don't do. and when you do those things that you don't do, the proper thing to do is to show proper contrition. not the way you may think is proper but the accepted form of contrition. and the accepted form of contrition when the rules of this body are violated is to come to this floor and to request the apology of these members. and until that is done, mr. speaker, proper contrition has not been made. my father used to teach me all the time, son, he would say,

the first sign of a good education is good manners. i took that to heart. and i would hope that this body today would demonstrate to all of those schoolchildren who are looking in on these proceedings that we are here to demonstrate what is proper decorum for you to follow in your classrooms. we must here today support our teachers and help them educate our children. silence gives consent. we cannot be silent in this matter because we do not

consent to th >> that house voted for ed resolution against represented wilson. with 12 democrats voting against the measure. later this week, the house is scheduled to debate hybrid vehicle research and federal student loans. live coverage when the house returns at 10:00 eastern here on c-span. >> coming up tonight on c-span, ben bernanke discusses the economy. a group of house republicans talk about proposed regulations of the financial markets. president obama speaks at the afl cio convention in pittsburgh.

>> congressman ron paul wants to hold the federal reserve accountable for the country's economic crisis. he wants to end the fed. all less on twitter for the latest schedule updates. -- follow us on twitter for the latest schedule updates. >> he said he would not coming in here. the reason is because he said this building is so elaborate, it will go to their heads. maybe he is right. it has become over time a symbol of the government and the need for stability, rule of law, which in the -- which is what america stands for. >> as a complement to this original production, c-span

offers teachers three royce -- 3 resources on our website. -- free resources on our website. ben bernanke spoke at the brookings institute today about the economy. mr. bernanke states that the recession is " likely over." this is the demon. -- this is 50 minutes. >> it is my honor and pleasure to welcome you here this morning for an event that is titled "a year in turmoil." sometimes it is thoroughly appropriate to look backward, since the past is prologue and particularly on the subject we will talk about today.

as the media is constantly reminding us, we are observing but hardly celebrating the first anniversary of a chain reaction that began with the federal takeover of fannie mae and freddie mac that was followed by the failure of lehman brothers and then deathe aig bailout. the public servant is our keynote speaker today. he has been credited with keeping a cool head to route this crisis -- throughout this crisis that is one of many reasons why president obama has reappointed him as chairman of the federal reserve. the chairman will speak to us, take questions, and then go back to work helping guide our economy towards recovery and renewal.

the chairman will be followed by a panel discussion that will mark the public did you two economist at are the new code directors ever economic studies program director of things. -- economic studies program director at brookings. ted served as an official in the bush administration's treasury department. the other panelists are vincent reinhart, glenn hutchins, and to the belwo senior fellows. it is my honor to welcome chairman bernanke to the podium. [applause]

>> as an academic i frequently came here for the meeting spirited it has been a very valuable institution over many years in a wide variety of fields. by the standards of recent decades, the economic environment of a year ago was quite challenging. a year after the onset of the current crisis in august 2007, financial markets remain stress, the economy was slowing, and inflation driven by a global commodity pool had risen significantly. well we could not -- what we could not appreciate was the economic environment was about to become vastly more difficult. in the weeks that followed, several institutions would either fail or come close to failure, activity in key financial markets would virtually ceased, and the global economy would enter a deeper

recession. my remarks this morning will focus on the extraordinary events of the past year, as well as on the policy responses both in the united states and abroad. one very clear lesson of the past year, no surprise of course to any student of economic history, but worth noting, is that a full-blown financial crisis can affect an enormous toll in both human and economic terms. a second lesson is that financial disruptions do not respect borders. the crisis has been global with no major country having been immune. history is full of examples in which the policy responses to financial crisis is have been slow and inadequate. often resulting in greater economic damage and increased fiscal cost. in this episode by contrast, policy makers of the united states and around the globe

responded with speed and force to arrest our rapidly deteriorating and dangerous situation. looking forward, we must urgently -- we must address weakness in the financial system. as of this time last year, financial markets in the economy were continuing to suffer the effects of the ongoing crisis. we know now that the national bureau of economic research has determined that december of 2007 was the beginning of a recession. u.s. unemployment rate had risen to 5.25% in july. household spending was weakening. ongoing declines in residential construction and housing prices and rising mortgage defaults and foreclosures continue to weigh on the u.s. economy and forecast the credit losses at financial

institutions continue to increase. indeed, one of the nation's largest institutions, indymac, had recently collapsed under the weight of distressed mortgages. investors continue to harbor doubts about the condition of the government's response to enterprises, fannie mae and freddie mac, despite the approval of the congress of open ended support for the firms. notwithstanding the significant concerns, there was little to suggest that market participants saw the financial situation as about to take a sharp turn for the worse. for example, although indicators of default risks remained well above historical norms, most such measures had decline from earlier peaks in many cases buy substantial amounts. in early september, when the target for the federal funds rate was 2%, investors appeared

to see little chance that the federal funds rate would be below 3.25% six months later. as of this time last year, market participants evidently believed it was probable that significant additional monetary stimulus would be needed in the united states. nevertheless, in september 2008, the financial crisis intensified dramatically despite the steps that had been taken to support fannie mae and freddie mac, their conditions continued to worsen. the treasury used its recently enacted authority to provide the firms with massive financial support. shortly thereafter several additional large u.s. financial firms came under heavy pressure from creditors, counterparties, and customers. the federal reserve has consistently maintained the view that the figure of one or more

systemically important institutions in the context of a broader financial crisis could have extremely adverse consequences for both the financial system and the economy. we have therefore spare no effort within our legal authorities and a corporate cooperation to avert such billion. the case of the investment bank, lehman brothers, proved exceptionally different -- difficult. the company's available collateral fell well short of the amount needed to secure the federal reserve loan of sufficient size to meet its funding needs. as the federal reserve cannot make an unsecured loan and as the government as a whole lot of corporate resolution authority or the ability to inject capital, the firm's failure was unfortunately unavoidable. the federal reserve and the treasury were compelled to focus on at mitigating the

fallout from the failure. . . the failure of lehman brothers and the near failure of were dramatic but hardly isolated events. many prominent firms struggled to survive as confidence plummeted.

the investment bank merrill lynch, under pressure in the wake of lehman's's failure, agreed to be acquired by bank of america. the major thrift institution washington mutual was resolved by the fbi say in an assisted transaction, and the large commercial bank wachovia after experiencing severe liquidity outflows agreed to be sold. but two large free maine -- free standing investment banks, morgan stanley and goldman sachs, were stabilized when the federal reserve approved on an emergency basis their applications to become bank holding companies. nor were the extraordinary pressures on financial firms during september and early october confined to the united states. the u.k. lender hbos, with assets of more than $1 trillion, was forced to merge with lloyds. on september 29, but governments of belgium, luxembourg, and the netherlands effectively

nationalized fortis, a banking and insurance firm that had assets of from $1 trillion. the same day, german authorities provided assistance for large commercial real estate lender and the british government nationalized another mortgage lender, bradford and been way. on the next day, september 30, the governments of belgium, france, and luxembourg injected capital into a bank of -- with assets of more than $700 billion, and the irish government guaranteed deposits and most other liabilities of six large irish financial institutions. soon thereafter, the icelandic government, lacking the resources to rescue the three largest banks in that country, put them into receivership and requested assistance from the imf and from other nordic governments. this was authorities announced a rescue package for ubs that consisted of a capital injection and a person of assets.

