the line for equality in this country has always been bipartisan. it has long been republican and democratic leadership on issues of civil rights and equality that has characterized the path toward progress in this nation. if i had one comment it would be this. the progress toward marriage equality that was shown by this vote, by bringing this bill out of committee, we showed something that i think is important. equality is not a narrow interest. equality is aall of us have theo change our votes. as senator dorgan said so eloquently, he is one member who voted for the respect of a marriage act, who recognizes that as he knows more about the harm caused, now that states

have recognized marriage between same-sex couples, he has changed his mind. the american people are changing their mind about the propriety, the power, the desirability of same-sex marriages, and the powerful -- powerful role models they can be. with this step tay, we me steady progress because we are moving on our national fabric. we took one important step forward towards removing that stain on our nation's history. >> we will hear from mr. bloom and fall and then answer any questions. >> thank you chairman leahy and thank you for your leadership as well as senator feinstein. i am deeply in debt to both of you and my colleagues. today's step forward strikes a blow for liberty on behalf of the citizens of new york, the citizens of connecticut, the

citizens of california, the citizens of all states where same-sex marriage is legally recognized. the loss of those states will now be accorded equal status in comparison with the loss of other states. today is a win for all americans because it is a step towards justice for all americans. that is our history. it is part of our dna from the very founding of our republic. today is a step, not in making new laws, not in forcing any state to change their laws, not in compelling any place of worship to perform a marriage against their religious principles -- it is a step toward repealing a bad, discriminatory, and on constitutional law. an unjust law. in the end, it will be struck down by the court if this body does not reject it. -- protect it.

what will happen first? action by the court or action by the congress to repeal and reject. martin luther king said the ark of history is long, but it has been towards justice. for many americans, we are a step closer towards the goal of justice for all americans. i am proud of being a part of taking that step today, which has very real life consequences. we have heard from same-sex couples that have been wrote denied retirement benefits, that have been denied health insurance. this does not speak to lifted are rhetorical. it is about real life -- this is not speculative or rhetorical. it is about real life consequences. thank you. >> do you have any questions?

>> [unintelligible] >> the other side of the pile said this would be a good time. there will be two days of real debate and then will vote on it. i disagree with that. >> [unintelligible] >> it would send a terrible signal to those who oppose this to filibuster. thank you. >> james murdoch of news corp. appear before the british house of commons for a second time and

denied that he misled parliament about the phone hacking allegations. that is next on c-span. then federal reserve chairman ben bernanke defends the federal reserve's economic policies. then eric cantor at rice university on job creation in the economy. -- and the economy. >> in the defense of liberty -- the line let me remind you also that moderation in the pursuit of justice is no virtue. >> he lost the 1964 provincial election to lyndon johnson, but barry goldwater's ideas and kantor galvanized the conservative movement. he is the future of the c- span's series "the contenders." live friday at 8:00 p.m.

eastern. >> the british parliament continues its investigation of allegations of foam packing by the media. james murdoch is a question about phone hacking at the news of the world tabloid. members of the panel also questioned james murdoch about the knowledge of a supplement to gordon taylor whose voice mail messages were hacked by employees at news of the world. this hearing is two hours and 40 minutes. >> you will recall that we spend some length about the decisions your father made that gordon tabek should receive a substantial settlement. you were not made aware of that

meeting on why that salomon should be reached and -- on why that settlement should be reached and were not aware of the existence of the e-mail. would you like to further assert that you have no knowledge of the e-mail? >> yes. thank you very much, mr. chairman, and all of the members. themeeting that occurred on 10th of june, 2008, was for the purpose of gaining the authorization for mr. cronin and mr. miler to increase the settlement that they had already made on a number of occasions to mr. taylor and his lawyers. the meeting, which i remember quite well, was a short meeting. i was given at that meeting sufficient information to authorize the increase of the settlement offer that had been

made and authorize them to negotiate that settlement. but i was given no more than that. certainly, evidence was described to me that indicated that the company would lose the case if litigated. but the nature of the e-mail, as far as it was described, which it was not, any wider spread or evidence or suspicion no for wider spread wrongdoing, none of these things were mentioned to me, including the detail and substance of the council's opinion that had been sought by them and received by them earlier. it was only sufficient information to increase the settlement offer that they had already made. >> were you made aware of an e- mail that contained [unintelligible] >> yes.

i think this is an important point to be very clear on. the e-mail was important for two reasons. on the one hand, it was a transcript, voice mail that was intercepted by "news of the world" and that was seen as evidence and sufficient to conclude that the company would lose the case. another part of that e-mail that was important, it named another journalist in that e- mail. that importance was not described to me in any detail or at all. it was not described as the e- mail. no documents were shown to me are given to me or prior. >> id is now your position that you were made aware of the existence of an e-mail and that

it would be damaging to your defense. >> yes. i testified earlier in the summer that i was aware that a transcript existed and it was on behalf of "the news of the world." it was perhaps the beginning of suspicion that other individuals were involved and it was not describe to me and the e-mail is not shown to me either. >> you did not see a copy of the e-mail? >> no, i did not. >> were you aware of the legal counsel's opinion? >> i was aware that leading counsel had been obtained, but the opinion was described to me had to do with damages and the estimate of damages were the case to be litigated and lost. it was not shown to me, the leading counsel's opinion, nor was it is described media the

things that were provided to you that or not to do with damages. >> we have since learned that there was a previous meeting that you had at the end of may. do you remember that meeting? >> i think you're referring to a note describing a conversation that he had had with mr. cronyn. i have now seen this note as well, but i had not seen it before. in that note, mr. miler says to mr. pike that he spoke with james murdoch. he did not say there was a meeting. he refers to a conversation he had or that he allegedly had with me. neither do mr. miler or i recall that meeting or a conversation or phone call. as i testified, the only

substantial meeting that i recall our conversation that i recall about the matter was the june 10 meeting. although i cannot rule out whether or not he called me or call me in a hallway for a brief conversation. >> my colleagues will ask questions in more detail. but but if -- >> but i think sheridan would like to before that. >> in 2007, [unintelligible] >> in december 2007, i returned to news corp. as regional chairman for all of our european and asian operations, which included news international along with five other large entities in the area, just for clarity.

in the absence of a full-time ceo, i had more direct responsibilities for a period of time for news international. at the time, mr. hanson did not discuss with me any of the matters around mr. goodman and the entire employment of mr. demint and arrest and -- of mr. goodman and arrest and conviction all predated my presence in the company. i had no discussion with him about it. he did not raise it with me or brief me on it. >> did you ask? >> did i ask about the good winslet in particular? >> yes. >> no, i did not. >> [unintelligible] >> it was some time before i joined the matters affecting mr. goodman.

the arrest and the convictions were well over a year before. there's no reason at the time to believe that there was anything other than a settled matter that was in the past. >> there was a significant amount of money for future discrepancies. you do not think it is proper to make sure that did not happen again? >> at the time, certainly, the company relied on assertions that internal investigations had occurred and that two people had been successfully prosecuted and went to jail and so on and so forth. i think it was seen as a matter that was in the past and that accountability had been delivered and the police had successfully prosecuted and closed the case. so there was no prompt or reason to revisit any

particular settlement matter that was well within mr. henson's authority as chief executive earlier to make a judgment on. >> we are told is your father was very concerned about the goodman case. why was he concerned? >> at very concerned about the goodman supplement? >> again, this is before my time in the business. when a journalist is arrested at one of the newspapers in the group, it should have been a matter of concern for the chief executive. >> why were you concerned about the goodman case? >> i was not at the company -- >> [unintelligible] you did speak to your father did you not? >> i do not think we discussed the "news of the world" matter -- >> so you did not find it necessary to ask father, why are you concerned?

>> he did not raise it with me. it simply did not come up between us. it did not have anything to do with my work at the time. >> your father expressed the view that he has been humbled by the whole event. do you feel the same way? >> i have had some time to reflect on all of these events. it certainly is appropriate to reflect and i think the whole company is humble. what we're trying to do and what i'm trying to do is learn from the events of the last number of years, tried to understand why the company could not come to grips with some of the issues in a faster way as i would have liked the company would have liked. so yes, i think we are all humbled by it and trying to

improve the bill does, improve the structures and leadership across -- improve the leadership across the board. these are things at i am very sorry about. >> [unintelligible] >> how do you mean? >> any technical advice to make sure that this does not happen again? >> i think the telephone companies -- i do not know the technical details of what a telephone company might do. we do not advise telephone companies on the matter of voice mail. >> have you had time to consider the phrase and tell the committee what you think it

means? >> i think you described to me at the time what it meant. what i reflected on was really where in this process were there places where the company could have heard the alarm bells, if you will, more clearly. and to reflect on them dispassionately. if there was a mistake or a shift that we need to focus on, it was the tendency for a time to react to criticism or allegations as hall style or -- as of style or -- as hostile or unmotivated commercially or politically or whatnot. almost all the din and clamor

around a large business like this around the world to try to be able to pick out those things that we could react to differently. at no point do i think the company suffered from willful blindness. -- willful blindness on my part or others. >> to you think that the evidence of phone hacking was kept from you? >> it is clear to me that coming in 2008, for example, the information that i received was incomplete. and it is also clear to me that, in 2009, upon allegations arising in a newspaper about the taylor case, that the full extent of the knowledge with in the business or the evidence with in the business as well as with the metropolitan police was not made clear to me. and that is something that i am very sorry for. >> who should have told you? >> it is important to remember that, after the resignation of mr. colson in 2007, mr. hanson

brought mr. miler in as an outside person who had the responsibility to both clean up the issue, investigate the issue, and move the company forward and the newspaper ford -- and the newspaper forward in a way that made sure that these things could not happen again. if he had known that there was wider spread criminality, that there was evidence or suspicions of that, he should have notified me. >> there was an aggressive denial of the allegations. why did you allow that statement to be issued? >> in 2009, it was the summer 2009 and a year after the taylor matter. as i said to you and testified to this committee, i think the company did push back to hard.

within 24 hours of those allegations emerging and the e- mail was a document that the police had possession of. the chief of police issued a statement saying that that same matter had been a matter of careful and extended investigation by detectives and there was no evidence to warrant further investigation. as i testified to you in july, we relied on the repeated assertions from the company around the breadth of the internal investigations that had been done in 2006 and 2007 and repeated assertions and reassurances by the police publicly that there was no new evidence in the matter as well as a third-party endorsement of the company's actions in the aftermath by the pc. -- pcc.

we relied on those things too long? i think it is clear that the company did. if i knew then when i know today, with respect to the relevant leading counsel's opinion and the details and the import of the evil document, the company would have reacted differently and something similar to that which we have reacted in the last year to move aggressively and determinedly as we can to make sure we put it right. >> there were people in the company who knew what was going on and were not reporting it to you. who should have reported these things to you? >> as i answered the question earlier, where evidence force officials -- where evidence or sufficient suspicion was there, this was the job of the new editor who had come in to clean this up to make me aware of those things. on the contrary, i was not shown those things in 2008.

in 2009, i receive the same assertions around the quality of those investigations that this committee reviewed. that is something that is a matter of regret. >> i do not actress expect you to know what was going on. it begs the question, which do you think was worse, knowing what was going on and being willfully blind to it or not knowing what is going on? >> it is important to put the "news of the world" in the context of the business and what the company deals with and what i deal with on a daily basis. it is in the operating company, news international that works within the european and asian business. this is a company of over 50,000 employees globally.

appropriately so, a senior management, myself included, rely on executives in low levels of the business in a certain way. we have to rely on those people and we have to trust them to get the job done that we need them to do. otherwise, it is impossible to manage every single detail of the company of this scale. >> this committee, a committee of parliament produced a report in 2009 where we found it inconceivable that one person was involved. that was based on the evidence of 2009. the results of that were thatyour papers describe this committee and the members of this committee as a disgrace to parliament.

should there be another internal investigation rather than ravishing the committee? >> at various times during this process, the company moved into an aggressive defense too quickly. it was too easy for the company to do that with all the noise and clamor around the business. particularly with respect to the early 2010 report,a more forensic look at the specific evidence that had been given to this committee in 2009 which have been something that we could have done. i could have directed the management of the company to do differently. at that time, i had stepped away from day-to-day management duties. today, i look back at the reaction to the committee report. that is one turning point that the company had taken.

>> you made a mistake in not taking that more seriously? >> what i would say is that the company at the highest levels should have had a good look at the evidence that was given to it in retrospect in a 2009 and had a proper look in 2010 and followed wherever that trail lead. >> after the arrest of brooks, we were given a legal response to going down a certain route without question. can you just confirm to me that you have not been arrested. you are not currently on bail. so can you answer the questions i put to you? >> i have not been arrested and i am not currently on bail. i am 3 to answer questions and i would like to. to the extended questions related to matters of criminal

investigation or related to individuals that are currently arrested or on belts that certain things would be inappropriate. >> you just said that you have now read the committee's emissions -- committee some missions. -- committee submissions. >> i would like to esterase -- ask you a series of questions about those documents. give me a yes or no answer. be used at accept a that a detailed memorandum detailing the case was sent. did she prepare a detailed memorandum concerning the case which sees said was minor? >> he prepared a memorandum, but it was substantially narrower and did not raise certain things in that memorandum that council raised. that is a critical point. >> that is a yes? >> i would question your characterization of the detail. >> but he did send a memorandum?

at >> i think it was on the 24th of may. >> the memorandum was prepared in advance of this meeting. >> i do not know that. i assume that was the case. some of the things were discussed with me on the 10th of june. >> that is a yes. this memorandum acknowledges the documents and evidence of widespread criminality of "news of the world" and that your position was perilous. >> he did use the words. at no point in that memorandum was it mentioned, white spread -- wider spread criminality with respect to phone hacking and those crucial details from the lead counsel house bill left out from the 24th.

>> yes. >> you are trying to put words into my mouth. the memorandum was prepared. it did not discuss those crucial elements of widespread criminality. it did not mention those individuals involved. >> did you say you met on the 27th of may to discuss the case? you said you were not sure if this was a meeting. >> bayh answer the chairman's question early on. -- i answered at the chairman's question early on. i did not have a conversation early on. we do not recall that conversation. a conversation or telephone call could have happened. i have no recollection of it. the most substantive meeting occurred on june 10. >> he believed that there was a conversation and that he relayed the message that you would take a view of the external qc.

you said that document exists? >> i do not think it says what you are characterizing it as saying. they had already instructed her leading counsel atthis is an important point. it was not me who told that two leading counsel. they had already done that. >> the note is very clear. he thinks that you wanted him to instruct him. >> he spoke to james murdoch, bought no options, wait for qc's opinion. it does not say that i told him to seek qc's opinion. eyes have seen that opinion.

>> they have stated that there is overwhelming evidence for the involvement of a number of news groups and journalists into the legal requirement into the names. and but what was surrounding the material around attempts to obtain information illegally. in light of these facts, there is a powerful case that there is a culture of legal information used at ngn for information. >> he did provide an opinion that was not shown at the time. he did not discuss the terms. includes -- it concludes that there is sufficient evidence that there was more widespread activity.

>> you would meet to discuss the gordon taylor case. following that meeting, in your discussion was reported. >> as i testified to this committee in the past and have written to this committee, the only substantial meeting i have had on the 10th of june was the case. it was to discuss the case. it was in order for them to increase the settlement offers that they had made. that seems to be what is in the documents provided to you. >> did you have a conversation with him on the 10th of june? jm said that he wanted to think through the options. >> i have seen that note.

i recall leaving that meeting with an understanding that they would increase their offer. i do not recall that part of the conversation. >> do you accept that they have not had access to their office file since they have left the company? >> that is my understanding. >> on november 5, at 2011, they said that you had a knowledge of the widespread criminality and subsequently confirmed and still believes the opinion of june 3, 2008. you have evidence from at least may 27, 2008 when you met to discuss the memorandum. >> i do not discuss that at all. -- accept that at all. i authorized the increase of settlement offers that they had already made.

neither him nor i remember a conversation on the 27th of may. mr. silverman's opinion was not discussed in that contest -- context. no further investigation was shown to me at that time. that is what i testified to consistently to this committee in person and in writing. >> you failed to inform him on -- inform this committee on the 27th of may meeting. we have a recollection of it. is it not inconceivable that to route this two-week. -- period that you would discuss with the memorandum or through email given that these were these three documents, they claim that you were previously defending?

>> i think that they testified and myler testified to this was like given to me at the june meeting. we do not recall an alleged conversation. we might have had a telephone call. it was not some stances. otherwise, one may have remembered it. i have testified to you very consistently about my knowledge or suspicion. that is what happened. the period between those days and on the 10th of june meeting and i was in india. then i was in hong kong. i returned on the test from other stuff in the u.k. and not related to news international.

>> did you mislead this committee in your original testimony? >> i did not. >> if you did not, to did? >> i have said publicly, i believe this committee will get the evidence by individuals either without sole possession of the facts or now it appears in the process of my own discovery in trying to understand as best i can what ever happened here, it was economical. my own testimony has been consistent. i testified to this committee with as much clarity and transparency as i can. where i have not had direct knowledge in the past, i have gone and try to seek answers to try to figure out what happened and what evidence there is. that is what i am here to do.

>> a respected lawyer for many years did what? mislead this committee? >> i issued a public statement in it something that gave to you in 2011. it was something that was inconsistent and not right. >> and do you think that mr. myler mislead us as well? >> i believe their testimony is misleading and i dispute it. >> i do not have a reason to believe that, nor will i have direct evidence. >> you said that the critical new facts as the company saw them emerged from the trial at the end of 2010. "that is correct, yes. >> we know that this statement was completely untrue. we know that the critical new

facts were received in 2008. it was only in 2010 that the company became aware. who told you that? >> i became aware of those critical facts in 2010 after the process of the civil trial had uncovered some of the police evidence. >> who told you? >> previously, i had received assertions from mr. myler that there was no new evidence. this was 2009 and later. >> you said that it was not a matter of real regret that the facts could not emerge and cannot be done faster. you now know that was not true. >> it is a matter of concern. what i was trying to discuss earlier with respect to how i think about what we can do differently and how we can

improve on what happened to, the amount of transparency between what was known by certain individuals and seen by them. if that had been more transparent to me, that would be more important and more helpful. that is a matter of great regret. >> the facts emerged in 2008, the committee was misled? >> certain individuals were aware. the facts did not emerge in 2008. none of those things were made available to discuss with me. i was not aware of those things. even in 2009 when the newspaper made allegations about those things, i testified to this fact and have written to you. the company has relied for too long on repeated assurances as to the quality and rigor of the internal investigations that

have been carried out previously. and we also relied on the assertions and reassertion is made publicly by the police that had all of the relevant information. within 24 hours of the 2009 allegations. >> did he mention it or could he have discussed that with you when he have that conversation on the 27th of may? >> we did not have any recollection of the conversation on the 27th of may. >> if your company solicited contemporaneous notes on this discussion. >> you agreed with myler to wait for damages. this opinion was being prepared so that you could decide what to do about the claim.

