its purchases of treasury and agency securities, we're confident that we have the tools we need to firm the stance of monetary policy at the appropriate time. most importantly, in october 2008 the congress gave statutory authority to the federal reserve to pay interest on banks' holdings of reserve balances at federal reserve banks. by increasing the effect -- the interest rate on reserves, the federal reserve will be able to put significant upward pressure on all short-term interest rates. actual and prospective increases in short-term interest rates will be reflected in turn in longer-term interest rates and in financial conditions more generally. .

the sequencing of steps that the fed uses is an economic stance and will depend and economic development and the i provided more discussion of these options buts. the federal reserve is committed to ensuring the congress and public have all the information to ensure the integrity of our intentions. we are with the most transparent center banks in the world, providing records and decisions.

over the past year, the federal reserve took steps to enhance the transparency of the liquidity facilities included the provision of regular report to the congress and public. we have worked closely with the joa and tarp on the range of matters. while the emergency credit was an important role, we understand that the nature of the facility create a special obligation to ensure that the integrity of their operations. we would welcome and review the management of all facilities created under the emergency authority. we would support legislation authorizing jao use of third- party contractors, accounting, financial reporting, and internal controls of these liquidity facilities.

the federal reserve will cooperate fully. we are prepared to support legislation that would require the release of the entities of firms that participated it is important that the release occur after a like that investors will not viewed the facilities as an indication of ongoing and enter problems which should underlie market problems. looking ahead, we will work with the congress in identifying approaches for enhancing the transparency. they are consistent with our statutory situation. it is vital that monetary policy continued to be insulated from short-term political pressures said that they can make policy decisions in the interest of the american people.

it they must be maintained so the federal reserve has a ways to provide liquidity to institutions for th. the ability to inject liquidity is critical for sustainability. strengthening our financial regulatory system is essential for the long-term stability of the nation. among the lessons of the crisis,çó regulation and supervision aimed at risks and the need for consolidation of every financial institution that is so large that this failure within the function of the entire system. the federal reserve strongly supports the efforts to achieve comprehensive reform.

the strength in the federal reserve oversight or position has conducted itself examination of the supervisory responsibilities and have been implementing improvement. the federal reserve has been playing a key role in international efforts for financial institutions, particulate systemically critical firms. we have been insuring that compensation structures provide appropriate the sentence without encouraging excessive risk- taking. the federal reserve is making changes in the supervision of large complex bank companies to improve the effectiveness of supervision and to incorporate a macro perspective that goes beyond traditional institutions. we are overhauling our supervisory procedures to approved ordination. we will facilitate more

integrated risks. last spring, the fed led an assessment program, commonly known as the stress tests. combining an on-site banking would analytical tools can improve probability of results and better identify potential risks. there in the process of developing a quantitative program for large companies. supervisory information will be combined with market based indicators. it will provide a more complete picture of risk taking institutions and the broader financial system. making use of the federal reserve's expertise, at this program will apply a multi disciplinary approach.

the recent crisis also underscored the extent of the direct involvement of the contribution to the effectiveness. including the making of monetary policy. most important, as the crisis demonstrated, at the federal reserve's ability to identify and address hard to predict threats depends critically on the information, expertise, empowers it has by virtue of being a supervisor in central bank. the federal reserve continues to demonstrate it in the financial services. since the time of the previous monetary report in july, at the fed has proposed a comprehensive overhaul of regulations governing mortgage transactions. we are collaborating with the department of housing to assist

how we might further assist in the mortgage crisis. we have issued rules for credit card accounts and private student loans as long as new rules to ensure that there a meaningful opportunities to avoid overdraft fees. the federal reserve has implemented a program for non- bank subsidiaries in foreign banking organizations. the federal reserve is committed to doing all that can be done to ensure our economy is never again devastated by a financial collapse. we look forward to working with the congress in developing comprehensive reform of the framework. thank you, mr. chairman. >> one of my colleagues raised the question of small business. i was pleased to note on page 13 of the report you sent the federal financial regulatory

agency supervisor's statement telling the regulators in the field not to overdo it. that is not mean you think they are. it is a mixed message problem that we have. i'll not take too much time. we have a hearing on friday on that subject. it has been snowed out. it is an all day regulation. people will be testifying. we appreciate your doing this. it is very important. we are getting everybody in the same room. the bank said the regulators are being too tough. the regulator said there is not enough demand. the bar said the bank will not lend. but that it was important to get everyone in the same room. i appreciate your mentioning. we will be getting into that. i want to talk about the central question of importance. getting people back to work is

important socially and for the overall economy. i was pleased to see you know it on a couple of pages -- you debate history as to whether not economic stimulus should take place. we do have a deficit. it does add to the deficit. people have taken to talk about the total stimulus numbers. 30% of it was tax cuts. people may not think it worked well. there is a note in your statement. you say that concerted efforts to stabilize the financial system together with highly stimulative monetary fiscal policy -- in the report in the first paragraph, the u.s. economy turned up supported by an improvement in financial conditions, stimulus for

monetary and fiscal policy. on page 8, a development that helps rebuild household wealth and income was lifted by provisions in the fiscal stimulus package. these are three references to the extent of which the stimulus package was adopted, aided in reducing unemployment. it has become controversial. am i accurate in into retain the comment as saying the stimulus was adopted and did not contribute to the improvement? >> yes, i think the stimulus has created jobs relative to where the bass line would have been in the absence of the stimulus. we do not know what the alternative would have them. >> one alternative was to do

nothing. there was nothing you could have done with the short-term stimulus that would not have added to the deficit. i know there are people who argued that tax reduction means more revenue. your predecessor as one of my colleagues if it was approved if you could raise revenue overall. he said that is theoretically possible but it did not happen in his lifetime. i do not think it has happened since then. this is important. we should get a debate about what to do next. i appreciate your comments. going forward, your primary responsibility is monetary policy, should we say concerns for not increasing the deficit is so important that nothing further could be done that did

have a fiscally stimulative effect? >> that is really the congressional trade-off that has to be made. unemployment is the biggest problem may have. we need to find ways to address that issue. there are difficult trade us. >> i appreciate it. inflation is not going to be above. we hear this threat that the rating agencies might reduce our debt rating because of the deficit. do you think there is in new realistic prospect of america building on its debt in the foreseeable future? >> not unless congress decides not to pay, which i do not anticipate. i do not anticipate any such problem or downgrade. there are long-term problems that need to be addressed. >> i get that. if you think it is a good net

risk premium, it by them. >> thank you. chairman bernanke, i think chairman frank mentioned the deficit in passing and the debt. that is what i want to ask you about. that is the elephant in the room. we have reduced our debt is going to double in the next five years, a triple in the next 10 years. it is fueled by historic deficits. i heard this morning on television that we have many cases across the united states and children and adults that are walking out on thin ice. they walked out day after day and they get some comfort and nothing happens. the thin ice is dangers. i submit that this type of budget half is a dangerous.

i would ask you -- i do not believe that our present budget passed is sustainable. my first question, it is our budget path sustainable? secondly, is there a need for the congress to come up with a concrete plan to change p that the toath? do you believe there is urgency in that? >> you asked about sustainability. you are talking of the medium term charge of a deficit that remains after the economy has returned to normal levels of activity. estimates of the sexual deficit range from 4% up to 7% of gdp. those numbers are above sustainable levels. in order to maintain a stable ratio of debt to gdp, you need

to have a deficit that is 2.5 the% or 3% at the most. we have a deficit and debt that will continue to grow. i do the it is very important that we begin to look at the trajectory of the deficit as it goes forward. there could be a bonus there to the extent we can achieve a credible plan to reduce medium or long-term deficit to have more flexibility in the short term. >> the current budget path is not sustainable? >> given the numbers that cbo projected, that is right. >> it may be upon the sooner than we think. is that a good analogy that i have used of walking on thin ice? >> yes, sir, that is true. it is possible that bond market will become worried about

sustainability and we may find yourself facing higher interest rates given that concern. >> is a critical that we have a long-term plan and we have now? >> yes, i think it is important. it is extremely difficult. i do not underestimate how difficult it is. it is difficult to address issues that are a few years away. it to be very helpful even to the current recovery markets confidence if there were a sustainable credible plan or a fiscal exit. >> if we do not address them now, i am not sure we can address them. >> it will become increasingly difficult. the cuts we will need to make will become sharper. >> i very much appreciate your testimony. i do believe they you have

addressed many concerns. i am happy that you have mentioned the legislation that was passed on a bipartisan way and that it has been an important tool. thank you. >> the gentlemen from north carolina. >> thank you, mr. chairman. chairman bernanke, i neglected in my opening statement in time constraint to congratulate you on your recent confirmation. -- to a second term as chair of the federal reserve. i wanted to do that and welcome you back to the committee. in response to a question that chairman frank asked, you made it clear if you do not want to

meddle too much into what congress does on these things. but -- and i will not ask you to stray over there -- i am more interested in what i perceive to be as read them between the lines of what you said is that you think the fed itself has used all the tools that are available to the federal reserve to help facilitate job creation, probably more than what would normally be done to facilitate job creation to create maximum sustainable employment since you do not really have a lot of concerns about the other part of the dual mandate, which is price stability.

am i reading that correctly or are there other specific things that the fed tool kit might allow the fed to do to create the environment for more job creation? >> i think one set of tools that we have that we can work done as regulators is to try to get credit flowing again. we know that small business lending is closely tied to job creation. we know there are problems with bank lending to small businesses. we have -- i do not know if you want to take her time -- we have more affirmation. we are trying to do everything we can to make sure that credit with the businesses can get credit and that things will be winning to reduce willing to take a second look. >> i presume that will be the subject of testimony by folks at

the friday hearing primarily? i will not ask you to allow three more on that in this -- allow you to leverage more in this context. what other things might be considered -- actually, i guess the question i should be asking is, are the short-term consequences of anything you might use in your tool kit with the long-term consequences? do you think that the fed really has done everything it should be doing other than try to facilitate credit as you just mentioned in terms of monetary policy, the emergency steps you

have taken? are there other things that you could prudently do, i guess is the question to facilitate the creation? >> we have accommodative monetary policy with though interest rates. that is a very accommodative to job creation. they will have to abide way whether additional stimulus would be necessary, depending on how the economy evolves. we will look at that. >> you are in the same position we are in on the other side. your policies are creating some stresses on your own balance sheet that over time might have some consequences and you have to get out. you are saying the we need to be the king of those long-term consequences of more debt and

more deficits so that we have an exit strategy to get back to a more normal kind of fiscal policy at the same time you are getting back to a more normal monetary policy. am i misstating that? >> not at all. with the greatest challenges is as someone we want to return to more normal stance. -- is at some point we want to return to a more normal stance. it is very important for confidence. >> thank you. >> the gentleman from texas. >> the federal reserve transparency act which has passed the house already is something that the federal reserve has been opposed to. when it the reasons they are opposed to its is it would politicize the monetary policy, which is not what the deal does.

