of diversions into the community. there are a number of other options short of releasing prisoners. >> the 17% goes exactly to my concern. this will have an effect on public safety. the experts can testify to what ever they want. if this order does not do that, we will see and the state of california >> based on the jurisdictions in other places we have seen that. and it also includes people who have missed their appointments, for example. >> if every other case has been done under the plr, or is this

the first one? >> this is the first one to reach this court, as i understand it. >> is there any evidence -- i see the suggestions that tactical parole violators go elsewhere. the elderly and infirm prisoners, some of them to be released with good time credits. and also, have warehouses and other kinds of prison facilities, which used to be called less physically restrictive punishments, or taking the money that you save and building new prisons. ok, that seems to be the gamut. is there any evidence, statistically or otherwise -- because it used to be that states did rely upon how for houses -- halfway houses,

certain camps, for example. and some of them were pretty tough. >> yes, your honor. >> is there any statistical evidence on the part that the justice has raised that it did not result in a higher crime rate? >> the evidence that the court found, and is not clear, is that these programs were not more effective in reducing recidivism and they were less expensive. that is part of the reason that the three-judge panel concluded the reduction and prison population would reduce crime. >> the state is responsible for a lot of different things. what happens when you have this case, another district court ordering the state to take action with respect to environmental damage. and another court saying we have

to spend this much on education and the disabled, and another court saying you have to spend this much more on something else. how does the state sort out its obligations? >> [unintelligible] >> you can say i have to spend money to build more prisons, but i also have to build water treatment plants. the point is, it is a budget prioritization that the state has to deal with every day and now it is being transferred from the state legislature to federal courts throughout the state. >> i leave the federal courts have an obligation to enforce the constitution and the laws. >> no, i believe that as well, counsel. but i'm saying that you have conflicting orders from different this record telling them you got to comply with the constitution by spending $8 billion here and another court saying i've got a constitutional problem of my own and you've got

to spend $8 billion over there. at what is the state to do in that situation? >> i think the simple answer, and i do not mean to be flat, but they have an obligation to follow federal law, constitutional law, and other laws. and if they do not, the federal court has an obligation to impose a remedy. in this particular case, the state has a choice. they can either increase rate 140,000 prisoners in a system built for 80,000 or they can incarcerate a lesser number. if it chooses to incarcerate 148,000 prisoners in a system built for 80,000, the state could choose to use less restrictive punishment, alterative punishment, get a better bang for their buck and have more public safety. if we impose that kind of a role, then the state would be

here saying it is violating divisions and making policy choices for this day. in this case, i believe the court gave the state the maximum flexibility to make all of the choices surrounding the incarceration of these prisoners. the constitution prevents the state from incarcerating somebody and not providing basic medical care and not die before their sentences up. that is what we have here. >> if you take these statements a moment ago and five years -- the federal court order is two years. we're talking three years. is there any indication of how fast the state's remedy would kick in? are we talking 5% differential for the past three years? >> there are a lot of states that can do it quickly. it can reform its parole system.

--i'm saying assuming compare what the state will do with what the court has ordered it to do. >> the governor proposed to the legislature that we reduced the prison population and he said it could be done safely by the same amount, roughly 37,000 prisoners in less than two years. what the court found was not what the governor also found. the five-year time frame is longer. and it is lumber because it takes time to construct the facilities that the state wants to construct. i believe that is the major difference between the two. but the other method, the good time credits, patrol, reform, diversion, those can be formed very quickly and those reductions can be accomplished

safety -- safely in that amount of time. >> so, if the court said two years for everything but construction, wouldn't that have been a more narrowly tailored ruling? except there was going to be no construction and adequate because of money. >> right, the state has not put the money to construct those new prisons. this case has been ongoing since 2006 and they have hardly constructive anything. the court found that construction would not be a more viable alternative. >> thank you. mr. phillips, you have three minutes left. >> thank you, mr. chief justice. first, with respect to the state of the record and what was proffered and what was not proffered, if you look at the joint appendix of 2085, but there is a specific proffer that

is made -- i'm sorry, there is a specific proffer that is made by the state. >> on our, what page was that? >> 2085. the intervening plan if -- plaintiffs say would like to intervene. the judge said it will not receive the benefit -- evidence. you are wasting our time. and then later in 2038, we have the person in charge of health care who said specifically, i've read this declaration and it will not be received to the extent that the state is in compliance. >> is the actual declarations the record somewhere? >> yes, it is. >> does the state find that it

can do this without any public safety impact in five years? >> yes, we made that a mission to the court and we believe we could comply with that -- that admission to the court and we believe we could comply with that. >> does this take into account the differences? >> the plan gives counsel talks about all the things you can do. talks plaintiff's counsel about all the things you can do. above the line that will get you about 16,000 inmates and below the line you need legislation. the reality is that any time you say you are going to release 30,000 inmates in a very compressed time frame, i guarantee you that there will be more crime and people will die on the street of california. there is no way out of that particular box. >> is there any way to do that to protect public safety in the way that you told the court that you could? >> we have not a body with the

safety impact of each of the elements of the state's proposed plan. and it seems to me they have an obligation to do that. there is not a shred of evidence that 137.5 makes any sense whatsoever. it was pulled out of the air. it is based on what was said at the time you got that particular percentage. what would make much more sense than just fixing this across the board is to go to a facility by facility and evaluate these matters on the various discrete elements of how you can reduce the population. and in conjunction with a person in place who can help implement this in a systematic way and get this the way we want to get

this. >> why did you not give this to the court as your plan? the court gave you the absolute discretion to the implement it. the court said they wanted you to figure out where you need to implement. your plan did not do that. why? peter in your five-year plan or your to your plan. either in your five-year plan or your two-year plan. >> because judge henderson said i'm not hearing that. put thank you, counsel. the case is submitted. -- >> thank you counsel. the case is submitted. >> coming up later, the changing nature of journalism in the face of new media. that is live starting at 6:25

p.m. eastern here on c-span. now a discussion on legal issues surrounding the wiki-leaks case and its editor in chief julien assange. from today's "washington journal" is 45 minutes. he represented "the new york times" during the pentago papers case. thank you for being here. similarities to the pentagon papers case? how do you compare the wikileaks case to that? guest: there are some similarities, in the sense of classified documents leaking to individuals not authorized to have them and then becoming public. çi would say the biggest difference is, the pentagon papers was an historical study of how the u.s. became involved

in the war on vietnam. it became public in 1971 when "the new york times" obtained a copy of most of the volumes of the secret study prepared for the secretary of defense, but the material wasll historical, nothing more recent from three years before, and the source had not given it the negotiation body -- volumes of the study, the most sensitive, which dealt with ending the war. here, the wikileaks lakes are much more sensitive, certainly ch more current. çby way of an example, you have an american diplomat quoted the king of saudi arabia, saying he wished israel would bomb iran

and cut the serpent's head off. there was nothi like that. nothing as alive, perhaps dangerous to publish, probably not as newsworthy as well. the pentagon papers as well showed a lot of lyi to rot the çyears from the american government to the american people about our increasing involvement in vietnam, how we became involved, and the like. i do not think these wikileaks leaks and all that at all. the government comes out pretty well. certainly, it does not show a pattern of misbehavior by the u.s. or its diplomats. host: a recent story in "the

wall street journal" says -- we are talking aut julian çassange. they say bringing to justice is another matter. what vehicle cld be used to prosecute him? how far does the espionage act go? guest: we have an espionage act. it is very old, passed in 1917. it is archaic in a lot of ways. it is phrased very broadly. it only you read it, you would think articles everyç day that you read in the newspapers violate the espionage law.

that is a problem if a law seems to cover too much, it ends up covering nothing. is it possible that the justice could mount a criminal prosecution? it is possible. it would be a hard case, but a possible one. one element they would have to prove, which is ordinarily difficult, is bad faith on the part of the personç that has documents, revealing information, not returning document which are secret, in one way or another. i think they may be able to prove that bad faith, although . assange woulargue that he offered to share the intermission with the state department, get the benefit of their views on what he should

publish and what not. but taken as a whole, yes, the espioge act could allow prosecution, but it would be çdifficult. the other thing is, we would have to find him. host: let's talk about that. you mentioned in an interview that mr. assange has gone a long way into talking himself into violations of the espionage act. how would that add weight to a charge? guest: some of the statements he has made, are on their face, saying, i want to frustrate america possibility to carry out foreign policy, i want to frustrateç government's eort to do things around the world. the espionage act is couched in

terms of people having unauthorized documents with reason to believe that they can be used to the harm of the u.s. or to the advantage of another country. now he is seeming to celebrate every time a document seemed to put the u.s. in a bad light. this is what he didç to the initial dumping of documents regarding afghanistan, in which he, in a terribly reckless way, included in the documents, ones which disclosed the identity of afghan individuals helping the united states. when confronted with that, he said anyone helping the u.s. ought to be exposed. that sort of statement is the sort of statement, that if the government were to prosecute, would use against him.

to beç fair, he would say, i wrote a letter, i said to the state department, tell me what is so terrible of what i have here, and i will think about it. it is not so easy. host: floyd abrams, first amendment lawyer, is with us from new york city. we are talking about the legal issues surrounding the wikileaks documents. next phone call. caller: thank you for taking my call. the lastç person talking about home foreclosure, we citizens have a right to know far more of the information that is being hidden away. the last person from alaska, homeowners, not everyone can afford to, we need help the buyers, there is no free lunch -- host: get us back on track here.

caller: if we had a wikileaks thing going on to show what is going on behind the scenes, which people, they can go buy these homes any time. çthe thing is, we have a need o know in this world. host: floyd abrams, can you make that case? guest: i think he will try to. i think the theme of the caller is correct. that is to say, there is the need for more information made available to more people, more often by their governments. çone of the problems here, a problem that we have had for

significant over classification of documents in washington, that too many secrets are not secret, too much that is classified has no business being classified. one of the direction we should be moving to in the future is making more information available. that does not mean the sort of thing that i referred to earlier. e identification of individuals in aç position to e armed in afghanistan ought to be made public, but it does mean that it is a matter of policy and we should be aiming at making more information available, trying to do things to avoid the over classification which has plagued our government for many years. host: error, democratic caller. good morning. -- eric, ñia democratic caller.

