his agenda certainly is totally in contradiction with everything that is emerging now in the region. so he front loaded now his position with all sorts of preconditions, including the palestinians to become not just zionists but extreme right-wing zionist by acknowledgingwe are r pluralistic, and -- inclusive democracy. we are being asked to deny our history and past and the right of palestinians in israel by saying we will accept xo -- exclusivity in israel. knowing that it will not be done. he as a prerequisite, precondition that is not going to be accepted. he presented security for israel agenda. security is the defining principle.

he wanted to maintain a military presence in the jordan valley, control over the borders and crossing points, or early morning stations, demilitarized palestinian state, etc., and lastly, decided on the outcome, the state of peace. he said the outcome of negotiation by saying no to the refugee right to return, no to jerusalem, and by deciding single hadn't -- single-handedly they would and next the settlement blocks and, of course, by condemning israel, palestinian unit -- while on the one hand he said palestinians are divided. in gaza, we don't talk to hamas. of have to do is keep security. in the west bank -- does not represent all of the palestinians. so we have no part of. now they are saying if you are you 19, this means you are having this unity -- if you are you 19, you are having the

palestinian equivalent of al qaeda. -- if you are uniting. entirely wrong and misleading and such a flimsy excuse for avoiding any engagement. first of all, you did not ask every single party to recognize a state or adopt a political platform consistent with what israel wants. two, we have a formula for the unification that put together a government that is not a political address but the government that is an address for providing services to the palestinian people, building institutions, and so on. and it is going to be rate -- made up of independents, not card-carrying members of any party. and nobody is asking them to negotiate with the government. plo remains the address for negotiations. it is best for anybody knows anything about this situation --

you would know this is just a very flimsy pretext, an excuse that is baseless, actually. it is a non argument and i do not see why it was presented or even believe it. so, palestinian unity was another pretext he used. and of course, he entered into -- i don't know, maybe in our society we tend to be much more polite, but it was a very rude confrontation with the u.s. administration. i do not know if you can go to of the white house and keep insulting the american president and get away with it. of course, he has always worked on this issue as having tactical gains at the expense of long- term strategic goals. he may have scored another point against president obama but i doubt whether this is

going to bode well for the future relationship or even for his own standing in israel. because he thought this was one way he could address the likud and the right of likud. i don't think in a long run it will work. already i think it is beginning to backfire. hearing voices and israel and and that u.s. that it is a clear case of overkill and you don't get away with itself in the present. lecturing people and coming to the states as if you own it. i doubt rather he would get such a reception anywhere in the world, including the knesset. another feature of the ict revolution is the compression and acceleration of time. i am saying this just to emphasize that there is a very pressing need within these changes in the arab world.

either we move fast, decisively, and seriously and substantively on the issues and conclude a just peace or real peace or you lose the opportunity for a very long time. i don't think this is open- ended. i think it is a very strict time frame. ironically, obama was trying to persuade israel that peace is in its own interests. he gave three reasons. remember? demographic argument that the palestinians are not going to stay a minority -- they will be a majority in the long run. it then talk about arab spring and regional development. and then of course he talked with the technological revolution, the knowledge that the whole world sees what is happening and israel is being isolated or criticized and it is losing its friends, so to speak. but even that does not move israel.

one thing we did not say is a bold vision of a real plan that is workable. first of all, we need to contextualized -- the u.s. must understand the context of the palestinian question within the arab spring and the arab world. this has to happen with if we don't understand it -- we cannot constantly talking about self- determination, dignity, freedom, and so on, and then put it aside and talk about the palestinians. because the palestinians are part of this. we are part of the need for freedom and self-determination. the same principle should apply. again, things like the rejection of going to the u.n., postponing jerusalem -- accepting the jewishness of the state. identification with israel and values -- guaranteeing security. all of these we heard.

but i doubt obama said anything new when he talked about the 1967 boundaries and i am really shocked 19 -- netanyahu reacted with such hysterical abandon. totally unthinkable because every president in the last 20 years has been talking about 1967. george bush said the occupation that began in 1967 must end. it is in the road map, the annapolis agreement and everywhere. it means that it netanyahu does not read or listen because the 1967 boundary is nothing new. to netanyahu, obama had the audacity of talking about 1967. it is is a route that has to set the agenda and boundaries -- israel has to set the agenda unilaterally. where do we go from here? more negotiations? two decades of negotiations produced more settlements, more

suffering, loss of land, and ethnic cleansing in jerusalem, changing the character of jerusalem. what we need would be either a clear, bold plan that would change the dynamic on the ground and come to grips with the requirements of peace or you have to go with the palestinians for pollock -- positive construction alternative. if you block us from the u.n., from getting accountability for israel, trying to get protection for the palestinians by peaceful means, non-violent means, then it seems to me you leave us with the option of violence as the only thing that works. even though we believe that violence is a non-option. but at the same time you cannot block a whole nation, keep it in activity under israeli domination which is, by the way, much worse than having your own regime oppress you because this is the type of oppression that is so pervasive that it affects every aspect of your life.

it has to stop. it is time it stops. we have a timeframe. people have to understand the gravity of the situation between now and september. either we move ahead of opportunity is lost and we have either a break out of violence or a breakdown. the forces that have been unleashed cannot be contained and the momentum is there. people are also acting with a new sense of self-respect, confidence, hope. this is what it takes to make peace. not a sense of defeatism or being broken. so we think the next move we need to discuss further has to be a collective multilateral global effort. perhaps with europe, expand the quartet, with an arab initiative that would produce new language and a new vision in the end time before matters get out of hand. thank you very much.

[applause] >> putting the microphone on. let me start by picking up on your last comment about mr. netanyahu and what has taken place in this town in the last few weeks. it is obvious that this town has witnessed a debate, may be behind closed doors, between those who wanted to move more proactively and in fact a package may be along the lines you outlined, and between -- that the president to wait until maybe after the presidential election. obviously the debate has been

decided in favor of the second approach. the president did not have any steps outlined in his speech. even the general principles that he outlined received, as he said, a lot of criticism, both from mr. netanyahu and from the hill as well. what is on everyone's mind is what would the palestinian response be? if in the context of -- in the context of the arab uprising. in other words, the issue of the arab sreet, as he pointed out, has not been a factor in u.s. decision making. people in this town feel that there is time. and that we can wait until the u.s. presidential campaign before we pick this up later on. what is your assessment of this?

it nothas -- why has t moved in a way that people thought it would? what is your -- [laughter] of the future, particularly given the context of the arab spring. >> that is what i was saying, the sense of urgency. to say that we do not have unlimited time. within what is happening in the arab world there definitely is an acceleration of time. things are moving very rapidly. what you can take for granted today you can't take for granted tomorrow. it can't think anything for granted except change. the fact we are undergoing a people of change and the way people react. some react to it by shooting their own citizens and killing people at will. some trying to prevent them by carrying out a reform plan and so on.

others sort of stepping down, liked in egypt and tunisia. in the face of overwhelming popular uprising. what the u.s. used to rely on -- the client regimes, so to speak, they cannot rely on. they are not going to carry out the bidding of the u.s. anymore. even those who traditionally have done it have seen what happened to regimes who were seen as only clients of the u.s. rather than leaders who are generally doing the bidding of their own people or responding to the needs of their own people. so, that is the way in which the regimes are discredited and ultimately dislodge. whether the u.s. is willing to understand it or not is a serious issue. you do not have time. any new regime coming up will

have of course on its plate a really have a domestic agenda, much of it having to do with the economic reform, economic prosperity, job creation. but it also will need to signal to its own people that it is a departure from the old pattern of behavior with the west. we saw that leave egypt because the mubarak regime was procrastinating, was told we do not need palestinian unity, so they really didn't engage effectively. the mubarak regime closed the borders and so on in gaza. many egyptians were telling us, this is a source of shame for us, humiliation. we wanted a regime that was good for palestine, for their own people, not what the regime was told to do by the west and israel and so on.

all the new regime is coming up it seems to me will try to carry out a domestic agenda, reform and so on, and to reestablish national credentials along the new lines we are talking about and to take steps pertaining to palestine. and these steps are not going to be to accommodate priorities by the u.s. or others or to put pressure on the palestinians to accept what the u.s. needs or wants. we saw things happening before. that is a real change. it seems to me -- that is why we said the u.s. must contextualize what it is doing and the reason, must understand palestine is not outside the a question the way netanyahu said. there were not demonstrating for palestine or against israel. but if you look hard you know it is the motivating factor.

two, there is a time frame. we cannot afford to wait until 2012. we cannot afford to wait until election campaigns and so on. there is a choice. you could either have a bold vision and a clear plan of action and be willing to expend your credibility and your credit on affecting genuine change and making peace. or you can tread water and allow the dynamics. those are the two options. choosing to tread water means that the situation is going to deteriorate. it is not going to get any better. the other factor is the israeli factor. you had in israel one of the most extreme hard-line militaristic coalitions -- with

a racist policies, of course. it certainly has an anti-peace agenda. anybody who heard netanyahu -- coming with a peace agenda, certainly has not heard him clearly. he came to say aye and closing all doors, that is it. there is no peace unless you capitulate, you and the u.s. and we in palestine and accept what netanyahu things is best for everybody. this is certainly a recipe for disaster and instability and conflict and for violence. this government in israel -- now there are voices, people right thing in israel saying this is a very dangerous and irresponsible approach. relying on pr tricks and retain and scoring point is against the president and show on -- so on and showing you can go over to the congress. what next?

where did you go from here? nothing. you have nothing to offer except more of the same of the situation that has cost the u.s. a great deal. it has cost of the best its credibility, standing, and a great deal of interest in the arab world, among the arab public, even if it managed to tame a few leaders. it did not manage to tame the arab public. it is a new ball game, i think. >> another question -- this town a few months ago, mr. abbas was weak because he did not represent all the palestinians at any solution that the not include hamas would not last. now that he has made an agreement with hamas, the debate shifted, as you also said. how do you see the next steps moving forward after the

government is established with hamas? do you see this as a positive or negative? >> i think this is extremely positive and a very badly needed step. when talk about empowerment, responding to the palestinian people's needs. talking about repairing our democracy, an active, pluralistic system. putting hamas as part of the system and not as a replacement. we always said hamas belongs within this democratic and pluralistic system, not as a substitute for a replacement. that is the only way you can have a functioning political system that can claim to democracy. we started that unity with technical steps. we need a government that is a government of independents,

professionals, that would deliver the services and build institutions and so on, and take care of people's needs. it has also additional task, prepare for elections. this is very important. so long as it is divided, we cannot have elections. whether local government, legislative, national, or even national elections for the plo. we need it these elections because, first of all, it has brought into question the legitimacy of institutions. we needed elections. the legislative council -- the residential election. everybody attacking everybody else. hamas saying president is not legitimate. everybody's saying legislative council is no longer legitimate because it has run its course. people were saying the plo was

obsolete because the president had elections and the needed to have elections in order to represent all of the palestinians, including hamas and others. that has to be done in a way to include palestinians in exile. to do that, which is a real requirement for a democratic system in palestine, -- i do not what does the government because we are unique in that our government is not political. that meant we needed to move ahead and we needed to have this unity to carry out elections. otherwise it is very easy to stop the elections. we said local government elections, hamas said no, prevented the election commission's from working in gaza and that is it. you cannot have elections in one place and not the other. the same thing with presidential and so on. the other task is gaza.

the situation is absolutely drastic. it is in humans. gaza has been destroyed, devastated. and yet under siege and without the ability and the materials and funding to rebuild it. we can start rebuilding -- under the moves and start -- to start rebuilding and get the funding. the problem is there were lots of funds pledged to rebuild gaza but they were not delivered, were not materialized. and because of the -- because of the rift and division, no one was able to start rebuilding gaza. now we can get the alleviation of the human suffering and gaza is very crucial. then you have to have a plan for the reunification of the institutions within the west bank and gaza. other than the elections as well.

and further along this would be not just the service departments but security. we have a reform plan, as you know, a couple of one that we worked very hard since the 1990's in which we set the security forces after the reforms in a sense that they have to be merged. we need no more than three and a need to be totally de- politicized and totally subjects to the political executive authority. that is why you have to guard our own unity. this is not a settling of the spoils and re-political -- politicization of authority. it means that your reform your security forces by de-

politicizing them. it is a long agenda and it is difficult and we are going to see problems. we already have problems even choosing the name of the prime minister and so on, because we do everything by consensus and whenever you do everything by consensus you have people objecting. but i think there is enough determination to understand we did not succeed there it could be suicidal domestically. this message has to be understood by the rest of the world. and i think the americans are beginning to see -- the fact that hamas -- political discourse, except the requirements of unity and elections and so on and it designated the presidency as the politically -- political address, and so on. would it in a sense allow for the palestinians to take decisions that are binding on at the wine -- everybody.

ultimately any decision you take when it comes to negotiations would have to be presented through referendum by the public. >> let us open it up. if you could identify yourself. >> my name is --i come from that national crisis group. i have to question -- no. 1, are you suggesting that the strategy of buying time which is route opted for for four years now -- israel opted for for four years is coming to an end? >> yes. >> as the plo are you considering seriously one way or another how to stimulate the dormant potential and influence of saudi arabia on the united

states? >> we are going to take a number of questions and then -- city have a chance to ask is my question. >> michael. do you introduced by saying you are someone who speaks truth to power. it seems to me it might also be useful to speak truth to the powerless. speaking particularly of palestinian refugees. whether there is or is not a universal right to return, regardless of the language of the universal declaration of human rights, are you in support of resolution 194? it looks like the israeli public across the political spectrum is united against the fact of many palestinians returning. at what point is it time to have a conversation with palestinian refugees about alternative futures so there is not another generation or more generations of people languishing in refugee camps in lebanon or whatever?

>> my name is -- egyptian- american living here. you describe prime minister netanyahu's visit, and even after he often did the present publicly on television and he gave -- offended the president publicly on television and gave his awful speech at congress, i am really sad. i would like to know how you feel about the joint session of congress -- senators and representatives, giving the guide -- i was going to say a dirty word -- giving him 26 standing ovations -- 29 or 59. >> i did not count them. >> it is really sad. you were saying the american public opinion is changing. i don't think it is. these are the people -- and the media again, everything was talked about.

obama's speech talked about the middle east and everybody talked about how bad obama is for mentioning the dirty word 1976. i would like to see how you feel -- and is there hope to change the american public about this? >> let's take one more question and then i will move to the back after we give a chance to respond. >> recovering journalist and the atlantic council. when i see you two are remembered meeting you 20 years ago when there was the post- madrid talks in washington. >> we had a good team. >> very good team. the question is about -- not violence that could break out but nonviolence. you talked about the new tactics being used. is there thought to trying to mobilize palestinians to march in east jerusalem, to march in the old city, and not to throw

rocks at israelis but truly use non-violence to try to press their case? when you talk about september, you know the denied the states will veto in the security council and a declaration of independence. is this just going to beat kabuki? the plo already has representation around the world. what is the point of pushing it this far? >> well, your first question is absolutely right. of course, buying time -- we have no more time and the conditions on the ground certainly make any solution impossible if we are a lot to continue. because when you talk about the two-state solution coming to an end, the the fact option is not a one-state solution. it is not something we can work on. it will be perpetuation of the occupation and more concentration and more control,

and so on. what that generate more violence or not? would it been sent other public opinion or not? would it change the relationship even between governments that have agreements with israel or not? there are all sorts of questions that are going to be raised -- israel does not understand there is no more time to be bought. bought that said, and the issue of the plo and saudi arabia, it is not just them. the whole world has power, has traction, has resources, and should be able to use all of these, not just with relations with the u.s., but with everything. the problem is they were neutralized in many ways. saudi arabia probably understands that the next phase is different. the next phase requires engagement.

there are people talking about the new alignment in the arab world. a monarchical system versus a non-monarchical system. it is still too early to predict, but there's certainly alignment's within the region, and i think saudi arabia understands that any country in the arab world has to, in many ways, i -- in many ways, use their inherent power to try to bring justice to the palestinians. we're not saying invade israel and liberate us. we're saying we need a just peace. speaking truth to the powerless. it seems to me that you cannot make it a precondition to abandon the palestinians and get the palestinian leaders to say that we were violating national

law. we will violate the rights of our own people. we will tell them they have no rights. no, i think the only way to deal with the palestinian refugee question, first of all, you have to knowledge the narrative -- acknowledge the narrative that there is suffering. it did not just happen like that. they did not become refugees because the arab world told them to leave. we know what happened. 1940 it was clear and it has to be it knowledge. -- 1948 was clear and it has to be acknowledged. the second step is acknowledging their rights. you cannot exclude people from the protection of international law and say, for you, you are the exception. you cannot do that. otherwise, it is the same as saying israel has no right to exist. that is not the issue.

you have to acknowledge the rights within international law. all refugees have these rights. palestinians are no exception. you cannot constantly cast and outside the protection of the law. but then, when you have the third option, when you do these two steps, then you can discuss alternatives and options, provided you give them the right to choose. once these two steps are done, then you can discuss all sorts of options and alternatives and so on, and give them the right to choose. that is the only way i think it will be soft. -- will be solved. but you cannot tell them to violate their own people in order to be able to talk to us. the arab initiative has a formula that takes a mutually agreed solution to the

revolution -- mutually agreed solution to the refugee question based on the un resolution 194. now, let's look at the different ways that can be implemented to safeguard refugee rights and give them options. these steps are in essential. -- are essentials. the joint meeting -- not a joint session, i am told because there is something legal about a joint session -- the joint meeting. only a joint session can be called by the president. unless netanyahu's suddenly things he has been made president.

-- netanyahu suddenly thinks he has been made president. [laughter] i thought it was extremely demeaning. if i were an american lawmaker, i would not accept this type of treatment. when someone is insulting the president and define the entire american interest and system -- i mean, there is such a thing as a national interest, after all. we do take this very seriously. goes to the representatives of the public and gets them to cheer him against their president, regardless of party politics or anything. this goes against the national dignity the arab spring was talking about. i felt it was extremely insulting or demeaning. if i were a congresswoman, i would be very careful about

safeguarding my interests over israel. public opinion is shifting in the u.s. if you go to universities, if you have public lectures, people are learning more. they have access to different information sources. they're seeing what is happening. they're engaging more. they are expressing a will to challenge the language on the problem that has been fed to them by the mainstream media all these years. public journalism is motivated by a sense of fair play. we get that all the time. how come we did not know these things? once they know, they have to move. they have told the representatives accountable. unfortunately, representatives think they can take foreign

policy decisions on behalf of the executive. the public has to hold them accountable, not just on issues of education and health care and so on, but also on issues like meddling in areas that are extremely dangerous and could set them -- as even the american military said -- could affect the national security and safety in the region. this blind allegiance and so on, ah. what is funny, now, there are certain people who are apologists and who will take whatever netanyahu says and turn it into the gospel truth. but there are also critical people in the media. i have been reading articles and

op eds and so on that are questioning this kind of attitude as well as criticizing the fact that when you do things that go against your own national interest for short-term gratification but not long term interests, this is a very serious policy that could backfire. i think in the long run the american public will make a difference. think tanks will make a difference. access to information will make a difference. we have always been the other, the strange, the terrible. people do not even know us for what we are, so we have to present ourselves. we have to challenge misconceptions, preconceptions. it is very cheap language that presents us to the americans the way netanyahu did, as terrorists, al qaeda and all of that. sooner or later, people will

know the truth. you cannot hide it. this is 1948 -- this is not 1948, 1947. people can get to the truth. our greatest ally is the truth. we need it. might not be enough to set us free, but at least it is the beginning. if non-violence would break out -- nonviolence did break out. if you remember, we were beaten up, we were shot at, we were arrested, but we went day after day after day and we faced a very strong, fully armed israeli army. we exposed the limits of the power of the military occupation. when faced with the people's will to be free. the problem is that acts of violence and so on has been extremely painful and has been exploited against us.

we stood up and condemned violence, particularly at the beginning. the problem, the jews decided to carry out violence against us. mobilization, yes, it will happen. you saw how palestinians mobilize on may 15th. this is something new. it is not just palestinians on the west bank, gaza, jerusalem. it is in syria, jordan, even in the united states. there is a sense of solidarity and identification. we will not be silent anymore. we will not be oppressed and excluded. we have a message and we will press it. now, this is something that israel has to understand and the u.s. has to understand, both. this is an opportunity to resolve this, and we gave them

that opportunity. the arab world give them that opportunity. if you do not take it, the solution will not be to anybody is liking. it is going to take time. it is going to be painful. but you will see that the palestinians will resort to popular nonviolent action. as for [unintelligible] yes, of course. can anything be worse than the u.s. vetoing the settlement resolution? the u.s. constantly said settlements are illegal, right? they said silence have to stop, right? and yet, -- a said settlements have to stop, right? and yet, when we went to the un, using american language, the u.s. was very awkward and sheepish about having to veto a resolution that was using their own language for the sake of

israel. that is something i cannot believe. this is the greatest power in the world so far. might not stay that for long, but still. you are violating your own policy in order to subject it to is really illegal actions of occupation. this is something unheard of, but they did it. not only that, but they put so much pressure on all of us, using also their arab allies, not to go to the un. the pressure was very great, but we stood it. we did it. we have to have access. we have had recourse. we cannot constantly be shut out. the strategic alliance between the u.s. and israel is playing against peace, but also against the u.s. interests. if they want to veto -- they're

trying to persuade the europeans now to not support our bid for recognition. but what we're asking for from the un is not recognition. we do have 116 countries that recognize us, 120, that recognizes palestine. that kind of recognition we are getting, and we will accumulate recognition. we have its premiere of. we have it from the arab world, africa -- we had it from europe. we have it from the arab world, africa. we go to the un and say this is not a unilateral declaration of independence at all. it is going to the international, multilateral address of international law. we're going to the un for heaven's sake. where are we going? we, as the victims, as

palestinians under occupation who have had no support from anybody on the issue of our own freedom, dignity and independence, are going to the source of international law and human rights. this is what the international community is, right? we want to tell them, please accept them as a member. we want to apply for membership. but we are always punished because we are a non-state. we do not have the rights of access. once you get membership, it means you have access. you have access to all of the judicial accountability you need within the u.n. system, and then you have the recognition that you do have boundaries. that 1967 are your boundaries. east jerusalem is your capital. if the u.s. vetoes in the

security council, we will resort to the peace provision and ask the majority to accept this as a member of the un general assembly. that is what we need to do. after all, united for peace is an american invention. during the cold war, during the korean crisis, to prevent the soviet union from constantly be telling. we have been slapped by about 30 veto so far from the americans only for the sake of israel. there is a consensus emerging in the international community. you cannot keep stopping the flood. you cannot keep holding back recognition common knowledge, human rights, awareness, for the sake of all the wrong things that israel is doing. >> let's take a question in the back.

