i note it was about 18 months ago that the president was elected. i think it was 13 months ago to double taxpayer liability for the g.s.e.'s. nine months ago -- >> not to double liability? >> under the original preferred stock agreements? >> under the law that the congress passed, you gave my predecessor unlimited authority to make sure fanny and freddie could meet their obligations. at this point, they made sure they had whatever capital was necessary to meet those obligations. [captions copyright national cable satellite corp. 2009]

[captioning performed by the national captioning institute] >> credit card companies, community banks, hedge funds, finance companies, payday lenders, pawn shops, auto companies, but still no plan for the g.s.e.'s except seemingly unlimbed taxpayer exposure. so one member's opinion, mr. secretary, with respect to the timing, i just think that the timing is unacceptable. but let's talk abouted taxpayer

exposure. clearly, you are familiar with the numbers. c.b.o. estimates with the next 10 years $376 billion. we know there are trillions more of exposure there. so on the one hand i see treasury continues to monitor the situation. i guess my greater concern is, is there in fact a defacto plan perhaps not by design but perhaps by accident. i note that the chairman of our committee in january stated that fannie may and freddie mac are now, quote, basically public policy instrumentsíúu of the government. charles halderman said, quote, we are making decisions on loan modifications without being guided=ñ solely by profittabili. daniel mu fsm dd said, the government is running fanny and

freddie as an instrument of national economic policy not as a business. it appears to many of us, and i'll give you an opportunity to disabuse me of the notion or accept the premise that what we now have are the g.s.e.'s an instrument at of the administration to fund taxpayer funds into frankly a failed foreclosure plitgation plan with nothing else in sight. i'll yield to you, mr. secretary. >> our strategy is to fix this damaged housing finance market, to make sure this country recovers from the trauma caused by the recession. we're going to do that as carefully and as quickly as we can. as part of that process we will work with this committee to lay out a comprehensive set of reforms to the housing and finance system including the g.s.e.'s. but our obligation now and our priority now is to try to make

sure, again, we heal what is broken in this housing finance system and we help this economy dig out of this terrible mess. >> there is still no time-table for that, is there? >> as to what, the recovery? >> for a plan dealing with the g.s.e.'s? >> again, we're looking forward to having this debate about reform. you are not going to care more about this than i am. i am the one who has 0 to preside over a broad assessment of commitments -- >> it is a simple question. is there a timetable or not a timetable? >> we will spend time digging out of that mess and making sure we work with you to leave our cut country in a better situation. >> is there any, in your mind or the administration's mind, is there any reason that inherently we must have a government sponsored entity to securize mortgages in order to have a

stable home ownership in america because i know many other nages do not have g.s.e.'s? >> this is the central question as you contemplatevb reform. as i said yesterday, i think there is a quite strong economic or public policy quaste case for preserving designing some sort of guaranteey by the government to help facilitate a stable housing financial mark. it can't be the one we have today or we've lived with over the last decade, but we are likely to conclude, as our predecessors have that there will be some rules. >> thank you, mr. secretary. the gentleman from texas. >> thank you, mr. chairman. >> i also want to say welcome to our secretary.[, as you know, most of us and most of my colleagues are aware, april is national financial

literacy month. throughout that month special attention will be focused on efforts to increase the awareness of financial education and work ong personal finances, increasing personal savings and hopefully reducing personal debt in the united states. i work forward to -- look forward to work on financial capability issues with you as well as with michelle green your deputy assistant secretary of the financial office of education. i have listened carefully to many of your responses, and i agree agree with you that the system for protecting consumers in the mortgage market was and remains fundamentally flawed. and consumers should have the information they need about the costs, terms, conditions of their norts. we should be incorporated into legislation reforming the house finance system. i'm sick and tired of listening to some of the folks who signed

contracts and showing me the 20 or 25 items that were listed on fees. something very different than what it was years ago. i am pleased that the truth in lending and real estate settlement procedures will be placed under one roof in the consumer protection act. we should address my many concerns regarding the implement tation of both of these acts. mr. secretary, do you intend to provide housing counseling in languages other than english? >> did you say acounseling? >> yes. >> i believe that it is true today that the substantial support congress is authorized to give in support of counseling agencies across the country includes many nonprofits who provide those services in languages other than english, but i would have to check that for the record. >> i was pleased when i visited

the federal reserve banks in dallas that they are!zy supporting these financial literacy programs and have it in eight languages in texas, and it is not uncommon to have school districts that have 40 or 50 languages spoken by some of the limbedps÷ english profishent students, so this is something very important, and i know there are some of my colleagues in congress that don't want anything but english in materials used by some of our federal agencies, so i degree with that. i think this is such a big investment that it is important to me that this concern be addressed. fannie may and freddie mac as government-sponsored entities are responsible for helping many middle class families in our district in buying a home.

so it is important to me that they survive through these difficult times. what actions will treasury take to ensure that they survive? >> congressman, as i said, we will do everything we can to make sure they can not just meet their obstacle gages, but they can continue to play an important role in supporting housing financing markets as we work on the design of a better, stronger, more effective housing finance system in the future. we are completely committed to doing everything necessary to make sure we allow them to play the very important role they now play in providing a stable source of housing finance for this country as we try to dig out of repair what's broken in our fenl system. -- in our financial system. >> i have been a strong proponent of community banks because my district is one that has a very, very large number of community banks, and that is one of the sources of borrowing.

some of them bought stock from fannie may and freddie mac and took a huge loss. is anything being considered to help them so that their balance sheets can look a little better because of the losses they took? >> congressman, we have propose8 legislation to the congress that would establish what we call a small business lending facility and this facility would make capital available to small community banks so that they have more financial resources to support lending to their customers as wej]k come out of s legislation. and this legislation would establish a $38 billion lending facility. it involves very, very modest costs rvings and we:÷ think thi is one of the most important things we can do to help small community banks continue to get

through. >> what is the time table to make that happen. >> the leadership of both are considering taking up a bill which includes a set of tax provisions other senate mechanisms like the one i just described. >> thank you, mr. chairman. in your testimony you briefly talked about an tern fifth to securitization. he -- paul kanjorski and i wrote a bill. i wondered if you looked at it yet? >> i haven't looked at it yet. i know you have been a long supporter of covered bonds. we have a covered bonds system in the fhlb. anyway, happy to work with you on that. i think looking at the covered bond issue will be important in looking at in the agenda. >> would that be helpful to get done sooner rather than later this year?

>> i don't know. my basic problem when we are looking at financial reform of the private financial system in the united states, you want to look at comprehensively the full compliment of interests tuitions, but, again, happy to work with you on that part of reform. >> a couple weeks ago, the talking about, we had the budget hearing, i chose an amendment that went down party lines which would put the g.s.e.'s on budget. back then i asked -- chairman bernanke and i asked him his opinion of this. i also asked him another question, and i'll ask you the same question. is the debt of the g.s.e.'s sovereign debt? >> congressman, you know this is a very technical question. the appropriate accounting treatment of fannie may and freddie mac and there are obligations.

>> let me give you two opinions -- >> yes and no? [laughing] >> g.a.o. agrees with the judgment we have made. it does not think it is appropriate for us to consolidate. we follow that basic model. on your second querks let me repathe peat again what i said in my written and oral statement. we will do everything necessary to make sure these institutions have the capital they need to meet their commitments. >> i understand that from reading your statements. i am not a chairman of the fed. and the chairman also recognizes and understands the difference because in his statement he says "i have noted the fanny and freddie debt did not have legal standing as treasury debt" so he recognizes there is a distinction between sovereign debt and g.s.e. debt. >> they are different. i want to emphasize in saying that they are different i want to make sure you understand that

again we will make sure they have the financial resources necessary to meet their obligations. >> and i undp. and the chairman says the same thing. although the chairman did say, i believe, thout the debate we will make sure there is no implicit guarantees, hints, suggestions, winks or nods. we will make sure it is explicit. with the debt we are incurring, is that on the same standard of the existing debt that is out there? >> by the g.s.e.? >> yes. >> yes. >> whether he says we should have no implications we are nodding and winking -- >> no, we are not doing any nodding and winking. we are saying very clearly, we will make sure using the authority coong gave us that these institutions have the ability to meet their obstacle gages present and future.

>> so the chairman is incorrect when he states there is a distinction between the debt they have and sovereign debt? >> no, i don't think so. you know the answer to this question. they are different types of obligations. but i want to make it clear that you understand we will use the authority congress gave us to make sure they complete their agreements. >> it is not sovereign debts, but it is debt we will stand behind. >> i will try to answer it the same way i already said it. >> is it sovereign debt? >> no. not in that sense. >> well, that's good. >> i want to make sure -- >> it is debt we are going to stand behind. >> we are going to make sure these institutions have the resources they need to mee meet their obligations past and future. >> and i understand that.

it is not sovereign debt, but it is debt we are going to stand behind because congress has given you authority to stand behind that debt. >> for very good reasons, yes. >> i still have 30 seconds left? >> three seconds left. we'll make it 10 more now. >> do you have any comment on the fact that bloomberg is saying that the bond market is saying to lend to warren buffet than to the administration? >> i would agree with that comment and i would say the following -- it is very important that the congress work together to make sure we put in place over time a set of policies that will bring down our fiscal deficits to a more sustainable level. that is very important to the strength of this economy. it will be important to the future growth of the american economy economy. we look forward to working with members on both sides of the aisle to bring those deficits down to a sustainable level. >> the gentleman's time has

expired. tom -- the gentlewoman from new york. >> thank you, and welcome again, mr. secretary. listening to the divide, -- debate, i can't help thinking about how i bought my first home years ago, in nursing. back then they didn't make ever money. so every door was closed to me as far as buying a home. it was my parents home. i was a good risk. it was through the g.s.e.'s i was able to get a loan. never missed a payment. paid it off. so there are a lot of us out there that certainly took advantage of it. statistics, the majority of middle income families will do everything they can to make sure they always pay their mortgage so they have a roof over their head. that's their dream. that was my dream. so i was just curious, when we

started going into this spiral downfall, and with the g.s.e.'s and also with the subprime lending crisis that we saw rblingt -- saw, who actually had the worst record? i know in new york city, we had -- i was reading someone's testimony that 13-20,000 loans defaulted. that came through a housing agency. so we need to look at things, how to change things. but i agree with my colleague that financial literacy is going to be an importantj> very good question. the program that we have put in place to make it possible for homeowners to restructure and modify their loans is now reaching more than one million americans and what this means is that for more than -- for one

million americans they have substantially lower payments which on average are providing $500 to $600 a month more in the pockets of those families than they had before those mod fantastics and we are trying to make sure that as many of those as possible are translated into permanent modifications, and we're going to keep working to make sure this program reaches as many people as they have so people do not have to leave their homes and can stay in their homes mple >> i just -- just one other question, too.57qi u)u$ obviouss and they have the backing of the federal government on that, there are going to be a lot of homes that probably will not be -- they are foreclosed now, they are sitting there. what are the chances of turning some of those homes over into rental properties where people are getting back on their feet again? >> i think there are substantial opportunities for doing that. again, i would be happy to ask my colleagues at faha or h.u.d.

