not identifying who it is because of the pending investigation, but specifically at a conflict of interest issue, some of the data provided by us from treasury. the fund manager was managing two funds, one being a private fund. took an asset out of a private fund and brought it back at a higher price. we are investigating that as a potential conflict of interest. i have to note that that behavior was made possible because treasury refused to adopt one of our most important recommendations about trick of -- a strict ethical law regarding fund managers. we have not identified that manager is. .

>> they were secretly betting that the investment would go bad. if the facts are true, it confirms our worst suspicion on how they could use the position to read the game in their favor. the sec is only of looking at one of the serious of investments. some of the securities were injured by a t produce and 80 is a tarp recipient -- cincinnati securities where aig as a recipient, i hope you will be

reviewing this in detail. has your office been involved in this investigation into goldman? if not, will you please investigate these transactions and provide an assessment to us about what did the payments to goldman can be recovered if they were based on this kind of fraud? >> absolutely. we were not involved on friday. it is not by aid. -- aig. they were written by a deeper do i have been in contact with the sec. we are going to lead the charge. we will review these transactions if necessary to give a close review of these transactions to see if there are allegations and basis of a broad

and i 80ff aig had fraud. >> i will ask my last question in writing. >> absolutely. >> thank you. >> thank you. thank you for your outstanding work in safeguarding the interests of the taxpayer and providing trend's parent say today transparency. -- and providing transparency. you are doing great work on behalf of this country. i want to thank you. >> thank you. >> one issue that has risen is eligibility for the net operating carryback provision. we worked on the during the stimulus program in extending it from two to 5 tears. . years. jpmorgan is a former top

recipient. they are reaping their funding to the government. there will benefit from $1.4 billion. it was clearly explicitly stated in statutes that note tarp recipients, either current or prior, would be eligible to use the net operating cost. who is responsible for making this determination? what should we do to correct this? this is not the intent of congress. i think we need to go back to the drawing board and make sure it does not repeat itself. >> we have been closely monitoring the situation. the fdic is the receiver. we are in discussions. there has been discussions about a settlement with jpmorgan that may allocate a portion of the tax break. we have been in contact with the fdic and some of the creditors.

we are going to continue to monitor the situation. we are waiting to see how the settlement breaks down. that is where it is right now. it is in bankruptcy court. what did the court judge will make a breathing. there are complicated legal arguments on all sides that we have been revealing. by now we have been taking a back seat to see what is happening before we make an evaluation. we have been on top of this to follow it. it is certainly a very complex discussion with the intricacies of bankruptcy. at first, our reaction was the same as yours. it is not make sense. if we get through the weeds, it is a complicated issue that we are still getting our arms wrapped around. >> we do provide -- will you

provide us with your thinking? we cannot preempt any decision at this point on this issue. i will look at it from that standpoint and so will my staff. we will evaluate it. it was clearly not the intent. it was expressly stated. somehow, it has gotten wrapped up and allowing this to happen and provided it to a former top recipient. i think that should not be be the case. what we need to do to address it is something we should consider. >> i would be happy to have my legal team sit down with your staff. >> i appreciate that. >> in the non detainment of dividends, there are $180.9 million worth of dividends that have gone unpaid by 74 institutions. that is disconcerting. when 74 companies have met three

or more payments. this obviously could become a significant issue. why is it? what are you doing, treasury doing, to recover those dividends but not being paid in a timely fashion? >> unfortunately, those institutions it often cases is because the regulator has directed them to stop making dividend payments because they are in trouble. because they are in trouble and their capital is deleting, taking capital away, it is feared that it did the tape the year of the bank in a complete loss of the tarp capital investment. all of these banks represented themselves to be healthy and viable before coming into this program. for those that rapidly digress to being unable to make quarterly payments of a 5% dividend, that raises some

interesting concerns. we are looking at some of these institutions in seeing whether they were misrepresented. the editing treasury is doing is recapitalizing its investments. we did tell some of those in the quarterly report. they are taking an upfront loss by turning their preferred investment into mandatory convertible preferred shares at a discount so far. they are recognizing this loss. they have come to view that if they do not do these things, the investment will be completely wiped out. it is better take a hair and now in hopes they can recover. >> who predict how many would be in that category? >> so far there have been five that have announced. citigroup was the first. one importer rico is the second. we tell three smaller ones.

-- detail three smaller ones. >> thank you. >> i would like to go back and pick up where i left off year, if i could. we are drilling down on who still owes money for the tarp. i think he mentioned it rather than away money back, we have an equity position. can you talk with us about that equity position? >> right now it is about 10%. that number can go down f fiat meet certain performance metrics like smaller cars. that number may come down to 8%. our ability to recoup that money will depend on how chrysler does. the goal is to get to an ipo.

that way, the treasury will have a method of liquidating inches through public failed stocks to the public for th. the goal is that these companies can get back on their feet and return to profitability said the shares of their stock will become attractive. ultimately, it will regain. >> if you can remind me of what happened in 1980 when the federal government provided loan guarantees to chrysler. they were able to find funding in the private sector. we did have warrants which we exercise several years later when chrysler return to higher levels. we wanted to sell it at about $2 a share. after that time, we exercised

our right to buy it. we turned around and sold for $30 a share and made about a $30 billion. how does this situation must chrysler resemble that? >> i think it is dramatic. we do have this investment. i am by no means an expert on the chrysler bailout. we are not really guaranteeing debt. we have given them money. a lot of it has been written off. the investment in chrysler preceded their bankruptcy. it was money that was given. a good chunk was recognized. it went to the old institution. there is a bankruptcy plan that has not been improved with the money that we have that has been lent to old chrysler. there is no expectation that we will get it back. >> how much? >> i do not have the precise numbers.

>> less than $10 million? >> i can certainly get them to you. >> thank you. >> a good chunk of the amount was there, but because we have an equity investment, and chrysler outperforms and does well, we will have a chance of getting a disproportionate amount of money that was carried over in equity back. assuming that they have an ipo and that the treasury will be able to liquidate. >> which we will recover some of the money? >> yes. >> there are probably some stock/price levels above which we would actually break even? >> i think the estimates are that we would have a significant market capitalization for us to get the break even point. i think that is why -- >> i have a two-part question. did you find that the answer to the first question? the second was, how high was the

stock? how high would have to go? >> it is hard to get it to an exact number. it is the publicly traded. the valuation would have to be equivalent to our investment. the cbo, when they make their estimates of more than a $30 billion loss, it is based on the assumption that the price will never get high enough to result in the recouping. >> [inaudible] >> in our quarterly report on page 160, we make reference to the assets and debts that are still in chrysler and it is about $3.5 billion in the original loans made before the company went into bankruptcy and one for $9 billion possession loan that also stayed in bankruptcy. -- $1.9 billion position among that also stayed in bankruptcy. >> where i am going with this is to try to better understand how

much of this roughly $100 billion is still owed. it is like we are likely to recover in the next year or two. what is the significance of 2013? >> this is the estimate from cbo fellow never be recovered other than through the recruitment. section 134 that has the recoup been standard requires that in the five-year anniversary -- six year anniversary of tarp that the director of cbo report to congress what the estimate of the permanent loss will be and that triggers the obligation to the administration to submit a legislative proposal to recoup that from the financial industry. >> we will hopefully know by that date. it will be successful. maybe they will be able to schedule an ipo. is that a reasonable assumption? >> the goal is to have the

initial ipos well before then. >> can i continue to ask a couple more questions? can we turn to gm, if you do not mind. explain the situation if we have an equity situation that we need an ipo to be able to recover to earn profits on. >> it is essentially the same. with the retirement of this debt, there is a preferred interest but the interest is overwhelmingly in the equity interest in gm. we have a controlling equity interest in gm. gm, the new ceo has announced the intention of having an ipo. it seems to be an intention that it will occur hopefully this year, that they will return to probability to gm. at that time, i think the offering will not be for 100% of the private interest in gm. it will start returning to becoming a public company. we will be able to better

quantify what the government ownership interest is worth. then we will see. the shares increase. there will be demand in the marketplace. it will give treasury an opportunity to have subsequent public offerings and to put interest into the market. hopefully, it'll be an ever- increasing value into the equity interest. >> thank you. we do not have a lot of people here. this is very interesting. i think it is very encouraging of the testimony. >> it raises the question of what degree should the tax in be. how much would be paid back? i think it is a good question to ask. >> let me ask one more question, if i might.

what is the status of the audit? if we own these, whether it is gm or what not, it raises interesting questions of our corporate governance. >> in response to your request, we initiated this audit. we are at the stage right now where we put up the responsibility for the gao. fannie and freddie and the tarp recipients. gao does. we split this up. but shwe are in the process of trading draft. i do not think we have an estimated release date. we are in the process of getting there the next couple of

months. let's i think it is very important. thank you for doing that. how many fed dollars exists -- assisted distressed companies? >> we reported on this number back in july. i anticipate that we will do a cat up on that, on how much money that is the treasury but overall in the financial system. in july, it was about $3 trillion all in for the various programs to support the financial industry. i recently saw an estimate. i do not want -- it estimated the number still at around $3 trillion. we are going to go revisit the previous reports in our quarterly report and get an update on where that number is. we will includeff breakdowns from the federal reserve, treasury and other entities that

have provided support. >> when will that report be available? >> part of our july quarterly report. but not until july. what is your best guess the degree to which the fed dollars recoup? >> the number will go down in certain categories and up and others. when we lasted very few, if the $1.25 trillion purchase of agency mortgage-backed securities was still in the ramp up days. that is completed. that money is now outstanding. some of the other emergency programs have been shut down. the numbers will decrease. i am not sure from in that perspective what has changed. we can probably give you an answer to that based off of the balance sheet. >> i appreciate that. >> common institutions -- how many institutions are overlaps, get both heart and fed assistance? >> i would say a significant

number of the large financial institutions would have gotten supports from some of the guarantee programs as well as the tarp. >> any way you can give us some reports on the amounts, on average? >> we do not have access to -- a lot of that information is not publicly available. for example, who benefit from the discount window. we have not been able to match that up. we have not passed that information. we have not done that. >> some recipients have been at it it predicts one would presume. -- some recipients have benefited, one would presume. >> there is no question that the largest financial institutions probably all benefited from those various programs. there is debt guarantee, money market guarantees.

there is no question that the big players all benefited from multiple programs. the return to massive fraud ability. it is a directly attributable to the support that this government has given them through tarp and related programs. i do not think there can be any questions. >> we are a small business here. we help large institutions, but i do not think it is a sufficient job helpfulness. >> i think the decision to provide this money to tarp recipients without any conditions or instances or penalty has resulted in them using this money in ways to maximize their own profit.

and not necessarily to carry out the government's goal, which was to incentivize and increase limit. >> center harbor? >> thank you. coming back to my line of questioning. gm has repaid $1 billion. they stand to pay another it $6 billion or $7 billion by this summer. it sounds like you are taking money out of one pocket and putting it in the other. is that right? >> yes. the repaid $2 billion. the $1.4 billion that they are getting ready to repay very quickly. the source of that was an equity capital facility that is physically escrow money. some of the money that was given to gm was not all given as a lump sum check. some of it was put into equity capital facilities, which they

can draw down. they have to report what they are going to do it the money, what the purpose of it is. the way it destructor come if there is any money, it has to be used to repay the debt but do what gm is doing is pulling that forward. it is taking the money out of the capital facility. two has been paid already. >> for the federal government to realize any additional funds, does an ipo have to occur? are there other additional moneys they need to repay? >> i am trying to think if there is some theoretical way. i do not think so. i think there has to the liquidation of the ownership interest. they could find a private player that would be willing to buy treasury equity investment outside of a public offering,

that would accomplish that goal. i think it is a practical matter given the best size of the investment. it is most likely going to occur as a plan. >> the assumption is that over time it will appreciate. the auto industry will recover. we will see how this all works. did i understand he said that with respect -- that we are not going to get any of that? >> that is right. the design of the program is for a $50 billion subsidy. it'll be going out with the mechanism for the payment. >> i just want to come back to the illustrations proposal.

mine recognition -- my recollection was that there would be a tiered approach with regard to the obligation to pay dividends under the money, i think the dividend rate was 5%. has the administration proposed that a similar dividend be said for the smaller banks that to be covered in this program? but they can lower that obligation to as low as 1%. is that part of the problem? >> that is correct. you have to start with the existing tarp recipients. the initial participants are

going to be approximately 95% of its existing purchases. those that are currently paying 5% will have the option. if they can demonstrate that they have increased their lending of the 2009 threshold, they can lower the annual dividend payment incrementally based on how much they can demonstrate that they have increased the lending from 5% all the way down to 1%. >> does the administration have the authority to go ahead and launch this $30 billion program? do they need our authorization to do that? >> if they did within the tarp, they would not have to. their proposals to take the money out of the tarp. the explanation for the reasons why is that emergency economic stabilization that the congress

passed requires treasury to put on certain restrictions to those institutions that received her money. for example, the executive compensation restrictions and other things that repurchase of stock related to warrants so the taxpayer can share on the upside. treasuries determine that those factors and the stigma of being involved in the tarp means that if they want this program in the tarp, they will not expect a much additional precipitation. they have to take those away in order to get smaller banks to come to the window and participate. and ordered to do that, they have to take the legislation out of the tarp. one of the important things, originally it was contemplated that our oversight role would come with it. it would take us, along with the $3 billion so we can

maintain in continue fluently our oversight. right now, the current intention is that we would not be included. >> i think you make a good point. we have touched on this a couple of times. if the action to this 30 billion, it seems like the idea is the oversight. you seem to be doing a pretty good job on it. we ought to continue it. >> i appreciate that. it is very rare i ask for more work. i do not look at it as more work. it is a continuation. >> thank you very much. you are doing a great job. we appreciate it. keep it up. >> thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> friday, three democratic candidates running for an arkansas senate seat take part in the first of three debates. blanche lincoln is being challenged by bill holzer. the primary is on may 18 to do the debate comes courtesy of abc 7 in little rock. what in life friday at 8:00 p.m. eastern here on c-span and c- span.org. british parliamentary elections are may 6. for the first time, the leaders of the largest political parties are facing off in television debates. this week's debate is the second of three. the topic is international affairs. according brown, david cameron, and nick clegg are all vying to be prime minister. you are watching public affairs programming on c-span. coming up later, a hearing

examined efforts to police the u.s./mexico border. next, judd gregg and johnny isaacson and chris dodd talk about financial regulation legislation. from the senate floor, it is the to 5 minutes. -- 55 minutes. they both addressed the pending legislation in terms of the financial bill that is coming out of the banking committee and the desire for both of them for the bill to be one that is amendable and debatable on the floor. i am here to talk specifically about just one facet of the financial crisis and just one improvement that is to be made by this bill that needs to be carefully address to make sure that we do not make for a repeat a mistake that was made in the 1990's at the failure of the industry. i have a chart that i would like to refer to for a moment.