>> i am from the imf. we have seen from what has happened in the arab spring that non-violence has been one of the factors for effectiveness of the protests and for the backing of the national -- international community. you have spoken about the un and the possibility of acceptance of palestine as a state. let's say this happens. there is still a problem of occupation. how do you deal with occupation? somebody mentioned the effectiveness of nonviolence. you were very active during the first intifada in motivating, indeed in organizing and inspiring the non-violent demonstrations that happened, and there were quite effective. by the way, i like your poetry that you wrote at that time.

>> thank you. >> what would be now your message to the power, to those who -- to the average palestinian, the ordinary palestinian who asks what should we do after september? the question is what to do with the occupation. how should we resist the occupation? would you yourself be willing to participate in a non-violent movement? >> i will take two more questions because we do not have much time. >> i apologize for not having gotten advance permission, but i brought along copies of the dvd i did in which your interviews play a key part. people can help themselves. >> thank you. >> is called, "searching for

peace in the middle east." and i think you do a beautiful job of summarizing the key issues. they're just as relevant as when you spoke of them three-four years ago. >> thank you. >> i apologize for having been laid for reasons beyond my control, -- late for reasons beyond my control. i have to comment, and i need your input in this. the first one is that israel, under the help of the united states, is pursuing a policy racism. i just heard george mitchell yesterday talking about the

jewish-ness of israel. that is pure racism. this has been expelled first by a second-rate president of the united states george w. bush when he called it the jewish state. ever since, it has been repeated. the second thing is that israel had been conducting a policy of armed robbery ever since it was created, and it has become isolated in the world with the exception of the united states. how can we this armed robbery notion to the world everywhere, because this is very essential?

thank you. >> one more question. we really are out of time. >> you mentioned that from 1967 you have been asking the united states for help to resolve this with the assumption that the united states was a kind of mediator or a disinterested mediator, but that was not true. would not have been better if you, it as palestinians you were in a situation like syria. at least of the protections of the russians who say that any resolution in the security council against syria will be vetoed? for that matter, when india and palace -- when india and pakistan were in conflict, the

united states were blindly supporting pakistan and the soviet union was supporting india. that is how india was able to get an upper hand. would not be better for you to look for somebody like russia, china, somebody willing to back you far better than the verbal support you're getting from the united states and the runaround for all these years, from 1967- now. this is one problem that has lingered on for too long. it is really sad that the united states has been able to bluff every betty and still continues to be to resolutions in the sick -- everybody and still continues to a veto resolutions in the security council. >> thank you very much.

i am so glad you read my poetry. i believe the need poetry to be able to deal with the situation. non-violence, as far as i'm concerned, has always been the most effective means. we use that, as you very well now. i have been involved, and i continue to be involved, because i have many ways of expressing resistance by nonviolent means in which the human spirit is paramount, in which you have the moral high ground, in which you expose and the firepower and militarism and the immorality of the occupation by being more moral than they are, of course, not by adopting their means. i really think that we can legitimize and reenergize the non-violent movement in palestine which has been going on for years now in a number of places.

there are constant nonviolent protests that are being faced with extreme violence. many people were injured and killed. many americans -- there is a young woman who wrote the song. i am sorry i forgot her name. i should not have forgotten, because she left and i at the checkpoint -- left an eye at a checkpoint while protesting for the palestinians. she wrote a beautiful song, and i for palestine -- an eye for palestine or something. after september, i think -- we can i give up. we have to continue. we have to pursue alternative means. we talked about going to the un

and the international community, holding israel responsible, asking for a new political agenda. you cannot control everybody and everything. you cannot keep using the same means if nobody reacts positively to you or listens to you. the occupation is by definition violent, very violent. we are a captive nation. when you're facing it with nonviolence, of course, if you produce results, then that is fine. but if you do not, people start picking up the same attitude is their oppressors, the same means, and this is where you begin to lose, unfortunately. but you do not control all the elements. you do not control everybody reacts. you have to constantly explain, mobilize, you have to show that

you are there, and you have to be able to show results. that is what works. thank you very much. you have always been a great advocate of justice and peace, and a just peace. i think we should knowledge or efforts for decades and decades. you have spoken out. the question of the jewishness of israel. this is a new precondition. we're never asked, throughout our negotiations, we were never told we have to recognize israel as a jewish state. we are asked to recognize israel. in 1994, there was an exchange of letters. after the meeting in 1988, we accepted the two-state solution and we accepted the state of israel. that is what generally happens. you recognize states.

we recognize the plo, not palestine, but the plo as the representative of the palestinian people. that was a condition that was that. then suddenly, netanyahu was the person who came up with the idea that if palestinians do not recognize the jewishness of the state, it means that they do not recognize the state. but we have recognized the state. that is the point. i do not see any other country that asks for the ethnic or religious character of the state to be recognized in a legal recognition, except maybe iran. >> i am not sure even them. >> it is part of their name. >> it is not part of israel's name. this is unique. we as palestinians -- i told

you. we've been struggling for a tolerant, inclusive, pluralistic democracy. israel is the only country in the world the says if you do not recognize our citizens, you are a traitor. what is it for? for non-citizens? for americans? if israel does not want to be a state for all of its citizens, it should say so, because there are non-jewish citizens. you cannot be exclusive. the palestinians have been there for centuries, before the creation of the state of israel. you cannot not buy them. you cannot say if you are not jewish you have -- you cannot nullify them. you cannot say if your note to -- if you're not jewish you have no rights. there are all sorts of, you

know, otherworldly solutions being presented based on racism. that will not work. anything that is based on exclusivity and racism and discrimination will not work. you have to accept the fact that we live in a world that does not close-up itself and that does except the other, and it does recognize that we are not all monolithic and one character, one type, one ethnic group, one religion and so on. that is it. as palestinians, we say this is a negation of our history, and of course, it is a negation of the rights of the palestinian people, who have to be acknowledged. i doubt that obama or anybody else would use a term, let's

say, this is the christian united states of america, the muslim kingdom of jordan, know. nobody would do that. the exceptional as some of israel is something that -- exceptional is some -- exceptionalism of israel is something that will eventually backfire. once it becomes a real estate like other states, maybe it will relax. -- a real state like other states, maybe it will relax. settlements are based on theft. they have taken other people's land. it is a land that belongs to the palestinian people for whom this land should be used for their own benefit.

1967 -- we cannot ask the u.s. for help. the u.s. is the only country that supposedly israel listens to, but now we know better. [laughter] during the cold war, of course, we tried very hard not to take sides. we were always under occupation, since 1967. we could not say, ok, we want to be a satellite of the soviet union or we went to be -- we just wanted the international community to end the occupation on the basis of legality and justice. that is all we want. unfortunately now -- since the dissolution of the soviet union you do have one power, you have the u.s. and the u.s. has adopted a policy since 1991 --

even before george bush and others tried to find a solution -- ending the conflict in bringing about peace in the region. so far they have failed. it might be -- look, i said years ago. i hate to repeat myself. quoting myself. the worst thing a professor can do. i said by no stretch of imagination can you ever accused the u.s. of being even-handed. we know there is a strategic alliance with israel. if you heard obama's speech, you know this is a longstanding policy. but when the issue of all the lip service and support comes to the point when it becomes obnoxious, when -- ultimately every country will look out for its own interests. is robust -- is becoming a liability for everybody.

it to itself, even. the occupation is a liability. this blindness to the needs and the rights of people -- and a palestinian rights, is going to backfire. it is going to draw the whole region and cost the u.s. a great deal. last year we talked about how the american military were saying that israel is a liability and a sense of what it does in the region reflects on the u.s. and it affects american standing, interest, and american lives. constantly do things and use the alliance with the u.s. to cover its illegal acts and violation. and i think it is up to in the u.s. to decide where the real interest lies in the long run rather than just appeasing an accommodating israel. we are not asking for support, asking for implementation of the

law. we are asking for justice. that is all. we will go wherever it is needed. we don't want to be part of any alliance or what ever. we have a cause that has its own integrity based on justice and legality and that is what we want and i think you have lots of people now who are feeling this and are of support in europe and the arab world and that america and so on. but here there will be a change. i know how frustrating it can be. look, i have been coming here since i was a student. and it is like sisyphus -- pushing the rock uphill and it keeps coming back. but you have to keep trying because ultimately you cannot rely on the ignorance on -- of people. it never ends is easily -- if you have troops on your side. thank you. >> join me and faking our guest.

>> your watching c-span, bringing you politics and public

affairs. every morning is "washington journal," it live a program of the nose of the day connecting you with elected officials, policy-makers and journalist. weekdays, live coverage of the u.s. house and weeknights congressional hearings and policy forms and supreme court oral arguments. on the weekend, cr signature in the programs. saturday, the communicators. sunday, newsmakers, q&a, and prime ministers questions. you can also watch programming any time that c-span.org, and it is searchable at our c-span video library. c-span, washington your way. public-service created by america's cable companies. >> there are three days of book tv programming this holiday weekend. from "the jersey staying," on one of the largest federal sting of -- operations in u.s. history. jenny scott on a singular woman,

untold story of barack obama's mother. from book expo america, new releases with jim lehrer, roger ebert, eric larsen. panels on feminism and favorite books of 2011. activist and filmmaker michael moore on his upcoming memoir. i find the schedule at booktv.org or text. this weekend on american history tv on c-span 3, "the washington post" journalist ben bradlee and bob woodward on watergate and the fallout for nixon. associate professor at george mason talks about the foreign policy of president reagan and we will visit fort myer, virginia, to learn more about armey's oldest active in trade union and its role in presidential real spirit of the complete schedule at c-span.org /history or have it emailed by pressing the c-span alert button. follow c-span's "washington

journal" on twitter and joined viewers to get advance notice of tomorrow's test, question of the day and high-profile bookings and links to video clips. you can also tweet in questions to our guest and add your comments. don't miss any updates. start your twitter account today at twitter.com/cspanwj. >> the u.s. supreme court is at a upheld an arizona law that sanction businesses for hiring illegal workers. maintains the state requirement that companies use the federal e-verify screening program, and on my program designed to verify a person's eligibility to work in the u.s. by checking various government databases such as social security and immigration records. five of the court's justices voted to uphold the arizona law. three of the justices dissented and one recused yourself because of conflict of interest. this morning on "washington

journal" we ask of viewers what they thought of the ruling. conversation with you about the workers law that was upheld by the supreme court, we are joined by adam lipstak, who covers the court for "the new york times." would you tell us about the heart of the law? guest: arizona added on much harsher penalties to the wind the federal law already has four businesses that hire illegal workers. the question was whether those harder penalties, which business calls the business death penalty, were consistent with the federal law. immigration is thought to be a

federal concern, not by the state. host: who were the petitioners on either side of this? guest: it was the chamber of commerce, so you had business interests, but it was also civil liberties groups. after all, a business that is in fear of losing its license might ere on the side of not hiring someone. host: who wrote the majority opinion? guest: the majority opinion was from the chief justice, john roberts. host: whawere some of his arguments in the fighting? guest: so long as the two laws complement each other, states are allowed to regulate this sort of stuff. congress, moreover, said we do

not want anyone to do anything conflicting with what we have except through licensing. much of the argument was about at the word "licensing" meant. the chief justice was in the direction of all kinds of license. justice breyer kind of mocked that in dissent. host: some of the response to this -- people are suggesting is narrow and limited in its scope. what's your interpretation based on your reading? guest: my sense is that if other states want to follow arizona's lead in the area of harsh penalties, they can do that. if they want to make up their own definition of what is an illegal worker and do something different from the federal

government, they probably cannot do that. what arizona did certainly serves as a model for other states. host: tea leaf readers are looking to if it signals the court -- the law that allows people to be pulled over and their status checked by authorities. guest: the ninth circu has blocked enforcement of that law, the much more harsh law. it's fairly likely that either that appeal or a later one in the same case will reach the court pretty soon. i wouldn't read too much into yesterday's decision about what it would do in that second case. it involves different issues. as i said before, the current

case concerned the word "licensing." that's not the problem in the later case, which has some constitutional fourth amendment issues. i would not read too much into it. i think it remains an open question. host: this was a five-three ruling. why? >> justice kagan recused herself. chances are, hadji participated, she would have joined the other three liberals. host: the obama administration joined forces with those who are opposed to the arizonaaw. am i correct? guest: that is right. host: the secretary of homeland security was governor of the state when the law was signed into place. guest: that is exactly right.

she found herself on both sides of the issue. host: thank you for your reporting this morning. adam liptak of "the new york times" and this is what this story looks like. you can find it online. thank you. let's go to your phone calls. our question for you is whether or not you think that a worker sanction law is the appropriate way to deter illegal immigration and whether or not you would like to see your states enact such a law. in "the wainon post" this morning, this is robert burns story this morning.

host: let's hear some of your comments, beginning with the fort worth, texas. let's begin with johna democrat. caller: thank you for having me on. i'm against that law and similar ws. i live in texas. 38% of our city's population is hispanic. i am a small business employer myself. it is not always easy to determine the citizenship status of a potential employee. to punish me, for several, an honest businessman who tries to provide a good seice to my customers -- to do something

that punitive to me that could be a simple mistake or even unintentional -- i think that is unamerican. all of these laws -- and i hope texas does not go the way of arizona. think it would be devastating to our state's economy. one of the reasons we have fare better is that we do have a great labour force. host: the arizona law reqres employers to use the federal government's e-verify system. do you have any experience with that? guest: no, i do not. i do not even know how you resposubscribe to that. host: carl, a republican. good morning. caller: they are coming here to do jobs that americans will do -- i think that is crazy.

i was an iron worker f 27 years. eventually, i was replaced by illegal aliens. host: how do you know that the person was a legal? caller: i was working there. i could see with my own eyes. i talked to the kids. i taught them how to do the trade. that kind of work pays pretty good money. surely, there are americans out here that are unemployed and legal residents that could be doing that kind of work and would love to do that kind of work can make that kind of money. the thing it boils down to -- these democrats want to stay in power, pure and simple. they know that these people are going to vote democrat. i remember when clinton nationalized all those illegal

aliens that were here. some of them turned out to be felons, criminals, but yet he gave them citizenship to get their votes. that's not american. host: the open boat elan said journal constitution" -- "the atlanta journal constitution."

> host: asking whether or not after the supreme court is of holding the arizona worker sanction law which would sancti and employers that illegal -- that hire illegal workers. fred, an independent. caller: yes, i agree with this law. on top of that, they say the americans do not want these jobs. i'm telling you that they do want these jobs. they are trying to go to this new, diverse world they keep talking about. you all keep saying that -- these senators represent the states. they should do what the states want. if not, you might as well say

states did not have any rights in this government. senators.tate our government has turned into an all-powerful government that does not represent the people anymore. that's all i want to say. host: robert is a democrat in wilton, conn. good morning. good morning. thanks for being with us. caller: i'm troubled by some of the comments i'm hearing this morning to immigration is a very complex issue. to hold employers responsible for a broken system at all ends of our governmen it's not fair to them. secondly, i cannot avoid but think that -- i have to think

that this is grounded in xenophobia. this is not far off from the more, well known arizona law -- the stop and frisk. if you are suspected of being illegal -- what is wrong? we are a nation of immigrants. we are all immigrants. tuesday go them because of hard economic times or -- to scegoat th because of hard economic times are the complex and of their skin through various government actions -- i would do that as unamerican. i disagree strongly with what the supreme court decided. that is what i have to send. thank you. host: thank you, robert.

jim, a republican. you are on. caller: i could not disagree more with the last caller. the tradition of our country is a stimulating those who come here, cutting the apron strings of the oldorld. i'm of german descent. only 6 million germans were ever allowed to come to america. the migration was halted. only 5 million italians were ever allowed to come and then immigration was halted. i also want to say most of the meatpacking plants that i started working in here -- i worked as a roofer until i was pushed out of my job by illegal aliens i have no voice. most of the industries across

pennsylvania, the backbone of america, was billed by the germans. the german work ethic gave the ability for the hispanics to come here in the first place. just imagine, hypothetically, if the were 15 million starving for black and white people that broken to mexico and demanded amnesty, free medical coverage for their children, demanded english-language signs in stores and schools, and waved american flags and the streets -- they would be driven out by the mexican military believe nothing to be ashamed of. we have every right to demand that today's immigrants be held to the same standards that those at ellis island were held to. thank you for c-span. host: one of our twitter

followers writes -- here is more from the arizona website. host: back you and the phone

calls. this is long beach, new york. joe is an independent. good morning. caller: good morning. i will tell you what is unamerican. there are 21 million americans out of work and we have a government that wants to bring in an interest is illegal aliens to come here -- bring in illegal aliens. this is memorial day weekend. go down to ground zero and a salute the building is coming up. the steel comes from china. to they're bringing illegals steal the rest of your jobs. you want to keep them in power? we have to get out every incumbent until we get a government that represents the working men and women of america and they look out for our jobs, our paychecks, and our well-being, and not people from foreign countries that are

breaking our immigration laws and coming here illegally -- not through ellis island. these people are here illegally. we need to look out for the american worker. thank you. host: thank you, j. on twitter -- "washington times" steven dinan has a view in a front-page story -- he writes -- host: next is a call from bridgeport, conn good morning to stored, a democrat -- good morning to stewart, a democrat. caller: based on my experience

practicing in front of the immigration courts in hartford -- my complaint about the system is that they are -- is that there are a large number of state laws that are violated by employers that hire illegals. that includes the unemployment laws. that includes the state minimum- wage laws. review criminalize the active hiring these people so that you can -- if you criminalize the active hiring these people so you can have greater profits by paying them $2 per hour instead of the minimum wage, i think you would find a very chilling affect on the whole problem of the legal immigrants. they're here for jobs in march measure. take -- they are here for jobs in large measure.

you take away the jobs and you will not have a problem wh them. we also do not have any enforcement. i started practicing immigration law in 1979. i can tell you that it is the least funded section of the justice department of all the departments. there's no computerization. they need to put in mainframe computers. they do not know who is here, when they got here, if they're still here, or if they left. the left hand does not have any idea of what the right hand is doing. the fact that they have a tall in-- they have a total indifference to the whole subject. host: thank you for your experience in working with the course. a little more from the arizona

newspapers about this. host: back to phone calls. next up is boston. this is a phone call from jerome, who is a republican. good morning. caller: out of chicago -- they have a practice of hiring these people. a lot of these companiesre hiring these people because of the tax purposes.

they get the taxes back at the end of the year anthis is why they hire them. the company i used to work for that hired me -- i know that these people do not get lower pay than i get. then you go over to coast arica, where e of the illegals work for my company, she has a better home then me and knew. -- me and you. this is why the country is so broke. they are not forced to spend their money here. they're sending it back. host: jerome from boston. on twitter --

"financial times" has a story about the ruling yesterday. below it is a separate story. let me have our camera go in on it, please. host: we are asking you whether or not you would like to see a loss similar to the arizona law -- see a law similar to the

arizona law imposed in your state. an independent, you are on the air. good morning. caller: hello? host: go ahead. caller: i would just like to say that our federal government has failed us tremendously on the border control. the jobs that are being stolen and the medicaid and the services that are taken should be controlled by the federal government's and it is not. the corporations have taken over this country. the reason that they hired illel aliens is the bottom

line. they make more money. if i have to pay more prices to get rid of this problem, i do not mind. i will pay whatever i have got to pay, but i want the united states bders to be secure. when mexicans come through, so can al-qaeda, so can the taliban, so can anybody else. it's not just a spanish problem. it is also a security problem. i think something needs to be done. if the federal government will not act -- and i think the states taking it upon themselves is well beyond due. host: a democrat in california, good morning. caller: i live in orange count have livedan d i here all my life as a carpenter.

