want in writing or for the record. i am trying to figure out how uniform privacy disclosure policies would affect apple if we were to mandate that. >> well, so, with respect to location, as i mentioned previously, there is a master on-off switch for location-based davis of the user has the option of opting out from any location data collection at all, as the chairman rockefeller pointed out, perhaps that could be a more easily defined interface, but that is the goal of that feature. >> with google, along these same lines about reading privacy policies when people are not looking at everything. you may have data on that.

i do not know how many actually read them. can you learn about how users learn about-board and how you inform them and what work you have done -- and about dash- board. >> we developed a pithy saying, and this is to say that show is better than tell. my perspective on this is that privacy policies are necessary, but they are only the beginning of the efforts we should be making to try to explain consistently the same things, the same important things that users need to understand about privacy in many different ways. this is why we have a google -- if you click the privacy link, you go not just to a policy but to the center, which contains the policy but also contains a frequently asked questions. it contains -- when we launched

chrome, we commissioned a comic book to explain some of the things about the way it worked and the controls we built into it. it contains youtube and videos of me and others explaining aspects of how we use data, what controls are there, how-board works -- how daskboard works. we tried to present information many different ways -- how dashboard works. another component of it, and one dear to my heart, is working to build the clarity right into the experience of the product. with the dashboard, it was a very important to make that be ideally something that people would go to just because they want to know -- where is all my stuff? it would be like going to your

desktop almost. because it presented -- in a useful and practical way -- a view of what the information stored in the account was. people would be consciously aware of that, even if they were not thinking privacy, privacy. we did not want people to first be concerned and then click through and see things. we wanted to put it in front of them. i think there is a lot of work to be done. there is a lot of mystery to clear up. hopefully, that will keep my team is busy. >> i know as chairman -- and talking about google and how you have grown, i was thinking about that. one of the messages is that you have been successful. we appreciate that. we appreciate the job you have brought, all of you, to our country, but with that comes

responsibility for privacy. but this responsibility for privacy of things we would not imagine people are trying to do to steal things and creditors in getting information, and that is what you are hearing from all of us today. it is what we hear from our constituents. i know you have heard them as well. it is our duty to say that we need to do something better. some of laws will be is affecting some of the things you do. i want to thank you for your testimony and we will work with you as we draft laws and try to do the best thing for the people of this country. thank you. thank you, mr. chairman. >> i have a closing thought. i remember 10 to 15 years ago, when it was y2k. when was that?

cato comes down with 10. do i have a 12? what was fascinating about that and what is on my mind is what an unbelievably naive display that was. an enormous number of very large a day before a vote to land at the washington airport -- jets coming in a day before a vote to land at the washington airport. senators right and left were summoned to meetings to tell us what the stakes were and how we should vote. the next day, and that's still very much in my mind, and it describes the separation in some respects between your world and our world.

it is not just a matter of silicon valley, east coast, those horrible people in government, but there is the unfortunate fact that we do have oversight over to. you. and this is hard for you to live with, because you are off on a tear doing great things for this country. and the senator and i left with incredibly frustrated parents, principals, , school board members, police officers coming in and complaining to us on a regular basis about the fallout about what it is you do. and i do not say that with hostility. i say that with a sense of, that we each have to reach out to each other. but you should know that this is a committee -- it is called the commerce committee.

i have been on it for 26 years. we have changed. and we have changed much more into a consumer protection- type of committee. we find ourselves up to our ups, rs in scams and pop- and what the health insurance industry did during the health care debate, the way they were taken to court. we had a lot to do with that and how they are still trying to take the medical loss ratio in which we finally had to pass when the public option it could not pass, and they are trying to twist that before health and human services can put out a final ruling on it. aggressively, people trying to shape the world they want the world -- shape the world the way they wanted to be. that is behavior i can forgive

provided there is a counter on the undersiother side. the other side happens to be us. you have heard bright people with some passionate thoughts and deep reflections on the success of your industries and the use of your industry is by but there is the other side. and that is where we use words like -- that is why i p ointed that out -- i made myself into a tree climber. that is what most people are like in this country. in the east, midwest, southwest, northwest, and california. and, um, so i just hold that out as a thought for you, that we are doing this together, and we are -- the people who sit behind us on these things are