what they can do in those areas. >> the gentlelady from west virginia. >> thank you, mr. secretary. i would like to talk about this a little more simplistically and maybe a little more globally. i got the report this morning that existing home sales are down again for the third straight month. unploifment, as you mentioned, remains too high. we have witness after witness particularly from the financial institutions asking why they are not lending or why people aren' borrowing, lack of confidence, uncertainty. my question is, in this is the lack of a certain plan forward with fanny and freddie leading to the uncertainty as well? i will just give you a for instance. speaking with a community banker

several weeks ago asking him why you are not getting into the mortgage market because the f.h.a. is taking up so much more of the mortgage area, and he said, maybe if you would give me a loan guarantee, maybe i would get into that a little more. are we, because of this, all of the government involvement with with fannie may and freddie mac and dollars and just what you said that we will back up the debt of fanny and freddie, could that be part of -- i know we need to do it slowly, would could it be part of maybe putting it in some mud and making it go slower? the confidence is not rebounding the way we need it to in order to get out of this flood that we're in? >> i don't think so. let me give you my sense of this. if you talk as we do, and we all do, with community bankers across the country and we ask them what'smk happening on the lending "seven on your side," generally they say loan demand

is low. they say supervisors are being very tough on us. to some extent they say they want to know what the rules of the -- they would like to know a little more -- with more certainty what the rules are going to be going forward. i think those are the principle factors of the conditions affecting small lending institutions. i think we can do something about those. the chairman of the deped and the chairman of the f.d.i.c. can make sure their examiners are not over-doing it. we can make sure that we provide capital to small community banks so they have an ability to get through this. if we pass financial reform that will bring clarity to the rules of the game that will be helpful. but i don't believe that what fanny and freddie are doing now, i think it is overwhelmingly

constructive to the process of repair of housing and finance. >> but it is the base of -- but is the base of a -- but if the base of a good solid recovery is going to bezv housing market bouncing back. would you agree with that? >> it will. it is hard to tell the timing now. part of recovery will be more durable housing financing crisis and you will see the housing market come back and take back of the business of housing finance that is now dominated by fanny and freddie and some of the f.h.a.'s. >> on a different topic, and we talked about this a little bit. is that where we have done the $1 billion million modification? is this affecting the bottom line of fanny and freddie at ale? are you concerned about the redefault rates on some of these modifications in terms of the ones held by fanny and freddie?

>> no. the way this bram works for both a private lender for fanny and fend freddie, they do the mod fantastics if the economic value being modified than it would be in foreclosure. these modifications do, they put fanny and freddie in a better position, not a worse position than if noñ"m were happening. >> we are still having redefault rates in those. >> given how high unemployment efforts are across the country, you will stilliéu see redefault rates happen. it is inevitible. we want to make sure we help people who lose their jobs and face the risk of losing their homes, but you will see some risk of redefault rates. >> thank you, mr. secretary. >> thank you, mr. chairman. welcome, mr. secretary. i think one of the major weaknesses in our housing finance system is the

securitization process. i was happy to see that you called that out in page five of your testimony and devoted a section to that. there was an article, i'm not sure if you saw it in this past sunday's "new york times" by gretchen morganson where she points out much of the difficulty with the mortgage-backed security part of our crisis was rooted in the opacity of these products. part of the problem, obviously, was the ratings and valuations that were assigned to these mortgage-backed securities were completely wrong, but because of the complexity and the opacity, folks were induced to rely on just the rating. that was a real problem. as ms. morganson points out, the bank of england has just issued an advisory, i think they call it a consultive report, and the

bank of england risk-manú: division has recommended that -- and they face the same problem. because in england, the collateral is being posted using these mortgage-backed securities. j to what we doing here. and what their solution is, what they are recommending is that there be more useful information, additional information, supplied by those, the issuers who are creating what these mortgage-backed securities, so that individual parties, the market, the banks, will be able to look through and actually vet them themselves rather than relying on triple-a. i think in our own situation with the feds doing what they are doing, you know, i think especially --kuy you know, theye posting collateral in much the same way. is this something that -- i

mean, this is so important. this is such a critical part of credit formation here in this country, it is a greatop thing the securitization if it is properlyly used. it this something we need to look to in trms of getting more information to the market to they can determine this object a -- on a rolling basis, not just a static rating when the issue comes out, but ongoing? >> i agree with you. i think you said it well. bringing more transparency to those structures so investors can look through them, understand true risk in them is very important. it is also very important, as many of your colleagues know, that to bring more transparency to the rating process themselves. we would like to see rating agencies he -- compelled to disclose more to underpin those ratings and we want to make sure that in the regulatory system

that supervisors preside over they are not creating assurances in alliances of ratings. we think that would make a big difference. >> let me ask you about that. in your report it is a little vague about the reform of the rating agency. you do mention it. but can you drill down on that a little bit? >> the reforms that this committee has embraced and which were at the center of our proposals had two pieces. one was to give the s.e.c. the authority to police conflict of you don't want the judgment skewed by model these fimples have been operating -- firms have been operating with. you don't want their economic interest and the issuer assigning excessively favorable ratings. that's very important. the second was to bring more transparency to the rating process. make sure they have to disclose

more information about the implications. that way the investors can bring an independent assessment about whether ratings make any sense. again, the big mistake to underpin everything that happened in the housing markets was that everyone made a judgment. almost everyone made a judgment that house prices would not fall in the future. the ratings were too favorable because of that. there was too little capital because of that. it was a systematic failure across the g.s.e.'s and transparency will help in that area, but we also have to make sure we put in place stronger capital requirements so we aren't vulnerable to those in the future. >> thank you, mr. secretary. i yield back the balance of my time. >> thank you, mr. chairman. mr. secretary, my questions have to do with the projected losses that are the existing losses that are in fannie may and

freddie mac. are you fairly confident -- do you have any confidence that the loans are being originated today and have been originated in the last year are high will have quality loans and are not of the same quality of the loans that were originated in the previous three years? >> congressman, my sense is that the underwriting standards today are much stronger than they were. and i think the people who have looked at this question carefully say if you look at what they are doing today in terms of new guaranteees and how they are pricing them for those guarantees means that the business is in a more stable footing today than it was. >> with respect to the ability in the long term of having fanny or freddie or a successor agency repaying or earning back the

losses over a long-time horizon, do you see that as a possibility? . i would like to explore the bridge loan, the loan that you are making from the treasury to fannie and freddie every month to meet their obligations. and i would like to explore it in fact that government or the treasury -- if in fact the

government or the treasury is going to have to take some losses eventually on these loans. what went into the judgment call of charging fannie and freddie such a high rate on the loan it is making to fannie and freddie, if in fact that only adds to that long-term debt and may exasperate that long-term debt, why are we not dealing with that lower-cost facility? is this money coming out of tarp? >> those are very good questions. this is under the hera authority, not the tarp. i have been carrying out those

responsibilities. what we're doing is making a careful judgment of how best to minimize the extent of losses that taxpayers will bear, max amass promoting a recovery in the housing markets, and we're going to do the best job we can to make sure that we've reduced the risk of future loss of these institutions, and we will look at the broader terms of our engagements. >> you see where -- >> i can see where it would not make sense to charge a punitive raid if we are charging ourselves that. >> a small bank can learn you the money to make the car loan, you have a $14,000 car loan and i don't know what would have

been accomplished here. >> i understand the point that you're making. we reconstructed some of the dead in concerns -- in part due to those concerns. but we want to reduce the risk of all the ones. >> thank you. >> the gentleman from indiana. >> thank you mr. chairman. thank you, mr. secretary, for being here. i think one of the things that has caused continued housing problems is obviously the on in "-- the unemployment rate, that people cannot afford to move into homes or purchase homes. a huge portion of the unemployment difficulties, at least in my area of the country , and it continues to be so, and i have a business after business after business to in trying to

-- they have had their lines of credit cut, not because they missed the pavement, but because the their sales were down 4 1/4. -- for a quarter. they had spent a eight year getting down to the lower line of credit, selling equipment, laying off employees, and telling me they could be adding employs if they were not in this situation. we have jobs bill after jobs bill across the street. the real jobs bill, the folks in the shop tell me, is having a normal credit situation. where are we going to be as we move forward on this? >> you're absolutely right. many businesses are suffering from this environment, even those who have very good payment

history. you're absolutely right. we have a small business package of incentives and assistance, with three important components. one is a series of tax measures for small businesses, zero capital rates on small businesses, or payable expenses appreciation, which we think will be very helpful. the second includes expanded authority for the f bm, and we propose a $30 billion small- business lending facility that would make capital available for small banks so that they could do loans to their customers. we think giving capital to small banks is one of the most effective things we can do. it can happen very quickly if congress gives the the -- gives us the authority. without that capital, it's hard

to raise capital and the private man -- markets. we think the tax incentives, that support, and the lending facility will make a big difference. >> here is the other conundrum. i get e-mails from my friends who are in businesses that said the banks will not lend us any thing. the banks command to the office and they say, we have money to land and we're looking to make good loans. so you tell me -- how do we put these two sides together? the lawyers what typically happens is that you have a bank that may have been are well-run bank overtime but may have been very exposed to commercial real estate, it has customers it is working with for 30 years, and they find themselves because of judgment and commercial real estate having to reduce exposure to the customer. in explaining that to their

customer, they often say it is the supervisor not letting us land. as i said earlier, part of what is happening is that supervisors are being tougher than they were. that is making these problems worse. part of the solution is to make sure chairman barron and chairman bernanke and their colleagues and supervisors are sending a more balanced message. >> that is the message that i would like to give you those. we want to make good loans, not bad loans, but at the same time we want to have supervisors who are understanding the entire economic picture here, that there are good loans that do not have to be extraordinary loans. it is really choking the lifeblood out of a number of jobs that are available. when we get these jobs back, people will be buying homes again. >> i agree.

