>> right, and to answer that question i don't know the answer to that and i am not sure that anne has explained directly that the nexus between credit score and driving. >> mr. snyder? >> am i more likely to survive cancer an . a fire? >> m sherman, the answer to that is no and that's why we supported language in the national insurance legislators model that removes collection accounts with the medical industry code. that is what was done first. in the past summer the national insurance legislators heightened that even more with our support this removes the consideration of the negative factors resulting -- >> just for the record so we are clear to all of the members of the committee you're coming here

representing who? just so we have it for the record. you are representing the american insurance? >> yes, sir. >> thank you. mr. wilson, you provide them the information so what do you think? >> we haven't tried to study the specific question that you asked and we also agree that medical colleions should not be used in this course. >> but they are used in this course? >> they are not. >> and the reports they are. in the credit report they are. if someone fails to pay medical bill it has a derogatory impact on my credit report which is kind of a derogatory impact on my credit score. >> i'm not going to -- >> you can't. it's not that you're not. really it shows up. in other words, mr. lson, if someone has difficulty paying a hospital bill and it goes to a

collection agency does that show up on the individual's credit report? >> it will show -- stila gindin as a derogatory effect on eckert is work. >> it is not used in our scores. >> but it is used in the credit report. >> it's on the credit report. >> thank you. and it is there on the credit reports. so, it's okay. everybody has witness is here. i don't think mr. wilson is to upset at me asking him the questions. and so what we are trying to get at here is how is it that people who have an accident, who has an illness in the end are not deprived of insurance even though they had no way of dealing with this and maybe doesn't have anything to deal debate could do wit them. so let me ask you if i am

employed and become unemployed and, you know, i can't pay my bill because i've become unemployed does that mean i more likely to have an accident or fire in my house? mr. wilson? >> again, the scoring models that do look at dealing with payments which would potentially be a result of having lost a job show that those delinquencies or insect indicative of greater risk claim filing. sprick therefore i would be more on health care insurance? i'm sorry, therefore i would pay more on the home insurance? >> you could, yes. >> i would. >> not every carrier uses the credit scoring is -- >> thank you. >> mr. chairman, if i might to provide a further response to that of the extraordinary life circumstances language adde to the national insurance

legislator model specifically excludes the use of loss of employment for a period of three months or more as it results from the one to recriminations suggest that is a factor we are trying to work with consistent with your question. >> mr. jimenez could -- unanimous consent for ten more seconds. >> if medical expenses are not considered then there would be no reason to have an extraordinary life exception to read also the end quote model has been adopted in different states and different variations as i said the state of illinois' only requires the ompany consider such an event. >> thank you. >> this is a remarkably important topic and i think there is a lot of misinformation that is coming into the debate

and a lot of hyperbole that occurs and i'm hopeful throughout the question period we will be able to sort out some of that. mr. wilson, you mentioned in your testimony that the main variables, he primary areas where the credit variables are looked at are the length of time of an account, number and type of credit account, indication of recent activity, degree of utilization and payment practices. and in the next statement that he made this is a quote, insurance scores do not consider factors such as race, religion, national origin and gender, marital status, age 06 orientatn to address some income, occupation. given that, why do you think there is always this misinformation out there about what goes into a crevice or? >> i do hink some of the comments introductory to this are accurate. not every consumer has a clear

understanding of all of the details of credit reports, cred scoring on how these things are used n making decisions about them so i do think we have tried to be all there making information available to the consumers. we've difficult training programs for continuing education credit for agents and insurance agents because they're often the first line of answering questions about these things. >> but providing information, providing the score you're not an insurance company? you're not a credit bureau, don't provide credit, you pride information. >> right. sprick there's a lot of information that goes into the rationale for why a consumer might be excluded from gaining credit. i would be interested in the opinion of the panel if we as a

congress dtermined that we ought to exclude certain things from being considered is it possible that what actually harm consumers as opposed to helping them? mr. willson? mrsnyder? >> mr. price, the ftc estimated 59% of the people pay less as a result of credit scores. frankly in the testimony given by companies in the states the numbers are much higher for many companies. so w would envision first of all a very negative effect on the fast majority of policyholders directly. second, it would deprive the market a critical tool that has allowed the market to evolves much more towards objective underwriting individually tailored to each risk which is given the company's confidence to write virtually everybody under the old system that was sort of past and feel you were either very good, normal or relegated to the high cost risk

plans. now because o the toll that is capable of individuals accurate and objective risk assessment insurance companies are pretty much able to write anyone who comes to them which has resulted in the shrinkage to the historic lows of the high risk pools so there are a number that would come some directly to the majority of policyholders and then indirectly to the market as whole resulting in less competition and potentially less availability of insurance. >> and higher cost. it was available the entire cost. mr. mcraith to you agree? >> we should always be concerned about unintended consequences and certainly the pricing of one risk in a company pool affect the pricing of another risk in the sample. however, we should not accept as gospel that 60% of people benefit from the use of credit based insurancescores because we don't know what the baseline is. >> do you dispute that number?

>> what i am saying is what i described earlier our effort was the data to collect inflation from insurance companies. one is to get behind the rhetoric to reduce a certain percentage of consumers benefit from the use of the credit insurance scores. we don't know when we hear the word benefit what is the starting point. we don't know what the baseline is and that is what we intend to find all and we will report back. >> mr. wilson, do you have a comment? >> and the remaining seconds, congress relied -- what factors to the congress lie on the mahlon lending uses of credit information while amending the fair credit reporting act of 96 and backend 03? mr. snyder? >> congress continued ability of insurers to use credit information for insurce underwriting and that haslong been the case and congress continued to the recent

amendment. they also made the whole credit scoring system better and frankly we of the major interest making sure scores are accurate and that people have access to their credit scores and their ability to collect any issues that may exist and i think the congress and approved all of that through the most recent amendments but did maintained a longstanding ability on the part of insurers to use credit for underwriting subject to the federal law under the fair credit reporting act and all that implies as well as being currently sit regulated all of the state regulation that applies as well.

if i am to have a low credit score, that will cause me to be a worse driver? >> no. >> are you prepared to assert to

me that if i have a low credit score, i'm more likely -- that's likely to cause me to have a fire at my house? >> i'm not saying that. >> but you are saying that it will the correlation factor makes it more likely that i will be a bad driver, right? that's what the nexis is in your lexisnexis. is that right? >> i'm not familiar what the lexis is in my lexisnexis. >> let's not get caught up in the hyperbole. you are saying there's a correlation.

we made it explicitly clear, if there is a correlation between race and bad driving or race and more likelihood that i'll have a fire, that's prohibited, right? you can't take that into account. there's no question about that. if you find some substitute for race that correlates in the same way, has the same impact, would you think it would be appropriate to use that as a factor and say, well, no, we're not considering race at all, we're just considering the correlation factor that we have out here? >> you are giving me a hypothetical. >> no, i'm just asking you a question. would you think it is appropriate to do that. >> if you can find a pure proxy,

you should not be able to use it, yes. >> what about you? i assume you wouldn't think it would be appropriate to do that? >> it is absolutely fair to say, congressman, that the state has taken different approaches to this. if one state identified something to be a proxy, i believe all states would deem it to be that. >> i -- >> i'm not sure i asked you anything, but you are welcome to add, if you want. >> thank you, sir. the f.c.c. concurred that credit scores are not serving as a proxy for race. >> i have read that study. it didn't exactly say that. i understand you want to get that in the record. you may want to tut that study in the record. we had it in the record last year when we had a hearing about this. that's not exactly what it says.

it says the same kind of correlation that you are talking about is legitimate here for credit-based scoring between this and race. and you want to use it on one decide and say we like the correlation on one side and we're going to use it, and on the other side we don't like the correlation, so we want to say no, no, no, no, we shouldn't be using correlations here. isn't there a strong core laying between these factors and race? that requires either a yes or no answer. is there a strong correlation or not. >> if found -- it was found that it was not a proxy for race. >> i heard that. that's not the question i asked. i want to know, is there a strong correlation, not whether there's a proxy.

i don't anyone in here knows what proxy means. tell us is there a strong correlation or is there not? >> if found there were larger percentages in various democratic groups with lower credit scores than other groups. it is also found that within these groups -- >> can i just get him to answer my question? i just want to know whether there is a strong correlation or not. that's a simple question, not a trick. >> mr. wilson, talk to us about the situation you have with your customer. your customer is an underwriter,

insuranceman? >> it is not a premium finance, it is a risk indication. >> so the credit history that you're looking at has nothing to do with the fact that as to whether the insurance company is going to get paid for the product they are selling? >> right. it is not about payment of premiums. >> so it is purely a historical

factor that gets plugged into the fact of whether they can pay, right? >> right. so the credit fathors are the score in conjunction with driving record in conjunction with coverage amounts, in conjunction with prior losses. it all goes into the underwriting or rating of the policy. >> so that if a customer comes to the insurance companies and says, i want this kind of coverage and i'm going to pay cash, companies still go through the same process and if your information taints that customer, even though they are planning to pay cash or pay for it other than with that company, it still taints that customer? or has potential to taint that? >> right. if the carrier does use credit

for score as part of their rating, it would be used as if the customer were using cash for their premium. >> this is the complaint that i get from my constituents the most. they feel like that because they have had bad credit or they have had ai car repossessed or they paid their last insurance policy and their premiums were slow, they feel like when they apply for more insurance that the reason why their insurance is -- the rate has been raised is because there is a direct correlation between the late peements payments on a previous policy. but you are saying it is late payments on any kind of credit that they may have? >> that's right. >> and not specificly on that product. on insurance itself. >> on the premiums, right. >> and you give the report to

them, but it is up to the underwriting department then to make its own decision based on your report, how much they weigh each of those things. >> that's correct. carriers would not use these tools if they did not work for them. in is a great deal of weight variance however in what

carriers assign to their credit rating programs. >> mr. scneider, in your particular instance, would a driving record be a significant factor in your information that you gave to an underwriter that bought your service? >> absolutely. auto insurance rating generally involves not only credit information but the age of the driver, the prior driving experience, the make and model of the vehicle and on and on and on. so the ultimate underwriting and rating decision is based upon many factors, only one of which is credit. >> the time of the gentleman has expired. mr. moore, five minutes. >> thank you, mr. chairman. our oversight smee held a hearing on -- subcommittee on the broad lesson of excess.

i believe one lesson is we need to go back to living within our means. i think that is true for businesses, families, and individuals. i believe we need to increase financial literacy. we need to teach personal finance to our students in high school and college and ensure our young people are empowered to make strong financial decisions. as we any of credit scores, how can we encourage people to correct any misinformation and learn to build their credit scores? >> it is a message we try to repeal. we talk about the need, what goes into an insurance score and the need to stay on top of it. there are adverse action notices that make that point as well. i know the credit industry is doing a lot. frankly, we look forward to

increased cooperation with the congress and the states on improving financial literacy. we have done some work on our own. we would like to work collaboratively to see what we can do to raise the level of financial literacy for everyone in this country. >> do you have comments? >> financial literacy is important for all sectors of consumer finance. insurance in particular can be very confusing to the average family, the average small business. states are committed to helping consumers understand how their insurance policies are underwritten, how they are prace priced, and providing wlaffer direct assistance we can. >> mr. wilson? >> i would agree with the gentleman. >> in your experience as a state regulator, do they get abused? are they abused by insurance firms?

>> we understand a broad range. so the weight one company might assign would be significantly different than another company. different states have different parameters. so there is a wide variation. i think one state estimates a variance of credit scores affecting a rate from 7% up to the high double digits. that indicates that companies use this one factor of credit scores. the companies use it differently based on their proprietary scores. this frequently is a problem for

consumers. state law varies with respect to whether consumers can be penalized for that or whatted recourse for the consumer might have in the event they are penalized. 3 -- it is inaccurate to say that companies do not consider medical debt as part of a credit score. it is also inaccurate to say all states allow medical records to be exempted. some states do, some states don't. >> with regard to the late oast point, we support the enactment of the national conference of insurance legislators model, including extraordinary life circumstances, including the ban on use of serious injury or serious ill negs -- illness with the individual or family member. >> thank you. i would just add that even in states that have not adopted an

end coil-like model, we still do not consider medically coded collection items in our scoring. >> thank you, mr. chairman. i yield back my time. >> the gentleman yields back the balance of his time. you are recognized for five minutes, sir. >> thank you, mr. chairman. good morning to you all. commissioner mcraith, if credit-based insurance scores were not used by insurers as one factor out of many for setting preemyusms, what other factors in your opinion would be more heavily weighted and what would be the likely effect on rates? >> congressman, the availability data to any one company at this point is so expansive, it is impossible to determine exactly

what or conclude what factors would replace the credit score. some companies are using all the sub components of a credit score and not relying solely upon a credit score in and of itself. what we expect is that eliminating one rating factor will shift cost. there are some people who might pay more. others might pay less. when you affect the price of one person in a risk pool, you will also affect someone else in that same pool. >> that's obviously my point. and whether that would be fair to others where the risk would be shifted is obviously a question of great concern. mr. snucker, do you agree on that? >> i would agree with director mcraith on the potential impact of people paying more 0. >> can you move the mic closer to you, please, mr. snyder. >> yes.

i would just indicate my agreement with the comments of director mcraith, that if some people pay less many more people will pay more. >> and from your experience, what might be those factors if we eliminate this factor? >> it might force the industry to go back to larger class fantastics and rely more on those, such as territory, and other factors which themselves were controversial. with the additional credit-based scores you have added a degree to individual tailoring that didn't exist before and allows not only accurate rating of individuals but has improved vabblet in the market because of the confidence companies -- availability in the market because of the confidence companies have. therefore, many more risks are being written in the voluntary market. >> credit scores are individual,

and i realize a fwuns in a lifetime -- and i realize a once-in-a-lifetime situation should be excluded. i realize territories may be unfair to those who live within the territory, and actually my judgment may be harmful to those whom we are trying to help. mr. wilson, your thoughts? >> that is certainly a possibility. there are only so many factors that are noted to have a correlation, and companies try to use them as effectively as they can to write risks. >> and quha would your view be on a risk based upon territory? >> territory has been demonstrated to be strongly inaddictive. -- indicative.

but as you know, it is broad. and one of the benfits as we saw it for credit scoring is that it was individual. >> it is my understanding congress had inappropriately tried to pressure those fannie mae and freddie mack. i would encourage we do not engage in the business in which congress was guilty of in that matter. i yield back the balance of my time.