the growing pressure was not limited to banks with significant exposure to u.s. or u.k. real estate or to securitized assets. unsubstantiated rumors circulated in late september that some large swedish banks were having trouble rolling over wholesale deposits, and on october 13 the swedish government announced measures to guarantee bank debt and to inject capital into banks. the rapidly worsening crisis soon spread beyond financial institutions into the money and capital markets more generally. as a result losses on lehman's's commercial paper, a prominent money market mutual fund announced on september 16 that had broken the buck, that is, its net asset value had fallen before -- below $1 a share. conditions in short-term funding markets including the interbank market and the commercial paper market deteriorated sharply. equity prices fell precipitously, and credit risk

spreads jumped. at a crisis of began to affect countries that had thus far escaped the worst effects. notably financial markets in emerging market economies were whipsawed as a flight from risk led capital inflows to those countries to swing abruptly to outflows. all parties in the united states and around the globe moved quickly to respond to this news -- authorities in the united states and around the globe moved quickly to respond to this news phase of the crisis, although the details differed according to the character of financial systems. financial system of the united states gives a much greater role of -- to financial markets and to nonbank financial institutions than is the case in most other nations, which rely primarily on base. a dozen united states a wider variety of policy measures was needed than in other nations. in the united states, the federal reserve announced new liquidity facilities with the goal of restoring basic

functioning in various critical markets. notably on september 19 the federal reserve announced the creation of facility aimed at stabilizing money market mutual funds and the treasury unveiled a temporary insurance program for those funds. on top -- on october 7 -- on october 2, the the fed announced the creation of a backstop commercial paper facility which stood ready to lend against highly rated commercial paper for a term of three months. during this period, farmers -- foreign commercial banks were a source of heavy demand for u.s. dollar funding, therefore putting additional strain on global bank funding markets, including u.s. markets, and further squeezing credit availability in the united states. to address this problem, the federal reserve have -- expanded the temporary swap lines that had been established earlier with the european central bank

and the swiss national bank, and established new temporary swap lines with seven other central banks in september and five more in late october, including four in emerging not a market economies. -- in emerging market economies. in further coordinated action, on october 8, the federal reserve and five other major central banks simultaneously cut their policy rates by 50 basis points. the failure of lehman brothers demonstrated that liquidity provision by it -- by the federal reserve would not be sufficient to stop the crisis. congress approved the creation of the troubled asset relief program, or tarp, with a maximum authorization of $700 billion to support the stabilization of the u.s. financial system. markets remained highly volatile and pressure on financial institutions intense through the first weeks of october. the group of seven finance ministers and central bank governors committed to a joint

statement to work together to stabilize the global financial system. in particular, they agreed to prevent the failure of systemically important financial institutions, to ensure that financial institutions had adequate access to funding and capital, including public capital if necessary, and to put in place deposit insurance and other guarantees to restore the confidence of depositors. in the following days, many countries around the world announced comprehensive rescue plans for their banking systems that built on the g-seven principles. to stabilize funding, during october more than 20 countries expanded their deposit insurance programs, and many others guaranteed nondeposit liabilities of banks. in addition, amid mounting concerns about the solvency of the global banking system, by the end of october more than a dozen countries had announced plans to inject public capital into banks, and several announced plans to purchase or guarantee bank assets.

the comprehensive u.s. response, announced on october 14, included capital injections into both large and small banks by the treasury, a program which allowed banks and bank holding companies to issue fbi -- fdic- guaranteed senior debt, the extension of deposit insurance to all noninterest-bearing transactions deposits of any size, and the federal reserve's committed commitment to -- continued commitment to provide liquidity as necessary to test a vote -- to stabilize key financial institutions and markets. the strong and unprecedented international policy response proved broadly effective. critically, it averted the imminent collapse of the global financial system, an outcome that seemed all too possible to the finance ministers and central banks to get in washington on october 10. however, although the intensity of the crisis moderated and the risk of systemic collapse declined in the wake of the policy response, financial

conditions remained highly stressed. for example, although short-term funding spreads in global markets began to turn down in october, they remained elevated into this year. and although generalized pressure on financial institutions subsided somewhat, government actions to prevent the disorderly failure of individual, systemically significant institutions continued to be necessary. in the united states, support packages were announced for citigroup in november and bank of america in january. although concerted policy actions averted much worse outcomes, the financial shocks of september and october nevertheless severely damaged the global economy. it starkly illustrates the potential effects of financial stress on real economic activity. in the fourth quarter of 2008 in the first quarter of this year, global economic activity recorded its weakest performance in decades. in the united states, real gdp plummeted at nearly a 6% average

pace -- average annual pace over those two quarters, an even sharper decline than had occurred in the 1981-1982 recession. economic activity contracted even more precipitously in many foreign economies, with real gdp dropping at double-digit annual rates in some cases. the crisis affected economic activity not only by pushing down asset prices and tightening credit conditions, but also by shattering household and business confidence around the world. in response to these developments, the federal reserve expended its remaining ammunition in the traditional arsenal of monetary policy, bringing the federal funds rate down in steps to a target rate of zero to 25% -- 25 basis

points by mid december of last year. it also took several measures to further supplement its traditional arsenal. the goal of these purchases was to provide additional support to private credit markets, particularly the mortgage market. also november 25, the fed announced the creation of the term asset-backed securities loan facility, popularly known as talf, aiming to improve the availability and affordability of credit for households and small businesses and help facilitate the financing and refinancing of commercial real estate properties. talf has shown early success in reducing risk spreads and stimulating new securitization activity for assets including in the program. foreign central banks also cut policy rates to very low levels and implemented unconventional monetary power -- monetary measures. for example, the bank of japan

began purchasing commercial paper in december and corporate bonds in january. in march, the bank of england announced that it would purchase corporate bonds and foreign currency. for its part, the ecb injected more than 400 million euros of one-year funds in a single auction by late june. in july, the ecb began purchasing covered bonds, which are bonds that are issued by financial institutions and guaranteed by specific asset pools. action by central banks augmented large fiscal stimulus packages in the united states, china, and a number of other countries. on february 10, treasury secretary diner -- geithner

and the heads of federal banking agencies unveiled the outlines of a new strategy for ensuring that the banking institutions could continue to ride credit to households and businesses during the financial crisis. essential component of that strategy was the exercise that came to be known as the bank stress test. under this initiative, the banking regulatory agencies undertook a forward-looking, simultaneous evaluation of the capital positions of the largest bank holding companies in the united states, where the treasury committing to provide public capital as needed. this exercise, unprecedented in scale and scope, was led by the federal reserve and the cooperation with the office of the comptroller of currency and the fdic. importantly, they agencies' report made public considerable information on the projected losses and revenues of the 19 firms, allowing private analysts to judge for themselves the credibility of the edge aside. financial market participants responded favorably to the announcement of the results, and many of the tested banks were

subsequently able to tap public capital markets. overall, the policy actions implemented in recent months have helped stabilize a number of key financial markets, both in the united states and abroad. short-term funding markets are functioning more normally, corporate bond issuance has been strong, and activity in some previously -- previously moribund securitization markets have picked up. stock prices have partially recovered, and u.s. mortgage rates have declined markedly since last fall. critically, fears of financial collapse have receded substantially. after contracting sharply over the past year, economic activity appears to be leveling out, both in the united states and abroad, and the prospects for a return to growth in the near term appear good. notwithstanding this noteworthy progress, critical challenges remain. strains persist in many financial markets across the globe, financial institutions face significant additional losses, and many businesses and households continue to

experience considerable difficulty in gaining access to credit. because of these and other factors, the economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels. how should we interpret the extraordinary events of the past year, particularly the sharp intensification of the financial crisis in september and october? certainly fundamentals played a critical role in triggering those events. as i noted earlier, the economy was already in recession, and it had weakened further over the summer. the continuing dramatic decline in house prices and rising rates of foreclosure raised serious concerns about the values of mortgage related assets, and thus about large potential losses at financial institutions. more broadly, investors remained distrustful of virtually all forms of private credit, especially structured credit products and other complex or opaque instruments.

at the same time, the events of september and october also exhibited some features of a classic panic, of the budget of the type described by bagehot and many others. a panic is a generalized run by providers of short-term funding to a set of financial institutions, possibly resulting in the failure of one or more of those institutions. the historically most familiar type of panic, which involves runs on banks by retail depositors, has been made largely obsolete by deposit insurance or guarantees and the associated government supervision of banks. but a panic is possible in any situation in which longer-term, illiquid assets are financed by short-term, liquid liabilities, and in which suppliers of short- term funding either lose confidence in the borrower or become worried that other short- term lenders may lose confidence. although, in a certain sense, a panic may be collectively irrational, it may be entirely

rational at the individual level, panics by rose and multiple contexts last year. for example, many financial institutions, notably including the independent investment banks, financed a portion of their assets through short-term repo agreements. in repo agreements, the asset being financed serves as the collateral for the loan, and the maximum amount for the loan is the current assessed value of the collateral less a haircut. in a crisis, haircuts to believe -- typically rise as short-term lenders attempt to protect themselves from possible declines in asset prices. but this individually rational behavior can set off are run like dynamic. as high haircuts make financing portfolios more difficult, some borrowers may have no option but to sell assets into illiquid markets. these four sales drive down assets, increase volatility, and weaken the financial positions

of all holders of similar assets, which in turn increases the risks borne by repo lenders and thus the haircuts the demand. this unstable dynamic was apparent around the time of the near failure of bear stearns in march 2008, and haircuts rose particularly sharply during the worsening of the crisis in mid september. as a saw last fall, when a vicious funding spiral of this sort is at work, falling asset prices and the collapse of lender confidence may can -- may create an edge of contagion, even between firms without significant counterparty relationships. in such an environment, a line between insolvency and illiquidity may be quite blurry. panic-like phenomena occurred in other contexts as well. structured investment vehicles and other asset past programs that relied heavily on the commercial market -- commercial paper market began to have difficulty rolling over their short-term funding very oil and the crisis. following the lehman collapse, panic gripped the money market much -- mutual funds and the

