hecker. you mentioned that there should and research and development of the light reactor in north korea far before this kedo project. you also mention that it is a completely new design. how do know it is a completely new design and what aspect of this is different from what we have seen in the world? >> the completely new that i mentioned is not the design but the designers. there is a new design team, a younger generation. i asked how young, and they said in their '40's. they were trained universities and have been in the nuclear trade, and they are now going to design this. designs are out there in the world all over. this is a very small version, 25 megawatts instead of a thousand megawatts. this is tiny, tiny, but it is five times bigger than the former electricity they currently have. the interest before was always to get it from somebody else. as late as 2008, february, i spoke with the technical people and actually ask them, do you have your people over at the kedo project, and the answer was no.

the light-water indigenous capability, somewhere they gave up, and they started to actually designer reactor. what we found in the past, they have typically pattern that after someone else's. in terms of the reactor, it was the reactor in the uk. in terms of the reprocessing facility, it was the one in belgium. they built themselves, but they were patterned. interestingly enough, and i have this in my report so i will say it here, he said they are modeled after the p-1's and p- 2's in the netherlands. so, they have some patterns that app -- patterns out there. they modeled them. a study them very carefully and

then they build their own. >> i do not know if this was deliberate or not, but it was hitachi. i think they were delighted to show that they had some sort of japanese support for this. >> at the elevators that run in the hotel are also a bit touchy. -- are also hitachi. >> doctor, i am wondering if you could talk a little bit about how this could complicate the return to negotiations.

north koreans could claim somewhat credibly that they need these subterfuges -- these centrifuges for electricity. what verification process would we want, and what is the value of inspectors? previously if they were there they could keep a close eye on plutonium facility is, but now, because of what is in your report as you have said, and we do not know what is going on in other parts of the country. two years ago, inspectors were allowed to roam around the country. could you talk about how this complicates the entire problem of verification and inspection? >> the biggest problem on verification is that they would not be that facility.

it is very simple with an on- site presence to know whether is leu or heu. it is a matter of having the equipment installed or going around and taking swipes. that would be simple if we got access to the facility periodically and we could say. the complication is, from what we saw, as i said before, i believe they must have moved in from someplace else. they must have had a whole bunch of centrifuges spending somewhere else to be able to do it so quickly. we are not going to find those places without having an some presence in the country, and that is going to be very difficult. i think in terms of looking at the future, it makes the verification issue really difficult.

before, we could assume they do not have an richmond's -- do not have enrichments. but this changes the picture. that is my concern. >> doctor, you've said that the chinese underestimate north korea. i think the same is true of american officials. they are uncertain about north korean enrichment capability is. the issue is the risk of being targeted by a nuclear strike. the theory is they do not care about that because they have many more.

what do you think? >> could you help me out. >> he said that like the chinese, american officials may underestimated north korean capabilities. [inaudible] >> so, the chinese underestimated and i underestimated them on a uranium enrichment based on what we have seen. it turns out that in 2002, the americans may have overestimated what they could do. what one has to do, i have always said, we know the least

amount about the enrichment, and i wish we could get a handle. they give us a handle by a indicting sen. >> all the way in the back, the lady with -- they gave us a handle by inviting us in. >> the lady in the back with her hand up. >> my question is, could this be related at all to secession announcements, in your view? >> mr. carlin. [laughter] >> sure. i am not a fan of single explanation rationale for north korean action. you have to be very careful not to choose the last deadline you have read and assume that is

what is behind -- last headline you have read and assume that is what is behind what the north koreans are doing. the program itself is not related to succession. it could equally be a target of opportunity. they needed to show it to an expert. there are not a lot of experts going to pyongyang. there may be a little bit of a succession thing in there. that is not my top choice. >> now that i have had a chance to think about it, in previous visits, we have always gotten quite a bit of propaganda, state propaganda. the question before was whether

they attributed this a facility to kim jong help, and they never did -- kim jong-il, and they never did. i should point out that i had asked to see the facility. typically, when you arrange your visit, they say, what do you want to see? earlier this year i had asked. i said i wanted an update on the plutonium facility. no one has been there since april, 2009. by the way, and now you have announced that they had been successful in the experimental procedure, i did not know what

that meant, so i said i wanted to visit the uranium enrichment facility. and they took us there. >> far right. hand up. stand up. thank you. >> thank you for putting this on. thank you for the report too. i wanted to get your thoughts on china again, but this time on their export control laws. our assessment is that much of the program that exists in north korea is due in large part to chinese export control laws. how do you stop that? what do you think about that? >> i was at a white house meeting yesterday afternoon, and the officials were congratulating you for that

report as well. >> the report is extremely timely. i actually had it with me in north korea. the chinese connection, from my interface with the chinese technical people, and i have done that since 1994, but particularly since going into north korea, and i do not know if you know, but we go in through beijing. i have frequent-flier miles on air korea. so we talk to the chinese on the way in and the way out, and i am convinced that the north koreans have had no government sponsored help from the chinese in terms of the technical issues. i think the chinese have always been surprised by what i tell them. as far as i know there has only been one chinese technical person that has ever visited the complex, and that was done in september of 2007 when

inspectors from the u.s., china and russia went in after they shut the reactor is down. the chinese were impressed that i was able to keep getting in there. in terms of the connection, i think none. however, there is a complex web, and i think one has to be concerned about private sector interfaces' in china and the transit of those things going into north korea. i would actually turn people to your report, because you lay out the dangers of that. >> you asked that just to get a plug, didn't you? >> i have a question to both gentlemen. doctor, you mentioned that the been moved.

do you feel -- did you feel any military presence during your visit? mr. carlin, it seems to be the most of your interface has been with the foreign policy government. between pepsico depth. brent apparatuses and how -- the difference between the different apparatuses, and how was that involving? >> we have not learned anything significant from the military. after the test, we had some discussions, and one of the interesting lines i will tell you. this was 2006, three weeks after they tested.

probably most of you know that first tested not work so well, but it was a nuclear test. it was only partially successful. a small field -- yield. they said, it worked, and we are filled with pride. then someone pointed out it did not work that well. the general turned to me and said, of all people you doctors should know that it is more difficult to build a small bomb them a big bomb. that is up the only serious interface we have had with the military, although i do find their wording very interesting. they do use the word weapon is with plutonium. this time -- weaponize with plutonium. this time they said they gave it over to the military. certainly, that was there in terms of the statements that they made. >> when we talk to the

safeguard director, we asked what his specific responsibilities were. he described them in terms of safeguarding the materials and program until it is handed over to the military. so when the product, when the material goes to the military, it becomes their problem for safeguarding, not his. >> one more thing. in one of the discussions, i think it was less same discussion, i did point out -- i think it was at that same discussion, i did point out that going to the military had to do with the safety of the country not the ability to deliver somewhere else. >> i want to go back to the possibility that north korea

might have received the new technology, i am talking about the new enrichment facility, from a foreign government. during my interview with mr. karl and he pointed out pakistan and iran -- mr. carlin, he pointed out pakistan and iran. poo would be your candidates for that? what would be the pot -- who would be the candidates for that? what would be the possible time frame that the exchange would have occurred? what you're talking about the timeframe for the exchange with pakistan? with anybody? >> where could it have come from in terms of a foreign government? [inaudible] >> let me recommend the ices report.

they did a very thorough analysis looking back at the connections with pakistan perhaps starting as early as 1993 and moving forward to a round 2001. their interactions with pakistan, but it is much more complicated than that. the aluminum, the steel, we know for a fact that the germans tried to ship aluminum to north korea. that aluminum shipments was intercepted, and that is why we know. there is aluminum that was reputed to have been shipped from russia and got through to north korea. there was some russian involvement. we do not know where they got the steel from, but we have a couple of potential avenues. then they need all of this other fancy equipment. they have a very sophisticated procurement network.

i think that network has been operating for at least the last dozen or 15 years or so. >> thank you. doctor, how much more difficult would it be to restore the 5 megawatt reactor with these new facilities in this location? in that connection, were you aware of any other conversion facilitates -- facilities to facilitate an enrichment program or egg light-water program in pyongyang? >> i am not sure i understand. how much more difficult could it be? could we start the 5 megawatt reactor?

first of all, we were told in no uncertain terms by the chief engineer that runs that reactor that the reactor is installed and they are maintaining it. when i said, you know, there are a lot of people in the west to say you cannot get it restarted, he chuckled and said, that is what they said in 2003 also and we started it. he made a convincing case that they could restarted, but the restarting will need a cooling tower, but that is reasonably simple. in six months they could build a cooling tower. the second thing, which is more difficult, they need more fuel. but it turns up that they have released one load of fuel rods. i have seen those fuel rods in storage. i asked to see them again and they said we do not have time.

but he assured me that the fuel rods are still there. those fuel rods cannot be put right into the reactor because two thousand are ready but the reactor has 8000. they have to take the fuel rods and clad them. it needs an alloy clad, which they know how to make. the building, the magnesium alloy cladding, that building is, as far as we know, still operable. i would have to assume that they can clad those fuel rods as long as they have them, and that they can restart the reactor, perhaps in six months' time. that is much shorter than they can get n l w are going, which is going to take them some number of years -- get an lwr,

which is going to take some number of years. >> i heard you say that north korea might be interested in fetched. could you comment on that? that they're going to make nuclear weapons is far-fetched. that is a big stretch. there is much else needed for nuclear weapons besides highly enriched uranium. we have no indication they have any of that, and it takes nuclear testing. so, there is just no indication of that.

you also need highly enriched uranium, but that is a small piece of taking the big step from a fission bomb to a hydrogen bomb. that is what i meant to say. >> gentleman in the back, a blue shirt, blue tie. >> thank you. quick question. did they say anything about their uranium fluoride production? >> i spare you all of those details. i have more visuals and all of the rest of it. it is a very interesting story, so i will put on my professor at. for the gas graphite reactor,

you on in the uranium tetrafluoride. you take that comment any reduce it to metal and you are done. that is what you put in the reactor. to enrich, you have to change the tetrafluoride to hexafluoride. that just means it needs new flooring. -- it needs more florine. there is no question in my mind that the north koreans can do that and could have done it at any time in the past. however, the hexafluoride that the libyans bought the pakastani claim they got from north korea. i think there is a good likelihood of that. i asked them, first of all, where did you make the tetrafluoride, because the building where the is to make the tetrafluoride, before 1994, had corroded so badly that the interior collapsed and they abandoned it. however, they found a work around by changing the technique to one that is less corrosive. they said that is what they did.