the other reason they give is that if congress had any influence come into camp late. the federal reserve can interstate to wrote two long -- too low, too long. interest-rate still down at 1%. they are causing them to conflate even more. there has been a political relationship between congress and the federal reserve, although congress has been derelict in their responsibility to perform oversight. when it comes to debt, they can monetize it and keep interest rates low. the covers can keep spending and get reelected. they do not have to keep raising taxes. you print the money and dilute the value of the money.

price inflation is a tax. the fed accommodate the congress by liquidating debt. the money goes down. the real debt actually goes down. the congress and the fed does have a cozy political relationship prevent i would like to bid to more specifics on the transparency deal, because it has been reported(ujxd thatg the 1980's the fed facilitated 851 $5 billion loan to saddam hussein. he then bought weapons from our complex. a lot of cash was passed through. there was a provisional government act after 2003. that money was not appropriated by the congress. there has been reports that the

cash used in the watergate scandal came to the federal reserve. when investigators try to find out, and they were stonewalled. we cannot get the information. you object toñiñrñr the idea thi wouldçóñr say give us six monthd then we can find out what we are doing. what about giving you 10 years? would you agree that the american people deserve to know whether the fed has been involved with this and what kind shenanigans they are involved with in foreign countries? we are working to bailout greece for all we know. the american people deserve to know. if the fed was not involved with this, it would be to your advantage to say we do not do stuff like that. i could not open the books 10 years later to find the truth? >> the specific allegations are bizarre. i have no knowledge of anything

remotely like that. after five years, we produce complete transcript of every word said in the meetings. you have every word. but we get the results of every agreement and loan namemade to foreign government? >> yes, sir. >> when this came out in the early years, they did have an effort that the fed never participated in this. it is easily cover it up. eventually, because the system is not viable and it is this cozy relationship, that we will get to the point where something will have to be done about this financial system. as long as we continue this cover-up, and quite frankly i do not believe that the real effort to facilitate some of these things that we've done in the past would be available to us.

it is in the interests of the federal reserve to make sure the people do not know. right now is a possible -- have you talked with any international groups about us precipitation in a bailout of greece? >> i have not. >> the federal reserve is capable of doing this. is it correct the fed can buy debt from other nations? is that not permissible? >> yes, that is true. we have no plans whatsoever to be involved in any form bailout. >> it they did, it was certainly be to our advantage to know about it. >> and recognize the gentleman from pennsylvania. [unintelligible] the federal reserve was engaged in those activities. he said during the '80s the federal reserve lends money to sit down the st. -- i agree the

way to look into what might have happened. >> i'm not one to take all my time. i know we have other committee members. i am interested in some of the communications we have had recently on the commercial real estate problem. could you give us your assessment of what the potential problem is today and where it could grow? are there any actions we in the congress should take in anticipation of getting this? >> it remains probably the biggest credit issue that we still have a. yesterday, chairman baird talked about the increase in the number of problem banks. a great number of the banks are supple because of their real- estate positions. the fundamentals have been worsening and problems in financing are troubled.

they are causing problems for a lot of things, especially small and medium-size banks. the fed has been a couple of things. we have issued with the other agency's guidance on commercial real-estate, which gives a number of ways of helping -- for example -- in shirting banks to give commercial real-estate loans and that commercial loan should not be marked down because the collateral value. we have also had a health program which has been trying to restart the commercial mortgage- backed securities market with limited success in quantities. we have brought down the spread. we are seeing a few rays of light in this area. it does remain a very difficult

category of credit, particularly for the small banks. >> is a anything you suggested the congress get involved with now in anticipation of any problems that may occur? >> i do not have a specific suggestion. i would be happy to think about that. but thank you. >> the gentleman from texas. >> thank you. congratulations on your reappointment i want to go back to page 9 it your testimony where you said that the federal reserve has been playing a key role in international effort to tighten capital and liquidity requirements for financial institutions, particularly systemically critical firms. can you give me an idea of a few you think the international systemically risky firms are? >> one of the issues that we

will have to address it the regulators agreed that there should be additional capital on systemically risky firms, the question of how to identify the firms. we will look at the size, complexity, the kind of service they provide. we have not addressed that question. we do not have a bias. it is possible we might try to do it in a more [unintelligible] we do not have the to be to fail problem. -- the too big to fail problem. >> you said you were gonna back internally and licking in your organization as to what were the things we missed, what we should have been looking at. i think one of the questions that i hear almost all of your colleagues say -- i keep using

the word capital -- i believe if you want to regulate financial institutions, the way to do that. looking forward, what is going to be the appropriate leveraged level that we should allow our of large financial institutions to have so that they will have a shock of moving forward? some of these were leveraged with the big numbers. is the federal reserve chairman regulator -- what is the appropriate leverage? >> everybody agrees with what aegis separate of more capital is needed. -- of what he said. more capital is needed. we will try to develop new standards. we implemented a few them from market trading. at this time, we have not completed the whole process of developing higher capital standards for large firms.

a proposal has been put forward that is now being tested. banks are acting as a pilot how much they would hold under the standards. -- are being asked how much they would hold under the standards. we are trying to figure out what would be safe. it would depend on the assets. the riskier the assets, the more you should have. we are working to try to have a very concrete proposal by the end of 2010. >> you would agree that the standards we have before did not work? >> clear the committee did not work. -- clearly, it did not. we are terribly well capitalized. they did not have enough cash on hand. higher liquidity is also a part of this. >> and some of these entities,

i'd seen some de leveraging and not a lot. is it not better sooner than later for the fed to develop these guidelines and start asking the entities that you are regulating to start ponying up more capital? the american taxpayers do not want another round of this. do you have a time line in mind where we could anticipate hearing taking action to increase the capital standards? >> i think around the end of the year we will have some formal standards. we have been involved with the banks to raise more capital. that is when the outcomes of the stress test. u.s. banks raised their capital and that has been very helpful in restoring confidence. >> are you concerned about what is going on in the european

union with greece and some of the other countries within the bureau, their levels of debt? some countries will have to step in and back them up. there are implications of what the destruction might impact the u.s.? >> there are very serious challenges there involving fiscal issues in competitiveness issues because of the exchange rate. we have talked to the leaders. they are focused on getting this problem solved in working closely with greece which had proposed as the consolidation. we are keeping an eye on it. the europeans are most exposed to those problems. >> gentlewoman from california. >> i would like to thank chairman bernanke for being here

today starting with your discussion on page 4, in addition to closing facilities, the fed is formalizing its lenders to commercial banks through the discount window. you go on to talk about your new federal funds rate and the discussion about why you have done this. and encouraging banks to go through the market for investment. you say that these adjustments by not expected to lead to higher financial conditions for households and businesses. last thing i heard before i came here this morning with a prediction by some of the analysts that in about one month, we can expect there will be an increase in interest rates on mortgages and home loans. everybody that i talked it really believes that this change you have made in the federal

funds rate is what is going to trickett that. is that true? do you have any thought to that? how can you guarantee that it will not? >> it is not the federal funds rate. it was the discount rate. that is the rate on which we land on an overnight basis to banks. we get that very bill because of the financial crisis. we wanted to make sure the banks have access to liquidity. now that there is easy access to private markets, if they do not need that help anymore. we have reduced the subsidy we are giving to banks. it hasn't been to the overall stance of monetary policy. it has to do it normalizing our support. we do not anticipate that action having any implication. >> the change that you have made, the discount rates will increase the amount they have to pay?

>> it is a very small amount. >> i understand that. what i'm trying to understand -- is there a connection between the increase in the amount of money they have to play -- >> i do not think there is any material. >> can you sure it will not happen? >> it is extremely unlikely. >> what i'm worried about is if you still have a lot of mortgages out there. they have 3% margins. if it is going to trigger an increase, we are gonna to have more foreclosures. the interest rates are going to be higher. that is what i am worried about. we have not seen the end of the foreclosures. with the exotic loans that were extended, people are going to be

more at risk. i do not want to see the interest rates included. >> there is no linkage between the discount rate in the federal hundred. >> i want to be clear. the actions that you have taken have no connection to the possibility of an increase in the house will interest-rate? we do not have to worry about that? >> the reason we took the action was to reduce the steps to do -- subsidy we are given to banks. >> when you reduce the subsidy, that means to pay more money. is that right? >> and do not think it will have an effect. it is very small. i do not think it will affect them. >> utah to but the 10% unemployment rate.