caller: in many respects, it is hard to make the u.s. look worse than how it has responded to this event. we have seen in recent years, china using drastic measures to block websites, the internet. i hear there are attempts by some groups to do thato wikileaks. we have also seen the assassination attempts in russia. now there are right-wing pundits who are advocating murderç to e head of wikileaks. guest: i certainly agree with you, the call for the assassination -- and there has been some of mr. assange -- are

out bridges, unacceptable. that said, -- and outrageous, unacceptable. that said, there is romm@r criticism for what he has done. fire want to move our law in a juror attritioa direction wheref thing is more difficult to do. so muc information is now available, so easily,qu in a mr rest form -- a miniaturized form. it is noso hard for a pfc.ç in the army to get information about discussions with general petraeus and afghan leaders.

that is madness. one reason is the technology that we have to deal with which makes everything so compressed, so available, and available to too many people. at the same time that we should make more information available, we need common sense on what information is genuinely secret. we need some secrets. we need to protect some secrets. we have to try to find a way to çdo that at the same time as we make more information more candidly and more vigorously available to the american public. host: do you think wikileaks is comparable to a news organization that would be deserving of free-speech protection?

guest: it is not just journalists who have free-speech protection. çwikileaks has played i hybrid role here, a quasi-journalistic role in one way, by providing information, sometimes, as i say, dangerous information, but providing information publicly. at the same time, it is almost acting as if it is a source. it makes informationç availabl, 1st to certain newspapers that they will not reveal it until a fixed date, almost as if it is the internal srce. wikileaks has a first amendment argument, and it is a serious

one, if ever charged. at the same time, the government'sç ha a genuine and serious national-security argument to be made, with respect to the behavior -- often misbehavior -- of wikileaks. host: jack in providence, rhode island. good morning. caer: good morning. the reason for the call is the wikileaks leak of this informatioconcerning iraq, fghanistan, etc. could probably parallel some things that occurred in world war ii. definitely, the public did not have access to information in

theame way. back in november of 1941, the secretary of war stemson stated -- this can be downloaded nowç as public information. we have to maneuver the japanese into fing the first shot without doing too much damage to ourselves. this is on admiral kimball's grandson's website. that is pretty damning evidence, as far as i'm concerned, that jjájjt to get into a war with japan. guest: i have to say, i am not an expert on the circumstances of the united states being attacked by the japanese, but there was a lengthy period at that time of the negotiations

with the japanese and of demand by both sides, which obviously lead everyone involved to think my impression was, all thatç ws meant by that statement was, if there was going to be a war, not that the u. wanted one, w ought not be the one to provoke it. host: an ap story -- çwikileaks is facing a varietyf attacks. paypal, amzaon have cut their

ties to them. there are all sorts of other ways that the service is being damaged. wikileaks said that paypalçad surrendered to government u.s. pressure. what is the role of government to conflict some sort of pressure on private companies to play ball with what they want? guest: that is a strictly legal matter. the u.s. can urge but not require companies to behave in some particular wayç. once it becomes a requirement, a ;m it, the first amendment comes into play. i think the issue of whether

private companies that disapproved of wikileaks' behavior should demonstrate will love all of their disapproval by taking a sort of action that you advertç to. it is an important one, a difficult one. these companies have the legal right -- indeed, the moral right -- to behave as they wish and take steps they believe in the interest of the country and themselves. on the other hand, we would be veryç concerned in other circumstances if private companies to disapprove of what a newspaper was printing refused to sell newsprint or refused to make paper available, or took

other steps to keep this event information from coming out. -- dissident çinformation from coming out. host: let's hear from an independent caller in connecticut. good morng, peggy. caller: i am surprised at my own reaction to all of this. i thought we were sort of shooting the messenger. i do not know i he exposed other secrets in other countrs, like he is doing with the u.s. m to some important people. i cannot wait to hear what the financial revelations will be, if there ever exposed. are you surprisedhat this has

such coverage, compared to the dollar plan case? i thought that was pretty serious. -- valerie plame case? the commutation by president bush -- scooter libby's sentence -- it was dealt with, as you say, with the stroke of a pen. the conviction stands, but there was no sentence to jail. i am interesd in your comment about assange, in the sense about some contribution he may have made. one of the reasons i find this all very difficult is, as one can see, by reading our newspapers, some of the material that had been made available --

even though it does not show misconduct from the united states -- does permit a better understanding of certain things going on in the world. at the same time, that the understanding can proper -- compromise our ability to accomplish whatwp want in the world. when wikileaks reports about yemen, for example, the about -- about the yemenis leaders saying to an ambassador, u, the u.s., can continue to bomb al qaeda, and we will say we did it. and that, in general,ç is something that the u.s., its people, believe is a good thing. we want to combat al qaeda, but

at the same time, we learn something of significance, in reading that conversation. are we better off, on balance, knowing that, or letting it happen without knowing? as a general matter, those of us who toil in the first amendment, you usually say more the more you get into deep tional security areas, the closer that question becomes. not as a legal matter, but the closer the question becomes, what we should warn, if we could will it. host: do yosee sort of a 50/50 moment, where some of the things that he has brought to light could be in this moment of free speech, adding to pubdib

but do you sees well potentially breaking laws? what is the balance you see here? how do the scales tip? guest: first of all, what he has done would violate jt about every -- violate the law in just about every country of the world. first of all, first amendment, we really mean it and we want to protec freedom of speech, even in situations ere the speech may do us harm, unless wedi c13 really persuaded as a general matter that the speech is sure to do so. that is one difference between the u.s. and abroad. second, we happen to have legislation which is so old, so badly drafted, so hard to parse

in terms of when it could be applied, that we nevernowç when the government code or might, or even sometimes should take action. for example, i am concerned if the government were to start an espionage prosecution, that one of the consequences, and unintended consequences, could be significantly to threaten the ability of the american press, at its very best, the report about serious matters relating to national security, which all of us would say, the public ought to know about. . . ç

host: a handful of senators are looking at tightening up the espionage act. they're introducing legislation they are calling the shield act and it would give the administration increased flexibility to go after wikileaks and julian assange. what you think needs to be done to tighten up the espionage act? guest: i think there should be a way to narrow the espionage act in a way that could be used in

circumstances similar to what mr. assange has done. but i have to say, it is not easy to draft without really getting into areas that might compromise the first amendment. congress drafted legislation just a few years ago, indeed, congress passed legislation that basically said that any communication, including publication, of classified material was a crime. fortunately, president clinton vetoed that bill. because so much is classified that the notion of making the classification alone the basis for a criminal prosecution would subject a lot of, as i said earlier, the best and most important of american journalism

to prosecution. yes, should congress have a look and see if there is some way to in a wayhe statuete that could cast the worst abuses while allowing the broad protections of the first amendment' still to hold sway, ye? yes, but they should look at it very carefully because it is very easy, particularly when people are very angry with what mr. assange has done, it is very easy to draft legislation that would make things worse, not better.

>> secretary gates had this to say about the impact. >> now i've heard that the impact of these releases described as a game changer, n.l. down and so on. i think those are for it is significantly overwrought. the fact is, governments deal with the united states because it is in their interest. not because they like us. not because they trust us, and not because they believe we can keep secret. >> do you disagree with that in terms of what the damage done here is? >> i think there is damage. it may be a little bit more profound. i do not think it goes to the extent that some people have been saying, but yes, there is real damage. social security numbers of individuals have been made public. technology about roadside bombs has been made public. the relationship of the president of yemen, who is involved in helping us by domestic terror in yemen, has

been exposed for parts of his relationship with the u.s. that could be very damaging. there are very similar efforts. in germany, some people are calling for the return of the ambassador. in other places, they will not talk to our people for a while. this hurts. host: senator john kerry speaking yesterday on "meet the press." as you hear his comments, and also those of secretary robert gates, what of those could be prosecutable? could this be a breach? and how much credence do you give to the effect that the documents drop has had? guest: i think they are both right. i think there has been a vast overstatement of the degree of harm. to that extent i agree with secretary gates. but i think senator kerrey is correct. there are a number of specific inclusions in the material made

public which i think do harm, and have done harm, and are likely to do more harm. it has been suggested that the first witness for the defense in any case would be secretary gates. would be secretary gates. that is to say, mr. assange would try to get the merial that you have just shown or for secretary gates to say it again as a way of ameliorating any concerns on the part of the majority or the judge to try to get the case dismissed. but i think the level of harm,

and we on the outside can of really know about it. the true level of harm is one factor which the department of justice is likely to take into account. the other one is whether we can succeed in a prosecution. the last thing we want, i think, is to go in and indict mr. assange and have some european country refuse to extradite him to the united states. host: tracy joins us in annapolis, md., good morning. caller: i have a couple of quick comment and a question. the first, and, i wonder what mr. assange's reaction would be to having his criminal file released throughout the globe. he is accused of two rapes and

interval considers it serious enough to go after him. i wonder if that should be considered public information. you mentioned that assange wrote a letter to the department of defense giving them a chance to score of the documents. let's take that a little bit further. assange feels he is in a position to say and released things that others should not. if there was a discussion between assange and the department of defense, the department of defense might say this cannot be released. he will say, you have to convince me and i will decide if you have convinced me. assange, a non-citizen, put himself at the level of judgment exercised only by the president of the united states. guest: i think you made two interesting points. the first, and it has not been talked enough about, there are significant privacy issues here with respect to what has been

released here and elsewhere by mr. assange. senator kerry referred to social security numbersfor example, being released. in other circumstances, wikileaks has provided valuable information and the identities of members are far right wing political organization. there are serious privacy issues with the will still revelation of certain types of information which wikileaks, invite -- in my view, has taken no account of whaat all. and putting aside whether there should be a criminal prosecution, that would be one of the reasons that i bieve mr. assange has behaved in a generally reckless manner.