how did you go to hexafluoride? yes, we did that here in pyongyang. i will just briefly mentioned that there are facilities you can see from bugler -- google earth, and some of those may be associated with having that capability. so yes, hyundai claimed to have reestablished -- so yes, they claim to have reestablished uranium hexafluoride. >> last question. >> [unintelligible]

how do see the development of the infrastructure for the material supply? >> for the hall light water reactor? >> and also for enrichment. >> 4 in richmond, they have demonstrated that they can do 2000 -- for enrichment, they have demonstrated that they can do two thousand units. it is not limitless. they are limited by exports. on the light-water reactor, what they have to do first of all is change the type of fuel, as you know.

it is a different manufacturing process. they said, we're going to have problems, but we are getting started. in my own view, they can do that part of that. i am not concerned it will be allowed to do the fuel. but cladding is a different story. they need an alloy that is tricky to make, and i do not know if they have any experience. however, you can use stainless steel. it does not have as good a performance, but they have a lot of experience with stainless steel. they can do the fuel. they have done the enrichment. my biggest concern is about the reactor structure itself and the interface with the regulatory agencies. i have been involved in the nuclear business for a long, long time. when you try to build a nuclear

facility today in this country, the seismic risk that you take and what you have to do to meet the size the criteria are immense. regulatory bodies are extremely important. i do not know how true that is in north korea. >> before we close out, i have a couple of announcements. one, we will have an audio of this available probably within an hour of the event. if you do not get it, let us know quickly. there are about 60 copies of the report available outside. now, we have a little split year. for those of you who would like to follow up with questions for the doctor, it will be available in our library, which is just back. we will get you there. for those of you too would like to talk about the artillery incident occurred in north and south korea, another doctor who

was here and introduced himself as a north korean specialist and i will be available here to answer a few questions or attempt to answer a few questions. so, one final announcement. this is a jam packed today. at 2:00 p.m., we have his book launch. "defiant failed state" -- if you are not washed out and full of north korea, this will be a terrific event at 2:00 p.m. grab a bite to eat and come back. with that, join me in thanking our guests. [applause]

>> more now on north korea. will get the state department reaction on the north korean attack on a south korean island. >> welcomeo the state department. i just wanted to give a brief shout-out before answering any of your questions. we've got four u.s. navy officers from the pentagon public affairs office with us today. i'm not sure what we can teach them over here, but anyway, welcome as well as five interns from senator lugar's office on the hill. so welcome to the state department. see, i knew people would come out of the woodwork. all right. i don't have anything off the top, so i'll take your questions. >> really? absolutely nothing off the top of your head? >> i don't -- >> secretary clinton's schedule this morning? >> do you have a question, matt? >> i understand that she met

with a certain scientist who might have some information that you guys are interested in. >> she did meet with dr. hecker this morning. >> and what did they discuss? >> i'm not going to get into the details. she was obviously briefed on the details of his visit to north korea, and i'll leave it there. >> all right. has she had any other discussions with anyone about the situation in north korea, particularly about the incident overnight? >> well, she's at the white house now, i believe, meeting with national security adviser donilon and secretary gates. that's a regular meeting, but obviously, north korea is going to be something they're going to discuss there. and i believe she will be making some counterpart or calls to some of her counterparts in the region. once we get a fuller readout of that, i'll let you know. >> the usual suspects? >> don't want to say yet. again, once i get a better readout, i'll convey. the usual suspects, but i don't want to -- >> china, south korea, japan? >> once we get a firm list, we'll let you know. >> are you suggesting she might

call someone other than that, like i don't know the botswanan foreign minister to talk about north korea? >> matt, i trust that you'll use your keen foreign affairs intellect to discern who she might call. >> but she hasn't made any calls yet? >> not yet. sure, christophe. >> most [inaudible] think that china is the only country to have some sort of leverage on north korea. so my question is: do you think china is doing enough? do you ask them to do more to help you resolve this? >> well, christophe, i mean, as you know, ambassador bosworth was in beijing today and he's actually on his should be on his way back, or i believe he'll return actually to the united states tomorrow. he had good discussions with the chinese. he gave a readout of his meetings there. i believe he spoke with or met special representative wu dawei as well as the vice foreign minister cui tiankai. obviously, they exchanged views

on recent developments in north korea, both over the weekend the uranium enrichment allegations as well as the exchange of fire overnight. and he gave a readout that said basically that they shared our concerns. we're going to continue to consult with the chinese through the six-party talks. we believe that it's important that we keep a unified and measured approach going forward. go ahead, nicole. >> but given that china's reaction after the cheonan disaster was it fell short of u.s. hopes, are you confident you're going to get the support you need from china, and are you taking any special measures to sort of shore up that support or ask for that support? >> well, i mean, bosworth was just in beijing. i mean, i know that was part of a preplanned trip.

>> i mean, what -- >> but obviously we're consulting closely with the chinese on next steps. and right now we're again, what happened overnight was an unprovoked military attack on both korean military personnel as well as civilians. our condolences go out to those who lost their lives and their families and loved ones. but moving forward, we're going to take a measured and unified approach. we're going to work with china. we're going to work with all our six-party partners on our response. but again, just to stress, it's going to be a measured and unified response. go ahead, in back. >> the spokesman yesterday said a number of times that north korea can't be rewarded for bad behavior, as he put it. particularly with regard to the alleged enrichment plant, is this viewed as part of a pattern in which a threat is revealed and then pulled back on an offer of increased assistance or aid from the outside? do you see this as some kind of pattern? >> well, you're right. it is a pattern, absolutely.

we've seen this story before, and i your question is right on the money. we're not going to buy into this reaction-reward cycle that north korea seeks to perpetuate. >> do you see any linkage between the events early this morning and that enrichment -- >> i don't know. >> mark? >> sure. >> same question in the past. can you trust that north koreans, whatever they had been saying before, that you provide them some kind of aid and all that and they will halt their nuclear weapons program and all that? and second, as far as chinese involvement is concerned, do you believe that whatever north korea is doing, whether it's exchange of fire or finding out the i mean, the south koreans or nuclear, that china is behind, or they are they cannot do without the blessings and the support of the chinese government? >> in answer to your second

question, we are fully engaged with china as a six-party partner and are committed to working with them within that process. on your first question -- i think it was something about being able to trust north korea -- you're right. it's hard. and it makes the six-party process a difficult process. i think ambassador bosworth said as much. but the onus is on north korea. we're going to stay unified with our partners. we're going to consult. we're going to figure out next steps. but north korea, through its actions, continues to isolate itself. >> and finally, as far as this exchange of fire is concerned, how serious it is, or are you getting un involved? >> that's a good question; too early to tell. again, we're consulting with six-party partners. but there may be some involvement at the un. i can't say at this point. go ahead, charlie.

>> ok. >> sorry. charlie. >> you've already answered one part about ambassador bosworth being on the way back. was there any consideration given before he started his return to keeping him in the region or to returning to seoul? >> my understanding is that it was always considered that he would come back before the holidays, but -- you mean keeping him after today's events, you mean? >> after the incident? because of the -- >> you know what, charlie? i'm not aware. i don't believe so. >> admiral mullen's office said that he is in contact with the commanders in the region. has there been any -- >> admiral mullen, did you say? >> yes. >> ok, sorry. >> has there been any negotiations or movement, military movement, to beefing up south korea's defense? >> again, i don't know. i'd refer you to either the korean defense forces or to u.s. forces korea. go ahead, kim. >> what would you like china to do at this stage? >> what would we like china to do? well, i mean, obviously, we're

consulting closely with them. they've got, obviously, a closer relationship with north korea, but they are also part of the six-party process. i think we want to make sure that we are all unified in our approach. and i think that's really, frankly, the best way that we're going to -- by presenting a unified, coherent front to north korea, make them aware of their isolation and -- >> but what is the approach? i mean, at the moment -- i mean, you don't have talks. >> we do not. >> the six-party talks aren't going anywhere. you're not engaging with the north koreans. they're not responding to the pressure. i mean, it seems like a deadlock. and all they're doing is continuing with military provocation. so what are your options? >> well, again, ambassador bosworth said we don't rule out further engagement with north korea, but we want to do it in a unified way. we don't believe in engagement for the sake of engagement, i think, is what he said, and that's very true. and you're right; north korea's

behavior has been very, very bad -- provocative, belligerent -- and again, we're not going to get into -- buy into this cycle of rewarding that kind of behavior. where,n a spot now again, we just feel that by working through the six-party process, by working with our partners, we're going to take a deliberate, slow approach to responding to this latest provocation. go ahead. >> you said that you want to approach negotiations with north korea in a unified way, but aren't you unified now? are you not unified now? i mean, the approach so far -- i mean -- >> well, we had the incident last night, or earlier today. we had the revelations over the weekend. it was an issue, obviously, we're aware of, but these are new revelations. and so we're in a consulting period right now, where we're -- obviously, bosworth dispatched almost immediately to

the region, met with our partners, and is on his way back now. i think i would just say that it's not that we're not unified, but that we're going to be deliberate about our approach to this and it's going to be a consultative process. >> are there significant differences -- >> yeah, go ahead, ben. >> are there significant differences in opinion about how to approach this? >> i haven't been in ambassador bosworth's meetings, and he'll come back and obviously brief relevant people here when he gets back. go ahead. >> so is the u.s. advising against an enormous military response, which the south has sort of threatened if they're provoked any further? >> i'm sorry, is the u.s. advising against? >> against, the south koreans had said, an enormous military

response if they're provoked further? >> i'm not aware of that statement by the south koreans. i think that everybody involved is stunned by the -- by north korea's provocative actions -- i believe the president referred to it as outrageous -- and that we are working, again, within an established framework with our partners so that we have a deliberate approach to this. we're not going to respond willy-nilly. go ahead. >> can you define the security pact between the u.s. and north korea? i mean, does it include the u.s. using any power necessary? >> our commitment to south korea as an ally is steadfast, but i would refer you to the departme of defense for the specifics of our defense agreement. go ahead, kim. >> is it an act of war? >> i saw that the white house spokesman was asked the same question. frankly, kim, parsing out the legal definition of that, it was clearly a provocative, belligerent action. and i just would stop there and say that it -- one that killed korean military personnel and i believe injured civilians. so i can't say from this spot that it was an act of war, but clearly an act of belligerence. >> was it a violation of the

armistice? >> i believe we said that we want them to abide by the terms of the armistice agreement, so -- >> so you're saying it was a violation of the armistice? >> again, i'll leave that for the lawyers to parse out, but it is -- >> the cheonan incident was a violation of the armistice. >> armistice, yeah. >> so is that -- >> again, i think we're evaluating -- >> so if only two people die, maybe it's not as much of a violation as opposed to 46? i'm curious as to why there is such a reluctance to call this what it is, which is a violation of the armistice, if not an act of war. >> again, i am not willing to stand up here and parse this out. i'll just say what it was, which was an unprovoked military attack on south korea. >> what it was was a violation of the armistice. i just don't understand why that isn't in the talking points.