commercial paper market, as i have discussed. more generally, during the crisis runs of uninsured creditors have created severe funding problems for some -- for a number of financial firms. in some cases, runs by creditors, augmented by other types of runs, for example, by prime brokerage customers of investment banks concerned about the funds they held in margin accounts. overall, the role played by panic helps to explain the remarkably sharp and sudden intensification of the financial crisis last fall, its rapid global spread, and the fact that the abrupt deterioration in financial conditions was largely unforecasted by standard market indicators. that year the cabinet crisis had elements of a classic panic, particularly during its most intensive phases, has helped to motivate a number of the federal reserve policy actions. bagehot instructed central banks, the only institutions

that have the power to increase the aggregate liquidity in the system, to respond to panics by lending freely against sound collateral. follow that advice, from the beginning of the crisis the federal reserve like other event -- like other central banks has provided large amounts of short- term liquidity to financial institutions. as i have discussed, it also provided backstop liquidity support for money market mutual funds and the commercial paper market and added significant liquidity to the system through purchases of longer-term securities. to be sure, the provision of liquidity alone -- liquidity alone can by no means solve the problem of credit risk and credit losses but it can reduce liquidity premiums, help restore the confidence of investors, and thus promote stability. what does this perspective on the crisis imply for future policies and regulatory reforms? we have seen during the past two years that the complex interrelationships among credit, market, and funding risks are

reaching implications, particularly during a general crisis of confidence. in particular, the experience has underscored that liquidity risk management is as essential as capital adequacy and credit and market risk management, particularly during times of intense financial stress. but the basel committee on banking supervision and the u.s. bank regulatory agencies have issued guidelines to in -- to strengthen liquidity risk management at financial institutions. among other objectives, liquidity guidelines must take into account the risks that inadequate liquidity planning by major financial firms pose for the broader financial system, and must ensure that these firms do not become excessively reliant on liquidity support from the central bank. but liquidity risk management at the level of the firm, no matter how carefully done, can never fully protect against systemic events. in a sufficiently severe panic, funding problems will almost certainly arise and are likely to spread in unexpected ways.

only central banks are well positioned to offset the ensuing sharp decline in liquidity and credit provision by the private sector. they must be prepared to do so. the role of liquidity in systemic events provides yet another reason why, in the future, a more systemwide or macroprudential approach to regulation is needed. the hallmark of a macroprudential approach is its emphasis on the interdependencies among firms and markets that have the potential to undermine the stability of the financial system, including the linkages that arise through short-term funding markets and other counterparty relationships such as over-the-counter derivatives contracts. a comprehensive regulatory approach must examine those interdependencies as well as the financial conditions of individual firms taken in isolation. well, during the past year, the world has been for the most severe financial crisis since the great depression. the crisis in turn sparked a deep global recession from which we are only now beginning to emerge.

as severe as the economic impact has been, however, the outcome could have been decidedly worse. unlike in the 1930's, when policy was largely passive and political divisions made international economic and financial cooperation difficult, during the past year monetary, fiscal, and financial policies around the world have been aggressive and complementary. without these speedy and forceful actions, last october's panic would likely have continued to intensify, more major of financial firms would have failed, and the entire global financial system would have been at serious risk. we cannot know for sure what the economic effects of these events would have been, but what we know about the effects of the financial crises suggests that the resulting global downturn could have been extraordinarily deep and protracted. although we have avoided the worst, difficult challenges still lie ahead. we must work together to build on the gains already made to secure a sustained economic recovery, as well as to build a

new financial regulatory framework that will reflect the lessons of this crisis and prevent a recurrence of the events of the past two years. i hope and i expect that when we review developments at another conference a year from now, we will be able to claim substantial progress toward both of these objectives. thank you for your attention. >> thank you, mr. chairman, we invited to come back with a more optimistic title. the chairman has agreed to spend another 15 minutes with us taking some questions from all of you. after i signal the last question and he answers that, i am going to ask that all of you remain seated for two reasons. one, because there is more to come. and also, said that he can expeditiously make his way out. and while he and i are leaving,

karen will lead the panel appeared to set up for the next part of the program. so with that, let's turn it over to all of you. wait until you get a microphone, please. >> thank you very much. the you have any ideas at this point -- do you have any ideas at this point as to what the size of the shatt of banking system will be under the revised macroprudential regime that is to be developed by the jeep-20, the central banks of the world, and the other agencies over the coming years? i'm with the department of commerce. >> i do not have the eight type of exact estimate. clearly the shadow banking system had been a very big part of our credit system for a long time. the contraction in najaf of banking system has been at least as important, if not more

important, than that in the regular banking system. i imagine that this at a banking system, at least in the medium term, will not return to decide that it was before. the changes in accounting standards and regulatory standards will reduce the availability of off-balance sheet lending by banks. certainly there will be a new look at the kinds of securitization is that take place -- securitizations that take place. i don't expect it to become a major source of funding in the near-term. but on the other hand, there are a lot of securitizations that have proved their viability, mostly plain vanilla securitizations of various types and consumer products, consumer lending, student loans -- of a variety of other things. indeed, our talf program at the fed as both supported -- has

both supported activity in these products and indeed we're seeing now very encouraging lay more activity take place completely outside of the fed's program that we're not being said -- that we are not supporting any way. my forecast would be that the shadow banking system and the securitization markets will come back and be a substantial part of the u.s. credit system, but that will certainly in the medium term peace simpler, smaller, less opaque, subject to more oversight by regulators, and those things will constrain its growth for a period of time. >> martin? dollars image of liquidity risk management, and as a complement to capital requirements in the latest treasury statement, they also mentioned liquidity risk management. i did not understand from that

statement what that actually meant and how they're going to define liquidity and what this liquidity risk management would look like. maybe the basel statement has it all worked out and i just have to read that. i would be grateful if you could tell us a little bit about how you actually do risk-management -- liquidity risk management, having roles about short-term liabilities and a kind of thing? >> yes, the basel committee put out a set of principles, fairly detailed, on liquidity risk management. there be both formally and informally incorporated into guidance here in the united states. the basic idea is not to rely on markets being open and liquid at all times. one of the problems with our supervision was that you look at the bank and they can always go

to this market and that market. of course, in a general crisis, that becomes much less possible. very few people anticipated the extent to which the repo market had become nonviable in the crisis. so the general nature of liquidity risk management is to let get scenarios in which normal liquidity sources or markets are not functioning properly, to look at company liquidity needs are going to be, possible offshore financing and other obligations coming due, and making sure that there is adequate planning and provision, perhaps in the form of holding on to very liquid assets, or managing more carefully the sources of liquidity and the uses of liquidity to ensure that a

company can manage through even several months of very intense conditions. i think that is very important, because historically solvency and liquidity have been that two pillars of stability in the financial system. we have focused internationally very much on capitol, which is very important, and indeed a strongly capitalized firm is less likely to run into liquidity problems. but that being said, we've seen in the recent crisis the situation where markets and lenders were not discriminating to the extent you would hope, and that either firms which in retrospect appear to have been fairly sound from a capital perspective were facing a of severe liquidity perspective. and alas, it is, we are so -- historians and all of us, we see "it's a wonderful life was " on television. a depositor retail run, that was

an historical form of run, but in a modern financial system, so much funding his wholesale funding -- is also funding, -- wholesale funding, which is prone to runs, and we need to make sure that those financial institutions can withstand even adverse financial situations for a period of time. dollars make it very much, mr. chairman. i am from the omb lodge. this is a question about the regulatory reform in light of the president's comments in new york they might resist some of the reform proposals that he is before. that ought to be responsible, was his reference. does this have any application to the regulatory community?