businesses will see a growing demand for their products again, and they cannot meet that demand because they cannot get credit to add more equipment and apparel. it is a critical problem but congress has a chance to do something about it now. that would be alongside what the supervisors are trying to do. >> i would suggest that the message is that the best jobs program of all, because they are jobs that can come back, but they cannot do it without capital. >> the highest return on the dollar of tax payer money. >> that is our small business guys making it happen. thank you, mr. chairman. >> will now hear from the gentleman from california. >> mr. geithner, good to have you here today. a lot of people in this country

do not realize that fannie and freddie did not hold their loans, which is interesting. 92% of the loans in this country are made by ready and 80 and the fha to date. -- fannie and freddie and the fha today. i am not here to defend them but i am looking at the reality. freddie and fannie mae and some tremendous mistakes. i am looking at the serious delinquency rate in this country, and annie has about 5.3%, freddie is out 3.7%, but in the private sector, jumbo's art 9.6%. in my congressional district, they are performing better. in l.a. county, the jumbo market is at 10.1%. in orange county, fannie and

freddie are 2.1% delinquent, jumbo is 8.9%, fha is 1.4%. in san benito county, 7.8% which is alarming, but the jumbo market is 20.4%. we need to allow the private sector to come lately control the secondary marketplace and get fannie and freddie out of it, but i am concerned that if there was a viable alternative to a gse, where was it in 2006 and 2007? it was not there. at the same time in the mortgage-backed security market, the booming part of the market was the group that sold terrible bundles to the private sector. many of fannie and freddie's losses were because when they

sold the securities, when they take that nonperforming loans out, and replace it with a performing loan, nothing country wider anyone did matches that. the way that they bought the securities, when the investors lost them, they invested in the market and they bought ads were asleep mortgage-backed securities -- actually worth less mortgage backed securities. i would appreciate an answer to that. >> i think you're exactly right. you look at the record of what happened, the most apology -- the appalling damage happened outside of fannie and freddie and happened and thrifts, mortgage finance companies, specialized finance companies. fannie and freddie's prime portfolio today has better quality day than the average across the market.

i think you're right in the basic emphasis, and right now you are right to emphasize that the only game in town are fannie and freddie and the fha, and it is very important and that they in this transition period -- and it will not going -- you will not go on indefinitely, but they need to continue to provide mortgage finance if we're going to deal with the damage across the country, including california. i have not seen an ideal model yet on what to replace this current system with. i think that we will have to take a careful look at how to design a better form of guarantee and support. >> and i am open to that. i am not assuming we have to have freddie and fannie, but what we do if we do not have them. in fact, nine years ago, we talked about opposing that. i am one who had the amendment adopted in high-cost areas.

and i assume that my colleagues disagreed with me. but as i understand it, fha and fannie and freddie, the best performing loans they are making are in high-cost areas, is that true? >> i do not know but i would be happy to check on that. >> the question is, what are the key structural improvements necessary to prevent governments from distorting the marketplace, because some of said they had shorted the secondary market in places. what can we do to resolve that? >> this is an unfair -- much more complicated problem then my answer suggests, but there two things that happened that we can prevent should prevent. we should not allow them to operate with the expectation of government support to build up a huge portfolio with a lot of risk in it.

>> i agree. >> and although economists disagree on this, fannie and freddie overtime did provide guarantees for lower quality mortgages without charging appropriately for that guarantee. the first was a greater mistake, but whatever we do redesigning the system, we need to avoid those errors. >> and the only time that fannie and freddie ever lost money was the year of 1985. other than that, there were profitable, and maybe congress did things to distort their mission and get them headed in different directions, and we need to go back to a time when that mission was not distorted, when they were making troupe performing loans that met the criteria that they specified. i yield back the balance of my time. >> will now hear from the

gentleman from florida. >> thank you very much, mr. chairman. mr. secretary, during this committee's last meeting, i believe, we heard breaking news that said fannie and freddie executives receive millions of >> in bonuses -- millions of dollars in bonuses, all the while this meltdown was continuing. i just wondered if you had any part in signing off on these bonuses when you met on december 24, 2009. >> they are -- they are responsible for proving the compensation packages. they reach that in consultation with someone i appointed. >> is that a yes or no?

>> i was not involved. >> that is all i need. i do not have much time. i'm going ask my questions, i will ask the chairman that you respond in writing. if by somebody what time it is, they start describing the clock. i wonder why we can never get an answer on you on a comprehensive recovery plan. we have testimony and we hear their same old rehashing. we never had any real plan, comprehensive plan for recovery. number three, i wonder how much longer we're going have to wait for a plan. what information anyone could still be waiting on to come for with the plan -- fourth with a plan. seriously -- the administration has serious credibility problems. the abrupt fade on taxes, not to take over personal property --

you know the stimulus has failed to do -- >> i do not agree with that. >> your words were that it would not exceed 8% employment and now it is 10% ample -- unemployment. there so many fair and legitimate questions that we can i get answered. when and fannie and freddie maze, conservatorship been? this is how we're going to go there. i don't think those questions are out of bounds at all. and number five, our creditors are worried about the failures of fannie and freddie, and of course i think it has been as before -- how do we prevent too big to fail fannie and freddie going forward?

these are questions congress passed to know. we cannot wait forever to find out. the board you do not have to wait forever. >> you do not have to wait forever. we are finding out today what you would like restructure the financial system. this is an enormously complicated question. we look forward to working with you to fix what a croaking in the system. >> what about the last year, what did they do? [unintelligible] >> if you worry that we have been idle, let me point out that we inherited the worst financial crisis in 75 years, since the great depression. >> who inherited it? >> this administration and this congress did. >> this congress has been run by the same majority for three years. i am sick and tired of hearing that we inherited it.

i am looking for some answers. >> we look for it to working with d on how to read formed the tse's -- working with you on how to reform it gse's. >> but no answers. >> we have laid out a detailed system of principles, what was broken and what caused this crisis, and that is a good foundation on which to build. if we do not agree on what was broken, we cannot begin the process. we're going to go through a process with this committee to consult with people in the private sector, and the academic, among republicans and democrats and figure out the best way forward. >> so you still do not have a plan. >> congressman, again, and you're asking us to design in the midst of the worst financial crisis in a generation -- >> every business in this

country is suffering right now and they are working on a plan for recovery and they are doing it in a crisis. >> and we have done extraordinary things and this economy is growing dim. when we came into office, when this congress came in, the economy was shrinking at a rate of 6% a year. today, because we actually acted as a country, the economy is now growing. things are dramatically better than when we took office 15 months ago because of the actions that we to. this house of representatives has passed the most sweeping set up financial regulations contemplate a new that -- since the great depression. we are on the birds and today we have a chance to begin a conversation about how to reapportion the -- reform the gse's. we will take the best ideas on both sides and propose some and

if the reforms. >> the gentleman from texas. >> thank you, mr. chairman. today we're talking about reforms and the house and financial markets which i think it's crucial and very important. my concern is that it has not been a full explanation on understanding how we got into the mess. so far what i hear is that we will deal with the problems with more technical solutions and more regulatory solutions rather than looking at the fundamental causes. to me the fundamental causes are well understood by the austrian free-market economists because they predicted early on is exactly what was going to happen, and it did. and i put the blame on three things -- big sink interest rates too low for too long, and also the line of credit with the

federal reserve, something that congress did, even though it was $2 billion, a created moral hazard because even greenspan admitted there was a $14 billion in direct subsidy to fannie mae and freddie mac, which also encouraged the distortion, and on the books, it was legal for the federal reserve to buy more -- mortgage debt. of course there note -- there were no restrictions because it was done in secret how much credit was created. because my concern and understanding of what was happening in july 2002, i was convinced that we were working on the financial bubble, and i introduced into days -- introduced legislation that would of remove the line of credit from the treasury as well as prohibited the fed from buying mortgage debt, which most people would object to. this was an emergency! but that is what caused the moral hazard.

and that was for the benefit of the selling debt overseas, encouraging foreigners to buy it, knowing the treasuries stand behind it and the federal reserve stands behind it. when i introduced that legislation back in 2002, by transferring their risk of widespread mortgage default, but government encouraged the risk of a painful crash and the housing market. the system could have staved off the risk by pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market. postponing the necessary but painful market corrections will only deepen the inevitable. that is not too much -- my statement coming out with that of my own, but i endorsed free- market and austrian economics, and i do not see any understanding of that coming

from our leadership in the congress or the treasury. i take it is so crucial that there is this understanding. so my question is -- are you familiar with the explanation of the austrian economist of the business cycle, how bubbles or form, and what we should do it? you shake your head yes. if you understand that, which part of it you not like and why don't we look more carefully at those economists? they were right 10 years ago, i believe they are right now -- why are they not consulted? >> congressman, i agree with much of what you have said. i think you're right to point out that a long period of low interest rates put it -- played a major role in this financial crisis. you are also right that moral hazard played an important role. most dangerously and fannie and

freddie. those institutions were allowed to grow to enormous size, take on enormous risk without capital to support those limits because of the expectation that government would come in and protect them. i completely agree with you. >> i wonder if i can get one answer. my bill -- would that be a proper thing to do now to make sure that line of credit and its inevitable purchase of this kind of debt from the fed, we should restrict that or remove it? would you agree with that? >> as i sat in my statement, when we think about what system should replace our current system, a critical part is to make sure you do not have institutions tied to shareholders taking advantage of a subsidy from the government that leads to taxpayer exposure to these risks. a centerpiece of the reform will be dealing with the moral hazard in the current framework. >> doesn't the monetary system

bring this in? but that is designed to be the lender of last resort. they are there to be there to pick up the pieces. >> you said it was different. because there was a credit line and expectation that the government would be there. >> the concerns were born out because that is what happened. the government picked up the pieces and now we are in a bigger mess. >> the gentleman from illinois. >> thank you, mr. chairman. mr. secretary, hank paulson, the former treasury secretary, wrote in his book that in september 2008, the treasury issued -- on

page 10 of your testimony, the purchase agreement. encouraging banks to purchase these. this was done at the same time to help satisfy the chinese government, which on billions of dollars of fannie and freddie bonds, which were paid off in their entirety. now we have these banks that were intentionally misled, potentially deceived to by fannie and freddie preferred holdings, and then after the government said by these, the government just defaulted and stock all those banks.