>> again, we want them to abide by the terms of the armistice agreement. if you want to extrapolate from that, you're welcome. >> well, does that mean that at 2:40 whatever this afternoon, local time in korea, they were abiding by the armistice or they weren't abiding by the armistice? i mean, yes, you say you don't want to parse it and it may be semantic, but it actlly has some meaning legally. so that's why -- >> i agree, it does. that's why i don't want -- >> so you're saying that when it's determined -- the u.s. has not determined this is -- >> well, again, i am not going to do that from the podium right now, but what i will say is that it was an unprovoked attack on south korea. go ahead, christophe. >> can i get back on china? china was the only big country who didn't explicitly condemn what happened last night. so what can be the reason for this [inaudible]? >> you'll have to ask the chinese government. frank -- i mean, i don't mean to be glib, but -- >> and it doesn't look that [inaudible] when they don't even condemn it.

>> well, but as ambassador bosworth said, he -- they were in agreement, he was in agreement when he left the meeting with the chinese, that last night's action was destabilizing to the region. but i mean, as for their public statements, really, i'll just have to refer you to them. i can't speak for them. yeah, go ahead. >> isn't the process now -- ambassador bosworth in seoul said it's not a crisis regarding enrichment. and isn't it enrichment? >> regarding enrichment, it's an issue that we've been aware of for some time. this latest information is obviously cause for concern, and as evidenced by the secretary's meeting this morning, we're trying to get all the details and all the facts as we formulate our policy going forward. but it's an issue we've been aware of. it's a serious issue, so -- go ahead. >> yes. what's the u.s. plan in the un security council on the incident? >> yeah, too early to tell. i mean, we're -- right now, we're consulting with our six- party partners, so i don't want to get ahead of the process. yes, sure, go ahead. >> what would be the u.s. position in the wake -- in the

case of a south korean military attack on north korea? >> boy, that's a huge hypothetical. i'm not even going to go there. goyal. >> another subject? >> sure. >> wait, may i -- >> go ahead. >> last week, the -- south korea denounced the u.s. policy calling for peaceful engagement with north korea, calling it a failure. is this another example of that? >> i'm sorry. again, who denounced? >> i'm sorry, the -- >> south korea denounced it. >> right. >> she's talking about north korea, that -- >> correct, that's what -- >> ok, i apologize, laurie. one more time. north korea denounced? >> south korea is denouncing this policy of a peaceful approach toward the north koreans as a failure; the current policy is a failure. >> wait, south korea denounced? >> yeah, last week in a white paper. >> i don't know the white paper. i'll have to look at it, laurie. sorry. >> ok. well, nonetheless, do you think that the current policy just

simply isn't working? is this another example? >> look, it's hard and there have been setbacks, but we're committed to the six-party process, so i'll leave it there. go ahead, goyal. we will hear from sheila bair next on c-span. today, the european union urged the errors garment to approve a budget plan for 2011 in order to get financial assistance from the eu and the international monetary fund. we will hear from ireland's parliament and promised later this hour. then president obama visits the chrysler plant in kokomo, indiana. congress is out this week for the thanksgiving day. when members return on monday, the house will take up censure measure against charlie rangel. both of the house and the senate

will work on the remaining federal spending for this budget year. the senate continues work on food and drug administration oversight of food recalls. the new congress begins next year. members will be sworn in jan. fit. among the more 16 new senators. in delaware, chris coons defeated christine o'donnell. he is a lawyer and former county executive.

now an update on the banking industry's performance in the third quarter of the year. we will hear from officials at the fdic. sheila there is the chairman. the fdic is responsible for insuring up to the tune of $50,000 at most commercial banks. this is 20 minutes. >> hello and welcome. lower provisions and losses are driving bank earnings. industry earnings in the third quarter totaled $13.5 billion. this is a substantial improvement from a year ago, but less than banks reported in either the first two quarters earlier this year. last quarter, almost all -- the proportion of institutions reported positive income rose to the highest level in more than two years.

lower provisions for loan offers were the key factor in driving earnings higher. insured institutions set aside almost $35 billion in provisions in the third quarter. that is $28 billion less than they set aside a year or earlier. the decline in loss provisions corresponds with an improvement in asset quality. as you can see, both net charge- offs and current loan balances decline for the second quarter in a row. the improving outlook has encouraged some institutions to reduce quarterly loan-loss provisions. it resulted in reductions in their total loan-loss reserves. almost 60% of institutions increased their reserves, but the dollar volume of reserve reduction exceeded reserve bills. most large banks had substantial reductions and the magnitude of

the reductions overshadowed the reserving that occurred mainly at smaller banks. as a result, as you can see, the industry's coverage ratio fell slightly, even though current non-loan balances also declined. it is not unusual when troubled loans are declining. we are seeing an improving trend in credit quality. as this chart shows, a troubled loans should remain near historic high levels of the coverage ratio is still low. many institutions came into the recent crisis with inadequate reserve levels and they need to exercise restraint in drawing them down now. at this point in the credit cycle, it is too early for institutions to be reducing reserves without strong evidence of sustainable and improving loan performance. institutions should always air on the side of caution. -- always err on the side of caution. at some point, the industry must begin to grow its revenues and long growth will be an essential ingredient. this shows that the declining

trend in loan balances appears to almost have run its course. total loans and leases held by fdic insured institutions declined by 0.1% in the third quarter. if not for the change in the accounting world that brought securitized loans back onto the bank balance sheets earlier this week, this would have been a small decline in two years. many large banks have had sizable reductions in their loan portfolios of the last couple of years. but in the third quarter, such reductions were notably absent. i hope we are close to seeing genuine increases again. however, surveys show that the demand for loans is increasing. it is in backup -- it is important to keep in mind that some institutions continued to experience distress. almost 19% of institutions were

unprofitable in the third quarter. almost 36% had lower quarter earnings than a year ago. the number of problem institutions continues to rise. 149 institutions have failed this year. they have already exceeded the 2000's -- the 2009 total of 140. but we expected the total assets to be lower than last year's. as we have indicated before, we anticipate fewer failures next year. as the banking industry continues to recover, we also see a positive trend in the deposit insurance fund. the deposit insurance fund balance at the end of september was -$8 billion, compared to - $15.2 billion in the prior quarter. if this -- this balance remains in negative territory. after declining for seven straight quarters, the debt balance has now improved for three quarters in a row.

at the end of the third quarter, our total cash position was just $144 billion, approximately the same as june. while we expect demand on cash to continue, our projections indicate that our current resources are more than enough for anticipated fellers and meeting obligations for banks that have already failed. the industry has come a long way in cleaning a balance sheets, increasing capital, and adjusting to the markets and the economy. but the adjustments are not over. this is no time for complacency. the recently disclosed documentation problems and foreclosures have race problems of the contingent liabilities they might face.

if they are not resolved promptly, the process will slow down and resolving problem mortgages could delay the u.s. housing market. we welcome the federal reserve's stance on dividend buybacks by large bank holding companies. banks should be conservative with regard to the evidence, bonuses, and other payments that could impact capital. as we continue to emerge from this devastating financial crisis, building capital must remain a priority so they can maintain a ready access to funding and continue to help intermediaries. i will take your questions. >> does this mean that it will get easier to get a loan? >> i hope so. i think so. we want prudent and safe and sound loans. yes, i think there has been a lot of bells should repair. the fact that we have not had more significant -- a lot of

balance sheet repair. but the fact that we have not had more significant declines is a significant sign. >> can you explain what you mean by questions about contingent liabilities that they might face? what consequences do you see as possible? >> we have already seen significant public commentary about investor and happiness. obviously, the securitized service loans have warranties that could be impacted by that situation. we do not have all the facts yet, but it is something to be aware of. >> can you explain further? it seems that the fate of large and small banks are still diverging.

the larger banks are doing much better. is that what the -- >> i think the smaller banks are getting healthier sooner. it is not as fast as the larger institutions. commercial real estate continues to weigh on the balance sheets of many of them. the community banks are improving as well. their loan balances have remained more constant. yes, they are little behind the bigger banks, but they are improving, too. >> can you give us another update on -- >> i think it is important to, that is part of the fdic, but

completely autonomous. we represent about $2 billion in potential recoveries. obviously, you are right, we probably will like and more that. there will be many more. if deposit insurance is a very valuable thing to have and it does require herbal hide -- does require high standards, it is important to be able to attract the boards. we tried to be very balanced. even -- and targetted when we bring cases. the criteria is gross negligence. there needs to be clearer violation propagation. when do we do that, we know we are wise to proceed. it could cost taxpayers money which backs the fund. they cordate with the fbi and i would refer you to them related to the aig investigation. thank you very much.

