to get a ,octorate, a master's, b.a. associate become a professional degree, it constitutes 60% of future jobs. -- 68% of the future jobs. for those with on-the-job training, 27%. what is emerging is that 60% to 70% -- 68% to 70% of what it takes to get decent job for a family these days. some of these will come not just from the university colleges, but from community colleges. the president the other day talk about that. he said that we put $12 billion

in community colleges because we wanted opportunities for green jobs come to make that available. $2 billion more into community colleges. community colleges are beginning to be very important, because that is where most of our kids are. we look at them not just as incubators for the workplace, but as places where we begin to round out the other things. there ought to be a black male program. a black male program. that ought to be a black leadership program. -- there ought to be a black leadership program at the community college level. it seems to me in washington, d.c., we are creating a community college with something like that, that points people in

the direction with other kinds of skills that make them whole people. you don't necessarily need a .octorate or master's or mba a couple of years ago, i served as a member of the commission on the black male. the civil rights committee has just come out with a >> this allows community has just about a 17-page blueprint on the civil rights reform. we ought to look at that very quickly it is structured in a

way in which privileges to some extent. methodologies and raises questions about whether or not people need the money better -- the money that is out there to get it. what happens when you have a whole generation of unemployable black males? we have talked about incarceration rates and recidivism and that whole ball of wax. i do not even want to get into it. -that sector, and in others, if

we do not deal with this, we are building a better route for a generation of unemployable people. to me, that is the social deficit that we need to be talking about. nobody talks about the social deficit. that is more important and more powerful than economic deficit. and the final point i would make is that jobs exist in communities. one of the things we have turned on in the last 30 because of the advent of the conservative new -- movement urban policy. together a white house office on urban affairs.

i would hope that at some point we begin to have a serious discussion about the context for employment, for jobs, for sometimes approach these problems as excerpt one sector of the community and to deal with it successfully. if you have a city like washington d.c. where areas of experiencing poverty, if you're going to take one institution out of that attrition and deal with it successfully -- i am leaving with that. and we need to deal with urban policy in a series way. i better shut up.

>> first, thank you again for having me and i thank the congresswoman -- >> [inaudible] >> yes, my name is mike jones. i am with one of the largest law firms in the country. i practice here in d.c. and across the country. and i live in d.c.. when i was at georgetown law school, i was a research assistant for congress when norton long before she was interested in getting involved in politics. my wife and i had a tutoring program for the naacp. we paid teachers and tutors to provide tutoring during the summer for poor african american students. we endowed a scholarship in new orleans for underprivileged students.

and we have done since similar -- something similar african- american students looking to go to georgetown. i have been active in the interim programs in d.c. and other similar organizations. in d.c. and other similar organizations. in connection to that, johnnie cochran came into my office and looked out the window at the white house and said, "homeboy, this is a long way from shreveport." i growth in shreveport, louisiana, which is the same place that johnnie cochran did. he has written a book called "the journey of justice." and if i was right when i guess it would be called, "the journey from the cotton fields of shreveport." at georgetown in the political

science department one student as the house that i feel at the time being one of the few african americans have a large -- to use his phrase, in large white law firm. when i joined the firm in 1986, they had never had an african- american partner. and in the whole firm i think there might have been two african-americans. my response was, frankly, that it felt a whole lot better than my first job, which was being an african-american in my -- in the cornfields in my aunt and uncle's farm. as tradition, we would start at 7:00 a.m. in the hot morning and and when the hot sun went down. -- and ended when the hot sun went down. i think the journey starts with that job, but includes a number of other jobs. some of those opportunities are

not available now. my next series of jobs was working through -- you may not even remember that there was such a thing, but it was called ceta, comprehensive employment training act program. by the way, the bravest thing i've ever done -- i have no anxiety about appearing before juries in new york or white or in front of judges, no matter their reputation. the greatest thing i have overcome is that in those first jobs, i was a high school leader, student council president, very well thought of. those first jobs were essentially working with the janitorial staff. it took me some time to get my mind wrapped around the idea of students seen me after having

led a meeting mopping and sweeping the floor with the janitors. when i overcame that i never had an anxious moment thereafter. those jobs taught me a lot of things. first of all, i spent a lot of time talking with the janitors. and not only did i earn a paycheck, which i absolutely needed to have, i was one of seven children. my father had a third grade education. i was a construction worker -- he was a construction worker who became disabled very early on. as a practical matter, mother had her own series of health issues -- the so-called other practical matter was, we had to work. working with a way, you know, not for me to get goodies or luxury's, but life necessities. i was hit hard by the death of michael jackson because he was the first guy that i ever was

aware of in my mind, growing up in louisiana, who was able to transcend race. and secondly, and probably more importantly, he provided me the incentive to stay there in the hot sun picking cotton because i had seen him on a "soul train" and i had seen those teutonia pants that he had on and i you could buy two pair for $5 at woolworth's in those days. $5 in those days was enough to give us those two-tone paint. pants. in terms of employment, i moved on from there, again through the ceta program, and then i was able to get some of those jobs working at urban development

before i went off to college. the work ethic among the kinds of attitudes that i learned -- the work ethic, the kinds of attitudes that i learned -- i learned to appreciate everybody that was a part of the team. at the law firm, that would be the folks in the mail room, the legal assistance, the secretary, the people who are increasingly hispanic who come into into the trash in the evenings. i see them all as an important part of the team and that helps me when i have to stand in front of juries and various places in front -- in the country. the and the thing i would say is that as dr. walters talked about general education, i want to talk about it more specifically. people who went to middle school, high school, law school with me would probably say, yeah, mike jones, that is that

with the smart guy. the first four years of my education that is not how people described to me. the first four years of my education -- in fact, i was just looking at the letter last night. my parents got a letter from the school board informing of 1968 negro go to any school they wanted to go to. as a result of that, i transitioned in the middle of my fourth grade year from a predominantly african-american been a white institution. think a was reading at a level that was considered a year behind. by the time i was in the sixth grade i ran across a teacher who interjected the idea of competition into the clot -- into the classroom. which is to say that, you have to do a certain amount of work and then you take a test and

then go on to the next level. i was intrigued by the attention that was being paid to two white boys in the class, david and rusty, who were at the top of the key, so to speak, in terms of reading. competitive. i ran track. in fact, i won the city meet the last time i competed. i liked the idea of trying to catch these guys. i liked the idea of taking athletic competition over into the academic arena and i'm happy to say that i did catch those guys. but by the time i got to middle school, i was -- again, after going to an all-black school -- and then i was exposed to the most profound teacher, the most profound experience i had. he was an african american

english teacher. you talk about making education fund. he was the first one i was ever aware of to have a quiz-bo competition and we had marvin gaye in the background, you know, "what is going on -- "what's going on?" and it was cool to be smart. it was one of the greatest educational experiences i had in school. i look at what i do now and i try to help other -- what i try to help other african-american men in particular with is i look back at whatever kind of job employment experiences you have, even if it is not what you want to be. you have to make the best of it because there is something to be learned from every level of employment. when we look at people in my law

firm, from the lawyers to the , and george yous may be able to identify it with this as an athlete -- i say so much of it has to do with attitude. so much of it has to do with the hunter. on my team's, someone who is hungry, someone who really wants to roll those sleeves up and win one for the team, even if they are not "the smartest," even if they do not have the best credentials compared to others, that is the person that i will be rooting for. i say this to folks that i mentor, too. one of the things the it is lucky for -- i see people at the supermarket and sometimes it

seems like when a customer comes up, you know, rather than encountering someone who is doing their job, they are interrupting people who are having a conversation about the things they have done. if you have in that situation and opportunity to advance somebody, i think the people who are going to get ahead are the people who come to it with a go better attitude -- with a go- getter attitude. i just kind of wanted to lay out to you my background. for those who believe in a higher being probably consider it a miracle and for those who do not, if rick of nature. the truth of it is that there is a winning formula, just like in sports. hard work and treating education just like you would with sports.

my kids actually left that i cannot believe it or not, when i was in college i had a chance -- that i, believe it or not, when i was in college i had a chance to study abroad. if one of the areas that i was weak on was my vocabulary. it was not as broad as i would like to be. what did i do? i did not lay down on my boat and hope for osmosis' it would get in there. i studied the dictionary. sure enough, and before long that was not a problem anymore. i look forward to answering any questions. >> ravi, introduce yourself. >> good evening, my name is rodney mitchell. i am honored to be announced by congressman homes to justify --

to testify onmestalholmes an issue that is very dear to my heart. i grew up in d.c. and i consider myself a survivor of the '80s. a survivor of one of the times in our history that was so devastating that when i came back from school in the late 1990's, half of my class were gone. seven of the varsity basketball players were dead from violent crime on the street. when i heard the call to come here to talk about what blackmon need to do in the toughest job market in history -- what black men need to do in the toughest job market in history, i will talk from the perspective of the population that i come from and challenges that we face as

people would call returning citizens. as a survivor of the '80s, i do not have to go into great detail, but i was never criminally minded. but there were dynamics and circumstances in washington d.c. in south central that led a lot of young african-american males to enter into an illicit market that had to do with the sales and distribution of crack cocaine. there was subsequently policy called the war on drugs that systematically ravaged that neighborhood in a way that hyper incarcerated african-american males in record numbers. i witnessed this both in washington d.c., the ghettos of

the cecum minorities, southwest as well as all over south central los angeles. in many cases, while not making excuses, a lot of these so- called drug dealers i will not say were forced into this market, but were compelled to take part in this market as a means to an end. for some, it was glamorous and romanticized. the whole idea of being a drug dealer. for others, it was day-to-day survival. that is a mixed bag of people. i do not know of one so-called baller from that time who is alive or who has invested those dollars and is now living a so- called normal life. most of those men and women are dead or doing life in prison.

i want to use part of my story to talk about the charge of what black men need to do in the toughest job market. i am practicing law now. i want to be careful about how i talk about my background because there were people who thought well enough of me to let me practice law after all of that. so, while i tell you that i am very remorseful and very dedicated and committed to living a civil and law-abiding lifestyle, that life style continues to this day -- i will not say hunt, but i must deal with it. the records of my past that every person with a criminal history must deal with at some level. i will start at the point of redemption and rehabilitation,

1992. i was paroled from the california correctional facility and i immediately knew before i was paroled -- i had already started rehabilitating. number one, my brief exposure to college by attending the university basketball camp for that one summer, it inspired me that i knew i wanted to college. it had more to do than just hanging out with the girls. i knew that education was part of my past, and to give early higher education. having said that, i have extensive work history as a teenager. i worked every summer. whether it was one of marion barry's jobs or a job that i found myself.

i worked on a street where all of the pins came through there. i always had a job. i knew that going to school was part of my plan to rehabilitate myself. i wasn't depending on state programs or county programs. there were none at the time. in 1992, in a halfway house and looking for work. and like many other so-called sex offenders, we look to the industries that would more readily take us. driving is one of the jobs that we do. everybody gets a c d.l. license when you come out of prison and i did as well. here's the catch. bypassed the cl license with flying colors and i went down to get my credentials and i was stopped dead in my tracks because rodney mitchell was a felon.

i spent a good eight weeks in that program. i walked into my sister's house and sat on her couch and cried because i knew what was facing me if i did not work. and i was determined and that i was not going back to any one of those institutions. my older sister to me to another place called "women at work." and i was like, i'm not going they're looking for a job. this is like my mom, if you understand i'm saying. and i found a janitorial job at night. and i got my job -- that job by misrepresenting my criminal history. because i had just lost one job.

i was potentially facing the street again. and i had to take a urinalysis tests to take that job. i passed with flying colors because another part of the story was that i was abusing substances while i was on the street. if you name it, drugs of all shapes and sizes, as well as all. -- as well as alcohol i knew i had to be clean. 19 years later and still in that state. i passed my urinalysis with flying colors. i say this because i want all of the brothers to hear this. it is not luck. it is a process for how you go from this state of mind to success. i want the job for one year and was promoted to the manufacturing side.

at the same time i have enrolled in city college and i had to establish remediation because i graduated from d.c. public schools, but i was reading at a ninth grade level. i transferred to the university of california berkeley. i wanted to study more about my fat -- my people and how did we end up with this situation, having heard so much about the civil rights movement and the like. how did we end up in a situation now where everyone i know is dead or incarcerated or on welfare? how did we get here? i started out with american cities and public policy. -- american studies and public policy. and i went on to gw law school. i got into a program that deals

this was a bit with reintegration, reentry and returning citizens. i work for the federal government and now i have my own practice. approximately 19,000 cycle in and out of the d.c. jail annually. among returning resident, there three times more likely to recidivate. 33% have some college. 83% of returning residents who violate probation or parole violate their probation. of returning residents

who violate probation or parole cannot find a job. large percentages find jobs that lack important benefits and require not sustainable hours. as a result, we're constantly cycling in and out of these jobs. to answer your question about what black men need to do in a tough economy, hybrid down into three large categories. finding jobs and careers and that kind of thing, and there is a spiritual category. there is also a category that the

men and women who run a self- help group that i'm talking to and we discuss these subjects. being emotionally ready for this tough job market, this is what we talk about. being patient, been determined, being aggressive, gaining self- esteem through small every day winds. not just the big things, but every day winning, giving up on time, going to look for a job -- getting up on time, going to look for a job. these things will help you have more authority to stand tall when you are out in society looking for a job and talking to employers and inquiring about work.