>> with respect to damages. that is my understanding. >> it contained the words that i just read to you. spread around horrible allegations, the horrible process. do not believe culture in the newsroom. james would say, get rid of them, cut out cancer. do you except that note? >> that is a good thing to focus on. >> what cancer did you think he was referring to? >> what i can see in that note was the conversation where mr. myler referred to the investigations.

with respect to the allegations in his dismissal claims, he does not believe the problem was in the news room. he showed that perhaps he was worried about raising these issues with me because i would have said get rid of them all. i would have said, cut out the cancer. people are expected of wrongdoing, we will pursue it. that is the way he would approach it. that is the way i would approach it. i think that speaks volumes. that is also why i was given a narrower set of facts and i would have liked. >> it does suggest that there was a discussion about a culture of packing. -- culture of hacking. >> what you are referring to is a transcript of mr. myler as i understand it.

>> when you said you had read that, i do not believe the culture in the newsroom. that is a completely different interpretation. >> that is a different interpretation. that would be a punctuation issue. in the transcript, it is hard to come across. it does not really matter. none of it was discussed with me. >> you suggest that there was no mention of the e-mail, despite being central to your discussions with colin myler? >> i want to be very clear. that was not referred to as the e-mail. it was mentioned to me as evidence that was greece -- important. -- with respect to it being a

transcript of a voicemail at interception. it proved it was on behalf of "news of the world." it was not shown to me or discussed with me. it might indicate widespread knowledge or wider spread activities of phone hacking. it was important for two reasons. it was evidence that was important to the case. in conjunction with leading counsel's opinion and what i would have liked in retrospect to have had and moving forward on a different footing. >> there was no mention that news group newspapers have actively made use of a larger group as was mentioned in the memo. >> it was only mentioned that there were voicemail transcripts there. those documents that you are referring to. >> there is no mention of the

number of journalists. who were obtaining access to information. umass with myler on the 10th of june, this time with crone. >> i did not receive mr. silverly's opinion. i do not know what they discussed. >> there was no discuss some about the culture of the illegal activity during that meeting? >> absolutely not. >> was this mentioned even in passing? >> they did not mention it. >> information going to the heart of the problem, they've met for a settlement.

>> they gave me sufficient and permission to authorize the increase of the settlement offer they had already made. they had commenced making before without my knowledge. they left that meeting with the authority to continue negotiating. they did not discuss them with me in the terms that you described. they did not describe wider spread phone hacking allegations. they did not discuss the wider views contained in leading counsel's opinion. >> you did not bother to ask about his contacts. >> mr. silverly's opinion was discussed with me in context of damages. the relevant information for mr. myler and mr. crone to increase their settlement offers.

>> you talk to them for up to 15 minutes without any detailed emerging? >> i think if all of those other details had been discussed, it would have been a lot longer meeting. >> you authorize a fairly large payment. you did not ask why the large payment was necessary. >> it was made very clear to me that the case would be lost. there was evidence in the case that linked the voice mail interceptions to "news of the world." the company's own cost, an estimate was made. it was somewhere between 500,000 pounds and a million pounds. this would be required to settle the case.

it was a reasonable decision to go with the very strong legal advice we had received. >> why do you think he would immediately question your previous testimony to this committee? >> i cannot speculate as to why they did that. >> their advice was that a case could be lost. in the absence of any new evidence, i was not made aware of any new evidence. criminal trials before i was there. it was a matter in the past. do you accept that this was not an accurate assessment? that the committee was misled? >> it could i'd just be clear. i think you refer -- you were referring to my testimony. that was my understanding at

the time. that was precisely how i understood it at the time and why it was reasonable to make the decision that was made. with respect to the leading council's decision, it would have been better if the whole nature of that opinion and the issues contained would have been fair to me. none of those things were discussed with me at the june 10 meeting or the other meetings at all. the only meeting was the june 10 meeting. the only things that were discussed were the things that they deemed sufficient for them to authorize the increase of the settlement offers they were already engaged in making. >> mr. murdoch, it is clear that you are not going to answer any of my detailed questions. i was not going to do this. i need to tell you that i met him.

i do not -- it was in confidence. i believe it is important to reveal what he said to me. i know you have not seen this yet. i will make it available to you. he said to me, did you discuss what your strategy would be with mr. murdoch with anyone else? he discussed the strategy with me at one point. what he did was this. just before he went to see murdoch and said that we have to settle, he spoke with me what the transcripts were all about. we have got a problem because of this. what is this all about? this is neville talking to tom crone. >> i never look back at it. i do not know. somebody must have asked x to do this.

x was asked to do so many of these by people on the news desk at this time. he would know. he would have to be pretty dumb not to know. tom comes to me. this had nothing to do with me. we discussed this. this shows that this had gone through the office. it has gone through x. news international is culpable and we do not have to settle. i am going to have to show this to james burdock. -- james murdoch. the reason i remember this is because i said, please, do i have to show this? he is going to think it was me. is there any way to get around this? i am sorry, but i am going to have to show him this. it is the only reason we are going to have to settle. i have to show him this. i am going to lose my job. not necessarily.

not necessarily. would that be a true and accurate recollection. >> i have no idea of the conversations that they had. i can tell you that at no point did they discuss suspicion of water spread hacking during the -- wider spread phone hacking during the meeting of june 10 in relation to increasing the offer of settlement to the attorneys. >> he said, this is not some vague memory. i was absolutely on a knife's edge. you have to show this to james murdoch. there is only going to be one conclusion. tom took it to him. i said, did you show him the e- mail? he said, yes, i did.

he did show it to him. he said yeah. he said, yeah, yes, it's fine. we are saddling. >> and i think he testified to you that he did not show me the e-mail. the e-mail was subject to some stringent confidentiality agreement with mr. taylor's attorneys and the police, or something like that. it was not shown to me at all. i have only recently seen the e- mail itself. large blocks of redacted text of the actual thing. that is all i have seen, which is what you have seen.

i am asking your questions in as clear a way as i can. i saw it with the reductions, yes. mr. watson, i really cannot say what mr. crone may have discussed. my recollection is very clear. all i can testify to you about is what i knew at the time, what i was told at the time, and what i was not told at the time. >> [unintelligible] >> i am not an aficionado of such things. >> intimidation, corruption, and

general criminality. >> again, i am not familiar with the term. >> would you agree with me that this is a matter of a description of news international. >> piping it is offensive and not true. >> if there are allegations of a telephone hacking and computer hacking, perjury -- all of this happened without your knowledge. >> as i said to you in this committee on a number of occasions, it is a matter of great regret that things went wrong at news of the world in 2006. the company did not come to grips with a those issues fast enough. i we all recognize that. i also acknowledge that evidence the committee was given without full possession of the facts in the past -- that is

something i am very sorry for. when evidence came to light and when we finally achieved the transparency that is appropriate, we have acted and the company have acted with great diligence to get to the bottom of issues and to make sure that our cooperation with the police, with this committee, and the like are such that we can bring any wrongdoers that are proven to be soaked to account. >> you must be the first mafia boss in history who did not know who is running a criminal enterprise. >> mr. watson, please. >> thank you, mr. chairman. i was. to ask you some questions about the decision to settle because you said the meeting you had on the 10th of june, 2008, was really about understanding what level of supplement should be

played -- should be paid. the question was not should we subtle or not, but how much should we be prepared to pay. when did you make the decision that this case had to be settled? >> i did not take the decision that it had to be settled. mr. myler and mr. crone had already decided that path. that is clear in documents that have been submitted to you. my understanding is it was mr. crone who started the summit discussions at weeks beforehand. it did not come to my attention until they felt it was necessary because the number had gotten large enough that it was going to draw my attention to it. they had already sought to settle at a variety of levels.

notte said you're certainly made aware of new evidence. do you still stand by that statement? >> that is what i understood at the time and i was not made aware of new things in 2008. >> there were internal discussions on the briefings. >> i take there were new disclosures. it was certainly presented as a buried evidence. they did not show it to me, but it was a transcript of a voice mail interceptions that proved it was on behalf of news of the world. that is what i was told to be clear, it was an instance of a voicemail and interception that had already been part of the trial before hand.

that was one of the counts that he was tried on. >> bid to challenge it when you have this conversation? after 2007, the settled for half a million pounds. did you question why this took place? >> it was something that predated my involvement in the company. it was brought to me as a case that would be lost. it was described briefly to me that there was evidence of the voice mail interception transcript that proved it was for or on behalf of "news of the world." it was open and shut that the company would lose it. mitigating the case would be

costly and it was seen as a matter of the past. it seem more the end of something that had been going on before as opposed to the beginning of something else. i was certainly told the number. the number that sticks out in my mind, i want to say, was it was 400,000 pounds. that was a number that was settled upon. >> i did not see it at the time. he described it as possibly more cost. >> he had an increase of 150. he said it would be increased to 350. these increases were being made. you are being asked to sign off

on a payment. >> the escalation of those officers were there. the offer had been made. it had been rejected. it would cost something in the range between 500,000 and 1 million pounds. they have that plus the damage is recommended. they thought that was reasonable. they give me strong advice. >> when you have this meeting, this is the first you had heard it. you did not have a pre-briefing. >> the first i heard of what? >> the fact that it was in this amount of money. >> it was the only substantial

discussion that had happened as we discussed in length. conversation that i recall. it would into details about authorizations and the evidence that was there. as discussed earlier, there is a discussion as to whether not there is a discussion on the 27 of may. one of three issues would be there. they contain information. it is a results of information that they needed to work.

it is for "news of the world." this was given more prominence. was this mentioned at all? >> no. it is not shared with me at any time. it was not discussed. what was discussed was an information to get authorization to increase the level of settlement. that is what was discussed. none of the other things were discussed. >> you gave him can sent -- consent. [unintelligible] >> there was advice when added in the costs that made a reasonable to settle at a higher level. i followed their advice.

i did not decide to settle. they advised to settle. i consulted with the legal manager for many years. the reason at the time had anything other to do with the best interest of the company at heart. -- had you lost lost, you know they are asking to settle at a higher level. >> i am not sure that is the case. if you take the to lennar 50,000 pounds or more and add in the 000 pounds and0, add the cost, you can get to higher numbers. it can get well over 100,000 pounds or more on each side

depending on the complexity. from a standpoint of the amount that was agreed, they described to me that they had received this. it to be appropriate. they thought it was the right thing to settle. they shot dead by said it was the right thing. i followed it. -- they said it was the right thing. i followed it. >> did you ever say to them that this is evident? why did you not just go to court? the case was already known about. it was linked to gordon taylor. there was nothing else you could do. >> it was described to me that there is clear evidence that the company would need to the case. there did not seem to be a point

to take it all the way to court. they were convinced they would lose the case. it was reasonable to avoid that expense. >> did you discuss risk to the company that might come out? i think it was seen as dragging up matters of the past. it would have been desirable to not have all of these things drag out again. i was not aware that there was any confidentiality or anything out did the norm. confidentiality was discussed between the different lawyers. it became clear to me after the fact. >> this is a normal part of companies. he may pay more.

many companies pay out because [inaudible] is that something you discussed? >> there is no discussion of other things. no other things were mentioned there. it did seem pointless to take it to court given that it would be high profile. the company was certain it would lose the case. it is a question of assessing what the cost was. is there a way to remove that or take it? is there a way to avoid all of that? >> people come to you. they say they have to do it. >> reasons were given to me a round the evidence. it was with respect to this case. >> he did say it was strong

advice to the company. >> you did not ask what they were in terms of the a proper amount to settle. that was the appropriate amount. >> they met with the opinion. this is where they had come out. >> if you had not ask, you would have gotten a different picture. it is different now to look at these? it was a lower amount. >> i was aware where it was likely to settle. i was given strong advice.

>> this is not a test but -- textbook example. >> it is a large amount of money. we can say more of transparency of rounds the capital opinion. there were other senior executives outside the newsroom. i do not have any knowledge that anyone did. more transparency. more transparency what have been desirable. in the context of the overall european business, the "news international" of business, this is in the irresponsibility of the editor and the legal manager. -- this was in the responsibility of the editor and the legal manager. the they got the authorization they were seeking. it was up to them to manage the

issue. >> one final issue. you never considered any other option other than settling the case? >> the only options available were to go forward to to settle the case. whether or not there were other questions, i do not recall. i recall leaving with the sense they would go and do that. >> just to clarify on some of this. i am still unsure on this. you are not aware that the meeting took place on the 27th of may. nodo you recall at some point saying to him to wait for the

silks view? you said to him "let's wait." do you recall that? >> i do not. there was a reference to a conversation that neither him or i recall. it may have happened. i do not have a recollection of this. >> you alter the opinion before you agreed. that would have family wanted. >> if they had not had one, i probably would have asked what of the council thought of it. they did. they came to me with a recommendation. >> you seem to be recommending that you were aware that they

still believe what a cut costs. you just said that you were aware of the exact numbers that he gave. >> the opinion had been saw. this was reasonable. >> use seemed to be very precise about what the opinion was. >> the advice was that the damages saw could be 250,000 pounds. >> that is exactly what i just said. crises seem to be saying you were not entirely sure. you knew the number was there.

usually people come a second time. there are not paying attention. i was wondering what that might be. >> the recollection i have -- there were a lot of numbers. they settled for damages. he said it could be 250,000 pounds or more. it will add on these costs. i'm trying to be as specific as i can. >> you described this meeting on the 10th of june. it is 50 minutes maximum. today you try to describe it. it seems to be slightly different from last time.

how do you explain the discrepancy to now? >> it is recorded at about 30 minutes. i do not know how long it actually took. i refer to it at the senate. it was the only meeting where the question was discussed in any level of detail. it was sufficient to give them the authority to go and increase the offer but no more. >> we are going to lose the case at hand if we visit, it to be 250,000 more. is that the information you

were given? >> it linked the particular one to the "news of the world" and that is important. the opinion was that the company will lose the case and that a certain amount was arranged and agreed upon. >> what was the basis that you a ride? -- arrived at? what was your rationale? >> i think the range that was given to me would be between 500,000 and a million with damages plus costs. they made a strong recommendation that it should be pursued. >> i asked him about this and if

they were willing to settle its at any price. -- it at any price. he said it was getting close. he said the cap was 500,000 pounds. that was beyond his authorization. it must've been knew that authorized it. he was very clear. that was the amount he was authorized to go up to. >> this was beyond. the authorization and was much lower. it is important to be fair. he tried to set this up at a number of levels before he ever came. some of these. to be above his authority.

-- some of these appear to be above his authority. >> there were a higher amount that he was authorized. >> certainly in the documents that i have seen recently, it appears that he took it upon himself to authorize 150,000. i did not authorize that. this was not at my authorization. nor do i have any records. i looked hard to find any record of any internationals that could have done so. there is no record of any of that. >> he is instructing your lawyers to settle a case for

150,000 without any authority from anybody else even though he is 10,000 pounds. >> presumably they had discussed these things. they did not come to me. >> on what basis did you give the authority to settle this tax who gave the cash -- to settle this? who gave the cash? >> i had agreed with in a range something above 500,000 pounds when you include costs. they have the authority to go out and try to settle it. >> had you given them a cap?

wants was it? -- what was it? >> it was the damage amount. i do not know the discussion amount of damages. it would have been quite normal to say go and have this. >> did you get a cap or not? >> they gave me a range. i said they could go and pursue it. >> they have the authority to go and settle the case. whether not they came back with the confirmation of how it had gone.

there were no subsequent meetings. they may have had a confirmatory discussion. >> it all seems very cavalier to me. it is very cavalier with money. given that your organization is so successful, i cannot believe you have done a by being so cavalier. he gave them without a blink of an eye. there was no real cap put in place. you should have the opinion. you do not even see the opinion when it comes. you seem to characterize this

for the cavalier approach. i do not know how this compares to the news operation. walmart it is better than the news corp.. i know that the chief operating officer, which may be a small part of walmart, i guarantee that if someone said here we have a legal problem, in the region of half a million pounds, at any chief operating officer i ever dealt with would have said let me have a look at that. i find it in a credible that you did not say how much is there.

i cannot even begin to believe that is an action that he could take with so much of this. >> it is important and i testified this. i've tried to describe this to you in some detail. the situation is one where assurances were given by senior legal counsel that the case would be lost. it is very clear that there was a losing case on the cards. there is an amount that was substantial. i wish sure that this was where it could settle at.

i air range these people to go and negotiate. e people toed thesw go and negotiate. they are responsible for a unit of the business to go and do the things they needed to do. they would be questioned from time to time and come with issues. i was given sufficient information. i was given sufficient information. i asked a question. it what do they say? it was a reasonable decision to settle that case. no other evidence came to light during that conversation are at

that meeting. >> what with the advice of the council had to have been to say "let me have a look at that?" we have these executives to go through this. why was he only having a 10,000 pound limit? this is not make sense. it is a mismatch. there is a strict 10,000 pound authorization. >> there is a contractor between

financial controls to make sure things are recorded properly, authorized properly, and so on and so forth. following the recommendation to counsel, this was a strong recommendation. a new editor had come in and had a fresh look at all of these issues. they made a very strong recommendation. pieces that can be helpful. there is a decision with respect to say are there other

things here we should be looking at? sufficient information was given to authorizes reasonably than to negotiate with the increase of a settlement offer they had already made. nothing more. nothing to indicate any other action. >> on what parts of that work in the confidentiality agreement that >> confidentiality as a cost was not discussed. it was something that was a line item that would increase the costs. it is entirely customary.

making the face was certain legal claims. it later became clear to me in documents that i had not been privy to a conversation. confidentiality was discussed as a cost in that settlement. i hope this is helpful. >> have you -- do you deal with things differently? if you have a more hands-on approach? can you not see that this actually is pretty lax for something in your decision? >> you cooperate with the police with respect to the criminal investigations.

crucially to learn the lessons, how can we improve the transparency?e and we have taken a number of measures to do that. you asked out. all of the operating companies that i have authority for, we have instituted a more formal process. we appointed a chief compliance officer full-time. we have had one meeting already

with the compliance agenda. the goal is to go through in great detail for legal matters that are facing the company. just in the last week we have instituted this entrained over 1000 staff. these are things i take very seriously. i have throughout my entire career. the transparency was not good enough. it is something i'm determined to sort out and that i feel very strongly about. >> just one question regarding this. they come to you to ask for

authorization to increase what they're offering. in do you remember what they're offering before the meeting? >> i know the previous offer they made was 350,000 pounds. i do not recall the exact amount they discussed with me. >> this is your first meeting with people you just described as having a low authorization. did you even ask them who gave your authority? >> i do not remember the 350. i do not have a discussion with them. >> i would have been more focused. i was more focus on what the count would be. that is what was focused on.