>> 0.1%, the trajectory seems to be going up. how confident are you that that will be positive next quarter? >> these cycles tend to run in

fairly predictable ways. we had the declining commercial loan balances for several consecutive quarters. wednesday the recovery came, it was pre consistent. you have seen, through the regulatory survey, that lending standards have changed. i think loan demand has lagged behind. large companies have gone straight to the market in recent years. they're starting to come back a little bit more to the banks. small businesses have lagged behind somewhat. they are seeing a lot of demand for their products. it has been a slow turnaround, but, once it does take place, then it will be sustained. >> will it be 0.1% again next quarter? >> we do not have a prediction for what it will be next quarter. but history shows that the cycles of contraction are very

sustained. they run their course. and the cycles of expansion are sustained. and they run their course as well. we expect expansion in the once these see if that economy, we see the activity. >> we did see them expand for the first time in three years. it is a capability. they are expanding. >> the chairman talked about the

need to -- "this is the time for complaints and say, the adjustments are not aware." are you giving any guidance to banks about backing off? what are you doing about it? >> this is the major area of focus of our on-site team spir ands. -- teams. they stand right now, it is important to understand that the

improvement can be sustained. and there is certainly good use in the economic environment. not to be too aggressive on pullin gback. >> it is a unique environment. we have a high volume of problem loans out there that have been reserved. it is a slow expansion. if does not reduce unemployment all that much to date. if in that environment, i think they are finding the level going forward. we are asking them to take into account that uncertainty. >> most banks are still increasing their reserves.

it is being driven by the reductions of the large banks. >> have you given any extra guidance to the foreclosure mess? have you given them an additional guidance there and instructions? >> there in the process of doing some on-site evaluations, institutions with a large bist institutions. you mentioned there definitely will be some guidance. >> was there a factor aside from

the strong capital growth? >> no, actually, we indicated a substantial increase. i do not have a list of who they are. we did see capital ratios improving across the board. we did see substantial improvement in the third quarter. >> that is because institutions are not deploying? >> they were adding to their capital. it is through means other than retained earnings. we did see a substantial amount

project. >> it has involve lending restraint for some time. it is involved with dividend earnings and recognizing loan losses. going forward, that is strength for the lending capacity. i think we are in a better position in turns of capital to make loans as it materializes. we see the u.s. trucking fleet a thing older. it'll need a replacement. that is leading to some loan demand now. the industry has improved their balance sheet to meet that demand. >> any of their questions?

thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> they wrapped said the second meeting and set a deadline by the middle of next year to identify which clearinghouses will be subject to federal supervision. it is signed into law by president obama earlier this year to provide oversight for the nation's financial system. from the treasury department, this is 20 minutes.

>> good afternoon. i want to call this back to order. we began our open session now. over the past few months, we have made significant progress toward reforming the financial system both here in the united states and internationally. in the international area, we have established the quality standards which has been affirmed by the leaders of the key 20 -- g 20 countries. it places u.s. firms in a very strong competitive position. we are also moving toward convergence internationally on a consistent and nondiscriminatory

oversight of the derivatives put market. at home, we have begun to build this council into collaboration to be published for implementation reflecting both our shared responsibilities and our individual statutory mandatesin that context, we received thousands and thousands of comments on these two initial request for comments. i want to thank those of you who have taken the time to offer your perspectives. one of the great things about our process in the u.s. is that you will be able to see these regulations in draft before they are finalized. that helps to make sure that the people around this table and in this room are better informed

about how to make sure we are achieving the objectives of along and regulations, making the more practical. the members of this council have made a lot of progress in moving quickly to begin the process of rule-writing and bringing more clarity and certainty to our financial markets. just looking forward, in the next few months, the council will make a set of decisions. there will be very consequential to the reform bill. in january, the council will propose a rule governing designation of non-bank financial institutions. this critical step will help the council to place under heightened oversight all financial institutions, not just banks, that could represent a threat to our financial system. the second priority, in the middle of next year, the responsible agencies will have outlining rules for oversight of derivatives markets, strengthening and bringing

transparency to a part of the financial system the played a very important role in this particular crisis. third, we will work to bring better clarity to the authorities that the law provides for an orderly liquidation of a major financial firm that faces the risk of failure. this authority was absent prior to the crisis. it is designed to help taxpayers from a bearing the cost and limit the risk of collateral damage when firms make mistakes. it is to help produce the moral hazard risk that we all live with in this financial system. fourth, we're working to bring transparency to mortgage disclosure forms and credit card agreements to help protect consumers better and help them make more informed financial decisions. those are a list of core primary items in the coming months. in today's meeting, this open session, we will do three specific things.

first, we will listen to a briefing, an update on work under way to adjust a range of problems in the mortgage documentation for closure process. we will turn to a discussion of designation criteria for financial market utilities and vote on advanced notice of rules making. finally, we have tv a procedural votes that will come to. let me just end by thinking again the work of the members of the council and their staff who have taken on an enormously challenging burden and are doing an excellent job getting this process and putting the reform in place. i compliment them for that. we turn to the mortgage foreclosure process.

i want to turn the floor to the assistant secretary of the treasury and as michael to give us an update on the work of the task force in that area. >> thank you, mr. chairman. on behalf of the foreclosure task force, how would like to give an interim update on status and reviews and the mortgaging system. this would be a normal part of a process to keep the council abreast of material developments in the financial sector. the foreclosure working group has five key objectives, determine the scope of problems, holding the banks accountable for fixing the problems, making sure individuals who have been harmed or given redress and that hah penalties where appropriate for their actions, getting a mortgage servicing industry to do a better job for households and -- household in financial difficulty, and acting in a way to hold firms accountable. there are five tier areas under review. first, foreclosure process,

second, lost mitigation, third, put backs, fourth, securitization trust, and, lastly, disclosures. reviews are ongoing and expects to report back to the council at the january meeting with initial findings. in the interim, let me make a couple of key points. first, we're working to bring clarity and certainty as quickly as we can, but reviews will take time. second, the bulk of the examination work to date focused on the foreclosure process has found widespread and, in our judgment, inexcusable breakdowns in basic controls of the foreclosure process. these problems must be fixed. let me provide a brief overview

of the extent of the reviews. earlier this fall, we formed a foreclosure task force at your request. 11 federal agencies, including the relevant as dog entities and the ftc, the department of housing and the department of urban housing and development, certain law firms and other matters, the working group is also courting closer with the state, the attorney general's, and state bank regulators. the exams are designed to test the inadequacy of bank assessments and make sure that foreclosures are completed in applicable legal requirements and that affidavits and claims are accurate and to determine whether troubled borrowers were a properly -- the scope of work for foreclosure governance is significant. organizational structure and staffing and vendor management, quality control, loan documentation, including

custodial management and foreclosure process is. examiners are conducting interviews of personnel and reviewing samples of individual foreclosure files from every 50 states. examiners are expected to complete on-site field work by the end of the year. once this field work is completed, regulators will aggregate results across institutions to ensure consistency, prepare supervisory letters, and return supervisory actions that may be needed. the regulators will draft a horizontal foreclosure report that identifies the range of industry foreclosure practices and common foreclosure governance and weaknesses that need remediation. they are targeting to complete this work by late january. in addition to reviewing the foreclosure process, there are

ongoing as compliance procedures. separate and apart from the foreclosure and provocation violations, servicers may face risk for originating loans during the height of the boom. origination cutbacks at relatively large scale have been occurring for some time and will likely continue for several years. there have also been concerns raised regarding whether documentation problems exist with respect to loans and securitization trust. regulators have begun to review compliance by servicers, custodians, and trustees with procedures required by servicing agreements, trusting custodial agreement, and related contracts.

in late october, with respect to disclosure, the sec wrote a letter about the related risks and costs. major financial institutions are being reviewed for problems across a wide range of issues, lost mitigation, origination put backs, securitization trust, and disclosure requirements. these reviews are ongoing. the task force will report back to this council at the january meeting. >> thank you, michael. any questions or comments for michael? thank you. we will turn now to the discussion of the advance notice of proposed rulemaking, seeking public input on criteria used to designate market utilities. why is this important? the payments, clearing, and settlement systems of our financial system and the rules that the financial market

utilities play in that system are critical to a well functioning financial system, imposing higher or consistent standards on the financial market utilities being the key piece of building a more resilient, more robust financial system. one of the critical responsibilities of this council is to take the first step towards that by designating systemically important financial market utilities. we will listen to a brief introduction from the treasury's office of financial restitutions. he will be joined to answer questions by three others. lance, give us an introduction to the rule. then we will have a discussion if necessary. >> thank you, mr. chairman. this is the first up in the canceled rulemaking process for designating systemically important financial market utilities.

such firms may concentrate risk as well. title 8 of the dodd-frank act provided the council with authority under such firms. the council shall designate those utilities that the council determined are or are likely to become systemically important. the financial market utilities defined under the statute as any person who manages or operates a multilateral system for the purpose of transferring, clearing among financial institutions or between financial institutions.

the failure destruction to function a financial market utility to increase the significant liquidity problems spreading among financial institutions or markets and thereby threaten the financial system of the united states. through this motion, the council seeks to gather information as it develops the specific criteria and the analytical framework by which you will designate these utilities that are systemically important. it provides the public with 30 days to provide comment. the npr will be provided with a notice of proposed rulemaking. this is npr does not address the analytical framework for clearing nativities carried up by financial institutions which will be considered separately. >> thank you.

questions or comments? chairman bernanke. >> your last question talked about -- there was a lot of clearing and settlement in the last quarter. sorry. your last question in the npr talks about international considerations. obviously, a lot of clearing and settlement is across the border. could you talk about what you have in mind there and how the international aspects of an institution could affect its designation? >> as you mentioned, mr. chairman, the most financial markets are global and cross- border in nature. increasingly, the post-trade process these are also spending borders and becoming more integrated.

in determining the systemic importance to the u.s. financial system of the financial market utilities, the council may need to consider several international aspects of those utilities, such as, weather, the utility is subject to liquidity risk from u.s. dollar and non-u.s. dollar transactions, the degree to which it has reliance on foreign financial institutions for such things as settlement services for contingent liquidity provisions, for example. >> thank you, jeff. german shapiro? -- chairman shapiro? >> let me express my support for the a advance notice. my staff worked very diligently across many agencies to get it done. i think it is very important, as we go forward, to address an

increasing system that we work together. i would encourage investors, industry, and other market but dispense to comment and give us the best of their knowledge and expertise on this. excuse me. it includes exchanges from a definition of the dfmu. i wonder how that affects agencies who are affiliated with the exchange as some more. >> chairman shapiro, the clearing agency affiliated with an exchange could be designated as such. the act does exclude certain entities from the definition of financial market utilities, including exchanges,

depositories, alternative trading systems that may be registered with the sec or the cftc. they are excluded to the extent of their activities that are required to be registered with one of those two agencies. beyond that exclusion, just because there is an affiliation with a clearing agents say, that would not affect the possibility it could be designated by the council as systemically important. >> thank you, robert. german consumer -- chairman genzler. >> they have a new role. in a new act, swaps will be clear. this is so important.

