goodwin and subsequent convictions that this committee learned we provided documents all pre-stated my presence in the company. he did not raise or brief me on it. did i asked about the good man saddam in particular? no, i did not. >> it was some time before i had joined the matter. the arrests were well over a year before, a year and a half before, something like that. and there was no reason at the time to believe it was anything other than a settled matter that was in the past. >> because of the significant amount of money, does this have huge consequences for the

company and future discrepancies? will you make sure this does not happen again? >> at the time, certainly -- at the time, i received assertions that the police had closed their case, but internal investigations had occurred, that two people have been successfully prosecuted and went to jail, and so forth. it was seen as a matter that was in the past. accountability had been delivered. the police had successfully prosecuted their case and closed the investigation. there was no reason. the settlement matter was within mr. hanson's authority to make custom -- to make a judgment on. >> your father was very concerned about the case. why was he concerned? >> concerned about the

settlement?

>> i was not concerned? >> concerned about the settlement? what were you concerned about the goodman case? at news corporation at the time. norma >> you do speak to your father now and again. >> i do not think we discussed the it news of the world matter,. the goodman case was unusual matter. apart of the ciceronian a moot and of this lost 9 feet in connection come

about the killer case, that the full extent of the knowledge within the business, or the evidence with in the as well as with the metropolitan police, was not made clear. >> who should have told you about it? >> it is important to remember that after the resignation of mr. holsman in 2007, mr. hinton was brought in to clean up and investigate the issue. it was to move the company poured and the newspaper forward in a way that made sure these things could not happen again. if he had known, which is an if,

that there was widespread criminality, or suspicion of that, i think he should have told me those things. >> when it was first reported in 2009, that thousands of mobile phones have been tapped, the international responded with an aggressive the nile of the allegations. why did you allow that statement to be issued? >> it was the summer of 2009. it was a year after the taylor matter. as i said to you when i testified to this committee, i think the company did push back to hard. within 24 hours of those allegations emerging, the relevant document, the chief of police issued a statement saying that same matter had been a matter of careful and extensive investigation by experienced detectives and there was no new

evidence to warrant further investigation. as i testified to you in july, we relied on repeated assertions inside the company around the quality, scope, and breadth of the internal investigations that have been done in 2006 and 2007, and repeated reassurances by the police publicly that there was no new evidence in the matter, as well as the third party endorsement of the company's actions in the aftermath by the pcc. did the company rely on those things for too long? i think it is clear the company did. if i knew then what i know today, with respect to leading counsel's opinion, the details and import of the document, the company would have acted differently, and probably in a way similar to that in which we have acted in the last year to move as aggressively and determined the -- and

determinedly as we can to make it right. >> there were people in the company that knew what was going on and reported to you. who should have reported these things to you? >> as i answered earlier, i believe that where evidence, or sufficient suspicion of widespread criminality, or allegations of it, were there, this was the job of the new editor, who had come in, as it were, to clean this up, to make me aware of these things. on the contrary, i was not shown these things in 2008. in 2009, i receive the same assertions around the quality of the investigations and lack of evidence this committee received. >> i am not a shareholder. but were i in the company, i might expect you to know what was going on. it begs the question.

which do you think is worse -- knowing what is going on, but being willfully blind, or not knowing what was going on when you should have known? >> i think it is important to put "the news of the world" in the context of the scale of the overall business and what i deal with on a day -- on a daily basis. >> the news of the world was the smallest newspaper, financially, of four in operating company news international. it was the smallest of the companies within the european and asian business. this is a company of over 50,000 employees, globally. and appropriately so, senior management in the company, myself included, rely on executives at various levels in the business to behave in a certain way. we have to rely on those people, and we have to trust them to get the job done they need to do. it is otherwise impossible to

manage every single detail of the company of the scale. >> i am just following on from the question period, this committee, a committee of parliament, produced a report in 2009 in which we said we found it inconceivable that any one person was involved, and we said the company was guilty of collective malfeasance. the results of that, your papers describe members of this committee as a disgrace to parliament. which would be more appropriate than that you would have another internal investigation in front of the same committee? >> i think as i said before, at various times through this process, the company -- and i am sorry for this -- the company moved into an aggressive defense too quickly, and it was too easy for the company to do

that, with all the noise and clamor around the business. particularly respect -- with respect to the early 2010 report, a more forensic look at the specific evidence given to this committee in 2009 would have been something that we could have done. i could have directed the management of the company to do that differently. at that time, i had stepped away from day-to-day management of news international. i think in hindsight today, i look back at the reaction to the commit the's report and think that would be one turning point the company could have taken. >> you admit it was a mistake not to have taken not more seriously? >> i think what i would say is that the company at the highest levels should have been -- should have had a good look at the evidence given to you in retrospect in 2009 and had a proper look at that in 2010, and

followed that trail wherever it led. >> after the arrest of rebecca brooks, we ever going to prevent this from going down a certain route with our questions. can you confirm to me that you have not been arrested or are not currently on bail and are free to answer questions i am going to put to you? >> i have not been arrested and am not currently on bail. i am free to answer questions, and i would like to. to the extent that questions relate to matters of criminal investigation or individuals currently on bail or under criminal investigation, some of those things would be inappropriate for me to answer. >> you have said you have read the committee submissions from farrar and tom crowne? >> yes. >> i would like to ask you a

series of questions about those documents, for which i would like a yes or no answer. >> you said there was a detailed memorandum concerning the gordon taylor case, which were sent may 24, 2011. >> he prepared a memorandum, but it was substantially narrower, and there were not things that the leading counsel raised. that is a critical point. >> so that is a yes? >> i would question the characterization of its detail. >> ok. but he did send a memorandum. >> he did said a memorandum, may 24. >> that was prepared in events of his meeting our discussion with you? >> i do not know i would assume that is the case. some things in the memorandum were discussed with me in the conversation. >> that is a yes? you said this acknowledges

