let's just stick with the status quo. it's dumpfounding. it's often said the definition of insanity is to do the same thing over and over and over again and expect a different outcome. i don't understand how anybody can argue that we can continue to spend the way we do and expect to free ourselves, free ourselves from this monstrous burden of debt. we need to break the cycle. we've got to hold congress' feet to the fire, now and into the future. a balanced budget amendment is the change away from the status quo and back to sanity. i don't think i can say it better than congressman defazio said in his letter to his democratic colleagues. when he wrote that, quote, democrats walk away from sincere bipartisan effort, will have let the american electorate down. if any of us walk away from this effort we will have let all

americans down. we've been working with -- without a budget, this greatest nation, for over 900 days now. continuing resolutions and debt ceiling increases are not the answer. supercommittees and sequestration is not the answer. enough's enough. today we have a clear choice. whether you want to change the status quo or you don't. either you believe that government must operate responsibly and a balanced budget or you don't. either you want to rescue our nation, ourselves, our children and our children's children from crippling debt or you don't. i'd like to close with the words of ronald reagan who once said this, quote, a congressional budget process is neither reliable nor credible. in short, it needs to be fixed. we desperately need the power of a constitutional amendment to help us balance our budget,

unquote. now, that is presidential leadership. with that i encourage my colleagues to vote yes on the rule, yes on the underlying legislation and i reserve research -- i reserve the balance of my time. the speaker pro tempore: the gentleman from florida, mr. hastings. mr. hastings: thank you very much, mr. speaker, and i thank my friend for yielding the time. what we have before us today should not be called the balanced budget amendment, what it should be called is the unbalanced budget amendment. because that is what this bill is. unbalanced. prudent fiscal policies, makes a mockery of congressional authority, and does nothing to address the economic struggles of millions of americans. this proposed amendment no more balances the budget than passing legislation to declare the tooth

fairy as real. saying it out loud doesn't make it true. what this proposal says instead is that congress needs to enact legislation that balances the budget. it doesn't tell us how to do it, just what we must do. well, if we could do that, mr. speaker, we wouldn't need a constitutional amendment telling us to do it, would we? if congress could enact legislation that balanced the budget it could do that without a constitutional amendment. requiring a balanced budget. merely imposing a mandate within the constitution does not mean that congress will be able to fulfill it. with this kind of circular reasoning, we could go back and forth until the next election and never have to spend one more minute on creating jobs to improve the economy. but that is exactly what my colleagues on the other side

want. they've been in the majority for nearly a year now in the house of representatives and have failed to put forth any kind of plan to create jobs and improve the well-being of millions of americans. . unless you count reaffirming in god retrust as the national the motto, weakening the environmental protection agency, or watering down gun safety laws, i was here in 1995 when this body passed a balanced budget amendment, and let us not forget that under president clinton and, yes, speaker newt gingrich, we did manage to balance the federal budget and leave a hefty surplus for president bush. but then president bush and the republican party squandered that surplus on two wars and people should never forget that. they squandered it on tax cuts for the richest americans.

and they squandered it on unpaid for prescription drug benefits leaving a big old doughnut hole we have been talking about ever since. and now the republicans in this body are so extremist that they refuse to consider any tax increases of any kind on even the best of us in america. instead they are leaving it up to the struggling middle class and poor people to bear the burdens of the republican party's free spending ways over the last decade. and i wish i had the time to really lay all of that out. in fact, mr. speaker, the republican party's intransigence makes this amendment voting requirement particularly unbalanced. this proposal requires a 2/3 vote, 290 votes, here in the house to pass an increase in the debt ceiling. you know what the definition of

insanity is as said by my friend? repeating the same thing over and over and over again and real crazy insanity is just doing it over and over and over and over and over again and expecting the same result. or as ronald reagan put it, there you go again. the republican majority wants to enshrine in the constitution a permanent hostage crisis for our economy. this supermajority requirement for basic economic management will ensure that we will on a regular basis bring our economy to the brink of collapse. just look at the republican's performance on the debt ceiling vote. i don't have any confidence that they'll act rationally just because there is a constitutional amendment telling them to do so. that is why this proposal is unbalanced. by mandating so many onerous,

supermajority votes, this amendment guarantees permanent gridlock in the budgeting process. and without the inclusion of a general emergency waiver, this amendment imperils our national security. let me repeat that. without the inclusion of a general emergency waiver, this amendment imperils our national security by creating a scenario in which congress cannot agree whether or not to vote on funding for national emergencies such as a military conflict. mr. speaker, this unbalanced proposal does not even include a clear enforcement mechanism. i asked about that at the rules committee and i got an answer that i still don't understand. making the balanced budget constitutional requirement means that budget disputes would be solved by america's court system.

they have already failed to pass the balanced budget when the power of the purse is our constitutional obligation. how can we expect to pass one when each eafer every provision is also subject to years of litigation? the republican majority wants to hand off our constitutional obligation to the federal courts that will have the power to raise revenue. no less than a authority than judge robert bork made the following statement regarding that. he opposed the balanced budget constitutional amendment declaring, and i quote him, the result would likely be hundreds if not us thats of lawsuits around the country, many of them on inconsistent theories and providing inconsistent results. the celebrated late professor archie balanced cox of harvard law school predicted there is a substantial chance, even a strong probability that federal courts all over the country would be drawn into its

interpretation and enforcement. and since my friend used president reagan, the former solicitor general to president reagan, professor charles prix, has testified an i quote, the amendment would surely precipitate us into subtle and intricate legal questions and the litigation that would ensue would be gruesome, intrusive, and not at all edified. the former attorney general to president george h.w. bush opined that judicial power could be invoked to address serious and clear-cut violations. the republican majority wants to hand off our constitutional obligations to these courts who will then have the power to raise revenue, impose taxes, cut spending, and reform major government programs. well, i guess, if that's the case, we can all just go home

now. this body has previously considered balanced budget amendments on numerous occasions. initiated by both democrats and republicans. the majority party has always ensured sufficient floor time for debate and and to allow the majority to offer alternatives. here we are in a situation where the proposal before us was never marked up in committee, never had a hearing, and in fact was drafted late this past thursday night by some mistearous tweaking of h.res. 1 that became h.res. 2, and this version was changed in secret and filed with last-minute surprises that fundamentally changed the nature of the legislation and will come upped a procedure that doesn't even allow a motion to recommit. this is no way to amend the constitution. by all means, mr. speaker, if

we want to balance the budget, let's not do it on the backs of the hardest hit americans. i don't need a constitutional amendment to tell me that balancing the budget without raising taxes on those of us that are best off in this country is unbalanced. where americans need the federal government to support the economy, republicans are trying to strangle it. where americans need us to put politics aside, republicans are bringing forward legislation written in secret. where americans need this congress to focus on economic issues, republicans are insisting that we vote on god and guns. we don't need to be voting on god, gays, and guns, what we need is some guts to tell the american people that, yes, we can do this and we can't wait any longer for them who are waiting for us to create jobs. now the republican majority wants to pass a constitutional amendment to tell us that we have to balance the budget.