we currently regulate 14 clearing houses. some of them, we co-regulate with international regulators. that might grow to 20. but i think this is an important role. we are writing rules right now. we're consulting heavily with international regulators. but our mandate is to try to write these rules by next july. followrying our best to international standards. my question for the team -- if

something is designated as systemic, although we have a clearing house is, what is the consequence? >> if the financial market utility is designated by the council as systemically important, it would become subject to credential and supervisor provisions of title 8. these include first conducting operations in compliance with applicable risk management standards, which could be higher in some respects than those applicable to other fmu's. the regulatory review procedures may vary from those that would be applicable to others. third, being subject to applicable examination and enforcement provisions -- the supervisory agency would be required to conduct an exam of an fmu at least once a year. >> what is the example of something that might be higher standard? >> in the case of derivative

organizing, a rule has been proposed that required that, if you were designated as system important, you have sufficient financial resources to meet the default of the two largest risk exposures. the standard that applies to other dco's is the decline of the single largest. >> we are trying to finish by next july. it is our hope and recommendation for this council that we would hopefully be able to move through this designation by that time or at least somewhat similar to that time. that would bring the greatest clarity. >> ok. other questions or comments? >> also would like to thank the staff for all the work that has gone into this. i am wondering whether staff has some sense as to whether t fmu's would necessarily be those that process key financial

markets or whether they might be small value fmu's that might be systemically important. >> that is a good question. >> the designation is not necessarily limited to just large-value organizations. it could apply to small-value payment, selling organizations as well. >> any other comments and questions? thank you all for the work in this area. we now move to the two administrative procedural issues. the first is an aspect of the committee structure.

we've sent recommendations that were developed by the staff to set up a set of committees. before we go to the committee structure, i need to ask you to adopt the resolution adopting publication of these. i need a motion to adopt the resolution. and a second. all a favor? any opposed? excellent. now to the committee structure. we stipulated before and our colleagues have discussed a said of standing committees that will allow the council to operate. i want to make sure that that structure is acceptable. i will not describe it here.

we will put it in the public domain if it is adopted. does anyone have any questions or comments about the committee structure? if not, ask for a motion to adopt and approve this proposed committee structure. a second? all in favor? any concerns or questions? excellent. the final administrative matter is the minutes. does anybody have any questions or comments, suggestions? hearing none, can i have a motion to adopt and approve the minutes of the first meeting? a second? all in favor? excellent. are there any other issues or questions before we adjourn? ok, thank you all for all your work. i appreciate it. a motion to adjourn? thank you very much.

>> today, ireland as for financial assistance. we will hear from the parliament and the prime minister next. and then present obama visits to the chrysler plant in kokomo, indiana. later, there will be an update on north korea. michael greene joins us. after that, they discussed the

recent article on u.s. foreign policy priorities 1a global economy. then, the number of diseases that are resistant to anti material drugs. "washington journal" to morning at 7:00 eastern. >> the question muslims about stereotypes, 9/11, and the war on terror. >> the irish prime minister face a physician for questions on a financial assistant package.

but they have extended 85 billion in gyros' of emergency loans to the republic of ireland. the prime minister >> we move on to another section.

> in the past week, we have seen the authority and the trust of this government evaporate. having been told only last week that there was not a need for any outside intervention or outside help about a financial bailout, would have now seen and the people have watched in horror from their point of view as the imf, the ecb, and the european commission in dublin. within three days, you, yourself, announced a formal application for a bailout. yesterday, we saw the spectacle of your absent friends withdraw their support from government on the basis that they had been betrayed and that there was not proper communication within the cabinet. it seems, following the press conference yesterday, there is an ongoing attempt to cling to

power at all costs. at this time of crisis, what our country needs is confidence and stability. it has neither at the moment. people who have money in banks are concerned as to whether they should leave it there on the basis that your budget might not get through. it is very important to reiterate to those people that their money is safe. i want to assure you that this party will act constructively in the interest of ireland and in the interest of stability and confidence that is needed both here and internationally. that is why we have been working since before the dawn this very evening to send out a

signal internationally about the importance of the 5.5% tax rate, such a fundamental cornerstone of any direct investment in our country. >> we have limited time for the leader's questions. >> that is why i except your invitation to go against the delegation that is here from the delegation commission. i do have one specific request to you. it is this. there are two days that you have within your grasp that can restore certainty and that can restore a sense of confidence. the first of these is the budget. you have made the point of the importance of the budget being passed. tomorrow, the four-year fiscal

plan will be presented. before that is in effect, the budget for 2011. what i want you to do now, in the interest of being constructive here, in the interest of certainty and stability and confidence, will you tell them now that you will bring for the budget next week? as you are aware from your experience, a slimmed down version can be put through with the key ingredients of that budget. i will facilitate the house sitting from monday to friday until all of that has been completed through the legislative process by christmas. this will bring some measure of certainty to a government that is out of control. >> first of all, there is no question the characterization that clinging to office is my motivation. that is not my motivation. my sole motivation is to ensure that the four-year plan is

published and that a budget is passed by the house. commissioner rand has made it clear that he does not want to see the situation without address by the new year. i suggest that we proceed with the budget on the day that we have set out. we want to do that and do it properly and do it appropriately. i agree with the commissioner when he came to talk with the minister of finance. we very much agree that the best statement of confidence for this country is to pass that budget. i think it is very important that it happen.

i do not wish to go over again some of the issues that were raised in his remarks. unfortunately, is becoming -- i want to make it clear. i refuse the specific reports last week that were put to me. firstly, that we had in fact applied. secondly, there was interest perhaps for people to do that immediately. but i was very anxious to ensure that i represent the taxpayers, that i represent the people of this country. in relation to the technical discussions taking place, we wanted to make sure that whatever concerns were being expressed that we were made aware of them and that we could deal with those issues. the political position made on tuesday night, that matter has moved around quickly, as you

know. i just want to make that point. there is -- there is no intention of any government at any time but to represent the people of our country the best we possibly can. i was simply responding truthfully to those specific reports that were untrue at the time. as you know, on sunday, we may formal application, having had the opportunity to set some parameters for these discussions, including the importance of the 12.5% coverage as the cornerstone of our industry. the second point i was making is that it was unusual in the situation for a country would not have considered a class facility at some point. but it is clear that the perception and opinion and the view of the g-7 and others that

we would consider this matter. we were prepared to do so. we do have international obligations, but we must also protect our own interest the best possible way we can. that is simply what i want to say in relation to that. there is no intention, no motivation, whatever by me or anyone in this government to deceive anybody. we're simply trying to make sure that we have room to maneuver what is constrained or limited, that we not be bounced into a situation, to look at the situation and the company

we walk with, listen to concerns, and we made sure that the parameters of the decisions we were about to make were consistent with what is public best for the country. in relation to the other matter that the deputy raises, i set out clearly in a statement yesterday evening what the government's intention is. we believe that it is true that the statement of confidence is necessary. we will publish our four-year plan as we said we would and submitted to the european commission. -- and submit it to the european commission. i do not want to anticipate what those are. we will deal with those issues as probably and as is possible to do in order to bring certainty to the situation.

i believe that, in the new year, it will be making that point. it will be an opportunity for us to go to the country and have the country make the decision as to who should have the mandate and continue the challenging work that faces this country for years ahead. if we delay that situation -- i know that there are some of genuinely feel that we should have an election at this time -- we need to pass this budget as we said we would. we need to proceed with the timeline. it is a 6 billion us correction that has to be brought forward. -- it is a $6 billion correction that has to be brought forward. we need to continue to do that in as a focused and calm a way as possible.

>> you have used two words that are important. first, you referred to the immediate priority. second, you referred to certainty. these are not normal times. this is not business as usual. frankly, i have no interest in attempting to play political games with something that is as serious for the people of our country as the situation is. the fact that you are absent earth while friends are not here, i am not sure that there sacked or are about to be sacked. that is for you to decide. i do not accept that, if you want to bring certainty to this matter with respect to the budget, that you cannot do so next week. it was very easy for the government to bring in a bill

overnight to take $1 billion off of pensioners who are in nursing homes -- overnight. what is at stake here is certainty, stability, the confidence of our people. maybe he does not appreciate the level of absolut is desperation and anger that is out there. one thing you can do is bring forward your budget next week. you can also bring forward, as i say, the essentials of your finance bill and i facilitate you by having the house said monday through friday for the next -- for the two subsequent weeks that you wish so that the legislative process can be completed by government. that is constructive. that is in the interest of certainty. it is in the interest of stability. it is in the interest of restoring confidence at home and abroad. i do not want to see is what i heard the minister of transport

is saying, talking about [unintelligible] the point is having an election out in april or may. do you have any concept of the reaction about the uncertainty that it create? i am telling it is perfectly in order for the government to bring in the budget next week, to bring a slimmed down budget of the financials and have it put through the of legislative process that you are likely to refer to and have it out of the way by christmas predella -- christmas. that restores some sense of belief internationally that ireland is beginning to move the way it should.

if you are serious about what you say, i would supporty that. i offer you the opportunity to bring down a slim down - slimmed down version. >> what can i say? i do not anticipate the timeline you are suggesting. to put into law the matters that will have to be complied with. let me make that clear. the second point i want to make is that, as ian know, november

is a very important month in terms of taxes. it is incredibly important that we get those rights. you will be aware it that is the case. we are talking but having the budget within a week of tt. this is why we always have our budget. the commission and the people with whom we are dealing except that the issuing of the four year plan and the holding of the budget, with the informational, it is important. we do it in that way. i am not questioning your at him

to be constructive. the government has still do this correctly. we are talking about putting this forward. >> the second question? >> i want to pursue this a bit further . the situation we are in is one of very considerable instability and lack of certainty. that has been largely brought about by the government itself. the contributed to its last week. we ended up with the governor

telling us what you should have told us earlier in the week. we ended up with the imf being brought in. of a ballot compounded by the decision of your partners in government. you say that one needs to be done is that the budget needs to be passed. let's be clear. strictly speaking, there is no such thing. the budget is brought in. if there are financial resolutions for the many are dealing with the matter. very often, they are not that

controversial at all. it is then followed by two pieces of legislation which are required to give effect to the budgetary measures last year, that was passed. last year, it didn't pass until the 25th of march. what is the time line the you are talking about? if you are saying -- you have rejected the suggestion that he has put a two-year -- put to you.