>> the intent of this legislation is ad myrrhable. i agree with her that medical debt should be removed from credit to court 30 days after the debt has -- from the credit report 30 days after the debt has been settled and that it not continue to hurt the credit rating of that person having gone through so many difficulties with sickness. i am concerned about one issue. for a long time we have been asking them to encourage credit reports in other languages, especially spanish. mr. chairman, i would ask that

each credit reporting agency provide in writing their proposals inform provide credit reports in languages other than english or that we at least have an opportunity to debate that. i'd like to ask my question to mr. snyder. i'm interested in legislation this would require that every adult mench citizen 21 years -- every adult citizen 21 years or older receive a frue credit score on an annual basis. would the american credit industry support such an idea? >> i think we would. we are interested in having more transparency in the process as well as accuracy in credit scoring. >> i haven't checked with my colleagues in the area, but i think anything that makes the

process more transparent is something worthy of serious consideration. >> i'm glad to hear you say that. mr. mcraith, do insurance lenders pay for the credit reports they obtain from the credit reporting agencies? >> insurance companies will typically contract with a vendor on which the underwriting decisions and pricing are determined by that insurance company. some of the larger companies have their own independent proprietary scoring system. >> i see. mr. chairman, with that i yield the balance of my time. >> the gentleman yields back.

>> if i am a business and i am using those criteria, i am pricing myself out of the market. is that a reasonable assumption? >> yes. >> so the checks and balances on whether that is being being used is the marketplace, right? >> yes, there are many checks and balances in the marketplace right now.

>> i would add, congressman, that the companies pursue the profitible risks, and if, in fact, credit-based insurance scorers identify perspectively less profit yabbling risk, the pricing might be geared toward reducing the likelihood of that less profittable risk from enrolling with that company. -- less profitable risk. i with say that's the business judgment of the companies. >> i don't want to do business with an insurance company that's broke, do you? >> no, that's right. we want financially strong companies able to deliver on the promises they make to consumers. >> is it fair to say that because of the underwriting

tools, credit being one of them, that people can actually effectively lower their insurance costs biff good behavior? >> yes, the system very much rewards that behavior. not only on the road, but in terms of responsible management of credit. >> i would agree. you do have the opportunity to modify your risk profile and therefore become a better risk. >> i think the thing we've gotten into the business around here it seems like, is we are trying to get government to pick the winners and losers. we do it with legislation that hand ties a process that works and rewards good behavior.

whereas people that pay their bills, drive safely, and demonstrate certain characteristics that they are responsible, and they get to reap the benefit from that. it looks like to me if we go in and sterilize that system that basically it becomes harder to determine who is a higher risk or the procedure profitible. so what happens is that in order for a company to counteract that, i guess they raised everybody's rates. would that be a fair assumption? >> i think it would, impact pricing, congressman. as i said in opening statements, we see people with policies where it would have been difficult for them to price a home own -- in our examples,

over time, i won't bore you with it right now, there are factors that congress or the stailingts later -- states later determined should be prohibited. >> should we be careful as we go down that road? >> those are questions they ask every day. >> i know there are differences. they ask you if you smoke when you get insurance. there must be a difference acktwarle -- actuarial. >> yes. several years ago there were

life insurance companies charging higher premiums to african-american enroll yisees because their life -- enrollees because their life expectancy was lower. that was -- >> we're going to leave this now and go to an interior secretary salazar on the gulf of mexico oil spill. the secretary just stepped up to the microphone. >> we'll get this problem resolved. we've been on this problem now going on 25 days. there are many different fronts on this battle. we are fighting them on all fronts. we are resolute to do everything we can to bring this problem under control. tomorrow in the afternoon with secretary chu we will be pulling together to take a look at the different options on the table.

secretary chu's leadership as well as the lab at the u.s. gee logical survey, all of whom had been focused on this issue with the command center in houston gives us hope that we will shall able to make sure whatever option is chosen will in fact work. so we are looking forward to having that done tomorrow. today i was in louisiana at the fort jackson wildlife center. i was there because i wanted to see what was language because of wildlife resources. the department of the interior has 33 wildlife refuges. we have seven nationals parks units along the gulf. we have a responsibility as the ut us fish and wildlife service that we are doing everything we can to protect the valuable he can logical resources of the d.

ecological resources of the state of louisiana. >> it has been up to a team of the federal family, an effort that was been relentless since day one. mrs. napalitano is impressed with how many people have come together with this oil spill. we feel the pain, we are frustrated, and we want to make sure at the end of the day no stone is left unturned relative to the effort that's concentrated on this matter. at radical? >> thank you, secretary salazar. we thank you for your leadership, all the members of the cabinet.

we thank you for the leadership and hard work going on at the national level. we also know there is democrat does work going on here in the gulf coast region, from here to the countries on the frontline, the countries affected. the lea leaders of these states as long as their staff and everybody that's out there in the community fighting this every day, it has been a continuing effort. we have had good weather. thankfully we have had whether that allowed this to be fought off shore. scurrying the source i know secretary salazar are folk -- focused on fighting the source. we have had minimal impact to the shoreline or wildlife and beaches and that but we know there are fisher mean that are out of work right now. if we fight this our demitment is to demit gate the economic

impact felt in this gulf coast reason. we began deploying sub sea disbursements. in doing that, i wrant to thank everyone in analyzing the three tests we had. we didn't cross this flesh hold lightly. this is -- this threshhold lightly. and we have other tools as well. obviously a controlled burn, skimming on the surface, work like that is ongoing. the weather sometimes challenges us. we need to be flexible in how we apply these tools.

i appreciate the experts who are investigating this issue. i want to thank the fishery communities. the national fishery service, along with the coastal states of fisheries folks are really trying to mitigate and minimize the recreational and the commercial fishermen and they are trying to do the best they can to analyze what's available out there, keeping people informed what fishery -- fisheries are open and where they can recreationally fish as we deal with that. we obviously are committed to bringing this to resolution because we recognize and we will not rest because we know how much the american people and how gulf coast residents rely on this to bring this to closure. thank you. >> i would like to thank

secretary salazar and ad radical landry. i just spent about 1.5 hours flying over the scene. i thought the first thing i would do is share my observations. it appears the sub-c disbursement is working. the ships and riggs working in the area are demirndemirned. in addition, the admiral has already referenced the fact this off shore appears to be working. there is oil and it is disbursed shown here on the map on the right. we are 23 days since the rig sank and since this began. we have had very little affect on the shore partly due to our efforts and partly due to mother nature. we are in the process of rising the insertion tube. this contains the flow. it doesn't stop the flow, but it contains the flow. we hope to have that tool

inserted by late tonight. it is back on the sea bed. we did have to pull it back to the surface yesterday to make some adjustments so we could connect it to the pipe that connects it to the ship. but we expect to begin operation of that equipment overnight tonight. the activity continues. the driller three, the de-3 rig is on day 13 now. we'll be completing the last of the tests on that and should resume drilling over the next two days. the dt-2 ship will begins drilling activity tomorrow. ? >> as the admiral has mentioned, the weather plays a role in this to combat this off shore. unfortunately they are not busy with skimming operations but we expect that to change over the next day or so. we use our tools over the

balance of next week. lastly, i mentioned that we continue to have a massive response underway. over 17,000 people are working on this effort. we have deployed over 1.4 million feet of boon. we have aircraft workers working 650 vessels. it is a massive effort involving four states, members of the government, bp individuals, and numerous, numerous contractors. i would like to extend my athanks to all of those people who are making this some success. thank you. >> at this point we will take questions. thank you. >> do you think there were design or execution problems with this cement job on the deepwater horizon? have you done testing to make sure the job had problems or was done correctly? >> i sl say my only role -- i

should only say that my only role in this, which i began working on this two hours after the event began, was to deal with bp's response efforts. i am involved so i do not have the place to comment on that. >> governor jindal has expressed concern that there has been a lot of attention paid to where the oil is on the surface. how much do we know about where the oil under water is? is that being modeled or are we watching -- waiting to see if it washes up on shore? are we going to expect to see more of these tar balls coming up to shore? what's the plan? >> we want to be transparent

with the entire nation. any information that we have, we need to make available. it is a difficult thing to measure, so there are lots of guesses out there in terms of the amount of oil. it has already gone out to sea, the amount of oil that has already been cleaned up. whatever information it is that we have as a government, we want to make that available to everybody. so we'll have admiral landry comment on that. >> yes, we have been working very closely with governor jifment ndal and his staff. we tracked how that might come into shore. what we're seeing on the shore is tar balls. it is not a huge swath of shoreline that's covered. it is a few places, and we have teams right away ready to respond to that spill and clean that up. what we are also doing is trying to communicate with everybody. we have taken information that we knew about the oil, and we

are trying to translate it to the pictures we are getting whether it is tar balls or emulsified ribbons, explaining that on a web side and how we would approach the clean-up so we can mitigate people's concerns. we have a good handle on the oil we're dealing with both at the source through the water column and on the surface and as it hits the shoreline and we are tracking it constantly. i would refer people to the web site to take a look. we are going to communicate this to all the gulf coast residents as well through their states, through their counties, through their parishes so everyone has an understanding of the fate of the oil. we apologize if people are concerned out there because they haven't gotten enough information. we are pushing this information out, and we will continue to do that to allay people's concerns that there is looming massive amounts of oil that are unknown. that's not the case.

>> hi, ed levandero with cnn. i guess i'm getting to the issue that there are many people that believe there are less tocxic -- toxic ways of doing this. i guess people are wondering why you haven't bought those and stuck with that. >> let me start with explaining what these disbursements do whether they are on the surface. their intent is to break the oil into much, much, much smaller droplets. what that does, it involved the degredation process. we use that to break it up into

much smaller pieces and allow the natural process to be accelerated. we have been using a exit product. we also have sink wrap four which we'll be introducing to the process as well. one of the things we have to understand is weather to be able to supply these in sufficient quantities. the good news about using it sub c is we should be able to use it considerably less disbursements than we do when we have to apply it to the surface. it works, as we've seen in the tests, it should mean there is much less oil on the surface which means total disbursement usage would drop scaptly. >> it is important to understand that the correctives are part of an equipment list that has been approved by the federal governments and the states through the national response teams. it is important to understand that there was a preapproval for

this ahead of time, and this is -- this is not done just by willie-nilly anybody can take a product and put it out there. it has been analyzed in studies as far as what the potential impact is. as far as new technologies and use of product that people are coming forward with, we are trying to actively engage with those people. because this is an opportunity for us to do more study and analysis, and we have set up a special team through that through the national response team and the regional response teams. the federal and state governments are working together and we're working with science labs. we're going to take a look at these new technologies and new offers. we have preapproved commodities being used now that have gone through this testing and analysis. i would caution us to not get too far ahead in -- in using something that hasn't been it ised, analyzed and preapproved for use. on a wide scale. maybe on a small scale, but not

a wide scale. >> any questions? >> we will have a question and answer section. >> please remember, one question per line. please stand by for the first question. abc news, your line is open. >> thank you. i wonder if you can tell us what specifically went wrong with the insertion tube today? >> my understanding is that there was an effort to try to put the insertion tube in tonight. there is now a second effort underway. the latest i have from bp is that they hope to be able to have it in place tonight. i want to comment on how this whole thing is being looked at from our perspective. the first is that these are

essentially militant gation measures. essentially there are three steps to this. the first is to deal with full mitigation and try to stop the leak as much as possible. the second is essentially stop the we will from -- the well from flowing. the third will be the ultimate relief well that won't be drilled until august. it is our hope that through all these efforts that are underway with bp and the global community that has come together to look at all these different options, overseeing -- overseen now by the group of the smartest people on the planet that the steps that are being taken are the appropriate steps to try to bring this insurance dent dense into control. -- this incident into control. >> thanks for the question. i didn't really hear an answer to that last question, though. what happened when you tried to

put the insertion tube down there? >> i will have doug answer that specific question. i will say this. every morning -- first thing in the morning, we get an update on what exactly is going on. b.p. has missed the deadline with respect to the scheduled activities it has in a number of different ways. it reflects the reality that they are operating in a very difficult circumstance and in conditions that are very difficult to essentially put in some of the mechanisms they are trying to put in. as to the exact reasons why the first effort on the risor didn't work, let me turn that over to doug as to what exactly happened. >> thank you, mr. salazar. actually, i fully agree with what the secretary just said. what happened last night, this tool sits in a metal frame so

that the adrill pipe lowered from the drill shift can connect to it. when they attempted to connect to it, the frame shifted zoo they were unable to -- so they were unable to make that connection. so what they had to do was bring the tool and the frame back to the surface and reor event the frame so that -- re-orient the frame. that's the problem. the adjusted frame and the tool are back on the seabed and they are attempting to make that connection. >> ok. our last question. >> yes, just a follow-up on that. you mentioned how difficult it is to be working 5,000 feet below the surface. in this instance with the risor, was it a temperature problem or a pressure problem that caused the pipe not to be connected? >> no, it was actually just the

mechanical act of trying to take this 5,000-foot-long stream of pipe and connect it to this tool. if you can imagine trying to do that, it is essentially a mile long into what we would call stab into or connect into this particular tool. once we insert the tool into the pipe, of course the reason we are using this insertion-tool technique is to try to exclude the water so we won't have the hydrate problem we had the previous problem with the container. >> thank you, everybody. thank you for coming today. >> so a live briefing here with interior skt ken salazar. on monday we will have more of the ongoing problem with janet napalatano and b.p. president

lamar mckay. you can see that live at 2:30 eastern on c-span. we will return now to the hearing we left earlier on consumer credit scores, and that's being held by house financial services subcommittee. you're watching c-span. >> we have the information that lost cause -- that lost cause went down dramatically because companies simply couldn't go through the elaborate process that you have to go through there. so i think there is strong

evidence. >> so what happened in california? >> well, what happened in california is that you have a situation with massive cross-subsidies, a very infish system with a huge overhead cost, and -- a huge inefficient system with a huge overhea head cost, and i think prices would be lower if free market were permitted. >> so if we were to restrict the use of credit scores, what you see in california you predict might spread nationwide? >> i think that's right. >> and we have congresswoman watters recognized for five minutes. >> thank you very much, mr. chairman. i was just going over some information with my staff here. i want to thank you for holding this hearing. i wish that we could get at some of the information that is

needed to understand how decisions are made to determine insurance rates and what's taken into consideration. .