every year in a way that no individual state or local government or business does. no borrowing, no trust funds, no way to plan for long-term projects like highway construction, national defense, and public schools. this amendment guarantees budgetary gridlock forever. and moves budget decisions to the federal courts not congress. this proposed amendment locks in to the constitution the most far right of the republican party's policies. forcing future generations to reap the pain imposed by callous disregard for the least among us, the ones who need the most help. mr. speaker, there are 273 national organizations as of yesterday who oppose h.res. 2, the balanced budget amendment,

and it's too olympic to place into the record or to put forward, but some of them among the most celebrated organizations in our country. i also would recommend to the membership an article written by the american constitution society for law and policy, a nonpartisan group, that discusses how unnecessary this particular provision is, and it ends with the following paragraph. the threat of a balanced budget amendment would pose to our constitutional order is unavoidable. congress of course remains free to act a balanced budget if it believes this is sound economic policy. it also remains fully equipped to institute effective controls to ensure restraint and balance in the budgeting process. therefore there is no sufficient reason to incur the

dramatic risk that the balanced budget amendment would entail for our constitution and our nation. this is not a balanced budget amendment, mr. speaker, but it is an unbalanced one. i reserve the balance of my time. the speaker pro tempore: the gentleman from florida reserves the balance of his time. the gentleman from florida, mr. nugent. mr. nugent: i yield such time as he may consume to the gentleman from california, the chairman of the august rules committee. the speaker pro tempore: the gentleman is recognized for -- without objection. mr. dreier: mr. speaker, i want to begin by expressing my appreciation to both of my friends from florida who serve on the rules committee. this is a very, very important debate. it's a debate that we haven't had since january of 1995, which is the last time that the house of representatives had a vote on the issue of a balanced budget amendment to the u.s. constitution.

back in 1995 when we had just won our majority, mr. speaker, i was one of the enthusiastic supporters, one of the 2/3 of the house of representatives who voted in favor of the constitutional amendment requiring a balanced budget. i felt very strongly at the time that as we looked at the fiscal challenges that we as a nation faced that the only thing we could do to achieve a balanced budget would be to have an amendment to the u.s. constitution that would call for that. well, mr. speaker, i have changed my mind. i have changed my mind and i will be voting against the constitutional amendment calling for a balanced budget. this is not something that i have done lightly. my friend from spring hill is absolutely right when he said that the imperative of looking at the tough challenge of

amending the constitution is something that needs to be addressed. but i'll say i agree with a number of the arguments that were put forward by my friend from fort lauderdale and a lot of the arguments put forward by my friend from spring hill. at the end of the day i concluded that we should not amend the u.s. constitution calling for a balanced budget. i said i changed my mind and i'm reminded of a statement that was made by our former colleague, the mentor of our friend, jeb hensarling, who is working tirelessly to ensure that we get our fiscal house in order with the work of the joint select committee, and his mentor was phil graham, democrat, then a republican, served in the house and the senate. and phil graham once said that ours is one job where you can never admit to having learned anything. ours is one job where you can never admit to having learned

anything. well, mr. speaker, i believe that i have learned something i'd like to take just a few minutes to explain why it is that i come to the conclusion that i had. i said at the outset that i believed in 1995 when i cast that vote, january of 1995, in favor of the balanced budget amendment to the constitution, that it was the only way that we would be able to achieve a balanced budget. i was wrong. two short years later we balanced the federal budget. we balanced the federal budget and that went on for several years. it went on until 2001. my friend was talking about the fact that we had two wars. we've got to remember, we've got to remember it took literally billions and billions of dollars to deal with national security issues like establishing the department of homeland security and many other things that were very, very costly. but what i found, mr. speaker, is that we were able to balance

the federal budget without touching that inspired document, the u.s. constitution. now, james madison, james madison in federalist number 58 i believe gave the real description of the power that lies here in the house of representatives. he said the power over the purse is the most complete and effectual weapon that could empower any group of elected representatives of the people. we in this institution, mr. speaker, have the power of the purse. we have the power of the purse and we proved in the late 1990's that we had the will to balance the federal budget. without touching that inspired document, the u.s. constitution. and those were the words of james madison in federalist number 58. the power over the purse. the power over the purse is the most complete and effectual weapon that elected

representatives have. now, some people point to thomas jefferson who famously in a letter written november 26, 1798, talked about letter this guy, john taylor, he talked about how it was essential for us to have a single amendment to the constitution to call for a balanced budget. it appears thomas jefferson learned something as well because five years later in the term of his presidency, he embarked on the largest deficit expenditures to take place since the revolutionary war. it was not a war expenditures. it was not an emergency expenditure. it was the 1803 louisiana purchase. and that was a decision that thomas jefferson made that most

of us inferred led to a change in his position from the november 1798 letter that he wrote to john taylor. we look at some of other arguments, my friend from fort lauderdale went from the arguments on the court. i think it's important for us to look at not just that part of it, but we need to look at the enumerated powers provision in the u.s. constitution. i believe that not only can we create as these brilliant jurists said a real problem within the court structure, what we create, mr. speaker, is a transfer of power from the first branch to the third branch of government. something that is completely contrary to article 1, section 7 of the u.s. constitution, where the power lies right here in the united states house of representatives. .

why? because most have said that if we were to get into these protracted legal battles this could end up in the court and we could have several years from now a court deliberating over a budget that had passed again literally years before. and so as we look at these arguments, mr. speaker, i will tell that you i'll take a backseat to no one when it comes to our commitment to get our fiscal house in order. do i happen to believe that our former colleague, jack kemp, was right when he said we shouldn't worship at the alter of a balanced budget, but we all know that with this $15 trillion figure that my friend from spring hill pointed to, we need to do everything we can to reduce that debt and our annual deficit. but it's important for us to focus on economic growth and that's why i congratulate those on the joint select committee who are working on that and i believe that that's something that we need to do. but having a balanced budget does not guarantee job creation

and economic growth. yes, of course having a degree of fiscal solvency goes a long way towards generating a climate that can make that happen. but we need to have pro-growth economic policies and fiscal restraint is only one of those tools. and so that's why i believe that as we look at the challenges that lie ahead, i don't want to say to the american people that i'm going to protect you from your future leaders that you're going to elect. the american people deserve the congress that they elect. i personally think they deserve better than some of what we've had here over the past several years, right now we all know we've got a 9% approval rating. but the american people could not have representatives that say, we're going to say to you that you can't have the leaders

that you elect do what you think is right. maybe there's another louisiana purchase out there. and that decision is something that should be made by leaders. and so i believe in very carefully amending the constitution and i will say that i've always been troubled by some who argue that the level of your commitment to a public policy issue is based only on your willingness to amend the constitution to implement it. well, i think that's silly. i think that's ridiculous. i think that someone can be passionately committed to an issue like saying we shouldn't burn the american flag and yet be willing to say, it shouldn't be enshrined in the u.s. constitution. i feel the same way about the issue of a balanced budget. and i'm proud to have voted to bring about these kinds of spending cuts. i'm proud to have done everything possible to try and reduce the size and scope and reach of the federal government and i do think that a lot of work has to be done and my

friend from spring hill, again, correctly pointed to the fact that both sides have responsibility for increases in spending. but i think we can come together , i think we can have the will to do this. even if we pass a bald budget amendment to the constitution, we all know very well we're not going to balance the budget overnight with a $15 trillion debt and multi-- now multi-trillion dollar deficits. we're not going to do it overnight but we have to get ourselves on that road and i'm convinced that we can. and i don't think that amending the constitution is going to do anything to help us get there. so, i do support the rule and i think the rule -- by the way i should say to my friend is one that was used when the equal rights amendment passed the house of representatives. so the argument to make that somehow having this done under suspension of the rules is not fair, there's going to be five hours of debate, there's going to be an opportunity to do this. i've had the opportunity to say my piece, i know that i'm in the minority in my party. i know that there's not a lot of