understand the dynamics of this highly competitive job market. experience verses little experience, credentials vs un credentialed. the cronyism and nepotism, these are issues that we face as black men and a lot of times do not have the understanding in facing them. understanding the negative stigma associated with criminal history. employment discrimination. i am not afraid to talk about race and racism in america. employment discrimination against persons with criminal histories is probing the minimal barrier to us finding jobs -- is

probably the minimal barrier to of finding jobs and integrating into society. sometimes when i talk to clients who are talking to me about the discrimination they are facing, i'm not sure whether they're talking about the discrimination they face as an ex offender or a black man or a man. it is hard to expect -- to distinguish. be prepared to be told no over and over and over again. i'm talking emotional fortitude. these are the things that we talk about. the committee has a responsibility. the government has a responsibility. but the individual -- that is what i have been talking about for the last three years. be prepared to be told no over and over again. be prepared to deal with the stress from family, friends,

paul and probation officers. -- parole and probation officers. a tremendous amount of stress, they are mandated to sign -- to find jobs when they come home. be prepared to take a job that might be viewed as menial, as we talked about. make the distinction between a job and a courier. -- and a career. there is nothing wrong with that job that gets you over the hump. it is not the job that is going to buy you the picket fence and a home. is going to get you work history. take menial jobs with enthusiasm and appreciation and perform at a high level. strive for excellence in your work. but in those wars, they used to shine and i was proud of that --

buffing those floors, they used to shine and i was proud of that. understand the complexities of race, class, and gender in the job market. do not use it as an excuse, but be aware of it. no excuses out here. it is tough. everybody is looking for the same thing, but understand that racism is alive and well. the armed spiritually, if it is applicable. and i will leave it at that. technically, we talk about technical certificates, vocational training, occupational certificates -- 58% of the job market requires that. you have to be credentialed. you have to have some manner of training. everyone has a talent or skill or something they can do well. work on a professional resume,

find a mentor, practice your social skills. be pleasant. smile -- we have a problem with the smiling sometimes. it is okay to smile. there is leverage you can use. there is a tax credit program, federal bonding programs. learn to network and small talk. talk to your family, neighbors. and be willing to go further, to relocate if necessary. look for on to the real opportunities. -- look for entrepreneurial opportunities. there are structural solutions as well. there are laws and mandates and policy that we need to look at as a city and a country that will stop on employment discrimination against this population. in closing, there are at least

three parties who are responsible for this idea of ex offenders, predominantly black men, doing well in the job market. that is, the individual, community and family, and our government. we have to look at all three of those parties working in tandem. it cannot happen in a silo. it cannot happen individually. if i have the last thing to say, i will say that we need to work? working together as a city, as a country to make sure that these folks are coming back and are successfully integrated. [applause]

>> we thank each of these witnesses in giving their time and we appreciate their honesty. i'm going to give members of the panel an opportunity to ask questions of our witnesses and then we can open the floor up. we will start on the side. >> first of all, let me applaud mr. missile -- mr. mitchell, dr. walters and mr. jones for their testimony here this evening. one of the questions i have, whether you are los angeles or washington d.c., atlanta, florida, it does not really matter. you encounter as a young brother -- you encounter a young brother on the corner, he may have kids, and is feeling the pressures f. being unemployed. and someone like myself sitting here will say, invest in yourself, get an education. but they are ex felon.

what message should we be conveying to these young people as they are out there dealing with those challenges? what tools could we provide them to help them up front, knowing that they're rednecks felon, unemployed, have a baby to feed -- knowing that they are an ex- felon, unemployed, have a baby to feed? >> thank you for these questions. what i say -- and i've had these conversations with family members and former classmates -- the absolute first thing is, do not make bad matters worse. do not out of desperation at to

the felony conviction another conviction. -- add to that felony conviction another conviction. the second thing is, be patient, particularly if it is a friend or family member obviously in a position to provide some assistance to tide them over. but to answer that more broadly, i would say, number two, be patient. and number three, in the meantime, even as you are out going to look for a job, find something to enhance this. instead of spending your evenings been frustrated, find some way to improve your skill set. to find some way to reach out to people like those on the commission who have networking opportunities.

those are the sort of things i would start with. first, do not make bad matters worse, and number two, improve yourself. >> i would say that and i was very impressed by the testimony about coaching individuals. last year, i had spoken in its and the brothers said, that we take you down to the good first -- to the hood first. they took me down to the black community and i was just amazed at the number of people in a four-block area that i ran into that were felons. what they could get in terms of a license to work, or could not, one brother in a barbershop

spoke about how he would not give up because he wanted to do hair and he finally got his license. stories about unions, how the unions in terms of their own forms would discriminate against violence would discriminate against . in terms of our organizations come out we had to do a lot of coaching. some of the recent books that have come out dealing with violent -- with felons, michele's book, an amazing book that talks about a sense of order. we have to focus on that. the people that i talk to simply found somebody to help them, some

organization to help them, or some way in which they could get something to get themselves started. you have people who are super motivated and a lot of people who are not. people, they are going to need some help from somebody else. >> i certainly agree with the comments of those two gentlemen, but i would also add that in many cases, the street corner is probably the worst place to start a discussion about upward mobility. are in the state of grinding," as we say, you have one thing on your mind and that is making your way.

it does not matter what where you come from. they are starving for information. a repository of information is what we have to be. and maybe there is a way to bring that message to the street corner. i am not that smart. i have not figured that one out yet. but i know that when i hold these groups twice a month, these gentlemen of all ages are hungry for information about how to -- how the process works, how education works, how jobs work -- all of that. thesee interested in kinds of issues. and we live our stories of struggles or success out there for them. >> first, i would like to thank the congresswoman for having this event. as dr. walter said, this is a

serious issue that they do not really say is going on. unemployment means people who were employed that lost their jobs, but it does not talk about the hopeless rate of all the people in the communities who never had a job or did not think they could get a job. our people are suffering much more than people realize or even the data shows on tv when they say the unemployment rate. one question i want to ask the panel is about the box. there are several states that have taken the box office of applications for people applying for jobs where they have to say they have criminal history. one, do you support that, and how? another question i have -- there was a great program in washington d.c. where 97% of the brothers and sisters that

got degrees f. lawton never went back -- at lawton never went back. however, there was another program where the hell brands -- and i believe that 5% of the pell grants that were going to prisoners was taken away from their children. for people like me who went to prison, i receive my ged in prison and i learned i had a purpose in college while i was in prison. brothers and sisters they are not given those opportunities. you think we need to try harder to push for legislation and get it back to the d.c. prisons and prisons around the country? och >> i guess, my first

response is to say that what i think we need to do it is to introduce more people to people like you, ron, and people like rodney. the sense that i have is when i think about all of the advocacy groups, i think about all of the pro bono efforts from large law firms and others who are assisting the underprivileged and people who are discriminated against and who have had challenges, with the exception of reinstituting voting rights that has coverage and people are starting to rally around that issue -- but i think the broader issues that we have talked about, like checking on the form whether you are an ex- , i do not think that has gained a target.

i'm impressed by and moved by your brothers and i think that if we can get more exposure, we can move it along on those issues. this hearing, in my mind, is a great opportunity. i would want to be thinking about other opportunities to engage people like the national bar association and various other advocacy groups to provide assistance. that would be my first response to it. >> i agree with that and i think the national bar association would be a great organization. if it does not already have a focus on the expansion movement -- expungement movement because

that has been a focus of these jiabao can get jobs, can get housing, can get -- so these people can get jobs, can get housing, can get benefits. the second thing i would say is the pell grant was taken away a crimehe 1990's in control act of 1994 that came out, sponsored in part by bill clinton, pushed by the conservative movement that took away a whole host of benefits for people that have been incarcerated. it was a hateful act. as look -- as i am looking at this right now, it is time to talk about repeal of some of what happened in 1994. are there really people talking about repealing some of this

stuff? they are finally starting to talk about cocaine sentencing. it used to be one to 100. it is now one to 18. three strikes you're out, we are to be talking about -- we ought to be talking are repealed. there are a lot of draconian things that were put in the 1994 crime control act. that is what i would say that we ought to be doing with respect to at least a few things. >> thanks for the question, ron. the whole idea with the box is to eliminate the question of criminal history until it -- an appropriate time.

once the employer has offered the job, then it is an appropriate time to talk about what is your crime and still important, is there a rational connection between the crime and the job you are seeking? this is the question that a lot of jurisdictions have used successfully to eliminate that question. what that question does is it successfully takes you out of the pool, for all intents and purposes. they can say whatever they want, you will be summarily removed from the pool of applicants once they see that box is checked. more importantly, i think we have to start educating the employees about the benefits, the pools of talent, and the laws of the public, of human capital when we refuse to have folks who have criminal history.

there is a talented pool of people out there that are dying to get work. that is one strategy, absolutely. education will definitely increase your chances of successfully re-entered rating. a college program in a penitentiary absolutely makes sense. it is just straight forward. one thing that did work well was allowing the pell grant -- there was a time if you had a drug offense you were not allowed to have a federal funding. now you can come home and get federal financial aid. that is a good thing. that was reversed in 2006. >> i want to make a statement in the interest of time. but we are scheduled to adjourn in a little over 20 minutes. certainly, we want to read knowledge this great response

from the public and we want to give them an opportunity to ask questions. what i'm going to do is defer my questions and i'm going to ask that the commissioners, if they have a question, limited to one question and just one panel member will respond. that way we can hear from the various people in the audience. >> mr. mitchell, quickly, you mentioned that when you buy your first job -- when you got your first job and you lost the cl opportunity, is that because the employer found your an ex offender? i run a school and i understanding is that the federal government provides bonding for former offenders. my experience is that employers do not accept that bond. they come out, go to school, get there should give it.

they are employable, but the employers will not accept -- and get their certificate. they are employable, but the employers will not accept the bonding. >> a lot of employers are not moved by that bond. philadelphia has a bond that goes up to $10,000, up from $5,000. in many instances, there's not enough incentive for employers to take on this vonn because they're looking at their risks being beyond that amount. >> you think it would help of the bond would be better? >> i think it would certainly help if we increased our bond. >> all of you have made some very profound statements as it relates to work-force development. and i can honestly attest to that because i have been a

workforce development professional for over 25 years. at this point, there are a number of great programs in washington, the afl-cio construction program, the the departmentat of services and a continuing education program at the university of the district of columbia and there are a number of green job programs around the city. my question is, how does that individual make that decision? that is a hard road to determine. all of those are for synergies are real. i believe based on your -- all of those opportunities are real. if i believe based on your experience, what would you say to the hundreds of people that are sitting behind you commodified how you make that decision on which road -- behind you, how you make that decision on which road to travel? >> one thing you cannot afford to do is to create a mismatch between the nature of the economy that you want to be employed in and the skill set

that you are training for. washington d.c. has been criticized because it is not producing the kind of employable people for the nature of the economy has. that is the first thing. you want to train to be a technician for a job at washington d.c., fine, go to florida. but here, you are talking about a whole series of jobs in managerial, clerical, computer science -- a whole series of other jobs like that. one has to take that into consideration when making that decision. >> this time -- at this time, i would like to open the floor. there are microphones on both sides. we have about 15 minutes. if we use that time wisely, one question, try to limit it to about one minute. one panelist will answer.

we should hopefully your four to five people on the side of the room. let's start with the lady right over here. >> my name is debbie thomas. now we are in the 20% tree and it is a different type of global -- in the 21st century and is a different type of global economy. it is difficult to get jobs that apply critical thinking. now when you go for jobs, even hamburger joints, you have to be able to pass an -- pass a math exam. there was recently i was on a bus and a young guy had to do a math test to get hired by an employer. is there any way you have a program set up so they can be literate in math as was no hard

to understand math to answer the questions to gain employment because if they can't pass the math, they're not going to get a job. >> i will try to answer your question because i have a technology company. you are absolutely correct. i think we are focusing in on the wrong aspect of the challenge. a lot of young people are unsuccessful in doing math because we cannot read, in some cases. today's match, if your reading ,omprehension -- today's math if you're reading comprehension level is not a two-part, you are going to struggle. -- not up to par, you are going to struggle. basic computer skills are increasingly important. there are resources i community

colleges, at public libraries, there are tutoring programs adkins hpcu. you can reach out -- tutoring programs at hpcu. there are programs you can reach out to in various communities. that is why organizations such as our opening stem schools, for that very reason. >> the gentleman on the left. glad that you're con and helping them out, but also, you have people in the homeless community who cannot get jobs. here in d.c., and those that we talked about that do not pay the

rent, the average rent is $1,400 per month here in d.c. have expanded and for any felonies. but i know a man who -- you do not have expungement for any felonies. man who had a funny when he was 19 and he is now 65 who had a felony when he was 19 and he is now 65 years old. are a number of blacks, ex-con, homeless who are hard to employ. i am part of a group that is working with the u.s. department "exit strategy for the homeless community." the person in charge, these jobs,

are they going to be billable wage? what jobs -- a livable wage? what jobs can you do to make at least $12 per hour? truck driver or not a mechanic or you are out of luck. how do you respond to that issue of having programs that focus on training and employee in the hard to >> not to be self-serving, but we train of mechanics per we have a two-year school and it does not cost you money and there is no disqualified. you have to be 16 years old. if you can't read or write, come to us. programs -- that one of the return citizens or the illustration on -- there is one program that will be teaching run -- young people and

returned citizens have to learn the landscape business. they are bidding on city contracts and that's how we need to take it we need to take these young brothers and sisters of corners who have sills -- skills. if you are selling drugs, you can run a business. people are coming from virginia getting all these contracts and we keep telling our young brothers and sisters that they are unemployable are there are some of the things that can be done in this city. there are some a contract but we have to teach our people how to do these jobs and how to acquire a trade and learn business skills and move forward in life. >> the gentleman on the right them. >> i am an ex offender 30 years ago and went back to school and got a degree in the culinary arts. i have a chauffeur's license.