incredibly sophisticated wizards at what you do. if we are going to make america better, protect children, because parents to do as much as they tend to be responsible but understand when it cannot be because they do not have the time, they are dead tired, they are on their third job of the day, what ever it is, that still, all of the system has to work. you started out the day a bit talking about, we are all about privacy protection online. and it ended up more with, well, we still have a lot to do, a long way to go. and there were things that came up, which i did not find satisfaction in but found interest in it. to simply say, in closing, that

we need each other. but it is important to understand that you need us, too, because we represent the american people in the way that you do not. they do more business with you, but they depend upon us. so we have our work to do, all of us. you are terrific to be here and to stay this long. most would not have done it. but you did get your machine back. thank you, all. >> nice to meet you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> in a few moments, secretary of the treasury tim geithner and implementing the new federal regulations on law and "washington journal" is live at 7:00 with jesse jackson on the health care plan. we will look at the process of withdrawing troops from iraq on "washington journal" and the rev. jesse jackson and the kansas insurance commissioner on immediate challenges on insurance plans. "washington journal" is live on c-span every day at 7:00 eastern. senate majority leader harry reid says debate on the nomination of elena kagan will begin today on the senate floor. you can watch the u.s. senate

live on c-span 2. three more states hold primary elections and you will hear from the candidates in kansas, missouri, and michigan this evening. secretary of the treasury tim geithner says the administration will move as quickly as possible to implement the new financial regulations bel pre one of his priorities will be to simplify the forms used to get mortgages and credit cards. he spoke at the new york university school of business. this is 45 minutes. >> we're pleased to have

secretary of the treasury tim geithner. [applause] in the audience, we have the president of nyu, john sexton. [applause] faculty, students, alumni, and members of the new york city business community representing the partnership for new york city. we also have journalists from all for 40 different news outlets. secretary died here, you need no introduction, especially in new york where you were president of the federal reserve bank of new york from 2003-2009. like all americans, we at the stern school are extremely grateful to you and the entire team at treasury for the leadership you have provided in rebuilding the road to ensure prosperity at home and abroad. thank you.

before we begin, let me remind you that after his remarks, secretary gunnar will take questions and with that, to is my great pleasure to welcome to the podium, secretary of the treasury tim geithner. [applause] >> thank you, peter henry and john sexton. i had breakfast with the mayor and he said york is strong. he said because we have a great mayor. [laughter] i concur in that thank you for coming and all of you in the room, i want to add say i admire what you do. it is important to our country. i will speak about financial reform which is tough but you are engaged in something very

consequential for the country. last month, the president signed into law reforms that will reshape the american financial system and restore it to its core purpose of generating lasting economic growth. today, i want to outline the next steps for reform and the challenges we face in making those reforms a success. before i do that, i want to recall how we got here. financial reform, of course, was an obligation, an imperative, it was not a choice. we had an obligation to fix the basic flaws in our financial system that helped trigger the worst global economic crisis since the great depression. we have an obligation to make sure this great recession would be remembered not just for the deep damage it caused, but also for the sweeping changes compelled. we had in obligation to rebuild our financial system so it could

once again be an engine for economic growth and innovation. this battle for financial reform was very hard fought but it was a battle of. of for much of the past century, the last century, the american financial system was the envy of the world. our system provided investors with the strongest protections anywhere on the globe. those protections and our dynamic competitive market for financial innovation puled the global ascendance of american business. this financial system, our financial system, provided the financing that greeted the great american manufacturing companies, on least a revolution in technology, and led to a life-saving improvements in science. this financial system provided hundreds of thousands of engineers and on reports, scientists, and small businesses with the unparalleled opportunity to transform their ideas into industries.