22 years in the field, i worked in all phases of construction. it is just as hot as in the fields with vegetables. i think what they really need to do is e-verify. i taught carpentry for 17 years, 11 of them in a high school, and seven of them in a union as an apprentice instructor. i watched them come through the high school programs. you cannot check their i.d.'s. in the union, i know they were illegal. some of them, about 30% -- some of them in that 30% of illegal

immigrants, i knew they were not legal because they had no i .d., but there were three or four that had zero education. could not even at 25 and 45. i had to teach them carpentry. even our unions are accepting. they're not doing the e-verify on their members coming in. that's king away from our veterans that are coming back and our high school veterans and high-school dropouts to be able to find jobs thatay good. a good carpenter out here pays $45 per hour. it now pays about $8 an hour. how can you live in california with eight dollars per hour.

host: you believe the e-verify system is a way to go. caller: absolutely. do the e-verify. when you talk about the welfare and all this and section eight and all that -- that's not going to the illegal parents. that's going to the illegal children that we pay for their medication and everything to be bought in america. we also paid for their education and medication legally. host: thank you for your call. west palm beach, a republican. good morning. caller: i used to have a landscaping business and i basically got ran out of the business because i could not compete with illegal labor. it is a felony to hire people

that are illegal. if someone in the united states -- american peoe are hiring these pple and that is a felony. they have never enforced the law in 20 years. last year, there was a nursery that got caught with 128 people with the same social security number. i think someone could pick that up. the federal government is collecting $80 billion a year in fi taxes they know they will never ha to pay up. the federal government is making money. there's no one to enforce the rules. there's nobody to arrest the people that are hiring them, i.e., americans are hiring these people. we have two schools that are almost all hispanic. it costs $43 million per year to educate them, give them free breakfast, free lunch, free day care. we had five illegal aliens still

at a construction site in three years ago -- host: beyond the list of problems, what's your prescription for the solution? caller: if you hire illegal aliens, you go to jail. you go to jail for 10 years. if you have illegal aliens that are not certified -- like last year when these five got killed on a construction site. you cannotlame them because we are hiring them. call the i.n.s., the fbi. they are not mexicans higher reading the mexicans. american's hiring the mexicans. host: here is a tweet. another phone call from florida. this time it is clear water. the caller is an independent. good morning. caller: good morning.

travel and a major highway in florida. you go into any new housing or commercial building developmt and the are illegals during construction, roofing, road construction, road repair. these are good payingobs. two or three of every four people on the project is illegal. the federal government looks the other way. unemployment in florida is 15%. there are literally thousands and thousands of illegals in florida doing good paying jobs because they cannot file for unemployment. they cannot file workers' comp claims. they work for less than what anyone else will work for. if they get hurt or sick, they go to the emergency room and the

taxpayer picks up the bill. host: thank you for your call this morning. covering the court for "usa today" -- joan writes --

we're asking you whether or not, after e ruling, would you like to see a similar law imposed on your states? the next call is from canton, illinois, a democrat. good morning. caller: good morning. i own to the largest landscaping business in illinois at one time. ias put out of business because the competion was hiring illegals. unemployment checks being sent back to mexico -- they do not contribute to our national debt. i contacted all the agencies concerning what happened to me and i got the runaround and no one would do an investigation. the best thing the people can

do, anyone under 30, anyone who was unemployed, anyone who was graduated, should force anybody they're going to vote for to take a stand on finding employers who hire illegals. illinois is definitely a state that needs this law, definitely. it is so outlandish. you can see them on street corners, everything. people have to do something about it and stop it. thank you. host: thank you, robert. virginia, good morning to dave, republican. you are on the air. caller: i have one comment. i've beeout of work for over two years. i have a son that is 17 years old. i cannotven afford to get them health insurance. i would like to know -- these

people do background checks for your credit, your past employment, a bunch of different things. i could get turned down for that job and they could probably get that job. what background do they have to check on? that's what i do not understand. for the same job, i could get turned down because my credit rating was down 200 points since i lost my job. host: what would you like to see done about the immigration issue? caller: i would like to see them and forced the laws -- them enforce the laws. i am not prejudiced. i cannot get a job because of the situation. are these people getting checked? i doubt it. host: you find yourself in a

circular situation. caller: yes, it's unbelievable. i haveeen out of work for two years. host: what kind of work do you do? caller: i retired because of my wife's health. i desperately need a job. my retirement is just not making it. i used to do construction, but i worked for the airlines previously to that. host: a tweet -- arizona is in the news for another reason. sarah palin has purchased a house there. here's a story about her in "the wall seet journal" questioning her presidential aspirations. a related story in "the new york times" today, national page.

host: next is a telephone call from welling, lahoma. good morning t mike, an independent. good morning. caller: good morning. if you remember, a couple of years before arizona passed its law, we made the news and oklahoma with one of the strictest laws against hiring illegals. in our area, we have some of the largest merger is in the country -- largest nurseries in the country. interestingly enough, they are all in business. jobs were taken by legal worker

s and also just regular americans. everybody is working well. the nurseries are booming. did not hurt a thing. thank you. host: i want to tell you about some interesting programming we have coming up this weekend. the next seven or eight months, we will be on the road visiting eight local communities in the southeastern part of the united states. we will be looking at the literary life and local history. our special focus is tampa, florida. look at the history and literary life of this gulf coast cityf its also the place where the 2012 republican national convention will take place. let's show you a clip of the mayor of tampa. >> within the city limits, there's about 380,000 people.

within our television market, we are the 13th largest in the country. that stretches down to sarasota. tampa is a working city. it's a poort city. we have a great research university here. tourism is one economic driver. we have agriculture. hillsborough county is the largest producer of tropical fish in the country. we have our industrial and business environment in the downtown area. not only is it our orins, which obviously, florida -- the spanish came and tracked through florida, oftentimes losing their lives in the process. the native americans were here already pre we have a long, colorful history, long before many people think of america beg settled.

many of the journeys throughout florida started here in the tampa bay. they thought there was gold here. obviously, there is not prevented not stop them from coming. we've been influenced from many different cultures. our predominant m&a group has been cuba's, italians, spanish, not to mention americans of african descent who came here unwillingly. the mix in this community is unlike any i've ever lived in. host: the mayor of tampa talking about his city's roots. american history tv and book tv. yocan find more on our web page. the next stop isavannah. later on, crleston, charlotte, and other places in the southeast. the next telephone call, as we talk about arizonas worker law -- would you like to see a similar measuren your state?

next is a brooklyn, angelo, a democrat. hello. caller: thank you. i would hope the new york would bring in a law like this. i have been listening to some of your callers and some of the things i'm concerned about -- they say hispanic. is it mexico, a dominican, cuba -- there have been a lot of chinese. new york is very diverse. the other thing i do not understand is that it is illegal. i do not understand what the rest of the discussion is. also, to do the jobs that americans will not do, what about putting our teens in school work programs so they can work, as well, and also learned some stability and responsibility, so when they get older, they know a little bit more of what to expect and the

work force. thank you. host: thank you. lots of presidential politics and the news. let me show you the page in "the washington post" today that captures a lot of this bid newt gingrich and a story -- captures a lot of this. newt gingrich and a story -- a number of items. finally, forr senator rick santorum of pennsylvania will officially enter the race on june 6. back to your telephone calls. next up is los angeles, abby, republican, good morning. caller: good morning. we have to admire people's work ethics. thank goodness the illegals here

are not like the gypsies in europe. when i went to the kingdom of jordan, i realize that every little boy had a job. it reminded me of the 1950's in america. what i find with the illegals here -- kids do not have that role model. they do not see their big brother working. they see a foreigner working. they do not think, "i can do that." they do not think of gardening. they do not think of delivering newspapers or cleaning houses. the role model is lost. they just play games. host: thank you for your call. we are running out of time. john, an independent, good morning. caller: good morning. i have a couple issues. yes, florida will get that law,

but i will light the united states to get -- i would like the united states to gethe mexican law. i'm glad that gov. scott in governor walker will support them. everyone says we will not support them. every year about the wetback operation? it can be done. host: "the washington post" lead today -- "cia will search bin laden complex." also, we mentioned congress extended the patriot act. the president is at the g-8 summit right now. "the washington post"ays he has directed aides to have the bill signed by auto-pen.

from japan, a japanese professor offers assessment that the meltdown began five hours after the earthquake. about 11 hours later, all of the uranium fuel was at the bottom of the injured containment -- inner containment. host: and we have pensacola, florida. james, an independent. good morning. please hit the mute button on your tv. caller: yes, i will do that. what i would like to explain, first and foremost, is that the driver's licenses in all 50

states are not uniform. in florida, are driver's license number starts with the first letter of our last name and then it has a series of three numbers, then a dash, then a series of three numbers, then a dash, and then two years from our birth date. host: with all the details, what's the point? caller: a lot of states use social security numbers in the driver's license. i believe missouri uses a social security number. host: where are you going with this? what do you want to have happen? caller: i would like all 50 governors to come to some unification or get all the drivers licenses -- either use the social security number, which i disagree with, or use

the florida system. the last two numbers and your year.eirth host: the point is that you want to use these four wr work. caller: it would make everything uniform. illegal aliens should have to go through the i. >> the u.s. supreme court yesterday upheld the arizona law that sanctions businesses are hiring illegal workers. hear of a high court's oral arguments.

-- here are the high court's oral arguments. [no audio] >> argument next this morning indicates 09115, chamber of commerce v. whiting. >> may it please the court. in 1986 congress converted what had been before at that time a merely peripheral concern of immigration policy -- that is, how to regulate worker authorization -- and converted it into a core concern of immigration policy by the passage of the immigration

reform and control act. this court has characterized that change in legislation as providing a comprehensive scheme for dealing with those issues. that characterization is obviously apt because congress provided for an exhaustive and exclusively federal method for bringing to the attention of federal authorities problems and worker authorization, the method by which those matters should be investigated, the method by which they should be adjudicated, all controlled by a matter of exclusive federal activity. and indeed, the ultimate judicial review goes exclusively to the federal courts of appeals. the sanctioning provisions are very explicit and they are very clear and they are very balanced. and for a good reason -- congress realized in this context that if you over-and force in one direction. that is, if you tried to deter hiring unauthorized workers you run a very serious risk of causing employers to air on this side of not hiring others who

are in fact all the rise but who may fall and protected classes. converse very carefully calibrated the penalties on both sides so that the employer essentially would play it straight down the middle and hire the best people for the job under the circumstances while, of course, complying it all possible with the federal requirements. and so -- >> why is that a problem if, as the federal statute requires and the states -- state statutes require, you have to show an intent to hire an on authorized worker? isn't that what the state statute here require? >> the state statute tested components. one is no wing and one is intent. >> why is that a problem for the business? so long as he doesn't intentionally hire an authorized -- on authorize worker? >> it is never 100% clear

exactly who is and not an unauthorized workers. what congress said is a lot not deal with this problem in the granular white, even every individual employment decisions, but looking at the generality of situations and realize if you put on one side of the scale -- what arizona has done here, which is to say you can essentially have the death penalty to the business, completely eliminate the businesses right to exist. and on the other side of the scale, $250 fine. it would be pretty to say i'm going to hide behind the intent in knowing arguments. >> we might have used reticulated penalty is or, you

know, and forced the federal law ourselves, but they forbade that. but they did allow us to enforce the law, immigration laws, through licensing, right? so it all essentially comes down to -- to the licensing issue, doesn't it? >> right. it does ultimately come down to the through licensing laws and -- the part of the -- and the fundamental problem, obviously, with arizona poses skiing here is that this is not a licensing law. this is a worker authorization sanctioning lot. >> well, when i picked up this -- this brief and looked at this case, i thought, oh, well, licensing, that the defined term, i will look in corpus tourists is a condom or alar or something. but it really is not.

your brief indicates you start with dictionaries, fair enough. you indicate what federal licensing laws are. but i see no limitation on what the state can decide is a license in injury spread it -- in any jurisprudential principle that you cited. >> right. justice kennedy, i think the better way to try to grapple with the meaning of the licensing law or whether it ought to be construed broadly to allow the statewide authority to engage in supplemental enforcement as, or nearly in order to say what really ought to happen in this context is, if you deal with the situation where the federal government has enacted -- has enforced a provision and imposed a penalty through the federal scheme, then that as a supplement to that the state does in fact have the authority to add something over and above what it -- what the federal government has done. but it seems to me quite remarkable to think that congress intended through a

parenthetical referring to through licensing laws to allow the state to adopt an entire alternative shadow enforcement mechanism, a non administrative decisionmaking process, completely a state run operation, and even at the end, the sanction is not -- is not imposed ultimately in effect by the -- by any regulated entity. it is ordered by a state court. >> that would be possible only because nobody would think that, with this scheme in place, the federal government would not enforce it. of course, no one would have expected that. but what arizona says has occurred here is that the scheme in place has not been enforced, and arizona and other states are in serious trouble financially and for other reasons because of -- of unrestrained immigration. and therefore, that they had to take this very massive -- i agree this step is massive, and one would not have expected it to occur under this statute, by expectations change when the

federal government has -- has simply not enforce the immigration restrictions. >> and justice scalia, i understand the point, and i understand the motivation for why arizona did what it did. but the problem is the statute was enacted in 1986, and that's when the pre-emption standards were put in place. and the notion -- if you look at the way the structure of the statute -- and this also response in some ways to justice kennedy pose a question about how should you read licensing, since it is not a self defining concept, it is that, first, congress said specifically that the immigration laws should be enforced uniformly, which says that there should not be 40,000 different locations offering up their view of licensing and the additional 50 states. second of all, and this is the part i think is particularly telling in terms of this massive state scheme that has been adopted, which is that under

section 1324, which is in 134 of the appendix, congress specifically outlaws the use of the i-nine form. and in some ways this goes to your question because it would be inconceivable that the state can in fact in for snowing and intentional decision making without having access to the i 94 because that's -- >> could i ask you this question to get back to -- >> sure. reid >> to the issue of whether this is a licensing law, licensing is not an unknown term. states and municipalities issue all sorts of licenses. for example, i think here in the district of columbia every business has to have a general business license, is that right? >> that is true. >> now, if the district of columbia were, after having enacted this requirement some years ago, were to pass an ordinance saying, and if you knowingly hire an illegal alien,

your general business license can be forfeited, would that not -- would that not cease to be licensing lot? >> i think the answer to that specific hypothetical is that is still not a licensing law, because it does not hide the grant of the license to the revocation powers. i think congress means for the states to adopt something more specific than that, although i do think eventually -- >> well, why is it -- this is the same question you are answering. why is it suddenly not a license because the -- because the state imposes an additional condition, where it was a license before? >> well i -- >> and i -- >> i think the question is whether it is a licensing law within the meaning of what congress intended. i mean the reality is, just as alito, there is no common definition of a license and various states and local --

>> actually there is. i mean, it seemed to me when i read this, it sounded a little familiar, and i think whoever wrote it in arizona copied it out of the administrative procedure act. i mean, you read the definition of license in the administrative procedure act -- >> but -- >> and this is awfully close. >> right. in this than that, just as pryor, and i agree with that. but the problem is that the federal law does not talk about actions with respect to licenses. it talks about licensing laws and -- >> that is right. it might have meant something different. congress might have. but what is then -- i read the s e i you brief. i thought that was pretty interesting. is that something you adopt as what congress did mean? i mean what do you think congress did it mean and what evidence is there -- if it did not mean that the apa

definition, what evidence is there for that? >> well, the sdi you brief does a very nice job of explaining the particular focus of congress and the agricultural workers protection act and in particular, has tremendous significance in terms of narrowing the state's authority here because, obviously, in their conforming amendments in that context -- >> it could have named that, if that is all it meant. >> i am sorry, your honor. >> it could have named that, the particular licensing scheme, if that is what it meant. but it did not name it. it said licensing generally. what did it intends to add to that? barber's licenses? >> no, i think what -- >> beauticians licenses? >> of course. >> how would any of this have anything to do with immigration laws? >> well, i think what congress

actually had in mind and what is the most natural reading of a licensing law is the fairly common situation where somebody violates federal law, usually on the criminal side, and a state licensing entity finds out about the conviction of the federal crime and says, wait a second, we do not want people to have licenses under these circumstances and therefore they -- >> but they are saying -- that is exactly what they are saying. >> no, but, justice scalia, there is a vast difference between that and what they are saying. >> i think it is very common to talk about authority to do business within the state as a license. you say "licensed to do business in" so many states. it is a common expression. now i have -- maybe will persuade me otherwise, but i have no doubt that insofar as this law limits the authority to do business with in the state, it is a licensing law. it is a little harder extending

licensing to formation of a corporation, but when you issue a corp. charter you really do two things. you create a corporation and enable the limitation of liability that creates, and secondly, you authorize that new creature to do business with in your state. so at least half of that corporation law is licensing, it seems to me. now, if that is what i think what -- >> actually, justice scalia, can i stop you there? >> go on. >> because i think, actually, if you just received the articles of incorporation, that does not actually in all states necessarily give you the opportunity to do business. it as simply gives you the right to exist and you may very well need to get a separate document in order to actually do business in a particular state. >> but you do not need the kind of a document that and out of state corporation needs. >> know, you do not need that. >> if you are in in state

corporation. >> that is true. but the reality is that nobody -- and common sense and common use of the term, thinks of articles of incorporation or of the charter of a partnership or of any of those as -- documents as licensing, which suggests that the state -- >> could i, could i -- >> i am sorry? >> just focus on the questioning? because we keep talking about whether the 88-type definition of licensing is what congress intended or not, but you do not disagree the congress at least intended that some -- that if someone violated the federal law and hired illegal aliens and was undocumented aliens and was found to have violated it, that the state can revoke their license, correct? >> right. >> to do business? >> yes, i do not disagree with that, just a sotomayor. >> so, it really does not matter whether they are revoking their

right to do business in the state. they can only revoke their charter or their articles of incorporation if they are -- if they were filed in that state. they would not have power to revoke a delaware -- >> right. they cannot do it in delaware, right. >> all right. so it is stopping them from doing business. so really the only conflict you're talking about is not the power to stop them from doing business, because you except that this saving clause gives them the power to do that, to revoke the right to do business, what you're talking about is a conflict in the adjudication of the issue. is that correct? >> right, and the enforcement and investigation. >> all right. so i am, you know, how they define license or not is irrelevant to me. what we through weather -- what expressly preempt that adjudication right. >> right. >> or what implicitly pre-empts that adjudication right. >> right. >> because that is, for me, what

the center of this question is. >> right. i think there are three pieces of evidence that respond directly to what you asked, justice sotomayor. first is congress, in section 115 of the statute, specifically says enforcement should be uniform, which suggests to me that this ought to be exclusively a federal investigation and adjudication process. two, the point i was making earlier about the i-nine form. those forms cannot be used in any location -- >> excuse me. do not depart from that. what does that mean, " enforcement shall be uniform." >> i am sorry? >> what does that mean, "enforcement shelby uniform." >> the enforcement of the immigration laws shall be uniform. congress stated that as an overarching principle. >> is that different from -- >> when it enacted section 115.