here is in d.c.. the problem i run into is when i go on job interviews, the jobs are not there. no matter what your field or background is, the job that was there 10 years ago are not there now. you need work now. i am trying to network. i work with employment services and social services and they talked about programs and when i go, they are about what they claim to be. i am willing to do anything outside my field. i am here to network and see where i can go to get employment anywhere, i don't care where. >> thank you. >> i want to respond to that in a positive way redefinition of a job -- i want to respond to that in a positive way. the definition of a job is to fulfill an unmatched need for employer. you have to look at your transferrable skills from previous jobs and recognize

where your strengths are. what are your strengths? that will keep you from just running in a circle. you have to 0 in and be focused and be determined and put your best foot forward. >> the gentleman on beloved. >> i work with the georgia institute. i like -- want to thank the congresswoman for having us here. i commend her for that. i work on the d.c. jobs coalition. some things we talk about in there is we need to reach out and employers to these meetings. employers are not necessarily exploiting what it is they want from people as employees. and there are some employable tax offenders depending on the offense. -- ex-offenders depending on the offense.

employees seeking work and not know some of the things they can do to minimize these issues i think it will have to wind up being some legislation. i was wondering how you all feel about pushing for legislation. i work with an employer now that if you have a felony, after the last day of termination after parole, 10 years after that you are eligible for employment with them. one person is not eligible for this company. until the year 2023. how realistic is that? should the seven years or 27 years? we should look at that i want to know how you feel about pushing for more legislation through the federal government that prohibits employers from discriminating to someone who has been incarcerated. >> there is legislation that is

constantly coming from the city council in the district of columbia. one is a human rights bill for return the citizens. people like the d.c. chamber of commerce which is run by barbara lang, they come down there and they made legislators fight against this bill. this is the only way i can see that people can have rights in the district of columbia with what you just stated them up for anybody who needs information -- >> many of the persons who ask questions night -- tonight, use this opportunity to network and exchange information. >> when i ride through this city and i look at folks who are doing the work in this city, building buildings, i see people coming in from maryland, virginia, i see black men standing on corners unemployed but i see other folks got the jobs.

something is wrong there. i don't want folks to think, it raises but most the folks who work in this system -- city are hispanics for they cut up -- they put a couple of blacks in as window dressing. one does not have to be qualified to dig a ditch. many of the folks doing work in this city, building these buildings, they are digging ditches. something is wrong. when folks are making money that do not live in this city and don't pay taxes, they don't contribute to the economy of this city -- i would not care if they hired hispanics that live in washington, d.c. something needs to be done. there are many things that black man can do. we have to look at what other folks can do. the contractors of this city do not live in washington, d.c. blue sky is one of the few contractors that hires residents of dc

i would like to command eleanor holmes norton for black men and women who are coming out of jail. we need to look at that and do something about it. we need to talk to the city council and encouraged administrators to enforce that particular law. >> thank you. the gentleman here on the left the. >> i have a question about the new form of employment discrimination which involves credit reports. if you have a bad -- bad credit score, you cannot get a job. stupid for you can be qualified and have 10 degrees but if you have a bad credit score, you don't get the job. somebody needs to start legislation to make that illegal. that is the most insane thing you can do -- you can ever do. you can only get a good credit scored if you have a job. how do we address that?

>> dr. walters? >> we just passed a financial services piece of legislation and this issue of credits course was taken up in the hearings. one of the object is what to do precisely what you were talking about, to stop using credit scores for things like employment. i don't know if that actually got in the bill. ok, all right, that is on the radar screen. it may even be in the bill. >> with the credits course, it should not have anything to do with anything, insurance or anything you do. why would your credit's core impact any of that? it is in the middle of everything. >> thank you for that. yes, sir. >> good evening.

thank you for putting these resources in front of a spread as i listen to you all testify, i don't see it in the it community. for the chairman during automotive training, we need to have some black-owned automotive businesses in the state -- in the sake -- in d.c. i am trying to work. i am a law-abiding citizen but it is being made extremely hard because most of all these a -- construction companies, what they are doing is they are discriminating against african- american man in the state --d.c. why are the city officials and the people who are supposed to doing all this stuff allowing taxpayers money to go to all these corporations that are refusing repeatedly to hire

african-american man for sample general laborer jobs. >> thank you, sir. >> have a good evening. >> anybody want to comment? part of the answer has been identified of things that has a population, homeless, reconnecting persons, re- entering persons, we have to be more of a united zero boys in lobbying and being active in political races. we think this is a great problem that is on the radar screen and we have to have greater enforcement in that area of. >> i have just been released from prison two months ago and i cannot find a job nowhere. i do not have any marketable skills so i went and got into college at udc.

the programs that are out here -- i took a three-week course, upo. they don't have any jobs lined up. all these programs -- they do the paperwork and you go through the process and you get no employment. are there any programs out there that are guaranteeing and plummet for people trying to work? for? offenders? are you talking about a job while you get what your training? at some point you have to have a skill. >> at some point, you have to pay your rent as well. i am in udc for my bachelor's because i don't have any marketable skills. in the meantime, i have to pay my rent. i have to pay for my travel expenses.

i need a full-time job as well as go to school full-time. >> are you currently on suburban is in? >> yes, five years. >> let me give you the words of one of our speakers, michael jones, who says don't make a situation worse and be patient. there is no substitute for time. do what you are doing. do things to enhance yourself and your intractability to the job market. i will talk to you afterwards. >> maybe one of you gentlemen can give me assistant. >> my name is samuel martin and i want to thank congresswoman eleanor holmes norton for having this event. i will abbreviate my point. this has been touched upon from the gentleman with dreadlocks and other people. this is about the guys on the corner. the gentleman from the

i wanted tocs, watch this. the younger people are watching the older guys hanging out on a corner. nowadays, when you hang out on the corner, you look across the street and you see the hispanic guy rehabilitating a,. our whole job is to come outside and hang on the corner and go back in and hang on a corner. my question deals with how you break that generational curse? we have all done it. we have all upon on the corner. the majority of us is to get jobs but we don't see that happening on the corner. i see hispanics who cannot speak english who are working and earning a living while our guys are holding up the corner doing nothing but holding the corner of. >> thank you for the question. >> one problem is [unintelligible]

i remember growing up and watching my grandmother and grandfather going to work every day and working 16 hours to make sure we are all right. even though i went astray, i was always taught to work hard. what i have done is to go and show the young brothers and sisters in the street that there is another way and it is never too late. we have a society that makes up excuses. when young people come around me, i showed them a way but i don't give them any excuses. people say your mother and father used drugs so it is more likely for you to use drugs. my mother and father used drugs so i did not use them. those are the examples i teach the young people. the more brothers and sisters who have made it need to go back to be a village in pulled young brothers and sisters off the street and show them the right way. the more we do that, i don't care what the white man or other man is doing, i know what to keep blaming everyone else for our problems.

we have to grab our baby and start opening up our own stores as starting our own businesses and stop hating on each other. the problem in the black community as we pull each other down. every time one of us makes it, we stop the young brother or sister from getting off the corner. we have to lead by example and start pulling those young brothers and sisters off the street and show them the right way. if we can do that, we can open doors. we can do this. it's possible. that's what the latino brothers and sisters are doing them at exactly. the library has been kind to give us 10 more minutes or so. if we use the time wisely, we can hear from everyone. the congresswoman has the last word of the evening. be pointed with your question and we will be appointed with the answer. >> my name is james r. reynolds and i like to thank congresswoman norton for commissioning this group to do

this work. i think of all of you all up there o ton the panel -- all the words you said tonight is truly an inspiration. thank you for what you are doing and please continue to do like you are doing. my question is directed to mr. walters and mr. mitchell. we talk about education for employment but we still as african-americans assert that we are the first fired but the last hired. therefore, how do we still address the issue of income and wealth in our communities if regardless of our education we are still under siege in the workforce. how does the process work and how do we learn to create jobs in our own communities? what is the process? >> i think it has been discussed over and over in this forum that we look around and there are

other folks doing jobs that we don't have a clue how to do. when i grew up, all the guys had hard hats and they came off from work because they were building stuff in washington, d.c. we know how to do the work. these jobs that you are talking about in our community like lance capping and other things and snow removal, those are things we can do easily and readily i tell the guys in my support group that it is a matter of you getting a license and getting a crew together and doing the work those are things that can be done relatively easy. we certainly can't do it. >> dr. walters? >> i don't want you to talk as though we have a choice. we don't have a choice. we have to confront the work force system with a degree of skill that will enable us to do

what we need to do. you're going to run across racism. 35,000 cases of right now are a eeoc. there is racism, obviously. we will have to fight through that in order to get justice. that is still a mandate we have to deal with in the 21st century. we will carry these things we will always carry. we try to get a job, deal with their families and at the same time push back against anybody that is pushing against us. we need the skills necessary to succeed. in other words, is making a way out of no way and we have always that the fact of the matter is, we don't have a choice. >> thank you, dr. walters. >> i want to address the

question basically to -- mr. stark. there is no shortage of jobs in d.c. people with skills to take these jobs, there is no shortage. the basic problem is job training, job training. that will solve our problems. what do we do to adequately youth? group from age 17- 24. how do we get the skills to that group to be able to fill those positions that are readily available in the district?

me add one other thing. i noticed that this is whetherization program which was by the district government, they gave a grant of $3 million to wic to fund a weatheredization program. the total length of time for program, $3 million, is six weeks. if we are going to fund programs that and it seems like the to fund programs like that and what no schools -- and with no skills learned six weeks? >> wait a minute. let's do the second one first. it makes me not when there are

these federal programs that are 30 days, 60 days, 90 days because you are right. they are fake progress. you cannot learn a true trade in 90 days. number 2, in terms of places you can go for job training, i run an institution call xl institute. we are a two-year school. we raise the money. you don't have to pay money. we teach you to read and write and teach you a trade. you can come to us. the lady in the blue shirt has applications. we opened up 200 slots in the fall. our -- there are organizations that are youngsters can go to. at the end of the day, you simply have to have a trade or you are kidding yourself. you are right. you are absolutely right. there are organizations where you can go get them off >> before we close -- >> i may two-year graduate

from the university of michigan currently working at a bar glen oak, maryland. >> we will be through in five minutes. >> the point about understanding the dynamics of a job hunting -- do you believe the apply for anything and everything that it? i get hounded possibly to apply for anything i say in the washington post career builder. why apply to be a nurse when i went to school for engineering? certain jobs i see out there i have the potential to do but -- i just lost my point. >> i get it. i passed the bar in 2002 and 2005 of was working at bed,

bath, and beyond and a law degree because i had to pay the bills. that was until i found my next job. do which you've got to do. this is so you can do better. there is no shame in that. get that job and define the job and you keep building on that. that is the way it works now. >> thank you. >> good evening, everyone. this is addressed to the young man that just spoke. you spoke about the man in the box. what are the necessary steps to get an employer accept an employee? you said $5,000 bond, $10,000 bond is even better. what can one do to get that employer to accept the employee so it can be raised from $5,000

to $10,000? >> employers have various hiring policies across the board and we need standardization. some employers will take people who have been home for two months and some for two years. there's a bond program that provides a $5,000 bond. sometimes that is not adequate. the city of philadelphia has a $10,000 bond that has been more productive that was the context of that discussion. maybe we need to increase our bond and have a city bond that matches the federal bond as well. >> what does one do to get this done? is that a law that has to be imposed? >> do what you are doing now. you need to be present and accounted for in city council hearings and lobby your city council, the mayor, the city

council and all the folks involved in this business of employing people with criminal histories. >> i want to speak in reference to ms.norton. i appreciate your coming out this evening. i know she has been very dedicated to our people and i love her very much. to the young man and a blue shirt and blue jacket, i think you have the best deal to offer people who need jobs by training. thank you very much. >> we thank you very much a [applause] know about you, my friends, but i have to tell you that i have spent my life in hearings and panels and i can tell you that most of them i don't learn anything. tonight, i learn somethin. by sitting here and listening to the testimony and the the commission. i learn something from

commissioner isaacs. i learned something from a commissionbyron and commissioner dickerson, and commissioner and i certainly learned something from our expert witnesses, dr. ron walters, michael johns, and rodney mitchell. what we heard tonight was the whole package. you got advice that was extraordinarily valuable here this evening. you heard from experts who gave us facts and figures we needed to have to process of the difficulties of black man at the bottom of the pile in america today and what we can do to help them rise up.