>> their authority levels was not on top of mine. >> or any other people involved in the chain of authorization? >> to my knowledge, the authorization process was that there -- he was authorized to make a legal settlement. to the editor would have been 50,000 pounds. others would have been authorized up to 500,000 pounds. i can find no record of those authorizations being saw are given. we tried to find out exactly how that occurred. >> it really was the show? >> and is in the documents given to you. we're driving the agenda around

the gordon taylor 1. well spent i will come to mr. crone and mr. meyerle, but the matter of tom crone, wrote to -- on a saturday which was a very busy day for "news of the world." the following tuesday where he is clearly expecting colin myler to the meaning within, which he said he can't be advocacy group are in for a holiday. when did you first see that name of? >> i didn't see that memo at the time. i first saw that memo recently since i gave evidence to you in july spent so that was a private note from tom crone to colin myler, and was not copied to? >> it was not shared with the. >> would you agree, the fact that you can't recall having a meeting, or discussion, certainly colin myler can't recall having a meeting that tom crone expect to happen, writing

pretty serious memo, the question as to how these two deal with each other and whether they fall in frank with what they're up to? >> i mean, i couldn't possibly spike lee about all the conversation they might have had with each other but i just don't know. [inaudible] people have occasionally refresh their memories, and colin myler has told he has been unable to verify details of the discussion that may or may not have taken place because news of the international have refused them access to the relevant documents, presuming relevant document exist. would you let mr. myler refresh his memory, you would give them access to any guidance he needs surrounding that meeting or otherwise? >> i can tell you that mr., you know, as a matter of, if there's an occasion to review policy

around former employees, access to systems, week in review that and i can get back to you on the. i can say that i had gone and looked for records around my own diary with respect to conversations during that period, and i'm happy to provide my calendar to you. there's no record of a conversation or meeting on the 27th of may with mr. myler or with anyone else on this matter. and i can provide you with that. those calendar events all the way through. [inaudible] wouldn't you agree with that? >> i think the company around all of these issues can the independent committee for that matter, if there's an occasion to revisit those, certainly i will meet with them. >> in the spirit of transparency? >> very much so. and i'm happy to provide you

with my own calendar and notes about the entire period. >> because a peculiar meeting come or not needing? >> i don't think anyone is suggesting it's a meeting. mr. pike recorded know that mr. myler told him of the conversation, so secondhand note of the conversation that neither mr. myler nor i recall, neither of us rule out the possibility of a brief conversation on that day, a telephone call or what have you, but it certainly would have been a transeventy because otherwise one of us would have recalled. >> just the way people argue with each other, you're very clear, you talked to go and settle, where as the notes made by julian pike with his conversation of tom crone, quite clear he said he went to think the options and that's not the case. that again raises the question about what these people are telling each other, whether they are being honest with each other if you are telling us the truth

spent by the mr. crone and mr. myler both testified to this committee, certainly mr. crone did, that he left that meeting with the understanding that they had the authority to go and settle. the authority they were seeking to increase their offer was something they left that meeting with. i don't know what the note from mr. pike is referring to, whether not mr. crone are mr. pike or somebody had to be gone but i just don't know. >> can i just got back a bit about your position, your responsibilities. you took over when -- was. [inaudible] moved over to "the wall street journal." and you were running a international operations for europe and asia at news corp. where you effectively executive chairman of news international? >> i was chairman of his international when he moved to new york to dow jones. and did spend time on the

business. and relied on senior manager put in place for some time. it was always the case that the company would appoint full-time ceo to replace mr. hinton. and it took about 18 months to get to that point. that was rebekah brooks? >> yes spent in september 2009? >> yes, although effectively i think was announced in the summer of 2000 and she started to play a much bigger role. >> so you were -- >> i think formerly the chairm chairman. >> not executive chairman? >> i don't recall. i may been the executive chairman. >> who was the de facto chief executive of news international before running the show before rebecca was appointed? >> we had an executive group, chief financial officer and

then, and i involve the editors more transparency. >> so you were an executive chairman? >> yes. i might have been but effective -- >> can i just come in this meeting on the 10th of june, the e-mail in its wide significance was not mentioned the fact that involve "news of the world." when you had this meeting did you ask colin myler, you know who taylor was? >> pardon me? >> did you? >> did you know who gordon taylor was? >> i don't recall if i knew he'd he was beforehand, but mr. myler would have told me spirit did you ask any meeting who the hell is this gordon taylor? >> i don't recall if i asked. i recall being aware of it at the time. what it was prior or maybe where

any meaning who mr. taylor was i don't recall spent do you know what he did for a living? >> i was told. as i just said to you to be clear, i don't know if i had a lot of knowledge about mr. taylor's role. >> the one thing that really, that really showed us and i think any 10 year old that the "news of the world" line did not stand up with the fact according to was not a member of the royal family or the royal household. so did you not say well he is not royal? >> i think the point here is not so much whether or not i was told gordon taylor was, but really what, you know, when i came to news corporation in 2007, what didn't happen was, i did not receive a briefing on all the matters in 2006, december 2007 i was aware that the editor had resigned over these things, taepodong to jail, one of them was a reporter.

the details involving the royal family, that was the royal reporter, those things were not brought to my attention spent you were authorizing a settlement, substantially above sort of damages what you see as they were talking about. and you are not even curious -- [inaudible] how can he pakistan's own? -- hack this man's phone? >> the original prosecution and that would not in terms of his being the royal reporter and it was a voicemail interception involving the royal family were not of my mind at the time. i was given a set of information that this was a case, it was an old matter, there was a question of, it was the same person

convicted before and so one who'd been working with the "news of the world" with mr. goodman, but mr. goodlatte i don't live was discussed at the meeting. and that there was a piece of evidence that would ensure that the company would lose the case because indeed the interception in question was only half of the company. that was information i was given spirit did not occur to you, did you ask? >> i don't believe so. i think it was known at the time that this was a voicemail interception that had already been prosecuted by the police and that the police had said there isn't anything more here. they shut their investigation and successfully prosecute the individuals concerned. >> i have a growly australian accent rattling around in my head at the moment that would take how much more is this person going to cost me question to you think your dad might've asked more questions than you asked for? >> i couldn't begin to

speculate. >> and you didn't come it didn't occur to you to sort of ask whether glenn mulcaire -- >> no, it was specifically said to me that he was doing this on behalf of the "news of the world" with respect to this. and that was the relevant, the evidence that was described to me. >> it's remarkably curious, are you so curious with all the other businesses you run at news corp.? >> i think it's important to be clear here is that the question, the questions were asked with respect is there evidence, what is the evidence about, is the case going to be lost? i was told the council provide acting within a range that somewhat recommendations were made. it was not as if there wasn't a conversation. it was not certainly a long conversation. in my view it was a settled matter. i was given very, very strong recommendation by senior and

experienced legal counsel, and the editor of the "news of the world." i think, unicom had been with the business for some time. and in industry for something. i had no reason to believe, nor was i provide any reason to believe that anything further was a foot in spent entrance of the opinion, either didn't occur or clearly didn't seem relevant to you even ask for a copy? >> i interested at the time and he was described to me at the time deleting counsel's opinion was with respect to damages. i was given an answer about the range of damages and what it would take to question with respect to what mr. taylor's requirements were, in terms of what you might want to settle for an have to do that. that was the discussion that was had and it was deemed sufficient. >> we do not at all curious whether they said anything else? >> singh as a told the qc had been passed on damages and it was described to me with a range of damages there were, it

didn't, it didn't occur to me to probe further. >> so you didn't even ask how long is this aqc's opinion, if it's a cute -- a few pages long? >> it was described to me that the opinion was made that it was with respect to damages and that there wasn't other things that but it didn't seem necessary for me to ask for a copy of it nor was a forthcoming. >> do you know how widely the qc opinion was to get a to get a? >> i did not know. >> do you know what it was a good are asked by rebekah brooks? >> i do not know. >> the e-mail was published of far, far earlier than our report in february 2010, published to shortly after the 14th of july, 2009, when it was disclosed to us. >> if it was in the newspaper allegation in 2009.

>> it was given to this committee by nick davis, the journalist. >> do you recall when the guarding produce that story and then a week later they came, the documents were published following our session, do you remember where you are? >> when a newspaper allegation was made i was in the united states. i was in idaho at a business conference. >> where you've been at the time based in london? >> yes, and i return to the u.k. the following week. >> did you ask for anything? >> my reaction was to understand whether or not it was true, that there were further allegations. and i asked, i received a telephone call from the u.k. i received a copy of the article and the allegations made, was asked is this true. went back to the news of the will to say, because they been, mr. koh and mr. myler had

answered the settlement that the answer came back very strongly that investigations have been made, inquiries have been made, previous investigations have been made and are, had uncovered no new evidence at all. the same assurances that you received in 2090 and, indeed, it was only well before i return to london, was only 24 hours after the allegations in december 2002009 emerged that the metropolitan police issued a statement saying that there was no new evidence and this was a matter of very serious investigation by a series of detectives and is nothing new to investigate. >> so when the story was published, but, you know, was published, you didn't even think about saying well, i'd better have a look at this, these transcripts that were mentioned to me previously? i'd like to have a look at the qc's opinion?

>> the transcripts themselves a? >> the e-mail. >> as you said, there wasn't much in the. i think there was, a facsimile of our something like that. sort of a redacted one piece. >> even in the middle of 2009, the executive chairman of news international, you are possibly the only person in london who still thinks that there's one rogue reporter and one private detective? >> as you are aware, mr. fairley, within 24 hours, the police issued a statement, and recall that the e-mail came from the police in the civil trial disclosure process, so the issued a statement saying there was no new evidence. >> bodmin spent but they said that the police had for longer than that because it had come from them. that there was no new evidence, that there was nothing new to investigate. secondly, the executives responsible were very, very

clear that thorough investigation had been done, and the company as i said earlier on in state testimony, the company relied for too long on assurances about thoroughness and scope and completeness of those investigations, as was the assurances of the police. >> let's move back to news international and reaction to some of these events. and july 2009 you said too quick and too aggressive in defense and when they talk about a thorough investigation, didn't happen because their investigation didn't even, honor the qc's opinion, which is pretty damned. cleanup you take responsibility as executive chairman for that failing. spent i think as i said, the company come and they do share responsibility as an executive,

senior executive in the company, relied for too long on very strong assurances from both internally inside the company around the quality, scope and authority of investigate have been made on an ongoing basis as was the 2006 in 2007, and also on the assurances from outside the company from the police who presume that more information and for the last word if you will on the investigations that they carried out and successfully lead to successful prosecution in 2006. and i have said that the company relied on those things to like and i have said i'm sorry for the. it's something that we're determined in how we operate a business going forward that we make sure these things don't happen again. >> -- [inaudible] pretty much repeated news international statements and said there was no evidence that "news of the world" instructed

third parties or others to access voicemails of individuals. you except now that colin myler, the editor, produced that editorial and the lead manager, tom crone believed that statement in the paper to be false? >> what i do know now is that in 2008 they had access to the leading counsel's opinion and other things. what conclusions they drew from that, and there are other things, is a matter that would be speculation if i got into that. and i think you have spent a lot of time with mr. myler and mr. crone, and i think also a matter for this committee. >> similar statements were made about our committee report in 2010. could i just very, very quickly deal with mr. crone and mr. myler who have taken issue with you, clearly mr. pike has already told us he knew that

people from news were not telling principally mr. myler and mr. crone as soon as they open their mouth. can't i just add something else into the mix here? as far as what mr. crone and mr. myler told us. originally, mr. crone told us as far as neville thurlbeck. i questioned neville thurlbeck then and i questioned the same subject at his position is he is never seen the e-mail nor had any knowledge of it. ..

>> i think that's -- with respect, i think that's a question for this facts or that was not as complete as it should have been, and i'm sorry for that, and the company is. this is -- it's not good, and it's something that i'm determined to make sure doesn't happen again. um, it is something, you know, the only thing i can speak to with respect to the evidence, and i made a statement to this effect, is, that, you know, assertions made about my knowledge were wrong. >> mr. krone also said when he came back for the first time, that's you, realized that news of the world was involved, and on that basis he authorized a

settlement. he couldn't have been more cat goeric. again, how does that reflect on -- >> could you repeat that piece -- >> yes, came back to the committee to say of the settlement organization for the first time he -- that's you -- realized "news of the world "was involved, and that involvement involved people beyond clive good match. on that basis, he authorized set m settlement. >> there's a lot of might have known and should have known and this and that. what never happened is mr. crone and mr. myler showing me the relevant evidence, explaining the relevance or talking about wider spread criminality, the queen's council opinions, all of these things. that simply did not happen. and people can suppose that i might have understood, but at the end of the day, those things were not provided to me, and as i said earlier, i was given sufficient information and only

sufficient information to authorize the increase of a settlement offer that mr. crone and mr. myler had already been eagerly increasing before it came across my desk, and that's what i received. i received nothing more. >> i'm just drawing a conclusion, so just to be absolutely clear, if mr. myler's telling the truth, you're not telling the truth. if you're telling the truth, they're not telling the truth. >> mr. farrelly, it's quite interesting. there is a lot of supposition in it. i would have known, they understood me to know, all of those sorts of things. what they never did was clearly tell you that they showed me those e-mails. they never clearly told you that they discussed with me the real significance of the queen's council opinion. they never went that far. it was very cob fusing and muddled -- confusing and

muddled, to be honest with you. but i think it's for this committee to decide the quality of the evidence and the testimony that it's receiving, not for me to prejudge that. >> right. my final question is given all the evidence that was clearly there within news of the world, given the close your and given the loss, do you think you handled this competently? >> um, i spent a bit of time, quite a bit of time refleblghting on my own decisions, my own behavior and the company's behavior more generally in this, in this matter. for the time where i had direct responsibility, um, as you put it executive chairman, i think it might have been executive chairman in title, we don't focus that much on titles, but for that time in 2008 and

leading up to the middle of 2009, i think with respect to the settlement, for example, i think i behaved reasonably given the information that i had. i do think the company -- and i share in the responsibility for this, and i'm sorry for it, the company took too long to come to grips with these issues with understanding what had been done and what had not been done in 2006 and '7 with respect to its own investigations. and understanding how to dispassionately look at what were perceived as attacks as opposed to legitimate criticism from the outside. and i think part of showing that responsibility and part of taking responsibility is also making sure that those things don't happen again and making sure that the quality of the business that i see with my colleagues everywhere around the world from my colleagues in hong kong to milan to munich and new york and california just to name a few, a huge and great

organization that clearly in this instance has failed to come to grips with something important. and part of taking responsibility is making sure to sort that out. >> yes or no, do you think the whole, this whole saga and your evident lack of curiosity in asking questions that were screaming to be asked show you to be competent or incompetent? yes or no? >> no, i don't think it shows me to be incompetent. and i don't think, for the record, that i would characterize it the same way you just did. >> can i turn to -- [inaudible] >> i apologize, but i'm going to have to leave the committee meeting after my last question. we have two from the same age, i think, and i have to go back home and pick them up. >> oh, good. good luck. >> when your father appeared before us in july, he promised to take under review news corporation's properties all around the world. to your knowledge, how is that review coming? >> there are a number of

activities underway. they are, some of them, discreet to different regions, so the newspaper businesses in the n if australia, for example, have undergone a review of editorial practices and so on and so forth. as you know, i think, and as we've informed this committee, in the u.k. the company has set up an independent management and standards committee reporting to the independent directors of the board, and that review of editorial practices proactively and to all of the titles, not just the "news of the world," is well upside way and a lot of detail. and i hope that's concluded early in the new year, although it's being managed separately to the business. as i mentioned earlier from a corporate perspective and from a governance and compliance perspective, we're making the changes we think that will, hopefully, insure greater transparency around things if

they do go wrong, but also insure the disciplines and really the prioritization of some of the matters around transparency up and down the chain of the business. so i feel they're coming along well. i don't have perfect knowledge of the management and standards committee independent review, nor should i as an executive involved in this business. i think one of the real lessons learned here as well is to avoid allowing, for lack of -- [inaudible] allowing the newsroom to investigate itself, and i think having ip dependent eyes and having a stronger and more proactive, um, to the corporate presence when things are raised or when an alarm goes off, i think it's something that is one of the key lessons that we've learned. >> thank you. in advance of the australian government's inquire ri into media standards over there, is the resignation of john hartigan

yesterday, to your knowledge, related either to phone hacking or to any unethical practices -- >> no, i'm not involved in the australian part of the business, but i would think certainly not glflt okay. to your knowledge, how many other international newspapers have been hacking e-mails or phones other than "news of the world"? >> the management standards committee, the investigation is underway, and i really don't want to prejudge the outcome of that investigation. it's an important investigation, and if there is evidence that's found, there will be matters of criminal informations as well -- investigations as well. as you know, a journalist at "the sun" was arrested recently which is a matter of great concern, but i also think it shows how seriously we're taking these issues, and the company is working, you know, determinedly to provide whatever information there is to the police in those