>> from what is the assumed situation with respect to all federal laws? >> well, not necessarily. >> are federal laws not to be applied uniformly? >> i mean, i think it depends on the circumstances. i can imagine a lot of -- remember, we're talking about immigration policy and immigration law here, and in general, you expect that to be pretty much uniform. but this court has decided that there are some elements of it that or not, and congress is simply reenforcing the basic notion that enforcement of it ought to be uniform to -- >> does not the exception for licensing mean that this is not going to be completely uniform? one jurisdiction may take the position that a restaurant that employs illegal aliens may lose its restaurant -- its license to operate. another one may take a different position. >> right. >> so it is not going to be the same. >> justice alito, i think that

is why it is terribly important to limit, to narrow as much as possible, and it is fully consistent with congressional intent -- >> well, they say that these -- >> and the need to get a full sanction done by the federal government and then just an add- on on the licensing side, rather than an entire regiment to enforce state law. >> but this is -- it cannot be uniformity of sanction, because the court permitted licensing sanctions. >> but only at that point. >> so let's go back to my question of adjudication. what you are saying is what is specifically pre-empted is the right to adjudicate -- >> investigate -- >> -- whether someone has hired undocumented aliens, correct? >> yes, just a sotomayor. and the last thing i would say with respect to that was the conforming amendments with respect to the agricultural workers protection act, there is

a situation where the department of labor, which used to engage in adjudication as well, was divested of that authority. it seems quite unlikely congress meant to give that authority to the state and take it from the department of labour. >> i do not see the problem in the first adjudication. would it not there be a federal question presented if a company claimed that it was deprived of the ability to do business because of a mistaken interpretation of federal law, that the person is hired -- it hired was not an authorized person? >> arizona does not purport -- >> would not that be a federal question that -- >> arizona does not purport to be enforcing federal law here. it has an independent state law basis for the actions that it takes. so that would not arise under federal law, justice scalia. >> does not the state law basis referred to federal lot? >> actually, i do not think. >> i thought it tracked it.

>> well, it tracks it, but it does not incorporated. it does not purport to be applying it. is the same standards but it is still a matter of state law. it is not a federal -- it does not arise under federal law. >> thank you, counsel. in general. >> thank you. mr. chief justice, and may it please the court, nearly a quarter of a century ago, congress declared federal employer sanctions central, not peripheral, to the policy of immigration law. congress broadly swept away state and local laws, pre- empting any sanction upon those who employ authorize alien -- who employ unauthorized aliens, with the sole exception being a mere parenthetical for licensing and similar laws. >> just to pose there, we have had a little discussion about what licensing laws are, but we have not talked at all about those last two words, "and similar laws." it seems to me that whatever

wiggle room or ambiguity there may be in saying whether this is a license or not, congress swept pretty broadly. it said, not just licensing laws, but the licensing and similar laws. >> that me tell you, mr. chief justice, what we think a licensing law is and then deal with the similar question. we think a licensing law, as congress to find it, was the traditional licensing laws that were in place in 1986. those were largely farm labor contractor laws. they were aimed at business to do business and they had a few essential characteristics in those laws. >> i am sorry. let me just -- i mean, businesses have had licensing laws pretty much across the board, right? you could not set up a electrical contracting business if you did not -- were not license to do business or met the requirements for an electrician. it was not just agricultural work. >> absolutely. but i think that this licensing law looks very different from

the ones you were referring to or the farm labor contractor once, for a number of reasons. the first is licensing laws issue licenses. they're generally about the issuance of licenses, not simply ones in which licenses are revoked. second, they are ones in which the issuance of the license, the criteria for issuance, is the same as the criteria for revocation, because they are -- >> excuse me. are you saying that if you have a licensing law that permits the revocation of a license, the revocation is not a licensing lot? >> what i am saying is that is a -- >> suppose i have a licensing law which says if you do this, your license will be revoked. does that remain a licensing lot? >> in general, that itself is not a licensing law. the licensing laws share a number of characteristics. we can debate about whether subtracting one or another of those characteristics -- >> why make exception for

licensing laws therefore if you cannot revoke a license under it? >> because congress wanted to preserve the state's traditional power for licensing laws, which were about fitness to do business. >> once you're in, you can do whatever you like. do you think that is what congress meant? you can pass on their fitness when you issue the license, but once it is issued, they can do whatever they like, is that right? >> i think that the criteria would be the same for issuance and revocation. >> and revocation. ok. so that raises the question, what does it make -- why does it make any difference if the revocation provision is contained in a narrow licensing law or if there is a general state law which says all licenses that are issued may be revoked for certain reasons? >> because what congress was trying to do is preserve the states and localities traditional power for fitness to do business. and one good indication that business to do business is not what was at issue in a

particular law is that they will lead businesses operate, they will license them without any care whatsoever as to whether they have a history of violating the particular provisions -- >> so they should just -- arizona should just and and all its licensing laws to require what they now require when the licence is issued, and to say, in each specific licensing law, that it can be revoked for the same -- on the same grounds -- >> that would solve the problem. >> that would solve the problem. >> even if they said "and you have to renew your license every year or every six months" ? >> that is correct. that itself, i do not think, is relevant to whether the licensing law -- in the other hallmarks are that they have discretionary adjudication by an expert body, that it's not mandatory, that it is genuinely aimed at qualifications to do business.

>> you do not disagree that whether or not a company hires illegal workers is related to quality or ability to do business or qualification? >> a state could certainly make that part of its genuine fitness to do business law. arizona has not done that. and we know that because the criteria for issuance of the license are entirely divorced from the criteria for revocation of the license. and if arizona really believed what you are saying which is that it is relevant to the -- a violation is relevant to whether they can do business or not, they allow every single one of those entities to get the license. >> your argument sounds to me like look at the law and see what its purpose is. if the purpose is to regulate undocumented aliens, then it is struck down. if it happens to put its revocation provisions in its licensing law, then it is ok. it does not make much sense. >> justice sotomayor, i am not talking about purpose. i am saying look at the face of the statute and see what is

being -- >> the face of the statute talks only about if you hire undocumented aliens, your license is revoked. >> right. so that looks like a punishment statute. there are essentially two boxes here. >> the saving clause says that it is ok. civil or criminal sanctions other than through licensing and similar laws. >> right. and this is not a licensing law. congress essentially had two boxes in 1986. one was the traditional business to do business laws, and the other was what congress -- >> if we disagree with you, could you answer the question i posed to your adversary, which is what makes the adjudication of status pre-empted? >> absolutely. the federal adjudication is expressly -- state adjudication of a federal violation is expressly pre-empted as well as implied so for three reasons. the first is that congress, and

developing by rca and a comprehensive scheme, set out a series of procedures, federal adjudication within eight l j, all sorts of different regulations to jot and title. and what arizona does here is what 40,000 different localities can do if this law is upheld. >> at the same time the statute was passed there were many many state laws that adjudicated revocation of licenses. perhaps not many had addressed the issue of hiring undocumented aliens, but many state level laws existed that independently adjudicated revocations. what in the legislative history or in the words of the statute show that congress intended in any way to limit those adjudications? >> it is undoubtedly the case that without the parenthetical, the mere parenthetical savings clause, that arizona-like laws would be swept away as sanctions, that these are sanctions imposed. so the question is whether the

licensing law phrase saves that. and i think it saves the federal -- state adjudication, and i think the answer to that is no, because to read the statute that way is to amend -- is to permit all the states to have their own laws, and it's undoubtedly the case that congress wanted to sweep away the state statutes that were in place that imposed sanctions on employers. >> counsel, just -- may i make sure i understand your approach. you are saying that arizona had a law saying you have to have a license to do business, and then it became aware of a problem it wasn't aware of before. it found out that a lot of employers were employing child labor, and they did not know they would do that, and they say we can revoke your license if you're determined to have employed child labor, that would not be ok? >> well -- >> but it would be ok if, in the

original licensing thing, they said "and you cannot employ child labor" ? >> well, i think that the answer depends on what congress was trying to get at. in 1986, we know that congress was trying to get at with respect to state enforcement of immigration laws. the broadly swept away the laws and they said for the i nine provision, which president reagan described as the keystone of the act, that i-nine documents cannot be used in any procedure besides i r c a procedures. >> but the chief justice can insist on the answer to his own question, but it seems to me his question is why is that not still a licensing lot? >> if it has independent adjudication, it is swept away by the first parts of the statute which say the provisions of this section preempt any state or local law imposing civil or criminal sanctions. >> but in the child labor

example, in addition to a regulatory licensing scheme, -- why isn't that an addition to a regulatory licensing scheme so that it is a licensing lot? >> i may not understand the hypothetical, but the word "provisions" refers to the entire subset -- the entire statute in i r c a, including the procedural protections, the procedures that follow for federal enforcement of the immigration law. >> i was just going to say you tried earlier to talk about the two boxes, and you said something would be pre-empted by the first clause. anything civil and criminal sanctions are allowed if they are imposed through licensing and similar laws. there are not two boxes. the state can do what's in the first part so long as it does it through licensing or seminal -- similar laws. >> right. our position is that this is not

a licensing law because it does not bear any of the indications of a traditional licensing law. >> is it similar to a licensing lot? >> i do not think so. congress, when they used a similar meant to sidestep the schematic debate about whether something is a certificate, as some of the farm labor contractor statute's use that term, or a license. >> thank you, counsel. >> mr. chief justice, and may it please the court, through their police powers, states traditionally have the authority to regulate the conduct of employers within their jurisdiction to determine what conduct warrants issuance of a state license and to determine what conduct justify suspending or revoking such a license. and although congress pre-empted some of our traditional authority when it enacted i rca in 1986, it preserved significant state authority through the savings clause that

permits a state to impose sanctions through licensing and similar laws. >> how do you answer the anomaly that arizona cannot impose a fine even in a modest amount, but it can revoke someone's license to do business? >> we think that -- we do not view it as an anomaly. the structure that congress established is one of the state's authority is determined by the nature of the sanction that we choose to impose. we do not have the authority to -- they took away our authority to impose civil monetary and criminal sanctions but preserved our authority to impose sanctions through a similar law. >> why would congress want to do that? >> it provides some accountability, because we are the entities that establish policy for our licenses, and we are the ones accountable for whether that business remains in business or whether we are taking it away from them. >> perhaps congress never expected that the states would have to resort to such massive

measures, and it probably would not have if the law had been uniformly enforced and vigorously enforced, right? you did not have any notion of doing this sort of thing in 1986, did you? >> we waited until 2007. >> maybe congress was not worried about it because it seemed very unlikely that anything like that would occur. >> perhaps. but i think also congress was recognizing what this court recognized, that unauthorized employment has significant local consequences, so they did not want to fully preempt state law. they wanted to preserve state authority. >> the main anomaly seemed to me to be this, that in the federal act, that was the first point that the chambermaid that is a fairly careful balance. there are a group of people in arizona, they may look as if they come from mexico or speak with an hispanic accent, and you

are not certain whether they in fact are illegals or that they are legal. now, think of that category. congress has passed a statute that gives the employer just as much incentive to verify, so there is no discrimination, as to dismiss, so there is no illegal hiring. it is absolutely balanced. a $1,000 fine for the one, a $1,000 fine for the other. so arizona comes along and says, i will tell you what, if you discriminate, you know what happens to you? nothing. but if you hire an illegal immigrant, your business is dead. that is just one thing they do. how can you reconcile that intend to prevent discrimination against people because of their appearance or accent with reckons -- how do you reconcile that with arizona's lot? if you are a businessman, every incentive under that law is to call close questions against hiring this person. under the federal law, every

incentive is to look at it carefully. >> your honor, a couple of points. first, in terms of how our law works, we do have a prohibition against investigating any complaint that based solely on race. so if we get a complaint that says these people all look mexican or hispanic, that does not get investigated under arizona law. we also had criminal penalties if frivolous complaints are filed. beyond that, we have the use of e-verify, which is an added protection for employers to prevent the hiring of unauthorized aliens. so if they use that, they are in good faith compliance with the i-nine process and they have no risk of exposure under arizona law, just as true under federal law. >> does it not frustrate the congressional intent when the federal law says that the i-9 can be used for no purpose other than the federal adjudication of whether a violation has occurred or not? does it not frustrate that lot

to have the states raise a defense that depends on forcing someone to disclose something that the federal law protect? i mean, this is a vicious circle. federal law says that you cannot do the i-9 for any purpose other than the federal adjudication. now you are creating a defense that says you have to supply us with something that federal law otherwise protected from disclosure. >> your honor, we do not think that the federal law prohibits the use of an eye-9 in a state proceeding, that these can be used under the federal proceeding or under the state. beyond that, if at some point in an actual enforcement action it was determined that federal law did have that impact, they would still have that defense available to them. they would just have to prove it up in a different way other than use of the form. >> that does not answer my point. does it not frustrate federal law when the federal law says that i-9 can be used for no purpose other than federal

adjudication of the status of employees? >> here is what the law says, it may not be used for the purposes other than for enforcement of this chapter. and we believe that the state enforcement action, under the authority for preserving sanctions through licensing and similar laws, would fall within that. so we think they should be able to use that, the employer should be able to use that. >> is there not a difference between saying that it may not be used for any purpose other than for enforcement of this chapter and other provisions of federal law, or on the one hand, and saying, on the other hand, it may not be used for any purpose other than in a federal proceeding? the enforcement, the i-9 certainly could be used in a federal proceeding by the employer. would that be used for the enforcement of the federal law? i would not think so. >> that is true. >> i have a question on the i-9. i am not certain. i thought under federal law that

if the employer is not certain but the employee says there is my social security card, here is the driver's license. the employer looks at that, he is home free, is that right? but under federal law -- under arizona law he is not home free. he still could be prosecuted. is that right or not? >> that is not right, your honor. >> so if he shows the driver's license, under the arizona law, the worker, the employer looks at it, the employer cannot be prosecuted? >> we would need the evidence that the person knowingly employed the unauthorized alien and a good face -- good-faith defense through use of a -- >> i thought in reading it that it creates some kind of presumption, but he is not home free? >> no, your honor. >> but under federal law he is home free. >> the substantive requirements

under arizona law and federal law are the same. we are imposing no new obligations. >> than -- and then he is home free? i am trying to understand. maybe it is not enough time to explain it, but i thought federal law requires this e-9 business or whatever this e review is. and i was worried about the review which it seemed to require because it seemed to me and 20% of the cases where the notice is this guy is not authorized, we do not have any record that he is authorized to work -- 20% of those are wrong, and he is authorized to work. said the employer who follows that is really going to fire 20% of the people who will be absolutely entitled to work. so i would just like you to address those points, as you wish. >> many walk-through how our law works to see if this addresses the concern. arizona does not change anything

in terms of the use of the i-9. we retain the same defense that is in the federal law for good- faith compliance with the i-9. we do require employers to use e-verify, although we do not impose a sanction on that employer if they do not use e-to verify. >> can you explain that, e- verify, because this is a federal resources, and the federal government has said we want this to be voluntary. how can arizona take a federal resources, which the federal government says is voluntary except in certain circumstances, and turn it into something that is mandatory? >> that is the question answered by looking into the conflict pre-emption analysis because congress did not address the role of the states with regard to e-verify. >> arizona wants to use of federal resources. and the fed makes it available if the employer can use it voluntarily, but not mandatory early.

how can arizona set the rules on the use of a federal resources? >> as long as it is not a burden to the objectives of congress, we think that we can require employers within our jurisdiction to use e-verify. >> do you make it mandatory? >> our statutes as you shall use e-verify. we do not impose a penalty against employers who fail to use it. the consequences are the same as they are under federal law. >> you just do not get the safe harbor. is that the only consequence? >> that is right. you do not get the safe harbor under e-verify. we did add after this lawsuit was filed some additional requirements similar to what they have under the federal system, where you cannot get state contracts, you cannot get state grants. >> but you are talking -- you're taking the mechanism that congress said will be a pilot program that is optional, and you are making it mandatory.

it seems to me that is almost a classic example of the state doing something that is inconsistent with the federal requirement. >> we look at the test for conflict pre-emption in terms of, does this make it impossible to comply with federal law? it is really a question of are we interfering with the federal government's ability to achieve its goals? and the goal in developing e- verify is to have a more effective verification system. >> if they fail to do it, then they cannot receive any "grant, loan, or performance based incentive," from the state. that is what the law says, isn't it? >> that is what, and that was added after this lawsuit was filed. >> i would think then the answer to justice scalia pose the question is, yes, there is that penalty. --isn't simply oratory

hortatory. >> well, there is no penalty in terms of -- >> you do not go to jail. >> you get find. >> what you do is you lose any grant, loan, or performance based incentive. is that right? >> that is true under current law. that is not what the plaintiffs challenged. >> does this lawsuit challenged that? >> it does not, your honor. >> you are under the old law, the only sanction is you lose the safe harbor, if that is a sanction. >> that is right. >> in answer to justice briers earlier question, in fact, relying on the i-nine does not provide a safe harbor, because under the e-verify system, you cannot just rely on the i-nine forms and statutes, you have to rely on the e-verify.

>> we have the same -- it is modeled after federal law. just as federal law has a defense for employers to be in good faith follow i-nine, so the state law. >> the federal law and the state law do seem to be exactly the same on this point, i do not understand how these two provisions fit together when e- rarefy is used. in the first thing an employer does is receive the forms from the employee, from the i-nine process. he looks at the forms. they reasonably seem to be authentic. so that employer now has the good faith defense that provided under -- by the i-nine process, under both federal law and state law. >> but, under both federal law and state law, the employer either must or may also use the e-verification system. the employer gets back a notice of non-authorization. and that creates, supposedly, a

rebuttable presumption under both systems that the employee is not authorized to work. how does that fit together? if you have a complete defense for having used the i-nine process in good faith, the whole e-verification process seems to be irrelevant under both federal law and state law. i do not understand how they fit together. >> we have not wrestled that in practical application, and i'm not aware of them reaching that point under the federal system either, but that system should work, if you have used the i-9 you get back a final non- confirmation, not a tentative non-confirmation, that employee is unauthorized, that seems like it should carry a greater weight in an enforcement action. i am not sure how that plays out in an actual enforcement action. >> i was not quite sure what she meant.

judge schroeder, in her opinion for the court, emphasized that this statute was being evaluated on its face and that -- she said in as applied particular challenges might arise. how would that work? if we determine this is not pre- empted, how would -- on its face, how would an as-applied challenge come about? >> perhaps in terms of what are the outer limits of our definition of license and they're saying that we are outside the definition of licensing and similar laws as in a particular case, perhaps that would be in as applied type challenge. i think some of the concerns are perhaps more appropriately resolved in a direct case were that issue has arisen on an as applied basis and i think she was concerned about some of the real implementation questions that were wrapped in a legal challenge. but, for the most part, i think the general framework of our

statute is appropriate for -- in this challenge. >> so you think after this case we could look forward to cases, one by one, for all the various types of licenses? those would be as applied challenges and would not have been resolved by this case. we are really wasting our time here, aren't we? >> would not be easier, if that is justice scalia's concern, to take the solicitor general's position, that if you are adjudicating good faith or intent differently in any way from the federal government, that it is pre-empted? is that not what waiting for an as applied challenge means, whether or not you are putting different requirements on providing good faith? no, because i was trying to give some examples of the kinds of things that may come up as a practical matter, but i think we can get the guidance from this court. i hope that we can proceed in implementation but -- >> then let me ask the question

directly. it arizona's system does not permit an employer to rely on non suspect documents, the i- nine documents that are permitted employers to rely on -- the arizona system says, no, you cannot rely on those. is that pre-empted or not? you cannot rely on i-nine, or the arizona system says -- on the i-nine documents. or the arizona system says you cannot hire someone who has not been approved under the e- verification system. is that pre-empted? >> i think those would both be problems. i think we need to be consistent with the structure and the obligations that are imposed under federal law in terms of our sanctions provisions. >> are you conceding that any variation from the federal standards for criminal and civil liability is automatically precluded? i mean, as i read the exception,

it is an exception for state licensing and similar laws. and it does not say "so long as those licensing and similar laws go no further than what the federal government has done." i mean, we often allow states to impose regulatory requirements that go beyond the regulatory requirements that the federal government has imposed, and that is not automatically considered to be pre-empted. why are you conceding that arizona cannot go a which beyond what the federal government says? >> i think what congress preserve for us with our ability to impose sanctions, including the suspension and revocation of state laws. i do think they established a uniform national standard. i do not think we could, for example, establish a strict liability offense in arizona. we would have to hassle s requirement as they have in federal law. >> what i was trying to get at, what i was looking at specifically is federal law, if you look at the driver's

license and social security card, then the employer has established an affirmative defense and has not violated the law. that is what it says. that is the federal law. arizona law that i was reading says, and determining whether he is an unauthorized alien, the court shall consider the federal government's determination. it creates a rebuttable presumption. that means it might be rebutted. i see a difference there. and the reason that that's relevant is because, my first question, if you're an employer, prior to your lot, it's 50/50. i better verify because if i'm discriminating, you know. and it's not that hard. i just look at the driver's license and i am home free and the social security card, and if i hire an illegal immigrant, the same thing. your lot, employer, look at the driver's license and social security, you're not home free. if it turns out that you have been hiring this illegal immigrant and he is not

american, your business is finished. but what happens if i discriminate? under our laws? nothing. that was the original point they made. that is why i brought this question of difference in standards. and i absolutely want to be clear what your answer to that is. >> i'm hoping i'm being clear, justice breyer. we have the same standards as federal law. we of the same eye-9 defense that in federal law. >> the rebuttable presumption issue -- and this is how that comes into play. we have to, in bringing an enforcement action, have to really -- the state, in making its case, has to rely on information from the federal government regarding whether someone is authorized or unauthorized. we have to rely on that information from the federal government. it seems to me that that paragraph means precisely what it says.