if you could maybe express your views regarding the appropriate role of the regulatory community in the discussions, the debate around regulatory reform going forward? >> inevitably the regulatory community needs to be part of the discussions. we haven't all a lot of information and experience that should be called on. -- we had a lot of information and experience that should be called on. we have advanced the number of ideas including, i should emphasize, reform proposals like the resolution authority would have nothing to do with the fed's own powers or status. inevitably, the regulatory agencies need to be a part of this process. of course, as with all parties involved, there are legitimate interest and there are interest

which are more self interested in publicly interested. that is issued that fits all the members of the discussion, including the members of congress. -- that is a shoe that fits all the members of the discussion, including the members of congress. there could be other things that congress has been concerned with, but i feel quite confident that a comprehensive reform will be forthcoming. this is just too big a calamity, and clearly regulatory problems were part of it, not the only part, but not just in terms of the effectiveness of individual regulators but the entire structure of the financial regulatory system. i remain optimistic that a comprehensive reform will be forthcoming, and the federal reserve's perspective is that we do not want to be in the situation that we were in that last october and september. we're very interested in trying

to support of reform that will be effected and will go a long way to preventing the type of crisis from occurring in the future. >> anybody over here? >> thank you for coming. you mentioned the borderline between insolvency and illiquidity. i am wondering if you feel that you have the time and tools now -- it is a blurry line but it is a line. can you make that distinction and in related -- i am wondering if we have a similar dictum on the insolvency, when we are clear on the insolvency side of the blurry line? >> i think the board line is of fundamental fact about and enjoy markets, less than the

capability of the federal reserve. in particular, what we saw in this crisis was an into markets that were normally liquid becoming very illiquid. in economics beat, there were big liquidity premiums on certain types of assets, those assets which may well have been sound assets if allowed to mature and to perform, but under a situation where they had been sold, a fire sale situation may well a brought was valued then if held. and so there was an interaction in a highly illiquid situation, and firms that might otherwise be solvent and a long run might not have been sought but then. this is not a deep, philosophical insight but what is true about a typical bank run. we know in theory debt of bank that has illiquid long-term loans on its assets, and liquid

short-term deposits on its liabilities side, we know -- there is a lot of debate about how often bank robbers are fundamentally run, but it could be driven by sunspots are some random event, a rumor, but say, and if the bank does not have enough liquidity, it would have to sell its assets and the insolvent even know if there had not been a liquidity problem, they would have been solid in the long term. the distinction is blurry in reality. center banks needed to a weekend to make sure that the liquidity side is handled. the solvency side, the central banks and the federal reserve do not have any scope. we have been forced into the government broadly, the point i was trying to make is that

despite all the focus on what happened in the u.s., this was a global event and many of these interventions occurred throughout europe, for example. these interventions were necessary, given the short term alternatives, but it is very important that of a natural form avoid the need for these types of interventions except in the most extraordinary circumstances. in particular, two ways to do that, to address the too big to fail problem which is a huge problem. we have to deal with that problem. tougher oversight, which includes more capital, or control of risk, and so one that reduces the risk of insolvency just on that side. but also in the case were insolvency occurs, one of the key ideas of the proposed financial reform is to have some kind of special resolution regime that would allow the government to wind down, any

critical systemically critical -- any systemically critical list petition to avoid this chaotic type of collapse that we saw with lehman year ago. we want to keep the government out of providing capital, and there are two ways to minimize the risk of that. >> i'm going to take the privilege of asking the last question about unemployment. i do so because we are told to expect improvement in jobs at the trailing edge of our recovery, and also when you return to the podium of year from now to keynote our follow- up to this later, we will be less than two months away from the 2010 elections. could you talk about the implications on the employment front? >> let me first say that economic forecasting is not one

of your more precise sciences, so that anything -- here in -- even here a brookings. we're forced, because far -- policy must be forward-looking and take into a fact of the lags, we have to be doing our best to figure out what the likely scenarios are, recognizing day-by-day as information comes in, we made revised that. -- we may have to revise that. but having said that, i see some agreement -- among the forecasting community at this point that we are in a recovery, that we will see growth in the third quarter continuing, and the growth will continue into 2010, but the general view of most forecasters is that that basic -- that pace of growth will be moderate in 2010, less than you might expect given the depth of the recession, because of ongoing headwinds, including

still ongoing financial and credit problems, the leveraging by households, the needs for adjustments in the economy, the need for fiscal as it -- and said at some point -- many factors that will likely make the 2010 recovery moderate, and in particular, not much faster than the underlying potential growth rate of the economy. the arithmetic is that unless the economy grows significantly faster than its longer-term growth rate, it will be relatively slow in creating jobs over and above those needed to employ people coming into the labor force. and therefore the unemployment rate would tend to come down quite slowly. that is a risk and the possibility, and there are risks on both sides of that forecast.

we could have a stronger or weaker recovery, but if we do in fact see moderate growth but not growth much more than the underlying potential growth rate, then unfortunately unemployment will be slow to come down. it will come down but it may take some time. obviously that is a very serious concern and that is one reason why even though from a technical perspective the recession is very likely over at this point, it is still going to feel like a very weak economy for some time as many people will still find that their job security and their unemployment status is not what they wish it was. that is the challenge for all policymakers going forward. >> u.s. certainly helped us understand a very -- you have certainly helped us understand it better. we appreciate someone who can combine an outstanding scholarship, careful study of the past, with the lessons that gives us for the future, a real

sense of what extraordinary public service is, and wise public policy. we want to thank you for inviting those values and representing them so well here today. thank you for your lucidity and candor and your cautious optimism. please join me in thanking the chairman and please stay seated after -- as really. >> thank you for the invitation. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> on to mars "washington journal," we will talk to a political reporter about congressman joe wilson. craig nichols is promoting climate change legislation, ran paul, and we will discuss health care with the johns hopkins faculty dean. washington journal is live every morning at 7:00 a.m. eastern on c-span.

>> next month, a unique look at our nation's highest court. its role, traditions, and history. dollars i do not think it is understatement to say that this building would not be here if not have been for the persistence of chief justice taft pierre >> he had in mind that the court needed have a building of its own. he believed that when he was president, and when he became chief justice, it became almost an obsession. >> supreme court week, starting october 4 on c-span. and go online now for a virtual tour of the court, historic fetas, and more at c-span.org. >> of group of house republicans held a news briefing today on financial regulations. this is one of several events marking the one year after the first government bailouts of financial institutions. speakers include financial- services committee ranking member spencer baucus. this is 40 minutes.

-- spent bachus -- spencer bachus. this is 40 minutes. >> i thank each of you for being here today. free markets and individual initiative had made the u.s. economy the largest in the world. it has given americans a standard of living in opportunity second to none. our economy is three times larger than the next largest economy, which is japan. and it is larger than the combined economies of russia, china, germany, france, and england. and that is no accident. >>> > >>> that is not to say that we cannot do better. we need smarter regulation, not that we need more regulation.

we need the governmental agencies that are assigned to assure safety and soundness and consumer protection do their job, not to -- not the creation of more government agencies. a consolidation, not more agencies. we became the greatest economy in the world through hard work, innovation, individual choice, and allowing people to succeed and fail. we do not want to give that up. unfortunately, that is a lesson that is lost on the administration as it pursues an overly ambitious economic agenda. as in the case of health care, an energy policy, the president has offered a reform proposal that would grant brought new authorities -- brought new authorities to government bureaucrats while unduly in treating and to the private

markets, innovation, and restricting personal chores. we need it approach to regulatory reform that draws on the strengths of our economy and our present system. we need to ended the bailout once and for all. if the government out of picking winners and losers in the market, and restore market disciplines so that the financial firms will no longer expect the government, or more correctly the taxpayers, to rescue them from the consequences of their imprudent business decisions were guaranteeing their obligations. those are principles upon which the republican regulatory bill is based. in addition, a number of us have introduced legislation this week to create an independent trust to the best the government ownership interests in companies such as aig, general motors, citigroup, and chrysler.

to expand on the points i have outlined, i am pleased to be joined by a number of my esteemed colleagues on the financial-services committee. at this time i want to call on a member of our committee, but also the ranking member of the agricultural community, frank lucas, for his remarks. ranking member bachus, and it's been a pleasure to serve with you on the financial services committee as well as in my role as ranking member on the house agricultural committee. at a time when america's becoming more cost conscious and literally that means the business of america also, dealing with the financial challenges they face this proposal from the administration with its goals of higher margin requirements and all of its other capital requirements seems to place a potential for a dramatically greater cost on using the financial derivatives in order to spread their risks

in the coming months, days, and years. that, i think s probably one of the greatest errors in this proposal. at a time when we face these challenges, when business has legitimate needs for these kind of tools, we set a standard -- potentially could drive these instruments right out of existence. we on the ag committee have worked very hard and also in my role in financial services have tried to create a balance to understand that the derivatives and the over-the-counter markets represent a very fundamentally important financial tool for a number of industries. were there problems and challenges? yes. the basic principle behind these products sound? yes. can we do more things to rationally provide oversight? absolutely. but the direction the administration appears to be headed i think deviates away from it and takes us in a

destructive direction that will provide fewer options for our business and thereby increasing risk and exposure. with that i'd like to turn to one of my colleagues from the financial services committee, ranking subcommittee member, the gentle lady from illinois for some observations she has. congresswoman judy baker. >> thank you, mr. lucas. i guess you're the twofer for this press conference. thanks for all your comments. you know, what's the answer to the financial meltdown? how do we prevent it from having again? what is not the answer is the democrats' plan to create another federal agency, allegedly to protect consumers. we already have the occ, the ots, the ncua, the fdic and the fed, so why not address the real problems with these agencies instead of creating another one? are we creating another agency or just another problem? one lesson that we learned is that bigger, uncoordinated