instances. but in that matter, that is the matter of a criminal investigation, and i shouldn't talk too much more about it. >> i wonder if you could, i might ask if it'd be in order for you not to say which journalist, but which paper if news international, to your knowledge, has been involved this -- because that wouldn't prejudice -- >> at this point, i have no knowledge of any of the other papers being involved in the hacking of phones, but i don't want to prejudge the management and standards committee's work, nor have i seen all the work their doing. >> okay. i asked you if you were aware of the allegations that phone hacking had been hacked on american soil, and you said you were not aware of any such allegations. since that time mr. martin lewis, the hour for the victims, has told us he is representing victims who were hacked by news international journalists on american soil. what do you know of that matter

today? >> um, i know that it's a matter of activity for the management and standards committee, they are looking into that and cooperating with the police here and the investigations that are ongoing as well as with any matters in any other jurisdiction with respect to activities at the u.k. newspapers, but i have no knowledge of the veracity or substantiveness of those allegations. >> so you still have no knowledge, you stand by your earlier testimony also that you have no knowledge that 9/11 victims or their families were hacked by news corporation? >> that's correct, and i think a loot of investigation and work has been done on that summit, and so far there's nothing to say that confirms it, as i understand it. >> so far you were coming up empty. it would seem that, at best, mr. tom crohn misled this committee in his most recent evidence. in answering questions from my colleague, tom watson, the

exchange went as followed: mr. watson, did you arrange for the phone hacking victims to be monitored by -- >> mr. crone, no. mr. watson, have you ever received a commissioned report from civil case lawyers that involved private information? mr. crone, let me just think about that last question. i may have litigation, certainly not in the last few years, but a long time ago maybe i might well have used, i probably did, in fact, use private investigators. is it not, in fact, the case, though, that many crone instructed news international's solicitors as recently as may 2010 to look into the personal relationship that may or may not have existed between mr. lewis and the lawyer, charlotte harris, also representing victims of phone hacking? >> i can say that, um, mr.crone

and another news of the world employee at the time did engage certain private investigators. the details around it i'm not sure as you describe it, but to surveil plaintiffs' lawyers, and i want to say for the record it is appalling, it is something i would never condone, and the company should never condone, and it's just unacceptable. >> when did you discover the lawyers of plaintiffs had been put under surveillance? >> very recently. the last few weeks. and i think it's important to say that was absolutely not a corporate activity that was condoned, and it's absolutely not appropriate, and mr. crone and the other person did not do that with any authority or knowledge by me, and i would never con tone that behavior. >> does your internal review of the record suggest that mr. crone authorized that surveillance on victims'

lawyers? >> there was surveillance that was done by mr. crone and another executive at "news of the world," and which private investigator and what bits between them i don't know, but they were involved in that. >> are you aware that mr. lewis' family was trailed by private investigators including his 14-year-old daughter, and would you agree with me that that is completely dispick bl and has absolutely no place in the practices of -- >> i totally agree with you. if it's the case, as i just said, the whole affair is just not acceptable. >> are you aware that private investigators investigated my colleague, tom watson, and other members of this standing committee and the predeaccesser standing committee during the time they were making their investigations into your company? >> i am aware of the case of surveilling mr. wattton, and

under the circumstances i apologize unreservedly for that. it's not something i had knowledge of, and it's not something i think that has a place in the way we operate. i think it's important to note that certain surveillance of prominent figures in investigative journalism is acceptable, but in this case it's absolutely not acceptable, you have my apology on behalf of the company even though it is something i didn't condone, wouldn't condone and don't agree with. >> i'm sure mr. watson will have some follow-up questions on that later. but can i put it to you, mr. murdoch, that it seems every month if one is following the hacking scandal here in the united kingdom, there's revelations about unethical behavior from news international executives, the latest being the scandalous revelation of surveillance on the lawyers of victims, on the families of lawyers of victims and on members of the select committee

investigating the company. you've spoken repeatedly here today and made reference to the review of practices in news international about the need to clean up your act, how proactive the company is trying to be. would you agree that it would be better for news corporation to get out in the open every unethical practice that is yet to come to light and, therefore, avoid the drip, drip, drip of incredibly damaging revelations which seem to come out week after week, month after month in relation to this scandal? >> i think, um, i hi it's important to note that much of the disclosure around, um, these activities around police payments, around phone hacking, um, really started to come out as we came to grips with this, and much of the disclosure has actually been disclosure by news corporation and news international first of all with respect to the initial disclosure around a journalist who's since been arrested in january of this year that led to

the restarting of the police investigation into the news of the world and into the phone hacking pieces with the disclosure of sufficient evidence that we thought the police should open an investigation into police payments as well. that was something that was there that we didn't know about previously, and when it came to light, we acted very, very quickly. and i think since the end of 2010 the company as it has found things out and discovered the extent of what has been isn'ted of happening -- is suspected of happening, we've sought to be as transparent as a company can be. and, certainly, that is the posture of the business, of the executives of the business, of the management and standards committee and at the board level of news corporation that to the extent that we can be as transparent in as timely a way as possible as to any behavior that is unacceptable, um, or illegal, that, um, we are seeking to deal with it.

and we're dealing with that with full cooperation with the police investigations that are ongoing and with being as transparent as we can given that there are criminal investigations ongoing and judicial inquiry with any other inquiries that come through. >> so just to be completely clear, obviously, you will need to clear all this with the police so that you don't prejudice ongoing criminal investigations, but with those matters which the police allow you to release, as the leader of the company, mr. murdoch, will you guarantee to this committee that you will publicize every nefarious practice that has happened in your company and allow it to be exposed in other media outlets? will you not come forward and admit wrongdoing where you have evidence of it and where such a mission would not prejudice the police investigation? >> i think, first of all, i just want to be very, very clear about the corporate governance structure we've set up recently

around these matters, that the disclosure of information both alongside with the police, to the police is something that is a matter of utmost importance to the management and standards committee, and the independent management and standards committee is responsible for the information and disclosure around, um, judicial inquire ris, new press practices, so on and so forth. it's my responsibility to be as transparent as possible which is why we asked in april of this year when the company admitted responsibility to wider spread phone hacking set up compensation funds, apologized unreservedly to victims of those voicemail interceptions. we've asked repeatedly for information to come forward that can help us get to the bottom of this to underscore the issue and move forward in a way that is as transparticipant and appropriate as possible. >> when mr. myler appeared before our committee last, i put it to mr. crone then that his

credibility had been dadged. it's also going to be further damaged by the revelation he said he did not authorize surveillance on the victims' families and lawyers when clearly he did as recently as may of 2010. since your answer to me shows that news international did know that tom crone had authorized this surveillance, why did you not write to the committee to alert us the evidence given by mr. crone in september was not true? >> my understanding that this information came to news international's attention very, very recently, in the last few days or weeks, and it was something that was not known to us and confirmed, is my understand. >> so you would have done if you knew we had been misled, you would have supplied that to the committee? >> i'd have to -- i don't know exactly when ohs in the company

became aware of it or our legal counsel and so on, but again, you know, those are the matters to december close before this committee i've tried to be as complete as i can in sending you documents and things that we've understood and found out since my last system. >> i'm sure you would agree that only news corporation can clear up this matter. i wish you luck in pursuing your ethical review of the company. thank you. >> i think given the line of questioning, louise has allowed tom to come in. >> be aware that the convicted private investigator -- [inaudible] prince william original inquiry, and this week we found out that the private investigator derek webb taunted prince william. you will probably note that the private investigator jonathan rees targeted these one friend of prince william in 2006, is that right? >> i wasn't aware of that particular piece, but i may have been, i don't recall. >> i know that because i've got

an invoice from news international's fly company limited from jonathan rees regarding that. could i ask that you check out your company e-mails and let us know when jonathan rees was contracted to work for the company when he came out of prison in 2005, how long he worked for the company, what he did and who appointed him? >> i don't want see that there's any reason why we couldn't share that. i think it's been shown that he worked for a number of news organizations including news international. >> he worked for a number of news organizations in the late '90s, and then he went to prison for a serious crime. he got a seven-year sentence. when he left prison, he was then contracted to work for what we now know is news international supply company limited and did a number of work for the company. and if you could check the -- >> absolutely. if you provide us with that, we can check that and come back to you.

>> are you aware of any other private investigators that taunted prince william? >> i'm not aware of any other private investigators. >> [inaudible] >> it's the first time i've heard that, so -- [inaudible conversations] >> and alex layton. >> if you'd like, mr. watson, perhaps you could write to us and we could go through all of that -- >> i'd like, given that we're talking about private investigators, i would like to ask you now. could you, also, examine the activities of the private investigator barry -- [inaudible] >> i'm not aware of the individual identities of private investigators were used. perhaps, mr. watson, it'd be helpful to just clarify one of the things the company is doing around this. the use of private investigators clearly has been, i think, in the industry and by "news of the world" too widespread, and i just apologize to you and to the other members of the previous committee as it was described to me for what was inappropriate.

it seems to me. one of the key changes we put in place over the last year is that the use of private investigators in particular is severely restricted by the journalists at news international and, in fact, no private investigator, um, under our new guidelines and new rules around this can be, um, hired. or contracted by a newspaper without the editor going to the chief executive of the company for approval such that the use of these private investigators doesn't get out of happened and is only finish out of hand and is only in the extremist for appropriate public interest purposes. >> well, under the circumstances, mr. murdoch, i'd like to say that's a great relief to me. >> well, i'm glad. [laughter] [inaudible conversations] >> are you aware of the serious organized crime agency investigation code named operation millipede? >> operation -- no, i'm not aware of that. >> did you -- i won't go there, don't worry, i'm just asking if he was aware. can you let me know whether the

company admitted liability to e-mail hacks during any of for settled civil cases? i'm thinking of taylor or clifford. >> i don't believe so. i'm not aware of any of that. >> if you subsequently find, could you go back and let us know if that's the case if you did accept liability? >> i'll consult with counsel about that to, hopefully -- but i'm not aware of any computer hacking that you've talked about in the past. >> whether that's a yes or a no. >> would you like me to talk to them now, or can i write to you at some point in the future? >> we've got a bit of time, yes or no. >> where is -- they'd like to get back to you. if they did, they're not aware. >> a few weeks ago -- [inaudible] told me he would investigate

allegations of computer hacking. has he started with you? >> no. he has oversight for the work of the management standards committee is doing, and i understand it's being pursued with vigor. >> are you aware that ian hearst has now had it confirmed that he's a victim of computer hacking? >> no, i'm not aware of that. >> and that 16 associated with him have had their e-mails read? >> i'll advise you, you are straying into areas -- >> okay, okay. this is about me. >> [inaudible] >> you may be aware or may not be aware given the line of questioning that operation -- [inaudible] contacted me last week to say that my name appeared on seized electronic advances, and they need more information to rule out me as a victim myself. are you aware of that? >> i have no knowledge of that. >> okay. um, i thank you for your apology

on behalf of the company for the surveillance undertaken by derek webb. key bring to your attention a conversation i had with another senior member, former employee of news international on this matter? asked me to allow him to remain anonymous about the consequences. he said to me in registration to the original -- relation to the original inquiry of members of this committee, dig up, you know, as much information as you can on the members of the committee. do you know who might have sent out that dictate? >> no, i have no knowledge of that. >> he said to me about rebecca brooks, you might find this amusing, you might not. he said, she didn't like you at all -- that's me -- she took an absolute pathological dislike to you. she saw you as a person that was -- she saw you as the person that was threatening. did rebecca brooks discuss my

line of inquiry on investigation with you? >> not that i recall, no. >> he went on to say to me, she tried to smear you as being mad. she was saying to blair, you've got to call this man off. he's mad. don't you realize he's mad? did you discuss the inquiry or do you know whether rebecca brooks discussed the inquiry with tony blair? >> i certainly had very little to do with the former prime minister, and i had no knowledge of discussions with him about this or other matters. >> okay. >> [inaudible] [inaudible conversations] >> well, okay let steve sinclair in, if we can just wrap up. >> did the lack of appropriate corporate golfer nance give a false sense of security that are news international was -- [inaudible] >> i don't quite understand your

question. i don't think there's a -- i wouldn't say that there's a lack of appropriate corporate golfer nance. i think we had an instance here -- in. [inaudible] >> we've tried to strengthen a number of procedures, but, you know, from the governance perspective, there is, you know, we -- i wouldn't call it failure of governance. i think there's a failure in transparency. we had individuals who were not making transparent information that was relevant and could have been more consequential to a higher level and what i tried to do is strengthen some procedures around that to make sure there's more traction participant si there. >> i didn't want mention failure or -- >> my apologies. >> you said earlier you want today strengthen it so, obviously, there must have been some flaws in the corporate governance. is it not the case that you failed the show the agency or the will to deal with unethical practices because, quite frankly, successive chief executives since 1989 have

believed they could do whatever they wanted and get away with it? >> i can't possibly speak to what chief executives in the past had believed what they could do and what they couldn't. i can say that as soon as evidence came to light to me, unequivocal evidence around wrong doing, this company has moved with determination and with vigor, um, to sort this out. and i think it's very, very important that the company takes responsibility for what happened with respect to liability with victims of illegal voicemail intercepts which the company did and i fully support as well as move to make whatever changes are necessary and pursue with vigor whatever allegations arise to make sure that people who are involved in wrongdoing are held to account and we aid the misto do that and, b, that we make sure to the extent at all possible that these things don't occur again.

and i don't want think that there's been -- i don't think that there's been a, certainly not in my experience in the company that anyone can untouchable actually. what we want is a business and we want to be a business that is a business we aspire to be where we are doing the good work of serious journalism, of serious creative endeavor outside of the other businesses and that these things don't happen in the future. >> do you understand the significance that the data of 1989? is. >> pardon me? >> [inaudible] >> no -- >> do you understand the significance of the date i gave, which is 1989? >> i think i know where you're going. >> okay. do you want me to -- >> yes. well, are you referring to the hillsborough -- >> of course i am, absolutely. it's the case that the -- [inaudible] 1989 because that was when "the

sun" newspaper published lies about the -- [inaudible] disaster under the banner headline and what the question i'd like to ask -- answer is the fact that "the sun" got away with telling outrageous lies in 1989 lead news international to believe they could do whatever they wanted without reproach? >> all i can say about that, and i'd like to say it clearly, is that, you know, i'd like to add my full apology to the wrong coverage of that affair. i'd lake to add that voice -- like to add that voice the chief executives of "the sun," i'd like to add my voice to that as well. it was wrong to do so. it was 22 years ago, and i was far away and a much younger person and, obviously, no involvement or really proximity to it, but i've since looked at it.

i'm aware of the concerns and the hurt that it caused, and it's something that is something we're very sorry for, and i am as well. >> in the public interest -- [inaudible] >> certainly not. >> okay, then. you mentioned that a journalist at "the sun "had been arrested earlier. did employees commission phone hacks? >> it would be inappropriate for me to comment on any of the circumstances around what was provided by -- >> no individuals, just -- >> i shouldn't probably comment on the charges or anything like that either. i hope you understand. >> are you aware that the sun appeared in the evidence file of convicted -- [inaudible] glenn walker? >> i was not aware of that. >> okay. this particular publication is indicated in phone hacking, and if it's revealed that the sun does appear nor the file, will

you close this paper like you did with "the news of the world"? >> i think it's important to not prejudge the outcome of any investigations, nor is it, i think, appropriate to prejudge what actions the company might take -- [inaudible conversations] >> pardon me? >> can you rule it out? is. >> i don't think i can rule any corporate reaction to behavior of wrongdoing out. that'll be a decision made at the time given whatever is out there. it's certainly -- i don't think it'd be right, but i think it's important not to prejudge any outcomes from these investigations that are important police investigations, and they're important internal investigations that we're proactively pursuing so make sure that our papers can be as good as they can be and that they continue to perform the important role that i believe they have in their commitments.

>> thank you. [inaudible] >> mr. murdoch, you've now seen the opinion of -- [inaudible] if any employee had seen it according to your code of conduct within news corporation, should that have been reported, and to whom? >> i think, um, i'm not, i'm not aware of the requirement in the code of conduct with respect to legal counsel being received and who it must be shown to and not shown to. i would say that given the allegations or given the findings and the content of that opinion, it certainly would have been appropriate for it to be shown to more senior legal come in the company -- legal counsel in the company as well as away from "news of the world" as well as in full to me, for example, and others. >> okay. um, so far you've observed that you did not see the opinion and, certainly, not briefed on the full contents of that.