differences disclosed in the taylor case, widespread criminality, and was fatal to your case, and your position was perilous. at no point in that memorandum was it mentioned -- wider spread criminality with respect to phone hacking. there is crucial detail from the leading counsel's opinion left out in that memorandum. >> that is a yes? >> mr. watson, i do not think it is. you are trying to put words in my mouth. i think the memorandum was prepared. it did not discuss those crucial elements of widespread criminality, and certainly did not mention those individuals involved. >> you met on may 27 to discuss the taylor case. you said you were not sure if it

was a meeting. >> as i answered the chairman to a question earlier on, i am aware of the notes of a conversation. neither of us require -- remember that conversation. it could have happened, but i neither the house -- i have no recollection of it. the only substantive meeting on this subject was on june 10. >> but you except mr. pike's notes of the conversation. he believes there was a conversation and delays -- relates the message that you wanted to take the view of someone external before deciding what action to take. you except that document exists? >> i accept the document exists, but i do not think it says would you characterize it as saying. mr. miller and mr. crone had already instructed legal counsel. it was not me who told them to

instruct counsel. they have already done that. neither mr. myler nor i remember that conversation. >> mr. pike was very clear that you asked mr. myler instruct him. >> it does not say that i instructed mr. myler to seek his opinion. >> but you except that qc prepared a detailed opinion? >> i have now seen the opinion. >> do you accept mr. silver leaf pip opinion there is overwhelming evidence of newsgroup journalists in an illegal increase? in addition, there is substantial material about journalist's attempts to obtain

access to information illegally. in light of these facts, there is a powerful case that there is a culture of illegal information used in order to produce stories? >> i do not think that exact -- he did provide an opinion. it was not shown to me at the time, nor was it discussed in any way. i have since seen it, and it concludes there is sufficient evidence to suggest there is wider spread activity in illegal voice mail intercept. >> if you were to find the receipt of this, this conversation on the 10th of june, to discuss the gordon taylor case -- following this, there was a report on your discussions. >> as i have testified in the past and written in some detail on this matter, the only substantive meeting i recall

occurred on june 10. it was with mr. crone and mr. myler. it was to discuss the case, but for them to receive authority to increase the supplement orders they had already made. >> after that meeting, crone met pike. do you accept that mr. pike states that jm said he wanted to think through the options? >> i have seen that note. i do not recall -- i recall leaving the meeting with a clear understanding that they would increase their offer. whether or not there was some time for a minute, i do not recall that conversation. >> you have said that crone and myler have not have access to their files since leaving

employment. do you except that crone sent a statement that he believed that you had knowledge of the widespread criminality, identified in the memorandum of may 24, 2008, and substantively -- subsequently confirmed mr. haverlake's opinion, and been from may 27, 2008, when you met mr. myler? >> i do not accept that at all. i was given at the june 10 meeting sufficient information to increase the supplement offers they had already made neither mr. myler nor i remember a conversation on may 27. mr. silverlake was not discussed in that context, nor was wider phone hacking or any reason to carry out further investigation. that is what i have testified

to. i've testified on in person and on writing. >> this committee -- you failed to inform this committee. mr. myler may not have a recollection. is it conceivable in this two weeks you did not discuss with ither crone's memorandum, silverleaf's subpoena, or the four level e-mail, and were making an unprecedented offer to taylor in order to buy his silence? >> i think mr. crone and mr myler testified none of those documents were given to me previously. neither mr. myler nor i room and call a 27 make conversation.

one of us might have remembered it. i have testified to you very consistently about my knowledge of evidence of a wider spread phone hacking. that is what happened. the time between those days is one when i was not in london. for the 10 -- for the june 10 meeting, i was in india, in hong kong. i returned late in the afternoon on the 10th from other business in the u.k. not related to news international. >> mr. murdoch, let me ask you again -- did you mislead this committee in your original testimony? >> i did not. >> if you did not, who did? >> as i have said to you and have said publicly, i believe this committee was given evidence by individuals, either without full possession of the facts, or now, it appears, in

the process of my own discovery in trying to understand as best i can what actually happened here -- it was economical, i think. my own testimony has been consistent. i have testified with as much transparency and clarity as i possibly can. when i have not had direct knowledge in the past, since i testified last time, i have tried to find out what happened, where the evidence is, and what is there. that is what i am here to do. >> mr. cronin was a respected lawyer and in-house -- mr. crone was a respected lawyer and in- house legal adviser for many years. >> as i stated, with respect to my knowledge, i thought it was inconsistent and not right. >> you think mr. crone misled

us? >> i do. >> do you think mr. pike, a partner of pharaoh -- farrow, his recollection of events? >> i do not have a reason to believe that, nor do i have direct evidence otherwise. >> the last time it appeared before us, you said the critical new facts, as the company saw them, only emerged from the civil trials at the end of 2010. is that right? >> that is correct. >> we know the statement is untrue. we know the critical new facts were received by the company as early as 2008. who told you it was only in 2010 that the company became aware? >> certainly, i became aware of the critical fact in 2010, after the due process of the civil trials had uncovered some of the police evidence and discovery by the civil claimants. >> who told you? >> previously, i had received

assertions from mr. myler and mr. crone that there was no new evidence. there were assertions in 2009 and later. >> you have said you sympathize with the frustration of the committee. you said it was a matter of real regret that the facts could not emerge and could not be gotten faster. you now know that was not true. >> it is a matter of concern. what i tried to describe earlier, with respect to how i think about what we could do differently and how we could improve on what happened here -- i think the amount of transparency between what was known by certain individuals -- at least what was seen by them, if that had been more transparent to me, i think that would have been very important and very helpful, but it was not, and that is a matter of great regret.