-- you talked about the 10% unemployment rate. that is not reflect what is happening in rural and african- american and latino communities where the unemployment rate are up as high as 16.5%. when you describe this jobless recovery, i think it would be important to talk about these communities that do not represent -- that are not represented by the description you give. what do you have to say about that? is there anything you could recommend that we could do to deal with this problem? >> you are right. minority communities in particular have much higher unemployment rates than the overall average for the that is a terrible problem. monetary policy cannot do much

about those distinctions. i think there is to the congress needs to address. -- they are issues the congress needs to address. it does not only short-term implications in terms of family income, and it has long-term implications for skills, work force attachment, wages, employability. it is a long-term problem. i can only agree with the 100%. the need to be addressed. but the gentlewoman from west virginia. >> welcome back to our committee. congratulations. >> somebody has his or her microphone on. it is making noises. would members make sure to turn their microphones off unless they are speaking? thank you. >> on page 3 of your testimony, you talk about lending

institutions. use a bank lending contingent -- continues to retract lending standards and weak demand for credit. my question is that i've heard from our community bankers -- they have the capital to lend but they are getting conflicting messages from regulators. how can we enter -- injured -- ensure that they have the capital to lend? creditworthy customers are not the ones coming looking for the expansion of their business. if they back confidence. that is my first question. >> it is true that because the economy is weak that some borrowers are not in the market for credit. that is why bank lending is down. the other issue in is that in

situations where there is a credit worthy borrower, we want to make sure they get credit. we have been very focused on that issue. >> but have not had the result? >> we have been working on the very heart. we have increased substantially our information gathering. we want to make an assessment of how many loans -- what is the rate of loss on small loans. we have added questions to the national federation of businesses to survey, asking not firms about their experience with borrowing and so on. we are trying very hard. our reserve banks are currently having a series of summit meetings with community leaders and the development to try to figure out what the problems

are. we are actively going out and learning about these situations. it is difficult. there will be some cases where tighter standards are justified. we need to make sure whether they can obtain credit. >> thank you. i think it is extremely important to stick to that nature. i second question is completely different. we have lost 4 million jobs. over the longer span, we have picked up 4 million jobs in the government. when i went to the recovery.gov website, the largest is a code was the state capital in my district. these were state jobs that were being retained or creative. in a larger sense, how do you feel this law and that our

economy if this trend continues? for me, it is a source of concern. it seems like the private sector -- it is more government and more government spending. let>> actually, we have lost 7 million or 8 million jobs. the total employment is very significantly down. some of those government jobs are bureaucrat tight job. two industries that have added jobs are health and education. many teachers are technically government employees. some of that may be showing up in those particular areas that are growing quickly. certainly, we want the private sector to be healthy and to be supporting the overall economy. we do not want to agree to much

overhead of government jobs that are not productive in some sense. >> thank you. >> the gentleman from new york. >> thank you. i'm sorry. >> economic committee. >> thank you. [no audio] thank you very much. congratulations on your nomination. i believe we have been fortunate to have at the helm a scholar,

prof., who has dedicated his life were primarily to studying the great depression, writing a budget. i believe the fed can create a commission responses to help us move out of this. i want to thank you for your leadership on many consumer issues that are important to this committee and congress. the credit card act that tells consumers will put money back into consumers' hands. the role that came from the fed was incredibly helpful with good thing a clear logic for work. also, the role on over draft is very well -- important to consumers. in the credit-card bill of rights, one of the items that will be in acted in august is the federal reserve's reaction

and analysis of charges that may be too onerous with how you would make them care. could you comment on what your work is in that area, when you intend to have that ready for us to see, and how you intend to approach it? >> we anticipate having those rolls out very shortly, two weeks. you'll be able to give us your views on it at that time. we wanted to get it out on time so that the law would go into effect as congress dictated. there will be no delay in implementation of the roles, even though there have been a couple weeks pleaded than we expected. -- later than we expected. we are working to have a comprehensive set of rules that we give criteria. if someone's interest rates have been raised for some reason, because they are perceived as

being a greater risk, and six months later the condition has been corrected, we are looking at the rules under which the interest rate ought to be returned to the normal or previous level. that is one of the issues we are considering. we will have it out shortly. we do not expect any delay. >> as we dig our way out if the recession and we are trending in the right direction, much of it that president obama took office, -- the last month the president was in office, we lost many jumps. we are trending in the right direction the fed is now looking at ways to really move back to a normal economy. some people felt you should invest more as opposed to other actions you are taking.

good deed comment on the said stuart taking the could you comment on the steps you are taking -- could you comment on the steps you are taking to help the people of america? >> we have two broad set of policies. one with a set of special facilities that were intended to stabilize our financial system. those facilities have been quite successful. they have helped stabilize the mutual fund and paper market. when the improvement in civilization, we had to shut those down. many were shut down on february 1. we believe we can begin to reduce that source of support. the other policy that we have

our policies intended to support the recovery, which includes low interest rates and the purchases of mortgage-backed securities and treasuries. those remain at a very accommodative level. taking that of the market will keep mortgage rates where they otherwise would be. there will still be stimulus. we think the economy still requires support. >> we are trending in the right direction. >> thank you. i believe across this country

jobs is number one. and you have referred to that. i want to go back to my colleagues -- calling it was region was talking about. -- my colleague iwas talking about it. you talked in your testimony here of unemployment being at 10%. in my state, it is higher. my congressional district is higher. you said 40% of the unemployed has been out of work six months, which is double from a year ago. he said the group was an education and in health care. there has to be some common sense. if the good done your road to the department of education, more than 100,000 people made

more the $100,000. money is proudly better use inside the pressure. where are some ways we can create judge quickly and at low cost? >> you talk that the international was correcting. there are three trade agreements that staying here. the president has said it you increase u.s. exports by 1% it quickly to nip the thousand jobs. -- it would create 10,000 jobs. would decree to under 50,000 new jobs? >> i do not know that number.

opening up trade create opportunity for us to export. that ought to create jobs. >> it would not cost anything more but it would create jobs and more in government? >> it ought to improve the division of labor between are different country. each country can be more productive. i suspect it would create jobs as well. >> we have had many discussions with the. the national debt in the budget debt. you told us that you cannot sustain a budget deficit over 2.5% or 3% of gdp. he said that earlier. aero done a few words. you said if we were able to get a fiscal exit, it would actually help the current recovery. is that correct? >> yes.

>> looking at the current budget, does that reflect the commitment of changing the growth curve of our budget deficit? >> the projections of deficits, i think everyone would agree that it is not sustainable and that we need to address those numbers. >> i heard you say that. i'm trying to say that looking at a budget today coming hearing your words that you have told us time and time again, that you cannot sustain this. what do we do today? you said earlier it hoped the current recovery if we were able to sustain that. looking at the current budget,

it does it give us the change in the din in any shape or form? >> it is not sufficient to look at this year's budget. you have to look at the next 10 years. >> we are at a place where we did today. beyonce 10 years. we all realize it gives it -- we all say 10 years. we all realize this. the current budget that i see did not give us that. i am asking you, do you see it? does it expand the deficit further? >> i think it would be helpful for the current situation in congress and administration -- and this is difficult, i am not minimizing how hard it is -- could provide a plan which shows how the deficit would fall to the 2.5% level at least over the next 10 years.

i do not know exactly which programs or changes you would make. a concerted effort to do that i think would be probably a boost in confidence. >> it to be good for the future or recovery? >> >> lower expected tax rate. >> your time has expired [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> next on c-span, president obama discusses economic policies and the meaning of the u.s. business roundtable. to lyautey executive testified about their company's recall. later, along with washington journal" with a preview of the health care summit. followed by but coverage of the u.s. help. h-- followed by coverage of

the u.s. health. tomorrow we will previewed the white house summit with members of congress including michael burgess, james clyburn, and bill custody. plus, a health-care reporter. it all begins life at 7:00 a.m. eastern on c-span. >> c-span, a public affairs content is available on television, radio, and online. you can also connect with this on twitter, facebook, and you tube. >> on wednesday, president obama gave a speech on economic policy and free trade agreement with colombia, panama, and south korea. these remarks are 40 minutes.

[applause] >> ladies and gentlemen, welcome to our first quarterly meeting of 2010 but the -- 2010. it is my unique privilege and high honor to introduce the president of the united states.

company. at toyota, we believe the key to making quality products is to develop quality people. each employee thinks about what he or she should do, continuously making improvements, and by doing so makes even better cars. we have been actively engaged in developing people who share and can execute on this core value. it has been over 50 years since we began selling in this great country, and over 25 years since we started production here. and in the process, we have been able to share this core value with the 200,000 people at toyota operation, dealers and suppliers in this country. that is what i am most proud of. second, i would like to discuss

what caused the recall issues we are facing years, been exp business rapidly. quite frankly, i fear the pace at which we have grown may have been too quick. i would like to point out here that toyota's priority has traditionally been the following. fir first, safety; second, quality; third, volume. these priorities became confused and we are not able to stop, think and make improvements as much as we were able to before, and a basic stance to listen to customers' voice to make better products has weakened somewhat. we pursued gross speed at which we were able to deliver to our

people and organization and we should sincerely be mindful of that. i regret that this has resulted in the safety issue described in the recalls we face today, and i am deeply sorry for any accident that toyota drivers have experienced. especially i would like to extend my condolences to the members of the saylor family for the accident in san diego. i would like to send my prayers again, and i will do everything in my power to ensure that such a tragedy never happens again. since last june, when i took office, i have certainly placed the highest priority on improving quality over quantity. and i have shared that direction with our stakeholders.

as you well know, i am grandson of the founder and all toyota vehicles bear my name. for me, when the cars are damaged, it is as though i am as well. i, more than anyone, wish for toyota's cars to be safe and for our customers to feel safe when they use our vehicles. under my leadership, i would like to reaffirm a value of placing safety and quality as the highest on our list of priorities which we have held from the time we were founded. i will also strive to devise a system in which we can surely execute what we value. third, i would like to discuss how we plan to manage quality control as we go forth. up to now, any decision on

conducting recourse have been made by the customer quality engineer division at toyota motor corporation in japan. this division confirms whether there are technical problems and makes decisions on the necessity of recall. however, reflecting on the issues today, what we lacked was the customer perspectives. to make improvements on this, we will make the following changes to the recall decision process. when recall decisions are made, a step will be added in the process to ensure that management will make responsible decisions from the perspective of customer safety first. to do that, we will devise a system in which customers' voices around the world will reach our management in a timely manner and also assist them in

each region and we'll be able to make a decision as necessary. further, we form a quality advisory group from north america and around the world to ensure that we do not make misguided decisions. finally, we'll invest heavily in quality in the u.s. through the establishment of an automobile center of quality excellence in the production of new divisions. sharing of more information and responsibility within the company for product quality decisions, including defects and recalls. even more importantly, i would ensure the members of the management team actually drive the cars and that they check for themselves where the problem lies as well as its severity.