>> should we have standards. there are general legal standards but to in courage models and the variables are on

a state by state business. >> your association. members, do they own studies? there's not one or two or three or four or five studies every year done by the association accept they all do different studies? >> for antitrust reasons the association can't discuss individual business but they're constantly reviewing data and factors and subject to insurance commissioner review on the models and programs and factors used in them. >> what's the difference between defending the fact that they all use variables unknown and different for competitive purposes? and the question i just asked you ability a study? you know

something that that? you can't talk about the studies, what's the difference? >> from general reports what the company and media said. >> any of the companies use maryland the zodiac study? >> excuse me? >> any of them in your company using zodiac study? >> excuse me? zodiac study? >> yes are you aware of that? >> i'm not. >> do you believe that given the way decisions are made by insurance companies, to charge, or to not ensure that is association satisfied that your companies in the association are acted in the best interest of

the consumer? >> yes, so far as we know. >> do you know of any changes you would recommend that should be taking place to have them do a better job of acting on behalf of the consumer? >> well, the answer is, i can't recommend to them how they do it? >> can you recommend to us? >> what we do support is reasonable recollection and they're ability to compete in the market. >> mr. mack graph. you present the national association of insurance commissioners. you must hear from commissioners all over the country about the problems that they have with whatever regulation they may be responsible for in their state. have you heard any of your commissioners complaining about loops? organs rather - in their oversight responsibilities that could be closed?

yes. thank you. >> the question. ten seconds. >> as you expect congresswoman there's a wide variety of view points on the use of credit based insurance scores. >> man mr. green? >> healths fi let's first revi intelligence. credit based scores are not held out as being predictive of an individual's likelihood to have an automobile accident or experience damage to their home. true or false? >> right. >> if you would, just true or false? this is true would you kindly raise your hand? nobody agrees this is true? >> the question - i'm sorry, the question is? >> credit based insurance

scores are not held out as being predictive of an individual's likelihood to experience an automobile accident or damage to their home? is this true? >> they're predictive of making claim. >> sit true they don't predict a person is likely to have an accident? >> models perform for groups of individuals rather than for individuals. >> to you know whether or not it's predictive of a person to have an accident? i'm not hears yes or know. >> it is of having an accident and making claim. >> a credit score can predict if a person will have an accident? >> it indicate as likelihood of sub submitting a claim. >> i'm not there yet. i'm talking about the likelihood of having an accident which i thought would be the easy question, by the way. will a credit score predict

whether a person will have an accident. >> i've not seen any study that indicates that true. >> so your answer is yes or no? i would love to answer your question congressman i simply don't know whether or not that's true. >> it will predict it. you probably read with - let's go to mrs. snyder. >> my answer would be the same as director. the studies indicate the greatest likelihood of submitting a claim. >> i'm not there yet. accident? do credit scores predict whether or not people will have accidents. >> they predict the likelihood. >> do they predict accidents mr. wilson. >> they're correlated with accidents? >> credit scores will predict whether or not a person is going to have an accident? >> excuse me, mr. wilson has the floor right now. i'm sorry. >> i would agree it measures

the likelihood. models performance for groups of individuals. >> credit scores predict the likelihood of a person having an accident. seems to be where you all are. >> i cannot agree with that. i don't know what that's true. it indicates the likelihood of a claim to an sans insurance company. >> if this is what you believe, that's problem if you believe a credit score can like lie predict that a person is going to have an accident? what's the correlation between the credit score and the likelihood of an accident? my thought is you would all say, no. that sit likely to predict wh e whether a person would file a claim. you seem to think it can predict whether a person will have an accident. so mr. wilson i'll give you one more chance are you sure that a

credit score can predict the likelihood of having an accident? >> for an individual, models perform. sometimes when you finish i don't know whether you said, yes or no. >> i don't think i know. >> okay. you don't know. >> let's go to the next expert. mr. snyder, okay again. >> a claim and you're not for certain types of automobile policies unless your in an accident. >> so does it predict the likelihood of accident. >> a likely hood of accident involvement. >> it's a simple question. is it likely to predict you're going to have an accident? here's what my intelligence tells me. it's likely to predict you will file a claim. that seems reasonable when you think about it. but if that's the case, and it predicts if your likely to file a claim, then the question becomes this or the statement

becomes this. the fact one is likely to use one's credit. par drop me. one's insurance if you have an accident then that says to me you have a lot of people that are poor and can barely pay for insurance and have an accident. can i tell you without a study that they're likely to use their insurance and want to take advantage of something they paid for. thank you, mr. chairman. yield back. >> five minutes, sir. >> thank you, mr. chairman. >> i'm interesting in the extraordinary life circumstances. and whether or not the three of you agree that extraordinary life circumstances should be ten taken into consideration with a regard to an individual's credit score. >> yes. >> yes. >> but it doesn't exist? i mean, who's taking that into

consider asian? >> starting with certain state laws. an extraordinary life event if the insured - policy reporter reports and submits that. >> california and hawaii? >> they prohibit the use. some states like illinois, for example require that the insurance company consider review and consider an extraordinary life event. some states require that make a reasonable exception to the rate. >> that's where i am. that's where i'm going. >> sir, the national conference of insurance legislators recently amended law to do provisions on extraordinary life circumstances. some states have enacted the pass legislation and it's something we support for all

states. >> all of you support that. >> i have a friend who is in the hospital now. suffering from cancer, and last summer he ate a cheese burger. so i've concluded that cheese burgers cause cancer. i've carried over - i know someone who has had two automobile accidents, so therefore, automobile accidents cause bad credit. point out the logic in that. either one. hamburgers or the accidents? >> well, congressman, as a chicago cub fan i think it's true the cubs have not won the

world serieses since theodore roosevelt was president so up until he comes back we're not expecting a victory. >> and i agree. [laughs] - but i mean we're in the age of deniers. we just will not - we will deny everything. i'm on a credit score, this goes back to mr. watts question earlier. in my hometown, kansas city, missouri. some of us protested years back because the newspaper and the real estate section would always in identifying the location would say east of truce. that's been unfortunately the mason dixon line separating the african-american, latino communities from majority community and they eventually stopped doing that. because they realize that they

were sending subliminal information. maybe not even so subliminal. and so - on a credit score, is not the address of the individual listed? >> sit on the credit report but it's not used scoring. >> that's - yeah. you just made the point i'm trying make. it's on the report, mr. watt was saying can there be a proxy or astute substitute? if its on the score, i'm saying isn't it also logical it gives additional information about the individual? >> yes. >> thank you, chief. >> um... let's - mr. snyder? >> as the gentlemen indicated

the address isn't included in the score. that we use. >> yeah. i saw that at the beginning. but i said that at the beginninging. so isn't - the question was and i apologize, isn't it very likely that's some additional information is being given about the individual more than the numbers? >> many - i want mr. snyder, please? >> certainly no demographic information. no other information than the number. >> you said the address is on there. >> no i heard the gentlemen say it wasn't. >> it's not? >> sit. >> that's unbelievable. >> you are saying that - it's expired. time. >> mrs. kill roy. >> thank you mr. chairman and thanks again to the witnesses

for their input again this morning. i wanted to bring up an issue that constituent and friend and former member of congress brought up to me. robert spent a great deal of his personal time working with my staff over the last six month and our committee staff to start to understand and analyze the way credit based insurance scores are being used and ub explained to ensure consumers. he was not able to be her this morning. i'll follow up with written questions for you regarding his specific circumstances and i hope you'll be able to provide me with some answers. thank you for that. you know there's a disparity between his overall excellent credit record and his choice point credit based insurance

score and i've looked at his materials and i don't understand it. so, could you explain to me how someone with an exemplary overall score, could end up with a mediocre credit paced insurance score? >> sure. um... one of the key considerations is the target that's being modeled so a credit score for financial purposes is generally targeting the likelihood or the odds of someone going to go delinquent on al loan payment in the next two years so. the bank as a pool of people that have gone delinquent and not. they model for that so the credit characteristics most in play come into that model. by contrast an insurance company is going to look at lost ratio

for pool of policy holders and they'll use the correlation between the credit factors and the observed lost race show to do a rank ordering. because the target is different, the credit characteristics and they're weights are different. >> what - which is congresswoman, to answer your question more directly if your friend is older than a certain age he's likely to see his premiums increase. it's not a credit based insurance score is not solely based on credit. there's many other factors considered as well including the age of the driver. >> mr. wilson said earlier age is not taking into account. >> it's not used our scores. >> it does come into play later on? >> yes. >> but the answer he got from his insurance company is it was based on his credit score and they gave him some reason codes,

but again i got to say, i don't see the correlation, and getting mind you mentioned earlier that you wanted to be transparent and we wanted to, you know get mind some of the rhetoric on insurance scores. still i'm kind of stuck here and it's pretty opaque to me. a lot of rhetoric in how that happens. >> i would free and would say it's possible that both sides can be right. that credit scores, credit based insurance scores are predictive and it's also possible that they might have a desperate impact on racial and ethnic minorities. both of those could be true. >> and you mentioned earlier mr. - about the large number of medical bankruptcys in this country. that's certainly true.

my bill is really not focused on that really significant problem. my bill is focused narrowly on people who actually paid they're medical debt. they might have had some confusion with the large number of bills. health me give you another example of a lawyer in my community. there daughter was in a significant accident. they life flighted her to a hospital. she had a grocery bag full of bills as a result. but she worked with her insurance company and paid everything off. and never heard anything again until years later. about five years later, she went to get a, loan to do additions on her home and discovered her credit score was dinged because of a $100 copay on the life medical life flight they had never billed her for. the municipality and somehow or

other had gone to collection. never that collection effort never came to her. >> those are real problems that people and families all over the country face every day and the states, i think are trying impose some requirements that insurance companies knowledge that exceptionle extraordinary life event. >> even if it's know the that type of event, if someone has paid they're medical debt do you think it's reasonable to have that disparaging comment removed? >> i think it's reasonable to have it removed and unreasonable for it to remain. >> time has expired. i thank you all very much. we have a second panel and i thank the first panel and being a little bias i thank you from illinois. thanks for the fine work you do for the citizens of illinois.

thank you for your testimony. >> thank you. in the >> we're going to go quickly to the second panel in which we'll continue to show the fairness of the democrats. we had two industry people and one person for the consumer and now we're going to have two industry and two consumer. then march 24th we had 7 industry and one consumer. just for the record. >> thank you. we'd ask everybody to please take their conversations and have a seat.

we'll introduce these wonderful witnesses and go to the second panel with four witnesses. staff attorney national consumer law center. mr. mark, executive director of the access project. president and ceo of consumer data industry association and the part ne of husband and cook l.l.c.. your all welcome. we're going to give five minutes. please? you have five minutes. >> we also thank you for inviting us to speak about the need to fix an error in the credit reporting act. the use in employment is afroing

practice with nearly half employers involved in it. it's unfair to american workers and for that we strongly support, hr 349. we thank for congressman to introduce it. only to those positions that it's truly warranted such as those requiring national security or, fdic mandated. we propose and support. hr 319 for a number of reasons the first and foremost is the profound absurdty of the practice. consider credit histories creates a vicious catch-22. worker loses her job. likely to fall mind on her bills. she can't rebuild if she doesn't have a job and can't get the job if she doesn't have bad credit. commentators have called this a financial death spiral. if turn making it harder to

return for the job. second the use of credit discriminates against job applicants study after study has documents that groups have lower credit scores including the, ftt studies. these have been effected by credit practices. autoloans and as a high for closure rates that have damaged the equal employment opportunity commission and recently sued one company over the practice. third, there's no evidence that credit history predicts performance. this issue has concluded there's not even a correlation. each industry presents. we don't have any research to show any statistical information and job performance or likelihood to committee fraud. finally the consumer reporting system suffers from rates of

inaccuracy. estimates range from 3% to 12 percent from the ftt. environment with 10% energy employment and 3% error rate and it's not acceptable. reason in her credit report and is able to fix it which is difficult can reapply for credit but very few employers will hold off a hiring process to allow a applicant to kraekt an error. workers are fairly judged on they're ability to perform a job. or recently signed a bill restricting the practice. other states are considering it and congress should do the same. the second issue i want to talk about is the error. amendments of 2003 may have

inadvertently deprived them of a pre-existing right they had of the, fcra's practice. this is when they're denied on an unfavored credit report. a totally new notice. risk paced pricing at 1681 and however a number of courts have interpreted the interpretation to section 1681 including the pre adverse action notice. congress can easily and should fix it because it's never part of the legislative bargain. facta's history indicates congress had no up attention and uncodified sessions state nothing fact should be construed to effect any liability under 616 or 617 at the fair credit reporting act. private enforcement provisions

existing before the date of this enactment and there's no evidence congress didn't intentionly do it. done it so the the banking industry with only the american banker noting perhaps in adver tantly su for the ryelations of the provisions. even 48 days later in a hearing before the full committee, my fellow testifiers said that a fact that intentionally abolished this private amenity. several dozen courts depriving hundred of consumer of rights we think the documented cases only touch the tip of the iceberg. >> time is expired. >> we look forward to your questions. >> green five minute start. when we get to the yellow, you have a minute. time yourself. mr. mark?