government does not work when it comes to protecting consumers and regulating football institutions -- financial institutions. instead, it only creates more cracks, confusion and costs for the consumer. and what's the cost to the new bureaucracy? the new agency has the authority to level fees on consumers and businesses which amount to more indirect taxes. most of these folks didn't create the financial crisis. did walmart and our local 100-year-old community banks, churches or yourmber w gives you alan c no. but all could find themselves regulated and taxed by this new agency. another victim of this new bureaucracy is consumer choice. the agency can tell businesses what service products that they can offer certain consumers, and it can make financial decisions for american families which really is an insult to the majority of americans who act

responsibly with their finances. with the right information, proper transparency and full disclosures, families can and do make their own financial decisions. they don't need big brother to do it for them. instead, congress and this administration need to go back to the drawing board, make tough choices and empower consumers with stronger, smarter financial regulations. consumers should be the top priority of banking regulators who should also monitor the safety and soundness of financial institutions and not issue conflicting regulatory mandates. that's what our gop plan does, it also protects consumers against fraud and gives consumers the tools to make the informed decisions or file complaints against fraudsters and scam artists. we don't need a band-aid. consumer financial agency, that's a facade for reform. we do need to end bailouts and end government practices of picking winners and losers and restore market discipline.

we need reform, we need smart, clear, and strong regulations to get our financial system back on track so that our economy can grow businesses that can create desperately-needed jobs and american families can secure credit. now i'd like to introduce representative shelley cap toe, the ranking member on the housing subcommittee of the financial services. mr. chairman. >> thank you, judy, and thank you all for being here today. what we're talking about of course, is our ideas on financial reform. my segment will be what about when these big firms are on the verge of collapse? what is your idea? well, i think one thing we know is that the bailout of failed firms that has become almost second nature is not the direction that we want to go. we have seen our government reward poor decision making, absorb enormous losses and then stick taxpayers with the bill

with our constituents facing severe bailout fatigue, regulatory reform will finally put an end to this mentality of the government picking wincers and losers. yet the president's reform, i think, will actually institutionalize this concept only guaranteeing more bailouts in the future. firms must face the consequences of their decisions. we've called for a new chapter of the bankruptcy code that would be more suitable for unwinding, failed firms. moreover, the certainty provided by a firm commitment to the no more bailouts will force banks and financial entities to account for their decisions. with a new chapter of the bankruptcy code, we can bring technical and specialized expertise to the table to help unwind these firms. special classes already exist in bankruptcy for farmers, municipalities and railroads. most importantly, there will be no many question of waiting for

government bailout. is it time for certainty in the marketplace? because taxpayers shouldn't be on the hook for decisions made on wall street or elsewhere. and our next speaker is jeb hensarling from texas. >> it was almost one year ago that the emergency economic stabilization act that created t.a.r.p. was passed into law. and we're not here to debate the impact of that legislation one year ago. we are here to debate what that legislation means today. legislation which was designed to be emergency legislation to deal with financial stability under this administration has now become a $700 billion revolving bailout fund to advance the political, social, and economic agenda of the administration. the administration, and the previous administration, crossed

the line when they first gave funds to gm and chrysler. if they are defined as financial institutions, what fortune 500 company is not defined as a financial institution? we now have a test if you can garner a headline, you can garner a bailout. that is where t.a.r.p. is today. this administration crossed another line when they put forth a plan leveraging t.a.r.p. funds that gave a sweetheart deal to their political allies in the united autoworkers at the expense of investors including farmers, ranchers and pipe fitters in the fifth congressional district of texas who invested tens of thousands in gm bonds for their 401(k). they ended up with pennies on the dollar, and the uaw ends up earning chrysler and getting a better deal than senior secured creditors and those who were equal to them under our bankruptcy code.

now all of a sudden investors have to calculate political risk in the united states of america as they do in third world countries. fearful that their property can be confiscated. republicans want to use the voluntary capital of investors to grow our economy, not the involuntary capital of taxpayers which is part of the t.a.r.p. program. fiat. fiat ended up with 20 percent of chrysler, up to 35 percent not being owed one dime, not having invested one dime. if they will produce green cars in the years to come. now, we know the president is serious about his global warming agenda, but what fiat and producing green car cans has to do with financial stability is beyond me and is beyond those who are behind me. already we know that there's $700 billion allocated to the t.a.r.p., and the cbo has estimated that the taxpayer will

lose at least 50 cents on the dollar. the democrats' capital markets reform legislation functionally, functionally insures that we will have t.a.r.p. for years to come, it will cost taxpayers billions of dollars, it will allow the picking of winners and losers, it will politicize our economy, and that's why we need the republican alternative that ends us as a bailout nation and makes sure that risk is lessened by market competition and not incompetent market fiat. next, i am proud to introduce the vice ranking member of the financial services committee, the gentleman from texas, randy. >> thank you, jeb. you know, in the past year we have seen unprecedented if not historical intervention by the federal government into our financial markets. now it's time for government to start focusing on its exit strategy and stop bailing out more entities. we agreed with president obama

that there is some reform needed in our system today, and we need to learn some of the lessons from what has happened over the past years, but we also think our reform plan is a better plan for the taxpayers and much better for the economy. our reform plan puts the taxpayers first and aims to insure that there are no more bailouts. the president's p that would not be good for the taxpayers or the american people. identifying entities as systemically significant, as the president plans to do, but the government back into picking winners and losers, and on levels the playing field. the other thing that it does is concentrate way too much power into the federal reserve. when you check the box for an entity to be systemically risky, you say to the world that this

is an entity that we will not fail, and you say to the taxpayers, it to check but thou because you will have to write a check. we set up an adequacy board that will produce real coordination between all of the regulators, close the gaps, review the capital requirements, and make sure that these entities are holding sufficient amounts of the current federal reserve chairman in the previous said that a lot of problems could have been avoided if these entities have been adequately capitalized. instead, they were not asked to put up the amount of capital required for the risk that they were taking on protect pares want responsibility from their regulators. they need to be more accountable and do a better job. we do not need more regulators but regulators doing a better

job. setting up at the fed as the too big to fail regulator -- rather than more bailouts to more bureaucracy, we need more regulator accountability. that is why they've republican plan calls to the market principles, consolidates the regulatory process, but sends a clear signal to the regulators, you need to do your job and we do not need to set up a situation where the american taxpayers are put at risk against the bailout people to make bad choices. . introduce the gentleman from california, mr. royce. >> thank you, randy. i'm congressman ed royce from orange crkts california. if you were to ask economists what created this fiscal calamity, the first thing they would point to is the federal reserve and other central banks who over a period of four years set interest rates at a negative

level, negative real interest rates. rates. and so that of ballooning in the economy, especially in the housing sector. why so much in the housing sector? well, for a couple of reasons. one, regulators and congress allowed overleveraging in that sector. but specifically one of the things we did in congress and it's never comfortable for members of this institution to look back at the role they played, but one of the things we did in 1992 was to pass the gse act. and as a consequence of that legislation we allowed government-sponsored enterprises to overleverage at a ratio of 100 to 1 and specifically in exchange for the goals that we set in congress, they were supposed to in their portfolio hold one-half of those assets in

subprime loans. that's one-half of 1.5 or 1.6 trillion dollars leveraged 100 to 1. now, the consequences of that, of course, eventually was that first the federal reserve came to congress and warned us in 2004 that we faced a systemic risk throughout the entire financial system that there would be a collapse. and congress decided not to take action, not in that year or any of the following years. as a matter of fact, i remember some of the debates on this, and i remember barney frank who's now chairman of the committee saying when it comes to regulating fannie and freddie for safety and soundness like we do banks and thrifts, i don't want to do that because when it comes to affordable housing, i'm willing to roll the dice a little bit on risk for affordable housing. a decision was made by congress to allow this type of overleveraging, and the cost to the taxpayers could accrue to about 400 billion, the cost for

the system in terms of housing, the losses, are over a trillion. so what i'm sharing with you is that it was government intervention in the economy and subsequently the thing that concerns me is that a lot of this debt, a lot of this overwe'vage has been transferred now on to the government, onto the taxpayers going forward. and what we see is a compounding of that, of that initiative of continuing, continued government intervention into the economy. one of the other concerns i have here is exactly what led to the problem with fannie mae and freddie mac, and that is the inability of a regulator who gets trumped by, well, in this case you had hud, and hud was in charge of the mission. so you have bifurcated regulation, the same type of thing we could end up if we listen to the concerns of the current safety and soundness regulators who are opposed to this consumer financial