where this economy xl relative to the other major developed economies in innovations and higher productivity, it did so in part because the american financial system was better at directing investments towards companies and industries where the returns would be the highest. the american financial system achieved all this because we had in place strong rules governing finance. these regulatory checks and balances elkridge a remarkably -- these regulatory checks and balances established a remarkably good system that was stable but also very good at innovation. over time, those great strengths of our financial system were undermined. the careful mix of protections we created eventually eroded.

new industries of consumer finance and mortgage lending built up outside the banking sector he evading rules put in place to protect consumers. huge amounts of risk "outside the banking system to where it was easier to increase leverage. those failures combined with a long pair of low real interest rates around the world led to a race to the bottom and underwriting standards and credit terms and ultimately led the american financial system to miss allocate hundreds of billions of dollars toward an unsustainable real-estate boom. when things fell apart, the damage is spread far beyond wall street. house prices fell off the cliff, business and trade halted around the world, trillions of dollars in savings that is, millions of jobs were lost, and thousands of companies across main street collapsed. how did this happen and why did this happen? the figures were many. on wall street and across the

american financial system, financial firms of all types to come risks playfully -- did not fully understand in washington, financial regulators did not sufficiently use the authority they had to protect consumers and limit access rest. policymakers did not act early enough to overhaul a broken system and congress legislative loopholes that allow large parts of the financial industry to operate without oversight, transparency, or restraint. is important to remember that in communities across the country, many americans took on more debt than they could afford and took on financial risk they did not fully appreciate. we all share responsibility for this crisis and we share responsibility for reform. the reforms that are now built low of the lead will help us rebuild a pro-investment financial system which will allow americans to save for retirement, to borrow an and

finance and education are home knowing that the proper safeguards are in place. it is a system that will help businesses finance growth with less risk so they're not starved for credit. to get there we have different responsibilities. for the american people, the challenge is to save a larger share of income and far more responsible and make sure we better understand the risks in investing and barley. that process is under way. americans are rediscovering the importance of living within their means. they are saving more and reducing debt and becoming more careful about how they borrow and invest. these changes are necessary and healthy. they will make us stronger as a country. for the financial industry, the challenge is to restore the trust and confidence of the american people and your customers and investors are round the world. you'll have to make your own

decisions about how best to do that but i thought i would offer a few suggestions. do not wait for washington to draft every rule before you start changing how you do business. get ahead of that process and out in front of your competitors. find new ways to improve disclosure for your consumers. and hidden fees and don't push people into loans they can't afford. demonstrate your business customers that after running for cover in the peak of the crisis that you are ready and willing to take a chance on them again. change how you pay your executives so you're not reporting them for taking risks that could threaten the stability of the financial system. make sure you of board members to understand your business and the risks you are taking. focus now on improving your financial position so that your financial ratings reflect your

on financial strength and earnings prospects, not the false expectations that the government will be there in the future to rescue you from your mistakes. you can do all this now even before the first new rule of the first new regulations are written. a substantial part of the responsibility for reform falls on washington. those of us in government, policy makers, regulators, supervisors must make sure that these reforms meet the promise of bulk law. we have to make sure these reforms provide the necessary protection against financial access but also preserve the benefits of financial innovation. that is our court challenge. i want to lay out some of the principles that should guide our work going forward. we have an obligation of speed. we will move as quickly as possible to bring clarity to the new rules of finance. the rule-writing process has motet a frustrating place and

have to change that. we will provide full transparency and disclosure part of the regulatory agencies will consult broadly as the bright new roles, draft rules will be published, the public will have a chance to comment, and those comments will be available for all to see. third, we are not going to simply let your new rules on top of old outdated rules. everyone who is part of the financial system knows that we have accumulated layers of rules that can be overwhelming and these failures of regulation, rules that did not work or meet their basic purpose, were in some way as appalling as the failures produced where regulation was absent. alongside our efforts to improve protection to the economy, we will elevate rules that did not work. wherever possible, we will streamline and simplify. a fourth principle -- we will not risk killing the freedom for innovation that is necessary for