if you are found to have violated this -- suppose somebody has been found to have violated the sanctions provision in the federal legislation. he has been found by the federal government. then what the state says, it can revoke his license. the other thing it says is that it does not want to preempt fitness to do business laws, such as state farm labor contract inlaws or forestry laws. in other words, it is thinking of some precise set of licenses, and that is why this licensing thing was there. and the very next part of this federal law are conforming amendments, and those conforming amendments apply to departments of government debt were concerned with maintaining state farm labor contractor laws. i grant you, you have to go beyond the text, but some of us

do because we get enlightenment. and going beyond that text, it seems to me we should follow what that house report says. what is your response to that? >> well, first, we would focus on the text where congress could have but did not -- >> yes, i have got -- >> limit, they did not limit it. >> i said yes, i have a broad licensing -- but let's deal with the part where you look at their explanation as to why they put those words there. >> first, the farm labor contractor is simply an example, and i think it says "such as" an example of the type of licensing provisions that existed at this time that addressed that. so that is not an all-inclusive universe of sanctions that -- of all the licensing laws that might be subject to this. they also do not specifically say there has to be a prior federal adjudication. that sentence has passive voice, "has been determined," without

specifying who is making that determination, and it specifically refers to state and local processes that provide for the suspension and revocation of state licenses. then there is the following sentence that says further, we do not intend to disrupt laws such as those forestry and other, you know, fitness to do business. we think this is a fitness to do business lot in that we are establishing as a state standard that if you engage in this context of knowingly employing unauthorized alien, we are going to have the ability to take an action against that license that we have given you to do business in our jurisdiction. so we think we fit within that last sentence of the -- >> can you also explain the i- nine? you said it is the same as in the fed. home free if you have documents, social security, a driver's license. but you also require the e- verify.

does the e-verify information modify the i-nine? >> they work in our system, your honor, as they do under the federal law, that you get a rebuttal presumption if you have used e-verify, that the affirmative defense if you have used i-9. there is that caution, it is good faith use of the i-nine system. we do have examples where, for example, if an employer is terminated because they are unauthorized and they show up with a different name and different papers two weeks later, you are not going to be able to establish good faith. so you are home free, but subject to that could this limitation. but we do incorporate the same obligations that exist under federal law. also i wanted to address more on the farm labor contractors and the amendments. and what we think that they were doing in those amendments was simply dividing responsibility at the federal level between the

department of labor and their processes that the existed i r c a, and what they were establishing in i r c a, and said we are not going to have these determinations of whether they -- the farm labor contractor has employed an unauthorized alien through a department of labor process, we're going to instead use the i r c a-established process. but, importantly, what congress did not change in the agricultural worker regulations was the provision that addresses state law. it said, before i r c a and after i r c a, that those laws -- two federal laws only supplement the authority of the state and that means that they preserve all of the state authority that they had before i rca in the area of farm labor contractors. and that i think is reinforced by the legislative history that -- that again reinforces that

those have been preserved through i rca. this is an area that has traditionally been within the mainstream of state police power. we knowledge that congress does have the authority to preempt us, but they left important discretion in terms of our ability to impose sanctions through licensing and similar laws, and we are doing so by establishing this scheme that provides for the suspension and revocation of state licenses. it is an important part of the balance that congress struck when it enacted i r c a by addressing what state authority would exist after that congressional enactment. we think the lower courts properly determined the scope of that provision. and unless there are further questions, in thank you for your attention this morning. >> thank you, counsel. mr. phillips, you have three minutes remaining. >> thank you, mr. chief justice, and once again, may it please the court, i want to begin frankly we're just as sotomayor pointed me to before, which is

the question of whether or not there really is a basis for allowing the states to independently investigate and to independently adjudicate these matters. and what is the evidence that congress did not intend that? justice breyer quoted from the house report, recognizing not everybody except that, but it does seem to me to articulate a very common-sense limitation that says you have to have a federal adjudication in the first instance, and once you have got that, then the state is allowed to add that sanction. that principle, it seems to me is reinforced by the limitation on what you can use the i-nine four. justice alito, you asked that question, but it does seem to me quite clear that what congress envisioned in 1986 when it adopted this is that you're going to have an exclusively federal enforcement scheme including the judicatory process, and it is only in that context that you are allowed to use the i-9. and the notion that the state could adopt a standard of

intentional or knowingly eiffel, and not be able to have the i-9 materials available, seems to me flatly at odds with each other, and therefore, it cannot be the congress intended under these circumstances to allow these matters to be adjudicated in that particular fashion. >> what can the state to that would be complementary rather than conflicting? >> the easiest is, an employer is convicted of violating i r c a and a criminal sanction, and he happens to be a barber, and the state licensing law says if you're convicted of a federal crime you lose your license, it is available to the state under those circumstances -- and i think this is exactly what congress had in mind -- to issue a notice to show cause why that particular person should not have the license revoked and then go from there. >> convicted by a federal government that has not gone after many convictions?

>> justice scalia -- >> that is the whole problem. >> but, justice scalia, it seems to me the whole question here -- and first of all, i do not think pre-emption can be a moving target. i think you have to decide it on the basis of what congress had in front of it in 1986. but remember, congress was balancing three, at least, very difficult problems, minimizing burdens on the employers, minimizing discrimination against people who are permitted to be hired, and avoiding hiring people who are not permitted to do so. and how you properly reconcile that is very difficult, but one thing seems to me clear is that that was a choice congress meant to leave to itself and to the federal government to sort out and not to give the states the opportunity to come in where they did. >> exit you are just kind of blinking over the savings clause, except through licensing

and similar laws. so that is not a real reservation by congress of this power to itself. >> if you interpret the savings clause as i do, which means truly as a supplement to federal adjudication, then it is a very narrow limitation on the basis because at that point you've already invoked the entirety of the federal scheme, and it does not modify the balance on those broader legal issues, your honor. >> thank you, counsel. the case is submitted. >> over the memorial day weekend, commencement addresses from across the nation. >> the republican senator who left the gang of six is our guest this weekend on news makers. the gang of six was a bipartisan group of senators working on tax issues. senator tom coburn will speak about why he left and his thoughts on debt reduction. that is sunday at 10:00 a.m. and 6:00 p.m. eastern, here on c-

span. >> juan williams talks about being fired from public radio for remarks about muslims in 2010. this is about one hour. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] .

>> good afternoon, and welcome. we're the world's leading professional organization for journalists, committed to our profession's future for our programming, event such as this, as well as trying to foster a free press worldwide. for more information about the national press club, please visit our website at www.press.org and to know it -- and to donate, you can also visit the website. on behalf of all of our members worldwide, i would like to welcome our speaker. our head table includes guests of our speaker as well as working journalists, where club members. if you hear applause in our audience, we always remind that we do have members of the general public attending. so it is not necessarily evidence of a lack of journalistic objectivity. i would also like to welcome our c-span and a public radio audiences today.

arlington's are featured on our member-produce weekly podcast from the national press club that is available free for download on itunes but you can follow the action on twitter using #npclunch. we'll have q&a after the speech. i ask each of you appear to please stand up briefly as your name is announced and ask the audience to hold the applause until after all are introduced. from your right, tim young, a free-lance pandit and, in the chairman of our very awesome young members committee. thank you for being here today. peggy is the congressional correspondent for the hispanic ellicott higher education. she is chair of our freelance committee but i am told not that long ago, she was an intern " working for mr. williams at npr. incomes my calling from associated press on the print side, michelle, and she is president and the national

association of hispanic journalists and a member of the national press club as well. congratulations to rafael williams, the son of our guest speaker, gist having graduated from haverford. [applause] that is fine. we can allow one round of applause. [laughter] [applause] well-deserved. we have an independent freelance journalist. she has formally worked for npr. then we had the devoted wife of our guest speaker today. skipping over the podium, bob is the senior press secretary for the natural resources defense council, and use the speaker's committee member who organize today's luncheon. first time out, great job. skipping over our speaker, greg, bloomberg news. he is chair of our npc diversity committee. he and i work together in buffalo, new york, many years ago and we're both sworn to secrecy about that. speaking of which, my colleague from the ap broadcast, in a member of the national press

club. she works for associated press television news. steve taylor is a fox news correspondents. eric is media critic with tbd, but moving over to the "washington post." congratulations in order there. and then a new member of the national press club. please give them a round of applause. [applause] we begin with a quotation. "yesterday in peer fired me for telling the truth." heene controversial remarks about muslims. his departure from npr set off a firestorm. a few months later, the president and ceo would resign, apparently under pressure. after his departure, he explained that he "did not fit in their box. nor does he really fit into any

box, which makes him all the more interesting and why we're so happy to have him here today. our guest speaker was born in panama, the son of a boxing trainer and a seamstress. when he was just four years old, his family immigrated to the bed style section of brooklyn. he would go on to earn scholarships to end exclusive quicker prep school, and later to haverford college, west of philadelphia. it was tested in newspapers in high school and college and an intern at the old philadelphia bulletin that he had his first case of journalism. in a column after the npr dustup, a columnist who first met one williams the deale bulletin newspaper, described him as being "from a different plot." juan started his career as an intern at the washington post. he spent 23 years as a reporter and a director of a column. at the post, he reported on everything from problems in the old washington, d.c., public schools, as if they are gone, to

corruption by then mayor marion barry. before going on to cover the white house and every major political campaign stretching from 1980 to the year 2000. his insight in reporting acumen led to numerous television and radio appearances they continue to this day. npr initially hired him as a host of its acclaimed "talk of the nation clause good show. later on, he went on to positions such as the senior national correspondent and a corresponding political there. it also led him to regular appearances on fox news, where on october 20 of last year during an appearance on the are rightly show, he said this -- when i get on the plane, i've got to tell you, i see people through muslim garb and i think they are identifying themselves first and foremost as muslims. i get worried, i get nervous. i mean cutting its ties with juan, the said his remarks were inconsistent with their practices, but npr's review of how that handled revealed problems.

he's moved on from that edges might be doing better than ever. use the author of best-selling books and civil rights icons, such as thurgood marshall. his next book due out in july, it is called "muzzled, the assault on honest debate." two months ago, we had the women who ran npr at this very podium to discuss that, just before she was let go. he has taken on an expanded role of fox news is a political analyst and regular substitute host. could the war national press club welcome to one williams. [applause] >> thank you very much. thank you for setting this up on your maiden voyage, bob and i

will tear high standards. thank you. it is a pleasure for me to be here at the national press club. i want to thank you all for coming out today. of course, thank you for the invitation to be here. you know, i have been in this room more than a dozen times to hear speakers. i never thought i would be the speaker, never. of course, i never thought i would be in a situation that mark described to you just six of months ago, were i found myself not having my byline are my comments on the front page on the tv, but it was me. the controversy was about me, and i found my picture and my voice is being replayed nationwide for being a journalist fired by npr, accused of bigotry and having said that i should keep my comments between myself and my psychiatrist, the suggestion being made that maybe i should seek out guidance from a publicist on what it is i say to

the official reading is that i violated journalistic standards. most of the journalists will understand that i hold this quite close to my heart. the idea was that because i had made the statement that mark described to you, i could no longer be an effective journalist. to that extent, was accused, therefore, of for minting hate and intolerance. i was a black guy making fun of muslims for the entertainment of white racists. and do not forget, that i was an unrepentant employee of fox news. so there was quite a list of charges against me at the time. given that tarring and my reputation, i again just want to emphasize how much i appreciate the opportunity to be here today, and especially to new

members of the press is suggested that i'd be invited to speak after the former npr president spoke here in march. her effort to minimize my firing and the personal attacks led journalists to ask that i be given this platform today. and i thank you. let me remind you that, as mark described, but not in full, that when that person was here, that reporters pressed her. they refused to accept the platitude and the efforts to minimize the idea of a major news organization silencing a commentator. all of this fits with the great tradition of this press club at the center major debate in american life, especially debate that touches on the heart and practice of journalism, and i say that in the context of this being a moment when journalism

is in the midst of such a transformation with the flood of 24-hour news creating demand for planning and analysis to help people make sense of the span, the posturing, the provocateurs that line at today's new hampshire media landscaping. niche mediaday's landscaping. when i was fired, i was not given a chance to speak. this is such a strange thing, but i was simply given a phone call and told that my contract was being terminated, and this is after working for npr for 10 years as a host, senior correspondent, and a political analyst. in essence, i had been muzzled, not given the chance to come in to explain myself, not being told exactly what the understanding was of the entire context that was prompting management to make the decision they made. and of the context of that moment, i've got to tell you, i

fear that my career as a journalist was over. i fear that i have lost my credibility. npr certainly has a large microphone in every town in america, and i do not know how this was going to play in the national consciousness. so to get back to my earlier point, i never thought i would find myself in this situation. i do not think i would ever have the opportunity to speak to the national press club. and with the ensuing congressional debate over npr funding, i found myself caught up in a world when that thing was journalists would be unaccustomed to. i have worked obviously in a tv since the late 1980's, locally here in washington, d.c., for cnn and then for fox. i have written best-selling books. but by comparison, the focus brought on by the recent controversy, i've got to tell you, i was fairly anonymous before all this happened. one man came up to me and he

said, you know, i did not know if you look like until i saw your picture on the front page of the "new york times." and of course, npr listeners used to say to me that it was nice to be able to put a face with a voice when they met me. in those situations, would have to bite my tongue because my instincts was to say to them, i did not know if you looked like either. it is a big surprise to me. [laughter] now i have the situation with fox viewers that when they meet me, one guy said recently that it is nice to be able to put a body with a face. that is a new twist for me. as we're speaking here today, i wanted to ask you to engage in active imagination. as mark mentioned to you, when i first went to npr, i was a talk show host for "talk of the nation tour, wanted to display around a little bit with imagination and have you imagine that you are listening to a talk show. that our topicnd

today is the firing of our guest juan williams. and we will take your call. we're going to have questions afterwards. but let's begin first with an update from juan williams. so since my firing, i was hired full time by fox news to be a political analyst there. i have -- i appreciate that, and i certainly appreciate fox making that decision. you can imagine how scary it is these days when journalists are under such economic pressures to be told you're gone. it is also writing a column for "the hill" newspaper and for foxnews.com. i just finished writing this book for four months, and it will come out in late july. so that is kind of an update on where i am now. now let me change had said to pretend to be the radio talk- show host.

and i would say, tell us exactly how you think this storm started. when the tornado ripped into your life? and i guess my response would be, well, i did not even know it had ripped into my life. what happened was that bill raley, who is the number 1 and talk show host and cable news in america, was on "the view" and then expressed his belief that muslims attacked us on 9/11, which prompted joy behar and whoopi goldberg to walk off the set. and then the following monday, and was believed guest on bill o'reilly's show, and he asked me quite bluntly -- where am i wrong? well, i said there was no way to get around the fact that there is a worldwide problem with radical islamic thought. i said candidly that when i get

on an airplane, as mark tokaji, and see people dressed in muslim guard, first and foremost, identifying themselves as muslims, it makes me there -- nervous. that was an expression of a feeling, especially after 9/11, after the shoe bomber, after what took place in london, madrid, indonesia, the christmas bombing, the times square bomber, who hasn't declared that there is the first drop of blood is being shed in the ongoing war with muslims. but then i added that we cannot jump to violate the rights of american muslims, are any muslims from any place in the world, because of religion. i said, think about timothy mcveigh, think about the olympic bomber in atlanta act, think about the westborough baptist church whose members continue, now with the supreme court's sanction, to protest at

military funerals while shouting that god hates gays. we cannot violate the rights of the people of any phase based on the actions of people who are extremists. i said all this at the time in the full context of the interview that was taking place. i will change that word interview to debate, with bill o'reilly. i made it clear that we cannot tolerate people using rhetoric and the words to attack muslims, because based on those fears, you could get into a situation such as was a recent case in new york or a cab driver had his throat cut by someone who was attacking him because he was a muslim. now, the discussion was honest and heartfelt and the lead npr to fire me. did i realize, did you realize,

juan, when you're making these comments that people might view them as inflammatory and bigoted? i have got to tell you, i have never had that thought, not to this day. here we are, may 26, 2011, about six months later. i have never once had that thought. no, some days you catch yourself in the shower and you think, i should have said this or should have done it this way. i have never had a second thought. because in fact, when i expressed was a genuine feeling. it was not a well-vetted analysis. it was not a suggestion that we base our tsa policies on the basis of such a feeling. it was simply an honest statement, a feeling. and again, coming in the aftermath of all that has taken place in terms of terrorism in this country. and of course, you know, it strikes me that even in admitting to a feeling how

difficult it is in this country today to try to solve problems of racial, ethnic, or religious discrimination. if people are unable to speak frankly, if people are unable to start an honest dialogue, it seems to me incredibly difficult. in fact, subsequently, some people who wanted to criticize me said, well, juan is black. with that had been said about three young black guys who were walking down the street late at night and somebody said, you know, i do not feel comfortable because i saw these three young black men approaching, and said, you know it, i am black. as you can see coming is the father of a black son. i was walking down the street in night and saw three young black men dressed in a thuggish manor and behaving suspiciously, i would be nervous, too. but apparently, you're not allowed to say something speed

up but what has been rewarding for me is that through all of this, there has been an incredible amount of support from left and from right. people saying that this is a time when political correctness needs to be called out as corrosive to public discourse and a to public debate. is the reminded the george washington, one of the founding fathers, said men are to be precluded from offering their sentiments on matters of central -- matters that are central, which may involve the most serious and alarming consequences than reason is no use to us as americans. he said this in 1783. i think it applies to this very day. so let me switch hats again. and as a talk-show host, what have you learned from it? there was a first and foremost for me, i have been stunned by

the number of people who come up to me, no matter where i am. basketball games, supermarket, walking down the street, airport, to tell me that they have had the same thought and that they, too, feel that they cannot engage in honest discussion. that you cannot tell people what is on your mind because somebody might call you a bigot, racist, or homophobe. you cannot tell people what is going on because there is the fear -- well, as in my case, that you might be fired, but more generally, that you will be shunned. so given the fact that we, as americans, and as a nation are going through so much change, political change, social change, demographic shifts in our population, geo-political shifts, dealing with so many critical issues, it just strikes me that out of keeping with our

history that we would try to silence debate and silence people who are trying to contribute to a better understanding of who we are and service the idea of solving problems and making us a better nation. let me switch hats again and pretend that i am the talk-show host. and say, what most surprised you during this? and i say, you know, right after i got that late afternoon phone call, i bit my tongue. i was so worried. i did not talk to anybody. i was just worried about what was going to happen. it was npr that used this as a story in started the national attention. there was a worry that if you know what, i can see where people who are conservative might decide they want to support me. they are most familiar with this idea that if you say the wrong

thing, you might be subjected to the charge of bigotry, racism, and more. but i wondered how the left wing of the country's political spectrum might react. would this be an opportunity to simply jump on? so it was a big surprise to me when people lie whoopi goldberg, john stewart, and even sarah palin on the far right, agreed that what had taken place was really out of bounds. since this controversy broke, and i have told you, people everywhere say to me, you know, i understand what it is to feel that you cannot speak in this country today, and tell me that they feel that there is too much coated speech, political correctness, and it is being enforced by -- well, and forced by political parties, enforced by lobbying groups, by advocacy groups, political correctness

that is used to enforce identity, a group identity in this country. it is used to raise money. of course, it is used by donors and advertisers. and therefore, people in the middle -- let me remind you, most americans did not identify as conservative or liberal. that identifies people in the middle. they have thoughts that very about different issues. and they find that, you know what, to be in the middle is often to feel as if you have no voice. you're not allowed to express reservations, concerns, worry that you have misunderstood an issue or that you're being misunderstood, because someone can say you're stupid. or again, you're out of line. and of course, they worry that the people who do get to speak in the country are most often

the provocateurs, the people who will say the most extreme things, arguing a platform, a microphone, a tv camera. and they said the most wild and of the wind things and everybody pays attention. then we go back to our politically correct speech coach in which so much goes on said. this inflexibility is a defining feature of our national discourse at this moment, and truly to me, it is tragic. so let me shift the game. and as a talk-show host asks, when do you think this started? and i guess i would answer that i believe that, in fact, you go back to the 1960's, and i think there was lots of effort to try to change the way americans spoke as part of fighting barriers of inequality, racial and gender stereotypes back then. and it was clearly of good

intent that we want to try to eliminate bias in the way that we speak, because that is evident of the way we think. but i think we have come to the moment now of this inflexible debate. let me offer you some examples. i think that when the obama administration refuses to call terrorists terrorists, despite daniel pearl, the "wall street journal" journalist to be murder, i do not understand it. think about others that have been killed. one man made a documentary about the mistreatment of muslim women and was killed. but no one wants to say that that was a terrorist act. well, you think about a journalist and a political cartoonist being in hiding to this day, because she proposed to have a day in which political cartoonists lampooned double the

prophet mohammed. the president has the guts to go on to pakistan to get bin laden, but again avoid speaking frankly about the source of these acts, the people, the terrorists. as a talk-show host, let me say that is one example. you have other examples? there would say, you know, with this kind of speech code, it also extends the current argument that we see in today's papers about budgets, entitlements. i think paul ryan, the congressman from wisconsin, was bred to afford an idea for how we can get entitlements under control. i might not agree with the specifics of it. but it was an idea put forward. every commission or group that has looked at this nation's budget agrees that there has to be a mix of spending cuts and

tax increases if we're serious about deficit reduction. but the other side of the paul ryan story is that the republicans will not even allow discussion of tax increases or even elimination of subsidies. and then cite the taconic president ronald reagan for refusing to raise taxes -- the iconic president ronald reagan for refusing to raise taxes. but on more than a few occasions, he raised taxes. even when politicians try to break out of this pattern of republicans are a lot to say this and democrats are allowed to say this, then they find that there are other people in the party who insist, who hammered them into adapting the official line. the official line in a message of the day. and the result is paralysis for us as a nation in terms of, and here's another example, taking

on major issues like immigration. you think back to 2006, president george w. bush, the chamber of commerce, senator mccain, all tried to take on this issue. but what happened to them? there were absolutely muzzled by the provocateurs, talk radio, especially whipped up anger, and with accusations of illegal immigrants were being given amnesty. then there were suggestions that we really did not have so much of a problem with the illegal immigrants as a possibility of terrorists crossing the border, and there was talk of lepers. it was unbelievable. but of course, it shut down the real debate, the real discussion on a major issue in american life, immigration. as a result, to this day, 2011, nothing has been done on the immigration issue.