-- and stuck all those banks. big time. at the same time you're considering a capital program for small community banks. my question for you is, when i look at the objectives are reform -- of reform, and this is the guideline, i do not see anything in there that addresses whether or not these community banks should be treated the same as the chinese. that would be made whole when they were intentionally misled by the u.s. government to buy these bonds that turned out to be worthless. >> congressman, i cannot speak adequately to the judgment my predecessor made. >> i understand. i am asking you if you have a solution for these banks that guy stuck? >> one of the most powerful things that we could do to get through the challenges ahead is

to put in place at capital facility ability to come to the treasury and apply for capital for small business lending. i think that would make a big difference. >> but getting back to the preferred stock purchases, and getting back the money they paid in the first place and not worry about another exotic program from the federal government. >> i understand those concerns, but small banks across the country face a lot, -- challenges, not just those that hold fannie and freddie preferred stock. that is why small businesses are having a hard time getting credit. >> bat and the fact that the regulators have really -- matt and the fact that the regulators have relate tightened up, the regulator said that they have not come up with the peace -- but they are making what credit is available even tighter. we have a situation where my question is, the treasury is part of a default program, are

they willing to treat the community banks the same manner in which they treated the chinese in making sure that they were in indemnified on their bonds? >> i would be happy to spend time with you and look at this in more detail. . >> i would have to think about

that and get back to you. >> that is fair enough. thank you. the secretary has now excuse yead you. like to thank you i think we had a set of questions answered in a reasonable way, and we will now call the second panel.

if >> is in a few moments, a news conference with david cameron. in a little more than a half hour, a british prime minister gordon brown at the foreign press association in london, and after that, president obama signs the health care bill passed by the house sunday night. tomorrow morning, an examination of the government's role in housing with the economic policies if reporter for reuters. henry cuellar or questions about drug trafficking and violence along the mexican border.

adam gelb at what prison populations have declined for the first time in nearly -- looks at why prison populations have declined for the first time in nearly 40 years. google closed its search engine in china this week because of concerns over government censorship. tomorrow, a commission made up of members of congress and obama officials will look at internet regulation in china. live at 2:00 p.m. eastern. >> which president was very wrapped in an american flag and a constitution copy under his head? andrew johnson. find these and other facts. >> a guide boat, but it is also a mini history, biography on

each of these presidents, and you can tell a lot about people at the end of their lives. >> a resource guide to every presidential graveside, a story into their final moment. now available at your favorite bookseller, or get a discount of the publisher's web site. type in "ghraib assume" that -- grantstomb at checkout. >> it is david camerons news conference. it is a half hour. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> before i take your questions, i want to talk briefly about two things -- the scandal that has blown up in the last two days in the budgets that will happen tomorrow. first, anyone who watched any of

the programming last night could not help but be disgusted by what they saw. four ministers talking about being cabs for hire, saying they were too ill to meet constituents but apparently have plenty of free time to make money, and yet a conservative suggested he would get a purines. i can tell you that is not going to happen. a couple months ago i warn this was the next scandal about to happen. i am not claiming to be some sort of great forecaster. the fact is the last government ended with scandals like this. the current government is ending with scandals that are frankly

words, and i am sure if we win the general election, corporate interests and will be all over the new government like a rash. that is why i want to do something about it and do something now. we are going to make absolutely sure e mr.x not able to use their knowledge of government for private game -- gain. we will put the committee on a statutory basis, so ignoring its advice will be an offense. the first task of incoming government will be to instruct the prime minister's advisor to undertake a full review of this episode so the government can learn the lesson of what has gone wrong and change other rules necessary to make sure it does not happen again.

we also have to put a stop to the practice of one part of government lobbying another part we would also look favorably at all other suggestions, including those on how we can regulate lobbying. let's be frank. we cannot be sure any of those changes would actually stop the situation in the program last night. that is why we need a proper inquiry. the case for one is i think incredibly strong. steven myers said he did not lobby. he said the kolb peter mendelssohn and thought regulations change. -- said he called and got regulations change. we need to see if e-mails and

telephone logs, those things, too rapidly establish what happened. it is surely serious enough for a brief but comprehensive inquiry. gordon brown has decided to rule out an inquiry. i believe he needs to think again. the latest revelations last night about trips. this seems to be a problem of a different nature. it is one where there are clear rules, but they were not adhered to. we will look at the penalties that apply when rules are broken. let's be honest about what is happening to british politics. our political system is looking ever more ragged. why? we depend on public trust, and that has not just been damaged. it is in danger of disappearing altogether. every time we pass of one part, another crack appears elsewhere.

we need to start from scratch. we need a new parliament, new government, new energy to fix this broken system once and for all. after the election, we will have an opportunity to bring about real change, to bring accountability throughout the political system, to the debt every option for restoring trust and confidence, and above all, to ensure a new generation of parliament and ministers understand the discuss people feel with politics today and who are determined to put things right. let me turn to the economy. tomorrow we have the last budget of the parliament and what i hope as the last budget of this government. there is the whole load of giveaways of fronts, but the nasty stuff is stashed away, something else we need to

change. this year we are going to do something slightly different. instead of taking over the small print ourselves, we want to grow so everyone can see what labor is hiding. i am going to publish the budget on the conservative website in a readable format, and we will help people logon, have followed, and help hold the government to account. from what we know already about the content and ambition, it is clear of labor has completely run out of ideas to answer questions the government needs it to. we have got the biggest budget deficit in the developed world. we had one of the weakest recoveries.

this do nothing attitude is last thing we need today. the country is falling out for urgency and action. we need action now. labour says if you so much as cuts the deficit, the country will go back into recession it is not taking actions that risk recovery. it is inaction, putting things off while our country slides into the danger zone of lower confidence and higher interest rates. everybody knows, the longer you leave it, the worse it gets, and it is time for government to learn the same lesson. there are a whole lot of people lining up, the institute of directors, many top business people. all of them are saying we do not have time to waste. we need urgent action to get growth moving in our economy. it is my fundamental belief it is not up to government to grow

recovery. it is business. the economy is going to recovery when we get the private sector going by boosting enter praise, and i want everyone to know how a reading boosting enterprise, and i want everyone to know how i'm -- the economy is going to recover when we get the private sector going by boosting enterprise. of we can do it. just weeks into the government, we will abolish national insurance for the first 10 workers taken on by new firms, we will stop red tape, and across the economic policies for welfare, the banking reform, and will do everything possible to get under for norris and send out the clearest signals britain is open for business. that is the difference revealed by the budget. labor says, stick with us.

we say, we are stuck with you. nothing is moving. we are stuck with your debt and your ways and taxes. it is time for fresh thinking. today it is only the conservative party that can get our economy moving and get our country going again. thank you, minister. adam? >> humans -- mentioned this matter, but we also have the ashcroft a fair. wouldn't it be better to say that you would not be putting in one forum for carriages -- forward for pierages. >> i think what we need to do is

have an elected house of lords. i do want to achieve that. there are so many things that need to be done that i do not think that is an early priority. there are times you have to create new ones for your if there was a conservative government there would be new people. they should go through the most rigorous process of analysis by the commission, which is on a much clearer basis. they should all be people that are proper. they should all bring things to the house of lords. you cannot simply say we're not going to make any appointments at all. it would actually restrict your ability to run a proper government. >> you have said the government

has 31 billion pounds worth of unspecified spending cuts to make. can you confirm if you are elected you will have more than 31 billion pounds of spending cuts to make? can you tell us how much more and how fast you will do it? if not, why won't you let the public in on that secret? >> we say you need to start earlier, and i still hope even days before a the budget the government will give of its stubbornness of saying there is literally nothing we can do about public spending programs in coming years. it seems a ludicrous position, but i would say, let's look a spending and see if there are not savings we can make. let's see if there are not programs. i think that should be done. that is absolutely what needs to

be done. when you have a problem, it should be done. you can then respond afterwards. >> have you clearly signaled he would go further, but you wouldn't say how much deeper how much faster? >> first, we said you have got to remove the votes. we have started to set out not fit easy choices, not just getting ready of the id cards, not as cutting ministers pavey. we set out difficult situations as well, asking people to retire

earlier, saying trust funds should not be paid for people, so we have artfully so difficult choices the government has refused to do. >> you had an interview where you send you would find out. have you now found out? >> in the european union parliament we have a general approach of nonvoting on internal matters of a country even if we disagree on a particular law. i think it is a balance to get the right, but i 50 if you believe the european union should be about cooperation, that actually does make sense.

these are internal measures. nobody can have any doubt we support equal rights, that we think being a strong party, for people whether they are straight or gay or black or white or woman. >> to insure a change is lasting, don't you have a duty? >> i think the change has been lasting and irreversible if you take the issue of gay equality, you can see we have the civil partnership. we support equal rights for people who are gay.