economic growth. our system allowed to much freedom for abuse and access or risk. as we put in place rules to correct that, we have to strive to achieve a careful balance and safeguard the freedom of competition and choice and innovation that are essential for economic growth fifth, we will make sure we have a more level playing field, not just between banks and nonbanks in the united states but also between our financial institutions and those in europe, japan, china, and the emerging markets who are all competing to finance global growth. we will do this by setting high global standards and will blocking and preventing a race to the bottom from taking place outside the united states. finally, we will work to bring more order and immigration to the regulatory process of the agencies that are responsible for building these reforms are working together and not against

each other. this requires us to look carefully at the overall interaction of regulations designed by different regulators and assess the overall burden they present relative to the benefits they offer. those are some principles that will guide our implementation of financial reform and you should hold us accountable for honoring them. this involves consolidating authority that is spread across multiple agencies and setting up new institutions for coordination and crisis management for consumer protection and for identifying systemic risk. it involves negotiations with countries around the world. each of the agencies involved in implementing reform, treasury,

the federal reserve, the sec, the sec and others are in the process of outlining how they propose to prioritized the rules. they now have to write initial dates when the public can comment on those rules. in september, when the new oversight council first meets, we will establish this integrated road map for these first stages of reform and put that in the public domain. i want to provide you with a brief introduction to the steps we expect to take in four of the most important areas of reform over the next several months. first on consumer protection -- we want to move quickly to give consumers simpler disclosure for credit cards, auto loans, and mortgages so they can make better choices more responsibly and compare costs and services. one of the ways we intend to do that is by combining the two

existing separate and inconsistent federal mortgage disclosure forms that consumers presently get rid we will convene mortgage companies, consumer advocates, mortgage counselors and others how to do that. we'll do that next month and test them on consumers and be able to unveil a new easy to understand short and accessible federal disclosure form. in addition, we will invite public comment on new national underwriting standards for mortgages so we can begin to shape the critical reforms of the mortgage market are consumer protection requires not just better roles but better enforcement particularly with consumer finance companies not regulated as banks. building on a very successful national effort to stop mortgage scams, we will coordinate a national enforcement effort targeted at other forms of consumer abuses including those

financial companies that target members of the military and their families. our soldiers protecting our nation', they should not -- ther families should not be exposed to risk. we will also address any mae and freddie mac. later this month, we will bring together leading academic experts, consumer organizations, for a conference of experts focused on the future of housing finance. we will use the conference to flore various models of reform and seek input from across the political and ideological spectrum. chairman frank plans a series of hearings on reform this fall. i suspect german dog will, too. we are obligated -- i suspect chairman dodd will, too. we will move quickly to shape

reforms of the route derivatives markets. we will work with the fed, the sec and cftc to outline specific quantitative targets and remove the parts of the over-the- counter derivatives market onto central clearing markets. we have to accelerate the international effort to define global efforts for oversight and the prevention of manipulation in these critical markets. the final area of reform is perhaps the most important. it is the task of establishing new rules that constrain risk- taking and leverage in the largest global financial institutions that operate around the world. all financial crises are caused by excess leverage. that is a broad term used to describe the amount of risk relative to the financial reserves they hold. capital requirements determine the amount of loss that firms

can afford and the rest they can take without risking failure. they helped the market provide discipline by forcing shareholders who enjoyed profits in good times to be exposed to losses in bad times. capital requirements are the financial equivalent of having speed limits on the highways, anti-lock brakes and air bags in our cars, and building codes in communities prone to earthquakes. part of what made this crisis so severe is the capital requirements failed to keep up with risk and failed to force firms to prepare for the possibility of a severe recession. this mistake was made worse by the fact that we allowed a large parallel financial system composed of investment banks, consumer finance companies, firms like aig, to grow up and decide the banking system. firms were allowed to operate

with pincushions of capital and reserves and finance their activities with bad practices of finance agreed outside the united states, the rules were even weaker in the united kingdom where in order to attract business, they built that financial system built on the unstable foundation of a strategy they called light touch regulation. it was also true in many other developed countries where the rules allow firms to operate with much slower levels of capital relative to risk. the global framework of capital did not work and we are moving quickly across the world to fix it. i want to describe briefly the key elements of the international agreement we are working to build. first, we will make sure that financial institutions hold more capital than they did before the crisis. we want the new requirements to be set so that we could face a crisis of this severity in the