protection agency. what they're worried about is dueling regulators who bifurcate that regulation and do what hud did with respect to fannie and freddie which is to say, no. we trump safety and soundstnd because we have this mission requirement. to get subprime lending up in the united states, we have to have a portfolio 50 percent subprime loans, therefore, we're not going to look at safety and soundness, we're going to look at this mission because it trumps safety and soundness. so when we look at this cfpc, cfba, this new agency that's being advanced and we look at why the regulators are concerned about it, the reason they're concerned in my mind and listening to them and we have an opportunity on monday nights to go here as members of congress and sit down with regulators and former regulators to try to over dinner figure out how we got into this mess, what i'm

reporting to you is that their concern is that if we walk down this road, we're going to replay the problem, these types of problems that we saw with the government-sponsored enterprises. and given the massive losses that were created there, anytime you try to short circuit the market and you believe the members of congress can achieve a goal just by mandating that goal or you give a regulator a power to trump safety and soundness, at the end of the day you risk the type of meltdown that we saw in housing, and i just have to go back to those conversations in 2004. it turns out that the federal reserve were exactly right. what they warned about, the meltdown that would occur in housing if we did not heed their advice to for congress to step in and pass the regulatory ability for the regulator to intervene for systemic risk at that time, they said this would, this would lead to a potential

systemic risk for the entire financial system. i think it's very, very clear that we should back off of this approach and begin to listen to the good advice that's been given to us in the past by the regulators and with respect to the fed the advice they gave us about systemic risk. thank you very much. >> we have one mr. speaker and then we'll take questions. >> thanks, spencer. my name's tom fite, i represent the sixth district of georgia, and i think you can tell the knowledge, the passion, and the common sense that my colleagues bring forward on what is really a challenging issue. as a physician i know in order to effectively treat a problem you've got to make the right diagnosis, and in this effort the democrats and the president have failed. in fact, some might suggest that they are about to commit malpractice. now, while they have indicted capitalism, it was instead the implicit promise of the tax

dollars would serve as the financial system as a backstop which distorted our market system. it became an explicit promise shortly thereafter. this too big to fail guarantee led to a recklessness from the very first bad loan all the way to the restructuring process. so at the heart of our solution, positive solution, is the true separation of tax dollars and private risk. we must not continue to privatize, reward, and socialize risk. so our plan, our positive plan creates a new legal process with the orderly winding down of in-- insolvent firms. in short, no more bailouts. this new legal process will insure that technical and specialized expertise is applied to these complex institutions and all nonfinancial firms would be summit to the same laws.

unfortunately, the process of the president's plan will insure more bailouts. his proposal would codify, would put into law the misguiding policy that allowed the bailouts of aig, bear stearns and others. so while the president lectures the financial industry it is, in fact, he who has not learned the lessons of the last year. and not until we stop enabling financial recklessness with a taxpayer license will we see the financial system acting with the discipline and the responsibility that we all seek. our proposal is a positive solution, i'm proud to stand with my colleagues on the financial services committee who put forward a solution that is based in fundamental economic principle and fundamental american principles. i'm pleased to yield back to senator bachus. >> thank you for those thoughtful remarks and all our members. we're going to take questions at this time, and i'll refer those questions to different members.

>> [inaudible] thomas green, the name of an antitrust lawyer who's gone after companies like microsoft, and the tobacco industry. i don't know if you're familiar with him, wonder if you'd like to comment on that selection. >> well, he's from california. [laughter] ed, i don't know if -- you know, we think the proof will be in going forward. but we do need to -- [inaudible] you know, yesterday there was a focus on that lehman caused all this because we didn't bail out lehman. well, in fact we bailed out bear stearns and a succession of

companies prior to that including indy mac and more importantly fannie and freddie. and there were several that were bailed out, and it obviously did not prevent the worst crisis. i think there was no accident that the president chose lehman which was perhaps the only major financial corporation that wasn't bailed out, and i think that fits in with his message, but i think it's the wrong message. i wish he'd picked fannie or freddie or general motors. >> i serve on the congressional oversight panel which has looked into this issue. as far as the historical inquiry panel or commission, clearly we're disappointed that it's rigged in favor of the democrats. if it was going to be a more serious effort in historical

inquiry, i think it would be balanced, so i suppose we go in here with very high hopes and very low expectations. but i think the gentleman from california, mr. royce, did an excellent job of laying out, again, how the premise that says somehow deregulation led us here is simply incorrect. it wasn't deregulation, it was dumb regulation. and with the exception of congress resisting any regulation over their financial frankensteins create inside a government laboratory, freddie and fannie, you really can't point to any lack of regulatory authority that could have kept us from the economic crisis. you can say regulators were incompetent, you can say they were dumb, you can say they were simply mistaken, but you cannot say they lacked the authority with the exception of fannie and freddie which, as the gentleman from california said, were begin afford -- given affordable housing goals, essentially told

to go out and insure that money was lent to people who could not afford to pay it back. the whole system bought in because the government cajoled and mandated that action, and the rest is history, and i would hope that the panel would conclude likewise. .. i think the big issue is how do we on wind what we started? if you think this marriage has been rocky, wait until you see the the pores -- the divorce.

have capital go to where they think they can get the best record on risk and then get back to what i call the normal tackling of a financial system. i think this blocks that and will take many years for us to get market back to be caving in a normal way. >> are you going to introduce legislation, are you talking to congress and frank about it? >> we really have urged congressman frank and administration to take out our proposal, but we wanted to communicate once again to the american people that we do have an alternative and we think it is a sound alternative.

talking about what precipitated this, we had gaps in the regulation. and we addressed that. that's not really been addressed. we also had as almost every member referred to, is we've had lack of enforcement. there were capital requirements. there were safety and sound requirements that were obviously needed with unregulated institutions, gaps and regulations, or there was lack. and i just made of wood be the poster child of that. is there was the loss. and i think before you start creating more laws and more agency you have to address, enforcing the laws that we have on the book. we quite frankly did have a new product, you know, credit default swaps, collateralized debt obligation, things of that nature, securitization, which was a good thing gone to the

extreme. and i'm sure that our regulators were up to the task or had the expertise to regulate those new products. and we addressed that. >> you are talking about 2004 when congress sort of dropped the ball. republicans were in charge of congress at that point, and the regulatory agencies were ahead of republicans at that point. >> right. >> have republicans learned lessons from this? why should the american people at this point listen to you guys? >> chuck hagel and the senate carried the bill for the republicans and got it out of committee and onto the floor. it was chris dodd to approach a. and were talking specifically about the bill, which would have allowed the gse to be regulated for systemic risk.

it was actually carried out the request of the federal reserve, and the debate really was a debate over whether or not we would allow the fed to authority, orwell the regulators to do with the fed had requested. in this case, they were looking at, they quoted at 100-1, and they were saying because of this overleveraged, we face a situation where it wasn't just a systemic risk to our financial system. it was a worldwide systemic risk. so in point of fact, it was the republicans in the senate who supported that position. it was the democrats who opposed over on the outside, i carried that a minute on the house floor. but it was in the senate that the major effort was made. and the reason i bring this up now is because it was an exact example of bifurcated regulation, you see.

and if we do this again, and we set up two competing agencies, especially in the face of the concerns that the safety and soundness regulator's themselves have raised, then i think we risk going through the same mistake. given the losses that we faced in housing and giving what a disservice it was, especially for people who were really stretching to try to unveil themselves of these new laws. you know, congress had leveraged this down to 3% down or 0% down for these loans which have traditionally been 20%. we were able to do that. at the end of the day we did no favors for those people, because by and large they lost their homes. so what i'm saying here is that we are failing to learn the very real lessons that economists are pointing to as examples of misguided government intervention into the economy. >> question on the resolution

trust, or resolution approach. the way i understand it is that it would, the way the administration proposal has to do with pay, large institutions would pay after the fact of an insolvent omran taubensee defund pang of counterparties as part of their payments so that they wouldn't have a systemic impact. then there is a lot of effort among administration officials that would have did posit insurance pool that would pay in advance, and that would go to pay off. so the administration argues this is not more bail outs with the resolution of 40. i just wanted to see if you could respond to this, that this would not be taxpayer funds and as with the funds from these large institutions that would supposedly pay for the resolution so they don't cause collateral damage. second, if you could talk about

the trust, aig trust if there's any support for that and why that is important. >> on the resolution authority, we look at this very carefully and felt that the best way to instill the most transparency and the most accountability was to use the system of justice set up to the bankruptcy courts by creating a special class of bankruptcy for these financial institutions. and if you look at the fdic as an insurer, we just passed a piece of legislation that upped the ability for the fdic to go to, what was it, 500. that is the implicit, that is the federal government taxpayers stepping up to the plate again to get a backstop to this. and i would like to just -- jeffrey lacher was the president of the richmond federal reserve actually made some comment on