imagine then again that i am the talk-show host, and i would say to you, ron williams, well, how do we get out of this mess? and i would say, day in and day out, as someone who covers american politics, i do not see an easy out. because i see our political leaders modeling just this kind of muzzling behavior. i remember that former florida congressman called his opponent in the congressional race last year, called him taliban dan and iran utterly misleading ads about his opponent. apparently you can get away with it. i remember sharon in goal in nevada proposing to use second amendment remedies. that kind of rhetoric is not only offensive, certainly threatening violence, but again, at the suggestion that your opponents are not worthy of

being heard. they have to be shut down. and of course, you all remember republican congressman joe wilson yelling "you live close quoted the president in the middle of addressing a joint session of congress on health care reform. i think we all know by democrats in wisconsin, a leading the state to avoid a vote in new there were going to lose. and what about senator john kyl recently saying that 90% of the planned parenthood does in this country is abortion. later when he was confronted with the facts and to all this was wrong, he said he did not mean it as a fact. well, how do you have a discussion many cannot express the facts? so was a talk-show host, let me ask this question of you, do we need to get back to the facts? is that one possible way for us to get out of this box?

well, for that question, i would ask to say that the facts are important. you can argue opinions but not fax, as daniel moynihan said years ago. in fact, it seems to me there is more room for solutions born of common ground than they provide the taurus and some politicians would want you to believe. that americans really are pretty sensible, trustworthy people. i do not believe that we are big hits. i believe that we can have a sincere conversation, but our greatest skepticism, our greatest scorn, should be for people with -- not for people who have different ideas than we have. but for people who refuse to listen, to discuss, people that refused to entertain any views but their own. a willingness to opine is with this country is all about.

so, too, is the willingness to engage in discussion and debate. when you hear about birthers and death panels and obama is a muslim, all it does contribute to the polarized, mean-spirited, and distorted political reality that we live with today. and i think too often people are being rewarded with political victories and money for maintaining this dysfunctional status quo. it was a congresswoman gabrielle giffords said before she was shot that a politician who tries to be reasonable, he tries to find ways to compromise, is not rewarded in this environment. that is why i think that we see today in the course of journalism, something all of us hold so dear, that really it is niche journalism today that is being rewarded. far left, far-right, websites, magazines. i think the consequences what i have experienced in the aftermath of my firing.

so many people expressing a hunger in america for honest, frank discussion, for people that they can trust. they can look in their eye and say in this and what you're talking about, tell me more. people who would not simply in voluntarily revert to rigid orthodoxy, to political correctness, or two speech codes. that is why i think what happened to me became such a large issue. it was never about me. it was always about our nation's ability to have debates and for people to feel as if, you know, we're talking to each other. we're telling each other what we're feeling, what we're trying to express in service to the larger goal of solving problems and ending the politics of polarization that is why, as those gathered here with you this afternoon, i would hope that all of you as practicing

journalists, all of you to understand the importance of this profession to our democracy, would pick up this mantle of trying to get away from simply repeating one more time, this is the official message coming from left or right on x issue and perpetuating the idea that anybody who disagrees is therefore not a good conservative or not a good liberal or does not belong in the club. and therefore, deserves to be shunned, silenced, are fired. we got to get away from it. it really is essential to our future as an american people. thank you very much. [applause]

>> thank you. he is not going away. i need to tell you, but here comes the talk-show host. >> here we go. >> so seven months since making those comments on the alrighty show. you said you have not had a lot of second thoughts about. but we do not have done anything differently at all if you were able to go back in time? >> no, and let me say that i was asked, you know, when i got that phone call, this suggestion was made, well, do have any remorse, and i said no, because that is generally what i feel. it is not that i offered analysis embracing the idea that people should feel this way our people should act this way our people should discriminate against a certain group. i was simply telling you how i felt. and that was not meant to be provocative. i was not trying to stir an audience. it was in service to a larger conversation to suggest that i

understand where you're coming from when you say i associate muslims and a terrorism in this society. i understand why somebody might have that thought, and then building on that as part of a larger progression to try to achieve some understanding between two points of view. so no, i never had a second thought about that. >> someone here in this speech said not one of the muslims that the mention, the 9/11 bombers -- i do not know how they know that exactly, the shoe bomber and more were dressed as muslims. so with respect to your comment, does that still hold up if you reflect on that alone? >> no, it was not the specific of being addressed. the dress, suggest to my mind, of course, that this person is identifying themselves as a muslim first and foremost. if not the case, i would not know. even if i did know, then of course, the question would become, you know, would it lead

to that feeling, to that reaction? all i am saying is when i saw people who were first and foremost dressed in that way, it triggered a response in me. i must say, if you read the papers every few weeks, you'll come across a story about a situation where people who are -- oftentimes, i see muslim clerics might be praying before a flight or engaging in what some people might regard as suspicious behavior because they're speaking a foreign language, and of those people have that reaction, and then of course it all gets into the papers. i do not think it is exactly an alien or strange feeling on my part. no, i do not. >> any thoughts that might be different as a result of what has happened with the arabs bring? in the sense of the arab world, the perception that the arab world has certainly been changed by the event of the last few months. >> do not quite see how those two would relate. again, the focus in my mind, you

know, all of us who lived through 9/11, who have lived through subsequent terror alerts, concerns, and attacks in other parts of the world to what happened in times square, you know what, i think that is the context in which i think prompted this feeling for my mind of seeing a pattern here that would cause me alarm as years of getting on an airplane. >> it is an interesting intersection. and you talked about what is going on in the media. and then the ability to express one's feelings, as he put it. s draw that out a little bit about what is appropriate, let's say, on there, and it contributes to a civil debate in a society where we value democracy. you're going on the air and you're in a wonderful position. you are paid to express your opinion. some journalists in other settings have a different set of guidelines. how do you decide what to say when you're on the air, what to

say and what not to say? >> you know, this is an interesting question for me, because i worked at fox news before was hired by npr. i was working at the "washington post". i was then hired by cnn, the fox, and then i went to npr. the question was put to me and the context of being fired, we do have said that on npr? and i said of course i would say that on npr, it is the way i feel. i do not change from one set of opinions to another based on the audience that i am addressing. and i think that is part of the value that was acknowledged by npr and fox in both hiring me to perform functions for their audiences the people would say, you know what, he is speaking his truth.

there is a clear line to be drawn between someone who is a reporter and someone who is a news analyst, a political commentator. i was paid in both roles as a political commentator. and i was asked therefore to express the opinion, feelings to try to bring people the larger picture to give them an understanding of how political event and political ideas are being driven in the society. i think that there is a line. if you are paid to tell the story in a straightforward manner, that is what you should do. i do nothing total budget activity is always possible, but certainly we can strive for that goal. but if you are paid to be a political analyst and commentator -- i think he used the word screen or filter out, i think if you start playing games like that, the audience realizes you're not authentic, you're not telling us what to think.

you know what is going on. but you're not saying it or you are saying it in such a way as to speak to one audience that simply wants to have its pre- existing views confirmed. and there attuning into that. that is just not who i am. i think that is why i strive for higher level of trust with the audience, that the audience would say, i trust you to tell me your truth. i think that is a very high goal for all journalists. >> and it just so happens that the npr woman wrote in her blog, she said that williams chance to speak one way on an npr and another on fox. what do you think about that? not true. >> thing she is wrong. i think, again, trying to understand her and trying to

understand what she would be talking about, and this is the same person who made the suggestion of what it is not through rough looking black kids walking down the street late at night -- to acknowledgement be anxious about that is evidence of racism? they do not think so. anyway, they're different formats. clearly, cable has a much higher value, put on time, less time, much more of a debate format, much more confrontation. you are on camera, so the way that you look has value. now on radio, i was working for npr morning edition. all things considered, weekend edition, all the shows. typically my role there was as a veteran washington journalists, someone who had worked for so long at the "washington post," someone who has been around town, and those people, has good sources. was being asked specific questions by a host.

but when the formal interview type format would break down, it was pretty much back-and-forth. sometimes humorously, systems pointedly. the very much like what you would see in terms of the fox for met. but that was less frequent on npr then on fox. but these are different formats. that is to be separated from content. it was never the case that the content i was delivering 91 format or the other would vary depending on the audience. i did that is like a politician who gives one speech to one group and another to another. i just do not play that game. >> now that that ever happens. but you are saying you do not do that. so we talked about the valley of -- a vivian schiller. ellen weiss deliver the message to you, correct? she was let go before built -- before vivian schiller. when you look back, were those dismissals warranted? >> well, it is not my call to

me. clearly, i felt mistreated and traumatized. i do not think it was a service to the institution npr, which i value greatly. which i think it is an important journalistic institution. i think when you're engaged in the kind of practice that would silence people or punish people for speaking their truth, i do not think that is healthy. i do not think is healthy for the institution given the pressures that it has been under for many years from people on it the right for saying npr is far too liberal. again, i think what you have to do that you're being clear with your employees and with the audience. and it is not about catering to anyone slice of the audience and saying we're going to simply tell people what they want to year and we're not going to introduce different points of view or different stories that might contradict the existing line.

so i do not think she was serving institutions very well. as he could tell from the subsequent debate about npr funding, it opened up a lot of discussion that i think has been debilitating to what is an outstanding brand, npr. >> perhaps we will get into more debt in just a moment. this is a chicken and the egg question. it is clear that the political debate in recent years has become much more negative in society. it just so happens that that is reflected in a radio talk shows on cable tv in a way that was not present in, for example, cnn, which led the way. now there's more time devoted to arguments. do you see cable as setting a tone for the political debate in our country or is it merely reflecting it, and what is the appropriate role for those media? >> first, want to remind you that i was the substitute host

for many years on "crossfire" on cnn. and that really was, i think, the beginning of many of these kind of debate format shows on cable where you get from the left and from the right. i am not sure i would agree with the preface there. but i would say that the idea of vigorous debate shall not be limited to the extremes. sometimes i used to think on some of those shows that the producers ideally -- no, if it was the to the producers, they would have david do get a louis farrakhan as a guest and say we are having a discussion about race in america tonight. what kind of discussion is that? yes, it would get big ratings. i am sure it would be fiery and a lot of nasty words said and stories about it in the morning paper, but i do not think it would actually be eliminating reserve to help us understand race relations in america. so when you ask me, you know, what format -- i think it is a born to have debate if you're

contrasting points of view, but i really did put a high premium on having reasonable people engaged in the debate and people who have some sense of respect and trust for each other, as opposed to people who simply delight in finger-pointing, playing the blame game, or somehow demonizing their opponent. >> this question is -- as a liberal, how to rationalize going to work for one of the most conservative networks? it seems obvious the conservative -- conservative pundits exploit you even though they say their fair and balanced. do they not? >> let me for said that after i was fired, the "washington post" wrote that i was the most conservative voice on npr, which was a surprise to me. but when i thought about it, maybe so. but it just tells you that, again, everything is relative in this world, that i might have been the most conservative voice in npr, i might the mutt -- i

might be the most liberal voice on fox. this question about being exploited by fox would suggest somehow that it might be better if i was not there, if i was not willing to engage in debate with people who do advertise themselves as conservatives. i think, again, that is an important act in terms of saying, well, here is a different point of view. no one is telling me what to say. i am allowed to challenge the debate. sometimes i think i get less time, the worst lightning, and the worst seat. [laughter] but i think the debate is there for all to see. at the that is one of the benefits of fox. you can hear the debate. you can hear both sides of it. now the idea that i am airfoil for some of the leading personalities i think is without a doubt. but again, that is the format. people watch in our current media landscape. people watch it to prime time

personality-driven programs. and people are looking for that strong authoritative voice of the host. that is what attracts people to that news product. and then to have someone come in and challenge the host, i think that is thoroughly legitimate. i do not think it is a matter of being exploited or having my credibility or legitimacy misused in some way. i think it is evidence of a legitimate debate being here for all americans to consume, and as educated media consumers, i think that is what we should be seeking out. >> were talking earlier about the funding debate for public broadcasting. you have said you know augur -- courtney if you're so wrong, but you suggested that funding should be cut off by the congress. can you explain that? is it is coincidental that you're no longer working for public broadcasting? >> no, it does not come from any

kind of vindictive streak in me. it is not my character. but it is in the midst of all of this, you'll recall that there was a tape made. it was secretly recorded with top npr fund-raisers in discussion with people. and there's a, we prefer not to have government funding. so that is apparently their genuine feeling. the public expression is, no, if we lose -- and it is a very small percentage, 1% to 2% of overall npr funding coming from government sources, that it might impact some small markets, rural markets. what a thing you would see is a lot of stations then join hands. i think he would see more consolidation of markets. it would not result in anybody losing access to national public radio. but the point that i feel most

strongly is this, and i say it to you as a journalist, that i think journalists should not have to look over their shoulder as to whether or not politicians of any stripe, liberal, conservative, whenever they might be, think that they're doing a good job. if you look to the debate that was taken place at the time over npr funding, there were fundraising letters being sent up by democrats and republicans want to cut funding because they feel npr response to rush limbaugh and hannity. so really? when they do not built npr is doing the job of responding, then democrats will challenge the funding? it think this is a bad game for anybody who wants to do journalism. what the politicians play their games, and let the journalists do their jobs. >> you worked for a number of different enterprises. how are news organizations generally doing on it newsroom diversity, however you might define it? >> i do not have the statistics

with me. that did not come prepared for that. but as i look around, my sense is that diversity with women is doing great. they're more and more women in the workplace. i see more and more women personalities. until recently, you had katie couric and diane sawyer as two of the nightly news anchors. in terms of young people coming in, i think young women are without a doubt far outperforming young men. in fact, it is part of a larger sociological dynamic where we see colleges and universities now predominantly filled by young women. if you look at the graduate professionals, i think the difference is even greater in terms of more young women moving up in terms of leadership and top skill positions in our country. but when it comes to racial diversity, there i find myself sometimes just shaking my head, because the racial diversity has not improved, even as you the

demographics of the country and say, well, there are more people of color, more than a third of the american population now, more young people of color than even that number would indicate. if you look at the population under 32, it is now approaching 40%. so you would say, it would seem like there would have been a breakthrough by this point in terms of representation of racial minorities in those highly competitive media jobs. but i think that with the cutbacks we have all been seen in newspapers, and of course that has impacted tv and radio also, it has not acted in any beneficial way for racial diversity in american media. >> is it true that donald trump sent you a note after you signed on to a draft trump website as a way of drafting him as a

presidential candidate, and if so, what were you thinking? is it racism that fueled some of his comments targeting president obama? >> i do not know you allowed drinking at these luncheons. [laughter] i do not know what that is about. that is the wildest fabrication that i have heard. >> you said earlier this month, we do not -- maybe we do, but we do not encourage it. you said earlier this month that ron paul could win the gop nomination. why do you believe that? and how with the gop ticket do in the general election? >> well, i did not say ron paul could win. i said i think we're living in the age of ron paul. you think of ron paul is really the father of the tea party movement in this country. you think of ron paul, whose son is now in the senate, we think of the debate we're having over entitlements and even the federal reserve and the role of government and its place in helping revive the economy. ron paul has been in the

forefront of so many of these conversations and arguments. it seems to me more-and-more that we're living in the age of ron paul. i am amazed, i was one of the panelists for the debate in south carolina and there is ron paul talking about things like legalizing marijuana, cocaine, and heroin into getting applause from a conservative south carolina republican audience. that is stunning to me. ron paul suggesting, you know what, we have been in afghanistan to long. on a stage, you had ron paul and gary johnson, the former governor of new mexico, both arguing this argument coming from republicans. that is not party lines, believe me. i thought again, this is very different. i thought gary johnson was that there more as a function of ron paul than the other way around. i think ron paul has become -- many people do not know him, and he's still able to raise a tremendous amount of money, but ron paul is a power player in a

way that i think oftentimes those below the screen. people did not pick it up in terms of his true power. i do not know if he would have much success as a presidential candidate. i would be surprised if he won the nomination. >> we're almost out of time. before asking the last question, a couple of routine housekeeping matters to take care of. first, i would like to remind you all about upcoming lutyens biggest it on june 13, agriculture secretary tom vilsack will discuss innovative efforts is central to feeding a growing global population. june 14, the former national security council adviser under president ford was to get our annual gerald ford journalism awards. june 30, gary sinise, the actor will announce the formation of a foundation dedicated to raising funds for charity supporting military. and on june 11, this is of interest to the general public, the national press club hosts the 14th annual beat the deadline 5k race.

second, i would like to present our guest with the withnpc coffee mug, a token of our appreciation for you being here today. >> thank you very much. [applause] >> now i ask the last question to the university as a newspaperman, been on the radio, and now television. i assume you are now better paid than your before. but it was not about the pay adjust but the work, which of those platforms would be your favorite and why? >> well, actually, bob and i were talking about this, and i said that if you like me in the middle of the night, i still think of myself as a newspaper guy. because i came up as a newspaper writer. i must tell you the note that i think people generally do not read by lines. on tv, they see you, but they see you more than they hear you.

and they have a very emotional response to you and to you are. you know, there will offer comments on your ties and all the rest. and then, on the radio, it is interesting, it is such an intimate medium. when i was doing "talk of the nation," i would find that people would write me letters. that would say that you're the other adults in the car when i am taking the kids to school in the morning. or you are the other adult when i am gardening. and i was like, wow. then they would send me pictures of myself. it is interesting, because the pictures, they were sketches, not actual pictures, the people who would the draw and would suggest that this is what they think i look like. i ended up looking bald. some pictures that would have a foatee. i would be this kind of thoughtful caricature of the npr talk-show host. in some of the pictures i would be white, black, hispanic.

it was really a function of their imaginations. i think you get far more into their imagination in radio than you do in the other two mediums. i will say that tv really spreads you out. people hear you. i think tv is the medium of our time. this is where the american public gets most of their information these days. but for in-depth reporting, there's nothing in my mind that beats a great newspaper. >> how about a round of applause for our guest today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> coming up this sunday, a historian in the first of a two- part program. he discusses his newest book. it focuses on a group of americans who lived in paris between 1830 and 1900 and the french influence on the young u.s. see it sunday at 8:00 p.m. eastern here on c-span.