>> so the position is the fact emerged in 2008 and this committee was misled? >> the facts did not emerge in 2008. certain individuals were aware. the four level e-mail was there. none of those things were discussed with me, and i was not aware of those things. even in 2009, when the newspaper made allegations about those things -- i have testified about the fact about the repeated assurances as to the quality and scope of the investigations carried out previously. there were assurances made publicly by those who had the relevant information that no new evidence was found, within 24 hours of the 2009 allegations. >> you previously informed us

that myler did not show you the "for nubble -- neville" e-mail. did he discuss that with you? >> we did not have any recollection of a substantial concert -- conversation. your solicitor notes a discussion following that meeting and said you agreed to wait for damages. >> presumably, i would guess that is what he is talking about. >> this opinion was being prepared to you could understand what to do about mr. taylor's claim? and it contained the words i just read to you, and also states ", c g spread around horrid allegations, did not

believe in the newsroom. james would say get rid of them ." de you accept that note? >> i think it is a good thing to focus on for a minute. >> what they think mr. pike was referring to >> i think this is the part of the know where mr. pike was writing down what mr. myler was telling him. i see a conversation where mr. myler referred to the hard process of investigations. i assume these are with respect to the goodman allegations and his dismissal climb. he does not believe there is a problem in the newsroom. crucially, it really shows that perhaps he was worried about raising these issues with me, because i would have said get rid of them all and would have said "cut out the cancer."

people suspected of wrongdoing, we would hold accountable. that is the way i would approach it. i think that speaks volumes. i think it is also why, perhaps, i was given a narrower set of facts than i might have liked in the june 10 meeting of that year, following a week and a half later. >> there was a discussion at least about the newspaper. >> not between myself and mr. myler. or referring to a transcript of a discussion between mr. pike and mr. myler, >> when you said that you read this as colin myler did not believe this was criminal, i read it as saying that the culture of the newsroom was completely different. >> that is a different

interpretation. it depends where you put the -- i guess it would not be a punctuation issue, but in a transcript it is hard to come across. the point is none of it was discussed with me. >> you are seriously suggesting there was no mention of the "for neville" e-mail, is but is being sent to your discussions between myler and crone, and in crone's opinion fatal to your case? >> the so-called hot "for neville" e-mail was mentioned to me as evidence it was important with respect to being a transcript of a voice mail interception that came through that proved it was on behalf of "the news of the world." it was not shown to me or discussed with me, that it was "fopr neville" and might indicate whether allegations of phone hacking. it was the evidence that was

fatal to the case, but it was also evidence, in conjunction with leading counsel's opinion, and the appropriate transparency i would have liked to have had, lead to further investigations, moving forward on a different footing. >> are you seriously asking me to except there is no way you knew that news of the world made use of private telephone calls? >> it was only known to me there were transcript voice mails their. the documents you are referring to were not shown to me. >> there were a number of journalists in identified by mr. crone at "news of the world" who were obtaining information illegally. we met myler again on the 10th of june with mr. crone. >> i did not receive mr.

silverleaf's opinion. mr. crone and mr. pike receive that information, and i do not know whether they discussed it with mr. myler. >> there was no mention of a culture of illegal information? >> certainly not. >> was this mentioned even in passing, given the strength of words used? >> that is exactly right -- they did not mention it. >> this goes to the very heart of the problem. you had a meeting to discuss the taylor supplement, and they did not raise anything within the silverleaf opinion? >> they give me sufficient information to authorize an increase of a settlement offer that had already made. the commenced making it some weeks before without my knowledge. they left that meeting with the authority to continue negotiating. they did not give me any of the relevant documents you refer to.

they did not discuss them with me in the terms to describe. they did not discuss wider spread criminality or the like, nor did they discuss with me the water findings contained in the leading counsel opinion. >> you did not bother to ask about its context? >> as i testified earlier, mr. silver leaf's opinion -- mr. silverleaf's opinion was discussed only in terms of potential damages, which was sufficient to leave authority to increase supplement offers. >> you spoke for up to 50 minutes without any veto emerging as to what the statement said? >> i think if those other details have been discussed, it would have been a longer meeting. >> it was a large payment. >> can you repeat that?

>> you did not ask what a large payment was necessary? >> it was made clear to me that the case would be lost, that there was evidence in the case that link the voice mail interceptions to "the news of the world," and if litigated the company would lose. the was an estimate of damages, including clinton cost. and -- including plaintiffs' cost. it was between 500,000 pounds and a million pounds. this was what would be required to settle this case. relative to litigating the case, losing, and spending that money, it was reasonable to go with the first strong legal advice received. >> what you think mr. crone and myler question in your previous testimony? >> i cannot speculate. >> their advice was that a case

could be lost, and in the absence of new evidence, you said you were not aware of any new evidence. you simply had to relate it to events that came to light in 2007 and the criminal event that was there. it was a matter in the past. now, the you except this is not an accurate assessment of the advice received by external council? the committee were be misled byc and m -- by crone and myler on that point? >> i think you are 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 having now seen the leading counsel to the opinion, as i said earlier this morning, it would have been better if the nature of that opinion and all of the issues

contained were made clear to me. none of those things were discussed with me at the june 10 meeting or other meetings or conversations at all. the only substantive meeting was the june 10 meeting between mr. crone and mr. myler. the only things that were discussed for the things they deemed sufficient for me to authorize them to increase settlement offers they were engaged in making to a larger sum. >> mr. murdoch, it is clear you are not going to answer any of these detailed questions. i was not going to do this. but given it is in the papers this morning, i need to tell you that i have met neville thrulbeck. although the meeting was to be in confidence, i think there is a public interest in revealing it. he said to me, "no one asked of crone before he saw mr. james