future without having the government have to step in and provide emergency life-support. the major banks will be required to hold enough capital so they can withstand losses similar to what we saw in the depths of this recession and still have the ability to operate without turning to the taxpayer for help. second, we will make sure that firms meet these requirements with common equity so they can better absorb losses. in contrast to the rules prevail today which allow a wide range of other forms of capital, the new requirements will be set in terms of real common equity, tightly defined to meet capital that will truly a absorb losses when firms get into trouble. third, firms will be required to hold significant more capital against the types of risk assets that caused the financial damage in this crisis. fourth, bigger firms will have

to hold more capital relative to risk then will smaller banks. the largest and most interconnected larger firms caused more damage when they failed. they need to be forced to hold more capital relative to risk. that is a simple principle of fairness and it will help provide stronger incentives for firms to limit their side and leverage in the future. death, these new capital requirements will be supplemented with new global standards for liquidity management so that firms can withstand a severe shock in liquidity without deepening the crisis by having to sell assets in a panic are cutting credit lines indiscriminately ordinate was the turning to central banks for liquidity support. this can all undermine financial confidence in periods of stress. under this framework, we are now

working to build, firms will be subject to "tears of capital requirements. they will need to hold a minimum level of capital and they will be required to hold and at a buffer of capital set above that minimum. if a firm suffers losses that forced it to eat into the buffer, it can do so but it will have to raise capital, reduced dividends. this will help make the system + more stabl over time. the most consequential part of these reforms will be the new quantitative capital ratios. we know they have to be substantially higher than they were but we also know that if we set them too high too fast, we could hurt economic recovery or we could simply and of pushing the risk outside the banking system, something that could ultimately come back to haunt us. to limit the potential, we plan to give banks a reasonable

transition period. banks will have until the beginning of 2013 to meet the new minimum and will have several years beyond that to build up their new capital boppers while implementing a progressively more stringent definition of what counts as capital. importantly, that means banks will have the opportunity to meet these requirements for future earnings and that will help protect their recovery and growth that is currently under way. for the u.s. financial system, it is important to note that because we moved so quickly with the bank stress test and early 2009, our financial system today is in a very strong position internationally to adapt to these new group -- global rules. enacting these reforms was a hard-fought battle the opponents of reform will continue to claim as they have over the past year that these reforms will bring

the end of the american enterprise and the end of the new york as the center of the financial system. 80 years ago, a previous generation of americans battle for great depression and four years after the great crash of 1929, they rose to meet the great challenges of their day by establishing a bold new bank protection and new securities laws at that time, just as now, the opponents of reform predicted grave danger. in 1933, time magazine wrote," though the great banking houses of manhattan last week -- through the great banking house of manhattan last week ran wide- eyed alarm, a big backer step one another in anger and astonishment, a bill had just passed that would rip apart

their institutions what they considered a monstrous system. they felt such a system would rob them of the pride of their profession but reduce all banking to its lowest level." one year later, the president of the chamber of commerce said," it is the opinion of not only stockbrokers but of thoughtful businessman that the sweeping and drastic provisions work -- would seriously undermine all members of stock exchanges and investment banks with a result of the disastrous effect on the stock market and would greatly prejudiced investors and would impose on corporations of the country's serious handicaps in the practical operations of their businesses." notwithstanding those fears and distortions, the reforms that followed the great depression laid the foundation for one of

the most impressive records of innovation and growth that any major economy has ever seen. financial reform cannot be just about fighting last war. future risk will look different from those that caused this crisis. we need a system that is more adaptable, more resilient, one that builds a strong foundation for lasting growth. the reforms we have just passed will fundamentally reshape the u.s. financial system. they will require firms to change the way they do business and with a change -- treat their customers and manage risk and change the way they wear their executives. these reforms will be tough but there will be toughest on those who took the greatest risks and those who operated closest to the edge of prudence, on those who chase the market down and compete in a race to the bottom on standards and practices, and those who made the most of their products in the most unsustainable of waste for these reforms will benefit american