>> congratulations on the baby news. i wonder how you felt about your wife moving towards labor. >> that is not quite the way i see it. we're very excited about having a september baby. the timing is not absolutely ideal, but we were very keen to have another baby. >> the question about state funding for trade unions. given the enormous deficits, and the country afford to continue paying millions of pounds through the modernization fund, and given the chaos in civil service, the using taxpayers will think that is a good use of money? >> there is the union modernization fund, which we have always opposed.

on many occasions we have said we do not support it. they said it would be suspended, so the deals with the modernization side. the union learning fund is different. many can only go to union training schemes of fairfax for the company itself. we do better workplace learning and training schemes. we want to make very sure there is no recycling of money going into the unions and off to the labor party and all the rest of it, and i think there has been sort of a boom in recent years. >> first you said with interest of transparency, does the mean

you would publish all correspondence and discussions with the chancellor? the second thing is picking up what you said about the cuts for 2010, you face of criticism for saying unless you make those cuts, we will lose our national economic sovereignty. and people point out we only have $1.5 billion -- 1.5 billion in cuts. you say we have lots of ideas, but the outline -- the ones you outline never go beyond. when are you going to go beyond those three areas? >> the whole point of the budget is to hold the seat to the fire and to report regularly on what is being done.

what is being done is taking a towards the goal they have set out. the whole point is transparency. the whole point is is is an open process. on 2010's, of we have said some of the measures could indeed come into place in 2010 -- coming to place in 2010. at a late stage they could see some common sense and recognize if we have a problem, it makes sense to start dealing with it, and we can judge them sometime tomorrow afternoon as to how they are getting on. >> is it still your policy to

have a fair fuel stabilizer? if so, would that come in straight away, and what would that mean to those facing prices of 120 p a liter. >> we do think this is a good idea. we think these endless undulations are bad for motorists. we never set a particular price, but the idea was to create some certainty and protect motorists from higher prices. >> in the interest of transparency, some of the things are reactive could you

proactively tell us if the party is spending money on the run-up to reelection? how much is a conservative party spending? >> i am not aware we are spending money on lobbying firms. i will have to check for you. we spend money on outside advertising agencies, creative agencies are not aware of any lobbying we are spending money on, but i will certainly get back you with an answer. >> can i ask you about your tax

on offense? -- tax on banks? how punitive will the levee, and how to do should if the region will it be, and how punitive should it be? >> i think it is an issue of moral hazard. the banks are in a special place. they have the backing and support from government, and they are able to speculate and make money and undertake all sorts of quite risky activity, and we think that has to be addressed because they are in a special place, and i think what president obama did in taking steps to address it were good. one is to say here are some activities they should not take part in because they are too risky, and the second to have some sort of levee that recognizes they are in a special situation and are not able to go

under, so they ought to be able to make a special contribution with respect to that, with respect to the wholesale borrowing and lending they do. the best thing is for international agreement and i think there are good signs that can happen the prospects are very good. we should go ahead with this, even if you cannot get international agreement. you would be much more limited because we do not want to send banks offshore can disrupt in any way a susceptible industry, so you have it there. i think it is possible to have a

lovely because of what they have exercised in our economy. >> he can look forward to a long career, but given that he is one politician who stands accused of offering cash for some access to senior conservatives, is inappropriate for him to stay in the party, and the you have any intention of suspending him while he is investigated? >> i think the right step is to assert himself. it does seem to me that withdrawing a writ from someone two weeks before the election is not the best form of punishment. it seems to be what i said this morning. >> isn't one of the big problems with restoring trust that in

these films release their own affairs -- that members of parliament still release their own affairs? isn't it time for radical reform either to have laypeople in the body over put that in the hands of an independent body? >> this goes to the heart of the problem. there are issues with the way the committee works. if anyone looks at the recent judgment, you do seem unfair judgment, and i am willing to look at all and any ideas for increasing its effectiveness, its fairness, changing its structure. also, the issue of whether some penalties are more automatic. it does seem perhaps if you do not claim something the right

way there is a fixed penalty. all the rules were there. i am prepared to the get all those things you have a bigger problem, which this how you have of the external regulation is very difficult to get right. all the different ways to make it work. >> [inaudible] >> i think that is a potential answer. that might help give that consistency. i did not hear all the

arguments. when you look get a different cases, it does sometimes seem there is a very ability. >> do you think mps should take money? >> this was brought up by nolan, and that is where the no advocacy came in, which is a good, tough rule. good the first thing to ask is, should there be any outside interest at all? i have always taken the position that they should, because being a black friends in pay -- a back bench mp, i think the connection is not a bad thing.

that is the first thing you have to ask. the second thing is, how close can those jobs get to anything that impacts the government? the current rule is no advocacy, and there are strict rules about how it interacts with lobbyists. do we need to look at that again? yes, but most suggestions i have heard do not deal with who inspires issues, and that is a problem. you have to think before you regulate. does it actually deal with the problems we are facing thelma some of the suggestions help. all of these things would help -- does it actually help deal with some of the problems we are facing? some of the suggestions help.

>> on the banks, you said if there is no international agreement, the amount raised would be much more limited. would there be a levy in that case? second, we have the idea that everything should be offered -- required to offer a bank account. >> on the second issue, let's look get the details. there is a problem for people left out of the financial system. they are not just a disadvantage by not having a bank account. they are also a disadvantage because they cannot get a lower tariff. that is worth examination. the first question, not necessarily. >> can i ask you about a specific choice. liberals of the cross said the

fuel -- liberal democrats said the fuel allowance should be cut immediately. could you tell me what the conservative government would or would not do to change the winter allowance? >> we would keep the allowance. let me take this opportunity to say to any pensioner watching this or reading any reports, i know you're getting letters from the labor party that says the conservatives would cut the winter fuel allowance, which would cut the free television license. those statements are quite simply lives. i do not use that word very often. they are lies. we would keep the 10th -- the extra money for pensioners. do not be frightened by a government trying to scare you into not opting for change. if the prime minister has a moral compass, could he please

have a look at it and stop the canada's from lying about this. >> -- stop the candidates from lying about this. >> he would keep the benefits, but you would not change them? >> all the things labor is saying are complete and utter lies. they know it, too. the sooner they get out, the better. >> what would you say for retiring mps? what would you say about the government being more specific about your cuts? >> what i would say to public affairs companies is there will be no special access for anybody. that is very important.

secondly, there is a role for improperly conducted lobbying. governments do need to listen to the points of views, and parliament needs to listen to all the different interests, and it does need to care what trade interest scare. there is a process to talk to government. there is a role for public affairs, lobbying, and 50 your position, but it has got to be done in a proper, transparent, and open way. i know this is a problem for every government. we saw that at the end of the major government. we are seeing it if they now. it is a new government. the new ministers get their jobs.

the new government starts, and business of lobbying -- i know this will happen, and that is why i made that speech. i want to do the things to make sure nothing improper happens as a result. you will never get rid of all the problems and difficulties there will always be bad apples, but you can take lots of steps, whether they are regulatory steps, accountability steps, to try to clean up the system and make it better. i actually think that building can be a great place. we have a fantastic opportunity to have a brilliant parliament that brings the changes we need, and it sickens me to see it drag into the mud. there is a real role for parliament to change and make things better, and the new government, new parliament with

new in peace -- new mps could make a difference. we have about 40 days to make that happen. thank you very much indeed. >> now gordon brown. he was at the foreign press association in london for about half an hour verio >> this is the third time i have been at the association. i should tell you this will be my final visit before i come next month as well. i discussed the five great

challenges of our time, and i think 2010 is a make or break year. for the first time in 12 month'' period, the world will come together to face these challenges. this will shape what we face in the next 10 years. the decisions made by the international community will determine the fortunes of many. this begins next month with president obama's nuclear security conference. it runs through to the climate change conference in mexico. we have a focus for renewed drive for international cooperation to secure a safer and more prosperous world. i think it is right to take stock of our concerted efforts and the challenges.

my conclusion is staff. at the height of the financial crisis, which came together in unprecedented cooperation to fight back against the recession. here in london almost one year ago, then with president obama in bottom, we forged a global plan to protect jobs end -and g. it will transform regulation. there was a new spirit that was visible for all to see. now i believe we must do far more to build upon the. it is why it must not be a year of ref. 2010 must be guided by what unites us across the international community.

i believe this will summon us to have new leadership. the truth we have learned is flow problems cannot be answered by national or regional solutions alone. global problems need global solutions, and we need more and not less global cooperation. that is why i am such a committed internationalists and passionate european. there are not commissions for the problems we face, but there are international solutions, and we must turn out word and not in word, so i disagree with those who misguidedly seek isolationism.

we had the largest stimulus package. we had an approach to procure a landing, and as a result of the decisions we've made, more severe global recession was prevented, but now is the time to take the next step, to complete the task of rebuilding the global economy, to strengthen international supervision in coming months, and the international summits in the next few months and at the spring meetings of the international monetary summit, we must show commitment to fully implement the g 20 framework for strong violence and sustainable growth, and we must do more -- for strong and sustainable growth, and we must do more to build a coordinated

approach to deliver fairer risk and reward across the world, and i warn the international community if we do not restore the same level of heightened cooperation we saw in the last year, we may not be able to secure the growth and jobs every country and every nation around the world wants to see. i do see signs of progress on world trade deal, and we're ready to make our contribution to making the deal real. on climate change, despite the disappointment of the copenhagen meeting, we have made more progress than i think has been recognized. the copenhagen of court has now been supported by more than 100 -- a court has now been supported by more than 100 countries. 17 have submitted emissions targets. if these are implemented, we will see global emissions

peeking around 2020, so one of our goal is achieved, and this will hold the temperature rise at 2 degrees as we wanted to do. at the same time, there remains much to do. first, we must implement our accord. we must agree to the glove will deal of 2030. in march in london we will hold the first meeting of the advisor recruit on global financing established by the united nations general secretary, and we must also reestablished negotiations towards an internationally binding global agreement, using important meetings in germany and mexico this year to accelerate this