murdock what his strategy would be. he discussed the strategy with me at one point. what he did was this. just before he went to see murdoch, to say he got to settle, he had to see what the transcript of "for neville" was about. what is this all about? -- this is e -- neville thrulbeck talking to tom crone. "clearly it is packed. what is it? somebody must ask -- must have asked x to do this. he would be dumb not to do that. i give tom a full explanation. this had nothing to do with me. he said this showed that this

had gone to the office, through the computer in the office. so clearly it news international are culpable and we will have to settle. i will have to show this to james murdoch i remember him saying that because i said you have to show him this, because he is going to think it is to do with me. is there any way we can get around this? he said, "i am sorry, but i will have to show him this, because it is the only reason we have to settle. i have to show him this puzzle i said, "i am going to lose my job." he said, "not necessarily." could that be a true and accurate account of neville thrulbeck's recollection? >> i would be happy to find out, if you can provide it to us. but i can tell you that at no

point did mr. crone nor mr. myler discuss suspicion of wider spread phone hacking during the meeting of june 10 or otherwise, in relation to increasing the offer of settlement with mr. taylor's attorneys. >> he said this is not a vague memory. "i was on a knife edge. he was going to show this to james murdoch. there is only one conclusion he is gone to jump to, which is get rid of thurlbeck. the following week i said, 'did you show him the e-mail? .'"d he said 'yes he said it is all right, it is fine, we will settle it. >> mr. crone testified to you

that he did not show the e-mail. my understanding is the e-mail was stringent to is -- was subject to stringent confidentiality agreement. mr. myler was part of that, but it was not shown to me at all. i have only recently seen the e- mail itself, which is as described. you have the transcripts of the "for neville" e-mail, and redacted blocks of text, which is all i have seen. i have seen it recently. it was not shown to me before. i am answering your questions in as clear and consistent a way as i can. >> published the report in 2010. >> i thought i saw the words at that point, with the reductions. >> you look at our report. >> as i testified earlier, i did look at your report. i really cannot say what mr.

crone and mr. thrulbeck 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 of the time. >> either the use the term mafia, fort -- they use the term "mafia" for the code of silence. would you agree that that is a group bound by secrecy, using intimidation and general criminality? >> i am not familiar with the term particularly. >> would you agree with me that this is an accurate description of news international in the uk? >> absolutely not. i frankly think that is offensive and not true. >> there are allegations of phone hacking, computer

hacking, conspiring to divert the course of justice, perjury. all this happened without your knowledge? >> as i have said to 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 those issues fast enough. i think we all recognize that. i have also acknowledged that evidence of this committee was given without full facts in the past, and that is something i am sorry for. i can tell you that when evidence came to light and when we finally achieved the transparency that is appropriate, we have acted and the company has acted with great diligence to get to the bottom of issues, to make sure this does not happen again, and to make sure that our cooperation with the police, this committee, and the like are such that we

can bring any wrongdoing to account. >> mr. murdoch, you must be the first mafia boss in history who did not know he was running a criminal enterprise. >> i think that is inappropriate. >> i would like to ask you questions about the decision to settle to take the case. you rightly said the meeting on the 10th of june 2008 was really about defending what level of supplements -- the fact that mr. silverleaf is clear. when did you take the decision

that this case had to be settled? >> it is clear in the documents provided to you by mr. pike it was my understanding that mr. crone conducted the settlement discussions. they felt it necessary, because the number had gotten large enough that it was going to draw my attention to it, but they had already sought to settle on a variety of levels before. >> you said you were not aware of new evidence, but it came to light in 2007 and in criminal laws do you stand by that? >> i was not made aware of new things in 2008. >> the transcript for new

evidence. it was regarded as new evidence. >> i think it was a new disclosure. i do not remember how exactly it was described. there is evidence. here it is. it is a transcript of voice mail interception not proved it was on behalf of "the news of the world." >> it came out in the trials. it was an instance of boys not a perception that had been part of the trial before hand, with mr. taylor, his voice mail being interception. i think that was one of the council that mr. mulcaire was tried on. >> in this conversation, the taylor case was one -- it was noted the case was so weak it ought to be struck out. yet less than a year later, it

was settled for half a million pounds. the question why this matter might have taken place? >> the history of the case proceedings -- our own counsel has said it predated my involvement in the company. it was brought to me as a case that would be lost. it was described to me there was evidence of a voice mail interception, a transcript that proved it was for or on behalf of "the news of the world," that the company would lose, and that it was important to settle because litigating would be costly. it was seen as a matter of the past. it was seen as the end of something that had been going on before, as opposed to the beginning of something new. >> were you told how much mr. silverleaf suggested the company settled at? >> i was certainly told the number. the number that sticks out in my mind was, i want to say, 400 and

something thousand pounds plus expenses. i think that was the number settled on. >> he give you a clear view as to what the next step could be? >> i think it was his opinion, which i did not see at the time, that it would be 250,000 plus costs on both sides. >> he was going to increase from 150,000. by the time you met on june 10, that had been increased by $350,000. the increases were being made and you were being asked to sign off. it doubled from the recommendation originally. >> the escalation of those offers back and forth is only something that has come to light to me recently. it was described to me an offer had been made. i cannot remember the exact number they talked about at the time. mr. crone and mylerr. myler --

and mr. myler thought it would cost between -- it was recommended that they thought it was reasonable. they gave me very strong advice that it was reasonable to settle. >> when you had this meeting on june 10, you said there was no briefing. you had no knowledge of what they would talk to you about. the fact was would have to settle the case for this amount of money. >> it was the only substantial discussion. we discussed at some length earlier this question. >> nothing more substantive? >> it is the only conversation i recall. it went into details about authorization to settle this thing, and the evidence that was there. as we discussed a few minutes ago, there was a discussion of whether there was a telephone call or something like that on

may 27. neither mr. myler nor i remember that, but there could have been a brief discussion in a hallway. >> in the note that tom crone prepared, discussed earlier, the "for neville" e-mail would be about a way to obtain information about gordon taylor. it is information that there were examples of other journalists from the news of the world that were being involved in illegal activities. this was given more prominence by tom crone. >> i think it is important to reiterate that the memorandum was not shown to me or shared with me at any time during this period i since read it. those things were not discussed.