beyond that, i think you make a good point that there are areas here in which material has bn released that he would not want released about himself. but alsoirony nein that, a reason to at least st of throw up our hands and say there is a very significant inconsistency in what he does, and as you point out, what he surely would like or not like. host: and in finding him, extraditing him as a serious challenge. he has not been seen since november 5. he is believed to be staying somewhere in southwestern england. are other countries interested, perhaps, in filing charges or

prosecuting him for the wikileaks issued specifically? guest: i do not think we will find other countries seeking to find him. i am most concerned with the finding issue. we have indicted a lot of people through the years to we have then had to try to find. we sometimes have found them later on. general noriega. sometimes we have not been able to find them, robert vesco in cuba, r example. as a general matter of american interest and as a diplomatic matter, if the conclusion of the department of justice is that in,n if he is apprehended an say, sweden or switzerland, that they would not extradite him

because they would consider this "political" rather than pure law enrcement and european countries do not extradite people for political crimes. i do not have a view. i do not know what the answer to that is. but if i ran the department of justice and i thought there was a very good chance that even if he were apprehended abroad, what we would litigated over there and there is a very good chance that we would lose, i would way that very heavily. i do not think we want to be on the losing side of this case. host: boca raton, fla., john, democratic collar. welcome. caller: good morning, c-sp. i have listened to most of what you have been saying and i am pretty much in need -- in agreement, but i think you got

off on the wrong tack initially when you started to describe the difference between the wikileaks and the pentagon pape. i think that is normally not germane. i think that is like deciding the difference between robbing a bank in new jersey and new york. i would like to ask you on a different tack, if you feel corporations should be defined as people and would you feel the impact of the united citizens case will be down the road. guest: first, i have to sit with candor i was one of the lawyers arguinin that case before the supreme court thathe mccain /fine gold law was unconstitutional. i think that and significant parts of the law, in limiting speech and corporate union was

on constitution -- unconstitutional. is far as the impact, it did not have much -- as far as the impact, it did not have much of one in the last election. democrats and republicans each spend about the same amount of money in all of the congressional races and gubernatorial races added up together. in fact, 63 races that the democrats lost in the house, the reason for the republicans taking over the house, democrats outspent republicans in two- thirds of them. so far, it has not had much of an impact. we will have to wait and see if it does. if it is bad impact. there is still the possibility that congress may pass

legislation requiring more in the way of disclosure by corporations and unions if they do or when they do spend money on the elections. i think more disclosure is not only allowed, from the citizens united ruling, but i think it is a good idea. host: end of this wikileaks -- and this ki-leaks is considered to be the biggest and that is the comparison. it talks about how the defense department is reminding federal employees is not to read secret cables because they are

classified documents. let's go to st. petersburg, florida. caller: the sundering of people that come out with truth and the whistle-blowers and the fact that mr. assange himself has had the charges of rape dropped and then picked up again, or molestation. and if yogo on the web site see that the charges themselves and have to do with consentual sex, but that id had to do with getting std tests for these ladies.

it seems like the courts themselves are really geared against these things. guest: i really have no knowledge of mr. assange's sexual behavior ms. behavior. nor about -- or misbehavior, nor whether he is being mistreated by the legal system in sweden. there is a role in free society for criticizing even whistle blowers, even people who think they are whistle blowers if we think they have missed behaved -- that they have misbehaved. if i, for example, use the word "reckless" about him, i mean it.

i think that may even be a soft word to use. that does not mean that i do not think some of the material released is newsworthy or even important, but i do think that he has behaved in a way that warrant criticism. host: david, republican. caller: i have two quick points. at thest, i'm outraged difference between the u. government prosecuting the messenger verses postured -- prosecuting the murder that w revealed by wiki-leaks. the murder of the helicopter civilian by the u.s. military and the two reuter's newspaper people. the u.s. government is aggressively going after assange, but ignoring murder

that took place by the military. secondly, i disagree with mr. abrams. he just wants to change the law a little bit. i think the laws are backwards. the burden should be on those making things classified, not on the public to correct things that have been improperly classified. i do not think the public should bear the burden of trying to figure out what is "proper" in the public domain. and the earlier phrase that the caller said, that we are criminalizing the truth. i agree with that. guest: me respond to your second point. under president clinton, the classification rules were anged so there was a presumption against

classification. that was repealed under president bush. i think it would be important to reinstate those standards. i agree with your second point, that it is important to put the burden on the classifie t justify their classification decisions. and i think that we should move in that direction as much as possible. host: a quick response to this question from twitter -- guest: first, there are all of the problems that i've identified in terms of the current law, but i'd want to take the question and in the way that i'm sure it was meant, putting aside the langue of the law, why shouldn't we be able to prosecute the new york times? the real answer is that is very

important. the first protections that -- the protections that the first amendment affords us is to learn of the information such as the "new yorkimes" has learned, to comment on it, to discuss it as a general matter to reveal it. the pentagon papers are one example. but here with the new york times -- the "new york times" day after day that has been commenting on material made public by mr. assange. the "new york times" did not make it public. the information is out there and i do think that once it is out there and available to it is useful and significant and important to discuss it and

protect the process and the entities that are engaged in that discussion. finally, as i said before, too much is classified. if we start prosecuting entities assemble because material is classified, in the nixon administration the white house menu was classified. we live in a world where individuals with the power to classify routinely over- classified. that makes it -- the fact that someone in host: floyd abrams, thank you so much. >> president obama will meet

with leaders at the white house shortly. he met this afternoon on extending tax cuts and unemployment benefits. those familiar with the discussions of the plan will reduce the payroll tax for workers from the current 2.6% to 4.2%. it would also introduce a tax credit for lower to middle income workers. then more live coverage on of the discussion of new media and the future of journalism. that is at 6:30 p.m. eastern here on cnn. and until our live coverage, -- hear on c-span. and until our live coverage, here's a look at the "washington journal". association of realtors. are you seeing any signs for

optimism? guest: let's remember, we had a home buyer tax credit stimulus throughout last year and the first half of this year, so the home sale activity has been respectable. i will not see great and good. respectable during the period we have the tax credits and once the tax credit and we saw a sharp drop off. in a couple months we have seen the natural revival given the job creation, very high affordability conditions, meaning that the mortgage rates are very low. so, we have seen buyers returning to the marketplace. host: you are looking at numbers, the state of the u.s. housing market, international asciation of realtors. existing home sales in october down 2.2%, pending home sales and october up 10.4% and medium sales price about $170,000, down nearly 1% from last year. what do those numbers mean to you? guest: existing home sales

measures act of the closings. signing at the closing tables, getting the keys. the pending contract refers to contract signing that is not yet closed. given that it rose 10% implies that months of november and december could be a little that -- a little better than people anticipated. of course, with the normal seasonal downturn in the winter months but perhaps of this winter when not be as bad as what we encountered in the past. host: have you seen a number like that in the past year, pending home sales rising so much? guest: that would be a very sizable jump so i was quite surprised and welcoming the figures. remember, coming off a very depressed level. obviously there is additional 10% increase that needs to occur to say that we are back to more normal, sustainable, market conditions. host: you mentioned the tax credit went away. what sort of effect has that

had? did it play out likeou expected? guest: i think it did its intended impact. the intended impact was to stabilize home values. right before the tax credit went into effect- it was falling in a double-digit pace. a sense of the tax credit became available last year, home values largely stabilize and have to remember last year there were 5 million job losses, but despite the five non in job losses home sales actually rose. so, that was a stimulus measure of bringing the buyers back into the market, stays up -- stabilizing home values. now the tax credit went away -- it should not be extended, should be short-term measure -- now we are seeing the natural market forces -- job creation, affordability. people are becoming more comfortable buying a home. host: was a precipitous drop off after it ran out? because the incentive may have given more people that normally

would have a move forward on first-time home buying? was there a backlash or pendulum swing? and how severe is that? how lasting? guest: compared to june -- june was the last month the tax credit was available. then we went over to july and there was a huge tumble, about 30% climb in sales. that is naturally expected because we have to remember that consumers are smart and they see the money on the table, a thousand dollar tax credit to close in june, no money available in july, therefore people rushed and so there were fewer people on the pipeline in july and august but we had the big drop in july and august. but now that we are about six months after the tax credit and as we are beginning toee some healing process. the skull -- host: our guest is from the nationalssociation of altors, talking about housing trends, guesses on home sales

and mortgage foreclosure price is going on. at the numbers to call -- we got this from your web site -- realtors say mortgage interest deduction vital to homeownership and the economy. talking about the mortgage interest deduction being on the table out as something to negotiate over at a place to maybe rain in some of the tax cuts that americans get. tell us your opinion? guest: we have to member the mortgage interest deduction has been in place for about 100 years. it is not a new tax break that suddenly occurred in the past 10 years. it has been arod for 100 years. americans are acctomed to it. bass middle-class homeowners have benefited from it -- vast middle-class homeowners have benefit. great for the middle-class who want to move up in tir career, their family life, to have the access to buying a home because

of the mortgage interest deduction. if that is taken away, natalie, that will hurt the middle class from becoming property owners in the u.s.. so, something that is in place for 100 years, i would say it is a issue in the tax code. host: dallas, texas, where catherine johnson is on the democrats' line. caller: how are you doing today? $8,000 tax credit. what happens with that is that it expires -- you have to pay it back eventually after the third year. host: talking about the first- time homebuyer credit? caller: the tax credit with $8,000 offered last year? host: that is now off the table. caller: after three years, that is what i have been told because people i know in my job have gotten it. but in housing, it does not matter about giving any time -- kind of tax credit.

any kind of tax credit because if people don't have jobs they are not going to be able to keep their houses. in my neighborhood, i work hard to pay for my house but i have so many foreclosures. i am not sure how the housing market is booming when people don't have jobs. guest: thentent of the tax credit was to stabilize the housing market. there was a steep downturn in the marketplace and we have to remember with 5 million job losses last year, that is a severe economic stress. but nonetheless, there are 129 million americans with jobs. and some of the people with the financial capacity may have been holding back, sitting on the fence. but the idea of the tax credit was to say here is money on the table, let's change some of the psychology aut the housing market conditions. if people enter the market, it will help stabilize the prices. stabilizing the prices will help

limit some of the foreclosures. if the prices have somehow declined 10% or 20% additional rather than stabilizing, we would be at much larger foreclosure prices than the much higher level we are currently encountering. host: catherine mentioned homes in her neighborhood being foreclosed upon. what is that doing to the optimism that americans have about buying a home and be able to stretch to afford it? guest: at the beginning stage when foreclosures were rising, we saw much hesitancy with buyers. they did not want to buy distressed buyers. then over time the buyers became more comfortable buying distressed properties because that is where the deep discount of prices were occurring. buyers entered the market. hours -- our sales data and lied that one-third home personages today are distressed -- our sales data implied that one third home purchases today are distressed.