from our commissioners and from our witnesses, we heard a real life experience to take home to mull over, to inspire the fact that you have sat here for 2.5 hours tells me that you must have been as moved as i was by the witnesses and by the commissioners. i hope you will give them a very big round of applause as i say good night and thank you to all of you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> a fromfp news, and number of americans filing for jobless benefits rose to the highest level in six months ending to a u.s. recovery concerns. initial claims were well above economists' expectations of 465,000, climbing by 2000. that was in the week of august 7 from the previous week. this from the associated press this afternoon -- senate majority whip dick durbin of illinois has had a stomach tumor removed and is recovering at the university of chicago medical center. his office says a surgeon removed a small tumor and for the treatment is not expected and he should resume a full schedule as soon as next week. he is 65 and is second to senator harry reid in the senate leadership ranks.

up next, government growth in today's political system as outlined in the new "vanity fair" article we are joined by the writer of the peace. "washington journal" continues. host: todd purdum is our next guest and if you watch political television you probably have seen him around. guest: over exposed. but as a monthly magazine writer you have to take opportunities as you find them. host: what we are talking about is the september issue of vanity fair. "washington, we have a problem."

we are going to talk about all of that and more in the discussion. how did this come about? guest: my editor, longtime managing editor, we have been talking for months on how to get the question that vice- president biden said last winter -- is washington broken? we thought if we just looked at a single day at the life of the presidency and spun out to talk about various problems, the impatience of the public, you probably create a pretty good portrait on an average day. my own members having covered the clinton white house a few years ago, my feeling of the pace of working in and covering the white house today is so much faster, causes so many more problems, that i cannot imagine doing it. that is worth taking a look at. host: we pulled two quotes,

picking up on the comment you just made. modern presidency has become a job of such gargantuan size, speed, and complexity as to be all but unrecognizable to most of the previous chief executives. host: would you elaborate a little bit more? guest: people point out to me that fdr was present on the eve of world war ii, six people with the title president and after the war he had about a dozen and they would meet in a semicircle. now there are more than 100 people in the white house that has some form of the word assistant in their title. because the responsibilities of the executive-branch have grown so enormously, it is very hard

for any entity -- you know, the west wing is much smaller than the typical corporate law office. it is action is very intimate place. not that much room to do the work and people are crowded one on top of the other. i think the gulf between the task that any modern president has -- by the way, this article could be equally written about present bush -- the gulf between the task at hand and resources are enormous. host: i want to reference two books that a been around for a while. a longtime reporter from "the los angeles times" wrote a number of years ago. it was a study of the throughout history how president our first flummoxed by the technology gebbie -- going back to telegraphs, newspaper, radio, and then learning how to master it and use it to the own and manage. a similar book written about

president lincoln, calling it "mr. lee and's email," about how the telegraph flummoxed lincoln because the generals were communicating absent him and he goes to the telegraph and started using it. guest: reading it and having sort of the first line of intelligence. host: my background. here is the second -- "when could also ask, even if washington is broken, is still partly usable? is there a way to play the washington game on its own of the terms and even play in ferociously because you have to, and yet transcend the game in some fundamental way?" the disruptive technology of the internet and twitter and and listen lobbying. guest: i think it is a very good point. this white house is clearly not operating out of some ivory tower or candlelight age.

they are pitching in all of these new media. the white house has a very active blog of their own. they did not wait 24 or 36 hours to have an op ed piece. if something happened that they did not like, they put it on their own white house block. they produce a video, produced news pieces that effectively compete with broadcast news and cable news outlets, versions of event. one of the complaints about journalists at the white house is the white house does not give as much access president of the past have given to news photographers but instead have a very capable and even brilliant staff, and they often release official white house goes to the news media. they are playing very hard, and i think by the light of some reporters, they are playing hard ball on it be questions. that is an interesting commentary on the way that they are, in fact, trying to exploit the new media as well.

host: a call from savannah. this is bobby calling on the republican line. you are on the air. caller: good morning, how are you doing? what to talk about the way the government is broken and carry over from some of the military that you just spoke about with the other guests. i have been in the military 31 years and i have been civil service full time of the military for over 30 years and i have been a taxpayer the entire time and one thing that bothered me is for most of my career i had to listen to the public's negative feelings about how the u.s. spends -- for instance, you heard about the $200 hammers, $500 toilet seats that our military spends -- that they spend too much. well, at the same time, i am highly involved in buying parts and supplies for military weapons systems. and we are forced and told to use minority contractors and female contractors and women- owned businesses. there have been numerous times i

could about the part that i needed that was the best fit but was diverted into other directions. anyway, i call it government overhead -- like any business, there is overhead. but part of our overhead is we use one service or one business or one aspect of government to fund others. what i think they should do and what i always said they should do -- because i have been a taxpayer of 31 years -- i wish they would let us work more efficiently. i wish they would let us buy the parts of the best place for the best price, and then -- so that people know where money is going. host: i want to wrap his comments into your discussion about the sheer growth and size of responsibility. here is a tweet on the topic as well. does washington control to much?

is, yes, inquestion fact this successive administrations, more and more is on a plate of the present but should there be a debate in the country going on about the sheer size of washington? guest: i think that debate has been going on for 30 years when president reagan came into the office saying government is not the solution to the problems, government is the problem. as you obviously know, republican candidates are talking a lot about how we should shrink the size and mission of government and get back to basic constitutional principles, and why is the government and all these things. he raises an interesting point about complex multifaceted priorities. on the one hand, to get the best goods at the cheapest price to the job and the other, to promote social justice through a notion of minority and women contract.

that has been a longstanding priorities of republican and democratic administrations to one degree or the other. it is a constant trade off. i think one of the problems when the government is so complex it is measuring the trade up, and in some sense, even being able to see them and understand them. so many things are built into the pie that the public it is not aware of the choices effectively being made because the choices are being cremate. it is the kind of evolution -- a line host: the kind of evolution -- they went through it in demise. guest: there has been a big debate. there was a book "are we rolm" about whether we are fat and sloppy and off our game. i think one thing that happens to any mature society is a certain kind of arterial scotia

in -- sclerosis. it is a hardening of arteries. we take for granted what our forefathers fought to take advantage of. this is not a new theme, but many ways, we are spoiled by the freedoms we have. we have low voter turnout, all these kinds of things that are signs. host: you are on the air with todd purdum. gary, independent line. caller: i think the major problem with our government is the corruption. i would like to bring up something here, with the financial reform. senator mark lee and levin put a roll in, known as but volcker role, that would have put a fire wall between investment houses and commercial banking. one of the key sanction -- sections was a ban on proprietary trading, gambling

for profit. there was a link and roll. one of the key sections there was giving gambling with dangers and to mislike credit defaults swaps. then we had a senator who -- and of being named after, mr. chris dodd -- the money he takes, as far as the lobbying, working behind the scenes to take any teeth out of that bill. to kill it. the senators and his own party debate maria cantwell -- they set up a watch on him so he could not put a substitute in. one democratic senator, congressman, him and geithner and schumer and the rest of those crooks -- that is the problem. that is why the american people don't trust our government.

host: you have given us a lot to work with. i want to use this as a jumping off point for part of the piece that looks at congress and influence of lobbying. the magazine blew out this quote. lobbying industry is the true fourth branch of government. guest: the logging industry spent $3.5 billion -- lobbying industry spent about $3.5 billion. it is really a record. it has been steadily growing over the past 30 or 40 years. just one small index. it amounts to something over a million dollars for every hour that congress was in session. the single largest lobbing into the was the chamber of congress that spend something like $130 million, which is more than the combined payroll of all 535 members of congress. so, the gap between the amount

being spent by those doing that influencing and am now available to those being influenced is still out wildly disproportionate. host: michael, republican line, from queens. caller: i watch your show every morning to get ideas about what is going on in the country. washington is broke, corrupt, and the kind of change that barack obama is bringing to this country, we don't need. he wants to bring america to the european system. this is the united states. we have a constitution that protects our government from us. what is next? would he tell us what kind of clothes to wear? it is crazy. michelle obama was saying, i am ashamed of my country. i ashamed of my country for what they are doing to it. we have veterans who are fighting for us, our freedoms, and they are tried to take them away. change? i see the change.

a european system. cannot join unless they get rid of our constitution and bankrupt the country and that is what they are trying to do. where in guest: where in queens? i was on a radio interview with someone from the british broadcasting corporation in england and he said he was puzzled with this line of criticism because people in england thought he was to the right of the new prime minister -- european style. it was applicable. i think anytime somebody comes into office and makes a change and president obama wasn't shy about wanting to do it.

they subject themselves to a lot of controversial. i think it's pretty clear that in historical terms president obama is in the broad mainstream of american life and he's not really trying to do anything that presidents of both parties to one degree other other has tried to do before. what his problem is he's counting on government to do big things, whether it's financial regulatory reform at a time when the public simply doesn't trust government very much, doesn't trust institutions. and i think that's really his biggest problem. host: started off the program showing peter hart's new survey , "grim voter mood turns grimmer." you know, ratings for congress is somewhat historic lows for as long as some pollsters have been registering them. let me use that to get into your section about the partisan divide in congress. what are your takes, what did you learn, what are your

observations of working across party lines in d.c.? guest: well, when thing that's happened steadily is structurally. since the civil rights and vietnam era, the composition of the parties has changed. the republican party used to be divided between midwestern conservatives, northern liberals. democratic is southern conservatives and urban liberals and moderates. those wings have disappeared. there are no moderate republicans and there really aren't conservative democrats. they don't have any structural interest in cooperating. 40, 50 years ago congress was in session up to nine years. their families were here. they socialized with each other and they knew each other.

ron who died was very close friends with the house republican leader bob michael of illinois and they used to drive back to illinois -- host: you write that the lively of congressional discourse has gone steadily downhill since 1789. guest: the truth is in, you know, discourse off the floor of congress, members are quite nasty to each other these days. host: we'll come back and talk about the filibuster which you write about. jean, republican line. caller: washington is not listening to the ordinary, everyday jews out there and they are stuck in their own bubble. and they are -- they are out of

touch with what's happening in the rest of the country. you guys have been plagued by john mccain on this c-17 issue is one example. he doesn't want any money going into that air force program. he puts this out and you guys keep talking about talking about it. those c-17 are the workhorse of the two wars that we were involved in and they are getting beat up and they have to be replaced and fixed and we just have the first one crash and it's probably from lack of maintenance. and you're putting my son, his -- is on the c-17 crew in jeopardy if you don't maintain them. and this president, he wants to be bipartisan, and he hasn't been bipartisan from day one. that's what's wrong with washington.

host: thanks very much. guest: well, i was puzzled about the whole announcement involving the c-17 because these are the workhorses of the military in terms of transport. i wonder do they have enough, what will they do? i guess secretary gates will cut someplace and presumably that was one that he judged as expendable. i do think it's wrong to say that president obama hasn't tried to be bipartisan. i think from the very beginning he did try to be. he certainly thought there would be more bipartisanship upon his taking office. republicans say when the bill got passed, their ideas weren't listened to. but i think at important levels president obama has personally tried to reach out. he feels that -- just reporting his perspective, he feels that he's been snubbed. this is objective fact. the republicans have not given support to any degree for the most important priorities. host: let's show this to our

audience who didn't have a chance to watch and get your reaction. >> talked about washington being broken. he talked about the president's effort to transcend politics in washington. and reporting is subjecting that the president made a concerted effort to reach out to republicans early on. i got to tell you, this administration hasn't sought to transcend the politics of washington, d.c. this has been the my way or the highway administration from the stimulus bill forward, democrats on capitol hill and in this administration have slammed the door on republican ideas, have slammed the door on bipartisan proposals, and, you know -- and, again, i just saw on your program again this morning, the president saying even though we handed the president a book of republican solutions in february at our retreat and he acknowledged that we offered policy alternatives to stimulus, to budget, to energy, to health care, the president is back to that old saw that republicans have no ideas.