we heard a lot about mortgages. we honor that it was not for fha and ba insurance and the fed buying fannie and freddie, there would not be much mortgage money available. it has all run away from the united states because of the subprime crisis. people are nervous about what happened in the financial markets. during this crisis that we have been in between 2005 and 2006, and my state of georgia, georgia is the 10th largest date. mortgages in default, totally in default or in foreclosure, it got as high as 8.2% for what i refer to as qualified mortgages. those are mortgages that were made to credit-worthy people that had good underwriting standards. those were good mortgages. well, up to 8.2%, or 1-10 of those at its e apex, was either

delinquent or pending foreclosure. but 24.7%, or what's known as subprime or nonqualified loans, were either in mortgage delinquency or in default. 3-1. the reason i show this chart is it demonstrates where the problem happened, not just on wall street but on main street and that is in chasing higher yields, in pushing towards a desire for greater homeownership. credit standards got lax, loans became nonqualified loans. they carried a higher coupon rate or a higher interest rate but a much higher risk. and it's acknowledged by me and i think by most in terms of the housing crisis that we've been on, the largest precipitating factor was, in fact, shoddy underwriting, loose credit, and subprime mortgages. now, the legislation coming out of the banking committee is going to create something known as shared risk or lender liability in terms of the making of mortgage loans. now, i'll be the first to tell you i'm not on the banking

committee. i haven't seen the financial draft, so what i'm going to address is what i hope will happen, not what i know will happen. but what i hope the committee will understand is, in its requirement for shared risk being that the maker of a mortgage retain 5% of that mortgage for its lifetime or until it's paid, is a significant amount of capital that's asked for an institution to reserve. an impossible amount, i might add, for a mortgage broker "a mortgage banker, but not for an institutional learned. the problem is, there are no institutional lenders like saves and loans anymore. one should revisit what happened with the savings and loan crisis, the resolution trust corporation and the failure that took place in the late 1980's and late 1990's. in america in the 1970's and 1980's, most of the mortgages made were made by lenders who didn't share the risk, they had 1100% of the risk. they were savings-and-loan associations that took deposits, paid a preferential rate of interest over banks by

regulatory design to attract the capital and they held the mortgage in portfolio until it was paid. and that's not shared risk, that's total risk. what were our foreclosure rates in the 1970's and 1980's, up until the end of the 1980's? very marginal at all. 1%, 2%, certainly not%, certainly not 12.7. whatever in the savings-and-loan is the federal government took away the interest preference to pay between banks and s&l's so capital flowed out of the s&l's. that was number one. number two, because s&l's then needed to make more money on internal portfolio, we allowed, the governmental loud savings-and-loans to create service corporations which were subsidiaries to deviate from their original charter and instead of allowing them to make home loans, to make commercial loans and developers. what happened? well, what happened is history. because we got off our mission, because we got off the risk, because we took our eye off the ball, the savings-and-loan

industry across america failed. congress had to create the resolution trust corporation to dispose of the bas bad assets ad the country. and we went through, up until now, the most severe recession we've ever been through. but this one is worse, this one's more pervasive, this one was called by a lot of financial certainly irregularities and a lot of poor oversight on our part as well as greed on the part of many lenders. what my hope is when we start fixing things with regard to mortgages, we will recognize that shared risk is not going to solve any problem if 100% risk didn't solve it in the late 1980's. what's going to solve the problem is for us to have some reasonable standards of required underwriting that are an insulator from institutions making bad loans unless they take the risk. i'm suggesting that we define what is a qualified loan that would not be subject to shared risk and what is a loan that would be subject to it. for example, what would a

qualified mortgage be? and i was in this business for a long time. when i started in the business in the 1960's through 1980's, you could borrow twice your annual income. you couldn't have a monthly payment higher than 25% of your take take-hoe became and your total debts a year or longer couldn't exceed 33% of your gross income. that was reasonable spurned writing. what were our foreclosure rates then? 2%, 1.5, in the mid-1980's. but certainly nothing like we've had in the 24.7% and 18.2%. what's a quul tied loan? it's one that requires full documentation so you really do have to have a job, so the boss verifies your job, so the credit agency actually verifies your credit, so you actual have a down payment, you don't have down payment assistance or some now, you see it, now you don't loan. no-interest loans. everybody knows you're not making an investment if you're not paying the debt service and only paying the principal. interest-only loans were a bad idea whose time came and it's went.

it may be good for certain forms of commercial investment but not for residential. no balloon payments. one of the biggest problems with these foreclosures were good people were loaned money with shoddy underwriting that this balloon payments in three, five or seven years. they didn't know what a balloon. they thought a balloon is something that flew in the air. what a bool loon is when the whole principal comes when it wants and you're subject to the ability to refinance. that's not a qualified loan. that's a high-risk gain. no negative am torization. that's a bad idea that came and really left. thaat the end of the year, you d more, not less. that's wrong. that was predicated upon rapid inflation or rapid appreciation, which isn't always going to happen. and ten requiring people to carry private mortgage -- and then requiring people to carry private mortgage insurance on their loan ifs they exceed 80% of loan to value on the loan.

a normal practical until we got into loosey-goosy. we would attract all the money towards qualified loans underwritten like we did them in the good old days and then put the shared risk retention on those loans that are not well underwritten, make the mortgage broker or the investment banker on wall street hold 5% of an investment that they sell because it didn't meet these qualifications. what would happen? they wouldn't do it because they wouldn't hold the money. it would have prevented what has been alleged, one of the brokerage houses did already. they'd never short something and bet on it failing if they had a piece of it. they'd only do it if you had the piece of it and they didn't. so i think it's very important when we get into this entire suggestion or this entire regulation or reregulation of the financial industries that we also recognize we have some obligations to correct some of the mistakes the government made itself in the past that caused the problem in the s&l's in the

1980's and with mortgages, nonqualified mortgages in the 1990's. what i'm suggesting, very simply, is this. let's take those things that are tried and true, not things we think will work but things we know will work. let's make them the gold standard. let's make them the qualification for the attraction of money into mortgages to fund the homes of the american people. and then let's say to those that want to take a risky loan, let's say to those who want to have shoddy underwriting, let's say to those who want to make a quick return and get out before the dollar comes due, they're going to have to take the risk. shared responsibility or shared risk is precisely right as an insurance policy to protect against that, but the unintended consequence of shared risk on a qualified, well underwritten loan is a higher interest rate for the consumer and less attraction of capital for the individuals who -- to form those loans to fund the housing purchases of america, which ultimately leads the government to do with freddie and fannie what it did before, force it to make loans it shouldn't, force the government, the taxpayer, to

be at risk in part on those loans and bring us back to another period like the s&l collapse or, later, like the financial markets collapse of the late -- last couple of years. there will be another one in the future if we don't recognize the need to make qualified loans well underwritten, do it like we did in the good old days when america flourished, our foreclosure rates were low and homeownership and housing was in reach within 70% of the american people. madam president, i yield the floor. a senator: madam president? the presiding officer: the senator from new hampshire. mr. gregg: madam president, i want to rise to talk about the same issue that the senator from georgia has just discussed. and first, i want to congratulate the senator from georgia, and this is the point that we've been making on our side of the aisle. he's come up with a very thoughtful and appropriate way to address what was one of the core drivers of our fiscal meltdown in this country. if you look at what caused the financial crisis of late 2008, which has caused this significant recession, which has caused us to go through all these expenditures as a

government and which has caused so many american people to have to suffer the consequences of this recession, there were three or four major events that generated this. one was money was too cheap for too long. that was a federal reserve decision. but right at the essence of it was the issue of underwriting, the fact that there was a decoupling of the people who were making the loan from the people who were responsible for the loan. and you had this whole service industry built up that was making money off of the fees that -- for originating the loan and really weren't that concerned about the ability of the person to repay the loan or the underlying asset. what the senator from georgia has pointed out in the proposal that he's brought forward is a very responsible way to address this fundamental problem which we have, which is the failure of underwriting. and that's the point we've been making on our side of the aisle. that we have a whole series of what we think are pretty good ideas as to how you can make

financial reform work better. now, i was impressed -- and certainly one of them is the idea of the senator from georgia. i was impressed to hear both leaders say that they want to have a bill that's bipartisan, that's comprehensive, that's thoughtful and that addresses the issues which we confront in this regulatory arena. unfortunately, that's not the atmosphere around here that has been created. regrettably, there has been a huge amount of hyperbole, especially in the last couple of weeks. most of it has not been directed at moving down a path of thoughtful and mature and substantive approach to this issue. most of it has been addressed at raising anecdotal events which have then been hyperbollized into single one liners as to how you address them. well, this issue of financial reform is far too complicated for one liners. that's just a fact. it's an extremely complex

undertaking, to make sure that we accomplish what we need to accomplish in a regulatory reform. our goal should be two. first we should do whatever we can to restructure the regulatory arena so that we reduce to the greatest extent possibly the potential of another systemic risk event. i'll talk about what we need to do in that area in a second. and second, while we're doing that, we have to make sure that the regulatory environment that we put in place people are willing to go out and take a risk and create jobs. when it the great uniqueness is of our culture, what makes this different, what gives a such a vibrant in energy is that we have people who are willing to go out and take risks. people are willing to be under the new wares. we have a system of credits

that makes capital and credit relatively available. as the third down this road of reorganization, we have to make sure the we do not suffocate that great strength of our nation. there are four basic issues today. none of them are part december do it the atmosphere around here, you think they all wear. we did our partisan the first is, how you and too big to fail. we cannot allow a system to exist where there is a belief out there in the market that the tax payers are going to back up a company that has taken too many risks. why is that? if that happens, it there is a belief in the market, when they

had taken too much risks and put themselves in dire economic straits, there is a belief that they will step up. capital will be averted. capital will not be efficiently used. capital will flow in an inefficient way to companies which have proved themselves to not be fiscally responsible, and that's not a good way for an economy to function, certainly a market economy to function. and so we have to end too big to fail. now, this isn't a partisan debate. senator dodd has brought forward a bill which he thinks ends too big to fail. in my view, it doesn't. it has some serious flaws. it's a good attempt, but it doesn't get there. senator corker and senator warner, two parties, two different parties, have actually put together a concept -- we call it resolution authority around here -- which actually does end too big to fail and does it the right way. it essentially says if a

company -- if an entity gets -- which is a huge entity gets out of whack, overextends itself, gets too much risk, no longer viable, well, then we're going to resolve that company. the stockholders will be wiped out, unsecured bondholders will be wiped out and the company will basically flow into bankruptcy and will not be conserved, will not be conserved. so that's a good approach and it's a bipartisan approach. another big issue, how you address regulatory oversight to try to anticipate a systemic event. well, again, the dodd bill makes an attempt in this area, but there are ways we can improve it. we need to have all the different regulators who are -- who have an important role in this sitting at a table, most likely led by the fed who will take a look at the broad horizon and what's happening in the marketplace and say okay, in this area we have a problem arising. we have too many people doing too many things which are at the margin of responsibility here. we're going to empower the agency which is responsible for that, the fdic or the o.c.c. or

one of the other regulatory agencies to go out and make sure that that activity ceases or is abated, and they are going to come back and report to us so that you have some oversight here. that's the concept. it can be fleshed out in better terms. and it goes to this issue which is raised by the senator from georgia, which is we should have better underwriting standards as part of this exercise, so that in the marketplace, real estate especially, residential real estate, we get back to the approach that we should have taken to begin with, which is we know that the asset value that's being lent to exists and that the person can pay the loan back as the asset -- as the loan is adjusted over the years. thirdly, we have got the issue of derivatives. derivatives are -- are a huge part of the market, massive. the number $600 trillion of

value, something like that. just massive numbers. what do they do? they basically make it possible for american companies especially to sell their products around the world or to take and put their products into the market in a way that they are able to address issues which they don't have control over. for example, if you're caterpillar equipment and you're selling something in china, you don't know if the currency is going to -- well, you do with china. that's a bad example. if you're selling something in brazil, you don't know if the currency value is going to change. you don't know if there is going to be a change in the cost of your materials that you're building that tractor with. you don't know -- a lot of different factors you don't have control over. derivatives allow you to insure over that. that goes to lots of different financial activity, all the way across the board to producers of goods. so there needs to be a regime put in place that makes these

derivatives sounder, where we don't get an a.i.g. type of situation. we're basically backing up to what amounts to an insurance policy was a company with a name but actually no assets. and so myself and senator jack reed from rhode island have been working for months, literally months on a daily basis to try to work out such a regime, and we think we're pretty close. we think it's going to be a good proposal. nobody is going to like it which we know means it will be a good proposal. but it will accomplish what we want to do which is get more transparency, more margin in the market. there will be the opportunity to have end users who are exempt, but there will also be a primary incentive to put people on a clearinghouse, and to the extent can you move from a clearinghouse to an exchange, that will happen also, without undermining the market. but the key here is to put in place a regime which doesn't force companies to go overseas to do their derivative activity. this is a very fluid event.

if we come forward with an overly regressive approach here and an overly bureaucratic approach, one that basically pontiacs to the hyperbole of the moment which is that all derivatives are bad and not transparent and therefore must be put on exchanges, something like that, we're basically going to push offshore the vast amount of derivative activity. that is critical to our industry in america being competitive. really, as a very practical matter, if we can develop a sound market, we want to be -- and we can develop a sound market, we want to be the nation where most people go to develop their derivatives, because it is a big industry and something we should keep on shore. third issue, consumer protection. time is up? fourth issue. the presiding officer: the senator has used ten minutes. mr. gregg: i see where the senator from louisiana wants to speak. but the point here is pretty obvious. this is not a bipartisan issue. we can resolve the issue of financial regulatory reform if we sit down and do it in a

constructive, thoughtful way. step back, be mature, and take an approach that's thoughtful versus wrapped in hyperbole and populism of the moment, preside. president, i want to spend a few minutes, if i may, this afternoon to talk about our -- the issue that has been the subject of much debate an discussion over the last number of days and that is the financial reform bill that will be coming to the floor of this body in a matter of days. an issue that is going to confront, as the circumstances presently are -- exist into members having to make a choice. and my hope is that before that occurs, that we can reach some understanding here that will allow us to have a strong bill that ends too big to fail, that protects consumers. builds the kind of architecture for financial services, that allows us to avoid the pitfalls that caused our economy to reach

almost near collapse over the last several years. so the choice is going to come down to sort of like this, mr. president. there are people who can vote to to help debate on financial reform legislation that will hold wall street firms, large financial institutions accountable and prevent future economic crisis, like the one which we are just beginning to emerge or basically defeat this somehow, walk out of this chamber and leave us basically where we've been. and that is highly vulnerable. individuals, families, businesses, the overall economy of our country once again exposed to the kind of vulnerablities that brought so much hardship to our country. or, of course, they can block, as they are apt to do some, listen to some consideration of this bill and leave us in a place -- a broken place with the status quo, which, again, would

create the kind of problems i described. so you have to ask yourself a question: who benefits -- who benefits for this bill to rein wall street or large financial institutions is strangled by a filibuster? we end up we can't even get to debate the bill. who benefits from that? certainly no one can make the case that the american family would benefit. these families have seen millions of jobs lost, trillions in savings wiped out because of the greedy few on wall street gambled with money that didn't even belong to them, causing the hard ship that we've seen in our nation. certainly not the american small businesses, they don't benefit. these are the ones who have seen the flow of credit and capital literally dry up. how many of us in this chamber back in our respective states have talked to small businesses that cannot get a dime worth of credit over the last several years to hire new people, to

survive during an economic crisis? anecdote after anecdote after anecdote of businesses desperately trying to find credit in order to survive. because of the unchecked risk taking of financial firms that caused this financial crisis, credit has virtually gone and the american businesses, small businesses particularly, certain will are not benefiting if we're confronted again with the status quo and a perpetuation of the senate credit rules. certainly, mr. president, not the american community banks, they don't benefit at all. these are the ones who have found it difficult or even impossible to compete on a playing field tilted so heavily towards the largest firms and, frankly, financial firms that are unregulated. wufn the things that our community -- one of the things that our community banks and others -- and i'm not suggesting that they dot every i and cross every t in the bill, but one of the things they're seeking is

some consolidation of recommendations, they want to see their competitors who are not subjected to any regulation be subjected to so they will have to face the same set of rules. the bill that i have written along with my colleagues on the banking committee does just that. we done sol date the regulation so that there's not the overlapping jurisdictions that exist and their major competitors, the nonbank financial institutions are going to be subjected to the same rules that they are. that creates that level playing field that our smaller banks need in order for them to compete effectively. mr. president, certainly not the american taxpayer, they're not going to benefit with the status quo either. these are the people forced to bail out wall street in 2008 and if this bill is blocked, might be asked to do it again. now i'm not in the prediction business, mr. president. but if some future congress goes back to the american public, as we did in the fall of 2008 and

ask them to write a check again for $700 billion because we failed to get this legislation through that would end too big to fail, the implicit guarantee that the federal government will bail you out if you're so large or so interconnected that you can't possibly fail, the american people, in my view, would reject overwhelmingly a request to write another check for that purpose. and our bill, for the first time, writes into legislation an absolute prohibition that the american taxpayer would ever or should ever be asked to do what they did in the fall of 2008. but, mr. president, here's the benefit if this bill is blocked, the same large financial firms that got us into the mess in the first place, they believe, and i presume they're right, that they can bolster their bottomlines if the status quo prevails.