enthusiastic support on my side, i know there are many democrats who are going to be supporting the amendment to this. so we're going to have a chance to discuss these as we move through today and tomorrow. so i do support the rule and the work of the rules committee. we worked long and hard on this. but at the enof the day i have come to the conclusion -- end of the day i have come to the conclusion that i have. i thank my friend for yielding and yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from florida, mr. hastings. mr. hastings: thank you very much, mr. speaker. i wish to compliment the chairman of the rules committee for -- mr. dreier: will the gentleman yield? i don't want to get in any more trouble than i already have. so if the gentleman could withdraw his compliment, i'd appreciate it. mr. hastings: i'm delighted to withdraw the compliment. what i wanted you to be able to do since you had become so enlightened about the balanced budget amendment was to be equally enlightened with reference to the rules and allow us a motion to recommit. mr. speaker, if we defeat the previous question i'm going to offer an amendment to the rule

to provide that immediately after the house adopts this rule it will bring up h.r. 639. the currency reform for fair trade act, which will help create jobs in the united states by making america manufacture products more attractive to chinese consumers. i at this time am pleased to yield to my good friend from the state of washington, mr. mcdermott, three minutes. the speaker pro tempore: the gentleman from washington voiced for three minutes. -- is recognized for three minutes. without objection, so ordered. mr. mcdermott: mr. speaker, today we have another triumph of the republican public relations office. their job is to hide the fact that the select committee of 12 isn't going to get anything done and their members are going home for thanksgiving and they -- what will they talk about? a failure? no, they want to give them something.

so this balanced budget amendment, that's why we're out here debating a rule on a job-destroying, poorly thought out amendment to the constitution. this house is considering an amendment to the constitution that did not go through the regular order, is not even the product of any committee debate, it is not -- it has not been an open and thoughtful process. mr. speaker, the job of this congress at this time should be creating jobs. for 11 months the republicans have talked about it but done nothing. now, instead of wasting the people's time with this doomed and irresponsible constitutional amendment, we should deal with this country's serious economic concerns, one of which is the chinese currency manipulation and how it hurts american businesses and our workers. it's time for this house to vote on the currency reform act for fair trade. the speaker needs to stop standing in the way of this

important legislation, we've been discussing this issue with the government of china for more than eight years. american manufacturers should not be forced to compete against a 28% discount on imports from china, all because of china's predatory currency practices. this legislation will help to provide meaningful relief to u.s. companies and our workers who are injured by the currency manipulation of china. this is a bipartisan measure. the china currency bill passed the house last year with a strong majority of republicans and the majority of the house has co-sponsored this bill including 62 republicans. and we can't get it up. the senate has already passed a similar bill with a strong bipartisan vote. the speaker is the one who has

his foot on it. because he's got his foot on the rules committee and they won't bring it out. american workers expect every one of us, on both sides of this aisle, to fight against china's predatory trade policies and to fight for american workers. we should be fighting for the american economy rather than pandering to the republican base with this terrible attempt to use the constitution as a partisan playground and a way to hide from the american people that were not doing what they sent us here to do which was to create jobs. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from florida, mr. nugent. mr. nugent: mr. speaker, i yield two minutes to the gentleman from south carolina, mr. scott, and a rules committee member. the speaker pro tempore: the gentleman from south carolina is recognized for two minutes. mr. scott: thank you, sir. let me first thank sheriff nugent from florida. sheriff, you're doing a fantastic job with this rule. i thank you for leading this

important debate. i wanted to ask a simple question of my friends who oppose the whole concept of a balanced budget amendment. what makes us, the federal government, any different than the state and local governments who have to abide under a simple balanced budget concept? but more importantly, what makes us any different than the 74% of americans that simply say that balanced budget amendment is in the best interest of the citizens of this country? simply put, washington needs to stop this runaway train of spending. so often, too often even, it seems that this town has lost sight of the fact that taxpayer dollars don't just appear from some magical piggy bank but rather are paid by hardworking american families. we have a duty to spend these

dollars wisely and unfortunately in this town that simply doesn't happen very often at all. the last three years, the last three years, not the last 30 years, not the last three decades, but the last three years we have seen the largest increase in the debt of this nation, in the history of this nation, and it is very clear, a constitutional amendment is the strongest option we have today to ensure that this doesn't happen again. how can we expect to create a proper environment for job creation when we can't even keep the federal government's checkbook in balance? how does the current administration think we can continue to force small businesses to completely revamp their budgets under an onslaught of burdensome regulations while washington does not have to do the same thing?

mr. nugent: i yield the gentleman 30 seconds. mr. scott: thank you, sheriff. it simply doesn't make sense. we should get this work done, we should get this fixed today and i will say as a part of the majority making class of 2010, with 86 out of the 87 freshmen on the republican side supporting some form of the balanced budget amendment, we should move forward now. the american people demand it and they should get it. thank you. the speaker pro tempore: the gentleman's time has expired. the gentleman from florida, mr. hastings. mr. hastings: thank you very much, mr. speaker. my friend on the rules committee, mr. mcgovern, i'm sure has views that are similar to mine. i yield to him 3 1/2 minutes at this time. the speaker pro tempore: the gentleman from massachusetts is recognized for 3 1/2 minutes. mr. mcgovern: i thank the gentleman. mr. speaker, my friends on the other side of the aisle claim to be about fiscal prudence, that they're here to get our fiscal house in order. that a balanced budget amendment

is the only way to do so. once again, mr. speaker, my friends on the other side of the aisle are wrong. the right way to balance the nation's budget is by making good, solid, smart policy. something the republicans have proven to be incapable of over the past decade. president bush was handed a gift from president bill clinton. he was given a budget surplus. and instead of crafting a smart, long-term fiscal plan he blew it in a couple of big spending sprees in the first few months of his term. with a lot of help from congressional republicans. let me be as clear as i can be. you don't squander a surplus on tax cuts to the rich and you don't sput putt two wars -- don't put two wars on the credit card. you certainly don't do those two things at the same time. but that's exactly what the republicans did. and they drove this economy into a ditch with unpaid tax cuts and unpaid wars. and now they want to amend the constitution with a balanced budget amendment. you've got to be kidding.