>> that's correct. >> i cannot find any evidence that says mr. myler saw the opinion or was briefed on the full extent of it. but something's happened between 2008 when it's clear, certainly -- [inaudible] because he was amending it. and also a strong suggestion that mr. crone certainly saw it. nobody else seems to be made aware specifically of certain allegations. however, 18 months later there is so much evidence that it is brought to the attention. so who brought it to your attention at the end of 2010, this whole business of si yen that miller and all the other -- [inaudible] was it tom crone that came forward? >> it was a matter -- no, first of all, there were a number of civil actions that were, um, that were following their process as it went through. and it was certainly in the second half of 2010 that the

company -- and i was not at this point involved in the day-to-day management of the company. the company started to grapple with this. the company went and proactively requested both the police and the newspapers that were reporting this, i think it was refer today as a "drip, drip" of allegations of the evidence that they had. up until the end of 2010, the police still asserted that there was nothing new that they saw worthy of opening up a new information. but, certainly, the company and the management company decided that if evidence emerge inside the civil cases that was sufficient to warrant further investigations, that it would react on that. and the company did. i don't recall who came to me precisely to discuss that, but it was a matter of discussion amongst a number of senior executives at the end of 2010. >> could it have been -- so you said no to tom crone, could it

been mr. myler or rebecca brooks? >> mrs. brooks was certainly involved in the, in those activities. she was running the company until the summer of 2011. >> just going back to the transcript of julian -- [inaudible] on the 27th of may, it's already been read out largely by mr. watson. talks here about didn't believe culture in the newsroom, we've already had that discussion. how the investigation, were you made aware of the outcome of that investigation into those three individuals? >> i received throughout the period in 2009 onwards after the allegations came out in the newspaper, i received repeated assurances that internal investigations had been conducted, um, that they were thorough, that they concluded there was no evidence whatsoever of wider spread phone hacking, and this was something that was repeated, i know, to you, to

this committee in 2009, and those are the same assurances that i was being given as well, also by the public statements, um, of the police at the time. >> um, further in that notice there's e-mail from members' staff, nothing is written about it. is it possible for you to give us some assurance or at least go away and make sure this happens that such evidence has been present today the police? is. >> certainly so. my understanding is that the police, first of all, cooperation with the police and providing them with everything that the company can as they require is paramount, and that's very, very important point to make. >> [inaudible] >> with respect to what the particular document he's referring to, i can't speculate what it is. >> no, i -- >> i isn't it is the evidence we've been discuss anything the this committee. >> yeah. although, unfortunately, julian did not make that specifically clear. however, just turning to financial governance, i think i discussed this with you in july.

with the evidence you sent back to us, you talked about how the editor hat a 50,000-pound limit, but any cash payments required the editor. is that still the case, or are there alternative arrangements? >> actually, one of the changes we've made is significantly tightening up cash payment requirements to the extent that for a period of time they were banned in the company, and as the new chief executive and the management and standards committee work, work through that with the editors in terms of what sort of petty cash arrangements should be made, um, those things have been adjusted a little bit. but the cash payment terms are dramatically tightened up, and i think, um, are, you know, rare at this point if at all. and be i'd be very happy to send you the policies and guidelines that have changed as well as when the management and standards committee's recommendations are finalized after their investigations are complete, we intend to, you

know, be very transparent with respect to both practices and a code of conduct with respect to journalistic practice, but also things like cash payments. >> well, building on that, sounds like you have made some changes, so it could be fair to now suggest that there is control perhaps on maximum amounts that be paid out by a certain person to a certain person -- >> very much so. >> -- provided the evidence back in july, i think, you suggested limits. >> i think right now there are very strict limits. i don't have them at my finger tips the exact number of those limits, but not only are there limits, but actually the number of people who can make cash payments and authorize them has been restricted dramatically. >> okay. thank you, mr. chairman. >> [inaudible] >> thank you very much. i've got, i want just to ask a final question on mr.-- [inaudible] and his legal costs of damages which i raised when we last met.

just before that, chair, this whole inquiry is really about this committee being misled for, essentially, what news international knew, who knew it and when did they know it. as part of what you call an aggressive defend on the 28th of february in reaction to our record in "news of the world "editorials, tom watson was not called mad, he was called a top -- [inaudible] and i was a former journalist on the observer mainly pursuing an agenda for my powers of the left-wing rag. sadly, the victims here are you, the public. well, how true is that? um, but very quickly after that appeared, um, the next big settlement was with max clifford in march 2010. chair, this is a about what news international knew, who knew it and when they did. you were the executive chairman then, but rebecca brooks was the chief executive.

were you involved in the, in the million pound settlement with max clifford in any way? >> i was not involved be the making of, with the arrangements with mr. clifford. i was informed of them, but in very general terms. but i was not involved in that, and at that point i was not running the business day-to-day. >> but you were the chairman. >> yes, i remained the chairman. >> did anyone come to you for the went fit of your experience in -- benefit of your experience in having settled the previous case? >> mrs. brooks did discuss the settlements or the arrangement with mr. clifford which was a commercial arrangement, i think, for services in the future, but not in any great detail. >> she didn't seek your authorization, did she seek your views? >> no. it was discussed with me in general terms but not with full day-to-day responsibility. she could make those judgments. >> and did you know who max

clifford was? >> yes, i was aware who max clifford was. >> did you ask -- [inaudible] >> the question with mr. clifford, there had been a previous commercial areapgment some years earlier with mr. clifford, i was told, which was around publicity for the client or the like, and it was desirable to enter into an agreement like that for the future. that would be a good thing to do with mr. clifford, and with respect to any specifics about the litigation, it was just seen as rather you take a commercial arrangement with mr. clifford going forward which was in both parties' interest, and rather than have an acrimonious litigation, i wasn't -- >> i've got this australian voice rattling around in the back asking how, how much is this going to cost me now? and in the future? were those, those questions weren't asked by you at that sustaining?

>> i think it's important to remember, and i believe this is the case that mr. clifford was, again, one of the original counts of voicemail interceptions that mr. moll care had been convicted of. so it wasn't at that point a new piece of wrongdoing or anything like that. and, in fact, i'm not aware of the details and ins and outs of that case one way or another. i simply wasn't involved in the legal strategy -- >> do you remember whether these four particulars of claim on the "news of the world "-- >> i wasn't involved -- >> i know it's confidential, but could you just confirm whether you did serve a claim or whether it was just a threat? >> i can discuss with counsel and come back to the committee whether or not that's appropriate or confidential. >> and do you know whether you went through the same process as with the, with the gordon taylor settlement of seeking outside opinion? >> i'm not aware.

i wasn't involved directly -- [inaudible] >> could the company confirm whether that was a process and whether there is a qc's opinion? >> we can certainly write to the committee about what details are appropriate around mr. clifford. i'm happy to do that. >> just on the basis of what the company knew, who knew be it and when they knew it. um, would you consider a request from the committee that if there is a work -- qc's opinion no doubt checking with mr. clifford to preserve any personal detail, whether that might be released to us as the silverleaf opinions has already been released to us? is. >> i think in general, mr. farrelly, it's probably wise, um, not to go down the path of routinely waiving privilege on legal advice around matters of litigation, matters involving individuals, matters involving the company. um, that said, i'm happy to provide you -- i'll go back to come and to the company and say,

you know, what can we, what can we provide with respect to details around the mr. clifford arrangements, and i'm happy to write to you on that basis, but i don't want to make any particular commitment -- >> we'll follow up in a let or. now finally, following our last session you -- mr. murdoch sr. said that, effectively, it was wrong to pay legal costs, particularly issuing an apology to the family whose phone he'd so cruelly hacked in the circumstances. you then came out and said that those legal costs were being stopped, but subsequently confirmed to us in a letter that any damages that are awarded against glenn mull care, the company will stand in good for. >> i think, and i'm not a lawyer, forgive me, mr. farrelly, but i think there are

questions where with respect to him being a co-for the and were to be a case or a damage award against him that he was conducting work on the company behalf, then really the company's liable for those things, is my understanding. and, again, i can provide more detail on that if you like, but i think there's a legal point there. and i'm not a lawyer, but there's a legal point there that is -- >> i'm sorry -- >> -- worth noting. an agent on behalf of the business. >> if he's -- [inaudible conversations] >> thank you. >> if he is where he can't pay his costs and, therefore, he can't man his defense, if he is sued and the court just makes an award against him, that is an award the court make against him and not you because you will also be in the dark with the claim, and a separate award may be made against -- well,

certainly, will no doubt be made against you. if you're backing him on any awards against him, we're back to where we were before the july committee. you effectively are making good an indemnity. is that right or wrong? >> i think, um, i don't want -- with respect, mr. farrelly, i don't think that's the right characterization. i think the word that i didn't, that i didn't want know but dr. coffee is right, this notion of vicarious liability is right. the matter of law and the courts and the question of paying for the defense is one thing. there's a question of the court awarding damages and the company being vicariously liable for those things is another. again, it seems like we're engaging in legal speculation -- >> i don't want, i'm sure you are engaged in legal speculation because i see your lawyer nodding in unison with you. but we're back in the position where you will be effectively supporting the man who hacked millie dowd's phone s. that

right or wrong? >> i think your characterization, and i'm happy to come back -- i don't think your characterization of our supporting mr. mullcare is right. the management this committee has taken into review legal expenses of various people armed these matters, has taken a view to cease paying legal expenses as my father, when he testified to you in july, indicated. the question of what legal issues there are, in the event of future litigation, they are ones that i couldn't possibly comment on. >> okay, my final, final question on this, um, there are over 5,000 names that are now being looked at in the notebooks. any amount of whom might sue news international and glenn mullcare. what will be the test for news international as to whether they

pay any awards? will it be just his word that somebody authorized, or will he have to satisfy a test, leap a hurdle to prove that, actually, there was authorization for the company for that particular hacking he did or whether it was just off his own back? will you discriminate between different cases in terms of standing behind mr. mullcare? is. >> the company has set up an independent process, i think as you're aware, mr. farrelly, to deal with civil cases coming through, and sir charles grey has an independent person, a former high court judge, as i you said it, is setting up a process to deal with claimants coming through. >> i'm talking about the courts, not charles grey's -- >> yes. so there's a number of test cases coming through over the next number of months, i believe, which will give, i think, the judge dealing with this a sense of what the damages

number will be in these cases, what the ranges are. and then if company has admitted liability where legitimate claims are made, and this is a question of the independent management of these cases and the company to judge what claims are legitimate and what are not, um, with respect to voicemail interceptions and then the settlement procedure will then take its course. >> final question -- >> i'm not aware of -- >> should a case come to court and not be settled out of court, is it your position that in all circumstances no further questions asked you will pay any award made against glenn mullcare, or will you be more discriminate? >> i think every case has to be seen on its merits, and that's the -- and i think that's the appropriate way for the courts and the company to proceed. >> i think we have finished up. i thank you for your attendance. >> thank you, mr. chairman.

>> ben bernanke visited kasich k military base in el paso, texas today. that is next on c-span. then eric cantor talks about the economy and jobs. on washington journal, we will look at a number of military issues. jeffrey buchanan talks about the transfer of power to the iraq government. then ray kelly. a conversation with andrew tilghman. later tomorrow morning, we will

take you to arlington national cemetery for a veteran state ceremony. our live coverage gets started at 11:00 eastern. >> in his new order by -- autobiographical novel autobiographicalkarl marlantes. "i started telling discussion about my symptoms. jumping out and the middle of the night and going outside. the car would haunt the behind me. i would get angry and attack the car behind me. he said, have you ever been in a war? that hit me so hard. i am in the middle of the room with 80 people. i started bawling. s not was coming out of my nose.

when he finally got me back into some semblance of control, he said, you have ptsd. have you ever heard of it? >> federal reserve chairman ben bernanke talks to u.s. soldiers about the economy and the importance of financial literacy for veterans. he was at fort bliss in el paso, texas. this is about one hour. >> good morning. how are we doing this morning? we have quite a treat this morning. a unique opportunity to engage with and talk with the chairman of the board of governors of our federal reserve system. unbelievable. this is actually his first visit since becoming the chairman of the federal reserve.

we don't this job is pretty tough. i don't you will have a lot of questions to do with the economy. -- i know we will have a lot of questions about the economy. he was an economics professor at princeton and stanford. in 2006 he was chosen by president george w. bush to be the chairman of the federal reserve board. as chairman, that is four years. he was just renominated last

year in 2010 by president barack obama. showing the bipartisan nature of his job. just a quick little about our federal reserve system. as you know, the federal reserve bank is our central bank. it is the bank of our central government. there are 12 regions. luckily today, we also have the president of our regional federal reserve bank in dallas, mr. richard lee fisher. it is good to have you. a -- our federal reserve has three or four general areas. one is conducting our monetary policy as a nation. the regulating -- supervising and regulating our banking institutions. maintaining the stability of our financial institution.

providing financial services to our lending institutions, the u.s. government and foreign institutions overall including playing a major role in operating the nation to talk payment system. as chairman, dr. bernanke with the president, the secretary of the treasury and testifies in front of congress. he is a major player in the world economy. in addition to visiting us here, he also took the time voluntarily to greet our soldiers coming back from iraq this morning at 3:00 a.m.. he thank you for that. [applause] we just appreciate you being here. let's give a big texas welcome to dr. ben bernanke. [applause]

>> thank you, general. it is an honor and privilege for me to join the men and women of fort bliss today. as somebody who puts a high value on public service, i want to thank the soldiers for helping to make the world a safer place. i admire your professionalism and dedication. i want to thank your family members as well. service members could not achieve what they do without the support and sacrifices of their families. he should all be proud of what you accomplished and what he stands for. you may be wondering what the chairman of the federal reserve is doing traveling to a army base in texas. as part of much of my meet regularly with all kinds of groups with different backgrounds and experiences on the economy. i tried to explain what the fed is doing and try to see what people are understanding. i think this is a good opportunity for me. i know that people in the military service are facing lots

of challenges. your home towns may be struggling with foreclosures. you may have difficulty getting a loan to buy a car or house. you may have family members finding trouble to find employment. he may be working -- you may be worrying about your own job prospects when it comes time to leave the military. i appreciate these concerns. i thought i would spend a little bit of time telling you what we are doing to strengthen our economy and increase opportunity. i also want to make sure that you are aware of some special plants are protections for people in the military. just this tuesday or earlier this week, i met with the office of service member affairs in the financial protection bureau. we share a common commitment to ensuring the men and women who protected the security of our country are protected from predatory financial practices. i will also share a few thoughts about what each of you can do to

give yourselves the best shot at a promising financial future. two words about the federal reserve. at the federal reserve, we are working hard both as the central bankers and as financial regulators to help restore our mission to talk prosperity. in 2008 and early 2009, he world suffered the worst financial crisis since the war great depression. had it been left unchecked, it would have resulted in a financial meltdown and collapse. working with policymakers it around the world, a federal reserve acted creatively and and forcibly to help stabilize the financial system. our economy has been growing adding jobs for more than two years now. for a lot of people i know, it does not feel like the recession never ended. the unemployment rate remains fairly high. more than two fifths of the unemployed have been out of work

for six months or no. these problems are very serious. we have been focusing on supporting job creation. supporting job creation is half of our marching orders. in the language of the law that sets the mandate for monetary policy. the federal reserve is to seek maximum employment and crisis stability. we pursue these two important goals by influencing the level of interest rates and other financial conditions. my colleagues and i on the federal reserve committee equipped price stability with inflation being asked supersensory bit less. that rate is low enough that people can make financial decisions without having to worry about rising costs but high enough to keep the economy away from the flushing, falling which is of course his pride

that is both because and a symptom of a weak economy. spikes in oral and it food prices, the push inflation up earlier this year, inflation appears to be moderating. based on the best information that we currently have, we think it will remain -- close to our projection of 2% for the considerable future. in the longer term, monetary policy is the main determiner of inflation. we have considerable latitude to choose our inflation goals. in contrast, maximum employment -- the other half of our mandate depends on many factors outside of the federal reserve to talk control suggests skills of the -- my colleagues estimate that to the u.s. economy could sustain an unemployment rate of somewhere between 5% and 6%

without a buildup of inflation pressures. regardless of whether this rate is 5% or 6%, with unemployment at 9%, our economy is falling far short of maximum employment. that high unemployment rate is why the federal reserve is focusing at strengthening the recovery in a job creation including keeping short-term interest rates near zero and longer-term rates had to the lowest levels in decades. keeping borrowing costs very low helps. overtime it leads to increased activity and employment. like other central banks and around the world, one where we have put to pressure on long-

term interest rates is by purchasing high-quality longer- term securities in the open market. in the meantime we earn interest on the securities we hold it. it has a side effect of reducing the federal budget. last year ended the year before, we returned a total of $125 billion to those to the u.s. treasury and the payments to the treasury in the current year will be substantial as well. in addition to our monetary

policy role, we share this possibility with other agencies for regulating and supervising banks, protecting consumers and their financial dealings, and find it -- fostering financial stability. we are working with other agencies that banks, especially the largest banks, must hold against possible losses. the fed and other agencies are toughening the restrictions of financial transactions the banks can undertake and working to ensure that compensation packages do not give them incentives to take such a risk. we are requiring banks to compensate and assist on homeowners who are unfairly treated. we are working to increase the resilience as a whole with those that may occur in the future premier also collaborating with

the federal deposit insurance corp. to implement new rules that will make it easier for the government to help if they get in trouble rather than being faced with a terrible choice of either bailing them out or risking the collapse of the financial system if they fail. of course, the federal reserve was never intended to shoulder the entire -- burden of economic prosperity. fostering a healthy growth and job creation and a shared responsibility of all economic policymakers and close cooperation with the private sector. spending and tax policy is of critical importance but a wide range of other policies pertaining to labor markets, housing, trade, taxation, and regulation also have important roles to play. the federal reserve along with other agencies is working hard to enforce and regulations that protect credit card holders, and other consumers of financial services.

the people in this room should be aware in particular of the special rights and protections provided to military personnel by the service members simplest -- civil relief act. this law's purpose list them perform their duty without worry of foreclosure, he eviction, and civil prosecution under circumstances. this caps interest rates for debts incurred before a service member begins active duty. prevents creditors foreclosing on a home more repossessing cars with a court order. he gives a service members the option to terminate property and vehicle leases. service members of -- it entitles service members to reinstatement of health insurance that was not effected before military service began. additionally, the department of defense rules such as packet

loss, a tax refund that participation looks and motor vehicle titles. it takes more than rules however sound and enforcement however diligent to provide you with a promising financial future. while i have the pulpit, and the offer three pieces of advice. first, while you are in the military, take advantage of training opportunities. many specific skills learned in the military, nursing and health care, computer programming, police and security work, transferred to civilian jobs. this morning i visited a community service training center that offers topics and understanding credit in car buying.

they say it help them get ahead in life. they said it help them to measure. the value means the unemployment rate for veterans is to be lower. when you leave the military, takes advantage of the education benefits. the post-9/11 to a bill pays for these, a monthly housing allowance, and supplies. on average, compared with high school graduates, people with college degrees earn about twice as much and supper about half the rate of unemployment. finally, educate yourself about your own personal finances. research by the federal reserve here at fort bliss shows that financial education can pay off. beginning in 2003, the federal reserve collaborated with the

army emergency relief, the u.s. army's own financial assistance program to provide an education course in two days. it was taught to younger enlisted soldiers, mostly men, in their early 20s. we survey that about their financial history and activity at the time of the course and we did follow-up surveys in 2008 and 2009 of service members who had participated and soldiers who had not. we found the soldiers who had taken the course were more likely to make smart financial choices such as comparison shopping for major purchases, saving for retirement, and educating themselves about money management. they were less likely to make questionable financial choices like paying overdraft fees, taking out car total loans, and continually running credit card balances.