i think that's the reason that his approval rating is plummeting. host: what was your reaction? guest: i thought that congressman pence is very smart and good legislator. he was really saying the only thing wrong with washington is president obama who is doing everything we don't like. but the truth is the obama administration made a lot of changes and compromises in its most important proposals including removing the public option from health care, in cap and trade. it's -- i mean, in the energy legislation, it's backed away from cap and trade. so he has done things to try to get republican votes. he just hasn't been very successful in getting them. host: next call is from corbin, kentucky. this is robert from the ind line. good morning. caller: thanks for taking my call. my question is, is it possible that government -- washington isn't broke -- is not broken and that what we're seeing is just a met more if i cisfrom --

metamorphisis -- and a lot of accomplishments has occurred and that the interchange between those who don't want to move forward in that new role, which will obviously take sometime, and those who maybe are pushing forward with the free trade agreement and other aspects of that? thank you. guest: well, i think robert raised an interesting point. for the past two i think we have been in transition from an old style of industrial economy and that is a stressful time. given the problems with our educational susan, there is a real challenge to make sure that our work force is up and ready for the jobs that will be there. and part of what you see in washington is that debate played out and those kinds of fights that have been around the world come to washington every day so i thinking makes a fair point

host: the next call is from delores. good morning. caller: we need our defense build up. we need our borders protected. thethey're also breaking up middle class in america and it is making us very nervous. general motors now, or government voters, that is not the government's place. -- general motors now, or government motors, that is not the government's place. thank you and have a good day. host: the question that comes out for me is how much of this is just tough for governing in

times of an economic crisis than in boone times? guest: id that is a very good point. -- i think that is a very good point. it is more difficult. i know john mccain feels this and other congressmen have made this point the of the day is that republicans got very sloppy about controlling spending. yes, they cut taxes, but the under president bush. i think both parties have been years bonds " with current finances. host: thomas, go ahead. caller: all these people accusing obama of being a dictatorial tyrant, where were they during the bush years when he declared that he had the

right to ignore those he did not agree with, and in fact, he did. he was struck down three times by the supreme court over the way he was treating the detainees in guantanamo. why do we hear all of these tea baggers andve decker' others, about this? guest: one of the realities in politics is that we have such a few -- we have such a short memory. there is not a kind of consistency and institutional memory that would help us sort through some of these criticisms in a more useful way. host: next call is from jim. what good morning, jim.

caller: [unintelligible] c-span won't even address that issue. host: to get his point of view, he is worried about neocons influence on policy and general patraeus's upcoming speech. guest: i do not think general patraeus is going to be the kind of person who will be unduly sway by either party. -- unduly swayed by either party. i think both parties agree that if anyone has to be doing this job, general patraeus is the man to do it. host: it is interesting this week because of robert gibson's comments about the left -- robert gibson's comments about

the left. he talked a little bit about this from the podium. >> do you regret any of what you said to the hilt? >> i will say i think there are many times when i read the transcripts even of answers i give in here that i could have said things slightly differently. i will say, you know, i watch a lot of cable tv and you do not have to watch a lot of it to get frustrated by some of what is said. i think that is what that answer host: there is a lot to pick apart there. let's start with this daily press briefing and what it is about. guest: i have to say that 15 years ago i used to go there and say, i'm not going to ask a question and mike mcguire woods is something that struck me as

not particularly right and then you end up in a 45 minute conversation. it has kind of evolved into a debate in society. it is not just that they need to have the sound and the pictures in directing with them. i think robert in many ways has a very hard job and i'm sure he gets frustrated by it. i think most democratic president get liberated by the most liberal base in the same way that most republican partisans get frustrated -- most republican presidents get frustrated by their most conservative base. it must be said, for all of the callers who have said that obama is taking us towards socialism or wherever, president obama has not received unstinting support from the most durable -- and

most liberal elements of his party. host: you participate in the daily political talk. guest: just as it were that obama participated in crazy game, too. one thing that has not changed in the past 20 years in washington is that there is much ating going on. we used to say that we have news in the 80 -- in the '80s and '90s, when there really was a lot more updating. now we have discussion about what the president does and what it means and what he will do next.

guest: the thing about twitter is that it is always a little bit like a haiku. host: someone earlier treated us , themr. lincoln's e-mails original twitter user. up next is greg. is washington brooke and beyond repair? caller: good morning, how are you? -- is washington broken beyond repair? caller: good morning, how are you. let's get real. he was a part-time professor at a liberal university. did anybody really believe this country was not going to go to hell in a handbasket when we elected this man? thank you.

guest: that is an interesting call from greg because by many indices, the president is, in fact, succeeding. he is getting done what he said he would do when he took office. you do not have to be a supporter of obama to recognize that he did many things other than standing on a street corner in handing out pamphlets. as abraham lincoln once said and as president obama used to say, he had enough experience to know that what was happening was not necessarily working. host: north carolina, and davis on the air. good morning. caller: i look around congress and i see a lot of these old guys, right now, these old world war ii guys and they do not have

open minds. ,et's say obama is a socialist if socialism would work best for our country, what would be wrong with that? obviously, something is not working. it is not just now. for people to say it started with obama, well, nothing has changed just yet. it takes time to correct where we are right now. host: both of us are in treat the that you as a high-school senior are interested in politics. what inspired you? caller: obama. host: what is next? caller: i will probably join the

reserves, go to university, probably north carolina state. host: will you eventually come to washington? caller: of course. host: thank you for calling us and sharing with us your plans. guest: he makes a good point. although, when you talked about world war ii generation politics, even charlie rangel, who is 80 years old, is a veteran of the korean war. that generation, in terms of service in government, has passed from the scene. dingelldn't mr. service? guest: he may have, but just a

handful. whereas, 20 years ago, there were many. obama was born during the kennedy administration. part of the stress in the criticism of obama is purely a generational question. host: i want to put another quote here on the health care debate. guest: it is sending to think about in this day and age because a lot of what used to happen in washington have been behind in scenes.

-- happened behind the scenes. transparency is the word of the day now. i think a lot of what used to happen in congress could not happen anymore. host: our producer is also reminding us about senator dan and away service in world war ii. guest: good point. host: let's go to theresa, atlanta. caller: good morning. i have some point and i ask that you not cut me off. i do live in the south and i do want to ask about the calculated assault on the white american male worker from this president. we have heard several people saying that contracts are only going to minority workers, will

women -- or women. the white male worker is under assault from this president. i want to get your opinion on that. that is how i feel. guest: of the interesting things about that is that almost all of the president's own senior aides are white males. he gets a lot of criticism for that. as kind of connecting a full employment plan for white democratic political operatives. i think that is just your opinion and i do not have any view on it. as one white male, 50 years old, who has been working for 30 years, i do not feel under assault. but that is as one person. host: next caller from maryland. caller: two people have called

in and said some ridiculous things. the lady that just called from the south, obviously, she is in immediate. she does blamed -- she is an idiot. she is blamed on obama issues for white men. you cannot get anything done. another caller said that he was a pamphlet backhander and what did you expect? president bush was a draft dodger and a drunk and he became president. what we need to do is fire everybody in the senate, everybody in the house, get people in there that have no tenure were you cannot get them out, so they can work and do things. we can get more things done with college graduates taking their place. we can move things along. the problem is we cannot get anything done because people are

blaming it on the republicans, blaming it on the democrats. i do not care about the politics of it. i loved lbj because i watch c- span and i saw the movie. i love the way he did things. you're going to support this legislation or you had to pay for it. host: he is referring to on saturday afternoons we hear the lbj and tapes. guest: as our wonderful tapes to listen to. -- those are wonderful tapes to listen to. there is intense anger in the air can -- and on roger during the round is the way to do it. -- and i am not sure throwing them around as a way to do it. hon host: next call from betty. caller: i would like to hear more news, just straight news,

what is going on. we have fewer journalists who are really journalists. these people are giving their opinion and they are going to the blogs and saying these things. this country shall not be so racist because other countries do that, too. we talk about other people in other countries, but this country, we are divided between colors. we are all americans. i think obama is doing the best to can. i think he really wants to change washington. i think he really is trying to do the best he can and try to go across the aisle. but republicans are going along with this tea party and they are just going crazy. hong guest: that makes at least

one indisputable point, which is that there's a lot more in in journalism that there yesterday. the late senator from new york for many years used to say, everyone is entitled to his own opinion, but not their own facts. i think these days we find that journalists tend to a substitute their own facts. i think we have to find something that we can all agree on and president obama is trying hard to do that, i think. host: the new issue of vanity fair has lady gaga on the cover. is it broken beyond repapair? >> a picture of the u.s. capitol

this afternoon. the senate has sent to president obama a $600 billion border measure to try to prevent drugs coming across the border. congress came back from their summer break to pass a voice vote on the measure today. the house passed the measure in a special session on tuesday. the flag at the capitol is flying at half staff in tribute to alaska senator ted stevens who died earlier this week in a plane crash in alaska. he was 86-years old. the senate also paid tribute to senator stevens today, the longest serving republican in the chamber. also, another senator died of cancer yesterday. his funeral will be held on tuesday in chicago.

on monday, may sect, the u.s. stock market suffered a drop of more than 6000 points in less than half an hour before trading was halted. this hearing looked into the causes of the drop and ways to prevent future missteps. the panel hears now from financial industry experts. this is about three hours, 15 minutes. >> welcome and good morning. i will call to order this third meeting of the advisory committee on emerging regulatory issues. the day is august 11th, 2010. this meeting is held in accordance with the sunshine act. we're joined by all of the members of the advisory committee except for two. i believe susan phillips may be

joining by phone. as we have done an hour prior meetings, my co-chair and i will share the presiding officer duties. first, i would like to allow office certification shapiro the chance to make some opening remarks. .> thank you di as part of the review of market events on may 6th, we are pursuing ticket related courses of inquiry. first, we have been reviewing raw action and order data, a trade summaries, information about broken trade and information related to the initiation of l. r. p. and self- help. the second area of inquiry is focused on extensive interviews with market participants, there firsthand accounts of what

happened on may 6th, and their responses to those events throughout the course of the day. these efforts will culminate in a joint report that will be presented to this committee for its consideration next month. they will be shared with the public as well. we saw input from institutions and individuals who can help us build an understanding of what happened, how it affected market participants, and how we might best avoid future events of this type. at our last advisory committee meeting, representatives of the various exchanges discuss their experiences and their observations of the market on that day. participants also shared their views and opinions regarding liquidity, trading, and the apparent breakdown of the market. today, we will hear panelists describe the impact of may 6th from the perspective of investors, both large and small. we think the perspective is crucial to understanding demands and fostering stronger capital markets.

as you know, the sec has undertaken two immediate policy responses. the first was to work with exchanges to develop new stock by stock rules. these rules, which were approved on june 10th, require exchanges to pause trading of s&p 500 stocks when they experience a 10% change in price over a five minute time. this has been applied on a pilot basis and is the market an opportunity to establish a reasonable market price and resume trading in a fair and timely fashion. in june, we published, and proposals to expand this program to include all stocks in the russell 1000 index as well as 344 specified exchange traded funds. we are currently reviewing comments received on those proposals and hope we will have commission approval of this phase soon.

the second policy response was to work with the exchanges on amending their rules regarding clearly erroneous or trades. fter may 6th, the exchange's needed the authority to break clearly erroneous trades occurred the day. the process that was used to draw that line was neither clear nor transparent to market participants. we have received reports that the lack of clear guidelines for dealing with clearly erroneous transactions, and a lack of transparency surrounding the trend -- surrounding the decision to break certain trades but not others, creating uncertainty for investors and others about how transactions would be handled in the future. the proposed rule changes are designed to address these concerns by setting clear standards for trade and curtailing the discussion of exchanges in the future. these rules were published for comment in june and are now receiving comments.

we are considering whether other steps are appropriate to reduce the risk of destruction and erroneous trades. we're studying the impact of trading protocols at individual exchanges, including the use of trading clauses, price collars and self-help rules. finally, we are exploring other mechanisms that make contribute to a more stable market, such as s straight up and down mechanism. as we continue to explore these it is critical for us to continue to hear a variety of informative years. our guests and committee members today will not only shed more light on may 6th, but provide the knowledgeable perspectives that we need. i want to say thank you again to all of our guests as well as the speakers that have chosen to be here.