what was discussed was simply sufficient information to get authorization to increase the level of supplement. that was what was discussed. none of those other things were discussed with me. >> you made your decision giving consent to go to half a million pounds of supplement. there was advice that made it easier to settle on a high level. there was advice to settle. i did not decide to settle. the editor of the news of the world, i have no reason at the time to believe had anything other than the best interests of the company at heart. >> had you asked what the

recommendation was, you would have known they were asking for something at a level no court would ever award that amount of damages. >> i am not sure that was the case. mr. collins, if you take the 250,000 pounds or more and add in the cost both of mr. taylor as well as the cost to pursue that, you can get to higher numbers. you have to add in both sides of that cost, which can be well over 100,000 pounds or more on each side, depending on the complexity and so on. from the standpoint of the amount that was agreed, they describe to me the amount would be appropriate. they thought it was the right thing to settle, as they testified to you. the give strong

>> 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. do 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.

some detail, just the situation that we had here was ne where assurances were given, very clearly, rather a description was given very clearly a senior legal counsel that the case would be lost. and a description of why it would be lost with respect to the linkage of these voicemail, it was clear it was a losing case. it was an amount of money that was substantial, you're absolutely right. i was assured that within a range leading catholic convert this is where it would settle at or could settle at, and within that range i authorize these people, mr. crone and mr. myler to go and negotiate that. i think, you know, the way that the company has always operated is to really rely on executives directly responsible for a unit of the business, paper, et cetera to really be, to go and do the things they need to do

under the assumption they would be appropriate, although they would be question from time to time andome to senior management with issues. i was given sufficient information to authorized that settled. i was not given no information. i was given sufficient information and asked the question, is there a legal counsel opinion? what do they say? they say it's within this range, it's reasonable that it was a reasonable decision to take to settle tt case, to agree with their advice. and take no further action because no other evidence or none of these other issues we have discussed today came to light during that conversation or at that meeting spent but what source of level with the settlement would have been or the advice of the council have to been for you to want to say let me have look at that we trust our executives to make

decisionsand go, mayb a few chunky questions here and there. if that's the case why was tom crone only had a 10,000-pound limit. he just might happen tosay settle up to half a million pounds, and it doesn't strike me as -- [inaudible] we will get a new authority to settle only to 10,000. doesn't make sense. it's a mismatch. this strict 10,000-pound authorization that tom crone has spent mister davies, there's a contrast here between controls and financial controls to make sure things are hopefully recorded properly, authorize probably and so on and so forth. anif they're not there dealt with in the right way. following the recommendation of experience counc. this is a strong recommendation of very experienced number of years, some 20 plusears as

counsel, the editor a new editor who had come in,a fresh look at all these issues i had assumed, and they made a very, very strong recommendation. and i followed it. and i think given, there are two pieces here, if i can try to be helpful. one is the question, decision whether or not to settle or to increase the authority within a range as i recall 500,000 to a million pounds, and all in cost, so and soorth. and then the decision with respect, or the lack of decision to say arethere other things a we should be looking . and again, sufficient information was given to authorize reasonably them to negotiate within a range, the increase of the summit offers they had already made, but nothing more and nothing to indicate any other action. there are two sets of things to consider there.

>> what parts of that was t confidentiality of? >> as i testify to you in july, at the meeting of june 10 in 2008, confidentiality as a cost item, if you will, was not discussed and it wasn't my absent at the time confidential i was something that was a line item come if you will, tha would increase the cost, so and so forth. it was entirely customarily for certain settlement agreements of this nature to be confidential. it's normal practice in many business passionate many, many businesses, if not all, when faced with ctain legal things. as i wrote to you in august, it later became clear to me after my testimony to you in docunts that had not been, that i had not been privy to conversations that i was not a part of the indie confidentiity was discussed at cost in that settlement. and i wrote to you in august to clarify at that point. i hope that's helpful.

[inaudible] do you come have you as a result of this, do you now look at things differently? do you deal with things differently? do have a more hands-on approach with the way you do with things in your company? can you not see that actually this really is pretty lax for someone in your position? >> it is huge focus to the business, and has been for the last year, to get to the bottom of this issue definitely, to cooperate with the police with respect to theirriminal investigations and this committee as well as judicial inquiry, and to the press, politicians, police, that is underway. and and i think crucially as well to learn the lessons from these episodes, to say first of all, how can we improve on the ground government of operating companies around the world, including news international? how can we improve transparency with the senior management on a

global or regional basis and operating companies in various territories. d we take a number of measures to do that. you ask how. for several at news international, all the operati companies i have a 34 we've instituted a more formal review process. will put an intel board in place. appointed a chief compliance officer full-time round those things. i meet with outside executives of news international order meet with the board. we've had one meeting already with the substantive agenda around these things. the goal is to go through in great detail both leg matters that are facing the company, ongoing and reputation risks, governance risk, compliance and so on. just in the last week we have instituted, for example, out of one of these in indy we trained over i think 1000 staff, we

trained with respect to compliance and risk. these are things i take very strictly. it's something i have throughout my entire career, clearly the transparency that was achieved around this set of issues wasn't good enough, and something i determined to sort out into something we would very, very strongly n. >>ust one question i've got regarding mr. davey's line of questioning. your first meeting, they come to you t ask for authorization to increase what they're offering the doing of what they're offering before they came into the meeting? >> i now know the previous offer they made was 350,000 pounds. but i don't recall the exact amount they discuss with me at the time, that i would imagine they would. >> this is your first

substantive meeting with people having alone opposition. did you even ask them who gave you authority to authorize 350 or whatever? >> again i don't recall him mentioning the 350. now i know that was an offer made the week before i was abroad. i didn't have that discussion with him at the time. i was more focused on what the tal amount would be that this would seldom given the strong advice that the case would be lost. and that was what was focused on spent. [inaudible] >> their authority level did not come up during the conversation. >> would any of the people involved in that chain of operations, john chapman to your knowledge to? to my knowledge, the authorization process was that there was about, m. crone was authorized to make a 10,000 pounds legal some of the mr. myler would've been