i myself am a trained test driver. as a professional, i am able to check a problem in a car and can understand how severe the safety concern is in a car. i drove the vehicle in the accelerator pedal recall in the prius, comparing the vehicles and decided the remedy was the settings. i believe that only by looking at the product by sight can you make decisions. you cannot decide by a report or a meeting room. whatever results we obtain from the investigation we are conducting in cooperation with ntsa, i intend to further improve on the quality of toyota

vehicles and fulfill the principle of putting the customer first. my name is on every car. you have my personal commitment that toyota will work vigorously and quickly to restore the trust from our customers. thank you. >> thank you very much, mr. toyoda. mr. anaba? >> chairman towns, mr. issa, members of the committee. thank you for inviting me to testify today. my name is yashima inaba, and i'm the president and ceo of toyota north america and chairman and ceo of toyota motor sales usa. as you heard today from the toyota president, akio toyoda, and as the subcommittee of

oversight investigation heard yesterday from jim lentz, president and chief operating officer of toyota sales usa, toyota is taking decisive steps to restore the trust of the tens of millions of americans who purchase and drive our vehicles. our 172 team members and dealers across north america are making extraordinary efforts to complete our kurncurrent recall quickly and convenient as possible. we have rigorously tested our solutions and are confident that with these repairs, the toyota vehicle will remain among the safest on the road today. we also are going further by installing advance brake override systems in all of our new north american vehicles before the end of 2010, and in

an expanded range of existing models as a customer confidence measure and taking comprehensive steps to ensure strict quality control and increased responsiveness to our customers and regulators in the future. as you have heard, mr. toyoda is leading a top to bottom review of our global quality control processes and will seek input from independent safety experts to ensure that our processes meet or exceed industry standards. as head of toyota north american operation, i will be closely involved in this review, working with a new chief quality control officer for north america. i will also take responsibility for ensuring we improve our dialogue with safety regulators

and that we take prompt action on any issue we identify to ensure the safety of american drivers. in inviting me to testify today, the committee asked me to address several issues with regard to our recent recalls. let me summarize my answers here. our recent recalls addressed five separate issues that we have identified with certain toyota vehicles. in total, some 5.3 million vehicles across 14 models are affected by one or more of these recalls in the united states. the biggest recalls are for solutions our engineers have developed with regard to two specific mechanical causes of unintended acceleration.

one involves inappropriate accessory floormats that when loose or improperly fitted can then trap the accelerator pedal. the other concerns, accelerator pedals that can, over time, grow sticky in rare instances. the solutions we have come up with for both these instances are effective and durable. with respect to possible accelerator entrapment by the floormat, toyota recently designed a vehicle-based change that directly addresses the problem and announced a solution to the public in november 2009 as parted of the safety campaign. announced on september 29th, 2009. owners of affected vehicles can, in the meantime, drive safely by ensuring that they use only properly secured, appropriate

floormats. with respect to sticking acceleration pedal, a safety recall in the united states in january to address this issue. the sticking condition does not occur suddenly, and if it does, the vehicle can be controlled with firm and steady application of the brakes. we are confident that vehicles whose drivers are not experiencing any issues with their accelerator pedal are safe to drive and toyota is rapidly completing the repairs on our customers' vehicles. in both these cases, to thoroughly and carefully evaluate technical aspects of these issues, however, we now understand we must think more from our customer's perspective rather than more of a technical perspective in investigating

complaints and that we must communicate faster, better and more effectively with our customers and our regulators. our recent recalls of 2010 prius and hybrids braking system, camry cars to inspect the power hose and certain 2010 tacoma trucks to inspect the front drive shaft all illustrate this new approach. chairman towns, ranking member issa, and members of the committee, i ensure you that nothing matters more to toyota than the safety and reliability of their vehicles our customers drive. we are committed to not only fixing vehicles on the road and ensuring they are safe but@@@@@)

and we are fully cooperating with ntsa in any information they require. >> has toyota disclosed all information about other potential safety defects with your vehicles to the regulators? have you done that? >> translator: i do not know the specifics, however, as i mentioned earlier, i do understand that all the information we have are shared with the authorities. >> let me ask this question.

today attorney general andrew cuomo of new york announced an agreement with toyota, and this agreement provides that if a customer might be afraid to drive his or her car subject to a recall, the dealer will pick up their cars, fix them, and return them to the customers. now, the customer will then be reimbursed for any taxi or rental car expenses that they might incur. will you commit to doing this for customers nationwide? if you want me to repeat it, i will do so. >> it's being translated.

>> chairman, let me address that question because i'm local here. >> i'd be delighted. >> i heard a number of instances that when this recall news came out, i think a number of customers who were very afraid and the dealers took care of customers very well, and in many instances dealers went to pick up their cars and also gave them a toyota rental car for the time that they're not able to drive. and this process we see going on. i think there is a good understanding on the part of the customers that the cars are being fixed well and they are confident about that. >> my question is, are you just doing this in new york, or is this something that you're going

to do everywhere? >> all over the world. i mean, all over the nation. nationwide, yes. >> i just want to make certain we have that understanding because i understand you're doing it in new york. and the last question that i have for you is that, mr. toyoda, you have offered a brake override feature for some recalled vehicles. why haven't you offered that feature for all toyota vehicles? >> translator: allow me to

explain the situation a little bit. >> you'll have to pull the mike -- >> translator: the fact orz that are contributing to the sun r unintended acceleration can be put in four categories. first, the problem with electronic system. secondly, the way in which a car is used or misusage of a car, and thirdly, the structural aspect of the vehicle, and fourthly, the structural aspect of the parts used in the vehicle. so these, i understand, are four major factors contributing to unexpected acceleration.

and of that, the electronic control system is designed based upon the concept of safety first, and therefore, whenever there is any abnormality or anomaly there in that system, the fuel supplied to the system is cut off. and even under a very vigorous testing conducted internally or by ntsa, no problem in malfunction was identified, and, therefore, i am absolutely confident that there is no problem with the design of the

etc system. >> translator: however, placing emphasis upon the fact that customers do have concern as to the possibility of unexpected acceleration which may result from the remaining three reasons, in order to offer extra measure of confidence as the chairman has just mentioned, we decided to add brake override system. >> is that a yes or no? that's what i'm trying to get to, if it's a yes or no.

>> translator: i yield to congressman issa, but i'm trying to find out, is that a yes or a no? >> let me address in a different perspective. we are -- just for the record, we are putting brake override system on all of the models for north america coming off the line by the end of this year. and now probably your question is retroactively. what about the existing models? we have already announced -- >> that's my question. >> -- and es 300 and is, those

are already included in it as an additional measure when we do the recalls. and we have recently announced a tacoma, which has a very high complaint rate, and add to it the secora. this is probably 72% of the recall population, and the rest of them, technically little not possible. we do not stop it there. we carefully monitor the situation. by the next year, with this new model, with bls coming in, with these retroactive measures, we're quite sure we can lower the industry average. >> i yield to the gentleman from california. >> thank you, mr. chairman, and the chairman has proven that he

can ask a question so complex as to even be difficult for people of your great knowledge, and it doesn't surprise me. let me ask in a different way the same question so that we all have clart. mr. anaba, i will put this to you. isn't it true in order to use an advance brake override system like this, your cars depend on electronic systems, they depend on microprocessors and they depend on independent control the data bus that brake has been pushed. isn't that correct? >> you are much better than i am. i believe so. >> so for all of us here who are concerned, of course, about fail-safe and acceleration caused by electronics, i

think -- i'm asking you, isn't it fair to say that although electronics could at times be a problem, and your people have not eliminated that, the solution is, in fact, electronics in this case. and that's what's going to give the higher level of safety. >> well, i can only say that this is an added measure to a customer confidence. and, of course, i do not mean to say it solve all the problems. >> yes. i understand that in the earlier testimony there were some zrepszreps discrepancies how secretary lahood would describe occurrence ands how you would. is that correct that you would like to be able to correct the record on some areas of secretary lahood's testimony? >> i'm not quite understand what specific comments are you referring to? >> i would welcome that if you would like to, we would offer you the opportunity to submit for the record any technical corrections in what secretary

lahood's questions and answers were during the earlier testimony. >> well, we'll be glad to for the record. >> thank you. and then ski that we put up the unintended acceleration exhibit that i showed earlier. and i put this up for both of you because in your current advertisement on tv you said something which i thought was extremely profound and a high goal. you said that good companies fix their mistakes and great companies learn from them. in the case of the unintended acceleration, in 2007, there was a problem in the united states for which the floor mats were changed. there was a problem in japan with a different model but similar in floor pedal in which the toyota pedal itself was shortened. and now in the case of all these

models, there is an electronic upgrade additionally to prevent an accident like we had in 2009. would that be the outcome today, the outcome of the recall including the electronics upgrade to advanced brake override, is that the type of learn from your mistake that we can expect in the future on any problem that develops? [ speaking japanese ] >> translator: i do not know the

situation you referred to about 2007. but generally speaking, whenever a problem occurs, toyota addresses those problems in the most sincere manner and attitude. >> may i make a comment? >> yes, please. >> i came to know japan's problem, to be shameful, only in the previous year you mentioned. and that was the very first time that i ever heard. and, therefore, let me@@@@@ %r

necessarily having the transparency of worldwide sales and problems. will you agree, mr. toy identifia, to identify -- mr. toyoda to be the company that provides the u.s. nhtsa with full transparency of your worldwide observations and help set a mad will fodel for all th companies here in the u.s.? [ speaking japanese ]

>> translator: to that question, i clearly say, yes. in the past cases of recall or

problem has solution in making decisions we based our decision on two issues. the technical consideration and also whether or not the regulations and statutes in different parts of the world are complied with. and in that sense, going forward we intend to exchange and share information more timely throughout the world and we are now setting up the system for that purpose. and for that specific purpose, we're going to establish this special committee on global quality which i personally will be heading. and that very first meeting of that will be held on march 30th. and for that purpose, we are now setting up the structure where the united states and other parts of the world will be represented in the meeting of that special committee for global quality.

and we are now introducing this system so that we really face up to this problem openly and transpare transparently. >> thank you. thank you, mr. chairman, for your indulgence. >> thank you. >> thank you very much, mr. chairman. gentlemen, welcome to the united states. i have to compliment you mr. toyoda for deciding to come here and testify. actually, it's quite a unique experience in terms you'll be able to brog about the fact that you with stood the interrogation of a congressional committee. that's a badge of courage in the united states. but if you heard any of the examiner's questions of the secretary, and i think now yourselves, we're a little disturbed about some things and i am, too. although i'm very sympathetic to the fact that we want to

encourage international business. we want to certainly open our markets to your manufacturing from japan or your ownership of manufacturing facilities in the united states. but i thought i heard this morning the secretary say that you had a problem in japan that was detected in '07 and then subsequently the same problem was detected in europe but there was no communication of that problem or the prospect of that problem being contained in american manufactured automobiles or your products being sold in the american market. if that impression that i have is true, that's very troubling to me. i would like you as best you can, and i understand the difference in language, to explain whether or not you're giving the american automobile

purchaser, your customer, and the american market the same level of attention that you give to the japanese market or the european market. and if you didn't in the past, what are you going do to make sure that difference doesn't occur in the future? we can't afford to have a lag of a year or two years of finding out something that is defective in an automobile. i suspect the stock price is reflecting that to you. that it can be very costly. i hope it doesn't destroy a great deal of the equity of your company. i hope you can move on and move beyond this question. but i want to hear in my own mind that there hasn't been this difference between the whole market and the american market or the home market and the european market or your

experiences in the home market and european market and ignoring of the american market and the american customer if i may. [ speaking japanese ]