making good well thought out a financial decisions can mccaul the difference in your financial future. i began my remarks by describing some of our country's near-term economic challenges. i want to end with a note of optimism. the u.s. economy remains the largest in the world with a highly diverse mix of industries and the degree of international competitiveness that has improved in recent years. the united states continues to be a great place to do business with a strong system of law as an entrepreneurial tradition and flexible capital and labor -- labor markets. our country remains a technological leader with many of the world's leading research universities and the highest spending on research and development of any nation. ultimately, these trends will reassert themselves if our country takes the steps necessary to prepare for the future. by putting the federal budget on a sustainable path, improving our primary and secondary education system, for example. the federal reserve will do its part to restore high rates of growth in employment in the context of price stability.

let me and by expressing my deep gratitude to all of you for your service to your country. i am happy to respond to your questions, thank you very much. [applause] >> anybody have a question? yes, ma'am? >> thank you for visiting us today. what lessons can the nation learn about healthy if not robust economy in army-towns? >> bell passover is a great example --el paso is a great example of military and civilian cooperation. fort bliss is expanding and bringing people here. it is creating services on the

base and off the base. it looks to have been a real plus for the local area. el paso had a downturn like most areas of the country. it was less than in other parts of the country. it is clear that this has been a very productive development and it is very positive the way there has been cooperation on issues of education, housing, development. it has been a real positive and a role model for how military civilian leaders can create a good economic apartment. >> yes, ma'am? >> i was deployed in afghanistan last year. the congress engage in risky

processes by not passing the budget until the 11th hour and raising the debt limit when soldiers were faced with the threat of not being paid while they were deployed. what kind of influence del the federal reserve have in the budget process to attempt having the congress avoid making such risky practices? >> that is a great question. ultimately, the federal budget is developed and passed by the congress and approved by the president. that is where the responsibility lies. we try to help and advise where we can. it is not our decision. that being said, we were very concerned about the debate in july and august about the federal debt ceiling. these expenditures and taxes had been decided by the congress. the difference between the two is how much you have to bar. that had already been decided. they were fighting about if we're going to pay these bills

are not and if you make a decision about how much you will spend and giving your in come once you make that decision, you should pay your bills. it created a lot of problems because people were concerned that if the debt limit had not been passed either would have defaulted on the government debt which would have been a huge problem in financial markets or the government could not have made its payments and would have had to cut back and any number of things. it is hard to know which order it would cut back but a large portion of payments would have to stop. this was a very negative event. we saw that consumer confidence tried -- dropped quite a bit during august and i think that had to do with how well our government is doing what it needs to be doing. the credit rating agency downgraded the u.s. treasury bills and bonds and its reason for doing that was not because

they did not think the u.s. could not pay its bills, they're concerned that the political process could not deliver good results. that is a real concern. but is in everybody's interest to work collaboratively together and to stay away from that brinksmanship. it is very important that we address a long term fiscal issue. we have a super committee right now that is thinking about that and they have more to do after that. it is important to do with the right way. yes, sir, over here.

>> i have two questions -- with the recent release of the vatican financial manifesto and the recent calls within the united nations for debt jubilee, what is the federal reserve position on that? with the possible breakup of the eu, how will that impact the united states if the eu slims down to a smaller member nationsbloc? >> those are two tough questions. on the first one, it is true that debt is a big part of our problem. we have an overhang of debt. we have a lot of debt which is in diligence your default and that causes problems for a our financial system and for the borrowers. households trying to improve their balance sheets and try to pay down their debt and reduce their credit-card balances are part of the reason why spending has been relatively weak and that has been a factor slowing the recovery. i think where possible we need to address the debt issues and there are various ways to do that.

one good way to do that is for dealing with people who have mortgage issues. but the reserve has been an advocate for a long time -- the federal reserve has been an advocate for a long time working with troubled borrowers to modify mortgages so that people -- the bar or can stay in their house and make payments. -- the bar were can stay in the house and make payments. t --he borrower can stay in their house and make payments. it is something that has been very constructive. likewise, whenever there are other debt situations which are unsustainable, when an individual family snowed under by its debt, clearly, counseling or bankruptcy is needed to get that situation straightened out and that is one option.

on the question of the eu, as you know, there is a lot of stress now in the european union in the euro is own related to the debt obligations of grease and other countries. to give you some background -- there are 17 countries and was called the euro zone that share a common currency, the euro, and have a european central bank. bureau's own a similar to the united states in that way. in the united states, we have a federal government which oversees the budgetary and fiscal decisions for the country as a whole. if one state has trouble and cannot make its taxes and

expenditures match, the federal government is still there to pay social security payments, medicare payments and transfer money as needed to help states for individuals in trouble. in europe, you have 17 different countries without a single central fiscal authority. it is much more difficult for them to move money between countries because it requires the cooperation and coordination of 17 different parliaments. that has been the nature of the problems. you have a number of countries starting with greece who have had difficulties meeting their debt obligations. there is no single fiscal authority that can help them out the concern the europeans have is that the banking system of europe owns a lot of the debt of these countries and therefore, if there was a default, that would cause a lot of pressure on the banks who would lose all the money on their balance sheets and that would in turn create a huge amount of financial straits in europe but in the world as a whole.

the europeans are quite aware of this, obviously. it has created a lot of stress to their economy. they have been through a series of plans which have attempted to help the country's in trouble to pay their debts, to help the greeks meet their obligations by lending them money and secondly to strengthen the banks by making them have more capital so if they lose money they will still be strong and third by trying to put up a fire wall that is a guarantee that if another country comes under pressure that the europeans as a whole will protect the country and prevent the problem spreading from country to country. it is a phenomenon called contagion. so far, they have not stem the

crisis that have taken some actions necessary to stop the european crisis. this is important for us and europe and the emerging markets because if the financial system become -- comes under pressure, that could have bad implications to the economy. it is very important to do that. that is really the current issue, whether they can stabilize the system and ensure confidence in the budgetary situation of a number of countries under pressure from lenders. any other questions? the gentleman over here -- >> sir, why found on our small business owners and i am curious as to what you are doing -- my wife and i are small-business owners. alone rates don't help when we have to have 100% collateral to secure a loan.

what is the federal reserve doing to help small businesses help create jobs? >> that is another very good question. as you point out, small businesses especially young businesses are a big part of the job creation processed. it is in the interest of the whole economy, not just individual small business owners, to get small business lending activity back on track. it is a significant problem. banks are lending quite freely to large businesses and they have access to corporate bond markets. credit constraints are not really a problem for the larger firms. smaller firms that rely on collateral and the value of

their home or other types of security are finding it very difficult. there is no easy answer. the fed is engaged in this issue. we have been meeting regularly all over the country with small businesses, with lenders, with government officials and. others we just had a small-business conference at the fed yesterday and i delivered the opening remarks. the idea was to talk about solutions and approaches to help small businesses to provide them with whatever assistance we give them whether technical or make a better law and publication and so on. -- better application and so on. as bank regulators, we try to take a balanced approach. we give guidance to the banks and to our bank examiners. we tell them when you evaluate a small business loan, if it is a credit-worthy law, if the borrower can pay back, even if

the collateral value has fallen, you should make that loan. it is good for the bank, is good for the bar were, but it is good for the economy, too. we don't want banks making bad loans. that is how we got in trouble in the first place. we have to be reasonably prudent and make sure the bar were as bo --rrowers have appropriate prospects and what ever collateral is relevant but we are pressing banks to look hard and many banks have taken a second look programs where if you are denied and you say you like a review, they will do a second review or you can meet with a counselor and they will make suggestions about how to address it. i would suggest meeting with a number of different banks and trying to get advice about what parts of your application needs to be strengthened. it is difficult but our

evidence is that things are getting a little better as banks have become more willing to lend. as the economy strengthens and the prospects of small businesses look better, i think the situation will improve. sir? >> i had a question -- you mentioned earlier that our credit has been downgraded by standard and poor's. what is the likelihood of another agency doing that to the united states and what affect would such a downgrade have in being able to read -- repay our interest in getting people to invest in the economy? >> as i noted earlier, we downgraded -- there was a downgrading of u.s. treasury debt earlier this summer. that was based and our ability to have a reasonable balance in our budgetary matters. i am not aware of any near-term plans. as far as i know, other agencies don't have any immediate plans to downgrade the u.s. they are always reviewing

and they try to make determinations about what the bonds present to investors. in some ways, it is a secondary issue. after the s&p downgraded u.s. treasury debt, interest rates we pay on our debt actually went down rather than up. in other words, the downgraded not scare off investors in terms of being willing to buy u.s. treasurys. in fact, u.s. treasurys remain a safe haven and whenever you see a situation where there is increased volatility in the market because of concern about your for something else, you see people come in and buy treasurys. that is among the most safe investments in the world. in that respect, the downgrade are any potential downgrade has not made any significant damage to the united states economy or

our fiscal situation. the underlying point is that we are not on a sustainable fiscal path. on our current programs, our national debt will begin to accelerate and eventually it will get completely out of control unless other actions to change that go into effect. it is important and the super committee is one step and more needs to be done beyond that. is important that we take measures to try and establish a stable path for our national debt over a. time one of the key issues which comes up again and again is the fact that our economy is aging.

our average public age of our sisson -- our citizens are increasing over time. more people retire and be on social security and need additional health care as they get older. health-care costs are rising at a rapid rate we don't necessarily have that much better results in our health- care system even though it is the costliest in the world. we have a serious long-term problem in terms of our ability to survive decent living standards and good health care and applying that to our rapidly aging population. i would say the biggest challenge on the health care side, if we can find ways to deliver quality health care to everybody efficiently in a way that does not break the bank -- right now we are on a track that we cannot sustain. >> good morning.

in regard to the european union and their economic issues -- what type of far-reaching effects world -- will there be from this and how will they affect the u.s. specifically? >> there is definitely a significant risk of there. the world financial markets are highly interconnected. if there were to be a substantial increase in financial stress in europe because of may be an unexpected default by one the countries that would create a freezing up of credit, a withdrawal of short-term funding, a decline in stock prices -- all those negative things would happen not just in europe but around the. world as a result a few years ago when the financial system freezes up, it has serious implications for the coming.

it is in the interest of the emerging world and ourselves and the europeans for them to find a solution to that situation. it is not something we would be insulated from although we do all we can at the fed to maintain stability and keep monetary policy easy and do whatever is necessary to minimize the damage. i don't think we would be able to escape the consequences of a

blow up in europe. it is important that they try to address these issues. yes? >> yes, sir, i helped prepare taxes one year and it was very interesting. it was also heartbreaking to see people dip into their retirement and no one wants. do that they would dip into their retirement to help pay for their mortgage to save their home and at the end of the tax year, they get double hit. is there any, of influence the federal reserve has on tax policies for that? >> on what specifically? >> they would hold a lot of money on taxes which they could not pay because they dipped into their retirement to save their homes or save their children's homes and then they got a double hit at the end of the year for doing that with more taxes. >> that taxes are the same as they would have been otherwise. it was just a question -- not just -- it was a question of having to pay the mortgage payments and taxes in the same year is what you are saying. is that right?

>> they got penalized. >> oh, i understand. >> does the federal reserve have an influence on a tax benefit? >> you are saying they took money out of there for 1 k or something, not just their bank account. that's right. to take money prematurely elevate 41 k, you can be penalized there are a number of things you can take money out for. i thought housing might be one of them. you can either take it out on a tax-free basis or borrow against 401k and pay that back overtime. i think that's a possibility. there have been various exceptions made overtime. there have been exceptions made

for charitable contributions and the exceptions are made around the time of hurricane katrina to allow people to rebuild. this is not really my specialty. these are rules that are set by congress and approved by the demonstration as part of the tax law and any change would have to come from them. i would be interested to get more information from you if you can share it with us. my impression is that there is some things you can do either in terms of getting special dispensation or borrowing against the savings that can allow you to do that without penalty. if you can get your mortgage payment down, that would not be betty there. -- that would not be bad either. there are programs that allow people to refinance even if they are under water. a benefit is a very low mortgage rate that the reserve is able to generate in the economy is that if you are currently paying 7% mortgage and you are able to

refinance, you can cut your monthly payments substantially. a lot of people have been on able to do that because they don't qualify because of their credit or they are under water which means that they owe more than their house. is worth there have been new initiatives including a program call harp by fannie mae and freddie mac that would allow people who are as much as 25% under water to refinance their mortgage and lower their monthly payments. yes, ma'am? >> good morning. i wake up every morning to npr and it is the rare morning that you don't hear statistics about the unemployment rate and housing starts and the debt crisis in europe.

i have no influence or control over those things but it makes it a very scary time as an individual investor. it takes nerves of steel to put money away especially for last three years. we continue to do it but it is hard to do it with confidence nowadays. what is your perspective on the noise in the media about getting back on track and getting the unemployment down and getting housing starts back to where they would be? we're not in a good place back in 2008 when things crash. we were doing things we should not have done and perhaps this is the way of working it out. as a good thing for us. i'm wondering what you think about whether or not we should be looking to get ourselves back to where we were or are we in the middle of a serious fundamental shift in american life such as we were after the great depression when it comes to how people live, buy homes, save, invest, consume, waste? how will we be different or not

at the end of all this? >> that is a very deep question. first of all, i don't think anybody wants to go back to 2005 if they are sensible. house prices were too high relative to their long run value. when of the banks and other financial institutions were taking risks. things were out of balance and it is true to some extent that we are experiencing the hangover from the correction of both. problems that being said, i am not a believer in the old tested a theory of business cycles.

i think we can help people, we need to help them. the couple reserve is trying to do what we can -- the federal reserve is trying to do what we can to get things back on track. we are far from where we want to be. i would break down my answer into two parts -- in the short run, the economy is still far from where we would like it to be. credit has not returned to normal particularly for small businesses and many household mortgages. the housing sector is still in very bad shape. unemployment is at 9% which is well above where we think it should be and many of those folks have been unemployed for six months or more which has long-term implications for their skills and ana ploybility.

there are a lot of short-term issues. volatility in europe is still pretty much with us. we're focused on the short run issues and trying to get more stability to get the economy moving slowly toward full employment and a stable situation and that is taking a. time understandably, people are impatient and worried. i fully understand that. i would offer a little bit of optimism. i think the fundamental strengths and problems of the u.s. economy today are pretty much what they were before all this happened. we still have the size and diversity of our economy and the market system we have an the

conjures pri norhip, the technological innovation. we have many other aspects of our system which have produced the wealth this country has ever years. we also have problems like the health-care issue and our fiscal budget, deficit issues but we have those before the crisis as well in some sense, we are trying to get back to more normal position and i have no doubt that we will as we try to deal with these individual problems we are addressing. in the longer term, i believe that taking into account and things like the growth rate of the population that we will return to a more normal growth rate. i don't really see any reason why we could not. you are right in that 2005, 2006, 2007 was abnormal and we don't want to do that again but we want to get to an area that is well balanced in terms of trade with other countries and give people opportunities to be employed and is financially sound. i think we can do that. hang in there. yes, sir?

>> how can veteran soldiers or retiring apply for lower interest home loans? >> we don't have any programs that i know of specifically that focus on veterans in terms of lower interest loans but there are programs through the va and other parts of the government. we are focused on working with the department of justice and the department of defense to make sure that people -- veterans are soldiers who have mortgages don't get unfairly treated. for example, if you have a mortgage and you go out on active duty, there are rules whichban any increases in your interest rate while you were on

duty. to give you another example, the federal reserve and other banking industries are requiring the banks that service mortgages that were found to have deficiencies and that practices, it requires them to go back and look at mortgages made in 2009 -- mortgages in which there was a foreclosure action in 2009 or 2010 and compensate people for whom there was any kind of problem there or mistreatment or failure to follow the applicable law. we are putting special attention on veterans in that case. we are requiring the banks to look every single veteran mortgage that was in a foreclosure process in 2009 and 2010 and see if there are any problems. we have detected some violations of the service members civil relief, actthe

scra, which protect service members and their families. we are trying to be helpful in terms of mortgages that are already out there. we want to make sure that veterans don't get a bad deal or get badly treated. in terms of new mortgages, the main thing i can say is that the fed got mortgage rates down pretty low. if you can qualify for a mortgage, the interest rate at this point is certainly among the lowest it has been in 50 years. the lady--- >> good morning, chairman. when i buyer is going to purchase a foreclosure, i don't see the banks being pro-active towards a buyer. i don't understand why that is. >> you have to say it more slowly. >> if i put an offer in on a new home, i will get a response

back from the seller by put an offer on a foreclosure, i am waiting one month-three months to hear from the bank. >> i see. the foreclosure process has been dragging out. it is taking months and months to go for. the process if you're making an offer on a proper rate which has already been foreclosed upon, it is just bad practice for a bank because they would like to sell it as soon as they can.

it is puzzling to me that i would not be responsive to you can get back to you. i would encourage you to keep pressing and try as hard as possible to find a single person who you can deal with on an ongoing basis. if you have any consumer complaints or concerns about mortgages and how you have been treated on a mortgage or credit card, the federal reserve does have a consumer complaint facility on our website, federal reserve.gov and a helpline and if you call it is not our particular area, we will transfer you to the appropriate agency or whoever can help you. if you have a concern like that, you should let us know. with this particular problem, we are encouraging banks to get going on the market and get through that process as quickly as possible so the housing market can be normalized. it is very much in their interest to do that and we would encourage them to do that. if anyone has more information on this, i would be happy to receive it. yes, sir?