>> thank you for co-chairing this meeting. i look forward to us continuing to work together on this issue, as well as vdot/frank and bill. -- dodd/frank bill. this act brings the over-the- counter market under comprehensive regulation. i know that when you're at the sec, you try to do that, but now congress has given the sec the necessary authority. i do look forward to that. our meetings to date have been remarkable. we set up 30 teams.

the sec set up a different set of teams. you all have more work than we do, but some of these teams have met five or six times already, exchange e-mails, and really worked in a cooperative way. we do not always agree, but where we disagree, hopefully we will disagree agreeably. i want to thank you for that of script. the agency's are also working together on the issues around may 6th. the advisory committee and expert panelists we're going to hear from today are critical with regard to this review. i want to thank the staff for all of their hard work and planning this meeting and of course, everything they're doing around may 6th. i want to thank my fellow commissioners.

the market events of may 6th to require continued review. the staffs of the joint agencies put out a report may 18th which was only 12 days after -- i guess with the whole rule writing we will have to have similar deadlines. today's meeting will be part of the ongoing process of building upon the staff reports. i think we're shooting for september, maybe even early september, that the staff will deliver the follow-up report based on the research of the last three months. then we look forward to this expert committee s to come back, and we will hopefully set you a deadline for that too, with your recommendations. whether you are able to do that as soon as a the following month, it will be helpful to get your thoughts on this as well. i look forward to the dialogue

today with the panelists and with the committee members, and i want to thank the staff again. with that, i believe i am supposed to introduce some of our panelists and we will get going. we are pleased to be joined by the panel of witnesses today. this panel will focus on the perspectives of those events from investors. we are joined by a pension fund , individual investors, retail investors, and more. we look forward to hearing from their experiences and comments on may 6th. i believe i am supposed to introduce this group here too, our group. we are honored to be joined in person by six of our committee.

three enormously distinguished economists and professors in finance are here. i am learning finance and economics. i am just a finance guy. mr. brennan used to run the largest mutual-fund complex, that may be your second some days. it depends on how you count. we're deeply honored by having the six of you join us. we might have susan phillips, the former chair of this agency and board of governors director. our witnesses today, head of

u.s. products for black rock, which might now be the largest asset manager, depending on how you count. [laughter] all right, so we will count differently. vice president and editor of american association of individual investors, managing director of a rallying sales and strategy for td america trade, director of global equity trading at invesco, and chief

financial officer of this center. we will now hear from our panelists opening remarks, beginning from the left. >> i am the principal manager and investment firm that manages public mutual funds. thank you for inviting me today to discuss the experience of the events of may 6th. the flash crash occurred in an otherwise well-functioning market. we moved to avoid damage from this event, unfortunately not everyone dead. -- unfortunately, not everyone did. we employ a quantitative methods

in most of our investment strategies. we invest in a wide variety of instruments, including u.s. equities. our holdings last month after years. some turnover every day, but none would be considered high frequency. we do not use market orders. we require -- we rely on liquidity providers to perform essential functions. liquidity is provided by dealer firms, whose ability to provide liquidity rises and falls with the help of the financial system. in the u.s. equities market, liquidity is provided by a broad base of participants. this was brought home to us during the most difficult weeks of the financial crisis. our exchanges performed admirably, from small market makers, to competitors to lead us to a broad base market. we have build safeguards into our trading processes, and have

human oversight of them, important steps for protecting client assets. on may 6th, our trading staff noted early on that the market was potentially disruptive and shut down our equity trading. we avoided trading at a dislocated prices and were able to retain the majority share of portfolio transactions for that day. nevertheless, this revealed a trading ecosystem that needs to be managed. i would like to highlight three issues. first, questions remain about the causes of the plash crash. -- flash crash. we know that there was substantial demand for liquidity of dollars, trade reports that appeared to be erroneous, and liquidity providers who feared they were flying blind without reliable market data. it is easy to see why they felt compelled to withdraw their orders.

meanwhile, others were unaware that the order book was not in order. second, what alternative course could events have taken that day? perhaps the elimination of order books was actually good, as the subsequent trade report screened out for market sellers to stop. without that loud blast, selling might have continued unabated, causing a real crash from which it would've taken much longer to recover. the order book may have acted as a circuit breaker, albeit a very sloppy one. better data, better coordination, and additional rules might have prevented the flash crash. i do not know. i encourage the committee to work with industry participants to explore this. we need to understand what role commanders of liquidity had on

may 6th and to better inform those participants of the large aggregate supply of liquidity. third, the complexities of our trading environment should give us pause for those seeking lightweight and simple solutions. the current circuit breaker pilot program may be a good start, but not all cases might be needed. erroneous trade reports can halt a stock. there is too much potential for substantial abuse. perhaps consideration should be given to a limited bought royal option. -- off-oral auction. -- off-rule option. on those rare occasions when markets are severely disrupted, market making obligations will

mean nothing. market maker obligations come with special privileges, and some markets may need this to encourage liquidity providers, in the ordinary course of business. hear, the suggestion is that privileges will occur for liquidity provisions in extraordinary times. they will not. >> in the managing director at black rock. i greatly appreciate the opportunity to speak with you today about the impact of the flash crashed on investors and the steps we can take to prevent this in the future. as members of this committee know well, widely accepted investment vehicles are available to retailers. there are currently nine and 85 retail products available on the

market that represent 30% of the total volume traded on national exchanges. they've become indefensible -- indispensable tools for a number of trading strategies. retail investors also use them in a wide variety of ways, asset allocation, of course satellite approach, or taxable investing to name a few. with their low cost, transparency, and easy access to a wide range of asset class is, they benefit investors. many investors both retail and institutional have found enormous value in being able to etf's e the price of the atf' during the day. against this backdrop, several conditions converged to affect equities during the half hour of

the flash crash. we know the non-u.s. equities were largely unaffected and generally traded at prices within normal ranges. many holding u.s. agrees did not. in our view, four factors simultaneously contributed to market prices diverging from underlying asset value. first, there was the sudden free fall in equity prices, which preceded the fall in etf prices, and made it difficult to value the underlying assets. second, anxiety over potential trade cancellations caused liquidity providers to fear that normal strategies would be interrupted, which cause them to pull back. third, exchange protocols and order routing rules increased pressures. finally, there was unintended selling because of the losses triggered. these stop-loss orders, which

turned into orders to sell at market prices, were is significantly below trigger points because of the speed of the free fall. due to widespread trade cancellations, there was limited impact. to better understand the effect on financial advisers, we recently commissioned a survey in late june. we commissioned at the flash crash study to learn from financial advisers what they think about the market events that affected individual securities. the survey revealed that the majority of advisers were minimally impacted by the market disruption, and they believe that market structures, such as computer systems and high frequency trading, were the primary drivers of the crash. grouting issues were seen as secondary. as relates to macroeconomic environment, advisers expect the

volatility will either increase or remain at today's level over the next six months. they expect an event will likely occur again, no matter what solutions are adopted. the survey also indicated that most advisers were not impacted by the events of may 6th. the most common cause was the stop-loss order triggered by the flash crash. this happened to about a quarter of the advisers surveyed. regardless of the cost of volatility, advisers identified etf's as the best way to navigate a volatile market, followed by bonds and mutual funds. we believe the reforms should include uniform circuit breakers across all exchanges, making exchange trade era cancellation rules less arbitrary and more

transparent, clearer guidelines for enter market rounding rules, replacing stop-loss orders with stop-loss limit orders, and expanding the role of lead market makers to ensure orderly market function, particularly in times of market reopening. we believe this would represent a strong step to preventing disruptions like the one of may 6th in the future. if we look forward to looking with committee and staff on this important issue. thank you again for the opportunity to speak today. >> i just want to ask if we have all of your statements in writing so that we can put it up on the web. >> in the vice president with

the american institution of individual investors and editor of the a 8 by a -- the aii journal. we focus on giving individual investors education and information about investing. our investors generally hold a college degree or an advanced degree. the majority of them trade on- line through discount brokers. most of them follow a long-term strategy, although some trade a little more actively. many individual investors continue to have questions concerning the may 6th flashed crash. they're unsure about the procedures because the market to be sobol talk. they are concerned -- the market to be so volatile. they're concerned that appropriate steps have not been taken to prevent such missteps in the future. they do not understand how

market-makers could have allowed liquid stocks to fall to a penny per share. most importantly, they're asking what protections are offered to individual investors. from the standpoint of the individual investor, the biggest flash crashedhe was the effect it had on confidence. they're concerned that large price swings could occur again. they're also worried about the possibility of a buy or sell order, especially stock order, not being executed in an orderly fashion. >> thank you very much. >> thank you for the opportunity to speak here today. i am the head of civil equity trading for invesco, and i appreciate the opportunity to speak today about the events of may sect. we are leading global assets management firm.

i will try to be brief in my statement. i have posted a more detailed statement for the record. i will spare you any of the drama, but we believe that the crash that happened was in large measure it the result of flaws and inefficiencies in the current u.s. market structure, specifically the need for updated s circuit breakers. effective and transparent procedures for resolving clearly erroneous trades, a review of the risks and effectiveness of market orders aligned with consistent practices and procedures used by various exchanges, an examination of the responsibilities and obligations of registered and unregistered market makers, and better coordination across all types of markets by needed. removing volatility from the equity market is neither possible nor appropriate,

however, establishing a mechanism related to market structure will help prevent another clash crash. -- flashed crash. we strongly support amendments to the rules related to erroneous executions, breaking erroneous trades, and uniform treatment across exchanges. however, we believe that the whole notion of taking trades off the table is generally detrimental to investor confidence. we would propose, rather, that exchange is clearly define and articulate what constitutes an erroneous trade, and then program their systems to identify these transactions. uncertainty surrounding various trades and the risks associated during the drop of stock prices, likely contributed to

the dramatic decline on may 6th. as was clearly illustrated, there was also a vacuum of liquidity. in this vacuum, there could be an impact on the prices of securities. this vacuum created a massive zero wave of sell orders -- a massive wave of sell orders. subsequently, nasdaq and the other exchanges were affected. this declaration of self-help allow the other exchanges to essentially [unintelligible] thus, various exchanges were determining where to route their orders, and were doing so without consideration. at the same time, liquidity providers were getting out altogether as the "receiving became a less reliable.

-- the quotes they were receiving became less reliable. in some cases, the only available quotes or the sub- quotes of some of the market makers. we have not used these methods for some time. in light of events of may 6th, small market orders have had -- obviously, recently with this triggering of circuit breakers, we recommend exchanges and broker-dealers only accept market orders which have collars on them. we would also recommend similar treatment for stop-loss orders. this would give investors some

level of protection from the impact of market orders in the current environment, and would likely reduce or altogether eliminate small shares triggering a circuit breakers. this provision was put in place many years ago to prevent manuel markets from unnecessarily slowing down trading. it was used at a time when there were very few high-frequency trading firms, and exchanges were done in seconds, not milliseconds. there is a connection between prices in the stock market and activities in the futures market. we suggest an examination of the linkages and interdependence of these markets so that the roles can be more consistent across all types of markets. parol of liquidity providers has taken on more significance as

the sudden absence in liquidity played a critical role in the severe price declines. we suggest increasing obligations surrounding set prices. in addition to traditional market makers, an examination of other liquidity providers, particularly high frequency traders, is warranted. we also believe there are some strategies that could be considered improper or manipulative activity. this highlights the need for the industry to better understand high-frequency traders and the practices of high-frequency trading firms. what is important for the advisory committee to study the impact of many things, we believe a more fundamental consideration is warranted, and that is whether the current

market structure has become too focused on the speed of execution over all other factors. at some point, we believe that speed and price discovery have an interest relationship and that this relationship needs to be well understood. i look forward to answering any questions you might have. >> thank you for the opportunity to participate on this panel. in the managing director of marketing strategy for tedium eric trade. tedium merit trade is based in omaha, -- td ameritrade. td ameritrade is based in alma mater, nebraska. we have pioneered touchdown --

in a lot, nebraska. -- omaha, nebraska. we have pioneered touch stunned trading. -- touchstone trading. as technology rapidly advances, it is ever more important the regulators complete the comprehensive review that they are now undertaking to ensure that our u.s. market structure remains amongst the greatest in the world. it is our intent to prevent -- present these comments on behalf of our 7 million comments, based on interviews that are regularly expressed to us. while the u.s. financial markets have experienced precipitous market declines during a single

day, including the 1987 market crash, when the dow jones dropped 500 eight points, the may 6th the event was in many ways unique, first in the speed of the decline. the market saw a thousand points drop in just 10 minutes. the decline was somewhat random and uneven. there were 90% at temporary declines in some stocks while others were in changed. third, and perhaps most importantly, it appears that the very nature of how the u.s. markets are structured was a contributing factor to the precipitous decline. although the causes may never be completely identified or understood, they appeared to partially lie with the structure of the u.s. markets and the market's increasing dependence on liquidity providers to have no affirmative obligations to maintain a two sided quotes. it is clear that this event has had an impact on investor

psychology and their trust in the market. how do you explain to an investor that a company with market capitalization of $26 billion at $40 per share can seconds later trade at less than a penny. obviously, investors are going to question the fairness of the market. similarly, misgivings faugh exist -- misgivings exist with investors who traded more than 60% away from the market. audio explain to investors that some trade -- how do you explain to investors that some trades were busted while others were not? we may need to adjust the way in which the u.s. markets are currently structured so that

investors can trust that the price displayed to them is valid, so that they have the confidence in the liquidity available, and so that they do not believe the markets are somehow rigged against them. may 6th was a wake-up call, one that requires a comprehensive response. today's panel is just a small part of the appropriate response. it is a response the requires looking across agrees, options and futures markets. requires addressing not only the imposition of circuit breakers, but also must include a review of durrells, access fees, high- frequency trading and naked access. we did the right approach is a combination of the following. first, we agree with the adoption of the circuit breakers as a first good step. this ensures that trading takes up pause during extreme movements.