this yesterday, and i'm going to read a couple of quotes because he says, and it is right on target, to where our plan i think addresses this issue much better. he says if not carefully crafted, establishing a procedure for the government to take over and wind down failed big financial firms without forcing it into bankruptcy could create new moral hazard that could weaken market discipline, and could lead to more -- could lead to more, not less volatility. and he says that we would be expanding government protection and regulation if we went the way the president wanted to go. and he feels that it would be better placing greater reliance on market-based incentives for prudent risk management. i think that is sort of the foundation of what we think a special class of bankruptcy created for these particular institutes cashback institutions with the expertise that would come along with that bank of the court what i think become, be

more transparent, more accountable and to take it out of the realm of the taxpayers and government dollars. >> one more question. >> on the trust, why is that, the aig trust. >> are you talking about the legislation. >> the specific offer. >> it would be aig, general motors would be covered. we think that we ought to wind down the government ownership of these corporations, that that's not what the american people want. and that's the government taking equity interest in companies and managing them. and i think the poster child there is general motors. which i think it has created problems that will continue to see. it is almost as if you're going to repeat the mistakes of fannie and freddie once again.

>> derivatives, you've been hearing from end users about problems with the obama plan. what would your proposal do to help? >> basically, the derivatives concept is not part of his initial plan. we are working through that at the acme add-on financial services, we are waiting for the majority offer something up. unfortunately, even though we passed an initial proposal in actuating back earlier in the year, the concept that chairman frank seemed to be working on are slipping. most really i understand, perhaps he has said that perhaps nothing needs to occur, and as late as december. we will see. but from the republican perspective, we need to be sure so as to not up in an industry that is so important to spreading out risk, to making things more affordable from the business perspective. that is the challenge.

>> the end-users are saying oh, my goodness. you mean they're going to have the ability to basically create these whatever kind of margin account? viewpoint that the ability to set the substantial capital accounts. in effect, their fear is that we will have regulators who will not understand the industry, the business, that will have political pressure from the white house directing those regulators and if you will create a situation where it will be impossible for energy companies or ag company or any other business to be able to use these markets to protect themselves financially in the future. it's kind of ironic that, of course, the chief of staff at the white house has some extent in dealing with these commodity issues. >> i think will go in after that and wrap up. is just happy because a lot of the transactions whether it is oil and gas or a culture that go on are buried unique in nature. we're not saying you should have more oversight, not more tranthirty. we agree with a.

we need to get that fine line down the middle and not be distracted in the name of doing something for the sake of doing [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> coming up tonight, president obama speaks at the afl-cio convention in pittsburgh. later, the federal government is preparing for a possible flu pandemic. on c-span 3 tomorrow, the senate judiciary committee hears testimony from the fbi director. live coverage begins at 10:00 a.m. eastern time. later, another senate hearing looks at the future of manned

space flight. we will hear about a recent review of options for the u.s. space agency. that begins live at 2:30 p.m. eastern. you can watch all of our lives even on our website. >> congressman ron paul want to hold the federal reserve accountable for the country's economic crisis and wants to end the fed. sunday, he talks about his new book. follow us on twitter for the latest schedule of dates. >> president obama spoke today in pittsburgh. his comments focused on health care and the effect of economic stimulus spending on jobs. it is the largest confederation of labor unions in north america. this is a half hour.

[applause] there is nothing like being back in the house of labor. let me begin by recognizing the man who came to washington to fight for the working men and women of pennsylvania and who has a distinguished record of doing just that, arlen specter. [applause] i want to give my thanks to one of the great labor leaders of our time, a man whose life has been devoted to working people who brought new life to a new movement, who worked tirelessly on behalf of organized workers and who will be stepping down tomorrow, your president john sweeney. [applause]

john, i know that maureen is looking forward to seeing a little more of you. your granddaughter kennedy is about to get a lot more spoiled by her grandpa, but we are so proud of the work that you have done and grateful for your lifetime of service. i am going to go ahead and take my chances and congratulate the man who will pick up john's mantle, a man who worked his way through college to lead the united mine workers, my friend, an advocate for america's ideals, rich trumka. [applause]

i also want to congratulate the officers coming in with rich. arleen who will be continuing her service. liz, first woman elected secretary-treasurer. i am looking forward to working with every single one of you. [applause] being here with all of you is a reminder of what we are trying to do in washington and why i am there in the first place. it is one of the fundamental reasons why i ran for president, standing up for hard- working families to these struggles, lift the hopeless, and make possible the dreams of middle-class americans. your stories are would drive me each and every day and the white

house. stories i read about in letters or i hear about in town hall meetings, or somebody who grabs me in a rope line and starts telling me something, stories i remember from the campaign trail. stories like one told by a proud member of the united steelworkers in indiana. steve spent 34 years at a steel company until a car accident left him with a disability and forced him to retire. when the company went broke, he lost his pension, and his family lost their health care. steve said, "every day of my life, i sit at the kitchen table across from the woman who devoted 36 years of her life to my family, and i cannot afford to pay for her health care."

as he said it, his voice started to crack. brothers and sisters, this is not just about steep. it is about all of us. when hard-working americans like steve succeed, that is one of organized labor succeeds. when organized labor succeeds, our middle-class succeeds. that is when the united states of america succeeds. that is what we are fighting for. [applause] for over half a century, the success of america has been built on the success of our middle class. it was the creation of the middle-class that lifted this

nation up in the wake of the great depression. it was the expansion of the middle class that open the doors of opportunity. it was a strong middle class that powered industries and propel the economy, making the 20th century the american century. the fundamental test of our time is whether we will heed this lesson, whether we will let america become a nation of the very rich and the very poor, or whether we will remain true to the promise of this country and build a future where the success of all of us is built on the success of each of us. [applause] that is the future i want to build. that is the future the afl-cio wants to build. that is the future the american people want to build.

that is the future i have been trying to build since the moment i took office. [cheers and applause] now, we have been hearing a lot of stuff from folks who are not that friendly to me. the [laughter] or the union movement. let's take a stroll down memory lane. let's just remember where we were when i took the oath of office a little over eight months ago. at the time, folks were fearing the complete collapse of our entire financial system. our economy was shot about

700,000 jobs in month. our credit markets were frozen. folks could not get loans if they needed them. what was a deep recession threatened to become a great depression. you remember that, right? ok. that is why we acted -- boldly and swiftly to pass an unprecedented economic recovery act, a plan that did not include any of the usual earmarks or pork barrel spending. it included a guarantee to uphold prevailing wage. [applause] because the recovery act, we are keeping a promise i made to give

all of you 95% of all americans a tax cut that will benefit nearly 5 million families in pennsylvania. we increased and extended unemployment insurance to 12 million americans, including hundreds of thousands pennsylvanians. we reduced the cost of cobra by 65% so a lot of families out there were able to hold onto their health care. we are putting americans to work across this country, rebuilding infrastructure with the largest investment in our if fisher since eisenhower created the interstate highway system in the 1950's. [applause]

all in all, many middle-class families will see their incomes go up by about $3,000 because of this act, helping them get back much of what they lost due to this recession. i know times are still tough for working people. i know too many people are still looking for work, worried they will be the next ones let go, but the recovery act is making a difference. we have stopped our economic freefall, something everyone can agree on. here is the problem. even before this last financial crisis, the economy had problems. just last week, a report came out showing that in 2008, before the downturn, family income fell to its lowest point in over a

decade. more families slid into poverty. folks at the top 1% did pretty good. everybody else saw their wages and income for latin. that is unacceptable. i refuse to let america kovach to the culture of irresponsibility and agreed that made it possible, back to an economy with soaring ceo salaries and sinking family incomes, back to the days where banks made irresponsible decisions. we are not going to go back to their -- to those days. it would be bad for the middle- class and bad for america. we are not turning back. we are moving forward. [applause]

we are not turning back. we are moving forward. that is why we need to build a new foundation for lasting prosperity, by creating jobs of the future, by reforming our health care system, by laying down tough rules of the road to protect consumers from abuse, letting the market function fairly and freely, and in short we do not experience a crisis like this again. that is how we will help our children climb higher than we did. that is how we will grow our great american middle class. i love you, too, sister. [laughter] [applause]

although it sounds like you have been hollering too much. [laughter] we are going to grow our middle- class with policies that benefit you, the american worker. i have set up a task force to do just that, run by my outstanding vice-president, that scrappy kid from scranton, pa., joe biden. [applause] we will grow our middle-class by building a stronger labor movement. that is why i named the new labor secretary. [applause] hilda and i know whether we are