>> good morning, mr. chairman. i have known several marines and soldiers here who are in thrall to one of the public can predict republican candidates to say you should not exist. i like for you to talk about the consequences. >> it is not a very realistic proposal. it is responsible both for managing monetary policy and to support growth and to help the financial system stay stable. the only alternative is there.

let's suppose it was. the gold standard did not create stability over the short run. it created the money supply. there is a lot of inflation. it cannot prevent of the crises that were quite common. it most historians believe it played a very important role in the great depression. because it transmitted monetary shocks. given the constraints, the

central banks thought they were restricted. with the system tha tled to the creation in 1914, there was a panic in 1907. it was created to address those problems. after the 1903's, the gold standard disappeared and was replaced with others. the one that is dominate inovlves floating exchanges rates, a bank, and around the world, the performance in terms of inflation and stability has

been q uite good. the record is good. alternatives are not successefful. the fed is not perfect. people can make mistakes. instituations can be improved. you see more alternatives. no country has anything other than a central bank. >> over here in the red. >> my name is veronica. i am a disabled veteran. i work for the army as a civilian employee. it has been said that war can be good for the economy, maybe more

so for the local economy. it is good for creating jobs. mine in particular. with the war drawing down and troops coming back from afghanistan, what is the foresight you're predicting as far as jobs and the economy in regards to the products that will not be needed any more? >> war can be good for the economy in a very narrow sense. you have to supply the army. this is a balance against the weight of war. this is necesarsary in some circumstances. even though they create jobs, you have to account for the fact

it is blown up. it does not help peopl eae at home. it leaves us with a large debt. after wwii we had a large debt. i do not advocate military operations. it is sometimes necessary for other reasons. local areas like el paso, it is relevant to what is happening. in el paso, because of the expansion of the fort there has been more expansion and job creation. why not spend them on roads and bridges and things that can

produce benefits? it it is not necssary, you are better off reducing rescources in other ways. jobs have short and long problems. we have not recovered like we got knocked down and not back up. we have a while to go before the rate is back oto normal. the fed is not the only hta thas influence. we are trying to keep rates low and providing stimular. in the longer run, it will come down to our skills.

we have a world in which there are hundreds of millions of poeple without high skill. the manufacturing jobs did not require a whole lot of skill for education. they will either disappear entirely where they will not stay very well. eventually they were dumb by low-skill, low-wage wokers. we have to compete with more sophisticated products. that is why it is so critical for you to take every opportunity you have to build y our levels and be highly trained. that is the way you will have

a job. for our society and ability to compete, the signal most important factor is making sure our work force has the skills. the military adds to that. things like the gi bill. i encourage here to take advantange of increasing yo ur training. thank you very much. [applause] thank yo u.

>> i feel pretty comfortable but the leadership have and the complex economy we have. the issues we have. we are in pretty safe hands. thank you for talking to our families and soliders here at fort bliss. we are in the middle of a desert. we're the largest training area. we have 1.2 million acres. part of that is the to walwyn desert. chihuahuan desert. we want to turn fort bliss into an oasis. we will do this one rock, one son at a time. as a part, we would like to give you this rock that came from

our desert. it says on behalf of soldiers and members of team bliss, thank you for service to our nation. thank you, sir. >> thank you very much. [applause] and smooth sailing for our economy. >> i hope so. >> thank you all for coming today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> up next, eric kanter at rice university talks about challenges facing the u.s. economy.

then james murdoch takes questions before a british house of commons committee about phone hacking by the media. >> this year marks the 100th anniversary of president ronald reagan's birth. tomorrow from the university of notre dom, they'll talk about the domestic policies. live coverage begins at 10:00 a.m. eastern on c-span2. >> this weekend on "booktv" corey robins discusses the history of conservatism. condoleezza rice recalls her years on the bush administration. secretary of state -- bill clinton's thought of the current state of the economy.

look for the complete schedule at booktv.org. sign up for a verdict in your in box. >> eric kanter talked to students at rice university. he has been visiting universities around the country in recent months. during this event, he was interrupted by protesters. from houston, this is one hour. >> good morning. on behalf of rice university's and the institute for public policy, we welcome you to this form.

we welcome mean. thank you for taking the time in what i know is a very busy schedule to share your thoughts with us today. as an institution for higher education, rice welcomes free and open discussion of important issues of the day. we encourage many points of view. of our mission is to foster "the marketplace of ideas." it is a simple exchange of ideas and information that will lead to better solutions to problems. we represent his participation

at rice and in houston. introduce a moment to his own representative. thank you for everything you do for rice and houston, a particular in promoting the university. we also have the privilege this morning of visiting one of the alumni, pete olson, who enforce a cannot join us. i want to thank the ambassador and his staff for hosting this vibrantnt a mccann is a center for the university's public policy debate and analysis. you come here at a very special time. next october we will celebrate the 100th anniversary. to the mardy began to

commemorate their remarkable journey that has transformed it from a small but cold institute to a prestigious university close to the center of the fourth largest city in the country. your visit is part of the longstanding conversation that takes place across our campus. in the beginning of our 100th year, they're pleased to welcome you as a leader. he received his law degree from the halls of william and mary and a master. -- and a master's degree. for he was elected in 2001 to represent the seventh

congressional district of virginia. they took over the majority after the 2010 elections. he is the co-author of the new york times best selling book "young guns, the new generation of conservative leaders. through these efforts, he has earned a reputation as a it strategic thinker and a conservative within the republican party. please to join me in welcoming eric cantor to rice university. [applause] ha blacks the morning. -- good morning.

[protesters chanting] >> ok. [protesters chanting] >> this is not include the right to interfere with the expressions and ideas to which you disagree. you will be escorted away from this forum for not respecting the fundamental principles of free speech within the university. [protesters chanting] [protesters chating]

[protesters chanting] >> contrary to the very fundamental expression of free speech that does not interfere. to interfere with the access of those who have come here to hear those views on whether or not we agree or disagree. congressman, i apologize for that interference.

we welcome you once more back to the podium. [applause] >> thank you pa. you have to say "only in america." we're here for an exchange of ideas. thank you for that in the kind introduction. i thank you very much as well, ambassador. it is great to be her at rice university in houston, the energy capital of the world. i am told as the president just said that you will be celebrating the 100th year of this fine institution and the excellence in innovation you have developed. i also want to thank my good friend and classmate, and john for being here for the work he does in the houston area and for his leadership in

tx. thank you. james baker the third for whom this in situ was named for a book called "work hard, study, and keep out of politics." today he might rephrase it to read "or car, a study, and keep politics out of it." too often our politics have been obstacles to prosperity. one thing i hear over and over is the only thing that worries us more than what washington has done to us is what washington will do to us next. it is easy to bemoan our politics. they are headed in a troubling direction. even so, it falls on all of us to identify the real problem and work toward common sense solutions. it is no badge of honor that politics, the government, or

washington have become our newest four-letter words. what has washington done wrong to make some money rightfully resented? today many people feel it has encroached on the american dream. that dream is built on hard work, education, and is being challenged. so is the hope that has always set us apart and has made america such a special place. so many people today are asking what the future holds for our country. in much bigger way, wondering what kind of country do we want to be? who are we? what is it to be america? american. just as important, what must we not become? when i think about the kind of country i want, when i think

about the country out want to leave my kids, i think about my grandmother story and about how my family that to american in first place. my grandmother and her family fled religious persecution to come here at the turn of the last century. like so many of third-generation in eastern europe, my europe, my grandmother faced the future no matter how hard she worked, no matter how smart she was, there were limits to. because of poor parents were, where she was born, there was only so far she could go. but our country is not like that. it must never be. america offered and still offers immense and authentic opportunity. my grandmother eventually made her home in a working-class section of my hometown of richmond. as you can imagine, in the

early 20th century, the south was not the most accepting place for a young jewish woman. widowed by age 30, she raised my father and uncle in a tiny apartment above a grocery store that she and my grandfather had opened. she worked day and night and sacrificed tremendously to secure a better future for her son. sure enough, this young woman, who had the courage to journey to a distant land with hope as her only possession, lifted herself and her children into a more comfortable, secure, and opportunity-filled place. to her, it was about building a better life for her kids. she made her home -- she made her own american dream into reality. this made her an american. not middle-class, not working class, not upper class, just an

american. . . through hard work, she was able to send her two sons to college. all she wanted was a chance, a fair shot at making a better life for her and her sons. she got that shot and she made the most of it. this is not just the stuff of american dreams but also something much more. it is the grand american promise. the promise that if you work hard and play by the rules, our nation of ford's you an equal opportunity to make a better life for yourself. our nation make that promise to people. in turn, are people promised to each other that we will cherish this unique freedom and work to make the most of it.

in deciding as a country who we are going to be, we need to be sure that the opportunity my grandmother seized is still here for all of us. make no mistake, our american way of life is not a given unless our laws protect it, our leaders respect it, and unless our people pursued it, it will wither and eventually disappear. we must not let that happen. we must protect that there shot that no matter who you are or where you are from, everyone has access to an opportunity to earn their success. the basis upon which america was founded and thrives is providing people with the equality of opportunity, not equality of outcome.

this distinction is important. it is the tipping point between what america has always been and still is and what america can become. this is what i have come to speak to you about today. there is a ladder of success in america. however, it is a latter bill not by washington, but by hard work, responsibility, and the initiative of the people of our country. my grandmother worked her fingers to the bone so that her sons could have a better life than she did. her son, my dad, did not disappoint her. he respected her sacrifice to send him to college and took that opportunity to start his own business in real estate with little more than the drive to succeed. emulating my grandmother's work ethic, he was able to provide a quality of life for my brothers, my mother, and me.

why? for the very same reasons that inspired my grandmother's. he wanted a better life for all of us. it is this foundation -- hard work, faith, family, and opportunity -- that provides each of us with the prospect of unlimited potential in america. each generation is able to get a little further ahead, climbing up the ladder of success in our society. how quickly you move up or sometimes down should be up to you. much of the conversation in the current political debate today has been focused on fairness in our society. republicans believe that what is fair is a hand up, not a hand out. we know that we all do not begin flights race from the same starting point. i was fortunate enough to be

born into a stable family that afforded me the tools that i needed to get a head. -- to get ahead. not everyone is so lucky. some are born into extremely severe circumstances. many in america are coping with a broken families, dealing with hunger and homelessness, confronted daily by crime and drug use. i was recently asked, what does your party say to a 9-year-old inner-city kid scared to death, growing up in a life of poverty? what can you do for that little girl? we know there are no easy answers to. i believe that child needs a hand up to help for climb the ladder of success in this country. she also needs some guarantees in life. she needs to know that the rules ours the same for everybody. although she had may have to work harder than many of us, she will have a fair shot of making

it in this country. she also needs the advantages of a solid family around her and a community that encourages her to learn and work hard. she needs some semblance of stability. the question for us is, how can we help provide it? stability's starts in the home but it can extend to places of learning as well. especially for those children facing the toughest circumstances, we need to ensure access to the best schools available in her area. if that is a public school, agree. some say charter schools help to provide greater stability and i wholeheartedly agree. in fact, president obama has also expressed that feeling for charter schools. earlier this year, we pass an act that encourages states to

support the development and expansion of charter schools. it also streamlines funding to reduce administrative burdens. in california, parents have banded together to ensure that schools are being held accountable and can transfer their kids to better schools or even start a new one where it is needed. kids in many cities actually line up for lotteries for slots at better schools. no child should be forced to stay in a school that is failing her. every child in america deserves an excellent education. it does not matter where this failing school is, the city, the suburbs, a wealthy or poor town, better schools benefit everyone. his little girl deserves a hand in attending a better school, a chance at a greater stability, and the opportunity for success and happiness. as a nation, we must make

education a priority. if our schools fail, we fail. parents also can use a helping hand. take the single mom living somewhere here in houston. after she puts her kids to bed and rest her head down at the end of each grueling day, she may be wondering if her job will still be there in the morning. she has probably stop dreaming about moving up the ladder. she is more likely just worrying, hoping, praying that she does not fall down or off of it. we need to find a way to restore her faith that moving up the ladder in america, even slowly, is still possible in this country. that mom sacrifices most of for life for children. she lives paycheck-to-paycheck. maybe she works two or three

jobs. ed has to worry about how she can take her sick child or parent to the doctor. maybe she would like to attend a school play that her little girl is performing in but have to work. what is the working mom to do? how can we provide both her and her kid just a little more stability? when asked, many working moms say what they need most is a little bit more time with their kids. we should find ways to encourage employers to provide parents greater flexibility. everyone provides a role in educating children. parents have the opportunity to be engaged in their children and it will only increase their potential for success. one option is to allow private sector workers the ability to negotiate with their employers to choose between comp time and overtime pay, a benefit that federal, state, and local

employees have enjoyed for years. does this solve all the problems? of course not. with a little hope and a helping hand to make life just a little easier, that single mom can send her children to college. maybe one day, her children will be like you. as students here at rice and the baker institute, he will be much better position than most to land a job after graduation. for the majority of young people, it is a small business that will give them their start. these employers are the restaurant owners, the health care providers, the small family farms, the small high tech start-ups. small-business people are the key to opportunity in america. each one of them took a risk and

did whatever they needed to make it work. they get into their savings or barred from family to start their dreams. they committed countless hours and a determination. they committed themselves and their lives in pursuit of this dream. these small businessmen and women may just employee a few people, but each one of those people is able to start building a better life for their families just because one person took a risk. that is why we should make it easier for them to start their dreams. last week, the house of representatives passed four bills that reduce regulation on small business owners, giving them a hand out to achieve their dreams by easing access to capital. the bottom line is, it is all about lowering the threshold for entry into the marketplace. leveling the playing field. we need to get government out of the way so investors are more

freely able to in brest -- to invest in a start up for business. in america, happiness is defined as a pursuit. that definition occurs from our founders in the declaration of independence. pursuing both happiness and independence derived from the ingenuity and grit of the american people, not the american government. america is a special place. different than any other on earth. here is an illustration. i received a letter last year from a student from stanford who happened to be working in england. he was amazed at how differently entrepreneurs were regarded in europe. how opportunities seemed limited and existence seemed dull. how old was missing among his friends in the u.k. the friends said they could not

imagine an entrepreneurial hotbed like silicon valley existing and europe. or how they would handle such an amazing chance to advance. "starting a business is a badge of honor in the u.s.. in europe, entrepreneurship is frowned upon. consequently, the best and brightest are afraid to take a risk. even though they are smart and educated, when i ask them about their career path, no one ever mentions starting a business." think about that. in america, starting a business is not something that is just possible, it is something a expected. today, that is being questioned. and people have been afraid -- people have become afraid to take a risk. many have lost their optimism

about the future. people in america are frustrated and the core of this frustration stems from a belief that the same opportunities afforded to previous generations no longer exist today. that is the core of this frustration -- the playing field is not equal. in a recent poll, 82% of americans think their children will be worse off than they are. what happened? what happened to the hope of passing the success from your parents? what happened to the unyielding american at sectionalism and the sense that in america, impossible dreams are possible. instead, there are those who want to divide america by turning those with less against those with more. they claim that these people have now made enough and have not paid their fair share. the truth is that washington

needs to take -- needs to stop taking the income of hard- working american taxpayers and start rewarding their success. think about it. how many of you really do think that washington spends taxpayer money well? even if you believe washington has the best of intentions, its track record is not good. our $14 trillion debt shows that. instead of asking americans to give more, we are better off stopping tax increases and forcing washington to do more with less for once. why shouldn't we create simple, clear, fair rules that apply equally to all americans? and then let you, the people, decide for yourself who you will become, how much you can earn, and what you would do with your life?

instead, we see so many in washington pitting us against one another. that tends to deflate the aspirational spirit of our people and phase the american dream. i believe it is time to regain that aspirational spirit. we have got to double down on the american dream. we should all dream to achieve. the most successful among us are positioned to use their talent to help grow our economy and give everyone a hand up the ladder and the dignity of a job. we should encourage them to extend their creativity and generosity to helping build a community infrastructure that provides a hand up and a fair shot to those less fortunate, like the 9-year-old girl in the inner city. these successful people, these groups of innovators, are the leaders of companies that create

life-saving drugs for parents and children. they are the people here at rice and around this town that take risks to create companies that employ our families, neighbors, friends. they are also the social entrepreneurs who support charter schools, the opportunity scholarships, the private job- training programs, the community centers, and other elements of community life that provides stability and constructive values to children and their families who are struggling. they are trailblazers like steve jobs, a man who started with an idea in his -- in his garage and ended up providing ipods and ipads to millions to change the world. job-building and community- building are was successful people can do. through his example, you can see that america needs more than just a jobs plan. it needs a see j -- it needs a

steve jobs plan. in a steve jobs plan, whether you are a democrat or republican does not matter. in a steve jobs plan, no american believes they are able to rise up. in a steve jobs plan, we do not believe that those who succeed somehow take away from those still working their way of the latter. why? because those who earn their success not only create good jobs and services that make our lives better, but they give back and help everyone move just a little bit further up the ladder so everyone can win. instead of talking about a fair share or spending time trying to push those at the top down, elected leaders in washington should be trying to ensure that everyone has a fair shot and the

opportunity to earn success of the latter. the goal should not be for everyone to meet in the middle. we should want all people to keep moving up and no one to be pulled down. how do we do that? it cannot simply be about wealth redistribution. you do not just take from the guy at the top and give it to the guy at the bottom and expect problems to be solved. it does have to be about fairness. over the last few years, america has seen too many favors for the politically connected. too many handouts for the irresponsible and too large a bill for everybody else. this is a step backwards. it does injured the american dream and violates the american promise. it hurts in real life and dollars this country that we love him.