goal. my third proposition is the must drive toward creating a low carbon economy. britain will announce new plans to promote investment in clean energy and new green jobs this can create. i want to say something about security, because the challenges are changing. today we face a new kind of terrorism and potential conflict. piracy in global increases in illegal migration all point to problems we have to solve as a community. we have forces fighting in iraq and afghanistan, but we have also committed to stronger border enforcement. every time we are vigilant in protecting the national security of our country against terrorists. this must be combined with

decisive action to target terrorism and extremism abroad, including building of other countries capacity to deal with terrorism. terrorist capacity from yemen and somalia have become an increasing problem, but because of the scale of the plan and the region in afghanistan and in particular the border, our priority remains the border area, and we look forward to the conference and will gather in washington next month. we will discuss the fourth challenge of nuclear security and proliferation. direct threats have sharply declined since the end of the cold war. we cannot be confident such threats will not reemerge. it is important to you came maintains strong conventional

forces treaty and we must live with our global partners to reduce the threat of nuclear weapons -- we must act with our global purchase to reduce the threat of nuclear weapons falling into rove state toward terrorist groups. that is why we are trying to obtain -- contain this. we will invite international atomic energy authority to carry out the security inspection. we will make funds available for similar areas of concern. we will also launch our nuclear center of excellence through which the u.k. can leave global efforts to secure, and we commit to renew the g-a global partnership beyond 2012 with renewed focus on nuclear and biological security. countries like iran that tried secretly to develop nuclear weapons must face concerted action by the international community, including more far

reaching sanctions. i want to make one final comment about poverty around the world. in new york six months ago we launched the story drive to provide health care to the world's poorest, and as a result, millions of women and children will receive free health care for the first time. in education, we are succeeding. we have already got 40 million more children into a school in the last 10 years by the collective efforts. we have so much further to go, and while our determination is unbreakable, others, including in the g-they have scaled back their commitment -- g-8, have scaled back their commitment, so the summit will be the final moments in achieving the poverty goals we set 10 years ago, and we must rise to this challenge. i do not underestimate how far

we have come in confronting these five global challenges. this is not enough. failure to work more effectively as a global community is not an option. we must better organize ourselves through reforms, three institutions in which we work together, building the cloud of the g-20, shaking up financial institutions, making the european council more representative, but most of all, we must show far better collective vigor. the history is one in which countries briefly set aside national interest for the common good before returning to their old ways, or they will regard this as a time in which we tentatively a good cry easily but then -- gradually but then decisively laid the foundations for sustained global cooperation. i believe we must make 2010 the

first year we can see the strength of global cooperation in making that truly global society possible. i am happy to answer any questions. >> thank you very much indeed, the prime minister, and now we will take questions in groups of three. if you could please wait for the microphone to state your name and organization and ask one question only. thank you very much. >> hello, swiss television. you mentioned banking regulation. they are said to be excited about getting their hands on thousands of british taxpayers with accounts in switzerland. what do you think should be done with this material? one do you think of the attitude of the swiss government -- what

do you think of the attitude of the swiss government who object to stolen material used for tax control? >> thank you very much. >> you define yourself as a passionate european in your speech. the using it is desirable to increase the influence of britain and -- do you think it is desirable to increase the influence of britain and free- floating exchange rates between the national currencies? if not, what would you advise your colleagues to sort out the problems? >> i was wondering if you could talk about -- talking about all these global missions. how would you respond to what some call tallboy behavior with

the incident in to buy a -- cowboy behavior with the incident in dubai and building settlements? >> let me deal first with questions -- previous questions. i would say at the g-20, we agree for the exchange of tax information, and it should be implemented, and we agreed we would publish lists of countries reserving that requirement to exchange tax information. although there would be reports and then sanctions against the international community. we have covered already 1 billion pounds of money due to the british tax payer that was left in lichtenstein at that time. we appreciate the cooperation. all around the world, people

know we will not have the fish uncertainty about the future of banking unless we have the exchange of information, so what -- we will not have uncertainty about the future of banking. we will of countries undercutting other countries and undercutting the court, and -- before, and you will have problems with the banking system. as far as the european community is concerned, the problem is achieving a sufficiently high level of growth out of this. unemployment and to insure as a result of growth each company can reduce its deficit, and when we meet next week, the issue will not be the currency.

issue will be growth. the issue will be how we can agree europe itself can grow. every country wants to export its way out of the recession, but not every country can export more than they import. we have to ensure a balanced policy requires collective commitment to growth. we agreed we would meet as individual groups of countries and work out a collective global strategy to get the maximum growth and what individual countries would benefit from. as we go to the european council next week and then for the meetings in canada, people will

be determined to set a path not upset by some banking failure during your on currencies, -- failure. on currencies, we understood the anticipation of meeting these five tests was such we could not join at the particular time. we have a great deal of faith people will insurer groups in europe make the european union grow a lot faster than that. when you raise the question, we want a peace settlement that

gives a secure and safe israel within its borders and a viable economic palestinian state. they had a meeting in moscow today with the european high commissioner on foreign policy, and we want this to move forward. i think what has happened in the last few weeks is of grave concern. i want to emphasize the importance of stopping the settlement program if it is a barrier to further talks that should be taking place between palestinians and israelis. i think all of us have got to think carefully about how we can help over the next few weeks in making sure the proximity talks and perhaps further talks are

possible and do not break down. we will do everything we can to make sure we work with other countries for peaceful settlement. has yet been able to deliver. >> -- no one has yet been able to deliver. >> thank you very much. >> israel radio. some weeks ago when the israeli opposition leader tried to come to this country, there was a problem, and you have probably seen the rapid action also given by the foreign secretary. we have seen some form of procrastination kicking in. it is impossible now for an israeli leader to come to this

country. can you give the assurance this will be dealt with rapidly? less good morning, mr. prime minister pierre your -- prime minister. i am with the chinese paper. how do you deal with [unintelligible] what kind of information has been brought to you by the foreign minister? >> the third question. >> prime minister, i am from greece. greece has financial problems.

is it time for the key issue to do it -- for the eu to do its best to protect the solidarity of the yeaeu? at the end of the day [unintelligible] >> let me deal with this country of international jurisdiction, because i think it is important to understand under the existing law of countries like britain, australia, and new zealand, there is a facility for private citizens to take an arrest warrant of three magistrates against anybody who is potentially a source of crimes of international jurisdiction. we have published this. i have to correct you on this.

we have published proposals to change these laws. we have said we wish to move, to clarify, to rectify the situation. people are subject to a private arrest, even if there is insufficient evidence in many circumstances, or there may be insufficient evidence for prosecution. .

with said that consultation date within only a few days. we cannot be accused of not taking action on this vital matter. one chinese and british relations, i've always valued at their relationship with china. we have been there cementing these relationships and i think it is very important that people recognize that the g-20 is the organization that is the premier organization for economic cooperation. the g-8 did not include china and the others, and now they are

part of the premier forum for economic cooperation. what i all -- what i want to persuade all this part of the g- 20, is that the progress we latin -- we made last year is significant, but if all we did was prevent a recession turning into a depression, an important thing, but do not look at the future, then the danger is that you are allowing the world to fall again into the possibility that you may have another financial problem with globalization. we've not only secure the recovery by the investment that we made with the world community, the protection we gave countries, but we have built for the future, and china has an incredibly important role in this. i want to make the g-20 the premier organization, not simply a group of people that meet every few months, but formulate

a growth strategy for the economy that may's global cooperation a reality. each of us will benefit from the cooperation with one another. it is incredibly important. prime minister papandreou has a great deal of time for the tremendous work that he is trying to sort out, the great deficit, something that he inherited. i believe that the european union will want to support prime minister papandreou. he came to one and only a few weeks ago. i know he visited other capitals, and i think we got the message that it creases able to take the action necessary, they will get the support -- that if greece is able to take the action necessary, they will get support. we want to make sure that their financial problems are dealt with and we can move to what is the main way we will in the long run address the deficit of the

european community and the rest of the world, by returning to economic growth. we get businesses moving forward, you're not paying unemployment benefits, and that is the way forward for the european union as whole. thank you very much come prime minister. -- >> of thank you very much, prime minister. >> time magazine. and this is not a question about the issue that you clarified in your letter to chilcot, there is a big issue that is overloaded. if you talk to eminent defense experts, they see britain sense of itself and britain ambitions

and british military capabilities. is that something that you recognized and is this something that you would see longer-term chefs necessary -- longer-term cshifts necessary. >> what are your plans for closer u.k.-branch cooperation? a joint british and french nuclear submarine fleet? >> a french newspaper. it the next government should be a labour government, what you think of the opinion that britain is to be the next greece?

>> i would say when the next government is a labour government. we make -- we have a decision to make about a deficit reduction plan. we have set out a deficit reduction plan that i asked you to look at in detail. it is the most ambitious of the g-8 countries. we have said that we will cut our deficit by half. we will not pull back spending until recovery is assured. that is a necessary means, so i disagree entirely with the conservative party and our country -- in our country that says we should withdraw stimulus spending now. it would be a mistake at this stage to withdraw the stimulus when we are determined to

remove the fragility of the growth that we have achieved over these last few months. choice about whether we raise the value-added tax or other taxes to maintain these front- line services. we made our insurance and we chose national insurance, it will rise not this year but next year. that is the policy of the government. i will say no more than that people should wait until next week and the budget. as far as the uk-french cooperation, it is at its highest level in all the time i had been involved in politics. and our defense cooperation is one that i value. i was talking to him in london last week. we have a degree of cooperation that is greater than we had

previously. but we will retain our independent nuclear deterrents. as i mentioned today, our independent nuclear deterrents trident will be maintained. we wish it could be a multilateral disarmament around the world and we agree to work toward that, but we do not see a world that is so insecure, completely with other countries, and i stress the importance of having sanctions against iran, we do not see the case for withdrawing the independent nuclear deterrent that we have as an independent british nuclear deterrent. as far as the defense posture of our country, you raise interesting questions. at no point in recent years as a country like ours been and two wars, and as the chief of the defense party, our troops are

stretched but not overstretched. we're trying, as you know, to do in afghanistan something not dissimilar from what we said -- what we did in iraq. 2007, we decided in iraq that would mitt -- we would move to a situation where we would build up the army and police forces there. we would ensure that local government elections took place at that politics took over from the insurgency, and we would work very hard for economic development in that area. and when we left basra we have local government elections with the significant numbers of candidates, and we were beginning to see signs that that potentially very prosperous area was starting to develop an economy. now look afghanistan. we are no longer in iraq. our armed forces are in one

major theater, afghanistan. our strategic defense review will be reexamined in the next parliament. we added a chapter a few years ago because of the threat of international terrorism. but we have our armed forces in afghanistan, a total of 175,000, and we're finding them to the operation that they are responsible for in the helmand province. as we have a future strategic defense review, we will have to assess this new threat that is not really the central threat of 1997, and that is the ability of rogue non-state actors who are terrorists to cause very big problems. and we have wrote or aggressive states to cause problems with the rest of the world. and we will have to cooperate -- incorporate that into our defense review.