your recognized. five minutes, sir. >> chairman, ranking member and members, i thank you for the opportunity to address the chit today. i'm executive director of the access project. we work on health care issues and have since 1988. we revealed some problems of medical debt. that's money owed for any type of medical service or product that may be owed directly to the provider o to an agent such as collection agency. i'd like to discuss the use of medical d debt in address or assessing ones credit worthiness. on medical debt. data gathered found during 2002 most recent year which date are available. 49 million working aged americans had medical debit and 7,000,000 elderly adults had

medical bills they were paying off overtime. 28 working aimed adult where is contactd for medical bills. what makes them unique. few americans understand that nearly 2 thirds of the people with medical debt had insurance at the time of the incident that they owe money. while insurance provides protection. patients still have out of pocket obligations to pay. americans are often confused by their health insurance coverage. one national study found that nearly 40% of americans did not understand medical bills or the explanation of benefits and did not know what service to pay for or the amount they ow eed or whether or not it was correct. er in lie one third went to medical selection and one in six didn't know whether or not they should pay the health care provider or the insurance company. when claims are not promptly

paid, they're sent to collections. the confusion regarding medical claims payment also carried over to credit reports. many americans mistakenly believe unpaid medical bills have no effect on that. industry representatives said this was an example of this. but in recent testimony, a presentive said they're score does not factor medical debt into consumers credit score. following that hearing letter was sent to the hearing to credit supply. this is only when it's are importanted directly by a health care provider and they clarify they include all of those including medical debt. given this it's important to understand how most medical data appear on people's report. according to experience. data provided for directly of medical providers is 7/100th of

a percent. trance union states say medical dates are not reported or signed to collection. 40% of americans are confused by medical bills and consumers and some scoring agencies appear confused as to if medical data and medical data can only drag down one score. i say this because medical debts paid off to providers are not calculateed one score. only those accounts sent to collection have been deemed delinquent are sent to collection. this system is stacked against consumers and penalizes those that experience illness. each when proper action is taken and one pays off the credit bill the fair credit reporting act allows this to remain for up to 7 years. this leads me questions. some lenders disregard these when reviewing loan

applications. the study in the federal reserve found nearly one third of americans with a credit file have a collection account on the credit report. more than half of the accounts in collection are medical accounts. went on to state that some evaluators report that they removed collection accounts related to medical services from credit evaluations because it often involved disputes over liability for the accounts and the account may not indicate fuuure performance on alone. in 2008 it's estimated americans spent 277 billion dollars in out of pocket costs. this results from millions of in voices that have been sent to collection as a result of along insurance claimed a adjudication process due to numerous bills from one visit. those that paid they're bills are very surprised to learn such actions continue to peg them as

poor credit risks. such data airs harm consumers and these reports slow america's economic recovery. hr 31 corrects the error on credit reports specifically would require that medical only the an accounts fully paid or settled be removed - thank you. >> five minutes? >> chairman, ranking member and members of the committee. thank for the opportunity to testify. i'll highlight just a few points in oral remarks. preserving a full and complete health history is up pertive. it contains positive and negative information in a persons management or his or her debts. the data that's considered diverse be deleted in 7 years.

congress recognized the fair consumer pass there's a positive payment history any ad verse from hardship or even mismanagement is set into this context. credit reports are the bridge in an impersonal marketplace. they tell our story. of hard work. good very lose and even times of trial. credit reports are the basis for building fair and unbias risk management tools such as credit score tools and race and agendale are no longer barriers to accessing loans and other services for these reasons we remain concerned with, hr 31 paid medical debts be changed to a 30 day period. consider the following. maintaining stability of the system is essential. we all understand better than tefr safe and sound under writing. removing sit not the right step

or direction. some may miss understand the nature. does not begin on the final date of settlement. this is running throughout the period of time the money is on the account prior to payment. data is regularly evaluated and prematurely removing a paid data removes the possibility of helping to ensure safe and sound decisions. we support the current approach to add verse data and urge the committee to con summit with users about the consequences since it's not just merely one for the reporting agency but ultimately that for user managing risk. let me turn to the use. while credit scores are not provided by our members of the jury wears for employment purposes, credit reports are used and this purpose should be maintained. it proposed to place a significant limitation on the use of credit reports.

we understand the desire for consumers to get jobbed during this time but credit reports do not serve as an impediment. employers use of any criteria for employer is highly regulated. they must observe if credit scores are important to said position. one survey found for example am that members use credit checks for positions that have if i due share positions. corporate, technology platforms and access to sensitive personal information and i think that makes sense. media accounts might lead readers to think differently background screenings only include a credit check in 18

percent of the cases. 80 percent of the time it's not used in the decision. fraud examiners has reviewed occupational fraud. and it found perpetrators were living beyond ones means and experiencing financial difficulties and there seems to be a view that credit checks are the final yes, or no from an employer. this is not the case. employers use applications and testing and interviews and many other data points the credit check is used where it makes sense. preserving this appropriate use under the current law as right income. thank you for the opportunity to testify. we look forward to your questions. >> thank you. i am a partner in the washington d.c. office of the hud law firm. my testifying draws on many years in private and public sectors including service at the

federal trade commission. i believe my b depth of experience is from consumers and financial services industry. i'm aware that credit information is used in a factor in predicting risk you there than consumers default on credit o obligation such as insurance and employment purposes. credit information is used conjunction with other empirical information for these purposes because it has been proven a reliable tool for risk. while some may credit or question credit history. there's times that's sensitive in fact to protect consumers many states require credit information in evaluating applicants for original licenses. as affair credit report recognizes it's critical that consumer reports be accurate to that end the law wires notice to a consumer before any ad verse

action paced on consumer report is taken. as a result a consumer report is not made up until the consumer is alerted to negative information in the report and that is opportunity to protect any inaccurate information. a consumer will receive notice if it formed a basis for the denial of employment or another decision that effects the consumer once employed. my previous testimony before the subcommittee addressed the use of medical debt collection history. as others testify this information is a predictive characteristic for that reason it's use benefits consumers as well as creditors and others that rely upon that information. in 2003. congress enacted, 615 which eliminated consumers private right of action for all private rights. since then litigants

have argued where congress intended to eliminate or where there was a skiber ins error. some complain there was no legislation history with the intentional to create the result. because of the haste with which congress deliberated the amendments at the end of 2003. on any of the provisions, more over some claim the placement of the private right of action is indicative of con grebsle intent to that particular subsection however that's not supported guy legislative record. rather than discern what congress may or may not have attended. i think the appropriate requirement is whether or not congress should reinstate a private right of action. based on my experience and participation as an expert within, arising under this

subsection i do not believe there's any measurable benefit in reinstateing a private right of action. there's no indication that consumer report users routinely fail to comply with section 615 notice requirements since the elimination of the private right of action. written testimony mentioned 44 cases that claims to alleged users failure to give and add verse action notice. in fact, virtually all the cases involveed a different allegation. usually that creditors gave consume another notice as required but the notice was not clear and con spicous was a. in other words the claim in those cases was although they received the proper notice, it was not in proper type size. the courts really saw those as blatant attempts to this. there's no indication the state attorney's general,

administrative enforcement is inadequate. at the same time as described the written statement. history shows the only persons stand to benefit from a private right of action under section 615 are those lures that can pursue class action litigation unless congress also implements appropriate limits on class action liability. otherwise consumers will ultimately be the ones in the form of increased credit and insurance. thanks for the opportunity to testify. i'll be glad to answer your question. >> i think - thank the general lady for being with us. we'll go right into the question. first, i would like to ask unanimous consent that mr. cohen often see be allowed to sit and when his turn comes allowed to ask questions. hearing no objection. so ordered and we welcome mr. cohen to the hearing here.

well, so mr. pratt. large amounts of debt and living beyond your means huh? i guess madeleine albri madoff could have done good. i guess they would be just fine. someone who's poor. in other words if your poor, your likely to live beyond your mean, right? tough. so your likely to have a propensity to be a criminal, right? no? what did you say? you said your going to judge people's character. you judge people's character given your credit scores right? an adjustment of people's character and they're integrity. do you really think you can judge people's character and integrity that you have the right to do that? or the ability to do that to judge people's character. you feel comfortable doing that?

>> if i could respond. >> i'm waiting. >> two things. no. somebody that's poor is not inherently someone with bad character. i worked with a mother with three jobs and work have had hard and paid her bills. >> one of your members is experienceded a one of the big-3 credit bureaus out thes employment insight. reports providing insight into quote applicants integrity and responsibility to his or her financial obligation. applicants integrity. you can see it with negative credit information and take a look. providing insight into an applicants integrity. if your member is actually judging people's integrity based on credit information? >> to the contrary.

an employer uses lots of different data to make a final hiring decision. >> they would use one of your clients. >> they could - is it or is it not true that experience taughts employment insight and they're one of the member of your group? >> yes, they are >> and i picked it right out of there the information. into applicants integrity to his or her financial obligation. integrity and responsibility in character? you know, i find it astonishing that someone could predict or claim to predict especially working men and women they're integrity and responsibility based on that. let me ask you a question, you talked about the spiral. could you talk about - i have bad credit, therefore i'm denied a job. tell me how that work? >> it's very simple.

actually exactly as you described the opening statement. you lose your job. you're not going to be able to pay your bills and you'll fall behind on your credit it card bills and your maybe your mortgage or autoloan and you try to get a job and your potential employer runs a credit check and denies you a job if you have bad credit you don't get the job and without income you can't improve your credit. it's society as well. debt effects your ability to both build assets, your children's. what you can pass to them and there are racial disparities. you know the evidence cited that certain minorities have lower credit scores an as group if that's supposed to be an accurate translation, then you're talking about huge up impact on the groups. people don't start off at the same place. poor person who loses the job

sles likely to have the assets to replace the bills with maybe a little savings. just makes things work. >> i just want to exmain from mr. pratt's testimony. the association of certified fraud examiners reviewed occupational fraud and early 2008 and found that the top two red flag warnings exhibited by perpetrator leading to the fraud is where the fraud ster was living beyond his or her mean and experienced financial difficulty. present 35 percent so if you have a financial difficulty and you get sick, as is already been testified. most of the financial difficulties the ma jr.ty can be related to illness and lack of health care insurance, then you're probably going to be a

thief and your integrity will be questioned and you get to do that. i don't have any more time. my time has expired. >> thank you, mr. chairman. mr. pratt if you would like to respond, i'll give you that opportunity. >> thank. you. couple of things. i under stand credit history is use bud not credit scores. they're not used in employment and employer wants to know when they look at a credit report what caused problem and employers are smart and they want to hire good people. that's why they use resumes and other types of tests of your qualification and that's why it's not a single determining factor of whether or not you get the job if you show financial stress employers are smart enough because it the credit history showing the full history

of your hard work it shows why the band of difficulty is correlateing with the circumstances we've had in this country with unemployment so a person will not just flip that applicant a side. particularly with a qualified person. the other important point though. credit reports are not being used for every kind of job if your stalking a shelf, credit reports are probably not used. construction trades. it's being used on the surveys from the society management resources management if you're a ceo and you have access to cash, a small business owner may want to know that and small business owners are some of the ones that do want to use a credit history as part of the review process and that's why they have interviews to learn more about a why your qualified for the job and why you should be the one hired for the job. >> ultimately it's your clients who decide how they wish to use

this information. your simply observeing in the marketplace that most will use it's a part of an interview process. i've had a number of different jobs. everything from bussing tables to serving in congress and every job, i had to go through a job interview. the one for congress was particularly grueling and took a year. what your saying is, this may be part of the hiring decision. i must admit as i listen to this debate it is little bit like groundhog day. a lot of the issues get recycled, but i continue to be struck by the mind-set that americans need congressional approval in decided what the criteria is they're going to use to make a hiring decision. i continue to be struck at this current that is antifreedom that says that you have to have congressional approval in your decision to offer credit.

i read the constitution and i don't see where there's a constitutionle right to force my neighbor to lend me money. i do not see that in the constitution and again, what i see here in my opinion and i know that the proponents - i don't question anybody's motives or intentions. at the end of the day what i see frankly are efforts to sensor credit files. this is a form of government censorship. to tell americans that there is information that their congress will disa them to have because they're not trustd with that information and that somehow, it's the responsibility in the burden of the small business person or the guy who's trying do a little store credit it in the furniture store in mineola, texas they had to justify

they're freedom. the default position ought to be freedom. i simply don't understand this current of thought. when you talk about a discriminating impact in hiring decisions, but if there's two people who are applying for a job, and if the employer wishes to use a credit score as the decision-making factor and you deny him that, and the person who had the bad credit score, be it his fault, somebody else's fault, nobodies fault. but if you deny the opportunity why aren't you discriminateing with the person with the good credit record. he's denied the job and you deny that information from going into the file and discriminate with the person with the good credit record. >> employ proiiers don't have

that discretion. we have equal opportunity laws. >> if the president barack obama administration not enforcing those? >> those that have a different impact are different. >> is the obama administration enforcing those laws or not? >> thank you. >> mr. green. >> thank you, mr. chairman. like to associate my comments with the chair and ask the panel the same question i asked the previous panel with reference as to whether or not one's credit score is predictive of one's likelihood to have an accident. we'll start with mrs. wu. >> i don't think ones credit score has anything to do with whether or not one is likely to have. >> do you know of any study based on empirical evidence that supports the claim? >> not that i'm aware of. i'm not and insurance expert.

>> let's go to the next person, please? >> i'm not an expert or aware of any studies that indicate there's a correlation. >> the next, please? >> i'll be happy to provide you and answer in writing. >> thank you very much. i look forward to your answer in write bug as for now do you know of any studies that indicate one's credit score is predictive of ones likelihood to have an accident? >> i have staff that's read the studies. i personally have not. so to do the right thing i need to consult with them first. that's all. >> ma'am? >> i'm not an ebbing spirit but i worked with insurance companies and a score that often includes a credit score is likely to predict the likelihood that they'll file a claim and that they'll have an accident. >> let's examine that statement.