what's worse, the republican leadership has decided to break their transparency pledge, not only are they thumbing their nose at their own rules, they are actually bringing a bill to the floor that has never been read, amended or voted on in a committee. that's right, mr. speaker. despite all their rhetoric, this balanced budget amendment was never marked up in committee and even worse it was changed without a vote before it came to the rules committee. even though there has been no official consideration of this specific bill by the judiciary committee, something this new republican congress promised to do, the sponsor of this bill had the audacity to say that this bill and the changes made in the document were supported by the -- changes made in the dark of night were supported by the committee. these changes actually allow war funds to be exempt from the balanced budget amendment. these wars have gone on too long and they should be paid for, they should have been paid for from day one. that's a mistake that we should learn from instead of repeating. we have already spent $1.3 trillion on the wars in iraq and

afghanistan. that's $1.3 trillion that's unpaid for, $1.3 trillion on our grandchildrens' credit cards. mr. speaker, i oppose these wars, i want them to end now. but if you support them, the least you could do is pay for them. and yet the republicans are repeating their same mistakes. and i shouldn't be surprised. this is the party that decries government spending but turns to fema with outstretched hands in time of need. this is the party that says the recovery act doesn't work but shows up at ribbon cuttings for projects paid for by the recovery act. and now this is the party that says we should balance the budget but we shouldn't pay for the wars that increase our debt. . this is a bad bill being brought up under a bad process. vote no on the rule and no on the bill. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from florida, mr. nugent. mr. nugent: i reserve the balance of my time. the speaker pro tempore: the gentleman from florida reserves his time. the gentleman from florida, mr. hastings. mr. hastings: mr. speaker, at

this time i'm very pleased to yield two minutes to the distinguished gentleman, the ranking member of the committee on ways and means, mr. levin. the speaker pro tempore: the gentleman is recognized for two minutes. mr. levin: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without objection. mr. levin: mr. hastings has indicated that if we turn down the previous question we will bring up h.r. 639. this is a fact. china's currency manipulation is hurting u.s. businesses and workers. according to a recent study imports from china account for 25% to 50% of the manufacturing jobs we have lost over the past decade. that's one million to two million jobs in our trade deficit to china continues to grow. the important factor in this picture is currency manipulation. american manufacturers are forced to compete against an estimated 25% discount on imports from china due to that

manipulation. that's on top of china's massive subsidies and other policies. dr. fred burkeson, who heads the peterson institute, says elimination of china's undervalued currency would create a million jobs mainly in manufacturing. and that manipulation is by far the largest protectionist measure adopted by any country since the second world war, probably in all history. meanwhile, the chinese government is pushing production of high-end manufacturing products, that compete head-on with american products, high-tech product, wind turbines, automobiles, aircraft, and others. this is a bipartisan measure. a majority of the house, 230 members, have co-sponsored the bill, including 62 republicans. the time has come for action. eight years of talk have

yielded meager results. american workers and businesses cannot wait any longer and the u.s. economy cannot wait any longer. the time is now for action. defeat the previous question. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from florida, mr. nugent. mr. nugent: continue to reserve. the speaker pro tempore: the gentleman from florida reserves his time. the gentleman from florida, mr. hastings. mr. hastings: would you be kind enough to tell me how much time remains? the speaker pro tempore: the gentleman from florida, mr. hastings, has nine minutes remaining. the gentleman from florida, mr. nugent, also has nine minutes remaining. mr. hastings: thank you very much, mr. speaker. mr. speaker, i'm very pleased to yield to my good friend, the gentlewoman from ohio, ms. kaptur, two minutes. the speaker pro tempore: the gentlelady from ohio is recognized for two minutes. ms. kaptur: i thank my colleague, my able colleague from florida, congressman hastings, for yielding and rise in support of congressman's

effort here to focus attention on this whole issue of chinese currency manipulation. when congress passed permanent most favored nation status with china over my objection, we were told by supporters of the agreement that trade with china would create jobs. more economic opportunity and trade surpluses for our country. well, if you look at the numbers, you'll see since that was passed what's happened is we've got more and more and more trade deficits every year totaling in 2010 over $273 billion. with chinese currency manipulation, that's almost an inflated number because it would be cut in half, it would be cut substantially, if it were marked to their true value not inflated value. china has never opened up its market. that's why we get these huge trade deficits. and they aggressively use government intervention through currency manipulation to rid the markets. we know they are the largest

intellectual property thief. they counterfeit their goods. they use industrial policy to promote and protect chinese industries at the expense of american jobs and factories. some call these tactics market leninism because we see state managed capitalism in china locking down on industry after industry. regions like i one i represent in northern ohio have been especially hard hit as production shifted from the coast of the great lakes to the shores of china. we can see this draining of wealth from the united states. last year our trade deficit again was over half a trillion dollars globally, and with china, they had over half of that trade deficit. if you look at the trade data we are on track to send at least as many jobs to china this year. you can see that the jobs being shipped to china in every community in this country, even scrap metal is being sent over there, for heaven sake. economists tell us that every billion dollars in trade deficit translates into 14,000

lost american jobs. if we could get the currency manipulation issue solved, we could bring some of those jobs back to this country. it's time for china to play on a level playing field. i yield back the balance of my time. the speaker pro tempore: the gentlelady's time has expired. the gentleman from florida, mr. nugent. mr. nugent: mr. speaker, i just want to make sure that everybody that may be watching us at home understands we are talking about a balanced budget amendment. i continue to reserve. the speaker pro tempore: the gentleman reserves his time. the gentleman from florida. mr. hastings: i would like my friend to know we also are talking about the previous question which i'm at this time pleased to yield two minutes to the distinguished gentleman, my friend from pennsylvania, for two minutes. the speaker pro tempore: the gentleman from pennsylvania is recognized for two minutes. >> thank you, mr. hastings. thank you, mr. speaker. i had prepared remarks i'm going to talk about to defeat this previous question so that we could bring the chinese currency manipulation bill to the floor, but we have been talking about this on a weekly basis. we have been talking about it on the floor of the house on a

weekly basis. mr. critz: and i think back to 10 months ago when speaker boehner made the statement that the house works best when it's allowed to work its will. we had a bill, this same bill that passed the house last year, overwhelmingly. it passed the senate, similar bill passed the senate earlier this year overwhelmingly. this bill has broad bipartisan support. 62 republicans are co-sponsors of this bill. four months ago i brought a discharge petition which is now just 30 signatures shy of bringing this bill, forcing this bill to the floor. it needs republican help. i'm imploring the speaker to bring this bill to the floor of the house. this is so important. as congressman levin said earlier, we are talking about jobs. i did a telephone town hall. the topic of discussion was about jobs. everyone wants to know when are we going to put our heads together and work to get this country back to work.

a million jobs. manufacturing jobs. this is an issue that everyone knows about. everyone can agree on. we just want to level the playing field. this is giving this country the teeth it needs to go after countries such as china that manipulate their currency and hurt american manufacturing companies. this is about locking arms with the american public and moving forward. so i urge those republicans, those 62 that are on h.r. 639, anyone can see those names. anyone can call and say, you need to support this bill. you need to support the discharge petition. get on it. let's talk about this. you can't hide behind the speaker any longer. we are going to continue this fight day in and day out, week in and week out. i urge defeat of the previous question so that we can talk about jobs for the american people. i yield back. the speaker pro tempore: the gentleman from florida, mr. nugent. mr. nugent: i continue to reserve. the speaker pro tempore: the

gentleman from florida, mr. hastings. mr. hastings: i'm very pleased to yield at this time to my good friend from texas, ms. jackson lee, two minutes. the speaker pro tempore: the gentlelady from texas is recognized for two minutes. ms. jackson lee: i thank the distinguished gentleman from florida. the underlying resolution has to do with the balanced budget amendment which most americans might say, yeah. but this is a deja vu because we debated this so many years ago and was found that a balanced budget amendment for the federal government will not work with all of the restraints and necessaryities of -- necessities of serving the american people. but mr. critz' bill and the idea of correcting the turncy -- currency manipulation of china will work. will create jobs. the world trade organization

cannot help. all the negotiations with china will not help. i would love for them to stand up and be counted in the world family so that we can continue to churn the economy that all of us would benefit from. but as the euro crumbles and possibly the dollar will step in, i oppose the euro many years ago, we've got to get a currency that responds to all of us. decent pay for a decent day's work. that does not happen when you have a manipulation of product cost so that some products are so much cheaper than the ones made by americans. we are not envious, we are not jealous. but this resolution or mr. critz's bipartisan effort can move forward if we vote no on the previous question. and then we can begin to help create jobs and we might say to the supercommittee that we thank you for your service, but