they can continue to take outrageous risks, along with using other people's money, knowing that any profit is theirs to keep and any loss will be made up by the american taxpayer. they're the ones. that's why we're faced with this prediction that 41 of our fellow colleagues here will vote against us going to this bill on what they call the motion to proceed to the bill. the letter from the minority leader has said we've got 41 votes here to stop you from debating this bill. when you explain that to the american taxpayer t, to the smal business to the american family and others out there paying the price because this mess that the american institutions who today are leading the charge against getting to bail, explain to them why the status quo is in their interest and their benefit. mr. president, those who vote to block this bill will be sending a clear message to american

families, businesses, community bankers and taxpayers and that message will be, i'm sorry, but we're not on your side. we're choosing another side of this equation. last month my good friend, the minority leader, and the republican senator responsible for campaign fundraising participated and ended up meeting in new york with wall street executives. and that happens all the time. certainly have right to sit down and talk with people, represent labor and nobody knows what was taught at that meeting. the chair comes back and all of a sudden we have this rhetoric about to be to fail. we cannot possibly go to this bill. i was born at night, but not last night. do not tell me that miraculously these things happen and all of a sudden we find yourself 41

colleagues, many i suspect that are not obviously enthusiastic about this game plan, that said do not ask why. do not tell us what is in the bill. just tell us the will line up and say no matter what anyone says or does, we are going to object to you even going to this bill. i firmly believe that there is more than a small minority of my republican colleagues to frankly find that argument objectionable. that is not to suggest they like this bill or agree with every position. they are sick and tired of being told how to vote on a procedural motion on a matter that begins our support. what we do know about the oppositin i is that the

republican leadership has false talking points written by a political strategist. talking points that have been debunked by the independent media analysis. sheila baird. let me point out, madam president, the memo that suggested this game plan written by the political strategist was written long before even one word has was written on the bill. they were told how to fight the bill that didn't even exist out here by akiewtion the bill of -- accusing the bill of leaving open the too big to fail, even though they knew, at least those who read the bill, that those provisions had been written so tight that no one could possibly argue that too big to fail would ever be allowed again. the republican leadership in return promising that every member of their caucus would vote to kill this bill before the debate even

began. madam president, i know for a fact that members of this body on both sides of the aisle want to pass a good bill. my colleagues here know me well, and they know my reputation over the years. i have never, ever passed a major piece of legislation in this body over three decades when i have not had the cooperation and backing of a member or members on the other side of the aisle, never once. on every major piece of legislation i have been involved in. and here we are on the brink of going forward with the largest -- the single largest proposal to reform the financial services sector of our country, and we're divided here like a couple of petulant teenagers. instead of sitting around and coming together as i have offered for months to get behind a bill that will allow us to go forward. it's long over due that we grow up and recognize that this isn't some, you know, athletic contest. this is about whether or not our economy can get back on its

feet, whether or not we can grow and prosper and create jobs, have credit flow and credit formed so that businesses and wealth can be created. nothing less than that is at stake in this debate and discussion. all the more reason why we need to go forward, and to go forward like adults, like members of the greatest deliberative body we are told over and over again in the history of mankind, the united states senate to resolve these matters. i have worked for hours with my colleague from alabama, as he well knows, senator shelby, to the point that he has said -- and i commend him for it and i appreciate it very much, that we are 80% of the way to a bipartisan consensus. in fact, i suspect that if richard shelby were asked today whether that number was 80%, i suspect he would even have a higher number. imagine being between 80% and 90% in agreement and yet we're being told by the minority we can't go forward. do we have to write the whole bill? is that how we go forward?

you have 80% or 90%, what you think is a good bill, but oh, no, we're going to stop any further debate. in all my years, i have never heard of such an argument, whether i have been in the minority or the majority, that i agree with 80% or 90% of what you have written, senator, but i'm sorry, we are going to have to stop even considering any further debate on the floor of the united states senate. i have worked for many hours with the senator from tennessee, bob corker, to try to get to hundred% as he well knows. no matter what was said in the meetings between the republican leadership and wall street executives, the fact is that the bill that i will be bringing to the floor reflects not only a bipartisan input but good common sense as well. and if you look at what the bill actually does, it's clear that there is no ideology here, just one principle. hold wall street and large financial institutions accountable so that american families and businesses can grow and thrive without fear of another economic catastrophe.

the bill, madam president, creates an early warning system so that for the very first time in our nation's history, someone will be in charge of monitoring our entire financial system to look out for emerging products and practices and problems not just here at home, madam president, but even globally. again, i don't think you would have to have a ph.d. in economics to know that what we read in the headlines and heard on our news shows a few weeks ago that there were major economic problems in the small nation of greece, that all of a sudden the financial system of every other nation around the world was at risk. and in that small exchange in shanghai, china, began to decline by 12% a few years ago, every other exchange around the globe within hours was adversely affected. that market, that exchange, madam president, represented less than 5% of the volume of the new york stock exchange, and yet because it declined by 12% one morning, every other exchange around the world

reacted. what more do i need to say about whether or not our issues here are global in scope, not just domestic? so, again, even further reason why we need to be able to pull together and create this bill that is essential. so we have a warning system in place that will monitor the financial system. as i said, look out for products, practices, and even problems that can emerge in other parts of the world, if they could pose the kind of risk that would bring our financial system to near collapse. under the status quo, of course, no regulator can see beyond the narrow silo of their own radar screen, and we changed that. this now involves all of these prudential regulators sitting in a systemic risk council, headed up by the federal reserve and the treasury here so they can actually look over the horizon and act as a financial radar system. what's going on out there? are there problems emerging in products or s&p 500 or nations

that could bring our country to near financial disaster? if we had had that in place back a few years ago, i would argue we might not find ourselves where we are today. so this is one of our provisions in the bill. what a pity it would be not to lose the opportunity to create that kind of an early warning system. that's how the subprime leading -- lending sector was able to grow so large despite the dangers it posed to our economy and why no one was able to stop it before it precipitated a crisis. madam president, i don't believe members of the minority caucus really want regulators to be unaware of emerging threats to our financial system. the bill brings new transparency and accountability as well to financial dealings by ensuring that even the most complicated or obscure transactions are concluded in an open marketplace. the presiding officer, of course, is well versed and talented, coming from the empire

state understands these issues. we happen to believe, i believe, that driefts, for instance -- that derivatives, for instance, are a very important component to growth and prosperity. they have become a pejorative, unfortunately. but my view has been let the markets work. now, how do the markets work best? markets work best when there is transparency, when buyers and sellers, investors have an opportunity to see with clarity what these instruments are, what they are designed to do. right now we have a shadow economy where some of these instruments operate in the darkness, and that's one of the problems that created the financial mess we are in. our bill opens up, sheds light, brings sunshine to these instruments so that taxpayers and more importantly investors and others can honestly understand what they are, what they are intended to do and how they can possibly -- how they work. for the first time here, madam president, we would force risky

financial companies like bear stearns and lehman brothers that have operated in the shadow of the banking system to be the subject of proper supervision again so we have the ability to understand what they are doing. of course, under the status quo, these dangerous giants that have been free to take enormous gambles in a single-minded quest for maximum profit and when they go down like the hindenburg, taxpayers are left to clean up the rubble. madam president, i don't believe that members of the minority caucus really want to leave the next lehman brothers unsupervised until its collapse shakes the very foundations of our economy. this bill that i have -- that we have before us beefs up the s.e.c. oversight, it strengthens protections for investors and gives shareholders a greater voice in how executives are compensated and how big their bonuses can get. under the status quo, of course, the same executives whose

mismanagement caused the collapse of financial giants get to collect ridiculous bonuses again. kill the bill. there is nothing in here that would preclude the same kind of abuses, the outrageous gouging, if you will, at taxpayer expense by a handful of these executives who fail to understand or if they understand even more outrageously were willing to reward themselves for their own failures because the american taxpayer shored up their financial institution. and the allen stanfords, bernie madoffs of the world are able to rip off investors for billions while the understaffed and underfunded s.e.c., the securities and exchange commission, fails to stop it. madam president, i don't believe that members of the minority caucus, the republican caucus, really want to leave these executives free to line their pockets with unearned billions or leave investors vulnerable to wall street predators and con

artists. that's what's happened, that's what went on. our bill stops it. we need to be able to go forward with this bill. our bill requires full disclosures in plain english, madam president, so that americans can easily understand the risks and returns of any financial product, whether it's a mortgage or a student loan. and our bill creates an independent consumer protection agency, a watchdog with bark and bite to protect consumers from the abusive practices that have become almost standard operating procedures. skyrocketing credit card interest rates, the explosion in checking account fees, predatory lending by mortgage firms and so much more. and you don't have to educate the american people. you will hear it over and over again from your own constituents. listen to what they have been through with these increased interest rates, interest fees. every gimmick you can think of to pick the pocket of the american taxpayer who today

necessarily needs to depend on credit cards in order to make ends meet in their families. of course, under the status quo, madam president, consumers trying to make smart decisions about their family finances are confronted with a sea of fine print, technical jargon, and they are vulnerable to the predatory lenders and the greedy predators that have taken advantage of them. our bill stops that, our bill puts an end to that. if we don't get the chance to debate this and go forward, that will be the end of it. what a disgrace it will be to be confronted as we were at the outset of this congress with the problems the american taxpayer have been through. 8.5 million jobs lost, seven million homes in foreclosure, retirement accounts evaporated, small businesses failing, and we did nothing to stop it. despite the fact that 80% or 90% of what i have written in this bill is agreed to by many in the minority, but you won't even allow the bill to go forward to be debated. for the life of me, i don't

understand that logic. in short, madam president, this bill protects the american consumer, american businesses, community banks. as i mentioned, taxpayers, from the very exact situation that occurred in 2008. an economic crisis brought about by wall street high jinks, large financial institutions and regulatory failures. and our bill creates a stronger foundation, i might add, on which we can rebuild the prosperity that we have lost in our nation over the last number of years. madam president, i don't believe that members of the republican minority, our friends and colleagues here, want to kill this bill. i don't want to believe that. unlike other matters we have debated over this congress, this matter ought to be one where we can come together, as i have tried to do, day in and day out, week in and week out, month in and month out, to craft a piece of legislation that reflected the myriad views embraced by the members of this senate.

and we are on the brink of going forward and i will go forward with this bill. now, we can do it one of several different ways. we can go forward and i will bring this bill up. the leader, i'm told, will offer a motion to proceed. my hope is we won't have to have a vote on that, that there would be enough common sense here to say this is a good product, even for those who don't like various provisions of it. and then do what we're supposed to do in this body -- debate, offer amendments, try to improve the bill based on your own view of what constitutes an improvement. but let's act like the united states senate on a major bill of this import here. instead of just putting on the brakes, don't show up, don't say anything, just vote no, we're not going to debate this until you do exactly as i want you to do. madam president, that's not the senate, and i think the american people expect to see work. my hope is, of course, that i will be right in that and that my colleagues, many of whom i have worked closely with on

many, many issues, do not want to be part of a blindless -- or rather a blind, pointless effort here just to walk away from this process. i believe that the -- that they believe, mr. president, that our friends on the other side are caught between the same commonsense principles that led many of them to spend so many hours helping to create this legislation and the political deals that have led their leadership to demand they help to kill it. mr. president, i have been in this body as i have said a moment ago some 30 years. i have served with many republican colleagues for a long time. i have got great friends. as my colleagues know on the other side of the aisle, people who i believe care as much about this country as any other member does, and they want to be part of answers, solutions. they didn't come here, they didn't fight hard to get here just to say no. they came here because they wanted to be part of the answers. now we can get our country moving again.

again, i am charged as a chairman of a committee to try to pull together a bill that represents the different points of view, that listens to our fellow colleagues here in crafting a piece of legislation that can work. i have tried to do that now over many, many months, and i have come to the point where frankly we need to go forward now in this body. i'm confident again if my colleagues will give us the chance, we can achieve the results that they seek. i'm hopeful that they will when the motion to proceed occurs and then engage in the kind of thoughtful, intelligent debate that this senate has a reputation of achieving and accomplishing. so, madam president, i thank my colleagues for the work they have contributed to so far. let us not take all of that work and dash it on the rocks of procedural filibustering here. we could do better than that, i'm confident we will, and i urge my colleagues to be supportive of these efforts. with

[inaudible conversations] >> the hearing will come to order. thank you everybody for being here. this is of a fair hearing our committee has held to review america's border security program in the wake of this stunning increase and violence caused by the mexican drug cartels. in fact by coincidence it was a year ago today our committee held each field hearing in arizona with some of the same

witnesses who are on the second panel. iowa regret to say in the year that has passed the situation has continued to deteriorate. since 2006, more than 22,700 people have been murdered in mexico by marco terrorist in the ongoing war between the cartel's and the government to get that number comes from the mexican government study. it is a multiple 22,700 of the number of americans killed in the war in iraq and afghanistan since 2001. the murders unfortunately have been steadily escalating. 9,645 in 2009, an increase of 50 per cent over the already unprecedented level in 2008 and three times the 200837 killed in