50,000 pounds, and other members of the executive committee, the chief operating officer, chief financial officer would've been authorized i believe up to 500,000 pounds. >> did they go through any of those? >> i can find no record of those authorizations being sought or given. and we have looked and tried to find out exactly how that escalion occurred during th period. spirit as far as you are what it really was tom crone and mr. myler show? >> i think very much in the documents given to you, you know, we're very much driving the agenda around the litigation but i think that's also what mr. chapman testified to as 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 didyou 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 thse two deal with each other and whether they fall in frank with what th'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 canell 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 hapy 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 indendent 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, aelephone 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 oter if you are telling us the truth spent by th 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 thority they were seeking to increase their offer was something they left that meeting with. i don'tknow 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. >>an 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 youwere 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 chairma >> i don't recal 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 n 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 tayl was? >> i don't recall if i knew he'd he was beforehand, ut mr. myler uld 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 awa of it at the time. what it was prior or maybe where any meaning who mr. taylor was i n'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 ld 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 selement, 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 voimail 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 aif 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 thatanytng 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 whher 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 20, 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 as for anything? >> my reactionwas to understand whether or not it was true, that there were further allegations. and i asked, i received a telephone call from t 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 answer 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. th 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 basias 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 ou will on the investigations that they carri 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 ppen again. >> -- [inaudible] pretty much epeated news international statements and said there was no evidence that "news of the world"intructed 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 henew 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 ques given to it. i have been very clear that i believe this committee was given evidence with executives either

without full possession of until 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 -- >> 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 beyo 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 spreadcriminality, 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 suffient information and only sufficient information to authize 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. >>'m just drawing a conclusion, so just to be absolutely clear, if mr. myler's telling t truth, you're not

telling t 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 d 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. >>ight. my final question is given all the evidence that was clearly there within news of the world, given the close your and given

th 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 coany'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 atcks 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 evywhere 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 e record, that i would characterize it the same way you just did. >> can i turn to -- [inaudible] >> i apologize, b 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 ar, 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 ll. i don't have perfect knowledge of the management and standards committee independent review, nor should i as an execuve involved in this business.

i thin one of the real lessons learned heres 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 uneical practices -- >> no, i'm not involved in the australian part of the biness, 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 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 nagement 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 awe 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 questn. 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 privatenvestigators. is it not, in fact, the case, thou, 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 ployee at e 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 kingm, there's revelations about unethical behavior from news international executives, the latest being th 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 revelatns 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 disclosu 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 wh 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 theseatters, 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 sndards 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 botm 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' famies 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 wouldave 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 pron in 2005, how long h 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 [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] 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 sa 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 operatn 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 t 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. is 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 theoriginal -- relation to the original inquiry of members of this committee, dig up, you know, as much informatn 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 mters. >> 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 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 whee 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 waed 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 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 atthe 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 wa 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 fi 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? >>an you rule it out? is. >> i don't think i can rule any

corporate reactio 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 i 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 w brought it to your attention at the end of 2010, this whole business of si yen at mille 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 thr process 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 matterof 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 thi 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 involv 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 arranment 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 ews? >> 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 yearsarlier with mr. cliffordi 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 wether 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 reased 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 lal costs, particularly issuing an apology to the family whose phone he'd so cruelly hacked in the circumances. 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 compy behalf, then really the company's liable for those things, is my undstanding. and, again, 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 ting. 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 i legal speculation -- >> i don't want, i'm sure you are engaged in legalpeculation 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, ihink as u'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 amitted 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 thinke have finished up. i thank you for your attendance. >> thank you, mr. chairman. 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. c-span3 c-span

>> i fault -- i always thought there with a. a-fisted agenda. a good boxer does not have just one punch, but the big zero punches. one punch was what we're talking

about in the last panel, which is growth. republicans were thought to be better at managing the economy generally. as you heard in the last panel, the ruben-benson agenda of fiscal responsibility with a thrust for growth was clearly a key in one of those punches, but it made possible the second punch, which is how do you then make that work for people? it is not gdp just to watch it grow. you have to make it look -- work for people. it provides the wherewithal so that you can make other things happen. it is not just social programs, but ways to make the economy reach people. programs like manpower training

and school performance that we have been talking about and college financial aid. home ownership to give people the opportunity to build some wealth and have some net worth. worker dislocation adjustments -- people who lost jobs in one part of the country. systemic changes, like changing the welfare program and changing the public housing system and focusing on teacher training and providing support in policing so that as prime came down, opportunities could be increased. to me, these were always two- sides of the barbell. there is the growth agenda, but not for growth's sake. it fuels the capacity to have these programs. we see these programs as essential to sustaining the growth itself. the whole essence of clinton-

gore economics was always a that -- those two sides working together. as you say, there were other elements that make it palatable like the assignment the president gave to the vice president to figure out the " third way." not rowing, but steering. those were all concepts that work well articulated by the president, vice president, and others. >> and made an enormous difference. you had a big job in the administration. you were heavily involved in the passage of the free trade agreements and the negotiations with china that the president believed would bring new jobs and opportunities to america. talk to us about that and the