we can go into 2012 deliberatively and thoughtfully looking at a plan that raises revenue and cuts the areas that does not leave the vulnerable along the highway of despair. i support mr. critz's effort. i want to move beyond the supercommittee and fund this government and create jobs in the way that the people elected us to do. i yield back. the speaker pro tempore: the gentlelady's time has expired. the gentleman from florida, mr. nuningent -- nugent. mr. nugent: i continue to reserve. the speaker pro tempore: the gentleman from florida, mr. hastings. mr. hastings: at this time i would advise my friend from florida that i'm going to be the last speaker and if he's ready to close, i'll go forward doing the same. mr. nugent: yes. mr. hastings: thank you very much. mr. speaker, this unbalanced amendment does not belong in our constitution. it enshrines far right ideology

and makes a mockery of congressional authority to set forth the nation's fiscal policy. this hardly belongs in the same company as freedom of speech and the abolition of slavery and a woman's right to vote. this proposal does not balance the budget, it only demands that congress do so, and yet it does not provide a mechanism to enforce that rule. so in a situation of partisan gridlock, the federal budget might very well end up in the courts. this is no way to govern. if this congress could balance the budget, we wouldn't need a constitutional amendment to tell us to do so, but the fact remains that the republican majority has steadfastly failed to set forth legislation that will create jobs and grow this economy. given their inflexibility, a balanced budget constitutional amendment hardly seems like the

magic wand republicans claim it will be. this congress needs to be serious about the real causes of economic hardship in this country, focusing on god and gays and guns and not having the guts to tell people we are not doing anything to create jobs, that isn't going to keep people in their homes. it isn't going to help americans obtain quality health care and education. these are the critical issues facing our nation. wasting our time and that's exactly what this is, it's going nowhere fast. wasting our time with political gimmicks like an unbalanced constitutional amendment is just that. wasting our time. so, mr. speaker, i ask unanimous consent to insert the text of my amendment to the rule in the record along with stroorl -- extraneous material immediately prior to the vote on the previous question. the speaker pro tempore: without objection, so ordered. mr. hastings: mr. speaker, i urge my colleagues to vote no

and defeat the previous question so we can debate and pass real jobs legislation today. not little old stuff that is appealing to the right ring of the people who are pushing nothing more than symbolism and talking about it being in our united states constitution. i urge a no vote on the rule and i yield back the balance of my time. . the speaker pro tempore: the gentleman's time has expired. the gentleman from florida, mr. nugent. mr. nugent: i want to thank my good friend from florida for a lively debate regarding the issues, though, that has sort of gotten muddled is about a balanced budget amendment, not about anything else as you've heard about on the floor. it is about a balanced budget amendment. but just to remind everybody, we talk about jobs, we've done, we've passed over 21 jobs bills that are currently sitting idle in the senate. so i don't know what else you

can do except it gets kind of frustrating we are seeing great pieces of legislation -- sending great pieces of legislation over to the senate. mr. hastings: will the gentleman yield? mr. nugent: i gave a lot of time. mr. hastings: i just asked you to yield. if you don't yield, that's all right. i want to know whether or not those 21 jobs bills that 10 of them are regulatory reform? mr. nugent: just trying to close. thank you. you know, we've heard a lot of debate here about a balanced budget amendment, pros and cons. you are going to hear five hours of debate in the very near future about the pros and cons of a balanced budget amendment. you know, this congress has done things that are amazing. we used emergency funding to fund the census. now, i know the census probably snuck up on everybody around

here so i don't understand -- i understand why you had to use emergency funding to do it. you know, we talk about the clinton years. we talk about budget surpluses and how quickly they disappeared. but remember one thing. part of the clipon surpluses -- clinton surpluses also hallowed out our force which required us to put our service men and women at risk for way too long. some of them having not to -- weren't allowed to retire through stop loss and others have had to serve 15 months in combat positions because we'd hollowed out our force. you know, patrick henry said the constitution is not a tool for the government to -- it's an instrument for the people to restrain the government. today we start building upon those restraints. a balanced budget amendment is more of an instrument to check bloated government, a government that wants to be everything to everyone.

today we're borrowing 40 cents, 40 cents of every dollar we spend. we're writing checks that we can't cash, hoping future generations will be about -- figure out how to get out of this mess on their own. the spending is just unsustainable. you know, i wasn't happy with the budget control act, but i voted for it simply so we can vote today on a rule to allow us to vote on a balanced budget later this week so we can fundamentally change where we're going. after 10 months in congress, i'm convinced that there are not enough people in washington with the determination, the dedication nor the fortitude to make the tough decisions for the good of this country. the constitution has saved us in the past and it can save us in the future. a balanced budget amendment would give americans a reason to believe that more efficiently and effectively

than any other proposal i've heard of. one of the things i hear consistently back home is you all have made decisions in congress that have put us so far into debt our unborn children are facing a debt of $48,000 this year for every child who's born this year. how can we stand up and look at people and say, this congress can fix it on its own, how can we look at people in the eye and say, you know what, just give us another chance, we've done so well over the last 30 years? i don't believe that the american people believe that we can do that, and i think that's why they're asking for fundamental changes. i think that's why they're asking us to step forward and do the right thing, mr. speaker . not kick the can down the road any more. you know, we have members here, and i have the utmost respect for our chairman and for my

good friend from florida, mr. hastings, but i adamantly disagree. i think we've had a change in government because there's a necessary need for a change in government. i think that you can't continue to do the status quo because if we do we're just going to wind up $15 trillion in debt today, $20 trillion in today two years from now. when does it end, mr. speaker? so i encourage my colleagues on both sides of the aisle to support this strong, strongly bipartisan legislation, and with that i yield back the balance of my time and i move the measure had majority vote. that was still less than the 2/3 majority needed to pass in the house.

the associated press is reporting that with the deadline days away, congressional mcgraw's heaters on the reduction committee to not appear close to agreeing on how to reduce the federal deficit by $1.2 trillion over the next 10 years. one cut that does appear likely is getting rid of the missile defense shield program for defending europe. legislation raised the debt ceiling and requires the 12- member bipartisan group to report on the deficit-cutting plan by wednesday, november 23. the deadline is effectively for monday so that the budget office can take two days to measure the effect on the debt and deficit. if the committee fails to reach a deal, a series of automatic cuts would go into effect. those include heavy reductions in defense spending. you can follow continuing coverage of the debt talks here on the c-span networks. this week, senator coburn of

oklahoma discusses the deadline facing the joint deficit reduction committee next week to cut federal spending by $1.2 trillion. >> was the super committee a good idea or a mistake? >> it was washington's answer to kicking the can down the road. >> what the entire interview on sunday at 10:00 a.m. and 6:00 p.m. eastern. it is also available online at c-span.org. >> they have learned this weekend as book tv brings you the miami book fair international. follow the authors and discussions. joining in this weekend on c- span2. you can also find excuse of webcasts -- exclusive webcasts.

>> ethnic nationalism, tribalism, religious fundamentalism are far more powerful than etiology -- ideology. we are not immune from these forces in this country. when the melting pot has been thrown out and you are preaching multiculturalism, what holds us together? >> from new york city, the 62nd annual book awards. find a complete schedule online. >> jon huntsman discusses his jobs proposal on monday while criticizing the economic plans of president obama and his fellow republican candidates. this event took place at the brookings institution in washington, d.c. it is the first in a series of forums with the candidates discussing the economy. this is about 50 minutes.