2007 mexican president felipe called verdone's first year in office. these statistics are of grave and a great concern to the united states has the hard to mexico. and it's strong and courageous president. i admire his unwavering commitment to rid his country of the plague of marco tener was on. in the past year the mexican government has arrested or killed literally scores of leading cartel figures including arturo known as the boss of bosses in december. but as cartel leaders are taken out, the violence seems to increase as they spike among themselves for the remaining pieces of marcos' trade. the obvious fact is we've got to do everything in our power to support the southern neighbors

than the historic battle they are currently waging against the cartels, and we've got to be vigilant on the american side of the border because there are deeply troubling signs that the cartel's and other smuggling groups are becoming more willing to bring their violence across the border and inflicted on american citizens. in the past month alone as you know, three separate incidents have drawn our attention, concern and anger. pregnant u.s. consulate employee, her husband and mexican husband of another consulate employees were gunned down in juarez as they left a children's party. he was consul at was attacked with an eye eda coming in improvised explosive device. there's a term we normally hear used with regard to the terrorist attacks against us on

our allies and iraq and afghanistan. and of course a well-known and much respected and beloved of rancher in arizona was murdered on his own property. all of this follows the murder of an off-duty border patrol agent last year so the bottom line before the committee today is what can the federal, state and local governments do to gather to control violence in mexico on the border between the u.s. and mexico and violence and other illegal behavior that will flow over the border into the country? it brings me briefly to a highlight focus of this hearing which is our effort to use technology to control the border. when the virtual fence or sdi net project was first launched, we are told that it would be extended across our entire

southwest border buy nearly 2,000 miles by early fiscal year 2009. well, is now of course april april 2010, almost four years after this sdi net began and $770 million has been spent directly and we are still waiting on the testing of the first 23-mile stretch of sdi net which is in the tucson sector. that's it. by any measure, sb donner net has been a failure. a classic example of a program grossly oversold and badly under delivered. win es benign net first started u.s. customs and border protection seem to have effectively told them away and do what you can do as quickly as you can without goals and expectations the the underestimated the complexity of

building the system i believe and the border patrol agents themselves, the people who would be relaunching on and implementing the system every day were not in my opinion adequately consulted on with their actable needs were. i am also troubled the program office responsible for spi net is heavily dependent on contractors weakening as the cdp's organics capability to manage the program and ensure capability bigot and of course the structure of the sdi net contract with single contractors means cbp does not get the benefits of competition for individual tasks undertaken for the sdi net program. from the beginning of this benign at cbp reports to congress requested to find that mystical point where the parallel lines finally meet. it's always just over the horizon that you never actually

get their. we've got to get there. our communities that visited the tucson sector over the recess and once again the word we are almost there. i don't think the committee members will believe we are almost there until we are there and we can see so with our own eyes. i'm pleased secateurs napolitano border blanka over an internal review of the sdi net program which will consider its long-term viability in determining whether there are technological alternatives to providing better border control. i welcome cbp commissioner alan bersin today. it's unfortunate to comes along to get into office is not accountable for any of the deily that i just described and but now has the responsibility of course and i look forward to his testimony and questioning that will follow. we are also honored to have a second panel of witnesses from arizona to bring our committee

firsthand from the local perspective on this crisis which is a homeland security crisis. i am honored to be joined as ranking member today by senator john mccain of arizona. he has an obvious interest in this crisis because it is so disproportionately affecting the people of arizona. he has been a persistent advocate for a border security and urgent action to deal with the violence pouring of the border into the u.s. and i'm proud to call him now for an opening set. >> thank you, mr. chairman and again, thank you for holding this hearing. you and your ranking member susan collins this is an important hearing. as you mentioned was exactly one year rego today that we have a hearing in phoenix and was at that time we called for the dispatch 3,000 national guard troops to the border and

unfortunately and as our witnesses will testify we are seeing increasing in violence the situation is not improved we are seeing serious spillover violence that affect americans living near the border. mr. chairman, i have a couple of three articles of like included in the record. one of them is entitled the corridor drug trafficking victimized residence that destroy the environment along the southern arizona mexico border. the border area home invasion is forced residents to take action, chico and the monkey how many times will a border collie o.d. and his accomplished captured and released by law enforcement would you believe 35, these are all very interesting articles that i put hope all of my colleagues would take the time to read so they could understand how serious and uncontrolled the border situation is. as you mentioned just last month

americans were killed on the mexican side of the border, a third generation arizona rancher was found dead on his property and the mexico border reportedly shot by a when you enter the country legally. interesting last week it was reported in the la times that more than 22,000 deaths in mexico and the past three years have occurred in mexico as a result of the drug violence with the cartel's. 22,000 mexican citizens and the violence is increasing and in feeding the everyday life and peace of mind of our citizens in the border region. some believe they're listening wall was land where there is little or no consequence for the violence violation of their land property and well-being. the president's most recent budget unfortunately seeks to cut 181 border patrol agents

inexplicable. inexplicable. this comes after the border patrol agents already declined from 2,009 to fiscal year 2010. los all of the premises known today the border patrol tucson sector accounts for almost 50% of all illegal immigrant apprehensions' across the country specifically in fiscal year 29 the border patrol in the tucson sector apprehended two injured 41,453 and officials to read the size of the population of reno nevada. and we will hear from our witnesses who are not apprehended some say three times, some say five times. but that number is astonishing. the tucson border accounts for 50% of all of the marijuana procedures in the nation. in fiscal year to doesn't mind the border patrol seized more

than 1.3 million pounds of marijuana in the tucson sector alone. the first time in the border patrol sector had ever seized more than 1 million pounds of marijuana in one fiscal year. additionally 90% of the cocaine used in the united states comes from mexico and much of it smuggled through through the highway. it's these reasons and fiscal year 2000 negative 73% are all the district of the criminal filings involve either immigration or drug charges. as you know, mr. chairman, yesterday senator connolly and i released a ten-point border security action plan that calls for 3,000 national guard troops to be sent to patrol the terrorism and the mexico border, 3,000 additional border patrol agents through the border, 24 now read a surveillance by creditor unmanned aerial vehicles construction of a fence that truly towards the entries

among other issues. i hope the hearing today will highlight the outstanding work that our state and local officials are performing to provide for the safety of americans despite the inability of the federal government to secure the southwest border from the flow of drugs, money laundering and illegal immigration. we will hear from our second panel, the major from arizona and the sheriff larry dever who deals with fees' on a day-to-day basis including our u.s. attorney who has increased the number of prosecutions i am happy to say. finally, mr. chairman, on the sdi and that it is a disgraceful failure. at least $800 million so far has been wasted. think of how that money could have been spent to try to improve our border security. there's been a lack of oversight and lack of accountability and

by most reports that this virtual cents which is already consumed hundreds of millions of dollars of taxpayer money has been complete failure. i will look forward to hearing from honorable allan bersin along with border security issues and again, thank you for holding this hearing. >> thank you, senator mccain. commissioner bersin i'm glad to welcome you for your first appearances you assumed the responsibilities of this critically important office and we look forward to working with you as the oversight committee for the department of homeland security and we invite your testimony at this time. >> thank you, mr. sherman could -- good morning. senator pryor, senator burris, i appreciate this opportunity to return to testify before the senate i had many years earlier years of the 1990's and which i

watched the border from my home and a place i worked in san diego and as i've come back during the past year by a understand we face many of the same problems but we have more opportunities because of the resources and the support that about congress and particularly this committee has provided customs and border protection. i take the range that the cbp with honor and pride and by understand i am accountable to the people and to this committee. the committee indicated that it was to hear from me on three subjects the status of border security efforts, and that is our number one priority to protect the american people and border communities from violence to assure public safety and assure security on the border. secondly, the committee wishes to hear about the status of efforts in support of the government in mexico as the chairman noted there has been a

historic reversal in terms of president paul -- calderone's efforts and i will be happy to report on the cdp, dhs and other elements of the was the front provided to president calderone. the third is to review the three of the action of the border security to go back over with the original theory was with regard to personnel and infrastructure and technology with specific reference to sdi net, its current status and future prospects. a year ago actively beginning in the last quarter of 2008 the american people became aware of something that it has started with the power of president calderon in 2006. we discovered and a hit the front pages the kind of violence that is not escalated to the point where senator mccain and the chairman noted more than

20,000, an estimated 22,000 mexicans have died as the cartel takes on and as the mexican government for the first time in its history takes on mexican organized crime. in march 2000 by secretary napolitano, no stranger to the border, announced the southwest border initiative that had three basic goals. one was to see the violence that was occurring in mexico would not spillover into the same form and same frequency as seem devastating impact and that it was having in northern mexico. the second was to reduce the movement of contraband and illegal crossings across all border on the southwest. and third was to support mexico in its campaign to crack down on cartels for technical assistance to intelligence sharing and to support on either side of the border the operations that were taking place south of the

border. significant resources were deployed at the border in terms of personnel, in terms of technology, non-intrusive inspection technology and x-ray machines, in terms of intelligence analysts and in terms of redirected stone garden funds. the chairman, mr. mccain, noted support and partnership with our state's local with aaa partners as absolutely essential in the federal strategy on border security. the result of the southwest border initiative resolve significant increases in illegal crossings that while this is attributable in some material part of the economy and recession that we've experienced within the north american and worldwide it also reflected heightened enforcement posture by the increased border patrol agents that fought the total level of agent strength to 20,000 border patrol agents to come an increase of 100% since

2004. and increase i should say of 7.5 to eight times what it was my last work at the border patrol in the 1990's. the statistics with regard to seizures of contraband and narcotics are set forth in the written testimony and i will leave the staff and the senate to refer to that estimate for the specific statistics. with regard to the violence situation, we have two reports. one that is cautious in its optimism but also in its recognition that vigilance is required and a second of that is not optimistic that reflects the kind of tragedy we saw in the killing of the rancher and arizona. the kind of violence that we have seen in mexico from the shu doubts in the plaza, the 200 days death toll in juarez that

have been converted that city into the most dangerous city in the western hemisphere we have not seen that kind of violence in the united states in terms of massive impact. we are geared to prevent that and detour the impact from coming across our border. that is not to say, senators, that we have not seen significant and disturbing trend is of increased violence attributable to organized crime activity based in mexico. we have and we do not and we take free seriously. the murder of rancher was the most recent incident in which an american citizen on our side of the border was the victim of organized criminal violence based in mexico. secateurs napolitano to production in responding to that murder. additional border patrol agents

deployed in the douglas station area of the tucson sector was no immediate dispatch of air and marine and to help track suspected murderous and we have reason to believe they moved into mexico the investigation continues. not only with the sheriff in the cochise county but also federal and state investigators and we are working with mexican colleagues and secretary of knowledge, wanted me to ensure this committee that she is committed to seeing that this murder is apprehended and prosecuted to the fullest extent of the law. we also see and it is disturbing the killing of american citizens and people connected to the consulate in juarez. the committee asks whether that or the use of an ied, an

explosive device against the consulate in florida represents a change in the cartel's approach to targeting or challenging u.s. law enforcement and u.s. personnel abroad. senator, that increase continues and we take that threat seriously and would constitute a change in the way the cartels have operated with respect to u.s. law enforcement officials or u.s. officials stationed abroad. last, in terms of the relationship with mexico, i can tell you from having returned to the border that indeed the future is not what it used to be with regard to mexico. whereas the border used to be a place for u.s. law enforcement stopped and where sovereignty is still respected the fact of the matter is cooperative relationships with mexico are at

a level and depth that we've never seen before. of this stems from president calderon's recognition of the extent to which organized crime has changed mexican politics and society but also results from the recognition by president obama and secretary napolitano and colleagues in the cabinet that we share a code responsibility with the situation on the u.s.-mexico border. but in fact the cycle of drugs coming north and guns and cash and south are part of one organized vicious cycle of crime and criminality that we have a joint responsibility to confront. and i am pleased to report to you, mr. chairman and senators will, we have confronted in cooperative ways not seen before. let me give you three examples. when is the extent to which we at cbp focus on southbound movement of cash and guns.

we've created an outbound division and field operations office. we've dedicated the resources. we've instituted the checks that look not only at people and things, cargo and goods coming north, but people and things going south. the result of that in concert with immigration customs enforcement has been at unprecedented levels of seizure of both cash and also of weapons. we've also seen for the first time in the history of u.s.-mexican border the dispatch and the deployment of the police in mexico in the area to coordinate with the u.s. border patrol. this creation of a communication north and south of the border colts out great promise and indicates something that would have been unthinkable even five years ago. at last on the prosecution can't, we see our prosecutors

mr. bruck will be able to describe this with specificity cooperating with the pt or the mexican prosecution force to share prosecution's authorities or responsibilities to see to it that lawbreakers are punished whether in american courts or now certain cases mexican ports. last, with regard to the personnel the infrastructure and technology we have increased customs and border protection to where we are now. we've 20,000 border patrol agents and 24,000 field offices. we also have build the infrastructure congress asked us to do with regard to the fencing across the u.s.-mexican border on the advice of border patrol in the professionals who live and work their we have met and all material respects the obligations placed on the department of homeland security with regard to the fence.