before she sits down from her federal post in july, federal deposit insurance corp chairman of sheila bair urged congress thursday to increase the $14.30 trillion federal debt ceiling. she said, as strongly as i feel about this issue, i felt just as strongly that a technical default on government obligations would prove to be calamitous. her comments came at a house financial services subcommittee hearing looking at financial institutions oversight. this is two hours. >> this hearing will come to order. i would like to thank the members of the subcommittee and our witness, the chairman of the fdic for coming today. sounds like we will have the first series of votes around noon or 12:30 p.m., so we hope

to have this concluded by then. it will be a lengthy series of votes. that is the plan for this hearing. we're joined today by the fdic chairman, sheila bair. she will be leaving her position in july. first, i will like to thank the chairman for her service, dedicated service. one thing you can say, it has not been a dull five years for you. you have had a lot of activity, and thank you to your service. i hope this provides a forum for our members to gain a better understanding of the role of the fdic in the financial crisis. the new role in the regulatory regime as presented by dr. frank and the current stated fdic- insured banks. the recent passage of god- fearing further enhances the role of the fdic and our nation's regulatory structure as they will be charged with

an unfortunate effect of the financial crisis has been an increase in bank voters across the country. the rate of bank failures has increased dramatically with 140 failing in 2009, 157 in 2010. these failures have significantly depleted the deposit insurance fund and fdic has been forced to utilize emergency funds to replenish the fund as well as requiring banks to prepaid premiums for 2010 through 2012. despite these efforts, the deposit insurance fund still has significant challenges. although i fully understand the need to replenish the fund, i am concerned about the future needs for prepayment of premiums. this could have an unintended consequence of reducing the amount of funds available for lending. the one common thing i hear from

committee banks across my district is they feel hamstrung by the regulators in their ability to lend. regulatory burden is not limited to the assessment placed on banks. i am very interested to learn what measures federal financial regulators aren't taking to in -- with other agencies are existing regulations. we need to ensure that new regulations provide enough flexibility for small institutions to meet the needs of their customers and not be encumbered by a one-size-fits- all regulation here to the largest institutions and our nation. nation. a diverse financial institution is good for all market participants. i am interested to hear how the fdic will work with the consumer protection bureau. finally, i would like to touch on the liquidation of authority granted to the fdic by the dog- franc act. i know the chairman sincerely

believes that these powers -- that these institutions are too big to fail. but i would prefer to see a different form of resolution where there is no taxpayer exposure. let's work together to make sure the mark -- the message is clear to market participants -- there will be no more government bailouts. i would like to introduce the gentle lady from new york. >> i just want to join you, madam chair, in welcoming our outstanding chairwoman. i noticed -- note that this is her last appearance before our committee and i wanted to express my deep appreciation to our service, especially during the most recent financial crisis and your attention to communities, to details, to members of congress. i truly believe you had done an outstanding job. thank you. the fdic was fced to take a

significant measure during the crisis and continues to act in the wake of the crisis to ensure the health of our banking system. your involvement and leadership was critical during this difficult time. we can now say that we are recovering from a crisis, not a depression. i think you played a meaningful and significant role sabecause it is happening during your last few weeks i in your tenure at the fdic, but also because it is happening during a period of recovery when we had the benefit of hindsight. during this most recent crisis, we sought 8.5 million jobs lost and over $15 trillion in household wlth mosque in america. although we are trending up in terms of job creation, it is lower than any of us would like.

this crisis highlighted how important it is to have a sound financial system in terms of the functioning of our overall economy. we know the fear that can set in on main street and institutions of wall street are challenged and, in some cases, fail. over leverage, overcapitalized financial institutions to contribute to the problem. structured finance products that were unregulated ran rampant, and you, the regulators, it did not have the tools you need to bring this in. congress change that with the enactment of dodd-frank this year. it gives the institutions the authority to wind down failing institutions and more power to regulate institutions. we made significant changes that directly affect fdic insured

institutions. for example, we may be $250,000 deposit insurance limit permanent. you played a meaningful role in making that happen. we changed the formula for deposit insurance assessment so larger institutions engaged in riskier activities will pay more than smaller institutions that pose less of a potential threat to the fdic. we increased the minimum level required in the d.i.f. to provide a better cushion in troubled economic times so smaller banks are protected from having to foot the bill that there is a need to raise additional funds. all these actions we took were meant to help both prevent another economic crisis and to help soften th blow when unanticipated things happen. i am looking forward to hearing

from chairwoman bair because i know there are a number of new requirements on regulators. what do you see as challenges going forward? i want to hear any words of wisdom you have to leave with us before you leave your position. i just want to underscore, again, how much i appreciate your service. i am looking for to the next chapter. i know you'll continue to make meaningful contributions to our country. thank you for your leadership and your service. >> i would like to recognize mr. royce or 1.5 minutes for an opening statement. >> thank you, madame chair. i would like to welme you and thank you for your years of service. i have enjoyed our conversations. as you know, i am is still concerned that dodd-frank has not ended too big to fail, but

has left us with a number of massive institutions that will continue to expand at the expense of their creditors because they're baring costs or lower. there is a 70% advantage according to studies you have done. at the end of the day, it is a system that enables the use of government funds in resolving an institution and it relies on the prudence of regulators during a crisis to avoid overpayment to creditors and counterparties. i think the fact we get the lower cost of capital shows it is human nature that we have created a moral hazard in the equation. while i hope this committee works to eminate the order liquidation of party and move to a more objective, and hast bankruptcy, i believe we can

take steps in the near term to minimize some of the unintended and some intended consequences of this legislation. i appreciate your efforts and pause today, especially on this particular team. thank you very much. >> i would like to recognize mr. lew meyer for 1.5 minutes for an opening statement. >> years ago when i was a bank examiner, we worked with institutions to make sure they understood the regulations to which they are subjected. instead of a partnership, i hear time and time again that relationships between financial institutions and regulators are more like a game of gotcha. i have heard stories of overzealous examiners. one bank was put on the problem list.

it was noted to me that the examiner had been scolded the previous day for not doi a good enough job for predicting another bank be put on the list. that bank, since then, has had problems. we need regulators to do their job to promote sound financial practices -- no more, no less. we do not need overzealous examiners to have no regard for upper management and refuse to recognize what is going on in the field or the economy. i urge the fdic to take a look at the examiner staff to work with institutions so we to work to get our enomy moving again. i look forward to the discussion. i yield back. >> i would like to recognize

the gentleman from texas for one minute for the purpose of an opening statement. >> thank you, madame chair, for holding this meeting. hearingis that today's addresses a very important question -- did the dodd-frank at institutionalize too big to fail or did it level the playing field as some politicians and regulators have argued? i am concern that recent developments, including market data showing marketing costs, are currently march -- much lower at big banks, and the continuing questions concerning the fdic's new authority to lead us to believe that too big to fail is still very much alive and taxpayers could be asked to bail them out in the future. i look forward to hearing from chairwoman bair on this important an ongoing issue.

thank you. >> i would like to recognize our newest member, mr. kantor from tennessee, for one minute for the purpose of an opening statement. -- mr. fincher from tennessee, for one minute for the purpose of an opening statement. >> as the newest member of the financial services committee, we are pleased to have the opportunity to deal with, hopefully, what will be the things that are going to fix the problems in the future. i was not in congress in 2008 when the financial crisis and war across the committees of our district. as a small-business owner, i felt it's a fax first hand as the bottom dropped out of our economy. one major principle i did take away from those days was the asset to credit is of vital in helping our small businesses of gen. until our financial institutions are allowed to

responsibly do their jobs again and own money to qualified borrowers, we are not going to seek business is creating new jobs again, thank you for your service. i lookorward to hearing what you have to say today, but too many times washington is not the answer, it is the problem. i yield back. >> i would like to recognize the gentleman from georgia for two minutes. >> thank you, mrs. chairman. i think this is a very important hearing. before i begin my questions or continue the comment, i would like to fill out some numbers for chairman bair. 63 is the number of banks that have failed in georgia since 2008. 12 -- the numr of bank failures in georgia since 2011. 10 -- t number of banks headquartered in my district that have failed since 2008, including this past friday.

this number is much larger if you factor the banks that only have branches in the district. these numbers or unacceptable. therefore, i will be introducing a bill directing the inspector general to inspect fdic long share agreements, the lack of an ability to modify or work out loans, and the application of the fdic policy by examiners in the field. this study is not only vital forces -- for surviving banks, but said the fdic can learn from the problems. it is my hope the fdic and my colleagues will support this bill so we can have an nest assessment of the fdic's handling of thisank crisis. georgia is in a vicious cycle right now, going the wrong way.

i have borrowed a lot of money from banks in my business career and i know there will be more failures in georgia this year, but i am here to say that when a georgia bank fails, my office will be searching for answers and holding the appropriate regulators accountable. with tha i yield back. >> that concludes our opening statements. i would like to now introduce bair.sses. sheila thank you for coming today. >> chairman capito, thank you for the opportunity to testify today on the state of the banking industry and the federal deposit insurance corporation, and on future challenges to economic and financial stability. much has been written and said about the events associated with the recent financial crisis and the factors that led up to it.

my written testimony summarizes four factors are considered the most important excessive reliance on debt financing, incentives and finance, regulatory arbitrage, and an inadequate resolutions framework that allows some companies to become too big to fail. the fdic was created in response to the most serious fancial crisis by american history in 1933. our mission then and now is to promote financial stability through bank supervision, deposit insurance, and the orderly resolution of failed banking institutions. shortly after taking the oath as fdic chairman almost five years ago, i came to realize that we would face significant challenges in a number of areas. although the fdic was still in the midst of a two-and-a-half year period without a failed institution, the longest such period in our history, there were signs that not all was well with the banking industry. predatory lending practices and unsuitable mortgage products, ich were already an area of focus for me at the treasury department when i served as assistant secretary for financial institutions in 2001 and 2002, became even more prevalent as the decade progressed. rising concentration in the banking industry waseading to the emergence of large, complex organizations that encompassed bank subsidiaries, special-

purpose vehicles, and nonbank affiliates, while a greater share of financial activity was migrating to nonba financial companies. i am proud of all the fdic has accomplished in the past five years. my greatest satisfaction lies in the knowledge that we get pace with the depositors we were established to protect. we have maintained a 78 year recordf no losses without borrowing a penny from taxpayers. we still have important work to do. our first task must be to follow through on the reforms that will and too big to fail. at the height of the crisis,e lacked the necessary tools to resolve companies in a water ak matter and had to authorize government bailouts. too big to fail represents state capitalism. unless reversed, the result is likely to be more concentration and complexity at the expense of the public. the dodd-frank act as the cycle

of government bailouts under too big to fail. they will be resolvable only at the regulators can exercise their authorities under the law. the success of this framework will depend on the ability to collect information and to determine whether they are resolvable under bankruptcy. it will also require the willingness of the fdic and the federal reserve board to use their ability to require structuralhanges. a less organizations are rationalized and simplified in advance, there is danger there complexity could make resolutions more costly and difficult than they need to be. these authorities are being shaped now and agencies will make them process. it properly implemented, they can make our financial syst more stable. if we fail to follow through on

these measures when market conditions are relatively calm, we will not be able to prevent bailouts in the next crisis. my tesmony looks at the role for banand non-bank financial companies. strong capital standards are of fundamental importance in mataining a banking system that supports economic growth. supervise the processes will always a lot of innovation to some extent and restrictions on some activities can be difficult to define and enforce. capital standards, all the other hand, are easier for supervisors to enforce and provide an additional cushion. skeptics argue that requiring banks to hold more capital will raise the cost of credit and impair economic performance. the crisis shows that the social costs are extremely high and that the lack of an act -- and adequate capital cushion makes

the crisis reciprocal. loans and leases held b fdic insured institutions of loans have declined by nearly $750 billion from peak levels while and used loan commitments have declined by $2.50 trillion. trade and more were lost. i would also like to highlight the urgent need for progress and the administration to address the rapid growth in debt. financial stability critically depends on public, and that's which should never be taken for granted. there is no greater threat to our future economic security and financial stability than an inability to control the size of the u.s. government debt. i feel just as strongly that a technical default on government obligations could be calamitous. any signal policy makers may not make good on these obligations

will destroy the trust that investors have placed in our nation for more than two centuries. i urge congress to commit to the irresponsible increase in the debt ceiling. i would like to share with you one lesson i have drawn from my experience as fdic chairman. it is the most important attribute of effective legislation is the courage to stand firm in the good times. it is during a period of prosperity that the seeds of crisis or sound. overwhelming pressure is placed on regulators to relax -- relaxed capital standards and to allow higher concentrations. the history of the crisis shows many examples when they failed to use of parties they already have or fail to ask for the authorities they need to fulfill their mission. many in the regulatory community -- regulators are

never going to be popular or glamorous with the they act in a timely manner or failed to act and allow it to take place. the best they can hope to achieve is the knowledge of the exercise statutory authority and act in good faith in the interest of financial stability in the broader economy crosses very much. i will be happy to answer your questions. >> thank you. we will now begin a portion of the hearing for questioning. i will begin my five minutes of questioning. we have had ongoing discussions with you and your staff concning the relationship of the fdic and the cfpb. the fdic just announced a new consumer division within the corporation. how will that work in relation to the cfpb?

do you envision a consumer protection within the fdic that takes the regulations that come from the cfpb and modify them for the other institutions? what kind of - are we creating a two-tier system here? >> i think under the statute the supervision enforcement remains with the primary banking regulators. the institutions will stay with us in terms of the examination. we have never had authority for the consumerole. >we had never had the ability to write the rules. the fed rice the rules. we have coordinated with them. i think the cfpb dictor will

be on the fdic board. that will help assure coordination. i am i hope that this will help increase the understanding about broader regulatory issues. in terms of creating a new division, i want to emphasize the examination staff reported structures in the region that this was an organizational change. there was additional administrative staff to support the organization that -- or his racial separatn. it -- organizational separation. the foc is far more effective consumer regulation.

i have concerns about community banks -- banks that i had expressed. there is more focus they should be on violations. reporting violations or what have you. we have tried to refocus the examination force. i think that has been a good outcome of the policy level focus of the fdic on consumers. i think this will be a way for us to have a better focus on consumer protection. coordinating with the new consumer agency will have an advantage. >> i want to go to another question quickly. it sounds like the structure is being enacted while these

institutions are under $10 billion or exempted. it sounds as if they are not going to be exempted, which is there fear -- not their fear, fear of the unknown. it would be coordinated through your institution >> with regards to examination reports, it does not really exemptions. it is what we have always done. the primary banking regulator will buy sure they comply with consumer rules. the consumer agency has rules for all institutions. whatever rules state right, they will apply to all institutions. i have spoken in favor of a future regulatory structures of taking certain areas thaare appropriate i think we will be able to engage with t consumer agency. that person will be on our board as well. >> over the last several years there has been increasing consolidation of the banking

industry. we talked about the advantages larger institutions have with -- that smaller banks. aller banks are concerned about being able to staff the regulatory issues, the legal issues they see in front of them because of dodd-frank. how do you see this playing out? is it a concern for you? i think it is a concern for main street america. >> it is a concern. we have the community advisory committee. we talk with them a lot about this. on the positive side, the dodd- frank did some important reforms for consumer banks. it will help them address funding disparities by havi a higher deposit insurance limit. it will save them about $4 billn.

i think there were some positive things in dodd-frank. we are trying very hard to make sure laws are implemented to insulate committee of banks from reforms that were targeted towards a larger institutions. we are very concerned about the differential in funding costs as well. we will talk about the implementation of more later. >> thank you. mrs. maloney? >> thank you. thank you for holding this hearing and giving us this opportunity to see sheila bair one last time. i will ask you to respond to what critics have claimed it --

the liquidation of party promotes bailouts because it allows the fdic to pay creditors 100 cents on the dollar. is it true that this is erroneous in light of the fact that the law requires the fdic to assure that predators take care of their -- creditors take care of their losses. the fdic pays creditors more than they receive in liquidation bankruptcy is very limited. it is subject to their losses. your comments, please. >> i think it is important. we clearly have a job ahead of us in terms of ecating folks about are processed and assuring them it is every bit as harsh as bankruptcy. it has t same credit priority you see in bankruptcy.

this is consistent with our powers under our traditional receivership powers. basically, it is a two situations. continuous operations -- keeping services going, paying your service people and employees -- that is also recognized in bankruptcy. or whether it is to maximize value. that is simply a mathematical determination. we see this in by resolutio of frequently -- they will pay us a premiuto cover all insured and uninsured deposits. it actually makes more money for us and maximizes our recovery to cover the deposits. we are making more money with

the premium that the acquirer pays. that is an example we maximize value by dferentiating. again, it is a mathematical formula. to emphasize it more, we have said that we do not think there would be a situation where a longer-term creditor pace longer than a year would either maximize value. for uninsured credirs in the short term, they will take losses as well. we have tried very hard to assure people that the losses imposed on creditors will be every bit of ours -- every bit as harsh as it would be in bankruptcy. the 97 cents on the dollar that comes from a report our staff did on the lehman bankruptcy.

the recovery will be driven by the losses and the amount of equity. as a matter of market discipline, the senior debt holders want to protect themselves -- they should look at the equity capitalization levels. >> to put it in a framerk that is helpful to us, could you explain the extent to which having the orderly liquidation of 40 during the financial crisis could have prevented bailts and the mitigated effects? >> there were lots -- there was lots of time that limits. there were many alarms before the institution finally failed.

all systemic entities under dodd-frank will have to have resolution plans on file with us. there will have to be a blueprint well before they get into trouble. the payment bankruptcy -- lehman bankruptcy as help to resolve the larger finaial institutions. we anticipate having an ongoing presence with the larger bank holding companies. the fact that there was a resolution process -- that would have been a strong incentive for the leadership to write their own ship and go out and sell themselves at a reasonable price. we see this all the time with banks. they know that if they fail and go into a process -- it is a

powerful incentive to take care of it yourself. about 25% of banks have gone out and recapitalize. they are very motivated. i think that would be an important factor we did not catch during the crisis. it also provides us a sense against blackmail. during the crisis, a lot of institutions were saying, "if we get down, there will be all these problems." the was no or early process. now we have an emergency situation. we can provide temporary liquidity support, but their shareholders and creditors are subject to law and their boards -- are subject tooss, and their boards are not. >> there are a lot of tools that we have. >> the gentleman from ohio.

>> thank you, et madame chairwoman. thank you for being here. i want to focus today on the composition of your board of directors. the new composition under dodd- frank, which includes the director of the cfpb -- coming from the private sector and rving on many boards, i have always been concerned. there is a concern about direct or indirect cost rates of interest. knowing you have to work on a regular basis of what one of the individuals, which would be the director of the cfpb, i am considered that there is a conflict of interest to a lot especially when it comes to your seat on the financial fsok.

it takes two-thirds to do that. i know my colleague, mr. duffy, introduced some legislation to try to talk a little bit about this. when you have to work with somebody on a regular basis and then you go over to -- and then you go over and have a vote and it takes seven out of 10 to block eight rule by the director who sits on youroard and that person also has a vote added the 10, you limit the ability to really have oversight by easing the financial oversight council. my concern is, when you have that kind of conflict of interest, is a good policy or a good procedure -- i will

introduce a bill next week that will simply replace the director of the cfpb with the chairman of the fed. i believe we need to focus on safety and soundness, yet a perceived conflict of interest -- get any perceived conflict of interest of the way. i would like your thoughts on thpotential conflict of interest. >> i think it is a good question. a lot of people said the fed was one option. i liked the rappers -- reciprocity. i think that would be helpful. i think the advantage support putting the consumer bureau head of the fdic board might help sensitize that person to sell the safety and soundness issues associated with depot insurance. frankly, there is a close connection. to the extent people were

worried about the consumer bureau had not been in the budget context of bank regulation. it may help educate that person. i think that is the argument for it. if you get to the structure for the cfpb, that might be a nice thing to have as well. we are find with this. we would have liked some rappers -- and reciprocity in the structure. in terms of the conflict, have sought actually as the ability to intercede with pretty much any of the regulators. if they think a regulator is doing something that is not appropriately adjusting systemic risk. these are difficult questions.

i think we can work with what is the law right now. >> it is interesting. you brought in the safety and soundness aspect. i read the mission statement yesterday and out of 754 words, the is no talk about safety or sadness in their mission. >> a safe and sound bank is the best bang for customers. similarly, consumer abuses as we saw with mortgages -- there needs to be a lot of cross- communication. >> in regards to the orderly liquidation of parties, there had been a number of examples. nk of clark county washington

-- $440 million in assets. citigroup -- $1.90 trillion in assets. the time, the energy, the staff that is needed -- i know i am runng out of time. i would like to find out how you believe the manpower time and strain -- how would you be able to exercise authority over much larger institutions? i yield. >> we will give you lots of me to think about that. mr. bock is from california for 10 minutes. >> i understand the fdic has issued an internal financial report to implement an orderly liquidation of 40. could you briefly discuss these rules, particularly to the extent to which they would

align an orderly liquidation process with bankruptcy is or failed bank resolutions and ensure creditors their losses if the institution itself does not survive? >> the statute is clear. it ends bailouts. to the extent the governor -- government would be to provide liquidity keep the bank going -- it is a process that is every bit as harsh as bankruptcy. i think we need to reassure focus on that. the purpose was not to reinforce the bill. we have engaged with rating agencies on this. some have decided to continue. we say to them, "read the

statute." they s, "we thinkongress will do it." they believe the congress will step in. i know you do not want to face the secretary of the treasury or the chairman of the fed asking for $700 billion. i think the tools are there to require a credible resolution plan. there should be structural changes. if they cannot come up with a plant, it shows a cannot be result in an orderly way. >> who would enforce that? >> the fed and the fdic. a supermajority vote can require a divestiture if necessary. >> some underestimate the living

will requirement which the defense and the fdic are in the process of implementing. could you discussed the importance of the living will as a ongoing regulatory tool that will mitigate against failure of large, complex financial institutions as a tool that will make this orderly resolution most likely a rare if that at large? >> it is a divestiture requiremen they must have plans in place that will show the order resolution process. for several restitutions this is going to require some structural changes. there are thousands of legal entitieshat they never bothered to rationalize. getting their business operations in line with their

legal structure, there is a strategy to break them up into marketable size pieces. i think international operations, there may be some levels that are required to separate themselves in certain foreign distribution -- in certain foreign areas. some already operate with this model quite profitably. i think it is the kind of thing we need to look at ander may -- we need to look at. >> thank you. i yield back the balance of my time. >> thank you. recently the fdic completed a pilot program of small dollar

loans and had a couple of different programs, one under $1,000.10 under $2,500 -- $2500. >> we were very pleased. it was very successful. the bankruptcy rates were a little bit higher than they are for other forms of lending, but the rates were very much in line. i think the banks that participated were pleased. they gave us the information which we in turn made more broadly available to banks in general. there is a particular need for small dollar credit right now. i think having a proven model was important to us. we were very pleased. >> what interest rate did you see on these small dollar loans work?