>> this session will be the first in what we hope is a series in which each of the republican candidates will come and have a session like this. we did something like this in 2008 with democrats and republicans. our guest this afternoon is governor john huntsman, the former governor of utah. today's discussion will focus on the economy, jobs, tax reform, and the budget. the governor will outline his comprehensive plan to create jobs and revive the economy. it is also a great pleasure to welcome his daughter and her husband.

this is the third time brookings has posted governor huntsman -- hosted governor huntsman. when he was the ambassador to china, he participated in our strategic form on clean energy in beijing and washington. as the 16th governor of utah, his economic policies were a tax reduction, reducing government, and growing the economy in utah. he also has extensive foreign- policy experience. as the ambassador to china and deputy u.s. trade represented, he served under four different u.s. presidents. he has argued foreign-policy is critical for national security and economic growth. he has been a businessman, a political leader, and a statesman. we are very pleased is able to join us today. the session will take

the session will take the form of a discussion between ted care, sitting to john's right, the professor of our economic program. he has also served in the bush 43 administration under hank paulson in the treasury department. welcome, governor huntsman. [applause] we are at best, treading water, putting much around 9% unemployment. if we were to get 200,000 jobs

per month, month after month after month, it would still take 12 years to get back to where we were pre-recession. what role does the federal government have to help us dig out of this enormous problem? what would you advocate as president? >> where i learned as governor i will reply as president, and that is, the leader through policy-making can influence a state or a country's level of competitiveness. we did that in the state of utah. and we made it no. 1 in job creation. we made it the most attractive

destination for business. we worked on innovative education policies, job training programs. we looked at what we needed to do in our state to compete in a region, the western region of the united states in ways that would set us apart from others. when you stop to think that, you know, the brain power leaving your state, which we saw going somewhere else -- you know, if your college graduates are leaving, that is a bad sign. that is your intellectual property development. if your entrepreneurs are not active, if investment is not landing in your marketplace, then it is landing somewhere else. capital is a coward and it will

flee were there are risks in the marketplace. if it is not letting in a marketplace, it is going somewhere else. you have got to create an environment that speaks to the attraction of brainpower. uka to create a marketplace that -- you have got to create a marketplace that speaks directly to capital. utah is not california or new york, but you've got resources and geography and well-educated work force. you have a commitment to the firm, which is what i heard from a lot of people. very loyal people. and we had a real entrepreneurial streak in the population. i got together a group in the run-up to the election in 2004. dozens and dozens of business leaders, stakeholders, academics to say, if you had to change 10 things to revitalize the

economy, what would it be? it cannot be 100 things. the band with this is not such that you can get that done as a leader, but it can be tending sick or five things or three things, so let's prioritize them -- it can be 10 things or five things or three things, so to prioritize them. that is what we did. we measured what would need to the marketplace in terms of revitalizing. we have a system that i liked to describe as a dilapidated system from the 1950's. if you are born to try to compete with the likes of colorado or idaho or tx, you have got to do better. we came up with a tax reform program. we failed before the legislature the first time. we succeeded the second year and is essentially flat tax.

we were able to close loopholes. we did not get all of them gone. that was my goal, i wanted all of them gone. even about as politically treacherous. -- even though that is politically treacherous. what we did produce was better than we had before. what it did as much as anything else is in fused a sense of confidence in the marketplace. people talked about us.

people's writing about the utah market. forbes, fortune, people cannot to do articles about the marketplace on the move -- people came out to do articles about the marketplace on the move. and brainpower is attracted to your local university, which we found becomes a more attractive place to be. revenues increased. we were able to make investments in our state that up to that point we could not think about what could not afford it, like a painter for they are worse. putting innovative programs into the classroom, like early childhood development expanding choice. and then at the higher up lockable, coming up with some centers of excellence that would attract brain power. i learned to sing -- sitting on the economic development board in the 1990's, there lesson of economic development, which was to open the floodgates for brainpower. level the playing field and tried to stay a step or two ahead of the competition. we just have to make sure our competitive environment is conducive to attracting the

elements that an economy needs for success. this is truly applicable nationally. we need to infuse a sense of confidence into this economy. there is capital. we have great ideas. we have the most innovative, entrepreneurial, created across the world has ever seen. they are still here. they want to be set free. but there is not a level of confidence today that is compelling companies to unleash a expenditures into the marketplace. we must, in this country, create an environment that speaks to 20% to competitiveness. attracting capital, brainpower.

why is this important? a think we have an opening in terms of rebuilding manufacturing muscle. a lot of people say those days are done. wanna was born in 1960 we exported we owned 36% of gdp. we have an opening here. why? china pointed gdp is going from 8%, 9%, 10%, over 30 here is coming. with that will be higher unemployment, which always carries a -- an element of political instability and that investment always will be looking for alternatives. butwe would be stupid if we do not address the alternative.

we will address these deficiencies and we will win that investment here. it also assumes you have a president who can sit down with the manufacturing alliance, the chamber of commerce and the business roundtable and say, folks, i know you have capital expenditures planned for all four corners of the world, but what you to do it here. a way to go back to your board of directors and think again about deploying these and in exchange for that, i'm going to fix taxes, creating a regulatory environment that is conducive to prove stability and growth. >> i want to dig a little bit deeper. you mentioned the tax reform. in your plan is essentially

endorsing one of the simpson- bowles fiscal commission. they have an array of tax rates that you can choose from. but in order to fund it, you've got to eliminate some of these tax expenditures. the problem is that i can count up least three of these commissions all come out with the edges nibbled upon. you get a lot local political figures saying this is a great idea, but not the mortgage interest deduction. in order to get those low rates even with some symbols -- simpson -- polls, you have to have a full child tax credit. are you dedicated to getting

rid of all tax expenditures are we back to picking and choosing? unfortunately, that is where we get back to. >> the samson-bowles plan, they did a fantastic job. it was thrown in the garbage can over a tactical error. why? maybe some of the numbers were a little bit different than where i would have put them. but on tax reform you have to have colleagues on the campaign front. 9-9-9 is not going to go anywhere because it will not deliver what is needed nibbles around the edges. if you are gaining a system

based on the polls, then you will continue to gain the system. we either think big and be bold when our nation needs of the most, or do not do it all. -- at all. you have to face a stress test in terms of what can be done in congress are you're not locked out on day one. if you have some good bipartisan mines that have analyzed except and seen something there that is there to like, and second, if the "wall street journal" comes out and says jon huntsman's economic proposal is the best of the bunch, i say, there is an opportunity we have to bring

together a bipartisan coalition. in the end, that is how you have to get it done to move this thing through congress. i would want all loopholes and deductions gone. as sensitive as some of them might be, and as politically treacherous as some of them might be. you have got to get the work of the people done. you have to start someplace. that is why i cry about today's world. to do the work of the people you have to put something on the table that at least stands a chance. loopholes and deductions, gone. that will be a negotiation at some point and it will be a fierce negotiations, no doubt. but you have to have a position of where you think you want to be. you have to invest in the code, such that you can get the rate

down. i would have a plan that has 8%, 14%, and 23%, which does not have the ring that 9-9-9 does. but it will get rid of the loopholes and the cobwebs. >> where these negotiations have started is where they have finished. one of the challenges is republicans will say they do not want a tax increase, but it is unclear what that means. some people said they do not want a tax rate increase. other people in the party would suggest they do not want any tax revenue increase.