last mr. chairman the senators with regard to the sdi net as you know secretary napolitano came into our office because of her experience as the governor of arizona she understood the promise of the virtual fence with brown's fell to san diego had not delivered and wasn't anywhere near being able to deliver. as a result as you know she ordered a midterm assessment and ordered some immediate steps with regard to the funds under the american recovery and reinvestment act to be had with the secretary order and has taken place was a reallocation of funds under to see to it that we would not continue to spend on the block one technology but rather to use those funds to purchase and deploy technology at the border but it had been trusted and tried by a were border patrol agents and field

officers and that has been done with regard to the $50 million i will be pleased to answer the committee's questions with regard to the specific allegations among the variety of devices that have been long used on the u.s.-mexican border and have proven their value. the secretary also started a science based assessment that is under way that will look at sector by sector across the u.s.-mexican border what mix of technology will best serve agents on the ground and communities of the border and i would say that while the news regarding the the wholesale integration at the border while the level has proven to be beyond the capacity of the contractors and capacity of cdp to date there are elements in the block one technology that we would urge this country and its staff to work with us to see

whether eight actually functions in a way that can be integrated with a placement and deployment of technology across the border so that in fact sdi net technology if not the sdi net system as originally envisioned but actually have a place as we move forward. mr. chairman, thank you for the opportunity to look forward to responding to yours and the committee's questions. >> thanks for a much, commissioner bersin. we will have time for each of the senators on this round. let me begin my questioning, commissioner, at the end and when you for the benefit of those in the room and those who may be watching or listening to contrast to things you said the are of interest to the committee. the first is in your estimation and you are fairly new at cbp,

the government, the federal government has met its obligations, met all of its obligations he said with regard to the defense and along the border. contrast that if you will with what everyone including yourself i gather views as the failure of the sdi net virtual fence system. >> mr. chairman, the infrastructure, the offense is an element of infrastructure. but we did beginning back in the clinton administration with regard to the old landing and then carried forward in the resources provided by congress as the fence of approximately 700 miles just about 670 miles to be more precise was built, very much more governed by differential and terrain and circumstances and the fury was to provide the border patrol agents with an opportunity

depending on the different terrain to be about to respond to incursions'. >> what area is that generally? >> it's been effective with regard to the different kind fencing that has been done support siggerud the points of entry you will see pedestrian fences, 15 or greater that what will keep people from scaling the fence and moving into a town or city which they can then planted to the population and escapes from apprehension. out in the middle of the desert different kind of infrastructures are required largely to prevent the movement of vehicles across the flat terrain. i think what we've seen as a successful and implementation of the differential of location of infrastructure. >> a contrast with the cspi net, that was intended as a backup or to cover the whole border in a kind of virtual cents? >> it is a system that was to give a combination of video and

through the radar and ability to detect incursions' on the screen and to identify the kind of incursions', the kind of person, the kind of car, the number of people, and the technology also happened to mention and in fact one while the assessment is still going on it has shown some promise in being able to do precisely that. what has not worked is the total integration of technology from each of the areas along the border into an overall system that would permit a central monitoring and control. the technology integration at the very broadest level has been the complete failure the committee described. >> that is a helpful clarification. so now let me ask you this. i presume you wouldn't say the combination of fencing and virtual sense of spi net whatever parts that are working are stopping the flow of illegal

immigrants from mexico to the united states today. >> no, it's not sealed the border such that there is no evil movement. specs there continues to be a movement in and out as it were. about me ask this to you have any relevant statistics, this is a hard thing to do i know because of all of the vagaries of making judgments like this since we are talking about is essentially on the is legal behavior. as the mcginn terms of the number success because the number of portnow? there has been some feeling that maybe has gone down because the economy is worse here. >> the statistics set forth mr. chairman and the testimony indicated in fiscal year 2009 we saw and encountered at the points of entry 224,000 municipal aliens at the port of

entry and we apprehended more than 556,000 between the points of entry. approximately in total 580,000 illegal or attempted illegal crossings. in fiscal year to date we've seen 113,000 aliens of the points of entry and 245,000 at the -- between the points of entry somewhat greater but basically the same level. ..

large-scale technology integration. in fact, i without speaking to employees of the office of information technologies today and i remember that the first trial at the federal court in the 70's was about the traffic control system, in which there was an integration of all the technology and the traffic lights in the city of baltimore and the expert nation which you can move based on traffic flow wearied you could direct all the cars in the city. it was a horrible integration failure. that would be a piece of cake technically speaking today. so i don't want to see the erratically, at some point, you couldn't have that kind of sophisticated technological integration of that fbi not originally project date. a racial or the secretary concludes a maker through based

on the price that we've received is that the wholesale education is not a goal that is part echo weather would produce the kind of project results that we would want to see. >> okay, let me ask you a final question, which is, in some sense you get a response, but i want to clarify for myself anyway. whether the murders that the council, whether the killing of rancher mr. krantz, whether other attacks on u.s. citizens indicate a change in tack ticks by the mexican drug cartels, which are generally in the past avoided direct attacks on the united states. a judge that the use of the improvised device, which is essentially a bomb. anything energy-saving you are not sure. should we worry that both cbp

personnel, american citizens and others on the side of the border will be -- and american interests and location and mexico will be subject to more violent attacks by the drug cartels? >> mr. chairman, the answer to the second question, should we be concerned? absolutely, and we need to take the possibility very seriously. at the same time, in response to the first question, we're not sure if we continue to investigate. so for example, while operating a premise might be that mr. krantz had been killed by someone connected with the smuggling outfit. we have yet to the investigation continues to establish that in fact. their hypotheses and certainly we need to take seriously the threat that the incident to reference to war is versus the

radio represent a change in policy. we have not seen the killing of an american law enforcement person in mexico since that of an reiko, reyna in the ninth teds. i hesitate to throw the same conclusion anecdotal, but we need to investigate that because the situation in mexico interned for where the violence is coming from, the streaking is coupled with the cartels wars that are going on, make it clear. but we need to take the possibility and the threat very seriously and we do. >> i trust our cooperative relationship with basic and government authorities and law investment include sharing of intelligence so one of the resources we would have in determining whether the cartels had taken a turn and decided no to target americans on either side of the border. would we learn that from a cooperative relationship. tonight that's correct, mr. chairman. the information sharing is at a

level that we've never experienced before. at the same time, given the weaknesses and mexican law enforcement security apparatus, they understand this as we do, it's very much in a trust verify basis. i suggest the committee may wish a more confidential setting to receive a briefing on exactly what we do know and don't yet know about that threat. >> thank you. thanks, commissioner. senator mccain. >> thank you, mr. chairman. mr. bersin, i think he can provide you with information with that leash circumstance late in evidence why is it shows there was this murder of rob cramp was done by someone who had entered this country illegally and very likely has to do with drug trafficking. haven't reached a total conclusion, but certainly there are signs that sheriff deaver

will inform us. do you believe that violence has increased or decreased on our border in the last year? >> with regard to the so-called spillover from mexico, the mass violence, we have not seen that. we're prepared for it and we understand the risk, but we have this phenomenally, senator mccain -- >> them in direct you right there. sheriff said to another law enforcement people will tell you there's been significant change in the behavior of the chair traffickers and that is that they're prone to violence. they're prone to trying to cause action in some freeway so they can get away. they have become much more aggressive. their weaponry and sophistication of it and types of it has dramatically increased. would you agree with all that? >> i do agree with all that and that doesn't gainsay the fact way of war is, the most dangerousity in the western hemisphere next to el paso,

which is one of the safest cities in america. that does not deny that everything mailed all-league and law enforcement sherritt dever said. we have a significant violent death caused by organized crime based in mexico. yes, sir. >> would not argue for increased enforcement on the border? >> as a dozen and we've seen subtly increased enforcement, senator mccain. actually, the budget proposal is a reduction in border patrol. sir, respectfully with regard to this year compared to next year, the border patrol, the level of border patrol agents will remain level without a loss in border patrol force. >> so violence is increasing on the border patrol members remain level? >> the use of -- this is not just about border patrol agents along. it's about infrastructure, technology, tactical operations, cooperate with law enforcement

locally in state and across border. >> and infrastructure that was plan on providing us with surveillance all across the u.s.-mexico border is now turned out to be in the assessment of the gao an abysmal failure. so that's why senator kyl and i an agreement with everyone present agency in the state of arizona have done what secretary napolitano asked for when she was governor of the state of arizona to send the national guard to the border until we are sure that we have some kind of control over the border. look, if you've got 241,000 people apprehended, just in the two sunset there of arizona, if you have intercepted a 1.3 million pounds of marijuana and you can cite the statistics as to how much is apprehended and how many are apprehended and how much gets away, does that

not indicate that our border is not under control? >> senator mccain, the threats that we face and not areas are taken seriously. we have deployed oath in march of 09 and are preparing to deploy additional resources to the border. i think -- >> and those resources are? >> the threat is appreciated. the national guard is one option that's under consideration i suspect that the secretary and the will be making that decision in the future. >> well, you just said you're deploying additional resources to the border. what are they? >> was deployed, for example, in response to the murder of mr. krantz, removed agents into the immediate area. >> i'm temporary basis. >> in a deployed basis until the threat level is present an

acceptable place. >> i don't see how, frankly, a situation where 241,000 people are apprehended, just in one sec here, and the two sunset there, and a 1.3 million pounds of marijuana are intercepted, that it doesn't argue for stronger measures to be taken. in the short term, do what secretary napolitano asked for when she was governor of arizona, and that is to get the card to the border. either way, i've often cited the goldwater ranges as an example where the marines and border patrol got together because we have a huge problem with illegal coming across and having to shut down mission over the goldwater ranges. and now it's worked. it was with commercial,

off-the-shelf capabilities. so let me get what you just a second about fences. in san diego, as you are very well aware, there's been construction of triple fences and the climb has gone done a great deal in san diego, is that correct? >> that's correct at the crossings in a particular portion of the sector had decreased a medically. yes, sir. >> does not order for double and triple fences and urban areas? >> in the places of infrastructure has always depended, senator mccain, on the professionals on the ground making their recommendations. or as you note in the novalis port of entry you have significant fences and other places in el paso you will have duplicate fences. this is always about a professional judgments about how best to direct the traffic and

to manage the flow. so i think as the secretary has implemented the intent of congress, it's been strictly done on the advice of our border patrol agents and other professionals on the ground. >> well, i do want to get into much detail, but obviously the yuma sector of our border has improved significantly unawares the two sunset or has not. maybe there's a little bit too much autonomy they are and not enough attention to lessons learned. i see that my time has expired, but i just want to say, ministers bersin, i wish you luck in your position. this is an issue of utmost seriousness. sheriff said to amount of shares in arizona will tell you that there has been a sea change in the last couple years and the behavior of the drug and human smugglers they are more violent come a more provocative, they

fight back, they have little or no disregard for the people that are doing the human trafficking and carrying the drugs. they are now using ultralights to bring drugs across their border. we need to uavs that would be airborne 24 hours a day, rather than just during working hours. and people, the citizens of our state are seeing their fundamental rights violated here their property being cost, their wildlife refugees being destroyed. and all of this has been ratcheted up over the last couple of years to a point where we are in a real conflict and there's very little doubt that the cartels are becoming more brutal, more effect kids and better armed and better equipped. and so, it cries out for action

and it seems to me in the short term but that isn't sending the card to the border, which was effective in the past when it was done. it would be the first time. and second of all, it would implement a package of us are along the lines of what senator kyl and i have recommended, which includes interoperability of communications with the local and federal authorities up to and including streamlined -- operations streamlined, which has been effect did in reducing the motivation and numbers of people crossing the border if they know they're going to be incarcerated for a period of time. and i just throw one more number i.q. that is alarming and that is that our law enforcement will tell you that 17% of the people that they apprehend today illegally crossing our border

have committed crimes previously in the united states of america. that alone is enough to concern us as far as the safety and security of our citizens. by thank you, mr. chairman. >> thank you thomas under mccain. senator burris. >> your response to that diatribe? [laughter] >> senator mccain as someone who was lived and worked on the border for more than a quarter-century. i appreciate your sense of urgency and i have lived and worked to combat it for many years and i look forward to your supporting the support of this committee to continue to do so ever more effectively. >> thank you. senator burris. >> thank you, mr. chairman. commissioner, i would like to congratulate you and welcome you aboard. i recently had the opportunity to travel to the southwest border and get a close-up look at the work of dhs and its component agencies are doing down there.

we've been fighting a tough battle in a grateful for the men and women who are working to protect our borders and i want to take my hat off to them and not the american people know that that is not an easy provision to be in great having visited there, seen it firsthand. commissioner, i am deeply concerned about fbi not. i am trying to get a clear understanding of your testimony, that you say that it is an overall combination of the various protections, but i want to know who authorized, they're probably no longer there, authorize this particular contract. and by the way, my people are here and i'm not going to start for interior the people in my state. i don't want bowling or any other country taking advantage

of the taxpayer dollars. if they spent all of this money and they haven't got a system that worked, i want to know why your wii continuing to do it? my notes say that we spent over $1.2 billion on a system that is not working. can you clarify some of that for me, commissioner? >> senator burris, not that this is good news, but the number of the expenditures slightly over 700 million. >> it's not a billion to? >> that's the only good news is that is not a billion two. the problem is the original conception has not been delivered upon the requirement that had been set for that not been met with regard to an integrated system. and secretary napolitano having recognized that has taken the steps that i described votes in the written testimony and briefly in response to the

chairman's question to both redeployed 50 million that have been added to the spi that coffers if you will to other technologies including thermal imaging devices and mobile surveillance systems that actually have demonstrated utility. what the secretary is also ordered and is in the process the dean accomplished is an assessment of what are the next steps with regard to spi nights. i suggest i think there'll be an assessment of the one portion on the border in tucson, where the system has been placed here at >> hardly commissioner, this is supposed to cover it over 700 miles. we did 23 and are a geo has only earned another 20 miles and we spent $700 million -- are we

planning on trying to use those on the other 600 plus miles that we have to go? >> will be the conclusion reached after the assessment the secretary has directed good >> why did we make the investment up front? anything but wayne is still working. don't you have competition than it is a contract year. we would talk to any competition to see if some other company could even do this better and cheaper wire we locked into boheing so deeply in this process? >> the contractual management of both matters that offer big lessons and i hate to appeal myself with the chairman's past or temporary past. i was not present in the creation of this, but i am accountable for it now and responsible for it now. >> can we cancel the contract? >> i am not able to render that legal judgment, but it's a question -- it's a fair

question. >> we did a pilot. i can do a pilot program that cost $700 million quest they were supposed to do a pilot. the pilot evidently is not working and so we're expanding now into doing more and we're not sure that's going to work. and we're going to continue to pay. taxpayers do not have unlimited pockets for boeing or any other company. >> i understand your frustration and anger, senator. >> is that under your purview now to assess what's going on or is that the secretary to assess -- >> on the frontline, the buck stops to me with regard to spi. >> commissioner, can you get in to find out just where the money has gone, where it's going to go in the future? we don't have unlimited funds to be pouring into something that is not going to work, regardless

of who the corporation is. not that it's been hard to get a contract -- there ought to be some kind of investigation into this particular contract. i'm deeply concerned about how could a contract of this magnitude could award it and one tested whether or not it would work. there has to be some follow-up here. i don't know where the gao was in reporting this, but we may have to get into just how this all to base and what were the deliverables that cozily coming out of this contract? because that's just a total abuse of the taxpayers money. now, and parts of san diego but i was then, commissioner, on the border, are there actually triple fencing down there? >> in a small portion of the border, you will find double and triple fencing in terms of the

infrastructure. >> i mean, the single fencing i saw on the border is like a 10 metal to stretch across their site and then of course that's world atrocious dumped over onto the side which we have to clean up your it's just a garbage pit and adult dreams almost to the ocean in which we spend millions of dollars trying to clean up. and our border patrol people say that so we have to do. is there any talk with the maximum government of how we can help work out this -- i mean to see what flows down into that drainage area. >> actually, i know this because i'm a resident of san diego, not because i'm a commissioner of border protection. it was actually the united states hope construct the sewage plan in that tawanna river

valley and if that is amazing to you to you, senator burris and on her visit to to be 10 times worse. so we are getting cooperation -- we're doing the work, but were getting the cooperation cooperation of the mexican government are penalties for using not as they are garbage dump is what it is any help from the mexican? >> yes, we are. >> your time has expired, mr. chairman. >> thanks, mr. burris. we'll show your frustration and anger. the gao has done some work on spi at night and i'm to talk to you about moore but this week i think with the commissioner coming on now and could return it and you to get a direct assessment and take action to either terminate the contract were to take from it what

worked. and senator mccain indicated earlier, it may be that the best in security discontinuing crisis and the continued flow of illegal immigrants to the u.s. is to go back to the old style offensive, double and triple tier layered, unless that's topographical impossible in certain areas. and we're going to move onto the second panel, but i wanted to thank you for her testimony. the bottom line from what we know in which he testified today. the flow of illegal immigrants across the mexican border into the united states remains unacceptably high. hundreds of thousands per year, even at the reduced rate that we see occurring now, that we know that the violence in mexico is just stunning in its scope and brutality. and we know.