allad loans are made during good times. the defaults that are occurring ramon's originating back in 2005 and in 2006. recent of origination, they are performing super well with very low default rates. that -- but because of the past mistakes unfortunately we have to go through the process of distressed sales. host: let us go to stefan, independent line. caller: i basally have a comment on your conversation earlier about the benefits, tax cut negotiations. it really shows how out of touch the republicans are with mainstream society when they want to give tax cuts for people who have more than enough money and there are millions of people with no money, they are hungry with no place to live and you really have to negotiate with them whether to get unemployment benefits and you have

corporations and thousands of other people who are just living free and they don't really have any income issues. host: to pull you into this conversation we are having, what do you think about the brakes and a tax code for home buyers, for those paying mortgages? caller: i think it is fantastic. anything you can to help regular or people out there who are just having a hard time. it is a good idea to help people don't have any financial issues, it shows how out of touch the republicans are because a lot of the people who did not have monetary issues bid, there are people who cannot feed themselves and we have to negotiate whether we should give them type of help. host: let us go to tyrone who is a republican in louisiana. caller: how are you what -- are you doing this morning? i want to ask you a question concerning the federal reserve in all of this. it seems to me that if we follow the constitution and let the

congress printed currency and regulate the value, then -- it is fine fothe people having trouble with the housing. we could get a handle on it if the congress would -- what they are doing with our money, they are supposed to be the government of the people, for the book, by the people. they are supposed to be working for us. host: the federal reserve is an independent agencyere in washington. they are supposed to be immune from any political pressure or pressure from the administration or congress and they determine how much money to print or set the short-term interest rate policy. right now they announced something called qeii, quantitative easing two, printing the money, because they perceive the number one priority of the current ecomic times is to stimulate the economy and

create jobs. that is the intent. in other countries where you have the legislaturen control of printing the money, you often see that they tried to balance the budget by printing of the money but there is no free lunch. what generally occurs is there is high inflation which at somemes turns to hyperinflation. so, the lessons of the past is, if the political players control the money supply it may lead to short-te benefits but there i always a long-term harm resulting. the u.s. is in a very unique position having an independent federer reserve. europeans also adopted the u.s. method hing the european central bank being independent of political pressure. host: let us take a listen to comments federal reserve chairman ben bernanke made last night on "60 minutes." >> it doesn't seem likely we will have a double dip recession. it is becse, among other things, one of the most cyclical

parts of the economy, like housing, are already very weak and they cannot get much weaker. host: federer reserve chairman ben bernanke. what is your reaction? guest: right now holding market is trying to stabilize under its own powers. i did some calculations about the people who want to buy a typical home in the u.s. back in 2005 versus today. what one finds is that if a person was to buy it's a book home today, their monthly mortgage payment would be lower by about $500 compared to five years ago. and that $500 saving is not a one-time saving but it is occurring every single month. it is a great affordability conditions. and this will steadily induce buyers back into the market. we are in a job-creating environment. we have a long way to go but we created about 1 million jobs

since the beginning of the year. the combination of job market, affordability condition, i think this will steadily help stabilize the market. host: senior vice president of research and chief economist of the national association of realtors is our guest. france is on the democrats' line from indiana. caller: good morning. have i got something to tell you? we jus got back fromlorida. we went to cocoa beach to see my mother in law. and we went to mcdonald's and while i was standing in line and there was guys from massachusetts standing behind us and my husband is from " -- massachusetts and got to talking and you will not believe what he told us. he says he was all in massachusetts and he could have been in a on a property -- $5,000, because of a short sale. thene went to the next one,

17,000. these are bids he is making. $200,000 condo, they sold it to him for 20,000. i am going to buy another one cause i have a 21 year old son -- he bought one for 58,00 but he's got two cond worth $400,000 in cocoa beach. water on botsides. bought for less than $80,000. all have to do is go online and by these properties, selling short through the banks. this gentleman that you have as a guest, i wish he would talk about these short sales and how people with money, cash, can buy property right now for 10 cents on the dollar.

guest: particularly in very distressed markets like florida, las vegas, nevada, where we have seen a buyer is russian for the exact reasons you mention -- home values have fallen so much, the cost of construction is much greater than buying the existing standing already in place at a much lower value. people are recognizing the value so they are coming into the market. one hurdle people has -- have faced was trying to obtain a mortgage because mortgage, i would say t underwriting standards, the pendulum has probably sng too much -- have been very lax in during the boom years and we don't want to have that condition ever again. but the underwriting standard may be too strict, which is the reason why we are seeing greater percentage of all cash purchases occurring in the market. but the caller is absolutely mark. in some markets of their total bargains out there. but even with the multiple bids, they are getting a great bargain.

host: susan writes on twitter -- tell us about the tax credit. guest: in the very early phase of the tax credit back in 2008, it was something people had to pay back. in 2009, they changed the code to say you did not have to pay back. the people who made the purchase -- i forget the exact date, february of 2009 all the way through june of 2010, this is a pure $8,000 tax credit and you did not have to pay back. host:ack on independent line from illinois. caller: i have a couple questions for the german who hopefully who is in line to answer. -- gentleman who hopefully is in line to answer. sent to the backbone of capitalism is kind of supply and demand, i did not understand what the people -- corporations

will get humongous tax cuts, and there is no one to purchase their products, i can't think of one intelligent business person who will create one single job if there are no consumers with money. i believe in the long run consumerist should pay- pay all taxes and the end. no one has a tax money tree where they will pick up and send it to washington. i don't understand how middle- class and especially low income are not getting a tax cuts because they will spend the money. guest: regarding the overall tax code, reasonable debate on both sides. but the home buyer tax credit is directly aimed at middle-class home buyer first-time tax credit or the young family starting their careers.

our data shows that about 45% of the purchases of first-time buyers. first-time buyers typically have income lower than national dian, talk about people right in the middle, low or middle class. but underwriting standard has been very tight and therefore people are getting into the market, having financial capacity. another trend we are seeing in recent market conditions is homebuyers to not want to overstretch. they want to stay well in their budget which is another reason why i think the rate originated are very low. host: talk about the idea of stretching to affd a mortgage or not stretching. what impact does it have on the market? our yers looking at a different kind of property? guest: you have to remember that this decade, the housing market boom and bust, unprecedented. we have never seen such activity in u.s. history.

why did the housing market bubble occur? essentially a credit rket bubble, the money was available for anybody who wants to buy a home. it was the credit market bubble at led to the housing market bubble. the old-fashioned way is to go to the bank and say i want to buy a home and the banks would say show me documentation. that was the old-fashioned tent -- checks and balances. now we are back to old-fashioned underwriting standards -- banks are saying, no, you cannot overstretch. independent of the banks we are getting a consumer survey report showing people what to buy smaller homes, want to stay well within their budget. rather than buying a home -- line host: from "the new york times." a report that during the great

housing bubble -- guest: absolutely, thease of people who may not have under normal circumstances able to buy a home, given the mortgages and as a result there was additional excess of demand that skewed the prices. now recognize that people overstretch the their budget and in some cases banks coming out with a very, very long documents, very difficult for the consumers to understand what they are signing. the payback period -- very unfortunate the housing market crash. host: have you visited any neighborhoods in the u.s. yourself that have had the foreclosure epidemic happening,

where there are blocks and blocks of homes dotted throughout the neighborhood that are being foreclosed upon or which are now vacant or in hands banks rather than in the hands of a homeowners? guest: i would say i go out in the field about 50 times a year in very different places -- st. louis, las veg, all different parts of the country. in just about every place, and countering economic difficulties, job losses. foreclosures are high. in some neighborhoods, very high. one sees a subdivision being built, but halfway through a completely stopped. now you have a situation where there is a line of vacant homes. but the previous caller mentioned the discount prices. .

>> you guys inflated the heck out of prices of housing. all of these contracting businesses or with contractors. you guys just can't bring up the prices. anybody could see this coming around the corner. i am hoping on a double dip recession. these housing markets should be capped at a 2% rate. >> i did not mean to cut you

off. we did understand you. >> the first question is the monthly data that has been reviewed by the market. that is except for the credibility. the new home sales numbers are released on a monthly basis. regarding the housing market bubble, as mentioned, prior to this decade, there was always a natural check and balance. if a one-if a young couple wants to buy a new home, they do not have the necessary income. they have to do with the old fashion way, stay well within their budget limit and demonstrate credit history and credit build up. then, we have the housing market bubble that was fuelled by the

credit market bubble. it was a very complex system. many people do not understand the concept. the money flowed into wall street. because of the loose credit underwriting standards, it led to many people who should have waited a few more years to get their down payment and their credit history. they t their loan right away, and we had this unfortunate situation where the prices were rising 50% while the income was rising only 4%, off of a percent sign. -- 5%. i would suggest, i would think

thatç the normal average of 3%o 5% annual return is something likely to take place once housing normalizes. we are not there yet in terms of normalizing but we are approaching. middle of next year, we may get there. host: loretta in cleveland, ohio. caller: how are you this morning? çhost: we are fine. go ahead please. caller: i was really finished when president bush came out with his ownership society program. the ownership society program was his effort to reach out to the low and middle class consumers, first-time home owners. host: why do you say you were finished? caller:ç republican do not do

anything they do not expect a return on. look at what we got. it fattened up america for slaughter. it was a factory. they passed all the people through there. they did not care whether any of the inrmation was correct. most o those applications for mortgageç lns, it was the agency that added and tweaked it to get it through. it is sad, when you look at how the system is set up, all we have is a pool of consumers. the way bush ran the past eight years, his billionaire buddy is, you were just passed from one to another.

then wall street came. they are still making their money off of us. çguest: home ownership rates historically has been about 65%. there was a continuing upward trend from 65% through the clinton years and halfway through the bush years, reaching zero most close to 70%, now it is closer to 66%. so we are returning to the home ownership rates that were historical. we need to keep in mind, not çeveryone can own a home in tht particular stage of their life. if property can be sustained, within their budget, it is good for them, owning a piece of america, but it has to be sustainable.

people who own a home should be able to stay in their home, not where they are overstretched and subsequently foreclosed upon. host: critics say it is creating an unrealistic goal, theç potential for everyone toe a homeowner. it can lead to a problem of people not prepared to take that risk, taking it nonetheless. guest: we need more responsible home ownership. there is a habitat for humanity's program, for example. you have families who cannot get a home through the traditional channels, and you see the joy that they have when they are given a home, soç we want to do things to extend this feeling of home ownership. these types of things are showing that, yes, people can stay in their homes.

however, these complex wall street products that say, let's lend to them, as long as housing prices go up, housing prices will cover the cost. of course, the price ofouses went down. mqi lawrence yun is the senior vice president of research, chief economist for the national association of realtors. james on twitter says -- do you agree? host: in a normal stable market, there is -- housing on to the north, they buy distressed property and they fix it up. that has always been the norm.