in good times or bad, labor is not the problem. labor is part of the solution. that is why we have begun reversing and replacing old anti-labor executive orders, ones that protect your safety, your rights, to organize and collectively bargain. [applause] that is why the very first bill i signed was the lilly ledbetter act to uphold the basic principle of equal pay for equal work. [applause] that is why i stayed behind the employee free choice act. because the majority of workers want -- if the majority of workers want a union, they should get a union. [applause]

we will grow. we will grow our middle-class by creating jobs for americans who want one, not just any jobs but jobs with good benefits and wages. jobs that give a person satisfaction knowing they will meet their satisfaction to their families. not a source of income but a source of pride and self- respect. every american deserves that much. i visited a plant in youngstown, ohio. youngstown, you are in the house. this plant his rehiring of about 1000 workers to make the cars of tomorrow, a sign of life in our auto industry, and i am pleased to see it. [applause] but, you know what? i don't just want to see jobs

return to our auto industry, i want to see them be created across every industry. we are investing in a clean energy economy to create millions of new jobs that cannot be outsourced. i have named a new point person to jump start manufacturing so we can make "made in america" not just a slogan, but a reality [applause] . [applause] we will grow our middle class by doing a better job educating our sons and daughters. it was the g i bill that helped strengthen the middle-class in the 20th century and our generation deserves that

commitment, which is why we have been improving standard, making college more affordable, and offering students a complete and competitive education from the cradle to the classroom, through college and into a career. that is how we will prevent not just some children but every child in america to outcompete every child in the world. yes, we will grow on the request by finally providing quality, affordable health insurance in this country. health care can't wait. [applause] it can't wait. [applause] few have fought for this cause

harder, few have championed it longer than you, our brothers and sisters and organized labor. you are knocking on doors and showing up at rallies because you know why this is so important. it is about the hundreds of millions of americans who have insurance, those that worry they will lose their insurance if they lose their job, fearing their coverage will be denied because of a pre-existing condition. a new report from the kaiser family foundation was released today, showing that family premiums rose more than 130% over the last 10 years, three times faster than wages. they average over $13,000 a year, the highest amount on record, which is why when you

go into to negotiate, you can think about negotiating for a wage increase because the whole negotiation is about keeping the benefits you already have. it is the fault of a broken health care system that is sucking up all of the money. when are we going to stop it? how many more workers have to lose their coverage? how many more families have to go into the red for a sick loved one? [applause] how much longer are we going to have to wait proved it can't wait. [applause] [chanting "we can't wait"] >> my friends, we have talked

this issue to death. year after year, decade after decade. that is why i said last week, before a joint session of congress, i said the time for bickering is over. the time for games have passed. now is the time for action. now is the time to deliver on health insurance reform. the plan i announced will offer more security and stability for those who have insurance and offer insurance to the americans who don't. it will slow the cost for families, our business, and our government. if you already have health insurance through your job, and because many of you are members of unions, you do, nothing in this plan will require you or your employer to change coverage, your doctor. nothing in this plan will require you to change your plan

or your doctor. what this plan will do is make your insurance work better for you. insurance companies will be unable to deny you because of a pre-existing condition. [applause] it will be against the law for insurance companies to drop coverage when you get sick or to water it down when you need it the most. they will not be able to place a cap on how much coverage you can receive in a given year or during a given lifetime. we will put a limit on out-of- pocket expenses. no one should go broke just because they get sick and america. [applause] insurance companies will be required to cover at no extra charge, routine checkups like mammograms and colonoscopy is because there is no reason we

should -- we should not be catching diseases before they get worse. it will save money and lives. that is what we are offering to people who already have health insurance, more stability and security. for that tens of millions of americans who don't have insurance, the second part of the plan will offer affordable choices. we will do this with a new exchange where they can shop for plans that work for them. because there will be one big group, the uninsured americans have leverage and can get a better deal than what they are getting now. that is how government employees get affordable insurance. that is how everybody in congress get their insurance. it is time to give every opportunity to americans that members of progress give it to

themselves. [applause] -- that members of congress giveth to themselves. [applause] one of the options in this exchange should be a public option. [cheers and applause ] let me be clear. [applause] let me be clear because there has been a lot of misinformation. this will just be an option. no one would be forced to choose it. what it would do is offer americans more choices and promote real competition, putting pressure on private insurers to treat their customers better and make insurance more affordable. when you are talking with some of your friends and neighbors, they might say that sounds good

but how are you going to pay for it? that is illegitimate question because i inherited -- that is a legitimate question. how are we going to dig ourselves out of this big financial hole that we are in? the plan that i am proposing is going to cost $900 billion over 10 years. that is real money bought less than we spend on iraq and afghanistan wars, less than the tax cuts for the few wealthy americans that congress passed during the previous administration, wars and tax cuts that were not paid for and did not help america's working families. [applause]

we want to make that mistake again. we will not pay for health insurance reform by adding to our deficit. i will not sign a bill that adds a dime to our deficit. we will eliminate hundreds of billions of dollars in fraud, waste, and abuse, including billions of dollars of subsidies for insurance companies that pad their profit but are not improving care. [applause] will also set up a commission of doctors and medical experts to encourage the adoption of best practices that can further reduce costs and raise quality in the years ahead. that is how we will pay for this plan, by using money that is already being spent, but spend badly. don't pay attention to those scary stories about how benefits

will be cut. we will protect medicare so it is a safety net for our seniors said they can count on forever. not a dollar for the medicare trust fund will be used to pay for this plan, not a single dollar. [applause] these are the reforms i am proposing. these are the reforms that labor has been championing. these are the reforms that the american people need. these are the reforms that i intend to sign into law. a world-class education, good jobs that pay well, a strong labor movement, that is how we will lift up hard-working families and grow our middle class, how we will put opportunity within reach in the united states of america. [applause] the battle for opportunity has

always been fought in places like pittsburgh, places like pennsylvania. it was here where pittsburgh rail workers rose up during a break the strike. it is here where guards were taken on at carnegie mellon's. it was here where something happened in a town called aliquippa. it was a tough place for workers in the 1930's. a benevolent dictatorship, said the local labor union boss. the company hired workers from different lands and races. despite threats and harassment, despite seeing organizers fired and driven out of town, these steelworkers came together, italian, irish, greek, alabama

slaves, the sons of coal miners, and they took their case all the way to the supreme court, securing the right to organize up and down the ohio river valley and all across america. i know that if america can come together like aliquippa and rise above the barriers of fate, race, region, and party, we will not only make life better for steelworkers like steve in indiana, not just members of the union, but make possible the dreams of middle-class families and make real the promise of the united states of america for everybody. that is what we are fighting for. that is what this white house is committed to. that is what you are committed to. arm in arm, we are going to get this done. i have a question for you. are you fired up? are you ready to go?

are you fired up? are you ready to go? let's go get this done. thank you, everybody. god bless you. [cheers and applause] ♪ >> senate finance committee chairman max baucus plans to present his version of the health care plan to his committee tomorrow. late this afternoon, he and kent conrad met with reporters after speaking with governors. this is a little less than 10 minutes. >> we just had a very, very good

meeting with governors. one governor after another said how much appreciated -- said a much they appreciate how far we have moved, how much better satisfied they are with this proposal with respect to the medicaid provisions. i think that was extremely positive. i think we had about 10 governors on the call. i think the reaction was what they want to see further detail, they were very encouraged by the direction of the events and the substantial movement that we have shown. second, the chairman has indicated he will release his mark tomorrow. we will continue to work to find an agreement. we have had after the discussion on medicaid and extensive discussion on how we take further steps to reduce premiums because if there is one

thing we heard loud and clear across all of our states is this concern with increasing cost to premiums. so we are going to continue to work together to see if we can't find additional steps that would reduce premiums for people in the country. there is the chairman, just in time. >> ok. we actually spend most of the meeting talking to governors about medicaid provisions in this bill. especially how medicaid expansion would affect states. states do not have all the details but the governor's we spoke to, i think is fair to

say, were quite pleased. the additional burden on states is negligible. the average increase the state would have to pay due to medicaid expansion, above the indicated baseline, is .89%. for some states, ahead. it was a very small the discussion. we also discussed what some states expect in terms of medical malpractice. we ask them of their experience.

we asked for their advice and what works for them in their own states. each state is quite a bit different. in the end, we discussed how to move forward. we are going to continue to meet and keep discussing, negotiating. i will be putting out a mark tomorrow, not exactly sure when. maybe around 2:00or 3:00. in any event, we will keep talking and working with senators throughout the duration during the week and during the markup and so forth. i expect, frankly, by the end of the day, that is, by the time we vote in committee on the final