and as you said, have reason to be concerned. we know that americans have been targeted more and we have reason to be concerned that it will happen more in the future. look, as you come on, i hope to make this your number one concern and you've got the background to really make a difference here. i urge you to -- the sole operation -- i'm not saying it's easy. if it was easy, we would've solved it long ago. but this thing needs to be shaken up. and from your background, i think you're somebody who can do it. i would also say about i call it, senator mccain and senator kyl, in their program they put forward today including the request for federal troops support temporarily at the border, i hope that she was the administration will give this the respect that i would want you to give if i am a colleague from connecticut were feeling

for federal help for natural disaster that occurred in our state is i don't think most of us in this country can appreciate why people in arizona are living with every day. it's just not acceptable. and it's obvious that the state and local governments can handle it themselves and we together with our allies and partners in mexico have to do a better job. so this is a big talent, but you are a person with the background experience and record. if anybody can, to turn it around. and i just urge you to be as tough and direct and aggressive as you feel you need to be to get this done. >> thank you, mr. chairman. >> thank you, commissioner. senator mccain, do want to add anything? >> now, except that i hope will examine senator kyl and my's

assessment and give us a response to that. >> thank you are a match and we will. >> thanks, commissioner. we have a boat that's just begun. i'd ask the members of the second panel to please come to the table. in the meantime, here it is in recess. >> ad asked the witnesses on the second panel to come to the table, please. and we will go forward with the hearing. we are really honored to have here, and i know came some distant, to three participants on this panel, the honorable denis burke u.s., the attorney for the district of arizona for the honorable garcia- van borstel, they are the city of

nogales. >> you did, senator. >> more or less correct. good to see you again. and sheriff larry dever shares of arizona. already that in the district and factor of two sons with confiscated over 1.3 pounds of marijuana -- >> can i interrupt you for a second. in your position, u.s. attorney, maybe you could give us a few words as to the assessment of the situation of which are doing. could you do that?

i'd appreciate that. i think be helpful for the record. the situation is for me in the test lab commissioner bersin and the questions earlier it is right on point that the individuals were involved in trafficking, drugs, the individuals involved in human smuggling are more violent than we've seen in the past. we deal with more firearms cases than we have in the past. we deal with more smugglers carrying firearms, being willing to use those firearms. it has an impact on the agent who work in the sectors in arizona. it has an impact on our prosecutions. we've seen an increased interest in smuggling weapons from arizona to mexico appeared with numerous ongoing investigations working with atf and local law enforcement with regards to gun trafficking headed to mexico. we have seen an increase in bulk cash smuggling. we've increased our cases with

regard to focusing on that. so you've got the drugs and the humans heading north and we're focusing on that. but at the same time we have to focus on the money and the guns heading south. we've seen an increase in all those particular areas. my district once had a 500-pound threshold for marijuana trafficking. if you come in the district of arizona 400 pounds, those cases were being declined. why? because the federal prosecutors in my office was so overloaded with cases that they literally were not able to get to those type of cases. that threshold is now gone thanks to supplemental funding from congress. we now have over 100 xt federal prosecutors working for me. that is a 50% increase in prosecutors stressed over the last three years because the doj funding i have just finished

higher in six additional border security prosecutors from the tucson office, a very seasoned attorney and i'm going to be receiving authority from the justice department in the near future to hire additional prosecutors. so the prosecutors are there. on the ground, they're experienced in their working incredibly focusing diligently on these cases. so when it comes to resources, the department has been backing district or if they do so because we produce and we're make in a 100% from fiscal year 2008 in fiscal year 2009. and this prosecution statistics in the district of arizona are also consistent wi

by 40 -- 40 districts in felony cases and the entire nation. they speak weekly with my counterparts and the other southwest border districts. we are constantly sharing intelligence, prosecution tips and indeed two of the border security prosecutors i mentioned earlier i'm hiding from her texas districts and their two of the best in the country. we handle on a daily basis, we are also very involved in a significant number of complex long-term investigations. involving international -- transnational organized criminal activity including as i mentioned earlier drug and firearm trafficking, and human

smuggling and currency exportation. this reflects the department justices cartel targeted strategy. and as i said, such as as we need to stop the drugs in humans heading north, we're focusing more and more than we have in the past on stopping the guns and the money heading south. it was reflected in commissioner bersin's testimony. there's more attention in our district to south and smuggling them there has ever been before. our investigative tools are more advanced than just a few years back. we are doing 50% more wiretap cases than we did a year ago. this is in conjunction with bea state-of-the-art wire room as part of their multiagency strikeforce. i mentioned our bulk cash commitment and are working with atf. and i'd also like to mention that just last week in the district, we unveiled

indictments in operation in plain sight. it was investigation that was two years in the making. forty-nine arrests, 30 search warrants were executed. fifty vehicles were seized. we targeted a cross-border human smuggling organization. we the entire infrastructure of their network. with ice, cbp, fbi, dea, the marshals service, ats, arizona department of public safety was involved, phoenix and tucson police department and the sheriff's office all work in conjunction with the investigation. they think the case also highlights the strengthening ties that we have been building with mexican federal law enforcement agencies, the ssp of the mexican girl government arrested one of the main targets in my case and executed search and arrest warrant simultaneously with our operation in arizona. this level of cooperation and coordination with mexico is

unprecedented and we are in fact for the first time ever, we refer port of entry drug trafficking cases back to mexico for prosecution. so if drug traffickers are being prosecuted in their own country, under their own laws and the senses are severe. ten years each in the cases we have so far referred. let me finally mentioned, with regards to our contacts and relationships in cooperation with mexico, a few weeks back, attorney general holder convened a meeting in arizona with his counterpart, the mexican attorney general chavez chavez in the attorney general included southwest border u.s. attorneys and other u.s. attorneys with drug trafficking organization connections in their districts to work on joint cross-border prosecution strategies. we are making more and more advanced is that we have over the past with mexico, the work of president calderon and his

effort is being reflected in its efforts and has developed relationships and work we have not ever had in the past. in fact, indeed mexico has been assisting us at the federal level with our efforts to track the horrendous murder of robert krantz in the cochise county area. so mr. chairman, thank you for the opportunity to give a general overview of my comments and i appreciate the opportunity to be here today. >> thank you, mr. burke. thank you for giving the committee a sense of the impact of this homeland security crisis on the ground in arizona. mayor, thank you for coming again. it's been good to see you. her testimony was for import into a slasher with a word to hearing from you now. >> very well. thank you, mr. chairman. senator mccain, good morning. as you mentioned, the primary of the city up nogales arizona. before i start with the key issues here today, i will raise with you, i want to thank --

onto thank you for this rare occurrence in opportunity to participate in this hearing. with that being said, allow me to get to the heart of the matter. gentlemen, nogales needs your help. nogales is a community that is extremely dependent on the border and our neighbors to the south or the ability to cross the border effectively, efficiently and in a secure and safe environment is vital. since september 112,001, we have all recognized that our world is different. we mount a flick at security at the same time that we look at commerce, trade and tourism. but that is also the key point that i would like to make today, that we must not lose sight, that we are working to secure the homeland so we can conduct our normal lives. we have all seen or experienced an increase on violence on border communities.

from the u.s. embassy and war as he became victims of the drug cartel violence. in fact, i was just at that embassy last week and met with the sub conflict and discuss the horror of the situation affecting american citizens. the assassination of the local ranchers and cochise county is evidence that the violence is in fact spilling over to the united states. perhaps, part of the solution we identified is to involve all government, local, state and federal. although i respect and understand it is a federal issue, the local government has to be able to perform part of the strategy because after all, we are the ones who are directly impacted the most. i for one would like better communication in order to get better support and address the violence and border initiative

spirit to give you an idea, our community has three land worth of entry, morley gate which is a pedestrian only costing, deconcini which they pedestrian private vehicles train a bridge crossing in mariposa which is a commercial crossing, but we are also cross pedestrian and private vehicles. are a few border stations currently process in excess of 15 million people over 300,000 tracks and well over 3 million cars each year and northbound direction. two-way traffic is approximately 30 million people, 600,000 tracks and over 6 million cars. i want to thank our congressional delegation in particular senator mccain that is with us today. and senator jon kyl as well for the even continued support for the issues that we face and nogales. and yes, we are making great headway on some very important border issues. for instance, the port of entry

is currently undergoing configuration, a project funded to the tune of $200 million under the american recovery act. this project will double, if not triple a part for inspection of both commercial and noncommercial traffic at mariposa. this project was started in september of last year should be completed by 2013. we are currently working with arizona department of transportation and the federal highway administration to improve the connectivity from the port of entry to the federal highway system. additionally, we are working with their mexican counterparts to ensure that necessary improvements are made to the mexican side of mariposa. in recent years, we've seen a clear focus at securing the border between the ports of entry. but there has been little attention to the port of entry themselves. i truly believe that in order to

have a safe and efficient border, you must have an affect his border. customs and border protection of identified some 5 billion to $6 billion worth of projects on the u.s.-mexico border, yet however yet the budget proposed for fiscal year 2011 shows only 93 million for one project. our ports of entry are a national asset. however, the budget does not reflect that. the violence between drug cartels have created a paranoia across both countries and have had a direct impact to border communities. tourists going south to north and north to south have lost confidence and i know afraid for their safety when traveling through nogales. we continue to the human trafficking and drug trafficking, i believe, as a result of lack of resources for border communities. our current wait times and

nogales are well in excess of an hour or easily two hours during peak hours every day. due to long waits, we have seen dramatic transitions from the people crossing the border in their cars to crossing on foot. but we are not ready for this transition. an increase of pedestrian traffic means that their wait times to cross on foot in excess of an hour. i've got a copy of a recent article published in our newspapers were shows a pedestrian line up at the border and i believe you do have a picture of that, mr. chairman. >> yes, enter that into the record. >> very well. thank you, sir. at the same time, secretary napolitano recently issued a press release collaborating the first anniversary of the southwest border initiative and from the great results from an enforcement perspective. yes, the program has used many weapons and stopped many

millions of dollars that were being laundered and shipped back to mexico, but at what cost to nogales and other border communities? the dhs initiative has entered inspection the trains, trucks, vehicles leaving the u.s. the unintended consequence in one of the key points that i want to make before you today, gentlemen, was not a consideration when this initiative was planned and deployed. none of the ports of entry at nogales are equipped to handle salt on inspections. cbp lays down a few columns on the road, perhaps in jersey barriers and simply stops every vehicle departing from the u.s. to mexico. then everyone talks about the nogales and border protection has notified us that there's every trust from the port of entry. the traffic acts up on south on

bases reach well over an hour and more during peak hours. the end result and the anticipated consequences that people are crossing less frequently and have to wait one hours to two hours coming in and out to her ports of entry. >> excuse me for interrupting. to the extent that you can come if you can summarize the rest of your statement. >> very well. i will move over to perhaps respectfully the recommendations that i have presented. first of all, i would respectfully recommend to staff, our ports of entry to the capacity that it is required. secondly, provide additional funding and an expedited and conference matter to our ports of entry. thirdly, dhs is to come up with

a plan to address the congestion , safety and other unintended consequences to the southbound inspection program. i'll summarize for everyone. forcefully, find ways to deploy trusted traveler programs from southbound traffic, for instance, the sentry program that is working so well for the own travelers be considered for south on traffic as well. finally, there needs to be better court nation and sharing of information and intelligence with mexico to help reduce the duplication of efforts to ensure that we maximize the return of investment. include all government, local, and federal to increase the success of psychometric wars at the border. mr. chairman, senators, senator mccain, again i'm a thank you the opportunity to discuss our issues and needs. these be assured for me and nogales security as their top

rarity and is essentially a likelihood. i thank you for your attention and look forward to your questions at the top. >> banks, may appear that was excellent and we appreciate your recommendations also. a person on the panel, we remember your testimony very well from last year and we look forward and would be particularly interested in an open investigation which will tell us about robert krantz. >> thank you, senator. it's a privilege and a pleasure to be here, sort of a pleasure. we did meet a year ago to discuss border violence in phoenix, arizona. i've heard a lot of numbers here today and i have a hard time wrapping my mind around all those numbers. i can tell you all knotted together came up with a big fat zero for rob krantz.

and it comes up with a big fat zero living out in the eastern part of cochise guy who suffer daily burglaries, thefts, home and patients come a couple who was tied up in their home and left forever had it not been fortunate enough for it to come by all their stuff stolen great a guy who gave aid to a couple of illegals and the start taped in his own home. any managed man to get his tongue free and dialed 911 on a cell phone with this time. i can tell you stories who lived out there for three or four years. one is been burglarized a 10 times. and it is a vast large area. the merger of rob krantz was particularly senseless or it may be detected on the case, who has seen some gruesome and did while he wasn't unnecessarily gruesome, but did some circumstances and she's still

with all kinds of horrible things brought her to tears. just because the defenseless nature of the whole thing. so i can't tell you a lot specifically about the investigation, although we've made great progress on initially what i thought we would. i can tell you that with a surety has been challenged on this with the how do you know he was an illegal alien or drug smuggler? mr. chairman, mr. mccain, is a 35,000-acre remote cattle range. there's jackrabbits, rattlesnakes and a few cattle grazing on the barren pasture, illegal aliens and drug smugglers out there and that's it. someone just couldn't walk to wal-mart to go shoplift something. so that said, we do know and have reason to believe that this man was a scout for drug smuggling organization and that's about the extent that i cared to ask you about what we know about who this individual

is. it was said earlier there was a word term used about people flowing across the border. i can tell you that one time that was the case. today the people crossing the border are led by very ruthless armed armed and well equipped individuals who are prepared to do whatever is necessary to do their financial interest in that smuggling operation. a few years ago we would dump dope on the fence. we would give it up and run. the people who entered the country illegally were coming on their own than looking for right here today everything is much for organized, much more dangerous and much more dire. and i mention the scouts. the scout said on mountain tops. they are high places with radiocommunication's and their armed and they simply relate the

location of the border patrol or eyesore sheriffs deputies were working the area that's how they deceive the law enforcement residence and they are very good at it. speaking of communication are better equipped than we are in many cases for using encrypted radio transmission. september 11th, all the language that came out in grant funding and his top about to part her with state and local agencies, federal government need to partner in order to better protect our homeland included language for interoperability according to radio communications and hard landline communications. the pursuit or the shooter of rob krantz had state department of corrections, dog track in teams, ice ages, sheriff's deputies to border patrol set your representatives to contact each other.