business and people by requiring a stable source of financing for investments that will drive future gains and economic growth some of you today are students of this great university and you have come -- you will come out of university at a time of great national challenge because of that, you will bring to the world not just a greater appreciation of risk and responsibility but also a recognition that what we each bring to the world depends not so much on how much we earn but on the nature of the work we do. that is a good thing for the country. america is coming back. the economy is healing. we are repairing the damage caused by the crisis and we are taking part steps by implementing financial reforms that will be essential to our capacity to grow and prosper in the future. these financial reforms will make our financial system stronger and they will make our

economy stronger. thank you very much. [applause]

>> right now, you see a recovery, a typical recoveries are very difficult. they are more moderate in pace than other financial recoveries because people have to still reduce debt and have to deleverage and dig their way out of that financial hole that caused the crisis. you always faced more had wins coming out of a crisis than a typical recession. it is not surprising this is a moderate recovery and is not as fast as most of us would like. we are going through the necessary changes to put in place a better system that works better. people are saving more and businesses are investing more

and those are encouraging signs. are jobs to help reinforce the process. >> next question, in the fifth row here -- >> i was wondering what your reaction was to the committee announcements last week on the possible three proposals because they seemed to be moving some of the positions you articulated today. i know that sheila bair of some of the other bank regulators have expressed disappointment with their decision then. >> the basil committee is doing these moves in two stages. first, they have a changes to definitions, changes to how they calculate the risk in particular

types of assets these are changes in the rules of liquidity. those are very important building blocks for the reforms. they do not speak to the key questions which is about where the new rules should set the required ratios. we are now in the process of trying to reach agreement on how strong those should be and we will work hard to make sure they are strong enough. by using the two-tier structure with time for people to build up their additional buffer of capital, we think we can get the balance right between having a much stronger rules to make our system more stable, but not take any meaningful risk and we add to the headwinds we still see coming out of this crisis. we are paying close attention to this and we will work hard to make sure these rules are strong enough. >> professor in the front row?

>> i was wondering if you are in a position to share with us something on the plans for the finney may and freddie mac and especially given the weak condition of the market and what might be a time horizon for that? >> i am looking forward to sharing those views but we're not quite -- [laughter] now is not quite the moment. we have to balance two imperatives. one is that we have a system that did not work, obviously. there are fundamental aspects of this current system including how those organizations are designed and it will require sweeping change. we also have to make sure that we help advance the process of repair in the housing market. we are seeing more stability and house prices but we still have a

lot to work through. is important to the strength of the recovery and fair for the american people that we continue to make sure we are reinforcing that process of repair in housing generally. we have to find a way to make sure we have a system that provides a reasonable security so you can borrow to finance a house purchase even in a deep recession. that is something we have to preserve and build. the system we have today is not tenable for the future and we out of bring about quite dramatic reforms. those financial institutions, to reduce it to its core, were allowed to build up huge portfolios of securities without the capital to back the risk in those commitments. they did not press their guarantees at a level that allowed them to build up a

cushion against losses. they followed the market down as underwriting standards were weakened, helping to contribute to what was a fair amount of excess as far as access to credit. those are things we can change. the system worked well for many decades and this is not rocket science. we have to make sure we have -- we can build political support for doing a pretty obligated under the law to put forward proposals to do that by early next year. >> all the way in the back? >> some people say the u.s. is heading for a japan-style recession. do you agree with this? >> i do not.