effect you take it had of the economy. >> i am just happy to be here. first of all, when gene sperling and i began to campaign in 1991, where both over 6 feet tall. [laughter] if any of you want to be short in stature, just work for bill clinton. i am it so grateful to be with my colleagues who i admire so much and i learned so much from. you could not gather a finer group of people in one room, with the exception of me, ever. second, i am it really grateful that the 32 years of friendship, you have to sit and listen to me, brother and clinton. -- president clinton. [laughter] [applause] let me just add a plant to this platform that has been laid out

so well by both panels so impressively. we were going to engage the world. if you look at the georgetown speech is, all three of them -- opportunity, responsibility, community -- but engagement, the new world, globalization -- we had to take it vantage of that. there are a number of ways to do it. first of all, balance our budget, every people out of poverty -- which we did. the greatest reduction of poverty in history at any time. take the people in america who were not doing well and let them grow. african-americans -- over 30% growth in their income. latinos -- over 24% growth. women did better in history with our economy. invest in infrastructure. what we had to do once we were

strong, how we were going to engage the world, build our markets, create jobs, and take it vantage of this global economy. i am a. to tell one story we were talking about earlier, president clinton. in august 1992, you were faced with a very difficult decision. the question was whether you would take nafta with environmental agreements. on that road from ohio and michigan, if they did not vote for president clinton, we were not going to win the campaign because we were not going into florida. that is what we had to do. we had many arguments about it.

this gentleman sitting in front of you has the guts of -- the most guts of anybody you have ever met. he put his whole campaign on the line. he knew naphtha was the right thing to do. if we wanted to engage the world, we had to start with our own hemisphere. he said yes. but we will have every our mental and at work agreements -- labor agreements -- environmental and labor agreements. that was the beginning of 300 trade agreement. if you are going to have a rules-based trading system, if you are going to have an open trading system, not free trade -- free trade is a misused a hot term -- bill clinton began

talking about that long before 1991. the talk about it at american university in 1993, as i recall. he talked about it in 1992 at the world's fair council in los angeles and set the stage, not just for those of us who worked for him, but for the rest of the world to understand that the u.s. was going to compete, not retreat. we were going to lead. [applause] >> as usual, my job is to get this program back on time. [laughter] could you talk to us before we go down about health care and

the progress we've made in health care? >> obviously president clinton put forth the children's health insurance program. it was part of the budget deal that you all negotiated. it was one of the most progressive and hallmarks of the president's tenure because it was the largest extension of health care in 30 years at that time. from an economic impact, it is two-fold. one is we note the continuing challenge in the country, the biggest reason people go bankrupt is because of health care costs. we have had a dramatic reduction in that because families did not have to go bankrupt because of their children. it is hard to imagine we could live in a country where children did not have health insurance. president clinton righted that

with his team. most importantly, this issue is in today's debate around these things -- the children's health insurance program, medicaid are vital in -- vitally important to state budgets. when we are looking at the debates today, medicaid expenditures are one of the best ways to help address some of our economic challenges because the money gets spent directly. when these programs are to threaten, we should also recognized that we are not just cutting programs, but limiting economic growth. i do not think that is the reason we did this program. it was in keeping with the mission that the importance of having not only economic growth, but policies that speak to how

we should be as americans and how we should solve challenges together as americans and also ensure we are writing the injustices all round us, i think if it was not far hillary clinton and president clinton, we would not have not had the progress we have made in health care sense. >> erskine, i would like to add a quick word. the president is not here. >> he is right over there. he is just out of your sight. [laughter] >> it was sound like pandering if i said he was sitting right here. what i wanted to say is the big part of economic leadership we had is just leadership. president clinton, i think -- and this is important to the students -- it is his natural instinct to be optimistic.

it is an essential part of his program. a subset of that optimism was a belief that you just have to work at it all the time. whether there was a temptation to and maybe play a political -- play a political card, his instinct was let's do the right thing, let's do the thing that will work. it may be called small ball on occasion, but let's do something. i do not know how many times i heard him say we need to show up in the morning and hit it fresh. what i am is saying is you cannot have an economic program in the abstract. it is fueled by the instincts, lotus, and leadership capabilities of the person driving it. [applause]

>> you are absolutely right, henry. i cannot count the number of times that president clinton would come over from the east wing of the white house and for you all that do not believe the president really knows what is going on in the country, he would read dozens and dozens of magazines and newspapers. he would have some article he tore out of the newspaper of some person in oklahoma who had gotten a wrong -- a raw deal. he would give that to me and say, go fix this. that is what he felt was his job every day. to wake up, to come over there every morning, at to make america a better place. he did not care how small or big it was, he wanted to do something of a kid everyday. and it was leadership.

-- if he wanted to do something positive every day. and it was leadership. [applause] >> gene, will you close us down? the nineties were not a time where there was a lack of partisanship. i still have some scars that show through. tell us what you attribute the progress, particularly on economic issues, that we made after the budget battle of 1993. >> well, you never want to look back with rose colored glasses. it was pretty brutal in 1995. we all know that. of course, a lot of times people like to say what brilliant strategist we were when the government shut down, except

that we were not trying to shut the government down. the president was trying to get an agreement. we were trying to work in that context, -- we were smart, i think, strategically in letting people know that we were the reasonable once tried to get an agreement, but we wanted to and there was a serious negotiation. the failure of the agreement was really the failure of speaker gingrich not being willing to move closer to the center like bob dole would have been willing to do that will always be one of my favorite moments of the presidency that the president was willing to shut the government down. it was really over the discussion -- everybody thinks it was medicare, but it was