what was unusualç in the housig market, people were buying property without seeing it, without putting 1 foot of equity, hoping to flip it within six months. so we had huge amounts of buying activity with the intention to fix it, hoping that market forces would naturally >> this is hosted by the council on foreign relations. we may interrupt this event to go live to the white house when the president speaks about tax cuts and unemployment benefits, but we will come back to this event after the president speaks. >> it educates and it is a bit of a throwback to the era of broadcasting. secondly, we are here to honor stands a short -- stan schorpe.

most of you will remember him from npr. >> we are leaving this to go live to the white house. here is president obama. >> we will need a responsibilities to resolve our differences and speed up the recovery and get people back to work. there is no doubt that the differences between the parties are real and they are profound. ever since i started running for this office, i have said that we should only extend the tax cuts for the middle class. these are the americans that have taken the biggest hit, not only from this recession, but for nearly a decade of costs that have gone up full paychecks have not. it would be a grave injustice to let taxes increase for these americans right now. it would deal a serious blow to

our economic recovery. republicans have a different view. they believe that we should also make permanent the tax cuts for the wealthiest 2% of americans. i completely disagree with this. the permanent extension of these tax cuts would cost us $700 billion at a time that we need to start focusing on bringing down our deficit. economists from all across the political settlement -- segment says that it does very little to grow our economy. this is where the debate has stood for the last couple of weeks. what is abundantly clear to everyone in this town is that republicans will block a permanent tax cut for the middle kos -- middleclass unless they also get a tax cut for the wealthiest americans, regardless of the impact on the deficit. we saw that on two different boats -- boats.

-- votes. this would be a chilling prospect for the american people. these taxes are scheduled to go off on january 1 because of arrangements that were made back in 2001 and 2003 under the bush tax cuts. i am not willing to let that happen. i know that there are some people in my own party and the other party that would prolong this battle even if we cannot reach a compromise. i am not willing to let working families across this country become collateral damage for political warfare here in washington. i am not willing to let our economists look backwards just as we are pulling ourselves out of this devastating recession. i am not willing to see americans that stand to lose their unemployment insurance at the end of this month be put into a situation where they

might lose their home or their car or some additional economic catastrophe. as much as political wisdom may dictate, it would be the wrong thing to do. the american people did not send us here to win symbolic victories. they would much rather have the comfort in knowing that when they open their first paycheck on january of 2011, it will not be smaller than it was before because washington decided they preferred to have a fight and failed to act. make no mistake, taxes going up on all americans would raise taxes by $3,000 for a typical american family. that could cost our economy well over 1 million jobs. at the same time, i am not about

to and the $700 billion to our deficit by allowing a permanent extension for the wealthiest americans. i will not allow any extension of these tax cuts for the wealthy, even a temporary one, without also extending unemployment insurance for americans that lost their jobs or additional tax cuts for working families and small businesses because if republicans truly believe that we should not raise taxes on anyone, then surely we should not cut taxes for wealthy people while letting them rise on parents and students and small businesses. as a result, we have arrived at a framework for a bipartisan agreement. for the next two years, every american family will keep their tax cuts. not just the bush tax cuts, but those that were put in place over the last couple of years that are helping parents and students and other people manage

their bills. in exchange for a temporary exchange -- we will be able to keep the tax cuts for the working families. the child tax credit that makes sure families do not see their taxes jump off to $1,000 for every child and the american opportunity tax credit that insurers over a million students and their families that will not see their costs of college shoot up. these are the tax cuts for those that have been hit hardest by this recession. it would be unacceptable if their taxes went up while went down.lse's we are facing the prospect of having this lifeline yanked away from them in the middle of the holiday season.

this would mean a 2% employee payroll tax cut for workers next year. the tax cut that economists agree is the most powerful thing we can do to create jobs and boost economic growth. we will prevent -- we will provide incentives for businesses to complete write off their investments next year. this is something identified back in september as a way to help american businesses create jobs. it is finally going to get done. in exchange, republicans have asked for more generous treatment of the estate tax that i think is wise. but we have insisted that that will be temporary. i have no doubt that everyone will find something in this compromise that they do not like. there are things in here that i do not lie, mainly the extension of the tax cuts for the wealthiest americans and the wealthiest states.

but these tax cuts will expire in two years. i am confident that as we make tough choices about bringing our deficit down, as i engage in a conversation with the american people about the hard choices we will have to make, it will become apparent that we cannot afford to extend those tax cuts in the longer. as for now, i believe this bipartisan plan is the right thing to do. it is the right thing to do four jobs, for the middle-class, for business, and for the economy. it offers us an opportunity that we need to cease. it is not perfect. this compromise is an essential step on the road to recovery. it will stop middle-class taxes from going up. it will spur the private sector to create millions of jobs and add momentum that our economy

needs. building that momentum is what i am focused on. it is what members of congress should be focused on. i am looking forward to working with both parties to seek that we get this done before everyone leaves town for the holiday season. we cannot allow this moment to pass. let me just end with this. there has been a lot of debate in washington about how this would ultimately be resolved. i just want everybody to remember over the course of the coming days, that these are not abstract fights. 2 million people will lose their unemployment insurance at the end of this month if we do not get this resolved. millions more of americans would see their taxes go up at a time when we can least afford it. my singular focus over the next year will be on how we will continue the momentum of the recovery to grow this economy

and create more jobs. we cannot play politics at a time when the american people are looking for us to solve problems. i look forward to in gauging the house and the senate's, members of both parties, as well as the media in this debate. i am confident that this needs to be done and i am confident that congress will do the right thing. thank you very much, everybody. >> from the white house, we are now going back to the council on foreign relations to hear how the sourcing and reporting of news stories is affecting national security and foreign policy. you're watching live coverage on c-span. >> he compared it with the roman town square. he saw the new technology --

let's turn to clark hoyt who is the editor at large at bloomberg news and mark whitaker who is the washington bureau chief of nbc news. should we talk about with the leak -- with the leaks -- wikileaks first? >> three or four years ago, there was a story that came out , and dan said that if this had been the case in the time of watergate, we would not have been able to report that story. a young staff member said that you folks in journalism have to come up with something better than watergate for people in my generation. they were not around for watergate and richard nixon was the guy who open the door to china.

-- opened the door to china. he probably did nothing worse than anyone in need any other generation, but he just got caught by journalists. please come up with something new besides watergate. let's turn to wikileak s. is there a chilling affect when stories like this reported from data that was just released? do the american people have a right to say that you are attacking people that are attacking diplomacy in our country? >> sure. there is certainly going to be a chilling affect on diplomacy. i do not think that this equates

in any way with watergate, which brought down a president. it does not have the potential in it anyway. while it may have a chilling effect and cause diplomats to do their business in some different way, i think you can look at what they have released. i think that you can look at that and say that it reveals some very encouraging things about u.s. diplomacy. also, for those who believe that we can move everything in the world at our will. i think it shows the limits of american power and the american

ability to control events. those are good, educational things for the american people to have. >> let me follow-up with mark. let's say the pakistan government has some information about the insecurity of nuclear weapons and is reluctant to talk to the american public. how're you going to sit on this? >> the primary reason that you might ask that question right now is not that the united states government created a communication system to take all

of this information off of a hard drive. i think that, as a citizen, i hope that it does have a chilling effect, in as much that journalists need to do their job and bring important confirmation that the public has a right to know. it disturbs me that we have all this information floating out there in the government's that may be accessible in that way. i think that that has the potential of more harm. >> the fact that it is so easy to find? >> obviously, it is an unintended consequence. the thought that after 9/11, by creating more sharing within the government and all these different branches in the computer systems, and that it would make it easier to go after

terrorists. but they clearly did not do it in a smart way. >> is that passing the buck of responsibility? if journalists are saying this? >> the other thing that is different about this situation compared with other situations is that this was not the of the newspaper's own reporting, it was something that was dumped in their lap. it was not dumped in their lap in the case of the pentagon papers, but somebody thought that there was a specific policy agenda that was wrong headed that somehow the american people needed to know about. perhaps, if the door -- if the people did know about it, maybe they would stop it. e do not know what manning's

motives were. he perhaps had too much time on his hands. he talks about transparency, but if you examine what he said, that he has this anarchistic agenda to, actually, by exposing this massive security breach, to get the u.s. and other western governments to shut down in a way that could actually hurt them. again, i think that if you actually proceed with caution, they talked at length with the government's about national security.

i think they did a very good job about presenting its and laying it out -- presenting it and laying it out. i think we have to look at what the sources of our information are. in this case, it disturbs me quite a bit. >> i think that that will subway nicely into what we wanted to talk about before we turned to questions. when earthquakes occur, the first word is from people on social networks and cellphone pictures. the uprisings in tehran was covered on social media platforms and cell phones. what are some of the implications of this? >> one of the implications is

speed and public service. i was in the newsroom of "the times" when salaam berger put the plane down in the hudson river. a picture was from somebody with a cell phone that saw the aircraft about to land in the river and snapped off some good shots that were not equal to professional photographers because they were not there to see it. if all this organization does is rely on ayrshire eyewitness accounts, i think that is an abdication. photographers and reporters supplement and verified information via the web and talking to the newspaper.

>> you can quickly verify that an airliner has gone down the hudson. >> you sure can. >> what about a demonstration in a part of the glove the -- of the globe that is remote from us when somebody opens -- sends out a tweed and says they have opened fire -- 8 tweet -- eight weeks -- a tweet and says they have opened fire. >> that can be a very good thing. the fact that responsible news organizations want to vent that information, it becomes difficult in. and not just because that we do not have a source, but we do not know if it has been doctored. digital tools make all lot easier for people to take -- to make what is not genuine

information look like genuine information. that is what disturbs me. i think that in a situation like the green revolution in iran, there is no question that we should rely on those sources of information. how we can tell whether that piece of footage that has been uploaded on a cell phone is genuine and has not been doctored in someone, that is a tough one. >> if you find out in the course of an hour the 100,000 people downloaded a video that is supposed to be a significant event, the create pressure on news organizations to follow through and report that themselves and their but amplify restoring.