>> the likelihood of someone to file a claim is inductive of the likelihood to have an accident? >> how is that. >> accident. >> you're talking about an accident is and the question is when it's an accident insurance company learns about it because a claim is filed. what the insurance company is trying predict is the likelihood that a claim will be filed. that's what they're insuring against. >> i understand that. your indication the likelihood of filing a claim is indicative of how i drive. whether i'm going to have good driving habits and where i'm going to stop at stop signs or speed. where i'm going to drive recklessly. the likelihood i'll file a claim is indicative of how i'll drive? >> what i said is if you don't have an accident, you won't file a claim. >> i understand, but see, what i can extrapolate from what your saying is this. the likelihood of filing a claim

is based upon the likelihood of your having had an accident. that's there's some correlation between the accident and the claim, but my question goes to the likely predicting whether or not you will have the accident itself? that's the question. can one's credit score predict whether one will have an accident? >> well, i think we disagree. i think it's the same thing. >> okay. well, i don't see the logic in what you're saying. i will accept it but i'm hoping you can help me with logic as apposed to just a statement because it's easy to say things but wheres the logic to support the notion that one's credit score is predictive of whether one will have an accident? i don't see it and i'm asking for empirical evidence? do you have that to support this premise. let's know not to go to the

claim if you have poor credit tainted bills are mind and you haven't managed you're a fairs well. there's a good likelihood you will use your insurance. there is good likelihood you will file a claim buts does it predict the likelihood to cause the accident? >> u don't know the study points o up that point but i said however the insurance companies are priceing an according to the likelihood you will file a claim after having had an accident. >> my last seconds the likelihood you'll file a claim. so do the insurance company want people that have accidents, do they want to do business with them? simply because you will not file a claim you had an consistent. that's what insurance is for to be there when you have the accident. so there's a likelihood you're going to file a claim each though you may not be at fault there's some means you viewed as negative and therefore we'll pay

more? >> well, the nature of insurance is that people that post a higher risk of whatever they're ensuring against. >> now the filing of claims. you see it nose that the accident. we'veest scraped the accident. thin lines have to be made. we're saying they don't want toy su simply because you filed a claim. not because you had a claim but your likely to file a claim. my time has expired mr. chairman and i yield back. >> gentle lady from california ? >> i simply want to thank the panel for being here and i'm focused to work with you and your legislation. we know who the insurance companies are and what they do and for the commissioners in bed with them, we just need some laws that's going to deal with this issue and i yield my time to you. >> thank you. i than it can general lady. >> i guess it's a claim. because i think when we go back through the record we're going to find even the insurance

representatives keep going back to the likelihood of filing the claim. i got a feeling i think i know the answer to that. that is, if you make more money you're probably less likely to file a claim. that is to say. say you have insurance on your house. you burn something, right? cause some damage. probably more likely just to take care of it yourself given your extra inl ccome. .

they told us earlier that if i am sick, that isn't used -- if it is put in my credit report but doesn't impact on my credit score. could you elaborate quickly on that? >> it is my understanding that

collection accounts go into the credit history portion of a credit score, and that following a hearing before this subcommittee it was clarified that medical accounts in collection are used as a factor in determining credit scores. so what is confusing to me as a consumer and wearing my policy hat is why medical accounts are treated differently based on who furnishes the data to the consumer reporting agencies. and i'm curious as to whether other data are treated in a similar fashion. >> i thank you. miss killroy, you are recognized for five minutes. >> thank you mr. chairman and panelist. you stated that you believe medical debt is predictive in determining an individual's credit worth? >> i believe i said medical debt collection information.

it is my understanding that is the information used in credit scoring as witnesses testified at the last hearing. >> i ask unanimous consent to enter into the record a may 3 letter to me. so you believe it is appropriate that we consider medical debt differently depending on where the information is coming from, is that what you are telling us? >> no. what i am saying is in credit scoring systems, as i recall, in a credit score models that they have developed, they use collection information, including medical debt collection information in the development of those models because that information has been found to be predictive in the models that are predicting credit risk. >> so you degree with vantage score that stated we don't believe medical debt women contribute to predictive performance? >> i would like to see the letter. >> do you agree or disagree

with the statement? >> what is the statement again? >> do you agree or disagree that medical debt will contribute to predictive performance? >> what i understand and what i've said is we are talking about collection information. that statement refers to medical debt alone without discussing whether that medical debt information is limited to collection information. >> you talked about the confusion and inconsistency in medical debt reporting, and you have taken a look at, as i understand it, at some medical debt studies. have you seen in taking a look at or talking to lenders and others, impact of medical debt, including paid medical date may

have on a person's ability to obtain say a home loan? >> we have talked with people from the lending industry who have been confused by the credit scores of individuals that they feel are quite good credit risks, and when they look at the credit report, find that there are oftentimes several either zero balance medical accounts that are in collection or medical accounts that have a very small balance in collection. this, to us, based on our experience, indicates oftentimes not a problem in terms of credit, but a problem regarding the health care billing system, and frankly, the insurance adjudication process. these bills are then sent to collection, and we have been told by some in the direction industry that a significant number of people whom they contact pay off those bills promptly.

we believe that they are doing the right thing by paying their bills, which is advised by those in the credit scoring industry as something people should do. we believe they are doing that. and in spite of those bills have a zero balance, they continue to drag down credit scores. we have dealt with some in the industry who have run people's credit history through a credit score simulator, and by removing medical bills, scores have improved 50-100 points. that is for accounts that have a zero balance due. >> so would you agree that hurting people's credit scores with paid medical debt for the seven-year period could after an adverse effect on america's economic recovery on people's ability to get a loan to buy a

car or buy a house? >> absolutely. >> i yield back. thank you. >> we have a unanimous consent. >> thank you mr. chairman. i asked unanimous consent that a statement boo independent insurance agents and brokers of america be entered into the record. >> without objection, so ordered. that clarifies that. the insurance agents apparently got to both of us. mr. cohen you are recognized for five minutes. >> thank you for your sponsorship of the bill. first i would like to ask mr. pratt and mrs. fortney if you can help us, it has been reported in a hearing in oregon, eric roseberg said at this point we don't have any research to show any statistical correlation between what is in somebody's credit report and their job performance or likelihood to commit fraud. are y'all familiar with that statement? >> i am. >> and do you concur or not concur? >> i don't because --

>> do you have statistical empirical evidence -- >> i would be happy to keep going. we really need the employers here because it is the employers who make the decision. >> i have heard your answer before. you don't have any data to discredit rose enberg, and mr. rose enberg doesn't have any information to support the credit words. so we are kind of going in a circle. >> not really. it is similar to asking us whether a creditor uses a credit report for a lending decision. you have to have the creditor here to answer that question because they are the ones to explain how they use the information. >> mr. pratt, i have a limited amount of time and i am not going to go through this. the question is statistical correlation, and there is none. would you agree -- mr. hensarling said we should have freedom, and we need freedom.

that was used about discrimination laws on race, gender and disability. would you agree that we should have laws that don't allow for discrimination based on race and gender? would you agree? >> you agree. >> those laws on? >> they work well. >> and you agree that they are good things? >> sure. >> and if something operates in practice to make it defacto or in its application a racial barrier or discrimination, then we should cure that as well, should we not, sir? >> if it is proven. >> is a fact because of jim crowe laws and slavery and the years of oppression grens africans, would you agree they would have less opportunity to have accumulated wealth in the form of stocks, bonds -- that

they would be less likely to have accumulated wealth to help them through hard times? or do you think african-americans have equal amounts stored? would you agree with that? >> i just don't know. >> obviously you don't know. i will tell you it's a fact and anybody would know it is a fact. you have 400 years of slavery, and 100 years of jim crowe, they had discriminatory practices, they could get credit. they owned the insurance companies, banks and the credit bureaus and had the wealth. so when they lose their job or have a difficult time, they have mama, or grand daddy's money to fall back on. yet when you look at credit scores, you say that score indicates whether they do good work and hard values. that is not a constant. if you have money to fall back

on, resources because of family wealth. you submit that shows you have got a good work habits and hard vules, that credit history equals hard work. that is not necessarily true. that shows you have family sometimes and support from years and years of opportunity that was denied others. the equal employment opportunity commission have sued people over the use of credit reports because they belief it is a racial barrier and it should be pursued. i think it should be, too. i think what you are talking about is a world where all is equal. you are great on statistics. i think you are thinking about fraud and not accidents. mr. green was talking about accidents. there is no way to predict accident. maybe a few people might not file claims because they a afford it. you are suggesting some people would file a clay to get some money. that is what i was thinking you were alluding to.

you don't discriminate against a person with a good credit rating. and the player can choose them. who can do the best job. mr. pratt, you said a lot of jobs don't use credit reports. if that is the case, would you agree that maybe we should pass a bill that those jobs that don't use credit reports now, that there shouldn't be the permission to use credit reports? could you sit down and come up with those industries after vation or trade? >> i think the laws today respond directly. we can't discriminate. we can't unintentionally discriminate. i think that the what the fcra works today, employers have responsibilities to know when it is appropriate to use a credit report. i don't think we need to know precisely when to choose to use it yearn. >> thank you. do you have a couple of documents you would like to be

entered into the record? >> yes. [inaudible] >> we have letters of support. without objection, so ored. i want to thank the witnesses and the members for their participation in this hearing. the chair knows that some members may have additional questions for the witnesses, which they may wish to submit in writing. therefore without objection the hearing record will remain open for members to submit written questions to the witnesses and play their responses in the record. this subcommittee hearing is now adjourned. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> remarks from the u.s.

chamber of commercial tom donahue on greece's debt situation. after that, secretary of state hillary clinton mets withs car decide. and later, on the communicators, a discussion on homeland security's role in defending cyber-attacks. >> this week on "america and the courts." kagan kagan -- elena kagan moderates a discussion. on monday, president obama nominated solicitor general kagan to replace john paul stephens, who is retiring at the end of the term. united states of america today at 7:00 eastern on c-span. >> every weekend, c-span 2's

"book tv" features books. this week, the reluctant spy. he talks about life in the agency before and after 9/11. he is interviewed by former c.i.a. inspector general. find the weekend schedule at booktv.org. >> now remarks from tom donahue on greece's debt. he said the problem is 0 so widespread throughout europe that it will affect u.s. exports. from the national press club. there is an hour.

>> for more information the press club, visit our website. to donate to our programs, please visit us. on behalf of our members worldwide, i would like to welcome our speaker and attendees at today's event, which include guests of our speaker as well as, woulding journalist. i would like to welcome c-span and public radio audiences. after the speech conclude, i will ask as many audience questions as time permits. i would now like to introduce to you our head table guests. from your right, william canada did i, senior editor for the journal of commerce. frank, mazano. director of the u.s. chamber's trade routes program.

a senior business editor for national public radio. the vice president of international affairs for the u.s. chamber of commerce and the speaker's guest. turn over the podium. we have the associate editor and the chairman of the national press club's speaker's committee. the managing editor of the america for bloomberg news. the president of the trade partnership and guest of our speaker. a report are with the fiscal times. a reporter in the washington bureau of the "washington journal." and brought cast journalist with aagin media, and chairman of the news makers' committee. thank you. [applause] >> for the past 75, the chamber

of commerce has occupied one of the most envisible locations in washington, d.c. it was the site of what was once the home of daniel webster. it stands across lafayette park from the white house. no president can look out his front window without it commanding his attention. the relationship of these neighbors may be described as less than harmonious since the current occupant of the white house moved in. president barack obama and the chamber have clashed often, but the two have found common ground on the capacity of trade to create jobs and promote growth. two weeks before president obama delivered his 2010 state of the union address, our speaker delivered his address on the state of american business. both speeches called for the doubling of exports in the next five years. factoring out inflation, the last time american exports expanded that quickly was world war ii. but no one has ever accuseded

our guest of lacking vision. he took over as president and c.e.o. of the chamber of commerce in 1997 after 13 years as the head of the american trucking association. the chamber was suffering in the aftermath of its support of the clinton headache plan. today the chamber can claim the mantle of the world's largest business federation. please welcome to the national press club, tom donahue. [applause] >> thank you very much, allen. good afternoon, ladies and gentlemen. i am very pleased to be here, and a special thanks for all our friend we were able to coerce to join us for this event. let me start with a very clear statement, that the greatest priority for our country today

is creating jobs. the unemployment operate is 9.9%. it soars beyond 17% when you count those who have stopped looking for work and the underemployed. we have lost roughly eight million jobs in the last two years. by the u.s. chamber's estimate, well need to create 20 million jobs in the next decade to replace those lost during the recession and to keep up with the growing population. although we have created 145,000 per month on average this year, it is not near enough. under these circumstances, world trade month is the perfect time to point out that expanding american exports makes more sense than ever. unlike past recoveries, we cannot simply rely on domestic consumption. american consumers are tapped

out in some ways, and the u.s. government some would argue are maxed out. so if domestic demand is weak, and the government's ability to stimulate the economy minimized, who will buy our products and services? where will demand come from? the answer, the rest of the world. 95% of the world's consumers, 87% of its economic growth, and 73% of its purchasing power reside outside the united states. last september the chamber set a national goal of doubling u.s. exports in the next five years and then doubling them again. if we succeed, this would put us well along the way to creating those 20 million jobs. we were pleased that president obama echoed that goal in his state of the union message.

so, what is standing in the way of our achieving this shared goal? look abroad and right here in washington for the answers. countries all over the world continue to raise protectionist barriers to tilt the playing field to their advantage, to favor domestic industries and keep their markets closed. nothing new. this happens in every recession. here at home, u.s. trade policy seems stuck in a state of suspended animation. there has been a lot of great talk, but precious little action. so what does all this mean as we attempt to assess the state of the world trade system today. on one hand, there is be plenty of trade and cross-border investment going on today. after a sharp deadline during the financial crisis, global

commerce is now recovering. yet, that's only part of the picture. the rest of the picture is not so attractive. in fact, if i had to describe the state of the world trade today, i would do so in two words. missed opportunities. missed opportunities to create new jobs, to let millions out of poverty, to raise the global standard of living, and to bring people and nations closer together. the good news is we have the capacity to recapture these opportunities and unleash a new wave of growth, progress and prosperity here at home and across the globe. now we must begin with the reality that global markets are not as open to american products as services as we are to theirs. the playing field is not level. in fact, since the financial

crisis, the playing field has become even more unlevel. we are aware that the w.t.o. has found that new protectionist measures enacted since the financial crisis began to cover just 1% of the world merchandise trade. but it has done little to gauge the impact of the behind the border measures that countries around the world are deploying.

i will be going to china next week to meet with the leaders in beijing and shanghai, and to address our growing concerns of our members on issues ranging from innovation, procurement, i.p. and currency. looking beyond china, india, brazil, korea and other emerging and developing markets also need to play by the same rules that we play by. they should take steps to further open their markets. india, for example, from which i came back just a few weeks ago, needs to open its markets to services, to retail and insurance and express delivery services. japan post, a government-owned

enterprise that provides insurance, banking and express delivery services enjoys unfair regulatory advantages over its competitors domestic and foreign. nearly 90% of the world's proven oil reserves are in countries that are dominated by state monopolies. how did brazil respond to its new large off shore oil finds? by laying plans for a new state-owned company to control it all. in this anti-trust rein, some nations, manipulating their policies to protect domestic producers and keep competitors out, are not playing according to the rules. there is also an ongoing assault against select wal property around the world. in addition to criminal

enterprises, i.p. is under threat by some fwofertses that promote the view that i.p. rights are an obstacle rather than a catalyst to economic development and growth. the united states must continue to work with like-minded nations to raise standards for the protection of i.p. by con cluting a robust and comprehensive anti-counterfeiting trade agreement this year.

we are smarter, boulder, and more comprehensive that opens markets and expand trade and investment not one that closes markets and seeds the global marketplace to our competitors. at all starts with our needs for a robust trade expansion and agenda based on the negotiation of trade agreements across the

board. regrettably, we do not have such an agenda in our country today. the reason why is clear. organized labor in excess of $40 million of the last election to help elect the current administration and the congressional majority. for reasons that defy logic, they vehemently oppose the very policies that create millions of new jobs for american workers, many of them unionized. as the rest of the world raises -- races to complete new deals, america is being locked out and left behind. there are 262 free trade agreements enforced around the globe today. the united states, the largest economy in the world, has just 11 trade agreements covering 17 countries.