but the operation in afghanistan in particular, our troops are funded for the commitment that we made and the operations they are required to do. we must not lose this central fact. we are in afghanistan because 75% of the terrorists plots that happen in britain, and we have been pulling plots very recently, starred in the afghanistan/pakistan border area. we would be even more at risk than other countries. >> thank you, prime minister. time is running out. with the permission of the prime minister, we will take the final round of questions. >> we will take two rounds. >> that is very kind of you. >> invite me back. and nobody will leave early. [laughter] >> nippon television.

i number of issues likely to be central to the collection. what you think is the single most important issue and your stance on it? >> [unintelligible] >> denmark. the opinion polls have changed to your advantage. how do you explain that? [laughter] if there is a hung parliament, do you see that as a danger to the british economy? >> on british middle east

policy what is the lead -- what leverage does the u.k. government have so that talks can resume? >> we have very good relationships with the israeli government. what happened over passports, which is now being investigated by organized crime agency, it is a problem and has caused difficulty. course as vice-president biden, the settlements, that is also a difficulty. but i believe that our relationship with the government can play a part in getting talks moving again. i know that there are so many countries in europe and around the world and also america that want to see these talks moving forward. the problem is that we can see

what settlements in a piece discussion can look like. we can see that there is not a huge difference on some of the major areas, but we do not have the means to get there. hopefully the quartet meeting in moscow today will make some difference. we will help the palestinians with their economic challenges, and we have already promised that we would be part of an economic roadmap for peace that would relieve the unemployment in the west bank and gaza, and i will commit that we do not want to be -- and not just want to be. as to issues in britain, the issue in this coming british election will be who is best to equip our country, who is best for jobs and growth at the national health service and the reforms we need to make, and was

best for tackling the educational challenges of the future, for the economy and the internet, relations with the european union and the international community. when people ask that question, a referendum on what the government is doing day-by-day, to a choice about what is best for the british people, and i believe it is because people are seeing that there is a clear choice, that people are starting to ask a very big questions about the conservative party and they are taking a second look at our new labour party. who is best to secure the recovery? there's no way that britain can be growing securely if we withdraw the fiscal stimulus. it is a matter of ideology, one wished to withdraw while one

party and the rest of the world knows it is essential to move the economy forward, then that is a major point of choice for the british people. do we want to secure the recovery? and on every major economic decision we've had to make in the last two years, our opposition party has opposed every action we take and on banks, on unemployment, housing, and protecting mortgages and small businesses. then i people -- that i think people want to ask who will be best to grow for the future? and i am excited about this prospect. go around and look at what is happening and a whole series of different industries. we are changing this economy and becoming a more high-tech economy. our medical research, are pharmaceuticals, are biotechnology, go around our country and look at how the different regions are starting

to specialize in new areas where, to be honest, the value added services, high service products, the knowledge industries, it gives us a base for exports into the rest of the world. we cannot compete in low-cost manufacturing, but we can compete in the quality of our innovations and the high value added products. so where are the jobs of the future going to come from and the growth? every country is asking that question but we in britain already have a clearer idea of the 1.5 million jobs we need over the next years as a result of the investments now being made or about to be made in these digit did -- in the digital creative industries, advanced manufacturing, and low carbon industries. we make no apologies about an industry policy for the future and that is a big disagreement between us and the other party.

the public service revolution taking place in our country is about universal public services becoming personalized to people's needs. so people will not accept a take-it-or-leave-it basis to get health care now. we have moved. people want the personal service that is geared to the needs that they have, the time they have a available, the convenience for their family life, and also the quality that is necessary but personal care. so we're transforming the health care service by giving people personal guarantees and na health service that they would get cancer specialist treatment within two weeks, that they will get a doctor on evenings and weekends, and not just during working hours. the maximum time for operations would be 18 weeks, they would get free health checks that are

available in a national health services, there will be urgent care needs met for the elderly, a guarantee that government are giving to people. this is not the top down health service of the blast. schools -- we're giving parents the chance to unseat the management of schools that are not performing well. the number of underperforming the schools is something like 1600. we want to get a 20 next year where we take over underperforming schools and put them on the new initiative. policing in our country, we have more police than ever before. the policing services are personal to people need. some people can hire a private security firm, but we want to give every citizen a chance to have direct access to the

policing service in their community, using texting and mobile phones and the internet and a direct accountability to the local people, that people now have confidence that not only has crime come down, as it has by 30%, equally that they can feel that the streets are safe at night. there's a revolution taking place in public servicing, and he was glad to carry that change through over the next couple of years? who believes that these front- line services are important what we reduce that deficit in other areas? there is a party that would not support any of these guarantees. i think what we are talking about is that there is a choice that is what the elections are about. i relish the opportunity to put our proper -- are propositions for the future and how we build bread-and-butter for the future, and britain being strong in europe and britain not being isolated on the fringe of europe

as we were 12 years ago, it would be not part of extremist groups that have linked up with a conservative party in britain, and we have to think that our future lies in looking outward and not in words, and that will be one of the sector choices that we have to make when we come to the general election in britain in a few weeks' time. >> the prime minister is gracious enough to give us one more round. this gentleman on the front. >> australian newspapers. since copenhagen, there has been a dramatic loss of countries including israel which previously supported the british government on this issue. there's a lot of skepticism. we have an australian of election that could lead to a prime minister who in the past has rejected the concept of

global warming has absolute crap. are you concerned about this around the world? >> regarding the e.u., prime minister, what is your view on the proposal to create a european capital? >> yes, the lady there. >> german business weekly. prime minister, you mentioned it is not about currencies but about growth strategies. what is your view on germany's current policy? is germany doing enough to promote growth or is it focused on reducing deficits within the you? i also wanted to ask about the

enormous tax privileges that foreigners and some citizens enjoy here in the u.k. you cannot get that anywhere else in the eu. >> i thought you're going to refer to lord ashcroft. [laughter] the exchange of tax information is the key to resolving these issues. that is what we're pushing around the world. people wanted to create a saving tax within the european union because basically germany, for example, was using money and luxembourg where people were putting money and other countries and avoiding tax. but if we did that in our own, what would happen is that people would not move to european union countries but non-european union

countries. so we had to talk about tax information exchange around the world. we had written welcome that because we have the benefit from liechtenstein, and that led be better off with the exchange of tax affirmation rather than harmonizing taxes. the issue on climate change, i think that people have agreed on national emission targets and plans, all the major countries have submitted there's, china, india, their national emissions reduction plan. we agree on financing that climate change objectives that have been set at copenhagen, but what we need for certainty of moving forward is a global framework agreed to by everyone. the challenge in mexico will be

the global framework. that global framework is the basis on what the emission targets of the individual countries can be readily understood as being progress that we've made at copenhagen, but not cemented because the framework is are real enough. i do not believe in the people that our climate change deniers. there is a real problem that we have to deal with. it is important to realize that all of the evidence, and despite the controversies, does point to the fact that we have a real challenge ahead of us if we do not take the action that is necessary. i also was asked about the european union growth, specifically about germany. we've got to look at how each country contributes to that growth.

i don't want to make an example of any country. it is our common interest look at how we can contribute to each other's growth. it is our common interest for europe to work with the rest of the world, particularly in relation to asia, to see how we can move -- remove clear barriers to growth. sometimes the barrier is the scale of reserves that are held by countries that deprived the world economy of money which it could have with the proper insurance policies such as we have proposed for countries that find themselves in difficulties. sometimes there are exchange- rate issues that have to be dealt with, but we have to address these seriously and in detail and try to find a way forward to promote growth. if we were able to do that, to prevent a depression by taking action to protect countries that might have fallen into greater

danger, as we did april of last year and at pittsburgh, we can do the same thing for the positive agenda of jobs and growth. i say that this is of vital year for us agreeing that the cooperation that we had last year is not going to fade away, and we're not going to return to the battle way. this is up 50 year -- this is of vital year to build on the progress we made it rather than let that progress be dismantled and the period for the world could become more protectionist and growth would be held back, and large numbers of people would face unemployment in every continent as a result of our failure to work together. the imperative for jobs and prosperity is that the world is able to work more closely together for the framework is there for the g-20 implementing that framework. that is the responsibility of the g-20 now. i say to all of our members that it is important to work together

and i'll leave you with this idea, that what we have seen in the last two years is that you cannot solve state problems without global actions. you cannot solve the problem of terrorism or nuclear security or climate change or economic growth or rural poverty without a degree of international cooperation that is far greater than ever than we have seen before. the public through the internet is already creating a global society. the institutions are not capable of delivering the results that we need so we have to meet -- we have to move further and faster to work together. otherwise would be criticized rightly by the next generation for failing to seize an opportunity that became available to us, and must be grabbed by all countries working together. thank you all very much. >> thank you, prime minister.

we give you some time so remain seated until the prime minister leaves. thank you very much. >> thank you all very much. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> due to daylight saving time, this year's prime minister's questions will be alive wednesday morning at 8:00 eastern. there will be no question time next week because of parliament's easter recess. in a few moments, president obama signs the health-care bill and the talks about health care at the interior department. and a little more than an hour, and treasury secretary timothy geithner are testifies on capitol hill on the government's role in the housing and mortgage

markets. and after that, a hearing on the president's nominee to head the transportation security administration, known as the tsa. >> on washington journal tomorrow morning, an examination of the government's role in housing with corbett daly, from reuters. but chairman of the subcommittee on borders, henry cuellar, will take your questions about drug trafficking and violence along the mexican border. we will discuss the congressional agenda with richard burr of north carolina. and a look at why prison populations have declined for the first time in nearly 40 years. "washington journal" is live on

c-span every day at 7:00 a.m. eastern. google closed at search engine in china this week because of concerns over government censorship. tomorrow, a group will examine internet regulations in china. live on c-span3 at 10:00 p.m. eastern. president obama today signed into law the health care bill passed by the house on sunday. the move was necessary and over for -- in order for the senate to take up a package of changes to the bill also passed by the house. after the signing, the president and vice-president biden spoke at the interior department three together, but the events last a little more than an hour. >> the president of the united states and the vice president of the united states.