>> translator: we provide the same services with the same degree of care to the customers not oem nly in the united state but customers world over. however, as the congressman has just pointed out, our expansion outpaced our development and training of people working for us. and right now i'm fully aware of that. in july last year, i became president. and since then, i appointed executive vice presidents

responsible for each regions of the world. and by doing so, we established a system where information of different regions can come into the head office, can be captured in a more timely manner. and on top of that, specifically about this quality issue that we're faced with at the moment, with respect to concerns of the customers voices before they're expressed in the terms of -- in terms of complaints, we're going to capture those so that information be conveyed to the head office in a timely manner. and we are putting in place a system to enable us to do that. >> let me address, if i may, specific issues of defect information sharing which was also a ranking member issa's question. i think we should have done a better job in sharing those cross regional defect

information. >> what have you dernld was the cause that you didn't? what was it? is it culture, psychology, something that happened in the communications breakdown? just seems absolutely -- >> whether you go into a certain data base, you can find it. but it is not, i must say, i don't know very well, but positively shared. now what we're going to do going forward is one of the things i'd like to report to you that we are making now one american we call product safety executive is a part of recall decision making as part of the global committee headed by one japanese, one american and maybe later added from other regions like europe and china. and then in that, all the information is shared there so that we can evaluate and know what's going on in other parts

of the world in more transparent way. so this is the change that we are making now. >> let me ask you just a side question. does japan have a torch similar similar to the united states where suit can be brought for damages by these injuries and loss of life? [ speaking japanese ] >> translator: i believe we do. >> we have a little bit of a contest going on in the united states. we call it tort reform. and it's an argument that my friends on the other side very often use in medical argument field. if you had tort reform and you just allow some people to die or get severely injured without

recovery, that would correct things. i think you are making the best argument in the world i've ever heard of why we should have the present tort system. and i hope you recognize what kind of payment for the injuries and the damages suffered by innocent american citizens who like myself have grown up in an atmosphere that we had a great deal of faith in something that was stamped made in japan, that it was of the highest reliability. and you injured that thought process in the american public. and you will be called upon under our system to pay compensation for that. i yield back. >> yild i yield to the gentlemam indiana. >> let me say we really need tort reform. we should just forgive these

companies and let them kill our people. >> never mind. we just have a difference of opinion. first of all, let me thank you both for being here. i think it's very, very good that you came. it shows real concern on the part of toyota. i also want to compliment toyota dealers around the country. i went to a couple toyota dealers this last week to take a look at what's going on. they're working day and night to correct these mistakes. and so to your toyota dealers, i want to say thank you for working so hard to correct the problems. now after having said that, first of all, i have a case that took place in 1997. i don't want to go into all the details. a woman was injured in an automobile accident involving a toyota. she lost both legs. and i would like for you to review that. and if you wouldn't mind, give me a response. would you do that for me? >> yes, sir. >> i'll have my staff give this to you so we can talk about that. the second thing i want to do

is, i don't understand this, i went to the toyota dealer and this is the floor pedal mechanism that's used in japan and in some cars here in america. this is one that's manufactured by cts here in the united states. and they have done a good job on this. this pedal here has been involved in the accidents, i believe that it caused fatalities. this one here, there's been sticking and they've been putting a shim in there, a little metal piece in to correct that. and my question is why the difference? these are going in the same model car and why do they have different specifications? because this one here has caused the problems and created some deaths and this one here had sticking problems which have been created -- or corrected. but it's different. and so when you're manufacturing the same car, why is it that they don't meet the same exact

specifications? it seems to me that would be easier to correct than having one that's made one way and one made another way. [ speaking japanese ]@@@@@@@ @

>> translator: some parts are designed by our suppliers with toyota approving that. and in other cases, toyota's own

engineers design the parts. there are two approaches. in the case of this specific pedal, the suppliers design the pedal and toyota approve that. and in both cases, we are able to identify two excellent suppliers whose parts were worthy of us to use in the united states and japan. and, therefore, those two parts designed by our suppliers were used in this pedal. [ speaking japanese ] >> translator: and on top of that, there's a philosophy to

grow together with our suppliers. and in that sense, rather than placing order with one single supplier, we source the same parts from multiple suppliers. that is to say when there are suppliers that can supply parts that perform the same function, we do that. and this is another point i would appreciate your understanding. >> if i may real quickly say i understand. but when there's a problem of this magnitude where people have been killed because of the part and there's another part that doesn't result in fatalities but there was a sticking, it seems to me it would be easier to correct the problem if there was more consistency in the two parts. >> okay, thank you very much. the gentleman's time has expired. i now recognize the gentleman from maryland. >> thank you very much, mr. chairman. i want to thank both of you for

being with us this afternoon. and to mr. toyoda, i have read your testimony. i have listened to it. and i can appreciate you saying and meaning that you're sorry. the problem is that it's one thing to say you're sorry. it's another thing when it seems as if time after time there are pronouncements that problems are being addressed and over and over again they seem like they're not being addressed. 2007, fatal crash involving a

camry because allegedly a floor mat, a person was killed. and we can't get away from these facts. september 2007, you then, 55,000 cars are recalled. i know this is before your presidency. august 2009, california fatal crash, four people were killed. sailor family. september 2009, 4.2 million cars recalled. we can go on and on. and then just yesterday, mr. james lentz iii said something that was very interesting. basically what he said was that even with the sticky pedal and floor mat problem, that this may not account for all of the problems. so -- and he implied that there

were maybe some electronic problems taking place. the question becomes at what point do -- and i know also you want to regain the trust of your customer base. but that trust is hard to establish or re-estabilsh when they see over and over again these kinds of situations and they say, well, why should we believe that things are going to get better? and i know that there have been members that have had good things that toyota has done. people in my district are saying they call and they have to wait to get their cars repaired. but at the same time, they got to take -- they have to take the children to the babysitter. they've got to go and do their marketing. i mean this is just practical things that are happening.

so i'm just asking you how do you say to your customers, to people who take their hard earned dollars in a tough economic time and spend them on toyota vehicle, how do you say to them that we can trust you now when -- and i say this most respectfully. when it seems as if there is no end to this series of promises and then promised that seem to come short of reaching the goal of safety. [ speaking japanese ]

>> translator: i sincerely regret that some people actually encountered accidents in toyota vehicles. [ speaking japanese ] >> translator: as i mentioned earlier, with respect to the electronic throttle control system, the system itself has been designed based upon the philosophy of safety first and, therefore, whenever any abnormality or anomaly is detected, fuel supply is instantly cut off. [ speaking japanese ]

>> translator: that notwithstanding accidents actually happened. and, therefore, i instructed that every effort be made thoroughly to reproduce and d duplicate the accidents. up until yesterday, those tests have been repeated and conducted. however, no malfunction or problems were identified based upon the tests conducted internally within toyota. and, therefore, based upon such thorough examination and testing conducted within toyota, i have

been saying that i have no question with respect to the integrity of our system. [ speaking japanese ] >> translator: and, therefore, in cooperation with the authorities concerned, we already announced that we're going to thoroughly examine and investigate the outcome and data recorded in event data recorder. and the findings will be made public and disclosed in a prompt and timely manner. and changes will be made in the

very transparent manner so that that be assured going forward. >> thank you, mr. chairman. >> thank you very much. and i yield five minutes to the gentleman from florida. >> first of all, mr. chairman, i'd like to request unanimous consent to include in the record the specific information on the administration's proposed 2011 budget request which cut national highway transportation safety administration's vehicle research problem and also further reduce the amount for vehicle safety research in the bunt. i didn't have this further. if that could be inserted also in the budget -- i mean in the budget information in the record appropriate to my previous questioning of the secretary. without objection. >> i'll review it and then we

will -- iry serve the right to reject. >> again -- okay. then i'll proceed. this is indeed a very embarrassing day for the united states national highway safety transportation administration. it's equally a very embarrassing day for toyota to have the son of the founder of toyota here as the chief officer to come before the united states congress. i'm embarrassed for you, sir. i'm embarrassed for my dealers that i've talked to. i'm embarrassed for thousands of people, hard-working americans who work in, i guess over ten plants across the united states. i thought actually i thought we were doing pretty good.

toyota was taking quite a hit and i'll put in the record later on your safety record and some of the things you've done positively, information that i got until i was shaving the other day and heard the news of the memo that was prepared by a gentleman who i didn't even know his name, bring over a copy of the july 6 inaba memo. i hadn't read this actually, the details of it today. mr. inaba, this is one of the most embarrassing documents i've ever seen. in your preparation of this, you embarrassed all the people i represent, those hard-working people across this country. this is absolutely appalling, sir, that you would identify -- i know you were on the job only a few days.

but key safety issues and identify is one of them on page 14 of the document you prepared. you identified the problem of the safety issue with regard to this -- these pedals. then on page 16, wins for toyota safety group. how could you possibly put in writing this and list as wins for toyota, particularly under the defects entry and negotiated equipment recall on camera es, sa saved $100 million with no defect found. i think you've done a great injustice, sir, in this. i don't know if it was -- it's

not a rookie mistake. obviously you've been with the company. but to prepare this document, to undermine the good working people and the reputation. toyota has an outstanding reputation and actually has had a great safety record. but this discredits everyone. how would you respond, sir? >> yes, sir. first of all, let me get the facts straight. this is the -- only a few days after my arrival to@@@@@@@ @ @

>> addressed to me. >> i did not know that until today. >> okay. the point is that, you know, i was in the middle of orientation tour. i didn't make it very clear. my name is on it. it is presented to me not me made it. that's all i want -- >> but you were aware of this. again, this is information you had and your company prepared. if in the future any company prepared a document like this and presented it to anyone in the company, to me, it would be -- to me, it would be one of the moest interesting thing you can do to anybody' reputation. i know it says on the side confidential and all of that. but do you realize the people that have been let down? me? the people in my district who go

to work every day in those toyota operations? the sales? and already the reputation has been severely damaged by what's been done here. >> i, honestly, with my honesty, i do not recall the meeting in any depth. but at the same time, now i see that. i think i must say to you that it is so inconsistent with the guiding of toyota. >> to me, it's unbelievable. >> i feel the same. >> you're in charge of the company. you have that responsibility. can awe sure the committee that this is not the approach? this will not be the approach of toyota now or in the future? >> because now i'm getting more familiar, i'm president of that

company. i am going to rectify that if there's any tone of it. >> the gentleman's time -- . . . and, of course, the agenda will woman from washington, d.c., will assume the chair. but i also want to let the gentleman from florida know that his time has long expired. >> yes, sir. and if mr. toyoda can just answer. [ speaking japanese ]

>> translator: i do not know about that specific document you referred to. and i do not know the comment. however, generally speaking, when a new person takes office as president, it is custom airily in any division to make presentations on various contents or substances going on in the company. however, generally speaking, the substance and contents of such documents does not affect the entire company in the way to cause drifting of the company itself.