actually the medicaid discussion. it is when the president said i do not care if it all comes down around me, we were not going to do the block granting and cutting of medicaid. that led to the government shut down. of course, i do not think any of us knew for sure how that would turn out. it was not some great political strategy, but i do think that the public responded by easily punishing the party they thought was the most retaliatory. what was nice about the time than what the people seemed to actually care about public opinion. it is, in retrospect, kind of refreshing that when people were moved, they did respond. i think that by the end of 1996 when we started the second term, there really was -- what

was great about that time is that the president wanted to get a balanced budget agreement. he was willing to, regardless of the politics, to do that. you had a republican majority that essentially did not want to get well by showing they could work with this president. i think it for that moment where there really was among the leadership 8 cents of mutual self-interest -- a sense of mutual self-interest. the president said to me recently, we remember that same kind of hopeless in september, october of 1995, yet the whole mood turned around. you would hope that would be a lesson for right now that while it seems that there is a portion of the house of representatives that is immune from public opinion that that could turn around and should give us some

hope. i think the one experience we had that is relevant to today, even though it does not always work, is the history of getting difficult bipartisan agreements is when you get the leaderships of both sides and both houses in a room. it does not always work as you saw over the summer, but it is the only chance you have. the 1993 experience -- one paying from 1993 is "you got b.t.u'd. you took a difficult vote in a house and the other house decided to not even give that forward. you put your butt on the line and it did not even happen. members of congress are very conscious of that. they do not want to put their careers on the line and find out

that the other house is not even going to bring it up. what we did in 1997 where we first had the process with yourself, myself, frank when we met with the democrats, we were all there. what that allowed for, the safe thing that happened in 1993 with tip o'neill and ronald reagan, is a moment where you can hold hands and jump together. you reached an agreement and everybody knows there will be political cover on both sides and i know both houses support that. whether or not negotiations over the summer bore fruit, whether the super committee bears fruit, that is still the most promising way to get an agreement. i think 1997 really showed that. i think the other positive is when that happens you build a bit of personal trust.

that can seem hard to believe at times when people are such a tough adversaries, but you do work together. the fact that sometimes we had to work together on some of the trade agreements built a certain report. i think that allowed us to reach out to the speaker and pass something in 2000 in an election year with the support of the speaker of the house. this meant tens and tens of billions of tax investment for more income communities -- far lower income communities. i think we went through the worst. you cannot always solved it in the room, but i think it is right to be on the side of trying. at the end of the day i think the public are ultimately like

parents in the front seat with the kids are arguing in the back seat. when you are the kid in the back seat, you think your parents care. -- you think your parents care who had the better side. actually it parents just want you to get along. ultimately the public just wants us to work together. as president clinton showed in 1995, you bear -- you may not bear the fruits of that immediately, but over time ip public rewards those who are willing to try to bring everyone together, who are willing to compromise -- do not see that as a dirty word. you almost had a balanced budget amendment in 1996. that is how quickly things turned from october-november of 1995. you should have seen the president and bob dole sitting in the oval office. they were literally cutting the

deal until politics took bob dole away from doing that. ultimately it did create the environment in 1997 where we started the year with a very clear mission. we had one goal -- get a bipartisan agreement. it can take a while. maybe it can take a year, but that is a mission. what happened between 1995 and 1997 under president clinton's leadership i hope will be the model for what will happen this time as well. >> nothing in the world positive happens without leadership. public service is a great honor and president clinton, on behalf of all 12 of us, we thank you for giving us the chance to serve. [applause]

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> this year marks the 100th anniversary of president ronald reagan's birth. from the university of notre dame, former reagan administration officials will talk about the 40th president's policies. live coverage starts at 10:00 a.m. eastern on c-span2. >> every weekend on american history tv, the people and events that document the american story. this weekend, collaborator a conspirator or innocent boarding home owner? mary surratt on charges she

was involved in president lincoln's assassination. from lectures in history, thomas wayon on the presidency and cold war policy. for our schedules in your in box, click the c-span alert button. this is c-span3, with politics and public affairs programming throughout the week. every weekend, american history tv. get our schedules and see past programs at our website. joined in the conversation on these social media sites. >> majority leader, eric kanter, talk to students at rice university about jobs in the u.s. economy. the virginia republican has been visiting universities around the country. during this event, he was

interrupted by protesters. 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 welcomesree 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 i 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 privilegehis 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 vibrant a mccann is a center for the university's public picy 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 longstding conversation that tas 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 20 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 spee that does not interfere. to interfere with the accessf 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 innovationou ha developed. i also want to thank my good friend and clamate, 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 obstacleso prosperity. one thing i hear over and over is the only thing that worries 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, wh 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 jesh 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 ho as her only possession, lifted herself and her children into a more comfortable, secure, and opportunity-filled place. toer, it was about building a better life for her kids. she made her home -- she made her own american dream into realit 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 tter 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 promis 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 proving 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 aatter 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 wh 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 pottial 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 deat growing up in a life of poverty? what can you do for that ttle girl? we know there are no easy answers to. i believe that child needs a handp 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 coury. she also needs the advantages of a solid family around her and a community that encouras 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. eaier this year, we pass an act that encourages states to support the devopment 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, 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 chdren. parents have the opportunity to be engag 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 committ 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 gulation 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 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 happinesand 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

owned 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 andhe core of this frustration stems from a belief that the same opportunities afforded to previous generations no longer exist today. that is theore of this frusation -- the playing field is not equal. in a recent poll, 82% of americans think their children

will be worse off an 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 realldo think that washingto spes taxpayer money well? even if you believe washingt 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. at 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 hp 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 ss fortunate, like the 9-year-old girl in the inner city. these successful people, these groups of innovators, are the leaders of companies that creat 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 program the community

centers, and oer 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 areas successful people can do. through his example, you can see that ameca 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 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. itoes 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 americ 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 thoseho 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 everyonto 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 werat 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, writteny 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 compan 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 we should all be committed to