and none of us could talk with each other. it's inexcusable and until that problem is result, all of our law enforcement efforts, no law enforcement efforts, no matter how well coordinated are and the bad guys are going to continue to win. senator mccain mentioned a 17% people captured crossing the border or criminal aliens, people who previously committed crimes in this country. that number comes from the douglas station of the tucson sector of the border patrol. i confirmed that before i came here. that means of all those millions of people in hundreds of thousands of people who have entered your, the bad guys keep coming. and no matter whether the apprehension rates riser fall, the numbers of criminal aliens rise. and that's fair, gentlemen, is a threat to our homeland security in this country. catastrophic events are a great concern and a vulnerability at the border for crossing materials and people with bad intent, but the daily crossing

of criminal minds, arabian communities brought this country in this entire nation is a real threat to our peace and harmony and there's a thousand other things that a bit to talk about. my time is up and i'll yield to questions. >> thanks very much, sheriffs. you know what, thanks for trying to describe, you know, the impact of this crisis on people who live in the area. as i don't think as they said earlier, i think people around the rest of the country appreciated, the people and your property, people burglarizing and of course worse. and would you describe is as a change as significant, which is it's not virtually what it has been reported as you see it, which is a movement of illegal immigrants. this is now movement, which is

being led by armed individuals who are protect in their business, basically. and human smuggling. bunny ask each of you whether i'm correct in saying or concluding that let's take a year ago that the situation along the border and the spillover of violence is worse today than it was a year ago. would you agree that, sheriffs likes >> absolutely. and there's reference after incident to verify and talk about them all day. i like to emphasize that it's worse than it's getting worse and i hope you understand. i hope congress can wrap their mind around the idea and the concept and the president in

this administration. if we don't get this right this time, when are we and how will we? you know, 1997 was my first testimony before congress about border violence. ten years prior to that, tucson sector chief of the border patrol was quoted as saying congress has mandated. we get control of her border. and whether it's illegal aliens, narcotics, terrorists, whatever. and that's what we are going to do. so here we are 23 years later and how many chances -- when his momentum never going to gather again, what event will it take to cause us to finally take action and bring this to a stop. >> well, those where should i go in our minds because whatever we've done, is obviously not working. and the problem mayor, is a

worse today than a year ago? b. mike i would echo the sheriffs comments and i that yes, sir. senator mccain mentioned there's been 22,000 killings in mexico. it is a full-blown war and we need all the diligence we can to make sure we prevent iran from continuing to spill over the border. >> mr. chairman, i would agree. although it also added in some respects, the steps that took on the border increased violence. these are organizations, criminal organizations to be being overturned and routes. as the sheriff mentioned, in the past that might offend a flow of across the border. another much while limited and controlled by particular organizations under much are violent organizations

undertaking it up on each other. and their also taken the opportunity because of the taking in certain spots to actually steal other people -- another organizations drugs are humans. what we see a lot of the phoenix area are drunk with bob's human with us, where an organization, instead of having a connection can get a sense of other organizations have been drop of drugs in human and will do a violent rip off of that world weather organization or that's another new phenomenon in the last couple of years. he didn't see that five to 10 years ago. now we have an epidemic amount of that in the phoenix area. >> let me ask you this question from a law enforcement point of view. obviously, we all admire the president held a round of overtaken on the drug cartels. and i infer from you answer that part of what's happening now is that the cartels, the violence in mexico and the cartel is

turning on people and government in regional are higher but also the cartels fighting each other because the church has been construed by the government. does i continued to be a reality? >> i think that's correct. we've seen that in arizona with regards to how the cartels battle all of their routes. it's evident in our conversations with agr. the pgr is the attorney general of mexico was like dead in our conversations with them and how they are dealing. and as i said to president calderon, but the pgr come the people we're dealing with are unbelievably crazy and what they're taking on. >> i agree. i want to emphasize that part of the way in which the violent death come over the border from mexico is with the cartels competing for the pathways nor

is. and you see it there. just to stay for the record company earlier hearing we heard from a representative of the fbi and he's told the committee that the mexican drug cartels are the number one organized crime threat in america today. obviously, not just at the border but in cities from anchorage alaska to her for connecticut to pretty much everywhere in between. again, from a law enforcement point of view, you think at some point as the government in mexico instead past and really courageous in continuing this battle not to yield control of much of the country to criminal elements that we would turn a corner and the violence would begin to receive. but that hasn't happened yet. so i thought maybe i'd ask you in the sheriff about that

because from law enforcement, can we hope for such a turning point, but the good guys will win here? >> i don't ballot stage and this juncture, mr. chairman. i can say that the steps were taken and the cooperation of the partnerships we have with mexico are as good -- the best we've ever had heard i think the concern by a law and law enforcement is a window of opportunity we only have with president calderon. >> yeah, sheriff, what would you say? ..

where they did we 24/7, 30 days not crossing occurred political

will and proper strategy and makes as has been discussed today by people and technology to include some serious and real assets to bring it under control. >> yes, sir i do believe so. it is a tough challenge i think that determines it's not a simple problem it's not a simple solution and we've seen where we've tightened the scenarios where there's been effective fincen and to the ultralights that is a new method they're using to bring drugs over. we've never seen that before. we've seen emergence of tunneling so there are only limitation of the own creativity to beat this sophisticated criminal organizations that are going to continue to operate as long as they can make money doing it. >> what percentage of the city

in arizona is hispanic? >> 90%. >> how do the citizens feel about this issue? >> senator mccain -- >> we recognize there is a desperate need to secure the border. it's been very frustrating and to be quite frank with you it's been very scary to live on the border. we need your support and let me just leggitt on the table we are willing to do our part and worked diligently with federal and state government to make sure that the border is secure and build confidence back towards constituents. >> operation streamline seems to have had a beneficial effect for the record that is people who are apprehended are incarcerated

for 15 to 60 to 90 days. how important do you think that methodology is in discouraging illegal immigration? >> it has been an effective program in the office we do about 70 a day and you know we do about 40 according to the cbp the records on recidivism are good or effective with regard to the streamlined. with that said, for all of the programs and activity wheat go on it is one small element of an overall program on any given day 700 to 1100 people are arrested in the tucson sector by the border patrol and streamlined profits 70 of them so it is still a small percentage of the

overall amount of people crossing. but it has been effected. >> how do you decide? >> it is the geographical determination made by the border patrol and the target date political era and in those individuals are brought in by that and we give priority for people with records and that is a determination that is made every day by border patrol and working with or prosecutors. >> am i and a standing from the letter from the judges we would like to see an additional magistrate and also an increase that could handle an increase in the number of people who would be subject to incarceration; is that correct? >> i'm not aware of that. i am aware of the judge's concerns about his capacity of the infrastructure capacity to take on a larger streamlined program. that is a major concern of his. i do know that in the tucson

district court increased magistrates have helped considerably with regards to the ability to prosecute cases. >> i was struck by you mentioned the previous rules anything under 500 pounds of marijuana was not prosecuted? >> that's correct. >> under 500 pounds. >> that's correct. >> yeah. [laughter] >> you have been the share of since 1996. >> yes, sir. >> maybe you could give a little perspective. we've all become no up the terrible tragedy in the family. what are people being subjected to that frankly citizens in the rest of the country are not

number one, and number two is that has deteriorated over time, and clearly the united states government has an obligation to protect people's lives and property. is that obligation being fulfilled down in the county? >> from a criminal to the standpoint i think most disturbing has been the number of home invasions versus a burglary when people were actually at home watching television or in bed or whatever and somebody breaks into their home which obviously predictably will lead ultimately to some kind of conflict on a physical confrontation and one side of lewis is. those have been increasing very very rapidly. the burglary problem, most of the home burglary of we have in the eastern county actually are

southbound traffic. smugglers who have hauled their cargo, the contraband north dropped off to the transportation and then are headed back south to steal guns and jewelry and cash and pop back across the border. so you get a picture in your mind these are people who successfully crossed the border carrying backpacks, defeated the enforcement effort, halted many miles north and then are going back south and committing additional crimes. so i have said for a long time that today the situation at the border today is if you want to cross the border you will ultimately succeed and until that changes, then we are going to continue to face the kinds of conflict and confrontation and death and carnage that comes with that.

>> there was recently crackdown in coordination of different and force the agencies of a transportation network where people were being transported to phoenix and from phoenix to all parts of the country. can you tell the extent of that network and how far reaching or they and how many people were the transporting and how sophisticated an operation that was? >> center, they were transporting thousands of individuals and what would happen is that they would go past the point of entry somewhere on the arizonan mexico border and have information that they received from mexico which was a part of the criminal organization to either go to a spot in nogales or work up to tucson where they would be picked up by the shuttle vans that were part of the criminal

organization and transported up to the phoenix area which served as the hub for the network for the entire country. and so this spread out into the east. we get investigation led us to north carolina, tennessee, illinois, throughout the country. and as i referenced in my testimony earlier, we ended up arresting 49 individuals who were involved in this organization and seized over 50 of the vehicles and had tremendous cooperation from mexico with regard to targeting investing the individuals who were involved in mexico. there were assisting and officials getting them lined up as to where they would go to an arizona to define their shovels. >> with a kid transporting drugs as all? >> there is no evidence of that.

let me indicate also the plaza, the area is of just more the rest of mexico on the arizona border referred to as the plaza are controlled by the drug-trafficking organization. they determine who can come back-and-forth through that area and so when human smuggling operations distinct from the drug trafficking come through they are usually paying some kind of tax to the drug traffickers so these organizations work human smuggling organizations they were not drug trafficking but some point or another they have some connection to pay a tax to get in. >> it seems a with a lot of work to do. can i finally ask your opinion do we need to guard on the border? >> as commissioner bersin said in the past the administration is evaluating it. there are success but i know

from where i was at that time when those decisions were made by no they were pretty complex and involved a lot of input from the department of defense and customs and border protection with regard to defining the missions and so forth so i know that it is under evaluation. i know there is a lot of success on the operation jumpstart and all i saw the impact -- sprick you would agree we need more personnel. >> always support more personnel on the borders, senter. >> bug guard has been on my top of my list for a long, long time, back to 1998 when this first took off and i asked the guard at the time napolitano to deploy the guard when she was governor of arizona she did not. just a year ago i had a meeting, face-to-face meeting with secretary napolitano and asked

her if deploy nina biggar on the border was still on the dhs plate or table and i was informed that it was, and it was a matter of deciding specific mission and number of resources that was a year ago. >> the fact is you informed me and others informed me a person in uniform on the border has a strong psychological the impact on the criminal elements in mexico; is that correct? >> that is true industry and much of latin america. i lived for two years in central america, and local law enforcement has little effect if it exists. the people have a very deep respect and often fear of in this country. so the military presence creates a whole new spectrum of deterrent, level of deterrent just by being visible in the

culture and mindset of people coming north. >> yes, sir, senator, i would favor the guard at the border, however i would ask for them not to distribute quality-of-life of our community. but probably even more so, i would support allocating more funds to the cdp to have more agents at the facilities as well for them to be more efficient with legal crossings. >> i thank the witnesses and you, mr. chairman, for your patience and for holding this hearing, for coming to arizona as you did a year ago and your commitment and concern for the people of my state and also for the people of this nation has just pointed out it was a network that reaches all over america that they were recently involved in cracking down on and so this isn't just an arizona

issue i think it is a national issue and homeland security issue and i appreciate your involvement and commitment on the issue. thank you. >> thank you, senator mccain. you helped motivate the committee that it is our responsibility. this is a homeland security problem and it is as critical as any we have got at this moment in terms of its impact day today on people's lives. we are going to stay involved in this and we will do periodic hearings as they are productive and make sense but i don't want to come back up again i hear from now and have witnesses on a respect and trust tell me that things have gotten worse and that is where i think the request for the guard have made sense just to try it because i think it is common sense that the more people you have the

less likely it is going to be that this kind of bad behavior, and acceptable societally destructive sometimes deadly behavior is going to go on, so we focus on one of rubber interim hearings on what we could do with southbound traffic and inspections and we increase the efficacy of this committee that really the appropriators increase the number of cbp personnel at the points of entry southbound for some reason the fiscal year 2011 budget proposal submission requests containing -- cutting funding better now involved in the inspections and and i just want to ensure that the committee is when to be communicating with both the administration and the appropriations committee to see

that there would be a very serious mistake. my thanks to you for coming up here. you make it real. thank you for doing everything you can to uphold the rule law in trying to provide a decent environment in which the people of the state and the community and county can live which is no more than anybody in the rest of the country wants, so with that we will leave the record of a hearing open for 15 days for additional statements or questions. i am very grateful for what you've done and i prefer your success as we go back home and again thank senator mccain for his persistent leadership on this critical issue. the hearing is adjourned. >> thank you [inaudible conversations]

[inaudible conversations] >> this morning, saxby chambliss will talk about agriculture the lip -- derivatives, and the regulations to regulate them that the committee is considering. and the director of the national parks service on the state of

the national parks. and then, a look at what is ahead in iraq and afghanistan with the former ambassador. this is every morning at 7:00 eastern. later, kathleen sebelius will talk about the budget requests of her apartment, including an insistence on medicaid assistance for the states. live coverage on c-span 3. >> on tuesday, nick clegg, leader of the liberal democrats, spoke to reporters. the liberal democrats were in second place behind the conservatives and ahead of the labor party of gordon brown. they are crediting this to his performance in the first debate last thursday. >> ladies and gentlemen, i would like to warmly welcome this

afternoon nick clegg. he is the leader of the liberal democracy party. and he is the man who has become, according to the british media, more famous than -- and the british obama. and the use to say that one week is a very long time in politics, but it seems that this has become longer than one week. this has brought to the front and to mr. nick clegg, spicing up the general election. and starting today, he will give us the honor and privilege to be with us today. he will be very brief in his opening remarks, and then, he

will take questions. unfortunately, we have very limited time and we will take these questions in groups. and we will do our best to get to a wide spectrum of the foreign press. thank you very much. without further delay -- >> i should warn you, if you are expecting anything like barack obama, you will be seriously disappointed. thank you for coming here this afternoon. let me give you a few thoughts about the election campaign and the role of foreign policy. this campaign, quite rightly, we have more on the issues that people face. we have more on wet we can do

for the british economy, how to provide prosperity, jobs, and economic hope for many millions of british people who have been shaken to their foundations with what has happened to their own sense -- their livelihood and their own sense of well-being. this will remain the dominant question in this election campaign. that does not mean that for policy is not important and that this should not play a major role in all of its different facets are in this election campaign and the weeks that remain. you will have a debate, the day after tomorrow. half of this will be entirely dedicated to foreign policy. the place of great britain in the world, i think, is connected

to the bigger question that we will ask as a community and a nation during the election. what do we want to be? what kind of values do we want have and what will be our role in the outside world? you want to provide security and safety and prosperity for ourselves and future generations. but this surely cannot be done without searching for questions about how we will exert this in a world that now has such a direct impact on every single aspect of our everyday lives. and i would like to say this to you, the following. the conventional wisdom, since this crisis has been -- this is something that the people in charge have stayed with,

religiously, ever since. this has been that the focus of all the british southern -- british policy should be organized around is the atlantic relationship. this is for very good reason. we have a kinship and the language, the history and the culture. these are the preeminent -- this is the preeminent superpower in the world, today. it seems that we are preparing ourselves for the future and not be imprisoned in the past. if we want to understand how to play an effective role in not only reacting to the world, but shaping this to our values, we are going to have to release ourselves -- >> we will have to release ourselves from this spell, that