>> the gentleman from ohio has five minutes. [ inaudible ] you only have a few minutes left. i'm calling on people who are left. i'm going to go to mr. connolly then since it goes on this side. we are. mr. connolly, you have five minutes. >> thank you, madam chairman. mr. toyoda, welcome to the committee. when did it first come to your attention that there was a problem with acceleration of your vehicles? [ speaking japanese ]

>> translator: i was appointed president in july. and there is a major difference between the sort of information i had received prior to assuming the position of president and the information i get to receive after becoming president. and, therefore, there may somebody difference between the information that company may have had as a company and the information i personally had as president. however, i will clearly state whatever i know and even in

those cases where i do not know or do not have any knowledge of, i will look into the matter and supply the report to you. [ speaking japanese ] >> translator: so responding specifically to your question of when, i would say some time toward the end of last year. >> toward the end of 2009? >> translator: that is correct. >> okay. were you aware of the fact that there had been complaints by consumers long prior to that time? [ speaking japanese ]

>> translator: right now i'm aware of that. however, did i have that sort of information before i became president? i didn't have that sort of information with the same degree of accuracy that i do now. >> but you had some awareness. we just heard from secretary lahood prior to your testimony. and he talked about the fact that nhtsa sent a team to tokyo to meet with the top leadership of toyota to bring to their attention as forcefully as they could the fact that there was a problem and that it needed to be attended to. that meeting was prior to your testimony just now that you only learned about this problem in december of last year.

were you not aware of the fact that nhtsa had sent a team to tokyo headquarters? [ speaking japanese ] >> translator: on that specific point, that was a matter handled by the division in charge of quality assurance. and certain person in that division, i understand, received the visit from nhtsa

representatives and had discussion with them. i know that. however, i do not know the specific content of the discussion nor the timing of that meeting. >> well, there seems to be some discrepancy. again, we're trying to get at what did we know and when did we know it to sort of gauge the company's -- the quality of the company's response to the serious problem on behalf of its customers. and obviously, we have an interest as american congressmen and women to protect our constituents who are your customers. and we know that the company certainly was made aware why u.s. officials through nhtsa who flew to tokyo for this express purpose and you're telling us in your testimony you didn't know about it. you were aware of that trip and that meeting but you weren't aware of the fact that there was a serious acceleration problem with your vehicles until just a few months ago, december of

2009. is that correct? [ speaking japanese ] >> because if it is correct, given your position in the company and your family's association with the company, that would constitute extraordinary compartmentalization. [ speaking japanese ] >> translator: i personally know that there was a meeting with nhtsa representatives. but i do not know the content of that meeting. >> okay. i'm just going to ask one more question and that's of mr. inaba. i'm looking at this confidential document made available to the committee. >> yes. >> my colleague was just

referring to. and on one of the pages it has a, you know, just a series of ticks like this. and the bottom tick in your briefing, i understand what you said, it says secured safety rulemaking favorable to toyota. what -- and i'm going to run out of time. could you at least answer what was your understanding of what that meant? >> as i said, i don't recall the meeting in any depth. and i had no idea about this recall process back then. therefore, i have very little knowledge about it. and funny enough that i only recall quiet cars in that whole list of that. of course, now i am made aware of this. you know, that was a revision of that. but i don't recall it. >> madam chairman, i know my time is up.

this documented is dated july 6 of 2009. >> the gentleman's time has expired, mr. davis. >> thank you, madam chair. i would like to thank you and also ranking member issa and members of the committee for allowing me to join from my position on the ways and means committee on this oversight hearing on toyota's recalls. i had the honor of representing toyota's north american headquarters in kentucky. and one of the voices of perspective from our region. toyota directly employs 172,000 in plants and dealerships in the united states. and it's toyota has an integral part in our economy in kentucky and investment in the united states of america. they maintained operations in a world class level of quality in the commonwealth for nearly 25 years. the georgetown facility now manufactures engines and automobiles, all part of the $5.4 billion investment in our state.

toyota has been an exceptional corporate citizen in kentucky. they've given more than $37 million to local charitable groups from education to social services. not only have they supported local charitable needs, but they've been one of the commonwealth's longest job creators. toyota north american headquarters in kentucky supplies distributors across the continent from my hometown. in all, more than 8,000 kentuckians work directly for toyota and almost 1500 are in congress's fourth congressional district. 90 toyota suppliers are located in kentucky creating more than 10,000 additional jobs. toyota's decades long reputation for quality, safety, and service is based on high standards of quality and innovation and based on their corporate ethic of discipline, honor, humility. they have had a positive transformational effect on every aspect of american manufacturing. i can speak to this as one of the few manufacturing professionals who serves in the congress.

toyota is -- as congress conducts these hearings related to toy oat wra ses recall, we need to keep in mind toyota's willingness to do something unusual in american business politics in the congress. and that's to actually take responsibility and ownership for the problem and continue their commitment to quality. and more importantly, for the well-being of their customers. careless words and unfounded allegations by those who may have other agendas can do irrepairable harm to job creation in kentucky and in the united states. at a time when quality jobs are in short supply and unemployment in kentucky and t@@@@@@@ o@

our safety administration is abet to affectively oitfy and investigate automobile safety. america needs clear and consistent auto safety standards. i pressure willingness to come and participate in this today and the contribution of your business to our country's economic strength w. that, i thank you and field back. thank you for your comment.çó you and yield back. >> thank you for your comment. >> the gentleman's time has expired. miss maloney of new york. >> thank you. thank you for coming to testify today. earlier you said the dealers in america are responding to any of

the problems and making the customer whole assuming all costs for repair and to try and subsidize for time and so forth. my question is what about the american families or individuals who died or were injured since the company knew about the problem? will you assume their medical costs, funeral costs? [ speaking japanese ]

>> translator: truly speaking, truly, i feel very sorry for the members of the sailor family who ended their life with toyota vehicle. and i extend the condolences from the deepest part of my heart. working closely together with engineers, toyota team members and suppliers in making maximum efforts so that such a tragedy be never, ever be repeated. >> but you did not answer the question of whether or not you would assume the cost of the hospital repair of the body, the expenses of the individuals. >> well, many of those cases

pending legal issues. and so we will leave it to our legal counsel for its information. >> earlier when this came forward you had this report examination done. and i'd like to know if you think this is -- this report on the problems and solutions was sufficient earlier commissioner lahood testified he was depending on the research of toyota. so i'm asking whether you feel that this is sufficient. and secondly, i'd like to go back to a field technical report that came in from europe. and in it, the mechanics are really very clearly stating that there is a problem. and i want to know why this information was not gotten out to people, to america, to the

dealers, to everyone immediately and specifically how many complaints triggered an investigation? is there a standard? when someone complains and says there's a problem, what happens? how many complaints have to come in before you start reaching out? >> first of all, as i stated before, we could have done a much better job and we're now taking steps to improve it, as i said before. and to the specific question of how many number of reports do you need to initiate that investigation, i think for the ua issue, unintended acceleration issues that we're committed to take actions in

investigating those issues one by one. in other words, once we get the complaints of reports of that ua issue going forward, we will -- the goal is to start the investigation within 24 hours of the information that we receive. and we are creating many, many s.w.a.t. teams to really go into that area. >> okay. i've been called for a vote. but i'd like to get on the record, if i could, your response, mr. toyoda. what have you learned from this personally? and what lessons has the company taken from the events leading to today's hearings? and how will you change toyota in the future to protect people and to provide an excellent product? and i'm running to vote.

if he could answer. >> you want him to answer? >> i want him to answer. >> you may answer, mr. toyoda. what you learned. [ speaking japanese ]

>> translator: with respect to the recall, thus far, we have been too much focused on two perspectives. one is technical perspective and the other is compliance with laws and regulations. the most important lesson that i learned from this experience relation to the following -- with respect to customer first philosophy, we have been placing the highest priority on the safety thus far and we will continue doing so. but on top of that, from the perspective of customer first, we'll place greater emphasis upon customers view point and perspectives. so that's the first lesson that

i would like to mention here. and in addition to that, we'll make sure that we get information from various regions of the world in a more timely manner so that the time line be minimized between different parts of the world and the global head office in japan. we'll make efforts in that direction. >> thank you. if i may say so, the reason that you have seen such emphasis of what you call the technical matters and the law is precisely that customers did, in fact, apparently over and over again complain about these issues but had no way to know the cause and expected toyota to, in fact, look at the technical details. the technical details are beyond a family that reports unintended acceleration. and the family expects that

having reported that there will be an immediate remedy. the matter of law goes to transparency itself. the law requires automobile operators in this country to -- manufacturers in this country to operate in a certain way. and, therefore, the first thing we do is to look and see if they are operating according to law. and law here meant, of course, the regulatory agency. i don't know if you do want to respond. but i do want to make it clear. i was pleased to hear that apparently the root from customer complaint to those who can do something about it is one of the reforms you have suggested in your testimony already. and apparently these went astray because they didn't get quite straight up to the fix it

person. and as i understand it, one of the most important reforms is not through the customer complaints you listen to. i suppose you heard them, but the right people in the structure did not hear these complaints. is that so? at the right level, the level to bring an immediate remedy. those people didn't hear it soon enough. and so the customers weren't heard soon enough. is that correct? [ speaking japanese ] [ speaking japanese ]

[speaking japanese] [ speaking japanese ]