was that clear enough? [laughter] >> can you elaborate on that? [laughter] >> when we were sitting with the president and the early stages of the transition, looking at an economy that we know is shrinking at a rate of 7% per year which is the deepest contraction we have seen in decades, a larger financial shock than that which precipitated the great depression. we were there trying to figure out which strategy to choose. the president made it clear that we were going to err on the side of fixing this quickly, not before in the tough things to put out the fire and we would follow as best we could the basic lessons of mistakes made by many governments in past crises. this was typically to wait too

long and let things escalate. does not only because people hope it will get better, but because the political cost of acted with forced to fix the financial process -- is extremely high. no one wants to be in a position of having to take the steps that would help institutions that precipitated the crisis. most countries wait too long and they under do it every move too quickly to put on the brakes of the first signs of life and hope. that is oversimplified but that is the simplification of crisis response. the president made it clear that we would not do that. if you look at what he did and we did alongside the fed, we decided to put in place overwhelming financial force to break the back of the financial

panic and stabilize the financial system and recapitalize or early enforce a brutal level of transparency on the banks so the market could differentiate among them to use the tax incentives, substantial investments, support for states to break the free fall in private demand and reinforce the actions of the fed. because of that -- if you look at any basic craft of financial markets and competence of investment of growth, if you look around the world, what happened to trade and exports, the world turned once they saw the full scope of acting to address this crisis. that is when the basic beginnings of recovery began. in many ways, we have seen grow stronger than many had expected. job creation and the private sector is much slower than what we need or what we would like but it came sooner than it did in the last two recoveries.

our financial system and the major banks are in much stronger relative positions because we moved quickly. because of our knowledge of the risks of getting this bill is wrong, i am confident we will avoid that fate. >> time for two more questions. on the right? >> [unintelligible] we are both a housing counselee agency and a cbfi and you mentioned about being in front to shape rules that are coming out. do you see a role for the not- for-profit market and of the cbfi to work with the new agency is being created? >> absolutely, we will not have only a few banks but over 9000

banks. those eight are 9000 community banks across the country still provide a very substantial fraction of credit to small businesses, credit to communities, and we will work very carefully to preserve that. if you look at the basic strategy in the bill, we have made a conscious effort to make sure we are, in effect, going to hold the largest firms to tougher standards to preserve the basic strength of our system. in particular play an irreplaceable role across the country. we have been very careful to use the authority congress gave us to deal with the potential collapse of our financial system and make sure we're providing capital to the cbfi's. that is a very high return investment to the taxpayer. that is important we find ways

that those firms can play active roles in those communities. >> final question here in the front row to my left. >> + come to new york city. what might be your view about the bush tax cut for small businesses? would you rather extend it? >> excellent question. let me describe what we think the best strategy is going forward. we are asking congress to act to extend the tax cuts president bush put in place that went to benefit more than 95% of americans that work in this country. we are proposing to extend temporarily the make or pay tax

credit that went to 95% working americans. we are up proposing to extend a series of business tax cuts which we think will be helpful to incentivize investment and hiring as the economy comes out of desperate we are proposing to make permanent the research and development tax credit. we are proposing to keep tax rates on investment income at a reasonable level. the president to find that in his campaign as 20%. we are also proposing to make that possible and allow those tax cuts that president bush put in place that go only to the 2% highest earners and the country to expire on schedule. we think that is a fair and responsible thing to do. to do so, this will allow us to show the american people and the

word -- world that we have the political will to reduce our long-term debt the says. there are some -- let our long- term deficits. people need to understand that this is a poor form of stimulus for they go to people who don't need the money and are likely to spend that money. if you believe and adding support to the economy, republicans believe in that, there are better forms of tax measures that would help support growth. is also important to recognize that if you decide to extend all of them temporarily, you will add a lot of uncertainty to the economy. think that would be effective for the recovery. we think that package of tax measures that go to the overwhelming bulk of people who earn a living in this country is a better balance of support for

the economy. it is a more responsible way to do it and a more fair way to do it. >> secretary gunnar, thank you for your remarks and taking questions -- secretary brightener, thank you for your remarks and taking questions and thank you all for being here. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> in a few moments, today's headlines and your calls live on "washington journal." then a senate committee hearing on the state of the economy. and we will look at the process of withdrawing troops from iraq with richard white of the hudson institute. hudson institute. the rev. jesse jackson