what is your time line? can i ask you this? one of the parties and governments have already detached themselves from governments. it is suggesting that perhaps the support is in doubt. q you considered the government has the majority that is sufficient to put through the financial resolutions? >> i have given the reason above

the question being an important part, particularly a budget that has been divided. that timeline is known to be with the people with whom we are dealing. we should do that rather than suggest it is a program for government. the people then, and prepare the budget. we all know that will take much longer. i also made the point that they have been undertaken with the european union and the

institutions. it is based arm the publication of a four year plan. that is an integral part of the process. he is right. there is also social welfare. there is a need for an appropriations bill. the other enactments will have to be passed. they will be drafted.

it is on the basis of filling all of those requirements and decisions that are taken and ratified by the house. what that time-, it will all be done with the proper procedures. i am not in the business of using this particular situation for any personal consideration for myself. regarding the whole question of the budget, i believe the

greatest statement is to adopt such a budget with the correction of the magnitude that we are speaking. it is a matter of responsibility that decides it this country will go through the budget or not. of course, i recognize the differences of many issues. i do not question the authority of me. and do not question the motivation and people fell look to these issues and national pardon. i am saying that openly. it comes to house with that budget. that is our national interest.

>> first deval, it is important -- first of all, it is important that we have privacy and stability. both in relation to budgetary matters and in relation to the country. it is brought anything but clear to prevent let me start with this. i do not think it is in this country's interest that the budgetary process is prolonged to the end of march. it is not in our interest bill every three or four months' time of instability. the budgetary process is not completed until it is enacted.

what is your intention with regard to the finances in particular? i am asking in relation to the finance bill, what is your relation? there is that kind incident since -- uncertainty. it is not in the country's interests. tell us when you see the end of the process being completed. and the second question which i asked you earlier, your analysis

of chelation and you have said this before a number of times, their constitutional responsibility for putting through a budget resting with the government. i am asking you -- given the announcement made yesterday by the green party, given the statements that were made by some independents, the consider that you have a majority on your side of the house to push through the budget and the legislation that goes with that? >> in relation to the first question, i say to the deputy the reason why i cannot -- not cannot -- the reason the budget has not been put forward other reasons i have given, not because i am trying to be difficult. there are valid reasons for that. there's certain circumstances that the budget can be brought forward. the second point to make is in

relation to the time or the enactment of all the legislation that we need, based on the announcements which i cannot anticipate that this point. i would expect, deputy, that certainly by february we should have everything completed. that would be my hope. i am sorry. you're asking me to give you an indication. the suggestion of april, may, four monds, i do not anticipate that. >> to be frank. >> you're paying games. -- you're playing my games. -- you are playing games. i am giving you my opinion. i think that is a reasonable time spain. that would be my view during that period -- during that period -- during that.

it is important that we get this job done, that we focus on the budget to be brought forward, and you ask me finally the question -- i believe there will be support for this budget. i believe there will be support for this budget, and i think this house knows and understands and i have indicated the leaders for the spirit in which it was received, it is available to both leaders and the question of offical of vice for official confirmation of the situation is what we need to do in the present situation that we find ourselves in. and i ask everyone to reflect on that. and i think everyone the time that you've had for this discussion. >> that completes the leaders

questions for today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> could i call on the leader to announce the business for today?

>> they shall be as follows. statements on the euro group finance ministers' meeting. it is proposed notwithstanding anything in standing orders not previously concluded. brought to a conclusion at 7:00 p.m. tonight. the following arrangements out of love. this critic its job because of london that orders and not exceed 15 minutes in any case. the statement of each member's call the fund should not exceed 10 minutes in each case. members take -- may share time. there'll be a period not exceeding 20 minutes. will be called upon to make a statement which will not exceed five minutes. >> the proposes a of the

ranking no. for the statement of the finance ministers reading -- finance ministers meeting. not agreed. >> this is probably the most momentous decision in the history of the state in this procedure. this is the effect of that decision by the government to request assistance from the european central bank, the european commission, and the international monetary fund. the proposal that this would merit nearly 90 minutes of debates is unbecoming to the irish constitution and to the people of ireland. taoiseach himself needs to convince this house and explain in detail to the people of ireland what his cabinet signed on to by way of a virtual

meeting and videoconferencing of finance ministers. as it stands in this particular discussion, the labor party would have won 15-minute slot. but the minister from finance will speak for the government. i think it is extraordinarily inappropriate. i think it is insulting to the people who are at home. not to have -- not to have the details of this explains in our parliament to the people of our country. we are being told from every newspaper in the world what the irish people need to do. everyone in this house his conscience of our international responsibilities and our responsibilities to the european union. but under the irish constitution, we have a responsibility primarily to the citizens of our own country. [unintelligible]

>> what you're doing is disorderly. and inappropriate. >> i wish to record opposing the order business as presented by the taoiseach. it is absolutely inappropriate that the taoiseach is leaving the moving of border business here today with what he should have done last evening at the very latest if not a long time before as we have called for is to go and allow the people the opportunity to give a mandate to a government in order to ensure that there is confidence restored and that measures are and produce. [unintelligible] >> of point of order. [unintelligible] >> we are not. have a debated this point. [unintelligible] [unintelligible]

the fact of the matter is that we should not be having this order business here today. the speaker has not got the support of either his own party [unintelligible] that they no longer [unintelligible] >> a motion on the order of business. >> is something i can think of in history not to give notice [unintelligible] >> you are out of order. you're simply out of order. [unintelligible] [unintelligible] [bell ringing] [unintelligible]

[bell ringing] [unintelligible] >> we are calling on today's government to resign. [bellying] -- bell ringing and] >> there will be another opportunity for the matter. didn't that question is the proposal to deal with the statement of the finance ministers' meeting of the 21st of november be agreed to? [speaking gaelic]

>> irish prime minister brian cowen remains in power, but opposition leader as and members of his own party have wanted him to resign before the budget vote. the prime minister has a coalition government. ireland was asked to come up with a four-year plan as a condition of the package. the budget will be released tomorrow. president obama and vice president biden travel to kokomo, indiana, off the side of a chrysler manufacturing plant that was part of the government-led i although restructuring. here in his reports, the president called on congress to extend tax cuts for middle-class earners an economic stimulus efforts. this is about half an order. >> the president and the vice president of the united states. [applause]

>> hello, folks, how are you? good to see you all. good to be back in an automobile plant, making things. hey, thank you all very much. we're delighted to be here and i expect as delighted as you are to be able to be here. look, when the president and i got elected we knew we had a heavy load to carry. the country was in some real tough shape. and we stepped up, and with the help of some of -- all the congressmen, the senators here, we passed the recovery act just

after taking office, in t midst of the worst economic crisis since the great depression. and we had three clear goals, led by the president. one is help communities and people who were hit the hardest, hit the hardest by this awful recession. save and create jobs today, but also lay a foundation for long- term prosperity in the future. because more than -- a year after implementing this act, i can say proudly that not only have we helped millions of people, but -- not only have we created millions of jobs, not only have we spurred growth in new industries, but we have completely transformed, with the great leadershiof the local and state leadershi here, communities like this one here in kokomo. look, i'm the son of an automobile man, and i nt to tell you he managed automobile facilities for my entire life. and kokomo, anybody in the

automobile business has already known, was one of the great auto towns in america -- not only making chrysler automobiles but delphi, supplying parts and so many other suppliers, and all the related jobs that go with that. to bring kokomo back, to bring the automobile industry back, we knew we had to change things. we couldn't just keep doing the things the way we did. we knew the auto industry had to get leaner, had to get tougher, had to be more competitive. and we insisted that they did. and now you see the result -- an old industry adapting to a whole new era, competing again, leading again, and most importantly, hiring again. hiring again. mr. president, i know you know th, but the last year of the last outfit we succeeded, they lost 461,000 automobile-related jobs. and so far we've created almost 75,000 new jobs, and a lot more

to come. and, folks, look, the government didn't do this. the government didn't do this alone. the government did was it was supposed to do. with the leadership of a president and leadership from the president, we had investment from the private sector brought onboard because the government was able to get back in the game and said we're pa of it. the auto industry has roared back in america. now, i was telling the boss over here that the thing i like most about everything -- again, being the son of an automobile man -- is that my dad would be happy. for the first time in 24 yea -- aricans like your product better than they like foreign products that are made here. that's a big deal. that's a big deal. look around here. look around here. for every one guy working here in the assembly line, there's five more doing exactly wt you're doing. everybody thinks it's only the assembly plants. well, there's five people working at plants like this for every single job in the automobile assembly line.