it punishes the exact behavior we must reward if ever we are to grow our way out of this economic darkness. let me tell you what i am talking about rewarding. a recent survey of over 500 successful entrepreneurs found that over 93% came from middle or lower-class backgrounds. most were the first in their families to launch a business. we should reward them. we should try to make moving up the ladder in just a little bit easier for them. we can help do that by help ensure there is fairness at every letter of it -- every love all of the economic ladder. that those who work at -- those who work hard and play by the rules can get ahead. we must ensure that the road to wealth prosperity is what mobility. everyone should have the chance

to move up. stability lost mobility = agility. people are climbing and succeeding. the key to economic empowerment is ensuring that income mobility. to me, economic empowerment means you can make more and achieve more this year than you did last year. for too long, indicators looked like the reverse. many people are not moving up. our efforts should be geared at how to accelerate income mobility. from how we help those who are unemployed get back to work two ways to encourage entrepreneurs and start-ups to encouraging the best and brightest to stay in america, there are many solutions that will help people succeed and grow this economy. as americans, we care about everyone. we should want everyone to be successful. we want everyone to see the path

forward. veterans day is tomorrow. as a nation, we will celebrate and honor those who have served. each of us should seize the opportunity to give rise to the american dream. we must honor those who have given their lives to that dream and those who were at the cost of this country. most of all, let east -- let each and every one of us work just a little bit harder to ensure that the america that our troops come home to is unworthy of them, worthy of their sacrifice. and there is a book entitled " man's search for meaning." it is one of the most influential books of the 21st century, written by a man named victor frankel. on the east coast of this country stands the statue of

liberty and. on the west, says frankel, should stand a statue of responsibility. when these statues join hands, the american people create a bridge that spans the entire company, a bridge of opportunity. on the pillars of that bridge, we must direct our ladders. with those who are successful extending their hands to those who wish to climb. it is students like you, the successful leaders of the future, who can be the designers and builders of these ladders. it is you that can determine the die mention, durability of america's ladders. who knows? some of you might change the world like steve jobs. but as you move on board, do not forget that we want everyone to be moving upward alongside of

you. as you move upward, hold out your hand and help pull others just a little further up the ladder. help them move on in your school, community, workplace. that is who we are as americans. that is what we do. we should all be committed to america's rising. thank you very much. [applause] >> very appropriately, the majority leader ended his remarks about our students. that is where i thought we would begin. i ask you to respect the fine line between a question and a speech and make your question as brief as possible. we are starting with four

student leaders. neither of us know what their questions are. you may know what the answers are without knowing what the questions are, but i do not. we will begin with george, the president of our student association. >> thank-you, mr. majority leader, for joining us at rice university. myself and my peers are encouraged to hear that education remains a top priority. considering the national economy and increasing global competitiveness, what can congress do to ensure that students remain and feel inspired and confident now and in the next 10 years? how are we putting american universities at the top? >> let me respond by saying, american universities, and rice being in the premiere rankings, are some of the crown jewels of this country. if you think about where we are

headed this century as a country and how we are going to continue to lead, we are going to lead by being innovators. that innovation stems from the kind of efforts and research that is ongoing in places like rice. we have to be committed, as a country, to allow for an environment for that research to continue. from a funding standpoint, from creating an environment for public-private partnerships, creating an environment where we can take that research and those ideas and innovation and translate them into commercialization, bring them to market. right now, what we are seeing is that that process has become too difficult in this country. as students, you're going to look for opportunity in jobs when you graduate. that same difficulty in translating that resource into

commercialization exists for job-creators in this country. it is too difficult because the risk is too high. we need to think, as america, we have got to be competitive. we have got to be able to match the efforts of those competitors in the far east, south america, and the west. we have got to adopt the mentality of an economic developer and to adopt a competitive strategy so that we can win. we have a lot of work to do as far as tax policy, regulatory policy, and access to capital in our markets and. let's thank you. i would like to say that at a price we are very excited that you are here today and that we have the opportunity to talk with you. many of our students are aspiring leaders and a look to you. and we are really supportive of what you do. thank you again for coming here today. >> our second question is from their representative of our

graduate student association. kenneth. >> hello. i am a fourth year graduate student and i've applied to the ph.d. program and am a policy interning in the science and technology program. my question is a follow up to georgia. in the last several years, we've seen a -- we have seen several of the major science agencies budgets remain stagnant. i'm wondering as the budgets come to an agreement, where do see the science budgets going? the does, how you see that affecting our economy and for students coming into the market?

specifically, in the south, who provides most of the outreach opportunities in running the gamut from a lot of the different fields. how do you see that affecting the progress that america is making in science and innovation? >> first of all, if you look at the proposals coming out of the house of representatives, we have put a priority on research. that goes back to my comments earlier about the need for universities such as this one to be in the forefront to help our country lead with innovation. that goal occurs in the context that makes a difficult outlook for the country. all of us know that we are generating deficit over dollars and have done so for the last several years. we are being forced to choose priorities.

research is a priority. there will also be the necessary decision making as those dollars flow. that is a decision that we are just about in the process of considering -- what will be the structure of research grants going forward? what will that be? as we look to some of our competitors abroad, there is a mind-set of centralizing research grants and research, allow for easier priority making, allowing for more focused research dollar grants. in our country, we have seen a proliferation of a lot of innovation. it is not just one university, obviously. we have a much more entrepreneurial, competitive research in farming in this country. -- research environment in this country. we will continue to try to

assess whether or not we are competing well, it is our research what we want? we also have to consider how we are going to take those ideas to market and create the jobs and opportunities for phd students and the rest? much of that has to do with the environment for people in this environment to take risks and the environment that this country offers to global investors to come here and take risks and build enterprises. right now, we see an alarming rate of decline in the startup world in this country. we have seen a decline in the number of ipo's in this country versus elsewhere. we have got to make sure that we get our regulatory system under control so that it is sensible in terms of regulation. but that we make sure that

government is not the one that determines who can and cannot succeed. we have an even playing field for everybody. we have got to have jobs, the best and brightest coming here and staying here. if we have and continue to have people from around the world wanting to come to rice and other universities, we ought to provide incentive for them to stay. they can help create jobs. they can help us grow our economy. this is all part of the discussion that we are about in trying to maintain a competitive america in the 21st century. >> we have more student representatives and then we'll open it up. the next is the price young democrat leader. -- the r youngice democrat leader. we have a substitute a. >> thank you for coming to rights. i have a more specific policy

question. the payroll tax cut is set to expire at the start of next year. this would result in $120 million of higher taxes for working americans and. my question is, how will the house leadership respond to the president's call for a payroll tax cut extension? >> republicans in general do not believe taxes should of on everybody, especially in an economy like this. that provision is a priority for the white house. it is part of the discussions on going on how we resolve the budget is used by the end of the year. we will continue to focus on that. we do not believe taxes should go up on anybody. >> the last of the questioners is anthony from the young conservatives.

>> like you, i worry about our nation's ballooning debt. i am not convinced about the balanced budget amendment, which you have been a proponent of an. justice scalia has said it would result in a lot of lawsuits because a balanced budget would be up to the courts. how we resolve this if we pass such an amendment? >> if there are lawsuits, the courts will have to resolve it. the thinking is, a balanced budget amendment would be the check on unbridled spending in washington area we continue to spend money we do not have. we are continuing to rely on global and domestic investors to buy our debt. if we do not demonstrate that we are going to be a viable ongoing concern fiscally, we will not be able to be the country we are. all we have to do is look to europe to see what we may

become. we believe strongly that a balanced budget is something we should have. the discussion about what a balance is or not, i guess that legal question can be determined in courts. most americans have to live within their means, whether it in the household or businesses. most states have a balanced budget in met -- a balanced budget amendment. they exist in a way that has not been challenged in court. we are hoping we can move towards that end triet >> if you have a question, please line up behind one of the microphones. please keep it as brief as we can, because we have very little time. frankly, we will only have time for four questions if people are very quick. >> i am a member of the debate team. one quick question about the republican platform on spending increases. right now, there is the ideology

of maintaining or reducing spending. for what causes is the republican party prepared to increase spending? what would justify a spending increase? >> right now, we are all facing this incredible deficit. and the debt that we are all going to pay for. not just you, the future generation. what it should be about is asking, what are the priorities? what are the priorities for this country? obviously, national defence and the security of our country comes first and foremost. but we will not have a country. we have got to make sure we are adequately funding that. one of the challenges for us is how we will continue to lead and beat the world superpower that we are if our economy is not strong.

where are we going to go in terms of spending dollars or affecting reform to get our economy back on track? it is about defense, security, the economy. obviously, we care about health care. that is so personal for everybody. this country spends a lot of money on health care. there has been much discussion and debate because we have got to do something to deal with the spiralling costs. unfortunately, the president's bill that was passed two years ago did not do that. the congressional office has validated that does not balance costs in this country. many of us are fearful that that bill will affect the kind of quality of care that most americans get. we have got to put some effort into designing a system, whether it is spending money or affecting reforms, to get to the outcomes we want. >> thank you. >> i will be quick.

you talked a lot about the inner city girl, ensuring equality of opportunity. with the economy the way it is, with the house pledge to not raise taxes, with our idea of doing more with less, how do you plan on clay -- on paying for those educational opportunities? you mentioned charter schools and that is great. for the public schools out there, how can we ensure that they continue to exist? that teachers can be most effective? how do we pay for that if we are not raising taxes and the economy is struggling? >> first of all, we have got to get growth going again. we need this economy to get back on track. i have spoke about the uncertainty that exists in holding capital and investors back. we have got to correct that. as far as the public school system in this country is concerned, all three of my

children went to good public schools. unfortunately, a lot of children in this country are not fortunate and do not have public schools. we have to look at how you make them good. the evidence shows it is not just money. some of the higher cost school districts are the least performing. we have got to effect reforms. you asked about raising taxes. the problem right now is this -- you have a budget situation that is disproportionately caused, at the federal level, by health care entitlements. the facts are, 10,000 people every day turn 65 and become eligible for medicare. the medicare program in this country is funded through premiums and taxes. the revenues derived from those

premiums and taxes covers a little over half of that program. if you think about that, that is every day x 10,000. you are 50% in the hole. you cannot sustain that. you cannot tax our way out or grow your way out of that. we have proposed to reform the system and maintain the safety net of our entitlements for those who need them. that is why we have got to do that. if you do not do that and then you raise taxes, you are digging the hole deeper. you are asking people, those job creators that we desperately need to create jobs and get growth going again, you are asking them to throw good money after bad. what you are also doing by saying raise taxes right now, if you are not going to fix the problem, you are exacerbating the jobs and economic growth

crisis because it is counterintuitive to think you're going to raise taxes on those who want to invest. they are not going to do it because it lessens the likelihood of a return. >> you mentioned that your grandmother came over from europe to escape the discrimination based on her religion and to find the opportunity of the united states current throughout the history of our country, what we do is we have enacted legislation to protect those who are not able to get equal opportunity due to discrimination. what i want to know is why, in 2007, did you vote against the employment non-discrimination act that would protect people based on sexual orientation from discrimination in the workplace? >> and none of us on either side of the aisle, either side of the spectrum, one discrimination for anybody. you are right. this country was killed on equal

opportunity and all people should be treated fairly. that particular bill was designed so that those employers who wanted to be able to hire individuals to further the mission of a private entity were making the case there were not going to be able to do so the way that bill was crafted. that was my vote. i understand your question. all of us should be driving towards equality and opportunity for everyone. no matter what your background is or who you are. >> i would like to thank you for coming to rice and your belief in our students as the future leaders of the world. i appreciate your devotion to creating opportunities for all americans. my particular question concerns the american tax code. i spoke to inform members a week

ago and he mentioned criticism with the american payroll tax cap at $108,000 which would be neither progressive nor equal for all americans, but rather regressive. as well as those earning in the highest income brackets may spend 10-15% of their income on goods while those earning less will spend a higher percentage on goods and be taxed even more than those in the higher income bracket. i would like to hear your thoughts about what needs to take place to reform the american tax policy? >> most of us believe we need to reform the tax code. for a variety of reasons, we have a tax code that really skews the allocation of capital and gets in the way of our return to growth in this

economy. you speak about the fairness issue in the tax code. i agree that the tax code does not breed their results. -- fair results. right now, you have 47% of the people in this country not paying income taxes for it to me, is that fair? everybody should have some skin in the game. even if it is just $1. we ought to have people willing to make sure that they are part of what we are trying to do, not just those who receive benefits and do not pay on the income side. but we do need to be careful. we need to be mindful of those at the lower end of the spectrum. we do not want to disproportionately burden them. but we ought to be looking at seeing how we can bring down rates. we know, from a competitive standpoint, the corporate tax system is non-competitive.

next to japan, we are the worst. getting back to how we are going to grow the economy, we are not going to provide incentives for people to put their businesses here with that kind of tax system. we also disadvantage american- based multinationals. they look at other localities around the world that do not treat their counterparts for competitors like we treat them. they're going to take a second look about whether or not it makes sense to headquartered in america. we have got to bring down those rates and kill the loopholes that are the preferences that have appeared in the code over the last decade. those loopholes tend to skew allocation of capital. we do not want that. we want a simpler, more fair code that everyone can abide by and help promote an environment for growth. >> we are overtime.

we will take two more questions. you can choose which combination you like to ask. >> on a different topic, when abortions were legal, women had them and thousands died or were physically maimed. according to your voting record, if you outlaw abortion, is that acceptable collateral damage to you? >> i do not know how we are going to combine that with another question. [laughter] if you look at my voting record -- what we do in congress is make sure taxpayer dollars are not used to fund abortion. that is what my voting record reflects. >> last question. >> houston is a leader in the energy industry. with companies like solyndra

showing government handouts can be a waste of taxpayer money or the tax rates given to the oil industry during the great depression showing that the government can help industries become bedrocks of the country's industry, how does the united states help the emerging renewable energy market grow in the united states when other countries are offering these kind of handout that could give those companies an advantage? >> great question. we have got to stride and drive towards sustainable growth. you are right. the future is of the upmost importance. i was in houston visiting some of the employers and businesses here who are trying to do that. right now, although we want a much more diverse energy future, this country has been very blessed with a lot of resources in the fossil fuel our ara.

many of the companies in houston are spending a lot of resources and time pursuing the exploration of that energy here in a clean and responsible way. what i think would work for them would work for industry players in any sector. that is certainty. that is an environment in which the tax code and regulatory policy does not imposed greater cost risk. we have got to have a balance. we want to do a clean and responsibly. i think we can help compete in the clean energy world as well as any other industry. an informant to innovate and invest capital which involves certainty, a tax credit, a tax code and gains rates that are competitive globally. all things being held equal, if we can accomplish those things, i guarantee people will want to do business in america. we have plenty of work to do

addressing those basics. i think that we can compete in any sector. >> please join me in thanking the majority leader for joining us. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> james murdoch of news corp. appeared before a british house of commons committee today because of the use of cell phone hacking by newspapers owned by his company. that hearing is next on c-span. then ben bernanke talks about

jobs and the economy. on washington journal for veterans day, we will look at a number of military issues. jeffrey buchanan joins us to discuss the withdrawal from iraq and the pending transfers of power to their government. on federal jobs programs. then we'll talk to the offer of a report on military suicide and a pentagon correspondent. "washington journal," each morning at 7:00 eastern. tomorrow, president obama and will deliver remarks at the arlington national cemetery. our national coverage get started at 11:00 eastern. >> i want you all to know. those of you wanted me to run so

badly and were disappointed, that i am doing the right thing. >> i believe that 1984 finds in the united states in the strongest position in years to establish a constructive and realistic working relationship with the soviet union triet >> with every program since 1987, the c-span video library is the definitive source for public affairs. there is a new way to access our program and. listen to audio for every c-span program. just 99 cents each. take c-span with you on any portable device. listen to what you want, when you want, where you want. >> the british parliament continues its investigation of allegations of phone hacking by the media. the chairman of news international, james murdoch, is accused of phone hacking at the news of the world tabloid.

a retired english football player's voicemail messages were hacked by reporters at the news of the world. >> first of all, you will recall that when your -- that when you appeared with your father before this committee, you agreed that gordon taylor should receive a substantial settlement. we understood at that time that that decision was taken by you but you were not aware of that meeting. of the details of why the settlement should be reached and the existence of the e-mail. as you may have heard, they say they did make you aware of it. do you want to say whether or not you still have been made

aware of the e-mail? >> yes. thank you. the meeting that occurred on the 10th of june in 2008 was for the purpose of gaining the authorization for them to increase the offer of settlement they had already made on a number of occasions to mr. taylor and his lawyers. in the meeting, which i remember quite well, was a short meeting. i was given at that meeting set this information to authorize the increase of the settlement offer that had been made. to authorize them to go and negotiate the settlement. i was given no more than that. certainly, evidence was described to me that indicated that the company would lose the case if it litigated. but the nature of the e-mail

that was described, which it was not, any wider threat or evidence or suspicion of why is spread, none of these things were mentioned to me, including the details of the council's opinion that was saw by them and received by them earlier. it is the only sufficient information to authorize them to increase the settlement offer that party made. >> even if it were described in the e-mail, it was the existence of the e-mail that contain the transcript, which was technically your case. >> yes. this is an important point to be very clear on. that e-mail was important for two reasons. it was a transcript of voice mail interceptions that were made on behalf of the news of the world.

hal was seen as evidence and suspicion to conclude that the company would lose the case. it was another part of that e- mail that was important for it. it named another journalist in that e-mail. that second car was not described to me in any detail or at all. i want to be very clear -- no documents were shown to me at that meeting or given to me at that meeting or prior. >> so you were made aware of these documents from the e-mail that was extremely damaging? >> yes. as i testified earlier in the summer, i was made aware that there was evidence that the transcript existed and that it was on behalf of the news of the world.

it was the e-mail that was the beginning of suspicion that other individuals were involved at news of the world and that was not described to me and the e-mail was not shown to me either. >> you did not see a copy of the e-mail? >> i did not. >> were you aware of the legal counsel sunday night that was obtained? >> i was aware their opinion had been obtained a writ it was described to me as having to do with damages and the estimate of damages were the case to be litigated and lost. it was not shown to me. nor was it described to me to. the other thing in the leading counsel's opinion that has been provided to you has to do with damages. >> we have since learned that there was a previous meeting that you had at the end of may. do you remember that meeting?

>> i think you are referring to a nodte that he wrote describing a conversation he had. in that note, mr. miler says to mr. pike that he spoke to james murdoch. he does not say there was a meeting. he refers to a conversation that he allegedly had with me. neither of us recall that meeting, a telephone call, whatever it might have been. as i testified, and the only substantive meeting that i recall, the conversation i recall about the meeting -- about the matter, was the june 20 meeting. i cannot rule out whether he phoned me or to me in the hallway for a brief

conversation. >> my colleagues want to go into greater detail. >> thank you. when you took over from liz hampton in 2007, what did they tell you about the case? >> in december of 2007, i was regional chairman for all of our european and asian operations, which included use international as well as in five other large entities in the area, for clarity. in the absence of a full-time c l -- ceo, i had more direct responsibilities for a period of time. at the time, mr. henson did not discuss with me any matters around mr. goodman. around mr. goodman.