>> translator: it's not that customers were not heard, in my view. whenever complaints were reported, we tried very hard to reproduce and duplicate those complaints to identify what it was that was actually taking place which led to the complaints coming from the customers. we investigated them very hard and at the same time whether the similar phenomenon is likely to continue into the future, how much possibility there is for the same phenomenon to spread through other areas or other cars is another aspect that is investigated. so i will say that i will accelerate that process of following these three steps farther into the future. but with respect to the reproducing -- re prduplicationf

the phenomenon we have been working hard in toyota to do that. but even with the best efforts made, there are cases that cannot be or that have not been reproduced. so going forward, we will enhance the transparency of the process of us working very hard to reproduce and trying to identify those causes, sometimes seeking cooperation from the authorities concerned and we intend to lead our efforts in this area in the manner that our efforts itself will lead to the improvement of the vehicles of the entire industry. >> i'm going to go on with my question. i want to make sure you're not blaming the victims. the customers reported. let's not say, you know, we want to hear our customers. the fault does not lie with the customers. you can bet your bottom dollar that the first time there was unintended acceleration, that's

about everybody's horror. you can bet your bottom dollar that that customer reported that. your answer, which goes to "we'll see if this is duplicated" is, in some ways, very troublesome. that is such a serious problem that once it is reported one time it seems to me you have got a huge problem on your hands and you seem to be saying, well, if we hear it enough then we'll know we ought >> what we said at my other times "customer first." is a think we have been doing and we have to make over on the customer concerns and complaints. we work choser with tsa. when we receive the customer complaint shall we like to know more about it and also some of

the information that will be open to us including vin number so that we can trace back each one of the customers. we are trying very hard to really put that word "customer" first. >> let me say to you, i'm going to ask you a question i think every american that has a toyota would want me to ask. i can ask this because it is personal as well as con depressional. i drive a camery hybrid. i switched to toyota reluctantly because i wanted to buy an american car. the americans were not making

hybrids almost at all. i went straight away to toyota. why? i didn't ask how much it cost. i was relying on this sco extraordinary rep takes had been built over generations. so i ask you, mr. toyoda, is there any chance that the camry hybrid will be recalled? for any reason. >> first of all, let me step in. first of all, chairwoman, you are driving american car. it is produced -- >> it's got mr. toyoda's name on it. you don't want to claim it

anymore? you are disclaiming the car? >> no, no. it is an american -- >> it was the americans fault? >> no, no. please. first of all -- and also, now camry hybrid is not on the recall list. >> no. i just want to find out if you expect it ever to be on the recall list for any reason. >> i think you will be very safe in driving the car. that's all i want to just step in. >> you stand behind the toyota camry, mr. toyoda? [ speaking japanese ]

>> translator: right now, it is completely safe. and every day, as customers continue to use those vehicles, they may come up with new findings. but, as i said, it's 100% safe at the moment. for the customers to be able to feel safe in the car and so that ourselves will be able to sincerely receive any voices of the customers anywhere in the world, we are now putting in place the structure worldwide to capture customers' voices wherever in the world.

and we will listen to those customers' voices very humbly and modestly so that they will continue to be safe in our vehicles. >> thank you. >> chairwoman, could i have one more sentence? >> yes. >> i'm afraid you misunderstood. the camry hybrid is produced here and the vast majority of the parts are coming from the united states. so that's what i meant as american car. >> i just don't know what difference that makes. you need to explain it to me. were the cars that have been recalled produced elsewhere and that's the problem? mine is safer because american workers did it? and produced it? i don't understand the distinction. the cars that had the problem were shipped from japan or something? >> the reason what i said, you

know, why camry hybrid is american car is because you did bought an american car. that's what i meant, which is produced here, supplied here and so that's all -- >> many toyotas are produced and supplied here, aren't they? we're pleased to have you produced and supplied here, but the worldwide reputation begins in japan and stands behind wherever they are produced. >> that's very true. mr. toyoda, i was impressed with your opening remarks. in fact, i'm impressed with your being here. i'm impressed with some of what you have said you intend to do because we are really going forward. i am trying in my own questions to get some sense of where we need to have confidence in toyota and where there is still some questions. but in your testimony you say -- and i'm quoting -- i would like to point out here, this is page

one of your testimony, that toyota's priority has traditionally been the following: first, safety, second, quality, and third, volume. i'm going to ask you a question about what seems to be a fourth priority. that is for me the most troubling aspect of this controversy. and that first fourth quality is secrecy. to get to the heart of my concern about secrecy and the culture of secrecy, i would go to the data recorder, otherwise known as black box. people in the united states are very familiar with airline black

boxes because they know that a in that black box is critical information. and if you get to it fast you can find the cause. you can put -- you cannot only respond to those who have been hurt, you can put to rest some of the concerns as people begin to speculate what, indeed, caused this. and they come up with sometimes wild conclusions. but that black box is critical. now, other manufacturers, understanding just how important it is to get to the cause of the accident for all concerned, make the black box data available to do download. i have had a hard time understanding, therefore, given the fact that your competitors

make this data downloadable easily, i have had difficulty understanding toyota invoking proprietary technology that allows only you, toyota, on the spot to download. why should we respect your proprietary technology any more than we with respect the proprietary technology of other automakers, particularly given the safety aspects of this matter and the fact that an accident has already occurred. why do you not want to clear the air as quickly as possible? on what basis do you invoke some proprietary technology interest

when your competitors do not in the downloading area? >> let me respond to that question first that yes, we know detroit's three manufacturers have this information and then the reader is commercially available. toyota is also -- >> wait a minute. what's commercially available and when? >> the detroit three -- general motors, ford, chrysler -- have this commercially available reader that this -- what you -- >> why don't you have such a reader? >> we are in the process of making it available commercially by probably middle of next year which is ahead of the law requirement, a.

b, that this year, by april, in less than two months' time, we are going to make a hundred units of readers available at any region, any area. the point is that, you know, also in the past with requests we made it always open. now, this is the information that is the owners' information. with their consent, we can make that information -- >> yeah, it was available if you were on the spot. >> no. we do not hide it at the request of authorities like police request or nhtsa request or some government authority's request. we made it open. >> once you came as if there was something so secret that you had to be there in order for law enforcement or regulators to read it. i just don't understand the difference. indeed, let me make sure i

understand what your testimony is. are you saying that the company is redesigning the black box so that it can be readable by law enforcement, by safety investigators and consumers? >> and owners. >> consumers, yes. >> it should not be made available to anybody else unless there is a consent, to my knowledge, of the owners of the vehicle. >> you would not have to be -- toyota would not have to be present in order for the black box to be read. is that true? just like other manufacturers, you don't have to come to unlock the black box personally? >> i don't know that technical detail to answer. >> well, that's the whole point, sir. one second.

the gentleman from utah has five minutes. >> mr. toyoda, thank you for being here. very much appreciated. mr. toyoda, do you believe you are being treated the same as other manufacturers in the united states of america? [ speaking japanese ] >> yes, i believe so. >> do you have any reason to believe that other automakers are treated any differently by nhtsa?

[ speaking japanese ] >> translator: no, i don't think so. >> if you could hand the document, please, to them. there is a document dated july 6 of 2009. if you could take a look at this, please. this is an internal toyota document dated july 6, 2009. it has your name on it, mr. inaba. my apologies if i pronounced it wrong. on page seven, the second page, it says under the first bullet point, changing political environment, massive government support for detroit automakers. is that concerning? why was that brought up? >> this is one of -- i explained already once part of it. this is one of my orientation because i was a few days into

this position. this is prepared by washington office to give me sort of a first look of it. i do not honestly recall all these notions. i recall there is a quiet car regulation which struck me with a very strange feeling, but that was the only thing. but looking at all these papers, " i can't comment on that. >> what does it mean to you?

let me go to the last point. perhaps both of you could take this. quote, the new team has less understanding of goring issues and are primarily focused on legal issues. can you explain what toyota meant by that? >> i still don't understand what the big difference of the two. engineer, leg, both will be involved in a discussion anyhow. involved in a discussion anyhow.ed in a discussion >> this is an internal toyota document. mr. toyoda, how would you read this?

[ speaking japanese ] >> translator: i can't understand it. >> my understanding is that both toyota and nhtsa knew about this problem back as early as 2007. yet it took so long to get it taken care of. is there a regulatory component here that was slowing us down? [ speaking japanese ]

>> translator: today i came to understand that this particular document was prepared as a part of the presentation material addressed to the new president. however, i do not know the background of this writing, nor do i know how this document was prepared. therefore, i apologize, but i simply do not know the answer to your question. >> do you believe it's true? do you stand by it or do you want to distance yourself from it? [ speaking japanese ] >> translator: well, i need to understand this further. that is to say, i cannot understand the english written here. >> now, eight months into this position, i'm beginning to learn myself and form my own opinion. so that is not consistent -- or

i'm learning this does not represent my feeling today. of course i will learn more. i would like to build a very good relationship with nhtsa so that we can work together very good. >> explain to me the negotiation that happens between an auto manufacturer and nhtsa. often the word "negotiation" is used. how does that work? what is negotiated in your -- >> i have met nhtsa officials twice. so i am not able to explain what the negotiation means. so it is still a little bit too premature for me to say anything. but i don't know. certainly negotiation doesn't sound like a good word. there is a discussion, yes.

but also exchange of information, yes. we oftentimes get the good guidance from nhtsa, from an official. we listen to it, respect them. they ask us information. we provide them. so this is sort of like the nature of the relationship, as i understand, whether it falls into negotiate or not, i can't -- i don't know. >> do you believe, mr. toyoda, that american unions have an undue influence in this process? [ speaking japanese ] >> translator: since i haven't understood the content of this,

i don't know how i should answer that question. i apologize for that. >> toyota hired some former nhtsa employees. why would it be appealing to hire former nhtsa employees? >> well, first of all, those two gentlemen who came from nhtsa i know personally. so, of course, having -- >> how did you know them? >> i just started meeting him more often because i am a president of that company and meet them. >> did you know them before they were hired? >> no, i did not. i'm beginning to know their personality, their professional standard. so i have a very high respect for both gentlemen's professionalism and ethical standards. so it doesn't matter whether they are coming from nhtsa or not, to me. it does not.