america is party to only one then more than 100 negotiations of a bilateral and regional trade agreements. we are far behind in the race to enact bilateral investment readings -- investment treaties. it is inexcusable for congress and the administration to be sitting on a three excellent free trade agreements with columbia, panama, and south korea. six months ago, the chamber released a study that warned that the united states could suffer a net loss of more than 380,000 jobs and $40 billion in lost export sales if a -- if we failed to implement the columbia, south korea agreements while the e.u. and canada went ahead with theirs. the scenario is already unfolding. the e.u. will sign its fta with

them on wednesday. the canadian parliament is poised to give a final approval to an fta with columbia as early as next month and canada and upon mom -- and canada and panama signed a new fda today. what does this mean? it means that the e.u. and canada will be but to sell their products in their markets and a much better price. we've will lose market price and jobs. it is as simple as a, b, c. this has the potential to be a model for other regions across the south pacific which accounts for half of the global economy. we are talking about the future right now.

then there are the people of colombia, good friends and critical regional allies who have courageously and at great cost stood up to the drug lords and reclaim their country. the united states gives them the back of the hand. it is unconscionable. if facts matter at all, i hope those who oppose these market opening in a job-creating agreements will listen closely to the results of a new study commissioned in -- and art releasing today. we looked at the fta's implemented over the last five years covering 14 countries. here is what we found. they created 5.4 billion american jobs. the overall trade relationships with those 14 countries supports a grand total of 17.7 million american jobs. i defy anyone in this town to

name another budget neutral government initiative that has generated anything like this number of jobs. trade skeptics cite the deficit for the reason to not negotiate fta's. the united states is now running a trade surplus in manufacturing goods. that is on top of our global trade surplus in services and in agricultural products. let me underscore a critical point. if we do not act not only will we miss out on opportunities to create new jobs but we will lose existing jobs. how can congress and the administration, and the unions and thinking about the member they represent, set by and allow this to happen? bilateral trade and investment

agreements are critical. we must take other vital steps along the way. we must not give up on doha. no matter how many obituaries are written about this, a global pact covering goods, agriculture, and services is essential to the goal of opening markets and a leveling the playing field for the united states. regional pacts also hold promise. especially a trans-pacific agreement and other arrangements arising for our presence. we need to enforce our existing agreements. they are not worth the paper they are written on if we did not act to enforce them. we must work with allies around the globe to combat economic nationalism. we must also resist economic isolationism at home. and you to comply with our own

principles or obligations -- failure to comply with our own principles in dangers american jobs and undercuts our efforts to open markets around the world. we need to modernize the u.s. export control system. at this point, i want to give the administration an important credit. we know they are reading this matter and crafting a proposal. we like what we have heard so far and we look forward to progress in the future. we need to do a better job of promoting exports. more than 280,000 small and medium-sized businesses export and they account for nearly one- third of all merchandise exports. 99 out of 100 small companies do not export. we need to change that. finally, we need to get our house in order. to complete globally, fiscal discipline is critical.

entitlement spending may be the biggest challenge we face, domestic or international. our country is at the front of the list. in addition, additionk-12 education systems, an adequate -- inadequate infrastructure, all of these erode the global competitiveness of the united states. we work of the chamber to forge a positive solutions. let me conclude. i began assessing the state of world trade. there is a lot of trade going on around the world all of the time and it is growing again. it needs to keep growing. we need to be a part of it. policymakers at home and abroad can act to accelerate this growth or stand in its way. standing in the way means fewer jobs, less prosperity, and missed opportunities. the global business community could be doing a lot more to create jobs, to lift people out

of poverty, to raise standards of living, and to force a greater understanding among nations. if only our government had political leaders who would let us do so. leaders from beijing to brussels to new delhi to washington must rise above these parochial views and narrow political interests. they must foster a dramatic environment in which capital goods, services, and people with all appropriate safeguards can flow freely across the globe. leaders in the business community and the labor movement have responsibilities as well. businesses must refrain from running to the government to seek an unfair competitive advantages in the global marketplace. union leaders must face the reality that their members livelihood's rely on the growth

of world trade. they can no longer be allowed to dictate our global trade and commercial policy. those of us who believe in free enterprise and free trade have a responsibility. we must do a far better job of explaining the benefits of open markets while not glossing over the distractions that affect some workers in communities. make no mistake about this. we have got to do something about that. we must devise ways to support effective programs to help those people that are disenfranchised. that is no excuse to turn our back on the promise of trade expansion and all of the new jobs and opportunities that can provide across this country. friends and allies abroad are starting to wonder and worry and ask, "where is the united states"?

we understand the political pressure facing the administration, but understanding does not mean we should accept it. jobs are at stake. a pair -- america's competitiveness is at stake. our image in the world is at stake. waiting until after the next election is neither possible are defensible because there is always a next election. it is no secret that the business community and our current national leaders differ on some issues. i am here to say that bold, positive action to move the nation's trade agenda forward would receive the enthusiastic support and praise from the chamber and the american business community. not only would we support it, we would praise it. we would work our hearts out on the hill and across the country to move this agenda forward.

the world economy is clearly not what it was 50 years ago, 20 years ago, or even 10 years ago. it is time that we all embrace the future. we have the best products. we had the best service. we have the most innovation. we have the best workers and companies in the world. we have a more and tougher competition than we have ever faced before. we have been sitting on the sidelines too long, ladies and gentlemen. it is time to get back in the game. thank you very much. [applause] >> thank you during much for your time. there are many questions we want to ask you this afternoon. i do not know if there is ever a day when at the head of a chamber of commerce would be here and we could not save that has so many business issues are already going on 247.

when the biggest issues right now is the issue involving the euro and the great debt crisis and the impact it could have on the united states. for several eurozone members, this may hamper growth even further. we are starting to see signs of this playing out. how will europe's situation affect doubling u.s. exports within five years? >> i have been thinking about the introduction of that question for a while now. the last part of your question, it could have gone several ways. what is going on in europe is very serious. some of these issues are under challenge. i am concerned about chancellor

merkel losing that election because we need her in europe right now. we all saw the new coalition that has formed in britain and now we are looking at what happens in greece, portugal, spain, and italy. we cannot fail all of those people out. there are three things to understand. it will have an effect on our currency. it will have some effect on trade. we have a massive trading and investment relationship with the european union. a large portion of it is with germany, france, and the u.k. finally, i do believe it will have an effect on the geopolitics we are all engaged in. europe has a fundamental problem in the question of demographics.

we all read in "the washington post" the social compact that causes a lot of money. we need to look 10 years down the road and ask the question, "do we look like greece, germany, or something else"? we better learn something from this and do so quickly. >> many of the european countries are experiencing war. they're having to carry out tax increases. near-term economic gains are necessary. what role would you see for taxation in reducing the u.s. deficit? >> there are a number of things that the i.m.f. and contributed nations are demanding of the country's that are going to get their share of this $1 trillion stack of money.

the first thing they are demanding is to change the cost base. that is what the big argument is about in the violence in greece right now. the free lunch will changing. there will be an increase in taxes. the major increase that i would support in greece is the idea of they pay taxes at all. only 30% of the people pay tax. here in the united states we have a much more vigorous payment system. we have a history of understanding what happens when we raise taxes. take all of the means. you will not do away with the deficits. the president did the right thing in appointing a really good commission to look at the deficit. they will have cost cuts. no one likes those, by the way, but we have to deal with them of the time.

there are places where we ought to reduce it and some places where we should increase it. we need to look for a third way to do this. is it an energy security deal where we begin to develop our own resources and sell them around the world? that has shown the way for brazil to fundamentally change their economic quotient. this is something i think will become more and more of a current issue. the american people, if you look at the polls, are very concerned about fiscal deficits and a long-term deficits. we are not even looking at the pension funds. we have a hell of a problem here in the states. i hope all the elements of our society can work together and we are certainly going to try. >> following up on your remarks on greece's tax code, do you think enough people in the united states are paying taxes? >> most people that make -- that

are well compensated, the payment rate is in the high 90%. the other people usually find their way to jail. we have an extraordinary compliance system. when you get into small companies and entrepreneurs all around the 26 to 30 million, i would suspect that the irs is right and some of these people are not putting all of their taxes. there was a thing in the health- care bill that will hire all kinds of irs agents and will require companies after they buy more than $600 of goods or services to file their tax number as well as their own. at the end of the year, they think there is a lot of money there. i think will be interesting to

say -- i think it will be interesting to see. >> the eu debt crisis shows that that can be a major problem. what cuts to u.s. spending with the chamber cut if tax hikes would be harmful? where did you find $500 billion in cuts in spending for fiscal year 2011? >> it all we had to do was find 5 $5 billion, that would be pretty easy. when - 6 in a billion dollars, that would be pretty hard. 62% of the federal budget is entitlements. medicare, veterans' health care, all of those things. when you go to the state level, we had huge medicaid costs. there are pensions, social security -- by the way, social security stops giving us money to spend.

we have been sending them saying we owe it to you. we have a set of issues here and we need to start looking at ways. there have been great efforts. we are going to have to have means testing. we are going to have to have some people working longer. after all, when they put social security and medicare together, the average death aid was 62 years. and is now 79. let's keep working. people are living so much longer. that is part of the problem. i like it. [laughter] to have to look at entitlements. we are building all of these deficits while at the interest rates are right down here. suppose they go back to 5% or 7%? you're looking at payments that will scare you to death. we need to take a look at this. what spending cuts would you support? i've support more than you think

if we are doing in the june the program. >> many congressional democrats have a post ratification of free trade agreements negotiated by the bush administration on the grounds they did not adequately discussed labor or environmental concerns. our labor and the environment legitimate concerns? if so, is there some middle ground that could be found between business, labour, and interests in support of future trade agreements? >> ok. first of all, and burma and labor issues are legitimate questions -- environmental and labor issues are legitimate questions. if you listen to the arguments the unions make about labor issues, i can tell you the countries we trade with all over the world are not talking about health and welfare but u.s. labor standards and pay

standards because their economies are much lower. we are taking people and moving the trade out of serious and challenging positions. we are taking more people out of poverty and near party then you can imagine. on the environmental side, we are in -- we are talking all over the world. we tried to do it in copenhagen. i would suggest to you if you could ever take those issues and solve them that tomorrow morning the labor unions would have another issue. by the way, these are not stupid people. more than half of the labor that is organized in this country are public employees. they are worried about trade? we will not treat them away.

want to make a note of what is going on in the next five years? there will be a war between public employees that are unionized and private employees that are unionized as public employees require more and more tax increases and other payments to pay for their very attractive pensions and huge salaries to be paid for by a lot of people including seven% of the work force that is unionized in the private sector. >> following up on the fault line the you expect that to happen, are their fault lines in the business community and your own organization? what might those be? >> people ask me that all the time. how can you have three and a thousand members and a representation -- how can you have 300,000 members to 3 million companies and not have

disagreements? we have disagreements every day. the worst thing is when you get the tax bills and that they form a firing squad. this year, we are going to try to get them to face away. the difference is in the business community, it is driven in a natural way. the difference regime beat -- people in service and manufacturing, there are different than people in technology and agriculture. one of our great challenges is the breadth of our membership. we look like we are doing well in holding them together. i spent as much time doing that as i do negotiating with congress. >> have discussed exports. are you forgetting about imports and its effect on manufacturing? what are you doing to police down. ? -- to police dumping?

>> imports are important. there are a lot of commodities be cannot get here. there are crowds we want to have and cannot get. by the way, these labor union leaders that complain about trade, they all shot walmart because you get quality products at lower prices. -- they all shop at wal-mart. that is good for a competitive economy. in terms of dumping, i am opposed. i have taken significant steps under the budget mensuration and undo the obama administration -- under the bush administration and under the obama administration. on the other hand, there are some people around the world that think some of the things we are pushing around the world come in great numbers. you do not get to be the largest exporter in the world without

selling stuff to other people. balance is important. quality is important. safety is important. that is no reason not to negotiate agreements and stick with them to create more american jobs. >> there are several questions dealing with china. the exchange rate has been a recurring source of tension. how significant a factor is that in growing the u.s.-china trade deficit? >> of china is a complex, fascinating subject. that me just say a word about the question of the value of the currency. i have long associated myself with those that believe the currency ought to be adjusted. the chinese have a clue -- have a very clear objective.

they want to keep these hundreds of millions of people employed. their system of government requires them to do that because otherwise they do not know how to deal with that many unemployed people and the unrest that comes with it. i am more concerned about the threat of intellectual property and the changes the chinese and making on the innovation side trying to domestically control of lot of that. the counterfeiting of american products, which happens here in the united states and just so you do not get too excited. it is counterfeiting in the united states which is tutored $50 billion problem to our economy -- which is eight $250 billion problem. . .

>> the other issue that is very, very important to understand. i talk around the country and people say, all these jobs left pittsburgh and pennsylvania and went to china. the hell they did. they went to texas and arizona.

most of the jobs have gone to asia have gone there to try to take advantage of half of the global economy. and to go in there and make business and keep the intellectual property and engineering and all that stuff in the united states. it is clear that companies, the box stores and others who can get greater efficiencies of scaler over in china and other places. to try to provide a better product at a lower price. >> u.s. trade is measured by imports and exports and a fraction of the united states companies and those of foreign firms. how many attention should be paid to foreign affiliate sales when assessing the u.s. trade deficit? >> that's a great example and you can see it in three or four places.

our largest trading partner is canada. and if it weren't the border, and just go back and forth across the bridge, you took the border away and the question is how much in and out is done across the border that is really an integrated system. and when you look at china and asias there are some and i mentioned the box store and others who are doing a lot of producing in foreign countrys and bring it in. and one other thing, since we have been working on this immigration. i am talk about that, and since we are working on immigration and tightening it down the border, it's harder to get seasonal workers and agriculture workers and legal and illegal, and what are the farmers in california doing? they have gone to mexico and renting space and land in mexico

and growing the crops there and exporting into the united states. you have raised a good question, having the exact numbers, i am not sure. but we have been doing it for years, and the best place is to look to mexico and canada. >> let's talk about immigration and what effect could that have on u.s. cost and business? >> first let me say what i think about immigration. there maybe one native american but the rest of us are immigrates. i was on ellis island and something that the chamber was doing on immigration. that's not why i went, but because my wife's mother and father separately came to this country through challenges

circumstances through ellis island. you can imagine i have emotional feelings about this and so many people in this country made so many great things happen here, arrived here in the same way. i think we need an immigration bill. we need to find a way to have guest workers come back and forth to this country when we need them. seasonal and agriculture workers. we need to find ways to find the h 1 b and visa people to come here and get a mechanical engineer, and we used to keep them but we need these people. we need to do something about the illegal workers here. there is 12 million or 13 million of them and their families. and a lot of people you go up the hill, they want to send them home.

and first you can't find them, and to send them home, that telephone call, you need to get your mother-in-law from the nursing home and she's got to live with you. that would change a lot of people's views about this. the bottom line we need a rational immigration program. we have millions of people work in this country that are hard working and they care. and quite frankly we don't have people to replace them. first we have to protect the border. i am not worried about the people coming to work but the crazy people and the drug people. and now get to arizona. i think a lot of the argument in arizona was because of all this drug violence. and president carlonin will be here wednesday and we are hosting him and this

guy bets his life everyday and trying to stop the drug trade that by the way comes to the united states, we are the consumers. we have to work on this hard. but the bottom line is arizona went too far. we do not associate ourselves with those who want to stop the all-star game or stop trading with people. and everyone can say let's not trade with california because we don't like some of their rules. but we need fix this because it's unamerican. >> we have a native american question, do you include native american tribal tours with your trade shows and can you benefit these with native american free-trade ports? >> let's separate that. if i can do the first part.

native american companies are certainly welcomed on our travel deals. and we had a conversation with people before. i am not going on gary lock's trade promotion, i am encouraging people to go there and have conversations with a few people in a room that you can't do in a big group like this room. so i welcome native american companies that are members of the chamber. who play by the rules. as we all try and do, and i would be happy to have them. i am not sure, i know something about the free-port issues, i don't know enough. and if the person who wrote the question would grab me on the way out, i would get myself educated.