>> news organizations have faced this kind of question. there are rumors out there. people are talking about the rumors. most responsible news organizations recognize some serious restraint on that. it is unquestionable, i think, that technology increases that pressure and makes a greater. -- makes it greater. news organizations will put it up there and because of the speed, we can fix it and corrected if we are wrong. -- correct it if we are wrong. you can put it up, and it could be wrong, like i experience at

"the times." you can put it up and it could be wrong, and you could fix it later, but what if somebody is all the incorrect information and left and did not come back. it is a real credibility issue trade. >> there were limited numbers of additions and most of them were thrown away the next day. now, if the new york times has something wrong for one hour, you make corrected the next hour, but what was out there for that our lives on forever in cyberspace. >> a lot of people would assume it was not correct. >> it is interesting. on the one hand, there is absolutely no question that 24- hour news, the web, and

everybody is a journalist. on one level, it increases the sense that in order to be first and be competitive, you have to get it out. i think we have reached a point that it cuts the other way. it is very hard to be 1st unless you have really been working on it. once you get into this competitive situation. the trade-off between chasing that idea of being first and maintaining your credibility by making sure that you get it right, i think it has become a lot easier argument to have. it is fuel, in this day and age, to think that you will always the first.

one problem we do have is the question of credibility. >> i think that being first is not the issue so much as someone else being first and then someone is second and third. at what point do we look clueless, even though we are not able to verify what is out there. i think that is a serious problem. >> mark, one of your predecessors, tim russert, who said to be aware of the pamphleteers, he expressed that the news industry has been a -- do we now have sources of informations in this country

that are left of center or right of center? do we have news organizations or are we becoming a little more like the european press used to be? i am going to pressure on that because you were in the unique position to preside over both between nbc and its msnbc. on msnbc, is it a market choice to go in that direction? first of all, i think that the thing in this whole debate is to remind everyone but the size of the audiences. the highest rated show on msnbc is key doberman -- is keith oberman.

his main competitor is bill reilly and -- bill o'reilly. o'reilly has a third of the viewers of other newscasters. >> to be fair, you would not be happy if none of these people were watching. >> the thing about cable television is that it is not -- it is almost intentionally a niche. cable has a vault for good reason because more people can look for more specific programming that they are looking for. in has work financially for

advertisers who will pay a premium to reach a smaller audience of people who have a defined profile. in the same way that entertainment, lifetime, the usa network and others, cable news has turned out that the same thing is true. cnn, over time, has lost viewers. and that does not mean that there are not people that are not interested in the news, but they are going to stick with network news which still has a net -- has good audiences.

we run into this all the time. you probably heard of an episode with mr. oberman a couple of weeks ago. there is no question that msnbc, once it took on a political flavor, probably in contrast, the ratings picked up. there was this phenomenon where it became the default panel. a real audience. people in this room who they watchung msnbc all day. that is their channel. that never existed before. from an audience point of view,

we like that. from a commercial point of view, it has worked out very well. the idea that somehow we cannot keep that separate from nbc news is this proven by the fact if the people who want it, the less ideological treatment of the news on our networks, are disturbed by the fact it was within the same company as msnbc, we would not have the ratings. we have within our company and other cable news network, cnbc. it is not as if there is a deliberate corporate strategy of going left, right, or center. >> there might be the strategy in terms of creating an image. journalists stuffed

shirts and sanctimonious to get worried about this? >> this is not uniquely a broadcaster cable problem. in my time as public editor, i came to believe that for certain set of the readership, the masthead was the liberal "the new york times". there was a sense the newspaper was edited ideologically. among a certain set of readers. what happens with msnbc and fox leads over in the sense, they do it, you are doing it. the first public editor of the "the new york times" asked the question, is this a liberal newspaper and answered, of course it is. my answer to that was somewhat

different. it certainly is a liberal newspaper on the editorial page. it is by design a liberal newspaper on the op-ed page. you can say that there is a liberal sensibility in a liberal arts cents in the newspaper. it reflects a market where it is published and readership. it does not take intelligent design or creationism as serious alternatives to darwin. many people believe it gives too much attention to skeptics about global warming. times" does an excellent job of professionally

reporting the news with a, i cannot use the term, fair and balanced, it has been destroyed. it is fair and accurate, fact based in its news columns and to reflect as many aspects of this situation as are warranted. i have asked people, if you are persuaded it is a liberal newspaper, in the context of fox news, how do you explain winning a pulitzer prize for democratic -- the democratic governor of new york. how do you explain the newspaper was the catalyst in the agent for the downfall of charlie rangel. the democrat who was chairman of the house ways and means committee until the times exposed his ethics problems. how do you explain the problems it created for richard blumenthal.

an exaggerated his military service. the senator is the attorney general. there is quite a list that suggests it is not ideologically selective in terms of investigative targets. >> we will open it up for questions. that gentleman has a raised hand. >> if i may go back to wikileaks. when i first heard about it, i was in shock. i started thinking about it. and read what "the new york times" wrote about it. i began to think, what is the big deal here? in the sense that this is the

kind of stuff that we hear about all the time. it is the kind of things that are linked to journalists like you. -- leaked to journalists like you. is it such a big deal? when i came away with was to conclusions. one was people in the state department are better writers funnier and smarter than sometimes they're made out to be. that was reassuring. in terms of our intelligence service, the number of people we have on the ground to report things was abysmal. there was nothing at least that i read -- is it a big deal? >> let me point out and asks out

-- ask our guests. one of the leaks mentioned 50 high-security targets in the u.s. there are a lot of people that worry about that. are these targets they had not figured out on their own? there are a lot of people in government and the state department, people who have been in government and served in diplomatic service that think this has a chilling effect. even if it was not news to you. they think it will make it harder for them to do their jobs. >> it is a big deal. this is an audience that probably has a much deeper, more nuanced sense of foreign policy without wikileaks. the general public has had maybe only a dim understanding of some

of these. it brings a lot of it into high focus. it is educational. there has been plenty of reporting that the arabs -- arab states are unhappy about iran. you have something concrete that gives you a much deeper sense of that. or that china is concerned about the internet. we learn about specific operations that were targeted on u.s. government computers. also forget that by the count of news organizations that have publish the material, there is stuff they did not publish. they still had access to and they could have published. if you are a diplomat or a source for intelligent abroad, the fact that there was extra information that did not get published as to inhibit you. the sources for the best

diplomats and our best spies are sort of like the sources for journalists. they are people who are not out there talking on behalf of their governments. sometimes, they are giving you extra information. there are not violating the trust. they're telling you more than they are supposed to tell you. that is what a good diplomat or spy will get out of them. those are the sources that if they think that will not be kept in confidence, they will say it is not worth it and not worth the risk. i am not going to say more than i am paid to. >> i wonder about this. whenever we get subpoenaed, we say we're not going to share our sources of the information. it is important that our sources know they're talking to us and they are not talking to the united states attorney. when somebody talks to a u.s. diplomat, do they think they're

talking to the press? >> i think eventually, it will wear off. i do think this is going to and -- it should cause a major review of the internet and information sharing protocol within the u.s. government. that is inevitable. to the degree that forces shut down and are less force -- sources are less forthcoming, it is human nature to want to blab a little bit. >> secretary gates said last week this is been going on forever. he quoted john adams complaining about this a long time ago. and said the government's deal with us because it is in their interest to do so. they know that it is the nature of the u.s. to leak information. they continue to do with us because they need to. >> any other questions?

>> i am with the u.s. department of defense. can you lay out for me what transpired when the first leakage of information to place the concerned dot and military activities in iraq and afghanistan? i was surprised there was not a more forceful u.s. government response. isl the sudden because it see these cables you are seeing, there is this a poor. why was there not a more forceful response earlier? thank you. >> first, the first material that came out was almost unintelligible to most people. it was material that was written in the field in military speak. a lot of it was impossible to

understand. this is material produced at a higher level by people, many of them were quite good writers. it has a much more dramatic impact. >> is gossip. the other thing is some of this is unfolding because of assange and his motives as strategy. he got most of this information from manning all at once. manning is under custody. assange has decided to dole out slowly. partly because he has his own illusions of grandeur and once a say in the -- to stay in the media in there are some legal reasons. he is revealing information,

threatening to reveal other information to protect himself because he has a lot of powerful enemies. the way in which the timing has come out is driven -- as much driven by that as anything. >> all the information came in at the same time. >> i do not know whether the bank of america information or whatever it is that is allegedly coming out, whether that came from manning. >> we heard a major breabank and also china which would be interesting if it is forthcoming. >> i want you to address the business model question. we are interested in quality and is continuing and can it continue for profit? what about the competition from the internet.

the business model question, how does nbc news survive in the age of the internet when people do not need to wait for their news and are not getting it from tv as much as they're getting it from the internet. how does "the new york times" survive? what about the non-profit model which i am interested in knowing about. the report rock model of charging for the internet. you have done this thousands of times, i am sure. >> i am a veteran of over one month, which at the rate they are hiring bixby began to become a veteran. there will be somewhere north of 400 journalists in washington for bloomberg by early next year

sometime. i spent my career in a news that nor company longer exists, knight ridder, which was the second largest in the u.s. it published several papers. the company was forced by wall street, a wall street trader who made a bed and it was sold and forced into play and broken up. the general newspaper business model is broken. it depended on circulation revenue to pay essentially for the distribution, the production and distribution and it depended on advertising revenue to pay for the days. all that -- the newsroom and

correspondents around the world. the good news in newspapers these days is it is falling less fast that it was before. it is still falling, and no one where the floor is. is papers like "the new york times" are the likely once to figure it out and transition from the printed page to the internet. advertisingwherever -- is going. at lower rates than was true in print. an organization like bloomberg has a different model. it produces news and analysis for people who will pay substantial amounts of money for it. it is actionable for them in some way in their business. whether it is the original bloomberg terminal that traders used to make decisions about investments, or whether it is a

new service that is coming call bloomberg government that will be aimed at people who have relationships with the government in one way or another. that is a robust business. for which there is substantial demand and willingness to pay. the long-term question is, will people pay for when it is considered such a commodity, sort of general news about government aimed at the citizenry? that is still an open question. >> the key in past and future business models that will be affected starts with creating a product that individual consumers will pay for. it is not just about advertising. it is also about -- it used to be subscription and it still is on the paper side.