>> these were consum loans. they were all below 36%, which is pretty high. we will actually give c.r.a. credit. >> do they think they could make any money? >> they did make money. most of them were significantly lower than 36%. >> four two years the fdic right was not profitable. debt is what my envelope says. >> there was no interest rate cap. there was a guy that's that said -- that was a voluntary

program. those were profitable. they were below 36%. >> we will work that out. thank you. with regard to the insurance fund, house of what are we right now? >> we are still in negative territory, but we should be in positive territory by the end of the second quarter. in 2009 -- it is improving. the banking industry is improving. that represents our equity position, not our cash position. we should be in positive territory by the end of the second quarter. >> do expect to make up the difference? >> we had an increase scheduled that we did not get because the

industry is recovering. >> with regards to enter change its fees, the other day we had chairman bernanke in front of us. we asked him that whenever the regulators take a look at the bank and shop all 13% of their income, will you forget about that loss of income or are there to make that up? he had no answer to that. we certainly want to see them continue to be capitalized. his regulations is going to have a dramatic impact on the bottom line for a lot of institutions. what is ur thought on that? >> ey are doing it as they see consistent with the statute. we are very concerned about it. the community bank impact, they are not supposed to be subjec

to this cap. can you really protect them, particularly if the network provider is not required to take the higher fee? we think the 12 cents is too low. the letter that i am happy to share with you, we think they should take a broad measures into account. we think they should do more to take the incremental cost of small banks for debit card usage. it will get the large institutions and the incremental costs are less. i dunno how we're going to come out with that, but it will take some more time with this. we hope they c find a legal justification.

>> my dad told me that a long time ago, he wanted to explain why it was a good thing. thank you very much. >> thank you very much. i wanted to start off by thinking you for the excellent serviceou have done as chairman of the fdic. and especially for responding for each time i call your office. you help us handle her. my state of georgia has a plethora of problems. led the nation and bank closures go. a number of banks, community banks in my state of georgia are under regulatory orders from the fdic. and i understand they are driven

by the loan portfolios and capital levels. the often require a bank to reduce their concentration to some artificial level. is forcing them to not renew, even performing loans to some borrowers. it seems to hurt everyone. they are so centered on real estate. it is difficult in these economic times while the bank loses a performing loan. surely, there is a better way to enforce rules and regulations so that they don't hurt the very consumers that are designed to protect and the bank that are designed to oversee. what might be a better way?

our policies are not consistent with what you are being told. again, i will say this. if there are specific examples where you feel the policy is not being applied, i pernally want to know about it. i cannot tell you how focused i personally have been on this. it is honestly perforng. if youave to keep making payments on that loan, it doesn't matter. it is a fine loan. even if the collateral has gone down, you have a credit worthy borrower, you don't have to write down the loan. if you're extending new credit or new money, the bank needto go naked of risible. that is a basic tenet of banking.

if a borrower is creditworthy, you don't have to do a write down. ellen through this again yesterday. i hear this and it is very frustrating to me. if he has specific examples, i want to know aut it. >> what should my banks do. that is not the way it should be? >> it is a confidential process, we can do it on a confidential basis. her name is sandra thompson, the head of our division. there are any number of avenues to bring this to ourttention and we do want to know about it. i have found a couple of cases where the policy has been applied and we collected it very quickly.

we really did have some problems. it made a different perception of what the credit worthy borrower is. we will review every single one. >> just last week, home to more banks failed in my home state of georgia. this brings the number of banks the close this year to 10, by far the most in any other state. this is not unusual moves as banks in georgia continued to struggle. can you tell me what makes a small banks untenable the closure? there were failures of banks agreed to fast and have taken brokered deposits. they particularly have made a lot of out of area lending, that as something does not good

unless you have reached that exposure. as we have progressed more to the economic troubled times, you're seeing more become. there is risk management there. there succumbing to economic conditions as well appear in is the losses are mounting in the capital has been sufficient, if it can't raise additional capital, and as a not we can do about it. it is fairly rigid. >> are there specific things you can say right now that the fdic can do to assist them? >> >> we don't have a different role than they do. they need to understand what is going on in the bank.

they need to listen to management. they must exercise their own independent judgment. it should be robust conversation with management. currently anytng we can do to help them recapitalize is in our interests. but don't want these banks to fail, it costs us money. if they can't reach ne capital, if you delay for a long time, the losses will go even higher. that is why we follow ed. >> thank you for your generosity in time. >> in a meeting i had two weeks ago with your staff, they informed me that it is unlikely that the ftse will wind down the use of sharing agreements in georgia.

setting aside my strenuous objection this, i have serious concerns about the agreements that will begin to mature in a couple of years. as the sought date approaches, i have serious concerns that the banks will begin to rapidly sell off assets to take advantage of the agreement. this could lead to yet another downturn in real estate and make it harder for people to obtain loans. what is the plan for these maturities? >> i am not sure we've got this figure. they coincide with the maturities of alone. their estimates about what they will expire. there is no cut off point where we think there is no longer any share that is going to be done in the market.

that is not how it works. we think that it prevented a lot of property going into the market because it has the deposits and the access to another depositary institution. it pro we would not taken the assets. the extreme liquidation discounts or hold ourselves and management which is efficient. it has helped keep a lot of assets in the hands of better capitalized and stronger depository institutions i want to emphasize thawe have very stringent rules about loss negation. if it will have more thaa foreclosure, we ought at that.

>> you might to send the folks out of the regulators that i should go out and do work in the fiel, see were the disconnect is. >> again, if you have specific examples, we would love to hear them. >> these banks are afraid to death of retaliation. we would be glad to give you examples, but trying to get some of these guys going forward, i have tried for a long time. i'm serious, they are afraid of retaliation. if you think the loss of share agreements are helping, the could be the problem. off, don't want to cut you but i do want to ask you another question. despite the occasional live service that some of these regulators give, talking about the community banks to provide

services or for a small business, the examiners continue to seconess bank management polici based not on the current status of the loan,ut based on scenario where there is no economic recovery. it is a significant downgrades. if the ftse is serious, are they being second guessed on even the best documented loans. bankingunderstand how get that on a report card and then six months later, do everything but called a board member crux. >> is hard to respond without knowing what it would be in the individual case. i was said that we do not, as a

said before, if it is performing, it is a good loan. even if the collateral has gone down, i want to know about them and i will personally ensure the banker that there will not be any retribution by bringing this to our attention. i know what else i can say. the need to understand their reasoning. there have been some big mistakes. hopefully we're through this. but early in the crisis, we had a very dramatic downgrades. they went to troubled status, and for that reason, we're putting more of an emphasis on the forward looking -- that is just from a risk management perspective, if the economy

tanks unexpectedly, have the startled and more capital >> i appreciate those comments, but i really hope that some of your senior management or whatever can go into some of these banks and as my colleagues from georgianansion, we have a tremendous amount that is either under a consent order or cease and desist. it is still to come out of these communities. the agreement and the media write down is doing a reverse the situation on the global economies. we need some help. >> if i could just indulgent the chair, i'll go you one further. i'm happy to meet with the group of bankers personally if that will help.

>> thank you for being here today. i like at my voice to those that expressed concern about banks' being told that they have to do away with performing loans and not credit worthy. or worse not getting access to that. i like to take you up on your offer to entertain those kinds of referrals and those kinds of discussions. i have heard it from a number of borrowers. i won a follow up on a couple of questions. you address the issue of bailouts of banks and what tools are that you have today the did not have. are you better position today? are the regulators better positioned to prevent a government bailout of a troubled financial restitution? if you could highlight some of

the things of how the incentives have changed and how the tools have strengthened? >> we can resolve the entire financial institution before it were only lead to the insurance bank. there is list to put them into receivership and to the process. if that would avoid a systemic consequences the process is very rigorous. >> temporary liquidity support the might be provided will be paid off of the top. all unsecured creditors are exposed to a loss pinheaded that has to be assessed agast the industry. as no way the taxpayers -- there are bells and whistles and this thing. we push forhat. we want to the assessment to actually provide the liquidity.

we really didn't have the bar from the treasury. we did not get that. even if there is a temporary borrowing, it gets paid off of the top. in the unlikely event, the be assessed against the industry. >> the manement has resigned, too. >> these are really strong. >> the is the potential for a why iar clawback that's again, i think a lot of benefit is prophylactic as well the managers going into this process have the option of going into a bailout. it will give them a strong incentive to raise capital. >> the second question to follow up on my friend's

question about the conflict between the safety regulators. what is your view on that as it relates asell to the governing bodies you discussed with my colleague from the other side? >> that will require a lot of collaboration tre is the consumer agency consulting with the bank regulators. that it will be there will help further that sensitivity and knowledge and awareness. i think it can work. rly on when congress is considering this, we were sympathetic to a board approach. even though it is more difficult for me, i am not a dictator.

the chairman of the committee has to do that. it is a good pross, so either way, you have this model and the financial and regulatory sphere. i would say that i have reservations, their arguments for either approach. is one that we support and one that we think we can work with. >> of the kinds of things they might be doing a round consumer protections, they see a big conflict with these issues? >> particularly with regard to the board, one of the things that puts pressure and led to a lot of that lending was by competitive pressure to have a lot of nonbank mortgage

originators and had no regulations whatsoever theyere selling these loansn the securitization trust. they weren't really driving down lending standards. having it for the nonbanks will actually help level a competitive playing field to mention that we don't have competitive pressure. >> thank you for your service, i appreciate it. >> of like to recognize him from texas for five minutes. >> the fdic repor about the possible order liquidation, who they said had the resolution authority granted to them have been in place, the estimated losses to the creditors may have only been 3 cents of every dollar. officials at the federal reserve including chairman bernanke have stated that one the primary reasons that the fed did not

step in to saveehman was because the estimated losses were so large. and they did not have sufficient collateral to post. chairman bernanke stated in hi testimony that there was not merely of collateral to provide enough liquidity to meet a run on laymen. the company would fail anyway at the federal reserve would be left holding the very large amount of collateral. the fdic seems to think that there was significant value in lehman while the federal reserve thought the risk was too large to lend to it. how could the federal reserve, such different conclusions? >> 97 cents on the dollar is a senior is not all the creditors

the residue of bankruptcy, you work your way with equity at the bottom. because of significant equity, we think the bond holders with a taken very small hair cuts based on a very aggressive assumption about what the loss rates would have been. i think there is a difference between what is available for collateral panel was available to lend as well as legal constraints against the lending institutions that really drove his comments. the value of unsecured collateral shouldn't be confused with a broader franchise value of the institution have the ability of a significant losses. which they could not rely on because there is no resolution process that we ha now. >> the difference of conclusions, was this discussed

with the proposed rules for living wills? >> and and think there really is a difference. it was talking about equality, the very high standards for collateral. that was well over a billion dollars into the broker a deal. because the counterparties temple of their collateral out, it meant a lot already and was a very destructi process. items think we are inconsistent with what we are saying. it is a joint proposal. >> they called the past experience with an orderly wind down instructive. they argue that the fdic is readily equipped to handle the authority a quick because from 1995 through 20 07, he agency

was responsible for the wind out of 56 financial institutions i hotbed questions as to just how readily they are to handle the new responsibilities. according to data from the web site, the total assets of those 56 financial institutions wound down to 2007 was about $12.23 billion or an average $218 million per banks. most were smaller than that. at lehman brothers had $639 billion of assets. this is the largest bankruptcy in american history and it w 50 times greater than all of the combined assets of the banks that the fdic shutdown over the 12-year high time. what makes them wind down such a

large institution? >> it may better attempt the failed bank assets over the past 2.5 years. washington mutual was over 300 billion and was resolved over a weekend, a process that was not a similar. we ensure these banks and we understand them. and i get this question sometimes, people try to paint it. we ensure these big banks. regrettably participated in the bailout of some very large bank. unclear quite prepared. and complex financial structures, with a very smart

people that do this for a living. we're the only agency and the world that has the experience of fincial institutions, and others look to us. others look to us for exrtise. >> my time is up, but i hope that the fdic has changed its own personnel and operating structure for the benefit of our financial system >> we are designed to expand and contract very quickly. we have reservoirs' of contractor helped because our work is cyclical. this is a challenge for us. and certainly compared to the expertise process, i think this is a good approach. how to prove to you that can work. >> gentlewoman for 5 minutes.

>> last congress,his committee held a hearing to examine community bankers' concerns that regulators were being overly restrictive, as the ftse address this concern to work with banks to increase small-business lending? i am concerned with the ranking member of the house. we held a joint hearing in this committee to address a lack of access to affordable capital. i would like for you to comment on this. i think this is been a major impediment and certainly your expertise with the small business sector, you know that much better than i. and then there are a variety of reasons. i think risk aversion is part of it.

our demand is driven by a couple of different factors. what is the uncertainty of how robust the economic recovery is. that is another downturn a year from now. that is a problem with the borrowed commands. because so much small band in regent small lending has dropped substantially, they don't have the collateral any more to borrow against. we encourage it and focus on it. i was very disappointed that balances were down in the first quarter. small-businessending was down. we want our banks to lend. with special want them to lend to small businesses and i think they obviously need to find creditworthy borrowers.

they're still standing on the sidelines. >> they recently implemented in and day to expand the depit insurance assessment which will result in community banks pay a 30% less in premiums while large banks pay more. what effect on small business lending will the new system have? >> i think it will help them. it will ease the assessment burden. is quite consistent with the loss exposure with larger institutions. it will help them and to the extent of the small banks to about 40% of the small business lending done by the depository institution. >> under the proposed rules for qualified residential mortgages, home buyers will have to put down 20% of the purchase

price. we're very much concerned about this. because it will have a significant potential impact in high-cost areas like new york city. should requirement to be based on local market conditions? >> i think they are meant to be exceptions to the general that if you're issuing a securitization, you need to maintain 5% of the growth. i think that they should not have skin in the game with these loans by and large. it led to a lot of underwriting and abuses that we saw in the mortgage market. it should be the rule. it is meant to be in their own part of the market, and with a not very broad standard.

if you maintain thrisk or all of the, have broad flexibility. the only applies to what i think will be a small slice >> have you looked at any other alternatives to a down payment? it will reduce the number of defaults in the future. >> the staff of all of the agencies, it is a significant driver on whether a loan defaults. i will say that we are out for comment on exec to the question among others and i anticipate this is a huge issue that we get a lot of comment on it. that indicates the 20 percent down payment was a rlly strong indicator. >> you understand my point? >> i understand the point. this is a huge issue.

what is a meaningful down payment for a low-income person could be very different for a meaningful down payment for those with other means. >> how do we meet those needs. and with the risk retention, you have a robust market and will have more flexible underwriting standards to me that's what and a continuation of the program. would like to recognize the man for questioning. >> i think a lot of my colleagues here have been pretty impressed overtime with the raightforward way the responded to questions is not always the rule around here. let me say i have laid out for you the arguments that i think are made via the stues. that if there is this advantage, this resumption that

a that is their systemically speaking, the show the same relative magnitude. to go back to the markup or the conference committee, i've put forward several amendments to try to overcome this tendency. one particular required the fdic to estimate at the outset of the resolution process what creditors would have received in bankruptcy and a limit payments to bankruptcy a hair cut at 20%. it would act as a sort of insurance mechanism against future write-downs. if following the resolution process under that scheme there were additional funds, the fdic would have the authority to pay back all or part of the 20%

premium. that it sold the market this presumptions. we did not carry this argument, but i think it still holds true. especially for the most interconnected and largest firms. now the resolution process. we're talking here about short- term creditors. those creditors are going to be considered essential under the fdic proposed rule. lending to tse large complex financial firms, subject to resolution authority is close to that. if these firms fail, creditors

are going to be made whole or close to hold. these are going to be able to borrow more cheaply end of the will grow even larger and they will become even more significant, systemically significant. there is a second problem also that arises. to go back to again, it is the clawback provision. it is going to be very difficult to recover, and that is why you see this basis point difference. bankruptcy verses resolution authority for the large is not hard to see a situation for a recently built up creditors strongly argues that handing a over these sums may jeopardize their unstable firm this is an argument that regulators having just bailed out these creditors to name a financial stability may find very difficult to

resist. additionally, there is no guarantee that a given predator will be able to pay back the diffence between the advance and what they would have received under the bankruptcy code. and under this mandate. to the president richard fisher that recently said this about these arguments that i have made in the past. incredible big bank resolution processes wilbe difficult to enforce, especially when regulators are explicitly directed to mitigate disruptions to the financial system. as they are in the bill. i understand you believed regulators need a broad authority to handle a crisis. the unintended consequences here have got to be considered. if we were to look at tightening the language while working within the resolution authority mechanism, are the steps we n

take to minimize the potential for abuse down the road? d the amendment iade earlier, ia hold water with you? is our way to get at that? a couple of things, we're all for tighning as much as we can. we want markets to come back. there is obviously a moral hazard. we need to market discipline to complement the regulatory process as a weapon again excessive risk-taking. remember, we will work with you. we're trying to allow this through regulation. please do not interpret that to mean that you're going to get it, because they are very much subject to loss absorption. one of the things with

liquidity is a commercial paper. even though you lose the funding, you replace it with government funding. the present and for the short term should be that they are taking losses, too. and i find that for instance with the derivatives, maybe they don't want to, if there are counterparties under secured or under collateralized, to find an hour with uninsured deposits, it will be a mathematical determination, however well maximize recoveries, that is what we will do. we think of the statute does have limitations. we are trying to tighten those even more. i am happy to look at language and talked to you. there is nobody that wants to and this and more than you. >> i will thank the chair, her,

and thank you for being here, i echo his comments. i appreciate your forthrightness. yet testified many times and we thank you for your service. all wanted to ask you, based on something you had in a written statement, he said that if properly implemented, it will not only reduce the likelihood of the future crises but will provide tools without resorting to taxpayer supported bailout are damaging the financial system? >> will lead to believe that we don't have future taxper bailouts. is to leave the door open. >> and that is his point, but we look at the breakneck pace of rulemaking, and you see

regulators in many respects overwhelmed with the volume and the pace. you have ccerns about the quality of the rulemaking? >> we are comfortableith it. we did not have the huge number of the way that they do. so i think we see that we are proceeding at a reasonable pace. for anything major, we're giving 60-day comments. at least from their perspective, we are comfortable with the implementation so far. i understand especially if the market regulation issues, there is a lot being thrown. a special wit derivative oversight. the rule making these to continue. it might have some merit. it might have some merit.