>> we had ron clerk here and he was spoke of trade policies and is that causing pressures to you from the people in the government. >> ron kirk was one of the best people that the president appointed. he was a mayor on the border next to mexico. he's a good man, he's trying hard and certainly should have his people confirmed. it took a while to get him appointed. and we encourage their confirmation. and we don't oppose those folks. and congress is playing games on that deal, part is the trade deal and part is the problem i articulated before. but ron has a problem, and i hope he will get a winner on the issue of the contracting arrangements that we are going to make on sensitive goods. and i am very hopeful that's a

winner for him. but he's got to get help from the white house and congress. and starting with the white house that we will never get these trade deals. and by the way his patience will wear thin soon. >> does the chamber have support of elena kagan to the supreme court? >> in every institution we have consistency reform of the nomination. and we do that and almost every incident we support them. if it's the passport choice and approved by the aba and competent people, we are inclined to support them. we do the process and keep doing it for the occasion once and how many times that everyone may want to rally around that. and i will tell you that the

chamber hasn't finished its process, but i have no objection to her. >> in the 2020 elections in what way will the chamber change for campaign funding. >> first of all, we plan in the election. second of all, the most incorrect information i have seen in this town is the stuff on the citizens of the supreme court. and the effort by members in the house and senate to construct a bill that would basically. if you look at the numbers and configuration would be aimed at one thing, and that's keeping the chamber out of the mid-term elections. there was testimony in the house the other day. and our lawyer, olsen, that is

probably the best constitutional lawyer in the country and said this is fine but it's all unconstitutional. and that's interesting in the courts, and said we don't care about that but delay you and keep you out of the elections this time. that's sort of what he said. that's not going to happen. it's still got to get out of the senate. it's so patently political, if people were members of the judicial committee arguing constitutional issue would be one thing. but these guys are seeing who will get elected in the democratic side and senate. it ought to be embarrassing. and guess what? even "the washington post" thinks so. >> if you look at the polls for 2010, it seems there would be gains for the republicans in mid-term elections. if that's the case, do you think

it's easy to get trade agreements passed in 2011? >> first of all, what is today? today is may. election in november; right. now there will be elections next week and the primaries and we saw what happened to bennett in utah and what is going to happen in pennsylvania next week. what is going to happen in hawaii. all the political pundents running around and get up and call each other and get excited. me, great. we will be there when the primaries are happening, some and not much. and we will be there in the elections. with me we support democrats and republicans. i get a lot of heat from business people of supporting democrats that vote for us. and

i get heat from business people from supporting too many republicans. but we have a system. we bring it up from the state and local chambers and they tell us who is important. no matter who you are, if you vote with us 70% of the time, we always support you. but the bottom line is simple, we will be in this election. and you have to fight the same fight on the trade stuff. but if we could balance the numbers a little, no matter who is in charge, i think we would have a better chance. >> we are almost out of time, but before we ask the next question, there are things to take care. i would like to remind that next week we have the honor tim kaine that will discuss his party's

elections, i guess he's one of that one thousand you referred to. >> yeah, he is. >> and we have a luncheon, and on may 26, barbara bush, the daughter of george w. bush and the global health court will discuss. and second we like to present our guest with the traditional national press club mug. >> thank you very much. [applause] >> and now it's time for the final question. i will read this one word for wor, the questioner asks, ok, don't hold back, tell us what you really think about u.s. labor unions. >> we work with u.s. labor unions on infrastructure, on immigration, on national defense issues. many of them are made up of

people that come from my families. extended family. i don't have any problem with labor union members, i have a problem with labor union leaders who have lost sight of what is in the best interest of their members. and are in this town holding back this economy and reducing the opportunities to create new jobs in labor union members and non-labor union members. i think when the government gets bigger than the people they govern, we have a real problem. and as i predicted i think you will see conflicts within the unions. we now have a new person running the sciu, and a new person running the afl-cio. i think it will be an interesting time. i came here not to talk about

them as people but of the behavior that has caused us to leave a lot of jobs on the side of the road. and a lot of americans wishing they had them. thank you very much. [applause] >> and thank you for coming, mr. donahue, and we would like to thank the national press club staff and the library and the center for organizing today's event. for more about the national press club and joining it, and how to acquire today's program, look at our website at www.press.org. thank you for coming today, this meeting is adjourned.

>> coming up next on c-span, secretary of state, hillary clinton meets with president karzai, and later on the "communicators" homeland security role and cyber attacks. and elena kagan monerates on the high court and the term. sunday on 2010 mid-term elections, and phone interviews

with several guests including a political reporter and science professor, plus your e-mails covered live on "washington journal" on c-span. >> joyce applebee discusses where capitalism and more information. >> sunday on c-span, remarks by gordon brown. >> earlier this week, secretary of state, hillary clinton, and mr. karzai talked at an event to institute peace. this is a little more than an

hour. >> good afternoon, ladies and gentlemen. i am executive vice president here at the united states institute of peace. and it is with enormous pleasure that we welcome, president karzai, and secretary clinton for a discussion. in addition, we have a full room down the hall in the academy, and we have a global audience watching line online. we hope to take questions following this event, this discussion and now i am happy to turn the podium over to ambassador richard solomon, president of usip. >> good afternoon, and many thanks for joining us. madam secretary, thanks for

coming to our humble abode. we are so jammed in here and i think we need more space, and we are working on that. and president karzai, we are honored to have you join us at the institute of peace. we have our board chamber, and other members, ambassador holebrook and ambassador ikenberry, and senator john warren, and congresswoman jane harmon, and accompanying president karzai, we have members of his cabinet. and we have down the hall other folks,we have established a

training academy for problem conflict and peace building skills. this facility is down the hall and under training. with folks working with the defense department going to afghanistan to try to help strengthen the defense of interior ministries as they bring stability to that country. let me just say briefly that the institute of peace has been working on the ground in afghanistan since 2002. we currently have an office in kabul and we have programs focused on the rule of law, and training conflict mediators and training women in conflict management skills and trying to work and establish that complex relationship between afghanistan's traditional

justice system and a rule of law set of processes. we are deeply committed to support our government and that of president karzai as they try to bring reconciliation and stabilization to their country. the institute is fortunate to have the talent in kabul, and bill taylor that will lead the discussion. bill, the podium is yours. >> thank you, mr. president and madam secretary, thank you for being here. it's clear it's been a very successful visit, congratulations for this. the message of an enduring partnership has been throughout, yesterday vice president you met many of the press many times.

we hope here at the institute of peace to have a more relaxed discussion over tea in our living room here. it's an informal opportunity to discuss serious issues. this is our opportunity to have a conversation. mr. president, tomorrow you will head for the 101 st air born and focus will shift. you and president obama has made commitments and timelines and there will be a policy review in december. so there are many things to be done in a short period of time. what are your priorities? what specific steps will you

take when you go back to kabul? >> the trip was good and remarkable and excellent hospitality. a lot of substance of discussions and the outlook was good. >> oh, i thought i was loud enough. >> no need for repeating i hope on the part i spoke. ok. so it worked very, very good. i had the pleasure of an informal dinner with secretary clinton and secretary gates. followed up the next morning by

an extensive meeting been the afghan government and the u.s. government and counterparts. we came in groups of five clusters of afghan ministry from economics and army and reconciliation and governance, and then followed up with a visit to the walter reed where i had the honor of visiting some of your soldiers who had returned from afghanistan with wounds and some had lost limbs, this was a touching part of the trip. and one that reminds us that we need to do more to have these sons and daughters of yours to come back home. without injuries and happier.

and we had an extensive talk with the president and his team. and today was busy with the congress. and yesterday was busy with the congress. and i visited the arlington cemetery this morning, paying my respects to the dead ones buried there. in short the trip was meaningful, substantive, and had all the right tones and objectives. going back home with this in background, the conclusion of the trip would bring me to the implementation of all that we discussed during our trip. that means following up on my

>> and what pace should it have. how to time it and how to model it as we move forward. with one thing taken for granted, that is that the peace process will be those of the taliban or other militant groups that are not part of al-qaeda or

against the allys and all of us, in any way that would endanger our constitution. the freedoms and democracy and the progress we have achieved. beyond that we have the conference that is afghanistan's plan for the future and in programs for which preparation is going on from our side. and we are in charge for preparing for the conference. we will be giving the world our ourour outlook for the future. and then with preparations for the partners. around these agendas and in continuing there is the issuance of afghanistan, and handling the

problems and make sure we complete our success as soon as possible. so that afghanistan is a prosperous, and good country and you are better in the united states. and we thank you for these moments. >> madam secretary, the united states made commitments as well. are there specific steps that we have between now and december when the policy review? >> first let me echo what president karzai said, from our side this was a highly successful visit. and the substantive discussions we had i think took our relationship to even a higher level. that will serve as a very good starting point for the efforts to rewrite and refurbish the

strategic partnership declaration that we hope to finish this year. and that's a statement of our commitment between our two countries, not just the governments but the people. and it will specifically set forth the areas of cooperation and focus. we had a great visit in large part because we had excellent cooperation and coordination and preparation for the visit. i want to compliment president karzai and his team, some sitting in the audience, that have done an excellent job. those who have met and ministers of the government, have uniformly come away impressed. i don't want to embarrass them but i have heard from my colleagues in the government and

my former colleagues from the congress. and there is a real sense of the commitment and the professionalism of the ministers who accompanied president karzai. on our side we had a great effort, quarterbacked by ambassador holbrook in the state of washington, and his team that is a broad and deep cross section of experts. and ambassad ambassador isenhol in kabul. this is no longer president to president or the occasional meeting between the secretary of defense and the minister of defense. or the secretary of state and the minister of foreign affairs. we are building a very strong

partnership that links together all levels of our government. to work on these challenges we are facing together. certainly the headlines are about our military and our defense, law enforcement challenges. but we are working very closely with the minister of finance. and there has been great improvements in the economy. the minister of agriculture and the minister of health and education, i could go on and on. so the implementation is already started. following the opening meeting we had in the state department on tuesday morning, groups broke off and went into great depth about the specifics as to what would be the follow-through. and as president karzai said, we have milestones along the way. there is an enormous effort put in by the government of afghanistan with our support for preparation for the conference.

we heard a description at lunch by the president about how we will be teeing up a lot of decisions. and it will be the afghan government that does it. but we will be in support of that. and then there will be an implementation scheduled following the kabul conference. the parliamentary elections will be very important in september. and i met with the women ministers that were here just a while ago. and there was a great number of women who are putting themselves forward as candidates. the story about what is happening below the surface is not told enough. and the ministers and presidents and we on our side are determined to do so. and also it's critical that we go into this with our eyes open. even though we have extremely professional counterparts we are work with on both sides.

there are very serious problems and challenges. and that's as president karzai said, the first step in his process of moving towards some peace effort will be this peace journey on may 29 which will bring people from across the country for a consultation. the united states supports this. the united states supports the efforts that the president and his leadership and the people of afghanistan are pursuing. so it's a multi-joint effort and it's not just for a good feeling, but it's a lot of work and we will follow-up on day-by-day and aiming towards the kabul conference for our first progress report. >> madam secretary, there is a lot of discussion about the date

of date of july, 2011, and a lot of discussion over the week of this enduring partnership. is there a tension between those two concepts? that is a date by time that some troops may begin to come down, be removed. and yet that partnership that we committed to, that strategic partnership. that's the discussion and either of your impressions how this fits? >> i will start from our side, and i think that the president said it well in the press conference yesterday. we are aiming toward july, 2011 to begin the process of transitioning security and some parts of the country to afghan security forces. it's a conditioned-based decision. we are impressed by the increasing capacity of the

afghan security forces and both minister wardock, the defense and the interior minister both on the military and police side reported the progress and also talked about the challenges. we see the july, 2011 date as another date to aim for. and we believe it can be the beginning of the security transition. the enduring partnership will last long beyond any security transition, any withdrawal of combat forces over time. we are committed to a strategic partnership with afghanistan. we believe strongly that the afghan people's love of freedom, their absolute commitment to their sovereignty, their belief

in their own potential makes them a long-term partner. and as president obama said and after he's no longer president and after president karzai is not president, we will continue this. this is not an unusual model, in previous times there may have been reason for american military forces to be stationed there. and in some cases they still are. from korea to europe. and i want people to remember our history. we have had long-term enduring relationships long after the guns were put down. and what we are doing together is trying to create the conditions, thanks to the great leadership of general mcchrystal and his people on the ground, to help

the afghan people regain security over their own territory. but we are not going anywhere. we will be there working with them, supporting their efforts far into the future. >> on this question, secretary clinton really answered for both of us. the i will add on the july, 2011 pull-out of possible troops question. we are planning in afghanistan to prepare ourselves in the form of army and police and other institutions of the afghan state to be able to provide for the security of the afghan people in parts of the country where we can't now in the next two to

three years. and to expand that, extend that to the entire country. by 2014. by the time my term in office is completed. so we are preparing ourselves for a take-over of security. so from the united states and our allies and neither economically afghanistan has the potential, the resources, the manpower, the location, the geography and position of central and southwest asia to do that. the question of enduring partnership or as we refer to it as the strategic partnership. secretary clinton put it correctly, it will be beyond the

military activity right now against jerusalem and into the future long after we have retired and perhaps into our grandsons and great-grandsons and great-granddaughters generations as well. so this is something that the afghan people have been seeking for a long time. the substance or rather the most important substance of our conversations over the past days have been the subject, and it's a subject that i can gladly take back to the afghan people. of course this partnership between afghanistan and the united states is good for the region and for the stability of the region. and it will provide the much needed confidence and peace in the region that we are now seeking but not yet having. >> thank you mr. president.