in the negotiation, how far are you willing to go if you're willing to do this trade-off with the some of the nontaxable rates with tax expenditures added back in and you may have to increase your rates? are we looking for net neutrality? are you looking at increasing the tax reform? >> you go in with certain principles. you can do it on a revenue neutral basis. that would be one of the rules i would abide by. second, you could phase out corporate welfare. we cannot afford it anymore and it comes up the system such that we need to be smart about a 20% 3. phase out subsidies.

and for some, going that far is too far. but that would be one of the principles by which i would guide tax reform, reinvested back into the cove, and allow that to lower the rate -- we invest it back into the code, and allow a lower rate. but also want a bipartisan coalition to be put together to drive it home, such as we saw around the simpson-bowles commission. i would use the community, to make arguments about what this means for job creation. if you can make a valid argument about what this means to reach fire around job creation, that will be the argument of the day. we need to pay the bills and provide more in the way of opportunity. that is the thing that must prevail throughout. we are doing this because we

have not touched taxes since 1986. we're doing it because many of the competing leading companies -- countries, they have dealt with taxes, market measures. i have not. if we have to act -- we have to act. >> tax revenue neutral on the a tax reform panel and we still have an expenditure side problem. because revenue neutral, as you know, on an expenditure side we are increasing at a rapid rate. the problem in the future is going to be mounting cost of medicare. we have longevity and the baby boomers and the continuing cost of health care. my oversimplification is, the left looks at this and says we can get this under control if you give them political

independence and they've picked the most cost-effective medical procedures that medicare should cover. everything else is out of pocket. that is how we get rid of constraint on medicare. the other side of that will be to grow that voucher and that will keep it under -- again, you do not have to buy my oversimplification, but broadly, we have to do something on the underside, and undoubtedly that is on medicare. what is your vision of reducing expenditures primarily through medicare? >> first, we have to start with the assumption that all options are on the table. if you are going to do this and do it right, which is to say to target four trillion dollars --

$4 trillion to $6 and trillion, then we will hit the wall. if you do not deride it will be by 2020, just based on current forecasts. you have medicare and social security interest payments and then that is it, you are out of gas. we cannot act -- we cannot not act. we have got to do something. i say what paul ryan has put on the table for medicare i think is valid. it is a realistic approach, the premium support system, not the doctor that he talks about. -- not a voucher that he talks about. we have a defined carta version marketplace, which is i think

where we have -- defined contribution marketplace, which is where we need to go. when you figure that this is a $3 trillion industry, and any expert will tell you that half of that number, is superfluous, needless spending, that is where you have to start. how do we begin and powering the patience of that when they walk into the doctor's office they know what is available and they know what the options are and they're not walking into an office where they are confused. in today's environment, nobody knows what the health care costs are, not the patient, not the doctors. we have to get around the cost drivers. over the longer term i think it will all mean something. we also have to recognize that the world in 1965 is -- was different than it is today. in terms of eligibility age, i

think we can move that out. perhaps even a means testing component, as i would say with social security, which in 1935 the average age was 61 points seven years, or -- was at 61.7 years, or thereabouts. the rate of return is a a 8% as opposed to 3%. you have more palkot paying in and taking our -- i say we have got to fix the underlying assumptions on social security for inflation and tie it to real wage growth as opposed to the consumer price index and have a means testing component where it faces in. you can deal with a big part of the problem by doing that. it is a shared sacrifice and

the president is going to have to step up and recognize that it will be a shared a sacrifice. i think we can save social security and we can deliver on the original intent promised in 1935. this is all about leadership. it is about political will. but i believe it is the will of the people in this country now to get our debt and spending in line with that which is that sustainable, something in line with gdp as opposed to 24%. it also has to be made into an argument about national security. and for me, that is an argument. when you're dead become 70% of

gdp, to be 80%, you just cannot grow anymore. -- when your debt becomes the 70% of gdp, soon to be 80%, you cannot grow anymore. then you look around a bend at where greece is at 170% debt to gdp, or italy, 120%, and remember -- i remember where japan was a few years ago. nonperforming loans and other conditions that made it impossible to start growth there. today, they are in their third decade. look around the bend. if you do not want to address debt and spending, you can see where it takes you over time. >> you obviously have extensive experience in china, so a little change of pace by asking about china. but governor romney said he

would thus china as a currency manipulator if he were president. this is something where a bill passed the senate essentially saying that same thing, proposing tariffs on china over exchange-rate issues. i'm wondering what you think of change raid policies -- exchange-rate policies and future growth for china and the u.s.. >> first, let's talk about what -- let's call it what it is, pandering. when we say we are going to go to war with china, the reality is far different. if you start to slap on a tariff, the chinese will turn around and say, remember the quantitatively easing programs, part one and part 2?

you did the same thing. and they will slap a tariff on us. i lived through the chinese dumping case about three years ago, not a good thing. what happened after the penalty was assessed? the chinese came up with a similar analogous lee valued countermeasure toward our chicken parts. completely disrupting our poultry producers. and that is just the way the game is played these days. recognize the reality and we are back to the united states and china sitting down in a negotiation and grinding it out. it is not a unique-dimensional -- a one-dimensional relationship. it is three-dimensional chess. new have weaponization in iran,

pakistan element, china and the south china sea, global economic rebound in ahman new technologies, and a lot of things you are trying to carve into a route -- a reality. like it or not, you have to sit down and write it out at the negotiating table. the same thing that president reagan discovered. i went with president reagan in the early 1980's in china. he campaigned for recognizing taiwan only to find that once you become president, even in those early days you have to factor in the chinese. that is a relationship that will require going forward. -- going forward, a dialogue at

the presidential level that is consistent, uniform, down a couple of times a year, not something that is on the margins of apec or the g-20, but a consistent dialogue that lays out our strategic interest in the region and allows us to pull out their strategic interest, and the like -- allows us in a dialogue we have not heretofore been able to achieve. we trade, we invest, we do all of the economic stuff, all of a of regional security work. but we need a lot more in the way of shared values and to give it staying power that will need for the first and second- largest economies in the world to be the relationship it can be. despite all of the challenges

that we will inevitably have. and now that the fifth generation is coming to the forefront of the congress this next year, with a lot more viewpoints that will carry some challenges for us. we need to expanded around human rights, the internet, religious liberties. these are all things we need to expand our debates around. why? because you have 500 million internet users who are having these discussions anyway. you have the raw material in china increasingly to have these discussions and have them picked up like never before. the party as reading the blogs. they do not like what they are reading, clearly, and they know they will have to make some accommodations to open up and liberalize. if not, there is a train wreck in the making.

there is no reason we should not be providing a little bit of intellectual context to all of that >> let's open it up to questions from the crowd. >> i am derek mitchell and i write the mitchell report. -- garecht mitchell and i read the mitchell report. i would like to talk about the one thing we have not talked about today, which is -- among others, i should say. you make a persuasive case about what should be done in the realm of economics and fiscal policy and with your experience as governor and ambassador suggest you bring a lot to the table on that equation. if you were to become president, what changes is to come to a town and you need something called the congress.