as anyone resetting a circuit breaker knows, they do little to address the underlying problem. second, there needs to be a way to incentivize market makers tuesday in the market. -- to stay in the market. today's market contain many players who use their liquidity opportunistic lee. applying it when it is in their favor by putting it during times of stress. third, particularly in the equities and options markets, the sec said proceed with all due speed to propose a stage that addresses collocation, flash, and naked access. as to the specific allegation that we telemarketer's contributed to the downturn, i

can tell you from a -- that retell marketer is contributed to the downturn -- retail marketers contributed to the downturn, and tell you that our average trades were the same during the downturn. do not unduly deny retail investors access to the markets a that they enjoy today. i look forward to answering any questions you might have. thank you. >> we appreciate the opportunity to share our perspective on how

the events of may it 6 affected us. we are applicable company with $22 billion in annual revenue. we have 190,000 employees, 30 two thousand of them in the united states, and our market cap is $29 billion. over 70% of our shares are held by institutional investors. just under 20% are owned by current and former employees. of our current employees, 25,000 our shareholders, 62 percent sign of whom are in the united states. -- 62% of whom are in the united states. we understand on may 6th that there was a perfect storm. based on what we have all witnessed in at the market that day and since then, there is every reason to except that this

can happen again. we strongly believe that in times of market stress, all markets should operate under the same circuit breaker rules in order to protect investor and business confidence. we have a unique perspective on the events of may 6th. over a 20 minute time, the price of our stock went from $41.10 to $0.10 and back again. in 6 minutes, our shares fell from $41.10 to $38, as liquidity evaporated in the equity market. this triggered a circuit breaker at the nyse. at that point, the nyse stopped its electronic trading and our stock went into slow mode so

that traders could line up an order of trade. trading was temporarily halted oil traders had the opportunity to execute other exchanges. -- while traders had the opportunity to execute other changes. in a tense second window -- a 10-second window, investors were directed to other exchanges. orders included 19 trades of 100 shares, each trading at $0.10. trades below $16.40 or subsequently busted. none of the canceled trades were on the nyse, where the load trade of the day it was $38. -- low trade of the day it was

at $38. this affected not only thousands upon of -- thousands of investors, the thousands of our employees. 51% of our 32,000 u.s. employees participate in a stock option plan. after may 6th, many employee shareholders were concerned about why our stock was affected more than other companies. we believe our concerns are consistent with those of retail investors. the staff report on the market events also highlighted trading of our stock that day and has brought further attention to our company. this has had an ongoing adverse effect on historical trading records.

after may 6th, stocks or more than 40% away from where they were before the flash crash were canceled. it is disappointing that the 52 week low for our stock is currently $17. this obviously reflects the malfunctioning of the market- making process on may 6th and not the truth 52 week low. the low point on may 6th was $38.75. we commend the sec for proposing new rules for canceling clearly erroneous trades. we support efficient and fair markets, but they need to be governed by some rules. increased competition with more and better technology has been good for the markets, and has driven down the cost of trading. nine years ago, the substantial

majority of our trades occurred on our primary exchange. today, that is only 45%. the rules need to be modernized, if you will, so that they adapt to how the markets are evolving and continue to work as intended. if we expect today's markets to function well and to keep up with increasingly sophisticated technology, then the rules need to be clear, coordinated, and consistently implemented. if something similar to the may 6th event happened again, investors could be deterred from investing in our company, even though it would have nothing to do with the strength of our underlying business, but instead be due to a market glitch. we therefore urge the sec to adopt the exchanges and proposed rules to expand the circuit breaker pilot be on the s&p 500. expansion of the pilot to increase companies in the russell 1000 would provide

protection to investors in companies such as ours. it would also provide regulators with a proper standard. in the end, while we understand it is good to pilot something with a smaller sample, it does not make sense to perpetuate different rules for different issuers. we firmly believe that changes are needed to impact the limit of market breakdown on shareholders, employees, an investor confidence generally. we urge you to probably expand the pilot to protect investors and increase confidence in the equities trading markets. cross is for inviting me to participate today -- thank you for inviting me to participate today. i welcome any questions you might have. >> we will now turn to our committee members who will do this in an informal way.

>> be taught in your -- you talked in your discussion for the need for collard orders. how would this stop-loss work? i am trying to understand the logistics and the execution. if it went through the caller, it would simply be avoided? -- if it went through the collar, it would simply be voided? >> so much of the liquidity available today is only available in places some orders

do not have access to. small orders, if not carefully government, market orders can have a big impact. what we would propose is that we have market orders that are allowed to continue into the system. what would happen is, any market order would have a reference price as soon as it came in. depending on what would be a reasonable%, i think 3%, it would not execute it was unable to find a price within that price range. this is something that has worked in various forums on other exchanges, and i think has been very beneficial. this would also have the of getting rid of the nefarious problem that has erupted in the last couple of weeks, which is circuit breaker halts on stocks

like cisco and citibank, that have no business being halted for such small share amounts. >> this is an issue i am particularly interested in. if the committee could pursue this way to have a calming effect on the markets, i would like to get some thoughts from the committee on this issue, particularly over the next couple of weeks. i think it would be very helpful to us. >> i think that chris might be miles away in terms of this issue. do you think that collared

market orders would work for retail investors? >> we are talking about stop orders and market orders. let me take the stop order issue first and talk a little bit about that. we offer a type of order through our technology that is called a trade trigger. it allows the investor to set a stop-loss limit price that will track the underlying price of the security. once the trigger event hits and then that order goes into the market as a stop. i think this is an interesting idea. i like a lot of aspects of it. the problem with some of the stops and market orders, by just eliminating those in the totality of the marketplace would have an adverse effect on retail investors.

retail investors really invest in the market at two points in time. one, right when the market opens. ironically, the circuit breakers do not start until 45 minutes later. why did they invest right in the morning? because they work all day. they go home, eat dinner, feed the kids, then sit down and look at their investment portfolio. we see an awful lot of that. 10%-15% of our trading day occurs at 9:30 a.m., even though the circuit breakers do not go into effect until 9:45 a.m. they want to protect the downside of their security. if there are callers in place and they happen to miss that

caller event, it is not going to be a very happy retail investor at all. . .

this is also for eccentric as well.

there are rules that affect price limit orders into the market so we have certain parameters in our system so that would need to be restructured. the one problem that you have is that what happens if that investor loses? that is where we need to take a look at the structure of the market, the liquidity in the marketplace and in times of stress. incomthe market went down, theye very similar. they need to go down in an orderly fashion. in 2008, when the market started to decline, that was pretty ordered.

what happened on may 6th was unique and different and that is the problem that you need to fix. >> clearly it would be nice to get something in place. when we did our survey, over 60% of advisers said they would use the stop-loss orders. i was in front of a group of advisers and we talked about this.

they would have been upset if they had stop-loss orders in place that had gone through the caller, they did not get executed because the market was moving so quickly. i don't think that this is something we should ignore. this is part of the larger issue because of the interlink to defense coming together. we should try to solve the bigger problem. >> to that point, i a think that you actually suggested what could be on alternative. >> if you look consent with a

single tray stripping beyond the levels, -- addresses that and not allowing trades in any market. secondly, it does not require so you did not will the market up and dow. stop-loss orders do not strip past the limit and they provide a chance to react to those losses before they trade again. the downside and maybe i can address this, but certainly to everyone, the down side of the

limits in a fragmented market is their only in a form in some ways. the our uniform as to when the market place starts up. there is always the potential you can have a single trade but still have serious pressure in the use the opportunity to have the option. you also results in one market starting up in a different time. is this a fair reflection? the thing that is a better solution? >> the public might not know what is a willing limit. >> and will try to save briefly

what to suggest. >> it is very articulate. >> this is always a miracle. >> you have separate breakers and a -- type arrangement or you go to this limit. what you would mean is that is not get any point in time would have a percentage that it would be allowed to trade up or down. that can trade down and that limit price. it has a opportunity to trade above that price. all of the investors would consider what happened. the two minute halt would end

and then the stock would go beyond the first limit price. you think that it would be a second limit price that would be appropriate. >> would you have the listed market reopens stock or would they try to reopen the stock? >> the devil is in the details. i would personally prefer that it would be coordinated, like the nasdaq and multiple players putting indications in. that makes more sense, you get buyers and sellers together and you don't get these dislocations. this gets to the issue of some of the problems that we have today, the blood to in their own thing and when you get to that, even if you come up with sensible solutions, and beneficial outcome which we think could happen, will not. >> the cynics say there are 40

trading menus, not for someone who trades through your company. do think that that can occur in dark pools and other trading thing used to actually make the net effect that you want out of that limit up or down? that has been one of the reactions because this is easy to do in the changes. >> most institutions would take the opportunity to make sure hot that they were in the right thing you to ensure that they are protected as that stock reopened or to source liquidity to where it was appropriately sorest. it keeps feeding back to the root issue, we have a very fragmented market. we're doing their own things and to the extent that that is not

that it will unaided, this will be difficult to fix. it generally, we would begin a supportive as an industry. many of these dislocations are happening. >> of the band has been working very effectively with the strategy. halting and stopping trading is always a bad idea because of the devil and the details of the process. i said this in my speech that the circuit breaker rules do not come until 9:45.

the average opening, all stocks are usually open until the 9:00. this is an ironic situation. with the circuit breakers, the problems that we have had with those have been in the reopening process. if you look at citigroup, is restricted on an erroneous trade. what occurred after that was not equal. this was an issue that caused this to go into a regular trading session that should have been extended. a lot of the reopening process tends to be difficult.

there is not a lot of transparency. if you are a retail investor looking into how close, it does not say that the stock is in a halt. that is confusing for the investor. when you get into some of the trading band issues, you start harmonizing across the different products and agencies, you can also tie this into a lot of the etf products which had a lot of the erroneous issues. that is my thought on the direction we would like to see. >> from our perspective, we are deeply concerned about the

reopening of the securities. closing is only part of the story. when we think about the role of the lead market makers. there is someone regulating the activity happening on the exchanges. when we look at the obligations with incentives and these kind of players, looking at things making the lead market maker response over -- responsible, this is the other side of the obligations that they might have to step into to be the lead market makers. looking at those issues is pretty important. >> to that point and the broader

issue since there was a difference of opinion suggested by a number of panelists on the market, start on one side, mr. mendelson, you thought that obligations of any sort would never solve anything and no one has ever seen an obligation for someone going off of a cliff in a steep downturn. where there was incentive, people were in net long and during those days. there are two pieces of market obligations, one is another piece of addressing accenture and addressing quotes and at least requiring a market maker to have a two-sided quote.

does this scheme the incentives? >> no, i think that is probably a different story right now. i don't think that this is helpful. i don't think that a pending bid in the stock, i don't see what economic function and service. >> may be on the other side, i know you both suggested that you favor some and increased incentives and obligations from a market making standpoint. incentives as in what. we have a very fragmented said exchanges that have little pricing power. there is ability to attract.

one market competes on the obligations and provides a significant incentive than that of be the new york stock exchange. other she's not to provide that. if there was a few of something more than getting out of the problem and if having a narrow requirements to generally be around the best bid and offered and then requirements to lay of the book, which is what i sort of see, we would probably avoid having sent a relatively small orders, that this change the cost-benefit. what incentives would be there to encourage that? >> well, i will tell you that market makers as a whole lot are very important to us. what they do is that they provide the retail investor consistency in the marketplace. if there is not necessarily

liquidity, that market maker will step up and filled the entirety of the order so that the client got the price they sought in the order. in terms of incentives, there has been a lot of talk about getting rid of some quotes by forcing market makers to get inside of the 10% threshold. the problem that we have seen over the past decade is that there are less and less market makers. a lot of the growth in overall liquidity has been more optimistic. i will be there as a fair weather trader but i will get out if it is limited. in order to counter that and to give incentives in the market, one, i don't think that this committee has the power to do, which would be tax incentives.

that would be very powerful. similar to how in some products come on we have a 60-40 on some products. that is appealing. the second thing is when you take a look at market data, the overall infrastructure, when yo. there is a disconnected some of that data. we don't see a fair allocation of the overall data. that is a very good resource. in our markets to date, the incentivizing is in the ", not the dow.

we provide a lot of incentives to post a limit order. i think that a wonderful job was done of making the markets more electronics. i think the overall market this should be eased. >> there are two ways that you want to look at this. as you look at different types of markets that are being made, the markets work as well.

this can understand what you can sell the etf for. it doesn't work when they get a better affirmation -- information. if you look traditionally at the market making function, market makers have been given some level of advantage. with that advantage, there is an expectation that there was obligation. there are some registered as market makers. the spread mechanism and as we had to the influx of new participants, the ability for

traditional market makers to participate and compete has been severely compromised. what we have today is a group of investors with high-frequency traders who have an advantage and they don't have a commensurate amount of responsibility. is it fair that they have direct access to exchanges with the rest of us. maybe the answer is yes, maybe people can argue the point away. i happen to believe that there are real arguments that can be conferred. everyone should have the same access which would be cqs and co-location would go away.