>> do you believe that the relationship between nhtsa and toyota or other manufacturers is too close, too cozy? >> i don't believe so. >> the gentleman's time has expired. five minutes to the gentleman from ohio. >> i thank the gentlelady. we have heard mr. toyoda say that toyota grew too fast. it's interesting that it's being told us as we are investigating cars that are accelerating out of control. it's ironic. but i would submit perhaps a misleading parallel. the problem is not that you were moving too fast but that you were moving too slow. too slow to recognize the material defects that a put people's lives at risk and too slow to have some internal

questioning about the effectiveness of your own value innovation program which in the mid decade began slashing production costs so that you could reach a 10% operating profit and when china came into full competition and began dropping their price for parts, you began to cut your costs even more. this committee hasn't really looked at the economic backdrop of the change -- what appears to be a change in toyota's culture but which may be, in fact, a kind of a cutthroat corporate competitive environment which caused toyota to drive costs down and, as we know, safety is then put at risk. there are 180 different parts you looked at where you cut the cost by at least 30% according to industry reports.

now, mr. toyoda, to your knowledge were there ever any discussions at toyota that certain design or engineering flaws would create system failures that would result in unintended acceleration? [ speaking japanese ]

[ speaking japanese ] >> translator: you pointed out that before i became president the speed of growth may have been too fast. i was referring to the fact that the growth may have outpaced our ability to develop and train human resources. and you also pointed out that the company may have become a finance-driven manufacturing company. and -- >> i understand your answer. it's not responsive to the question i'm asking. i want to be polite, but i also

hope that you will answer the question that i ask which is -- were there ever any discussions at toyota that certain design or engineering flaws would create system failures that would result in unintended acceleration. that was my question and i would appreciate the courtesy of a direct response. [ speaking japanese ] >> translator: whenever the issues of recall came about within toyota, we had very

serious discussion as to at which stage so-called unintended acceleration takes place. >> let me ask a follow up question, mr. toyoda. have you ever been advised by your attorneys or business associates not to discuss any defects in the electronic throttle control system because such an admission would create such liability which would be financially devastating to toyota? [ speaking japanese ] >> translator: that has never happened. >> mr. inaba? >> never happened. >> you have had no discussion with your attorneys about matters of material defects in your products? [ speaking japanese ] >> nothing cost toyota more than the loss of a customer's trust

in our vehicles. for that perspective, we are as eager as anybody else to know if there is any problem. >> thank you, mr. chairman. >> mr. sauter? >> thank you very much. first, i want to make a couple of comments at the very beginning. first, i want to thank mr. inaba for visiting warsaw, indiana to the new toyota dealership there. it was a big thing for the small town. dave illing is running that in my district. people were very excited to have you in. secondly, i have some concerns about the way the hearings have been conducted. to some degree it seems we are having a hanging before the trial. i'm not saying you're not guilty. it seems by hauling you in here and the way we have handled this and by going through a lot of internal memos, there is a lot yet to be decided.

and i'm trying to get to the truth. i represent an auto area. we make parts through my whole district. ft. wayne, indiana is the proud home of the silverado and sierra who is in competition with you every day. my goal is to sell ford, toyota and chrysler. also cts is right at the edge of my district. these two petadals have differe problems. the longer one was having a slightly slow release which means when you take your foot off, it comes up just a fraction of seconds too slow. it also was sticking in floor mats because it was longer, but nobody was killed from that. it was a standard recall problem where you say, okay, we're going to fix the part a. this one, however, whether it's electronic or whatever, the one from -- is it denso?

it had acceleration. in other words that when you let go it went up. it was causing the car to go faster and that's -- all the death cases came from the denzel model, not the cts. when you go through the models, and this is important for many things. one of our concerns as american congressmen is you treat america like the rest of the world. we are concerned about memos thaáká'2@ @ @ @ @ @ @ @ @ @ @ @r it made the pedal that's causing it. there's clearly going to be an investigation. i thank you for working with our part suppliers. i understand you need honorable

suppliers. it's good to have competition. have the competition. that's how we get better things. i understand why as a corporation you need legal protection. although you need to be honest about what's happening here. when you have hearings like this more people file lawsuits. you have to protect yourselves and stockholders. i understand that. but in looking for safety i urge you to look at the american suppliers. i don't know if it was whether you were trying to do cost controls internally on your historic system, but what i see happening -- and it's interesting when you match up these models, what happened is that it isn't true that the american company was supplying your american-made vehicles. that you have been transitioning over and where the problems were occurring were in the denzel model and you moved 50% to camry in 2007. but you have been moving lexus over. i'm praising you, not criticizing you, for moving

over, but it's an acknowledgment that when you had problems in this one, they weren't as great as this one. i would encourage you to look at whether there was interaction in the type of pedal, whether it was the cruise control or the electronic or whether there is something inside here. because you're addressing the snap-back. because that's just a fraction. we have people sticking carpet under. you can have any kind of pencil get under to affect that. but that's still different from the sudden acceleration. i encourage you to continue -- you have multiple manufacturing plants in the state of indiana not in my area. we are more the big three. i also want to encourage you in addition to not treating us differently compared to japan and europe and safety questions and continuing to use american suppliers and doing your standards, the companies in my district are saying when you come in, you're aggressive making sure they have good

standards, but to continue to do that and i also encourage you -- i'm discouraged that a number of years ago you said your goal was to be the number one auto supplier to iran. we have rules in the united states about supplying iran. i hope toyota also reverses that position because, as americans, we arer very concerned about that. i would welcome any comments. [ speaking japanese ] >> thank groyou for the suggestions. we do not treat american customers any differently from europe or japan. just a matter of timing that there may be a difference in reacting or resolving the problem, but there is no way we can differentiate any american drivers from the rest.

>> the gentleman's time has expired. the gentleman from illinois, congressman quigley. >> thank you very much. >> thank you. my colleague from ohio stressed that he raised a point to get a more specific answer. i will briefly try to do the same thing as it relates to black boxes. clearly, other manufacturers make this black box data available to download. at this point toyota has proprietary technology that allows only toyota to download this data. now, beyond adding more the specific question is -- will your company redesign the black box so they can be readable by law enforcement, safety investigators and consumers? [ speaking japanese ]

>> it is true that we have one reader in the united states which can read edr. and we have made a decision that we will have a hundred units of them made available by the end of april. >> how will they be made available? to whom? >> this is made by our supplier. so it's toyota's technology. let me carry on. by middle, i guess, of 2011, prior to the law requirement, we will make this reader commercially available in this market. so there are steps that we had to take maybe because of that reason, but also for us it is very important to know the reasons of any accident and, you

know, getting into more technical details of that. of course, we have been always opening our information to the authorities' requests. >> but the other manufacturers don't make these entities hurdle to get this. it's just -- it's not proprietary. you're still making it difficult, even if you add more readers. as you say, information is so important. as we talked about before, one of our big concerns here is we don't know exactly what's happening. yesterday it was said mr. lints isn't certain a recall would solve the safety problem. again, we are flying blind and with respect, i don't see that what you're talking about is a dramatic leap forward to improve how much information we're getting with these incidents as

they take place. >> and as other manufacturers you are referring to in my understanding, to the best of my knowledge it's only again motors, ford and chrysler. no other makes are not ready yet, i don't think. so i think we are still among the early wave of that information available. >> with respect, i think that it would behoove you and everyone who drives your vehicles, including my family, if you rethought that and advanced the efforts to make this information available far more quickly than it allows and even in the redress attempts you're talking about now. >> yes. we are trying to, sir. >> getting to the main point made by mr. lints, he wasn't certain that a recall would solve these problems. it came down to the issue of

electronics and still a question there. what is your level of certainty as to whether electronics is a main cause of this problem? >> well, let me try my way. >> okay. >> my level of confidence is 100%. i think i have full trust in toyota's engineers. over 50 years, i think they have done a great job to bring toyota's name up to here. and i have no doubt they are still doing it. so, of course, all the exhaustive testing done at toyota, it is exhaustive in their mind. that's why we went outside to exponent. if that is not enough, we are willing to stand. we are just in the process -- just very close to announce what

mr. toyoda referred to as outside advisory board. this is going to be two very prominent -- i can't name it now -- maybe in a couple of days -- two prominent safety experts leading the panel to investigate this etcs of toyota, whether it is any -- i mean, whether it is any problem or it is robust. and they can choose any outside laboratory to test it. so we are now hoping that we can announce it fully so you will understand, but we are willing to take that sort of test through this advisory and they can be also advisory board to our overall quality improvement. this is what i wanted to say. >> thank you. >> congressman fortenbury from

nebraska. >> thank you for coming today. frankly, it is refreshing to see corporate executives show remorse in what is a very serious issue and to try to unpack the way to move forward on safety concerns with your product. with that said, i would like to ask you one question and then perhaps propose a creative opportunity for you to consider. is your corporate culture in america different than your corporate culture in japan so that the corporate culture in america is impeded from responding more quickly to safety concerns? >> if i understand your question correctly, is corporate america culture different from japan at toyota. is that the question?

>> it would be helpful to have an understanding if your corporate culture in america is fully free and independent to be able to respond quickly to the safety problems presented to them here. >> well, of course there is a difference. because our corporate culture in america is very much composed of so many americans, vast majority of americans and therefore, there might be a difference, but at the same time it is amazing that we see a lot of -- i personally see a lot of camaraderie. i have worked in this country nine years. so i have seen many of the toyota associates here, including our leaders and the corporate culture is very, very similar, to my surprise, to that of toyota value in japan. but there is also a difference, you know, in communication, i have to admit.

and there is sometimes, you know, a lack of communication because of the language differences, because of the cultural differences, too. so here i am being the head of this north american operation. i am called half american, half japanese. so i think i can bridge that gap very easily so that our corporate culture of customer first and then honest and transparency should be kept intact. >> so there is nothing in the american toyota corporate system that is not free or is impeded by the dominant corporate culture in japan to quickly address safety issues? >> it would be fair to say that there is none. but there is always a difference. >> i understand. >> i think my job is to sort of even it. >> one of the most significant issues here, of course, is the unintended acceleration. the earlier comments were

suggesting that -- and your executive yesterday suggested that what you are doing may not totally fix the problem. now in that regard, unintended acceleration has affected other car manufacturers. so i would suggest to you that you have a potential opportunity here, as the dominant player in worldwide automobile manufacturing, or certainly one of them, to perhaps lead on a new way of thinking about the safety problem, working perhaps in a consortium with other manufacturers, your competitors, working with the united states government. we had the secretary of transportation here to think more creatively and perhaps do the research and collaboration that shows it is this mechanical problem that we were demonstrating earlier or is there some electrical issue that has not been discovered yet that more collective minds working together could actually discover, and broaden the impact

of the safety changes for the entire car industry. [ speaking japanese ] >> translator: as the congressman pointed out, throughout the world toyota has been deploying and pursuing business in the world. i believe the corporate culture of things we treasure very much are commonly shared anywhere in the world. [ speaking japanese ]