in npr, viewers will send in donations to support you. in cable television, it takes a slightly different form. you will pay your cable bill partly because you get these cable channels and the cable operators feel they have to pay to offer you that package. one of the things that was tragic in a way about what happened with newspapers and other media organizations is they went down a road that depended only on advertisers. thinking that could support them and throwing the principle that you had to charge the consumer as well. i think what is happening out there financially to the this business, i lament it as much as anybody. the industry has only itself to blame. there is nothing that said all

of the great news organizations had to start giving away their content on the web for free. they did it because they did not take the web seriously enough at the beginning. when they did take it seriously, they viewed it as a marketing tool and not a true source of competition. when it started to generate some advertising revenue, they thought that will grow to the moon and that will support it and that has not turned out to be the case. a lot of horses are of the barn and they are trying to figure out how to put them back in. it was not inevitable. >> there is nothing that feels like success. for years, the newspaper industry was so profitable and when threats like the internet that were coming along, it was difficult for someone, as general motors. it is difficult when you are extremely successful to be nimble and to change in the

face of external threats. even when you can see them. >> to the market factors affect coverage? a major story that is before the world. is it responsible for the disappearance of foreign bureaus? >> the general principle is true. the less money you have, the less you can afford to cover. on the other hand, it comes back to this question of foreign news and foreign bureaus. i think it is too bad that a lot -- there are not 50 great american news organizations that have bureaus all over the world. they're less than a dozen. on the other hand, i think that in response to a lot of the

changes in consumer habits and technology and availability of information, news organizations have to focus on where they can add value. a lot of information you used to be able to get from "the new york times", anybody with a computer and an internet connection can get by getting a lot of the original source information, for an papers or whatever. it is not so simple -- it is not clear to me at least that because there is other fewer american news organizations that have foreign bureaus that the availability of smart information about the rest of the world is not available to people who want it. >> let me pick up from your question, if i could. is there -- is a possibility that the news business will be deprofessionalized? people will be reporting their

own stories their own way within 10 years, forming their own associations? >> i do not think it is mutually exclusive. there will be a professional -- a profession of journalists who are trained and to have standards and probably have bigger audiences than a lot of those nonprofessionals. the nonprofessionals are going to be in there because they can. there are not the barriers. in order to be published, you had to buy ink by the barrow and newsprint, or you had to be able to get huge cameras out into remote places. a lot of people have those tools. we have to compete. in aggregate, they add to the cacophony. they will become as powerful or

competitive in aggregate, but not individually. the news organizations will have the loudest voice. >> it is bewildering to most people. ultimately, there is a shaking out. people will turn to professional news organizations with standards that can recognize and understand to help them make sense. >> there is a blogger who sold for millions of dollars. she operated out of a studio apartment in west hollywood. >> we had a reunion of "newsweek" workers.

she emailed us and said "now that i am rich, i will send you a check to pay for drinks for everybody." >> thank you. >> when we talk about the major news outlets, it is still television and cable and newspapers. it seems to me that it is homogenized and pester is. nbc has more viewers. if you look at the content of abc and cbs, the content is the same. i consulted for abc for a lot of years. i know how that works. everybody in print and television looks over their shoulder at the other -- and if the other guy is not going with that story, should weigh and all that. it seems to me that they missed

the boat on wall street. >> there is an extraordinary but -- book that was just written. in terms of daily journalism, the guys who caused the problem are still there. they're making more money than they have made in their entire life. they gave back the target money so they can do what they -- a tarp money so they can do with there were doing before. no deep reporting about who these guys are, how their operating and what they're

doing. there is a new film "inside job" that i recommend. why is it not on the front page? >> they have been writing all this. >> he is talking about this on npr. >> we have hundreds of people covering wall street. >> i went back and read the coverage that the times had produced on this. going back over time. people said there was never any warning. it came out of nowhere. i was pretty impressed with what i saw. i think you are putting your finger on something that you hear a lot with a lot of different stories. people may be asking of news media more than news media are able to deliver. which is results. you sound to me quite angry about what is happening.

as many americans are. they're angry about the bonuses and back to business as usual. somehow, why is the news media not doing something about this? >> we have an hour on msnbc every day if you would like to watch it, it comes on at 4:00 every day and it is all they talk about for an entire hour every single day, five days a week. exactly what you are talking about, with the same passion you are talking about. >> they ignore the world series to talk about it. >> some people think he is a little too passionate because that is all he talks about. >> one observation that a question -- and a question about

the chilling effect. once we discovered that the law changed and there is no more confidential, i have not seen a [unintelligible] so the chilling effect was immense. one of the very best compared religious students of sociology, two of them, so that gives you a sense. patients can read their medical files, most do not. physicians note he had a good taste for wine. i expect that diplomats will clean up their language.

i understand it is not the american tradition. we are depending on resources and method. is not a time [unintelligible] for us to answer israll ans no. my answer would be no. i think that we have managed and model their way through for a long time without that. talk about a chilling effect. this is a government that tried to reclassify the fact that british intelligence cooperated with the united states during

the second world war. there is a certain absurdity to an awful lot of classification. you can get an administration that feels hostile toward the media. and if you have an act like that that is available for prosecutions, the potential for this kit -- mr. is great. i have not seen demonstrated the compelling case that without it, we have suffered some sort of rivers harmon damage. harm and damage through the ages. i heard on sunday a republican campaign strategist said assange committed treason. he is not an american. i do not know how you commit

treason against a country or not a citizen of. this would be a recipe for a great deal of harm. >> it is ironic that "the guardian" would not be publishing it if it were leaked from the british government. >> i want to thank you for being here. we have run out of time. thanks so much. thanks for remembering [applause] . [applause]

>> president obama announced an agreement with republican lawmakers a short time ago on legislation to extend expiring tax cuts after two years and to renew jobless benefits. the planned cuts social security taxes for millions of americans for year. house democrats were no closer to signing on to the president still after meetings today. harry reid was also noncommittal, issuing a lun -- a one line statement. "now that the president has outlined his proposal, senator reid plans on discussing it with his caucus tomorrow."

it can see the president make an announcement about the agreements at 8:00 p.m. eastern here. remarks by securities and exchange commission chairman mary schapiro and she talks about efforts to update the regulation of dealer broker companies where financial transactions are made on behalf of a company and its clients. the sec is one of several agencies in charge of regulating the financial industry. this is about half an hour. >> good morning. i am chair of the sec regulations committee. it is my honor to welcome mary shapiro for our keynote address. she will be speaking with us for about half an hour. hopefully, there will be time to take some questions from the

audience. i encourage you if you have questions to fill out those parts and send them up. please join me in welcoming sec chairman mary schapiro. [applause] >> the morning. it is a pleasure to be here. it is through your efforts that investors receive the timely, reliable, and comparable information needed to make informed investment decisions. it is through the decisions of fully informed investors our markets are able to officially allocate the capital that fuels innovation and growth in our economy. unfortunately, the scandal and the crises of the last decades have shaken the public's trust in america's capital markets. for some time now, the sec and

other regulators have been working hard to restore that trust. this goal is not one that can be achieved our regulators along. the accounting profession has an important role to play. one of the first rules were adopted was one that recognize the importance of your profession to the functioning of our financial markets. their rule where we saw to leverage the knowledge to my judgment, and expertise of certified public accountants. it was early 2009, and wanted to find a way to provide insurance to investors their accounts held the money their investment advisers said they held. we enacted rules and called on independent public accounts to serve as a second set of lies in support or investment adviser examination team. the rules mandate annual surprise examinations of advisor held accounts but independent -- by public accounts. as of the affiliate's served

custodian. the adviser must to ensure controls are in place to control assets. as a result, we believe it will be more difficult for an adviser who has misused assets to get away with that deception. currently, we're contemplating ways to further leverage the profession by updating the custody role for broker-dealers as well. that rule requires auditors to provide assurance that the numbers are accurate as well as controls and compliance. the rule was implemented nearly 30 years ago. among other things, we're considering strengthening controls over the foundational financial responsibility and customer protection requirements. we're considering preparing a 21st century foundation in which

we can implement its new oversight authority over broker- dealer audits. we're considering eliminating overlap for broker-dealers that are custodians of a registered investment adviser. we're considering enhancing oversight of broker-dealer custody by providing new information and tools to regulatory examiners. once more, our actions will _ your importance to the financial system. custody rules have been far from our only concern. our efforts to range beyond areas that directly attacks the accounting profession. i think it is fair to say our investor protection efforts have been in overdrive for the past two years. since i arrived, we revised our enforcement an examination units so those that may be tempted to harm investors have a real fear of being caught. we adopted comprehensive rules to strengthen the resiliency of money-market funds and rules that give investors better

information regarding the qualifications of their advisers and the fees they are charged. we began a detailed review of the structure of today's high- speed computer driven markets, our view that position us to respond to the events of may 6 with circuit breakers and other measures intended to reduce the chances of another similar event. more recently, we have stepped up efforts to increase transparency in areas that may breed systemic risk, like the asset backed securities market and private funds. and since the passage of the dog frank act, we have created -- dodd frank act, we have created [unintelligible] this is the cornerstone of our efforts to restore faith in our financial markets. ropemaking and our reforms are not enough to achieve that goal. -- rulemaking and our reforms are not enough to achieve that

goal. in fact, in our quest to restore confidence, there is one in particular we cannot dismantle without your help. one barrier without which you have to leave the fight. skepticism that springs from a decade they see marked as misleading window dressing and quarterly reports and off- balance sheet exposures that prevented them from making fully informed investment decisions. an essential touchdown is an investor's ability to get an unvarnished assessment of the company's financial condition. that is why the foundation of markets is accurate and transparent financial reporting. and honest verification of that reporting by an independent objective party. the commission's role in promoting uniform principles for these tasks is an important

chapter in our history. while accurate and transparent reporting begins with detailed reporting from every corner of an enterprise, which generates numbers that add up at the bottom line, it does not end there. that is because accurate reporting is also about time we come awful, and fair disclosures of those numbers. it is about getting to numbers that mean the same thing, from company to company and from country to country. it is about pushing back to assure yourselves that investors can rely on those numbers. i appreciate you have a difficult job. translating a complex and global financial world into something that can be understood not only by market professionals and regulators, but by individuals with less investment experience or sophisticated financial training. i recognize your responsibilities are only growing. as we all appreciate, today's markets are far more complex than those navigated by the

accountants who formed the predecessor organization more than 120 years ago. your profession was a fundamental rule remains more important than ever. as spelled out in your code of conduct, your obligation is to discharge duties with integrity, of john timoney, do professional care, and the genuine interest in service to the public. that is why we see your profession as an important line of defense and ally in protecting our markets and restoring confidence. for most investors, the most visible front is our and best -- enforcement efforts. one of my priorities on returning was restructuring our enforcement unit and streamlining our enforcement procedures. today, our teams continue to pursue cases stemming from actions that contributed to that financial crisis of the past several years. these have included successful