>> thank you all. >> we got to get going. thank you all. >> fire it up. a fire out.

>> fire it up. ready to go. >> mr. president, i think you have a happy room here. [laughter] it seems ridiculous to say thank you all for being here. [laughter] ladies and gentleman, to state the obvious, this is a historic day. [applause] and our business, we use that phrase a lot, but i cannot think of a day in 37 years has united states senator and my short time as vice-president, that is more appropriately stated. this is a historic day.

and history is not simply what is printed in the textbooks. it does not begin and end with the stroke of a pen. mystery is made. history is made when men and women decide that there is a greater risk in accepting this situation that we cannot bear, and it steals our spine and embraces a promise of change. that is when history is made. [applause] history is made when you all assembled here today, members of congress, taking charge, change the lives of tens of millions of americans. the efforts of those lucky enough to serve here in this town, that is exactly what you have done. you have made history. history is made when a leader steps up, staying true to his values and charting a fundamentally different course

for the country. history is made when the leaders passion is matched with principal to set a new course. ladies and gentleman, mr. president, you are that leader. [applause] you deserve it man. you deserve it. mr. president, your fears advocacy, clarity of purpose to show your perseverance, it is not hyperbole to say, these are the reasons why we are assembled in this room today.

today, but for those attributes, we would not be here. many men and women are going to feel the pride that i feel in watching you shortly sign this bill. not only did their work that help make this day possible, mr. president, you're the guy that made it happen. and so mr. president -- [applause] all of us, press and elected officials assembled in this town for years, we've seen some incredible things happen. but you know? mr. president, if you have done what generations -- not just ordinary but great men and women -- have attempted to do. republicans as well as democrats. they've tried before. everybody knows the story. starting with teddy roosevelt, they have tried.

they were real and bold leaders, but mr. president, they fell short. you have turned the right to of every american have decent health care into reality. mr. president, i've got knew well enough to know that you will not stop me from embarrassing. but i am not going to stop because you delivered on a promise, a promise he made to all americans when we move into this building. mr. president, you are -- to repeat myself -- literally about

to make history. our children and our grandchildren, they are going to grow up knowing that a man named barack obama put the final girder into a framework for a social network in this country to provide the single most important element of what people need, and that is access to good health. [applause] and that every american from this day forward be treated with simple fairness and basic justice. look, the classic pose virgil once said that the greatest wealth was health. today america becomes a whole lot wealthier because tens of millions of americans will be a

lot healthier from this moment on. ladies in german, the president of the united states of america, barack obama. -- ladies and gentlemen, the president of the united states of america, barack obama. >> thank you. thank you, everybody. thank you so much. thank you. thank you. thank you. thank you, have a seat. thank you. thank you, everybody. thank you. thank you, everybody, please have a seat. thank you, joe. [laughter]

>> could be here, mr. president. >> today on for almost a century of trying, today after almost a year of debate, today, after all the votes had been tallied, health insurance reform becomes law in the united states of america. today. it is fitting that congress pass this historic legislation this week. as we mark the turning of spring, it will also mark a new season in america.

in a few moments when i sign this bill, all of the overheated rhetoric over reform will finally confront the reality of this bill. and while the senate still has a last round of improvements to make on this historic legislation, these are improvements i am confident they will make swiftly. [laughter] >> the bill i am signing will

set in motion reforms for generations of americans to prosper. it will take four years to implement fully a many of these reforms, because we need to implement them responsibly. we need to get this right. but a host of desperately needed reforms will take effect right away. this year. [applause] this year we will start offering tax credits to about 4 million small business men and women to help cover the cost of insurance for their employees. that happens this year. [applause] this year tens of thousands of uninsured americans with preexisting conditions, the parents of children who have

pre-existing conditions, they will finally be able to purchase the coverage they need. that happens this year. [applause] this year -- this year insurance companies will no longer be able to drop you from coverage when you get sick. they will not be held up place like time limits or restricted annual limits on the care that you can receive. this year all new insurance plans will be required offer free preventative care, and this year young adults will be able to stay on their parents policies until they're 26 years old. that happens this year.

and this year, seniors who fall in the coverage gap known as donut hole will start getting some help. they will receive $250 to help pay for prescriptions, and that all overtime fell and that whole. i want seniors to know, despite what some have said, these reforms will not cut your guaranteed benefits. in fact, under this law americans will see free preventive care without payment are deductible. that begins this year. once this reform is implemented, health insurance exchanges will be created, a competitive market

places where uninsured people and small businesses will finally be able to purchase of affordable, quality insurance, getting the same good deal that members of congress get. that is what is going to happen under this reform. and when this exchanges up and running, millions of people would get tax breaks to help them afford coverage, which represents the largest middle- class tax cut in history. that is what this reform is about. this legislation will also lower cost for families and for businesses and for the federal government, reducing our deficit by over $1 trillion in the next two decades. it is paid for, it is fiscally responsible, and it will lift a decade long drag on our economy.

that is what all of you work together on to make happen. our generation is able to succeed in passing this reform, a testament to the persistence and care of the american people who championed the cause, who mobilized, who believe that people that love this country can change it. it is also a testament to the historic leadership and uncommon courage of the men women of the united states congress, who have taken their lumps during this difficult debate. [laughter] >> yes, we did. [laughter] [applause] >> you know, there are -- there

are few tougher jobs in politics or in government than leading one of our legislative chambers. in each chamber, there are men and women that come from different places and face different pressures or reach different conclusions about the same thing and are concerned about different things. by necessity, leaders have to speak to those different concerns. it is not always tidy, it is almost never easy. or perhaps the greatest and most difficult challenge is to cobble together add up these differences the common interest that advance the dreams of all people, especially with a country as large and diverse as ours. we have leaders in our chambers which not only do their jobs very well but did not lose sight of that larger mission. they did not play to the shortcomings.

one of the best speakers the house of representatives has ever had -- [applause] [chanting "nancy!"] 1 of the best majority leader's the senate has ever had, mr. harry reid. for all that terrific committee

chairs, all the members of congress who did one of the most difficult but did what was right, they passed health care reform -- not only this generation of americans will thank you, but the next generation will fight it. victory was also made possible by the painstaking work of members of this administration, including our outstanding secretary of health and human services, kathleen sebelius. in one of the on song hyssop -- heroes of this effort, an extraordinary woman who led the reform effort from the white house, nancy-and the paul -- nancy-ann deparle.

today i am signing this reform bill on behalf of my mother who argued with insurance companies even as she battled cancer and her final days. i'm signing a four ryan smith who is here today. he runs a small business with five employees, trying to do the right thing, paying half the cost of coverage for his workers. this bill will help them for that coverage. i am signing at 411-year-old marcellus owen -- for 11-year- old marcellus owen who is here. marcellus -- marcellus --

marcellus losses mom to an illness. she did not have insurance. she cannot afford the care that she needed. so in her memory he has told his story across the country so that no other children have to go through what his family is experiencing. [applause] i am signing up for natoma who had to give up her rates after her rates were jacked up over 40%, meaning that she would have to lose the house that her parents built. so she gave up her insurance. now she is in a hospital, praying that she can get well without insurance. natoma's family is here because she cannot be, and her sister,

condi. condi, stand up. -- connie, stand up. i am signing this bill for all the leaders who took up this calls through the generations, from teddy roosevelt and franklin roosevelt, from harry truman to lyndon johnson, from bill and hillary clinton to one of the deans who been fighting this along, john dingell. to senator ted kennedy, and it is fitting that ted's will come

vicki -- that tads widow -- ted's widow, vicki, is here, and his knees caroline, and his son patrick, whose vote help make this reform our reality. i remember seeing ted will through that door to a summit in this room a year ago, one of his last public appearances. and it was hard for him to make it.

but he was confident that we would do the right thing. our presence here today is remarkable an improbable. with all the punditry, all lobbying, all the game playing that passes for governing in washington, it has been easy at times to doubt our ability to do such a big thing, such a complicated thing. to wonder if there were limits that we as a people can still achieve. it is easy to succumb to the sense of cynicism about what is possible in this country. but today we are affirming that essential truth, the truth every generation is called to rediscover for itself, that we are not a nation that scales back its aspirations. we are not a nation that falls prey to doubt or mistrust. we do not fall prey to fear.

we are not a nation that does what is easy. that is not who we are. that is not how we got here. we are a nation that basis is challenges and accept his responsibilities. we are a nation that does what is hard, what is necessary, what is right. here in this country, we shape our own destiny. that is what we do, that is who we are, that is what makes us the united states of america. we have not just enshrined, as soon as i sign this bill, the four principles that everyone should have some basic security that comes to their health. it is an extraordinary achievement that as happen because of you in the ad because all across the country, so thank you, thank you, thank you and may god bless the united states of america. >> good job.

>> congratulations. thank you. thank you. all right. i would now like to call up to the state some of the members of congress to help make this day possible and some of the americans who will benefit from these reforms. and we're going to sign this bill. >> your dad is proud of you. >> i know that he is. >> this is going to take a little while.

[applause] >> i have to use every pen, so it is one to take some time. -- it is going to take some time. i did not practice. [laughter]

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