madam secretary, you both know that there are skeptics in both the united states and in afghanistan. and they can be forgiven for asking, well, we have been at this over eight years, and they are asking you, i am sure about what is new. why do we think this is going to be different. the skeptics in afghanistan, mr. president, are worried that the american troops will be pulled out too early. and the skeptics in the united states, madam secretary, are worried that they have been there too long. how do you address the skeptics? >> in afghanistan the skeptics are not so much on the need for the strong relationship in america, they are the other way around. they want a stronger more

forbidable relationship with ameri america and for the complete of the struggle we have. the july 2011 date does not pose a problem, because we know that the united states will not abandon the cause. what we are seeking is beyond that, what is so rightly described today is the assurance we have. >> and bill, in addition to that very fundamental point. you know skepticism is part of the american character, it goes with the territory. and it's important because hard questions need to be asked all the time. and that's what

president obama did when he came into office. he was confronted early in his term with a request that was held over from the prior administration for additional troops. he agreed with that request and ordered a thorough review of our policy. and it was extraordinarily indepth, i have lot of -- and the president eached a conclusion that should be respected by americans, it was not foreordained but he did it after careful examination of the facts, what was at stake for the united states. and the importance of going forward for our commitment to afghanistan. and i understand why there are

people that are skeptical. as i say that kind of goes with the territory. but this is a commitment that we believe very strongly is america's interest. we want to see afghanistan succeed. we want to see the people of afghanistan have a future of peace and prosperity and progress after so many years of suffering. but we are in afghanistan because it's in america's interest. and these interests converge. and that really what this meeting this week has been about. demonstrating the convergence of our two respective nation's interest. and we are well aware of how hard the task is ahead. and we are well aware that we face a common enemy. and we

are well aware that afghanistan lives in a dangerous neighborhood. i don't think there is any question that any skeptic could raise that we have not thought about and worked our way through. we are very committed and as the president said confident of the success of this going forward. >> mr. president, how comfortable are you with the plans of your forces and coalition forces for the spring and summer? >> it has since last week adopted the right approach. when i say it, the afghan and the international forces. we are talking of a process, and the process means bringing

conditions to the regions around where there is better governance, better resources, more active, vigorous, vibrant intelligence activity. and then if and when and where needed an operation militaryial, in concertation with the community and backed by the community. this is the approach we have adopted. and this approach will definitely succeed. when i return i will revisit condarar, and engage with the community and the leaders there of all kinds and colors to reengage them on the question and have their advice and move

along with them to stabilization. that area does not have front lines. it's terrorist activity. it's fascination and more psychological than physical presence of the terrorists and taliban. and we need to have the appropriate tools in the form i described to go ahead and win. >> if i can add to what president karzai rightly described as the approach taken by the afghan and international forces concerning kondahara, it's important to realize this is not marga, it was much more dominated by the taliban. kondahara is a strong, bustling

city and people are getting on are their lives. and there are pockets of taliban and insurgents that are engaging in a variety of violent acts including assassinating the deputy mayor just weeks ago. as was explained to the president and the national security team, this is going to be an action that will use different tools. because the goal is to root out from what is a very active and ongoing urban area, those who intimidate. now they do not pose a threat to kondahara, but their presence has a chilling effect. it keeps people inside. it keeps girls from going to school. it keeps people from feeling

comfortable going into public places or going out to work with the farmers as we have heard. so this is a different kind of campaign. it's not a huge, massive assault. it's a much more targeted effect effort to try to weed out the taliban. and we have no doubt they are dug in. we have no doubt they have support there. but as the president said, the combination of the military and intelligence assets of both afghanistan and the international forces. the president's own personal involvement going to kondahara, in any counter-insurgency is to

go and not be affected. and pick up the phone and walk out and tell of suspicious activity. that's the goal and i think it's well-planned and we obviously hope for an early success. >> mr. president, in that same line, you are a war president. you are a commander in chief. and the secretary mentioned there are taliban killing your officials in cities, in afghanistan. in the afghan culture how does this notion of being commander in chief, a war president fit? how does it fit in the afghan culture? >> well, this fits all right. the afghans are not unknown to the situation like that. so it's understood and

comprehended well. with one difference in my mind. that we are speaking from a higher morale ground. they am president of the country at a time when there is terrorism, suicide bombers and iud's, and those behind the attacks have suspected and abused the general morality of human beings. for example our minister of interior was describing to fellow senators over lunch, that we have a 14-year-old boy that came and said he was trained as a suicide bomber, and he doesn't want to be a suicide bomber. we are looking for the parents of this boy to bring them over

and return the boy back to the family. we don't find them an equal opponent in those terms. they have stooped low into the lack of morality or if you can describe immorality. i don't know if that term is right. all right, yes but we are morally higher and claim better and that is the winning element there. >> mr. president, you have mentioned a couple of times of the peace conference and preparations for that. i remember talking to administer yesterday and he reminded me in work here at usip, madam

secretary, he put together the plan and the surge as well. and it's coming about and your plans are later this month for the peace meeting. ambassador that was going to join us, what is the outcome and end state of that reintegration? >> reintegration means the return back home and of fighting of arms for those thousands of taliban soldiers that are driven out of their homes in their country by circumstances out of our reach and control and beyond

theirs. and those who have been driven out of their homes and into the arms of those who have given them guns it fight against their own countries because of the mistakes we have made, both as the afghan government and our coalition partners. now these thousands of the taliban that you are trying to address and reintegrate are not against us, they don't hate the united states, perhaps a lot of them would like to visit the united states given the opportunity. who don't hate their own government or country and would would have a problem with our constitution. who out of fear or other circumstances are now having against their own country that we must try legitimately to return them. reconcilization is an entire different issue. that's with the leadership and mostly beyond our reach and our

neighbors in pakistan, and have them involved and some regional questions involved. reintegration is about those i described and reconcilization is more to the future thing. >> we have been hesitant and cautious about the reconciliation component of this. and yet, mr. president, you have indicated support and certain conditions are there. are we prepared to support these compromises that will presumably come out of these conversations? >> i think we have the same position that president karzai did, that there are certain conditions that have to be met. people cannot just show up and say they are prepared to re-enter afghanistan society

after having directed suicide attacks and other violence against afghanistan. and i think that as the president said this process really starts with the reintegration off the battlefield that was president was describing of the people that for a variety of reasons find themselves in the ranks of the taliban. i don't think we have predict what the outcome of the next phase will be. first the president has to have his own consultative peace jerga because they may have their own opinions. there are some that are leaders of the afghan taliban that do

not want to reconcile. they are against it. so starting about reintegration and thinking about what reconciliation would mean. from our perspective everyone whether a person that pursues reintegration or reconciliation, they must abide by the laws and the constitution of the government of the nation of afghanistan. they must renounce violence and cut ties with the extremist allies in the networks that al-qaeda is directing or inspiring. and on a person note they must address the women's rights, and the women that suffer too much of the highest mortality ratines in th world, they are deserving of our support and receiving the

support of the president and government. so there are many steps along this way. but the general principle is as the president stated, it's to see how possible it will be to try to move on a political track. there is no military solution to this conflict, as with most there is a political track that is pursued and we will support the president's efforts to do that. >> as mentioned there are other people in addition to this room who are watching down the hall, and they have been able to ask questions, i will turn to their questions and questions to the people in this room. one question from the other room, mr. president, can a free, fair and effective election be held this year? >> absolutely. absolutely. afghanistan began the current

democratic process in 2002. with your help from al-qaeda and the terrorist networks. and we did well. millions of people participated in the election. the first election of the president and the councils and the election for the parliament and then the second election for the president and now the second parliamentary elections. we have in place all the necessary tools to make sure that the election is credible. and in keeping with the standards that we can apply in . .

>> we are now at nearly the mid stage of our preparations of our army and police. in other words, the minister of defense and the minister of interior. our army has crossed the 130,000 -- 120,000 mark. we have trained -- well-trained troops and officers. about three months ago, i went to witness and gave the certificates of the second batch of afghan military academy graduates who looked quite professional and uniformed in the height way. the afghan police is nearly

180,000. but the goal is 180,000. so the training is going on. the army is training early on from 2002 to 2003 onwards with speed with a little intervention. the police began much later. we only began to pay full attention to this important element of the afghan security in 2007. now there is massive investment by the united states and our other allies in europe to the training of the police. the sector is already emerging as the professionalism is emerging, and the discipline is being seen on the streets of the capital and the rest of the country. while this is going on, sir, the police especially as it is training is also daily facing the threat of terrorism and

sacrificing daily at least four policemen a day are dying in afghanistan defending the country. at least four. that's the average that we have taken. some days there may be much bigger numbers. the aspiration that we have in the minister of defense and in the minister of interior is to have our army and police reach together at least 300,000 that we are reminded the minister of defense is asking for much more. he's asking for 400,000 only of the defense force on which i'm quite cautious for the cost that it will incur to us in the future. but we are trying to have the right numbers between 300,000 to 350,000 for now as we move move

forward and bring democracy to afghanistan of course we'll be speaking more and concentrating more on quality and equipment rather than numbers. >> mr. president, that brings us a question of the sustainability of 400,000 afghan national security forces. dr. ghani has been describing the mineral wealth of afghanistan. and you mentioned a couple days ago at the state department sometime in the near future, not too distant future, where afghanistan would be able to stand on its own feet i think you said financially. 400,000 troops of various kinds will be expensive. >> yes. if we keep going at the current speed of revenue collection, this year -- and correct me, this year we had 22% increase in our revenue collection.

58%? yesterday you said 22%! [laughter] >> yesterday was a good day! [laughter] >> d.p.d. growth. sorry. that was g. -- g.d.p. growth. and 20 something the revenues this year. now, if we move at this speed within three years afghanistan will be able to pay for the existing numbers of our security force. within three years afghanistan will be paying total services, military and police services, from its own pocket. now, that will be a tremendous achievement. and it is a benchmark that i hope our ministers will keep very, very strongly in mind so we can come back later to the united states and tell the u.s. congress and senate, look, we've done it. now we will not be asking you for salaries but we will be asking you for investment and f-16's.

[laughter] >> there is an afghan journalist that i would like to call on whose name is lalik jahah. >> i'm from afghan news but i'm an indian. >> ok. that's good for you to be working in washington on behalf of your agency. >> thank you, mr. president. as you conclude your trip here, what is the takeaway for you for the people of afghanistan from this country going back. and madam secretary, i would like to ask you the question on cbs news on sunday in which you referred to a sentence called see the consequences -- question on pakistan, what happens in the case of attack in the u.s. which having its footprint in pakistan? would you like to clarify about that? because on monday ambassador

holbrook told us the context in which you gave that statement was misinterpreted by the media, cbs, and that interview. also i would like to show you parts of fox -- indian in july. and how is it going to help you achieve the goal of defeating the taliban in afghanistan and pakistan? >> sure. sir, i'll be taking away back home quite a few achievements. one thing that i will take back home is to tell the afghan people of this tremendously warm hospitality of the american people. that we have to do a lot more in order to show that we are also hospitable in afghanistan. second on issues of concern to both countries, we have reached agreements on a range of issues.

the most important of such issues as far as afghans are concerned were issues of detentions and the continuing of detention center ins afghanistan run by the coalition forces. we have agreed that there will be a transition of detention center to the afghan authority january of next year, first of january of next year. and that will be as soon as we are in kabul assigning teams on both sides to work the exact time lines of the complete transfer of detention centers. there was a fundamentally strong sentiment expressed by the president, by the secretary of state, by the defense secretary and the vice-president yesterday on civilian casualties and the desire for the protection of civilians was strong and very, very visible. the question of nighttime raids

that concerns the afghan people was raised particularly and then instruction issued to reduce it to the minimum possible. on strategic partnership and enduring partnership, you heard both of us spoke. on economic matters we had extensive engagement on the issue of agriculture and the important importance of agriculture and the viability of the afghan agricultural secretary able to produce the best quality of foods and to export on mineral resources, the ability of afghanistan, the richness of the country and the mineral resources that can easily run off the knowledge that we have today of the afghan mineral sources to over $1 billion our ministers say that it can be between 1, to $3 billion. yes, 3 billion. 3 trillion. yes, $3 trillion. sorry. that's what i meant, trillion.

1 to $3 trillion. now, this is massive wealth, massive opportunity. and with help given by the united states to create better technologically sound and in time afghanistan will do it. these are all very good messages that we can take back to afghanistan. and of course u.s. backing of the peace process and so on. >> well, with respect to the question that the gentleman asked me, i responded at great length to the interviewer on "60 minutes." i started by talking about the importance of the strategic relationship we are developing with pakistan, the fact that we have expanded our interaction far beyond the counterterrorism

agenda which was basically what we inherited that we are focused on trying to create a broader and deeper understanding between our two countries, and that we have gone quite a distance in creating a better atmosphere. however, we are concerned about the recent attack and other efforts that thankfully have not been successful just as you heard president karzai say that he was concerned. and we've been encouraged by the way that the pakistani government and military has in the past year been much more willing to go after the terrorists who are not only outsiders but threatening them. the military actions, -- we think that there is more that has to be done. and we do fear the consequences

of a successful attack that can be traced back to pakistan. because we value a more comprehensive relationship. so we do expect more. and the investigation is going well between our two investigative bodies. there is a lot of effort that is being undertaken on the pakistani side to provide information to our teams over here. and we just believe strongly that there is more that pakistan must do to face what is now a common enemy. you know, the attacks by the extremists inside pakistan are no longer aimed across their borders. they are aimed at destroying and killing people in mosques, in markets, in every walk of society. so this is a matter of great concern to the american people