>> at our firm, we stracke our transaction costs, we have for a long time. but costs have gone down steadily. -- at our firm, we track our transaction costs. there was a group of participants with very significant advantages. the results was that investors paid significant amounts every minute of every trading. when there was a market- disrupting event, this did not help. in 1997, we had a crash. this was not like the '87 crash but we were down about 7.5% in the s&p 500. the market makers for not there to purchase more stock and they will not be now. what we have is we are hoping

that by providing special incentives or publications or preferences for market makers, that they will do something that they were simply not do. they will not stand there and purchase the stock at the wrong price. on an orderly basis, the system today allows us to trend more cheaply in the more stocks than ever before. the market-making functions today are opportunistic, i don't think that this is opportunistic, they'll always the. one participant suggested that obligations that they have to be the 97% of the time. also say with no requirement for obligation, certainly a electronic market makers have been present this year. 99.75% of the time.

150 trading days so far, there is probably 20 minutes where some of them failed. i don't think an obligation when 97% that you have to be there is helpful. >> i was wondering when we talk about incentives for market makers, does it make any sense to think about the is not as -- sometimes, you would like to make an incentive for market makers to stay in the market to fund the. -- to stay in the market. would this have an effect in a temporary market disruption? obviously, this is not going to

stop the prices falling off a cliff but it will stabilize an event potentially like the last crash. >> if you had a large enough incentive that might work but at the time, you are facing enormous risks. if you have an enormous edge, you will be more likely to participate but it might be too big. >> nolan would expect an person an invocation to catch falling ice, that is probably not helpful. hopefully, they are there making fair and efficient markets and this facilitates people for confidence in the market spent them.

-- in the market. i don't think that they should step in and absorb half a trillion dollars. a beast get into that point would be fair and orderly. walking away from it does nothing. nothing good comes out of that. talking about this particular market, standing up and taking one for the team, this is an overall effort to a sugar that are of these pieces of appropriately in place so we don't get something like may 6th. that will happen, we had more than our fair share of this of the past couple of years. not commented we have things happen but also a market that has a plan to the point where it is electronic and is so little

communications and exchange is that this is in a family plan to happen. there is a huge price point drop and the rebound. this clearly tells you that something is wrong. this was not the shock to the system that caused a semi- permanent erosion in the value of the stocks. that is what we are talking about, we are trying to address the every day flow of investments. >> from an incentive perspective, most of the market makers felt there was the right level for risk in the market and that was why they were in there today. the problem is that no one will

take this out of business. but looking at the positive this was really remarkable, 25 percent of the brussels securities dropped 25% in a few seconds. we were talking to the market makers and they were anticipating a 5000 point decline. the market maker is in need or the liberals to operate within. thinking about circuit breakers or restarts, this gives them the confidence on the trade rule. when they are doing trades, they are hedging. no one would like to go into the

overnight holding a long or short position. they will take trades up to 20% in the case that they will be lopsided. there are concerns and that raises other issues. should it be straight cancels or should we believe looking at other values and simply what the futures markets do. what do we facilitate to make the participants be there through thick and thin from a structural perspective. if the structure is right, the business model is there. >> i think your idea is very intriguing and i would like to give it further thought because this will tell you that the retail investor, we get about

10%-15% of our orders overnight. in 1987, we had something that actually worked and the market rebounded after that.

the combination is to go a long way to sue if confidence and fear. >> the isleton limits, now lives in a lot of time -- bill are willing limits, now we have spent a lot of time on the markets. >> of the sun that you think would be better? >> -- are there some that you think would be better? >> there are many thoughts on how to change market structure for the better. there are many things that we

can do to change the structure. one of those is how we incentivize a "today. we have not focused anything on the size. >> to be and unspecific on how you would answer that. >> how i would get liquidity okay, what i said earlier, i think that ways that you can start getting liquidity into the marketplace are through tax incentives, market data, changing the structure of how you provide rebates to limit orders today. i think that those are a couple of important steps we can take to do that. in today's markets, the lender

you expose your hand, the liquidity is gone. if there are processes like that that can help to bring that liquidity into the visible marketplace, that is important. there we will see some of the guard pulled changes in how they market -- some of the dark pool component and how they operate. i don't think this is the only way but this is part of the process. >> it has been proposed that

orders have to have a minimum life span and you could incentivize some market makers to continue to make them by not having the rule will apply to them. if we can think differently about not just the market structure but the market structure as we would like it to be. away trading is done today, some of those limitations might not apply to market makers as a way to give them incentives. >> there is a process in place with a charge for cancellations. cancellations themselves in our market structure, we have a profound amount of orders.

if you take a look at any quote, you can see updates of as many as 60 or 70 in seconds. those are orders followed by cancellation. the irony is that this is taxing the infrastructure of the pipes to get that down to the client. i do think that there are things that can be done so that everyone has to pay their fair share to utilize the infrastructure of the band which that we have. we don't use the largest pieces of the pipes and that seems unfair. things like that, taxing cancellations on a certain basis and forcing people if you're going to put a big "homolka maybe that needs to be there.

-- a quote, maybe that needs to be there. >> as trading velocity has increased, the average contracts, -- we have studied this and you get this data by early september, market makers are really there, there are dozens and dozens but they are staying relatively flat. they are a whole economic model, they are not putting a couple of billion dollars on the line, they are simply not.

in an environment where the average trade sizes way down, the average trade time has come down, all of the orders are sent to you in a second. at normal times, the cost to transact in the futures and securities market has come down. the book offers a spreads have narrowed and that is a tremendous benefit to the american investor in most times. that is just a question. >> mind want to follow up on the mantle of the incentivizing of size. one way to do this would go to price size time which would incentivize size but your retail traders would step behind.

as we think about these rules, how do we get through this? >> priority rules should be looked at this. when you look at the retail investor, the duty of dealing with a lot of market makers is that they understand the importance of taking care of the public. there are things that you can do in that particular instance. there are many things that were done back in need of the dais, when new york trotted these, none of the list that some of the other markets would incentivize the eldest, they would manage the liquidity available so they kind of molecule where you're at a limit will so that when that became available, you will then executed for a we tell them it builders and it was a for the klan to get double protection. if you incentivize the market maker, things like that and because and that is a fairly

intriguing idea to bring science back to the marketplace. >> -- size back to the marketplace. >> nothing could be clearer than to watch ibm trade down in a vacuum and some of the other names that ordinarily would have had significant levels of interest on that book but because of the predatory nature of some of the participants, we have no incentive to post large amounts of liquidity. transaction costs have come down, but could they be lower if the markets were more efficient? are the dimensions of cost that we cannot understand today because we're not sure a lot of the value of the "is prooquote ? these are fundamental issues of what the value of the securities market is. i submit that a more important

effort would be to try to help institutions come to a better understanding of how of our orders directly to the market and to pose them so people can see them. many people are talking about whether or not there should be a trade out rule which would say not only is there a top of book protection but the first one in gets executed. that is reasonable. some say to do the whole book. why should not then be time and price priority? i am not prepared to discuss this yet but need to have this in our arsenal if we are not finding the right mix. make no mistake, if institutions had higher incentives to post limit orders and if there were not these participants jumping in front of us who had no interest in a stock until we

had an interest, we hide in dark pools. there are 5000 a second. what is the value of that enterprise? let's concentrate on some of these things and get back towards the fundamentals which is really creating a market with transparency and posting liquidity is not only incentivize the decrease efficiency. >> -- not only lucentis but also increases efficiency. >> the one time with these issues become very relevant is if you had rules about the rate of decline for stocks, then the question of -- you have fully

and statement of the supply which is manifested and you are restricting the market. at that point, who gets the priority of a film that makes a big deal -- of fulfillment makes a big deal. the greater the market in balance, the greater their prioritization. >> these things that we are talking about right now seem to be more about how the market functions day in and day out, not so much about the crash or

something like that but there's clearly a relation on how the market making activity is done so we don't know whether the flash crash was or a real crash. we don't know. when we talk about things like in vesco not having incentives, that is true. the transaction costs are lower because the trading is like a repeated game where you have to adjust to what other people are doing. others are showing smaller size and trading in smaller lots more frequently. others have to adjust. if you don't, you are disadvantaged.

others have to adjust and change their trading size. it is not clear if this has to do with this. others would have been there. this is exactly related to what happened. confidence in the markets is everything. this is everything. until and unless we get a greater levels of confidence in the market and a better ability for all participants to guarantee a level playing field, we will have these kinds of issues. >> we are not really addressing

these kinds of problems which exist in my mind because of some of the problems that have existed in the high-frequency trading market. we have computer trading going on with their retail investors severely disadvantaged and others were able to trade in an automated fashion. we have programs which are established and are not subject to human intervention. >> if they don't imagine, a real loss of liquidity, we will continue to have these kinds of

things. we have a reasonable understanding with the liquidity providers.

you have this disconnect between what the providers are thinking, some are arguing other way and those who are demanding that are going on their merry way. that is where the imbalances. we have not focused a lot on the other side of the equation. maybe we should. retail has been a significant winner because their trading costs are lower, the commissions are lower, and i'm sure that they would bear this out. on the machines, there are people sitting in front of those

machines and those are the ones who turned them off. there are people sitting there just like in the old world of market makers. >> i am a little bit in between these two groups and we don't want to throw out the good with the badge. if i use something like the etf, it is difficult to say if you're getting the right price. we have trading in different places. we can look into the underlying securities in the etf. for the largest and heaviest traded, the cost of the spread requiring this from the market is inside of that basket because of the activity of all the trading going on. for bette davimany days, there a

difference. how you define a high-frequency trader, i have not heard anyone come up with a single solution. doing things intuitively does not sound like a good idea. however, i do not know. we have to be cognizant that even long-term investors at some 0.1 to sell their securities and you will not find another to sell it to all of the time. -- at some point want to sell their securities. maybe this is a privilege that you give to an elite market maker and not someone else who will throw trades in front of the market makers. maybe you have to say there are three levels of orders with size because anyone can come up 97% and only show 100 shares.

that is the way we have to be thinking about of the behavior of the marketplace to try to negate 20 bad minutes. >> i think between these two firms, i know that you are not over there. one other firm, this is probably 80%. you said something that i don't think that this bears out with some of the facts we have been looking at. you said that these followed. you used different words. after the critical minutes, not just dozens but it got to the point of hundreds which for breaking down early and they were not just small, some of them were the largest and where vanguard's. what do you think it was? why 6, 7 minutes before the dive, there were so many that

were significantly down in the market? >> i would like to see that data because i would not agree with that statement. from what we have looked at the end of the individual securities and the baskets. >> i'm not saying whether the atf posture reflected this, but there were many before the dive. -- the etf's reflected this, there were many before the dive. what is it that you think has a higher proportion of the broken trades? more of them were in the 5-10 minutes. >> i will assert that i did not see and i would be happy to look into any data which shows that they were leading the charge for this.

the pricing put out by the market members is determined by a deep waited value of the securities. as it became more difficult and as they were rapidly dropping, as a contingent in the basket, as they were going off in multiple different locations showing prices across the boards. the confidence level in the derived price was very unclear and the confidence level was falling rapidly and that is where you start to see this step back from the pricing. the closer the etf got, that is the point because of the rapid deceleration of the disconnect between the price of the tf and the -- the etf and the

individual securities. you also have a situation where some of the electronic market makers are not calculating the price. as the market makers stepped away, the opportunistic traders went away. you said that these are a disproportionate number of the council'ancels. the reason that we have seen for that is that once the self-help

provisions kick in, over 90% of the estrange rated funds, their primary listing is on the new york stock exchange. 30%-40% actually execute their. for the lower average volume, this is over 60% of the executions at the most critical juncture of the day, when liquidity was most important and most of the trades would go off, many of that got lost in the closed loop where again there is more sellers than buyers. >> off from exactly the direction you have said with respect to self-help, certainly

any time the primary market and there is a tendency for that to be the deepest book. i have no doubt that we are waiting for the analysis and this is one reason why they were a substantial amount of the councils. -- cancels. the self-help today is essentially driven by the sec and fairly specific standards with the standpoint of an exchange and what we must see in respect to response time. it sounds like you think that some of the calls were too quick or something else should happen. my question would be, how would you change the self-help requirements with respect to a primary market as perhaps another reason to have a pause.

but would be the change that would make sense? >> can i just add on to the question? d you think it is beneficial to have something like lef's in existence? is it then efficient to have different rules? >> the one theory that i have, etf's are very important to retail investors. i will submit that the

calculations for those are not always readily disseminated. my understanding of this would be the price value and the mechanism that allows you to calculate what the value of the etf itself. >> that is not transparent, this is not readily disseminated by the underwriter. we saw this in one of our articles. that is probably partially responsible. getting to the issue of the clearly erroneous, similar to the circuit breakers.

how you should implement the self-help rules, this is not standardized. this is not consistent. that is the same issue. these are not and free exchange these are not every exchange. was that a real price, there was some self-help rules that were called against -- at that particular time. the roles across the exchanges need to be consistent and that is one thing that we have turned dow. -- that is the one thing that we have. that is the most important thing that we could have with the self help change. >> you would like to