puts us in the position of default athleticism. i say this because the greatest glue was the cold war. this was the ideological conflict that divided the world very rigidly, soviet communism against the rest. we were very right, unambiguously. we were joined with our friends in america in this existential, ideological conflict. but those days are in the past. the world that we face is not a simple. the threats are multiple. president obama said, quite rightly, he spelled this out

very clearly. the greatest threat that we face is not the old, cold war state conflicts. these are individual terrorists or terrorist groups getting hold of dirty bombs. the increasingly scarce resources -- and the conflict of identity. these are the natures of the risks that we are facing. this is not the same of the ideology of the past. and secondly, there is nothing wrong in saying that there have been very profound differences between ourselves and and the u.s. administrations, during the orchestrated war on terror. it seems obvious to me that a number of things were said to have happened, torture,

extradition, flagrant disregard for the most basic standards of conduct in conflict and in interrogation of those who had been detained in war and conflict, which, flatly contradicted the most basic values on which this nation was founded. the rule of law. fairness, human rights. and i think that, until we fully investigate these allegations, and we investigate the allegations of possible, over to or accidental complicity by the security services in this country, we are not going to move on in developing a mature relationship

between the united states and great britain, that will recognize where there are differences of opinion, and i speak as the leader of the only political party that was against the invasion of iraq, that was supported by the labor and committed -- to the labor party. until we are more mature about where we are and have the courage to investigate them and get to the bottom of this, i believe that we will continue to have problems in the relationship. the huge transformation between america and the outside world, with the arrival of barack obama. i think another reason that this relationship is changing is because this is what the americans themselves are saying. it is rather embarrassing, the way that conservatives talk in this slavish way about this

special relationship. if you talk to people in washington, they say this is a good relationship but this is not the special relationship. i would say, it is important how we get along with india and china, and brazil. very important how we deal with europe. we have the great relationship with the people in london, but this is not the great relationship. if they are moving on, why can we not do this? why don't the conservatives and labour politicians understand that this has happened as well? i will continue to ask, as the leader of the liberal democrats, difficult questions about foreign policy assumptions that the other party does not want to question at

all. i was the first party leader to ask questions about whether the strategy in afghanistan was right. i think there was an attempt to try to get this right. but when i spoke out last autumn, it was obvious to me that we had been there for eight years, and we were quickly going in the wrong direction. there was no strategy or political strategy, no way to deal with the politics of the conflict with the situation in afghanistan were confrontation of the issue of corruption, or to divide them by dealing with the non-hardline parts of the taliban. there is the issue of resources and equipment -- all those questions remain and i will continue to ask them. but as someone who thinks that

the reasons that we are there -- it is in our interest to be there, i would like for us to be there in a way where we do the job property or we get -- properly or we do not do this at all. and on some major, future questions about the military resources, i will not stop asking difficult questions about the automatic assumption that the conservative and labour parties have that the only thing that we can do with our existing cold war missile system is to renew this completely. some estimates suggest that this is a price tag all the way to 150 billion pounds. why do i believe that this is lazy and irresponsible? the first is because this has many years left to run and every military expert will tell you you do not have to take this to the next parliament.

i ask them to do this before the review has been held before the next election. why not think about other alternatives? using the submarine, not having the continuance deterrence. and why not listen to those people who observed that the great, strategic threats to the country are no longer cold-war threats. they are different. is this missile system renewed at the cost of 100 billion pounds, designed to go to say petersburg? is this going to stop a dirty bomb? i say to the old party, the world is changing. you either change with this in politics and ask the difficult questions about the near future, we remain a prisoner of the past. that is what at stake in -- that

is what is at stake in the general election. >> we will begin to take questions. please wait, and the microphone will come to you. thank you very much. >> it is good that you are talking about foreign policy. in your support -- have you brought a lot of liberals of the closet, and can you keep them for 60 days? >> we will take two more questions. >> hello. i would like to ask you, last year, you suggested that arms embargo in israel.

how will this lead to peace in the middle east or any other region? and how would you suggest to deal with the nuclear ambitions for iran? >> thank you very much. it is now universally acknowledged that gordon brown was in agreement with nick clegg. do you agree with gordon brown, and do you agree enough to consider a coalition, if we are talking about the parliament and labour? >> this is the one pace in london where we would not talk about this. can i compliment you? people are using the formulation for your question -- and i can see that i am in sophisticated surroundings.

you have suggested the closet liberals -- this sounds like the way i handle my laundry. what do i think has happened? i believe that some people are describing the way that this has come to life as if this is a bolt out of the blue. the breakdown of the old politics has been going on for several years. the last general election, for the first time in british history, the effort -- more people did not vote and those who voted for the wedding party. we have a dramatic change were an increasing number of people are voting for political parties like the liberal democrats. 6 million people voted for the

liberal democrats, more than any other liberal party at the time. this is one in four people who voted. the geographical map of great britain has been changing for ages. are we safer? something very dramatic has happened. 10 or 50 years ago, the urban britain was labor britain, and now this is liberal democrat great britain. the list goes on. the majority of these are outside of london. nobody could have predicted this a decade ago. i am leading a campaign for the liberal democrats, where, ironically, i am the leader of the smaller of the three main parties. this is on a bigger geographical canvas than any other party. the labor party's are

nonexistent. we are here in the same way that the conservatives are nonexistent. the polls go up and down. all of that kind of thing. there is a great deal of volatility. for many years, the old patterns of politics were breaking down. the choice that you allowed to have was in the conservative and the labor party. millions of people were voting against us. my best guess about what has happened is that the people were starting to believe and they were hoping that they would do something different. there will be scandals and all the rest of that over the next few weeks. but at least, i hope, people

will begin to believe that this will count. i do not see -- i am not a military specialist, but the military medals -- military matters did not seem to have this as an option. we have the saber rattling, we have the relationship with iran. the greatest asset that we have is we have the iranian people, themselves. what we need to do is work in

lockstep with each other, because it is crucial that europe and america speak with one voice. we want to rent -- to continue to put pressure on iran. this is a major threat. does this need to be stopped? yes. we see this with the international community and the diplomatic sanctions and the other non-military forms of pressure. my belief has always been that

the ideology of israel, this is odious. the use of terrorism by these organizations is unacceptable. it is the long-term interest to have 1.5 million people in a state of grinding poverty in gaza, seething with the greater radicalism and hatred, this is right on the doorstep. this was disproportionate. i remember when i said this, i was shouted down. everyone says that this was a

disproportionate use of military force. we are using this equally so we are entitled to say, this is not the international force with a military force that is used. i cannot understand we need a blockade to repair these buildings. we have established concerns and legitimate concerns, and as long as this is the case, the european union is entitled to use their economic muscle in their relationship with israel, and i think as a british politician, we cannot only leave this to the united states. the european union is an economic giant.

this is the largest market for the goods and services from israeli companies. this has been -- established. this is international relations. we have the conditionality on the trade agreements. this is how you show the influence. you can pose the question, at the time when this election campaign has come together and there is the enormous amount of unpredictability, i believe that this is wrong for the politicians to second-guessed

how people are going to vote. i cannot tell the future. in what circumstances that we find ourselves, in parliament or not, we can do this with them whenever circumstances, with tax reform. this is an unfair tax system. we provide a fair start to the children, the children who are not getting a fair start. the new approach to banking in the economy. we have this under the labor governments, giving special treatment to people with prosperity and growth. and then, we're working to clean up politics.

we're making the voting system more fair. giving the people the right [unintelligible] what can you fight for? and if people believe in those things, but for this and support the. david cameron will say that a vote for me is a vote for gordon brown. and other people say exactly the reverse. they are in a corner and they're trying to frighten people into thinking the only choice that is available is the older parties. >> the clock is ticking. we are here -- and i am squaring

the circle. we are looking for more space and time. >> the performance has surprised everyone, as you have outmaneuvered the other opponents. and this gives rise to what people say -- our you going to contain this and maintain support? some people have discovered that you do not share their interests in the x factor. and also, how can you convince people that voting for the liberal democrats does not mean that there will be five more years of court in brown? >> you speak foreign languages?

how many of them do you speak? >> including english. >> half foreign leaders started to take an interest in you? we had nicolas sarkozy come over, they sought david cameron. would your party not only like the treasury, but also, in light of less -- was just said with the relationship with the united states, and other priorities, moving on? would you like a job in foreign affairs? >> i am from the netherlands, with the other language that you speak. this is not from the west, the

implicated choice for europe. this would also indicate, the euro. if you joined the euro with the u.k. -- >> can i take another question? we have heard the spanish voice, and this may be interesting. what's are you in favor of establishing -- >> are you in favor of establishing the border control? >> the bubbles sometimes burst. i am aware of this. we are in a fluid stage, and there is a long way to go. we have the ways that the

liberal democrats offered the real change that we want. if we do something different, maybe we can deliver the kind of fairness. this is the for-looking and the self confidence of the place of great britain in the world. we do this in the privacy of the ballot box. we see this with the vote. there is the nonsense about the other parties. voting for the democrats, a vote for the democrats is a vote for the democrats. the vote for them as part of what we are talking about this afternoon. they will try to scare people

-- we have the status quo and people will say that any change his arrest. people say, you cannot do this. the labor and conservative parties will take the risks. you cannot predict them. i think more people -- i am sorry? i have not met -- this is not a snob or anything. you ask about the post. you are putting the cart before the horses. this is a long way to go in the

second campaign. they are now focusing on the election campaign. we would go through the first week -- they are charging across the place. we are trying to properly engage them. we have what the politicians say to each other, and the personal ambitions. i am trying to add to what i think is a major demand, they are crying out for people to try to do something different. that is what this is about. i do not think that entry into the euro would be a great thing and i would not implement this. i recognize that the euros own -- this would have been inappropriate.

as we have always said, if this was going to rise again, we have the entry into the euro. many politicians would decide -- such a momentous decision would have to be decided by these people. this is in the manifest of this time around. i understand that this would remove the border controls. the united kingdom has to maintain this and go a little bit further. we have an approach to the borders that we have had several years -- i would like to see the introduction of the exit controls. i would like to see them coming in. i would like to see a dedicated

police force. and then, we will have to deal with the legacy -- we have some creative ideas about how we do something for the people who are here, already. they're usually in the hands of criminal gangs. we have the people have been here for three years, and want to make a contribution to this country. this would go from the hands of criminals to the taxman. this would go from these underworld employers. many people are coming here illegally. and now they want to air brush this completely out of the debate. i think that this is wrong. this is just flushing this under

the carpet and this is not the kind of politics that i am believing. >> i am from italian television. you say that you are leader who is willing to ask difficult questions. you are arguably the best leader when it comes to understanding europe. the moment has come to ask people if they are in favor -- if he became prime minister tomorrow. >> i am from a leading e -- a leading german magazine. do you believe the conservative party when they say that you are in favor of the european union,

that this brings back the nazi party of the conservatives? >> i am from a russian newspaper. if you become the prime minister of this country would be your policy with eastern -- the eastern borders of the european union, with russia and that part of the world? especially with the russian roots? >> thank you very much. >> do you believe that you have not been taken seriously in the british press? have you been pushed out and what has changed?

>> we really should not invite the liberal democrat leaders to talk about the british press. there is no complacency, absolutely none at all. people are taking a forensic interest in the policies. i am committed to the policies. but when the issue of the united kingdom being placed in the european union, and i believe that this will, inevitably. and there will be discussions and we will talk about how we will do the things that we need to do? but when this comes back on the agenda, i think the only honest question to ask is the fundamental question. are you in or are you out? we should be there to lead. to shape the european union.

it is the european union perfect? they took 15 years to define chocolate. this is not a mile -- a matter of efficiency. i am appalled and there is a waste of money by sending this to strasbourg. i was angry about this and i was working on the campaign to open up. i want to change this. but you cannot change anything from the sidelines. you have what they were stuck in to, any kind of arrangement -- you reduce yourself to the tents

on the side. and then, i know where i want to be. this will occur -- under the liberal democrats. when this happens next, i will argue -- i like people to have this choice. what is so dishonest about the conservatives, they made a guarantee, with this bit of elastic. and they pretended -- there was the one specific treaty. they were addressing the fundamental issue. there were not honest with people. the british people were voting against this. they were reading the next day, great britain is against europe. guess what would have changed in

the european union? nothing. literally nothing. the policy would still be wasting away. there would be as many people in brussels. this was a dead -- a dishonest pledge. the conservatives knew that they would be offering this and there would not be the fundamental question. you may disagree with me, but i will tell you -- and this goes to those who ask me about the european union. this is just, of course, suddenly under pressure everyone reverts to their type. they are doing what they have done best, and this is frightened people. i am in favor of a european super-state? far from this.

i spent a lot of time arguing against the new measures. my predecessor recently posted an article talking about the alternatives and you could just prolong the life of this, because these submarines are already subjected to be viable after 2024. and you can downgrade this for the 70% of the time -- and you can use the us. submarines, with nuclear missiles. there are a number of these kinds of options. and what you have proven, comprehensively, is that david cameron and gordon brown are wrong when it says that is for this replacement for nothing. this is not just the liberal democrats.

this is also the field marshal. listen to what the head of the army was saying. this is nonsense. this is not the only option to replace this. and when the world is changing, while which commit to spending all of this money? when there are no other alternatives that are being looked at? on the eastern border, i have been very frustrated and disappointed, with the failure of leadership within the community in dealing with and developing the mature relationship with moscow. i think that the french president and the british prime ministers have always been very skillful with the incumbents of the kremlin, perpetuating the idea of the bilateral relationship -- this is what matters.

vladimir putin was very good at using this, looking for the russian power in the energy sector and oil and gasoline. he was not allowing the european union to speak to the some of their parts. i am not saying this in an antagonistic way. i believe russia is a very important part and i spent a very long time with the hard- nosed negotiators from the russian government. the european trade negotiator and the world trade organization. we have the bloody-minded skills of the negotiators. and i have learned that the way that the european union can get the best information out of russia is to be the sum of their parts, and i think that this is said. >> we will hear a question --

>> be careful about what you have said. this may be used against you in court. we are coming back to the issues with america. obama is increasing his scope, with other countries becoming involved, is it not true that in europe, america is trying to the dissipate with the conflict. because you were against the invasion in iraq, does this mean that you would reduce the availability of the british military and you do not want great britain to be the automatic partner in the conflicts that are brought. >> we have a german colleague that we will hear from. and then, japan. >> i was wondering if you think

that there will be an initiative to support the british countries? and if you want to extend this and if you have some particular idea in mind? >> we were coming to you -- from the front. sorry. >> i am from a japanese newspaper and i want to ask you , do you tolerate the two-party system or would you like a new, three-party system? >> would you like to terminate the two-party system? >> the very last question, this is an agonizing issue. the gentleman who was wearing glasses. >> thank you very much.

you have said, before, that the man who wants to the prime minister has the biggest mandate for the people. is this the most popular vote? and are your children in london? >> unambiguously, i do not think that any nation should automatically make its brave, young military men and women available automatically to the other governments. yet this would -- this would be absurd. morally, i find this unacceptable. we will deploy the troops, and we will put young men and young women -- a young british men and british women at risk if this is in