actions against countrywide, american home mortgage, a new century, and citigroup. public companies failed to disclose millions of dollars in -- in losses and billions of dollars in exposure to subprime mortgages. these facts when unidentified or were in some cases actively concealed by the prepares and executives charged with making them public. their failure is not only -- has not only cause damage to shareholders but the economy as a whole. we continue to demonstrate a willingness to prosecute those who portrayed -- betrayed the trust of the public markets. bringing actions after the fact is no substitute for full and honest disclosure at the outset. enforcement actions are cold comfort for investors who lost their savings after relying on misrepresentations or half truths. we have been struck by the

magnitude of the misrepresentations we uncovered. even when these investigations lead to a high-profile charges against cdos or cfo's, controllers, they can also raise troubling questions about the many others involved in preparing and auditing the filings and reports. we wonder if questions could have been asked early on by preparers and auditors, or of warning flags were -- but were ignored. we wondered if the losses to shareholders and investors were multiplied many times because material information was not made available in a timely fashion by people who should have been able to produce accurate disclosures. rather than sec prosecution after the fact, shareholders should be able to rely on accurate accounting and effective auditing upfront and transparent financial reporting. i urge you to ask yourselves the critical questions when you sit down with the numbers. questions like, could i be doing

more to insure that the information is accurate? are the results in reporting which will thinking or to report results? joye understand the company i am monitoring well enough to recognize red flags? have i taken all necessary steps to respond to them? even if the numbers are accurate, do they convey a fair picture, or is there a need for additional disclosure? if these questions to not yield the answers you need, i'd urge you to have the courage to challenge those answers. a willingness to take your judgments about the quality of disclosures to the highest levels of management and to the audit committee. we appreciate that it is not always pleasant to report results that are not ideal. we know this firsthand. earlier this month, the sec completed our performance and accountability report. it is the equivalent of a company's annual report.

we posted it on line. our gao audit found that the financial statements and notes included in the report were presented fairly and in conformity with u.s. [unintelligible] we discovered two weaknesses. it is good to know what the witnesses are. they are in no way acceptable. we are moving to address them. we will be migrating our financial system to a shared service provider designated by the office of management and budget. one with proven ability to meet the high standards the american people deserve. just as we rely on our prepares an auditor's, investors rely on you to find and identify -- identify weaknesses of the can be addressed. you're honest assessments are what the accounting standards division expects and what investors in capital markets deserve. the challenge of restoring public confidence is complicated by the fact that today's

investors rely not only on accurate information about u.s.- based entities, but about entities across the globe as well. today, a tucson based investor trading on the near stock exchange may be trying to analyze a german chemical company with subsidiaries in d chile. and to la to bring needed cross border consistency to accounting and auditing. for supporting the efforts to remove obstacles that have kept it from carrying out its responsibility to u.s. firms. i applaud the decision that allows us to negotiate with countries that will permit you to permi[unintelligible]

in this and other important areas, we're looking forward to a pcob that functions with renewed energy. as you know, two positions were filled on an interim basis by members whose appointments had expired. this was largely the result of a constitutional challenge to the very existence of the board. with the supreme court ruling, the sec is searching for new chair and to more board members. insuring these positions are filled with individuals of integrity and spotless reputation as an commitment to the interests of investors in the public is a top priority. we are now in the final steps of the selection process. i want to be the first to say that during these trying times, the board did an extraordinary

job. we are excited at the prospect of dedicated and highly qualified members taking their seats and the board able to focus on their critical role without a legal challenge hanging over its head. in addition to the negotiations, there is another international issue of significant interest to the sec and the accounting profession. we're focusing on accounting standards and convergence. because investors should be able to make accurate comparisons and judgments regardless of an entity's line of business, owners should status, or corporate domicile. the sec continues to monitor the progress being made by the iasb on the convergence of standards. the path toward convergence is steep and winding. both boards have responded to the challenges.

iasb launched efforts to deliberate issues jointly in monthly meetings which will allow for members to discuss and resolve issues face-to-face. they have increased efforts to work through unified product teams which include members of both boards. both have committed to periodic public reports on the status of their efforts. i believe these actions will increase the effectiveness of the collaborative efforts by the boards and i am sure that the acting chairs will have more to say on the subject when they join you tomorrow. convergence is a top priority for the sec, but it is both -- as both boards recognize, the resulting standards must be high quality, uniform, and an improvement over current standards. review and comments are important parts of the process that will produce high quality standards that investors need.

sion to modifynd reprioritize the standards being developed under joint agenda. the resulting saggered schedule for issuing the boards exposure draft will allowor greater input by stakeholders. and this will create an enhanced ability to consider whether the standards result in a consistent, high quality, globally accepted accounting standards and solutions we all seek. hopefully, many of you that a chance to read the progress report by the sec staff that we posted in october. as you will hear later, the staff is highlighted several preliminary observations based upon their work to date, including observations on important implications related to different methods of corporations, the iasb funding model, and observations regarding the important role that could be played by fasb if the commission were to mandate ifrs for domestic companies.

i am pleased with progress to dateand i remain optimistic about hieving a convergence that benefits invested in the u.s. and around the world. a significant portion of the work plan remains in progress, and the commission works for two preceding period reports on the step into making more progress in the year ahead. day, investors are trying to shake theirs giddiness. they are aking if everyone from regulators to accounting, doing the job they expect us to do. and that's a fair question. and because investor caution makes it harder for dynamic enterprises to raise the money they need to expand and grow, it's important that investors get the answers they need. i believe the sec is on track doing the job that is expected of us as a rule maker, an examiner, and a law enforcer. but the importance of the accounting professionals cannot be overstated either.

it's not just new rules and regulations that protect investors. it's accurate, honest and complete accounting i men and women who, as chief justice burger wrote in u.s. v. arthur young, demonstrate complete fidelity to the public trust. our markets depend on competent investors, and their confidence rests in part on large part in your hands. i know that's a great deal of responsibility but that's important role you play. the sec and other agencies can increase the confidence invested into our financial markets, but our effort succeeds only those investors believe the numbers you write on the bottom line. thank you very much. [applause] >> okay, the first question relates to ifrs workplan come

and what a my personal expectations regarding when will the commission make a decision on adopting ifrs for u.s. companies, what is the commission likely to decide, and when it's implementation likely to occur? okay. are not in the middle question. you know, it's still our plan to make a decision on the incorporation of ifrs into the u.s. reporting system next year. and despite a common perception that it will be by june of next year, we have not held ourselves to the june date. so sometime nextyear. we expect to be able to make a decision. one of the reasons we have the staff so vigorously engaged on the workplan and making their progress public is so that everyone can see the areas where we have concerns over the areas where we think significant progress is being made. implementation, one of the things we heard in response to the comments when we republis

the work plan in february was a great desire, pretty much across the board you can while ifrs was not by any stretch uniform embrace the u.s. public companies, or by investors, there was a lot of unanimity around if we go in this direction allowing sufficient time for companies to adjust. so i think it's likely to be a minimum of four years, although again that a point for the commission after we make the more fundamental decision about the extent to which, if at all, we will be incorporating ifrs. next question is, some singular the sec's timeline requires the commission to address the possible adoption of ifrs b june 2011. however, that timeline was established before the passage of the dodd-frank wall street reform and consumer protection act. given a significant amount of rulemaking that dodd-frank requires of the sec's in the next 12 to 18 months, is

june 2011 realistic? how does the demand of dodd-frank affect the commission's timeline? as i said, we are not strictly committed to june 2011 decision date, or rather sometime in 2011. i will say that while, you know, i'm sure you read in the press we have been extorted amount of work to do with respect to dodd-frank, over 100 rules to write, many within the first 12 months, certainly within the first 18 months, 20 studies to conduct, a number of new offices degrade within the agency, i will say that on a small amount of that burden is falling on the office of the chief accountant, jim kroeker can probably speak to this later. much of that burden of dodd-frank rulemaking really falls on other divisions, most notably trading and markets for all other derivatives, regulation, division of investment management for the private funds, regulation and a division of finance for the new public company disclosure requirements that has been

decreed by the law. so i think we will be able to not have ifrs or other accounting initiatives delayed in any way by the dodd-frank effort. many of those have commented on the possible adoption of ifrs by domestic registrants, have ben larger companies, investors and audit firms. healthy sec identifies the issues and concerns of the rest of corporate america? i.e. the vast majority of domestic registrants, investors and audit firms who do not have the resources to write comment letters or to inve in preliminary and -- evaluatios of the effect of adopting ifrs. it's a great question and one we've been very focused on, and in our workplan, you will note that we talk extensively about our desire and really need an determination to understand what the impact of incorporating ifrs

would be on smaller u.s. public companies who might not see the benefits, frankly, of being comparable and having operability with issuers in other countries just because of the nature of the shareholder base. so we are highly focused on the costs and burdens of smaller companies. we did actually get quite a number of comment etters that raise that issue. we try to make the comment process very simple. it doesn't have to -- you don't have to hire a law firm to write a comment letter. you don't have to do sophisticated analysis. you can e-mail to us to a comment mailbox. we try to make as simple as possible for smaller companies and those who can't expend the resources or the time to go out and hire somebody to write full-blown comment letters. so we have actually heard from lots of smaller companies come and our office of chief countant has also made an effort to reach out to smaller public companies to understand the issues that they think ifrs

uniquely presents for them. but on that note i would encourage you to make sure that your clients views are heard at the sec directly. the next question, let me take a sip of water, on the disclosure project. about a year ago, we heard about a core disclosures project to review the commission's disclosure requirements and evaluate whether they should be revised to elicit the right, not more, disclosures. we haven't heard much about this since then, what is the status of it. do you think we'll see any action, anytime soon? when we announced the core disclosure project in our defense, i will say that it was a longer-term project. it was before dodd-frank was actually passed but we were anticipating lots of work ahead, and particularly for a corporation finance division.

but we did think it was a very important to put out on the record set at we could begin to get comment and commentary from others. our desire to really review all of our disclosure requirements from a-z, to understand what we have competitive dsclosure, when we have disclosures that no longer are elevant, where we have gaps wre disclosure might be more appropriate. and i would point perhaps to our window dressing proposal that we did in august or september of this year one of those areas where we saw gap in disclosure. as a wa