it's a big, big process. people working in places like here and delphi suppliers, making parts was a major part of this recovery. and then when you guys have jobs, guess what happens. the coffee shop stays open. the barbershop stays open. the restaurant stays open. people open new businesses downtown. people sell jackets and shoes and hats. people, in fact, have jobs. this has an effect all the way through the economy. and that's what's happening here in kokomo, as your mayor can tell you. the lunch counter needs a few more waitresses and servers to feed them. the remodeled plant can reinvigorate an entire community and give people who don't work here hope. the people who don't work here. we were just in town. people were saying, thank you. they don't work here. they're saying thank you for this facility. but we can't just build a new economy by revitalizing and modernizing an old industry. we can't stop at creating new

jobs in old industries. we need to create whole new industries, as well. and that's what the president did. a great example is over in tipton, aboundsolar -- whole new industry. there's no reason why you can't build the best automobiles in the world and also be a leader in what the new industries -- the new green industries in the world are going to be. the president did what every great president has done in the past. he's looked to the future. we used the recovery act to provide seed money that sparked private investment -- private investment in new industries like solar and wind, advanced batteries, high-efficiency lighting, high-speed rail. folks, some of our friends forget, that's what all great presidents did. lincoln did it when he built the transcontinental railroad by putting down seed money to the railroads to go build it. that's -- we're doing the same thing here again. every great president has a vision. and now we're doing it here. we're doing it here with the renewable energy investments

that are being made outside the city, with the new industries of the future. and in a sense, there's a whole new automobile industry building a different kind of automobile. mr. president, my dad used to have a saying when he was -- ran automobile dealerships of almost four decades. he said, joey, all they got to do is give me product. give me product. give me product, i can sell it. i can -- you're giving them the best product in the world again. we also believe we can't have a strong economy without strong communities. and that's why the president in the recovery act made sure we helped hard-hit towns like kokomo. we now -- we were just at the fire station. there's 13 firefighters still on the job because of the recovery act and because of the safer act. teachers, law enforcement officers on the job. when i tell you an international recession hits and a worldwide recession, guess what. a town like kokomo and other towns of 50,000 all across america, they can't do it on their own. you got to help them stand up a little bit.

and that's why we helped with infrastructure and roads, to bring improvements, to bring back main street, to bring it back to life. kokomo is in the forefront of it all. and nowhere is it written that kokomo can't be the hub of innovation in emerging industries of the 21st century -- like it was in the 20th century. nowhere is that written. look, nobody knows better than this man that our work certainly isn't done yet. we're just starting. but it's important we recognize success stories like kokomo as signs that we are definitely moving in the right direction. this town and its people are a model for others looking to do the same thing over and over again in this country. you guys here have been the embodiment of the limitless potential when we put government and the private sector and the community all together, working toward the same end -- a community built -- this community -- this community is built on grit and determination, a willingness for

you all to fight hard, to pick yourself back up off the mat and to march toward what you all believe now -- i believe, i hope you do -- is a better day, a brighter future, a new start. we know it's a long road back. but we know we're on the road. and the one most important thing we've got to communicate to the nation and to everyone listening is we can't stop now. we can't turn around. we're heading in the right direction. kokomo is coming back. america is coming back. and it couldn't have happened without the vision of the man sitting behind me. ladies and gentlemen, the president of the united states, barack obama. [applause] >> thank you. thank you, everybody. thank you. everybody have a seat. thank you so much. thank you, joe. thank you, kokomo. i have to just say, by the way,

joe is not only one of the best vice presidents in history. he's also one of the best introducers in history. i try to take him wherever i can. i want to thank your plant manager, jeremy keating, for the great tour and the great work that he's doing here. he is proud of the work that's being done at this plant. i want to thank your local uaw president, richie boruff, who's here -- thank them for showing me around. a couple other hotshots -- u.s. senator evan bayh is here. congressman joe donnelly is in the house. congressman andre carson is here. congressman baron hill is here.

by the way, congressman baron hill is in the indiana basketball hall of fame. now, that's pretty cool. being a congressman is cool; being in the basketball hall of fame in indiana -- that's something. mayor of kokomo, greg goodnight, is here, doing outstanding work. the ceo of chrysler group, sergio marchionne, is here. president of uaw, bob king, is in the house. we've got some of the best workers in the united states of america right here at this plant. and i had a chance to meet some

of you as we were going around seeing these amazing transmissions that you're building. and i was very happy to hear that after a couple of tough years, this plant is now running at full capacity. and that's why i'm here today. that's why i'm here today. now, we all know that one plant by itself doesn't mean that there aren't people in kokomo who are still hurting. i had lunch with the mayor and some firefighters, and there's still a long way to go. the mayor has got all kinds of great plans, and there are businesses that are looking to start expanding. but the fact is there are millions of people around the country who are still looking for work in the wake of the worst recession in our lifetimes. i don't have to tell you that. many of you still have friends

or neighbors, a husband or a wife who is still struggling. and i know that before this plant started rehiring, a lot of you were in the same position, so you remember that it is a tough, tough thing when you're out of work, especially when you've taken a lifetime of pride in working and supporting a family and making great products. but even as we continue to face serious challenges, what's happening here at this plant - the changes we're seeing throughout kokomo - are signs of hope and confidence in the future -- in our future, together. you're showing us the way forward. you're living up to that spirit of optimism and determination - that grit - that's always been at the heart of who we are as a people, at the heart of america.

i remember coming to kokomo a little over two years ago. joe will remember this. some of you might have been here. what was happening here reflected what was happening all over the country, all over this region. for a decade or more, families had felt a growing sense of economic insecurity. a lot of manufacturing had left the area. and then a recession started taking hold, and folks were seeing job losses and facing new hardships. that was before anybody knew how devastating the recession was going to be. so by the time i took office, just a few months later, the financial crisis had hit, the auto industry teetered on the brink, and we were losing millions of jobs. and that left joe and i with some tough choices. one was to help the auto industry restructure.

and that wasn't an easy call. i understood that there were some reservations of those who said that the industry should pay a price for some poor decisions by the part of management. but we also knew that millions of jobs hung in the balance. we also knew that the very survival of places like kokomo were on the line. and we knew that the collapse of the american auto industry would lead to an even deeper disaster for our economy. and you know what, we also believed that america, which popularized the automobile, whose middle class was made on the basis of manufacturing -- that we couldn't just give up. we couldn't throw in the towel. that was not an option. there were those who were

prepared to give up on kokomo and our auto industry. there were those who said it was going to be too difficult, or that it was bad politics, or it was throwing good money after bad. you remember the voices arguing for us to do nothing. they were pretty loud, suggesting we should just step back and watch an entire sector of our economy fall apart. but we knew that the auto industry was not built, and this country was not built, by doing the easy thing. it wasn't built by doing nothing. it was built by doing what was necessary even when it's difficult. so we made the decision to stand behind the auto industry -- if automakers, if ceo's like sergio were willing to do what was necessary to make themselves competitive in the 21st century, and if they have the cooperation of workers who were taking pride in the products that they made. we made the decision to stand with you because we had confidence in the american worker, more than anything.

and today we know that was the right decision. we know that was the right decision. today each of the big three automakers has increased their market share -- each of them. for the first time in over a decade, americans are buying a larger share of chryslers, fords and g.m. cars, and a smaller share of their foreign counterparts -- for the first time in decades. we're coming back. we're on the move. all three american companies are profitable, and they are growing. some of you read last week, g.m.'s stock offering exceeded expectations as investors expressed their confidence in a future that seemed so dim just 18 months ago.

and as a result, the treasury was able to sell half of its g.m. stock. so here's the lesson: don't bet against america. don't bet against the american auto industry. don't bet against american ingenuity. don't bet against the american worker. don't bet against us. don't bet against us. don't bet against us. this plant is a shining example of why you shouldn't. two years ago, production here was plummeting. a lot of folks had lost their jobs. today, this plant is coming back. the company has invested more than $300 million in this factory to retool.

but it gets better. sergio just told me today chrysler is announcing an additional investment of more than $800 million in its kokomo facilities -- $800 million. that's good. that's good news. that's real money, $800 million. see, the mayor has got a big grin on his face. you're pretty happy about that. over the next few years, folks here expect to manufacture more transmissions than ever before. and as a result, hundreds of

workers are back on the job. jeremy said we're going to be hiring more. this includes -- i'm going to name a couple of people just to embarrass them a little bit. where is sharon ybarra? is sharon here? right here. sharon lost her job of 20 years at a paper mill. she was only able to find work that paid her far less than her old job - until she was hired by chrysler. and now she is doing a great job right here at chrysler. we're proud of you. jim faurote is here. where's jim? jim's right next to her. jim worked for chrysler for a decade -- right?

then he lost his job when the plant he worked at in new castle shut down. over the next few years, he could only find intermittent work on and off. it wasn't until after the restructuring that he was able to have a job he could count on. he's been back at work now for more than a year doing an outstanding job, making great products here at chrysler. at a plant down the road, workers are manufacturing parts for hybrid vehicles. that's already led to dozens of jobs, and will lead to nearly 200 jobs over the next few years. a few miles outside of kokomo, in tipton, a clean energy company called abound is going to be able to hire 900 workers - taking over a plant that had to shut down a few years ago. so a factory that was empty and dark will come back to life. and when people have a

paycheck, as joe said, they can go to the store, they're able to spend. that helps the economy grow. and so on main street in kokomo we're seeing a revival, with new businesses opening downtown. so, for anybody who says our country's best days are behind us, anybody who would doubt our prospects for the future, anybody who doesn't believe in the midwest, anybody who doesn't believe in manufacturing -- have them come to kokomo. have them come to kokomo. come here. meet these workers. visit these plants. come back to this city that's fighting block by block, business by business, job by job. this is a reminder of what we do as americans. what we can do as americans when we come together, when we're not divided; we're not

spending all our time bickering, but instead focusing on getting the job done. we don't give up. we don't turn back. we fight for our future. no, we're not out of the woods yet. it took a lot of years to get us into this mess. it will take longer than anybody would like to get us out. but i want everybody to be absolutely clear, we are moving in the right direction. we learned that the economy -- we learned today that the economy is growing at a faster pace than we previously thought. that's welcome news. but we're going to keep on making it grow faster. we're going to keep on creating more jobs. we need to do everything we can to make that happen. that's why in the coming days it is so important, the coming months it's so important, that democrats and republicans work

together to speed up our recovery. we've got to put aside our differences. the election is over. we've got to find places where we can agree. we've got to remember the most important contest we face, it's not between democrats and republicans. it's between america and our economic competitors. other nations are already making investments -- other nations are making investments in education, energy and infrastructure, technology, because they know that's how they're going to be able to attract the new jobs of the future. and throughout our history, democrats and republicans have agreed on making these investments. if we don't want to cede our economic leadership to nations like china, we've got to do the same today. we've got to make sure our workers have the skills and the training to compete with any workers in the world. we should give our businesses

more incentive to invest in research and innovation that leads to new jobs and new products and new industries like the ones we're seeing here in kokomo. we should make it easier, not harder, for middle-class families to get ahead. i'll give you an example -- on taxes. next year, taxes are set to go up for middle-class families unless congress acts. if we don't act by the end of the year, a typical middle-class family will wake up on january 1st to a tax increase of $3,000 per year. so, in the next few weeks, i'm asking congress to take up this issue. the last thing we can afford to do right now is raise taxes on middle-class families. if we allow these taxes to go up, the result would be that a lot of people most likely would spend less, and that means that the economy would grow less.

so we ought to resolve this issue in the next couple of weeks so you've got the assurance that your taxes won't go up when that clock strikes midnight. now, this is actually an area where democrats and republicans agree. the only place where we disagree is whether we can afford to also borrow $700 billion to pay for an extra tax cut for the wealthiest americans, for millionaires and billionaires. i don't think we can afford it right now - not when we are going to have to make some tough decisions to rein in our deficits. that's going to require sacrifice from all americans, including those who can most afford it. so i'm eager to sit down with leaders from both parties next week and to hammer this out. but we need to hammer it out. you know, long before transmissions were coming off the line at this plant - and by the way, you look at these transmissions today and somebody

20 years ago or 10 years ago might not recognize them -- they're amazing. before henry ford built the model t or walter chrysler took up the reins at a start-up called buick, a man by the name of elwood haynes decided to do a little experiment right in kokomo. he set up a one-horsepower boat engine on his kitchen; he bolted it to the ground. his idea was that he might be able to rig the motor to a carriage. so he starts it up -- and the engine worked great. in fact, it worked so well that it came loose from the bolts and destroyed the kitchen floor. and after a brief and what i imagine was a difficult conversation with his wife -- elwood decided to continue his tests in his machine shop. and he toiled for months. but when he was finished, he

had completed one of the earliest working automobiles ever built in america. and he named it the pioneer. so kokomo has a storied place in our history. this is a city where people came to invent things and to build things, to make things here in america; to work hard in the hopes of producing something of value and something that people could be proud of. that's the legacy of all of you. you are all heirs to that tradition right here at this plant. that's the legacy that has made this country the envy of the world. and i am absolutely convinced this legacy is one you will continue to uphold for years and decades to come. congratulations, chrysler. congratulations, kokomo. proud of you.

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♪ >> coming up, a look at north korea's nuclear program bridging and the tensions between north korea and south korea. congress is out this week for the thanksgiving break.

when members return on monday, the house will take up a censure measure against charlie rangel. but the house and senate will also work on the remaining federal spending for this budget year. the senate continues work on food drug administration oversight of food recalls. live senate coverage on c- span2, the house here on c-span. the new congress begins next year. members will be sworn in january 5. 16 new senators including mightlee of utah. he defeated robert bennet, he then won 62% of the vote in the general election. chris coons defeated nnell.ine o'do

>> here are some programs c-span is airing on thursday. jeff bridg talks about his work to you reduce youth under. jane goodall of her love of nature and animals. the role of the supreme court, and lawyers discussed the retirement of supreme court justice john paul stevens. president clinton presents medal ttony blair thangiving day on c-span. >> stanford professor siegfried hecker return for north career where he was given a tour of a secret nuclear facility reportedly capable of enriching uranium. the u.s. has said its ambassador to the six-party talks in the regi. he presented his findings at the korean economic institute. this is 90 minutes.

>> it is our great please to host this event. as you can see by the turnout, and the interests, this is in fact a very significant event. what i like to do is tell you how we will run things. i will give you preparation in terms of the trip that we went on one week prior to dr. hecker 's and bob karlyn's trips. a few interesting points that we will make and then segue into dr. hecker's presentation. he will come up, make his presentation, and then we will have a shuffle as we bring some chairs up so that bob kc arlin can join him. on the second of november, we went to north korea. we were there from the second to the sixth of november. we at ask to see the facilities

to look at thet new construction but the figure out what was going on in the intervening time since the last inspectors were there. in april of 2009, i think. when we got there, we were briefed by the general bureau of atomic energy safeguards division director. he gave us a preview of what was going on at yongbyon which was not much. we began i discuss some of the their richmond facility that we were looking for, uranium enrichment facilities, were in fact at yongbyon. the reaction that i got back to pyongyang and began to talk with the ministry of foreign affairs, they were surprised that we were told that. in the ensuing discussion, the points that we made with them were -- you are heading down the

path that will put you in the same light as the iranians. you said you are building a light water reactors for peaceful nuclear energy. there is a uranium enrichment facility did you say is for low enrichment uranium, for creating nuclear fuel for this light water reactor. but given our history and the background that you display, no one is going to believe. and if you take a look at what has happened with the iranians, you are on the path core additional sanctions, international condemnation. but if that is exactly what you say, that is, no reason in the world that you should not allow people t take a look at this. the iaea inspectors to look at this, or at the very least, you should show dr. hecker these facilities.

they sat back and essentially were very thoughtful and said we will consider what you said. i have no idea what they were going to do but when we came out of pyongyang, with the beijing and i contacted dr. hecker who was just arriving. he and i had a conversation about what we have observed, what we believe, and that would better prepare him to focus on the enrichment facilities and light-water reactors. with that background, how like to introduce dr. siegfried hecker, a professor at stanford university sees act -- cisac facility. >> the crowd is just older than the usual stanford student crowd. [laughter] the former secretary of defense and i teach a class on the role of technology and national security. we touch on places like north

korea, iran, and others. i'm going to try to put this trip and proper perspective. not just give you a travelogue -- let me make sure that i turn this on. not just to give you a travelogue but try to put the whole thing in perspective, particularly since this trip seems to have gathered a lot of attention. as jack manchin, -- as jack mentions, this did not come out of the blue that they would invite me to come to pyongyang. this is my second visit to north korea. -- my seventh visit to north korea. i was taken their rigidly by jack lewis. the first time was in 2004. that is when they -- that is

when they showed me the plutonium. that is when they actually said, we have the plutonium. the message was -- because they had a message for each of these trips -- the message was we have the bomb and you have to pay some attention. we're back in 2005 and the message that time was, talking to john lewis, it just before the september 19 agreement, we are ready for the agreement but we want an l.w.r., the light- water reactor. and the agreement was signed a month later. in 2006, and shown here with the director of the yongbyon nuclear complex, three weeks after the nuclear test. they were filled with pride. that manage to get the bush administration to actually engage the north koreans and a bilateral discussion. in 2007, there was a february 1

agreement signed and i was then in august of 2007, and the message was, could you tell those skeptics in the west we have actually turned the reactor off? they turned it off in july 2007. in 2008, they had begun the disablement process. and that is me in what we call the anti-sikh clothing to put this up against -- in time -- aiti-seep clothing. the disablement taking it and putting it somewhere and being able to put it back. they did that in 2009, because in 2009, they essentially announced we are going to leave this six-party talks, we will to

a michel launch. and the rest is history. -- a missile launch. and the rest is history. this is the current visit. jack indicated date he gave me the heads up because he went to the facility that is shown on the left and instead of erecting another cooling tower, which is what some people suspect did, if they told us we will report this to an l.w.r. and pilot enrichment facility. but no one believed us when we announced this in 2009, which they did, including you, dr. hecker. and it is true. let me read -- this is the only reading that i will do. let me read you the essence of what the chief technical officer told us in the cast house when we came and visited this november 12. he said, in the 1980's and 1990's, we agreed to give up our reactors for l.w.r.'s. 2,000 megawatts electric by

2003. the was the key to the arrangement. we built a 200 megawatt reactor of the gas graphite design. now their new construct -- new concrete structures and iron scrap. i can attest to that for the 50 megawatt reactor. if we have not been able to contribute to the national demand for electricity so we made a new start. if we decided to build our own l.w.r. stated that we would proceed on our own light- water reactor fuel cycle. we have completed the discharge of the 5 megawatt electric displacement and delivered it for what ionization. that is what was done in 2009 when they walked away from the agreement. our nuclear program has not proceeded as expected. we have not delivered electricity and thus have impacted the ink jet -- economic impact of our condition -- of our country. we will solve the electricity

problem. we're willing to proceed with the six-party talks and the september 19 agreement but we cannot wait for positive agreement. we're trying our best to solve our own problems. we will convert our center to an l.w.r. and pilot enrichment facility. it is a high priority to and develop uranium richmond. we will have difficulties with this but we're proceeding with the l.w.r. fuel cycle. we have designated a site and also for the l.w.r. and for the uranium enrichment, it is the first days in the first priority. the construction is completed. the facility is operational. if you'll be the first to see this facility. we showed the l.w.r. construction site to another delegation headed by jack pritchard and his colleague. that is what they told us. all wanted to read that because that is very different from much of the high. and by the way, that is included in the report that i wrote which

is available on the website. i wanted to read it to put it into context. they are serious about building an l.w.r. but first, let me go back and review the status of their plutonium program. that is what concerns me the most at the beginning and is still what concerns me the most today. the 5 megawatt reactor which is showed -- the site is shown on the right lower, a photo that we took in 2008 -- is shut down, it is in stand by, there is no new plutonium being produced. if there is no cooling tower. the fresh fuel to load is not ready. the reprocessing facility is in stand by. we saw no action. there is no plutonium in the pipeline for that facility. the fuel fabrication facility, they are starting to converted to l.w.r. fuel. the 50 megawatt reactors is indeed iron scrap and a concrete

mass. the 200 we did not see but it is not salvageable. that is me back to the plutonium inventory. 24 to 42 kilograms is the general estimate. that is enough for four to eight bombs. they claim that they have what denies all of that. the main thing that i want to take away from this -- that they have what a nice to nice -- they have weaponized all that. they have tested twice. they know how to build a plutonium bomb. that is where they would go. they took as to the light-water reactor construction site. and the circle that you see is the concrete containment shell going up. that is right next to the 5 megawatt reactor. the motivation for l.w.r. -- since most people say they cannot build one -- they have

been after an l.w.r. for a long time. they started the reactor building with gas-graphite reactors. the best way to do that is those reactors are great for bombs, if not too good for electricity. they built them for both but they never finished the big ones. the same direction that the u.k. and france began with, but they have switched a light water reactors also, as has most of the rest of the world. in the 1980's they realize that they have problems making electricity, so they tried to get off to live reactors -- light-water reactors from the soviets. doubt was dashed by the end of the soviet union. the soviet union.