-- meet something called the congress. rule 22 in the senate, the stranglehold that the rules committee house and house, the extent to which regular order has become an oxymoron up on the hill suggests that no matter how well prepared and how thoughtful the next president of the united states is, he or she will have to deal with an institution that holds the purse strings and is really in a state that makes it difficult for good governance to take place. i would be interested in hearing you talk about two things. the one, the extent to which you have thought about the problems that congress deals with. and the second one, what role could a president in leadership play in bringing about change so that the country could have

good governance again? >> we have to figure out ways to enhance trust in the system. i do not have an easy answer for you. when i was reelected in 2008, we got just shy of 80% of the vote. the turnout among the young people was such that i was a little discouraged about the future of our system. what do you do to enhance believability in our democracy? to get younger generation folks more invested in our future? and what is driving the apathy? campaign financing, the role of lobbyists in society, a lack of term limits?

whatever the case might be -- and we put some people to the test to get a report that outline may be some steps that could be taken. shortly after, i was taken to china. i do not know if there was a connection to the report or not, but i think the same thing needs to happen to the next president. we first and foremost need to build a level of trust the system between the people and to the elector. the fact that we are running on empty today between the people and the institutions of power concerns me greatly. congress and the executive branch, wall street, we are running on empty in terms of trust, which is a precarious place to be. how do you build trust in the system? that has to be a conversation that we have as a people in this country.

if it is fundamental changes that would bring about in congress, you have to look at it to enhance overall trust. i do believe that when you are elected, and i understand these structural problems that you are talking about. it gives me a headache every time i talk about it. is there a way around it? the reality is that a president has about two years to get things done. it is kind of like a governor. there are certain rhythms to governments and after two years -- to govern and saw, and after two years, the door is closed. recognizing that reality, you are elected president, you go right up to capitol hill and you say to my -- you say, it is a very simple congressional agenda i have for you, folks. i have three years by one -- three things i want to get done and i know i have two years to do it. i do believe what motivates congress more than anything else is the will of the people. when they speak out in an election cycle, there is movement.

the question is, how long is that movement sustained before it drops into a state of complete paralysis, which is where we find ourselves today. and what you find in that state of paralysis? mr. making on capitol hill, nothing getting done. there is no -- mischief making on capitol hill, nothing getting done. there was no one leading. we need to reduce confidence in the system. it is not complicated and it is doable. here are the regulatory reform measures of like to see done, and they will do with health care, with obamacare, certain aspects of financial services reform. we have a too big to fail problem in this country with the banking system. i do not know where to begin

their except to recognize that it is a lingering out there and we have to address it. and third, simple steps toward energy independence. step 1 for may would be looking at somehow -- for me would be looking at somehow dismantling the distribution system that gives preference to one product, oil. they own the system. when i drove a natural gas car as a governor, i never thought you could drive a natural gas car until somebody introduce the concept. the limiting factor is that you're not on the grid. there is no distribution, no film of station. you have to start with the structural problems. you have to deal with regulatory issues and i want to deal with the energy dependence problem in this country. what i am worried about is this 30 years in from -- the 30-year interim between now and when we can have an abundance of options that are affordable.

let's deliver for the american people. >> one more question. >> thank you, first of, for bringing pragmatic views to the campaign here. earlier, you mentioned three- dimensional chess in the foreign-policy arena. my expertise is with the fence. i'm very concerned about the budget control act cuts coming down the tubes. i was wondering if you could give us your perspective on finding a future and finding a balance on international foreign policy with defense

spending. >> i have two boys in the navy, so i think about this from time to time, about what their world is going to look like. what concerns me today and leads me to believe that we have to shake things up a little bit is we have a bit of an overhang from the cold war. in the second decade of the 21st century. 700 facilities in 60 different countries. we a 50,000 troops in germany in 20 different installations. i say, falls, the russians aren't coming anymore. [laughter] we have 100,000 in afghanistan nation-building when our nation needs to be built, when we have to pick from a counterinsurgency to counter-terrorism effort there. you need technical intelligence gathering, special forces on

the ground, some training aspect with the local afghan army. let's be real about that. but to say, longer-term as we think about our security structure, afghanistan is not our nation's future. iraq is not our nation's furniture. our nation's future is how well we are prepared to compete, and that is economics and education. and that is the pacific region where three-quarters of our trade will flow. were the most sick of it militaries will rise. for us not to recognize that does us damage for how we position ourselves in the future. if we have foreign policy drivers that will inform our defense priorities, what should those be? this is going to sound corny from a foreign policy person. a first foreign policy priority

will be fixing our debt. when we are not strong, we are not able to protect the values of democracy, liberty, human rights, and open markets. i lived overseas when those markets were projected. it is an awesome thing to behold. it transforms billion history. we're not projecting today. john number one is fixing the jobs they. it is transcended. i want a foreign policy aided by a defense structure that puts economics first. i was in beijing for the last couple of years. we have 100,000 troops in afghanistan. we protect the land.

the chinese go in and take the mining concessions. there is something wrong with this picture. we need to be driving foreign policy first and foremost led by economics. that is what plays back to strengthening our core and creating jobs at home. trade alliances come investor relationships, we need to be far more aggressive than we are today. third, we cannot forget about this asymmetric threat called terror that is out there and will be as far as the eye can see in the 21st century. i do not know that we need more sophisticated weapons systems or more bomber fleets. what i think we need is a better ability in real time to collect and analyze, and share

intelligence, and rapid forces deployed ability -- deployability. there is the whole paycom aor from the coast of california to the indian ocean. that will be a theater that we need to pay serious attention to. i believe that will be driven by new network of friends and allies. i said this tongue-in-cheek but i kind of mean it. i will consider the job done when we pull the uss ronald reagan into cameron bay and have a relationship there. we have new opportunities in the asia-pacific region to bolster new alliances. my defense priorities would be built around those realities. the army can probably be taken down from 485,000 to maybe 450,000, supplemented by the

national guard troops. as a former commander in chief of the national guard, i can see how that would fit in. but also by purchasing and procurement practices in the pentagon. at some point, you have to lift up the hood and ask why the machinery is not running as efficiently as it should be. after world war ii, we had 117 carriers. we were producing 100 ships a year. today it is larger but we are producing less than 10 ships a year. there is something that does not look right. for the red tape, the systems in place that fog us down. that needs to be looked at and reformed. the strategic concept around defense planning, following

economics, following counter- terrorism, and asia-pacific being important long-term. submarines would be included in the mix. we need more in that regard. there would be an aspect of pentagon reform that would say we have to do it more efficiently. we have to stretch the taxpayer dollar better in terms of what we're getting by way of return. i think you can get some really good minds together that would be able to do very good things for the american people. >> thank you for coming. it has been a real tree. we appreciate it. [applause] -- it has been a real treat. we appreciate it. [applause] >> thank you. [applause] >> please remain seated while the governor departs. we will then open up the doors so everyone can go. i appreciate it. [captions copyright national

cable satellite corp. 2011] [captioning performed by national captioning institute] >> on c-span's road to the white house, rahm emanuel will be the keynote speaker at the jefferson-jackson dan yergin des moines, iowa.

-- in demand -- in the morning, i want to read -- in the morning, iowa. >> it was a story i was told that when obama was given the first budget, and there were some 6000 or 7000 year marks in it, his first instinct was to veto the budget. he was told that you cannot do that. you cannot cut ties with the democrats. i just think he would have been the tea party had he vetoed that. had he signaled his fundamental desire to change the system and the way washington works he could have continued to rally the reform movement that breaks out all over the world because of frustration with the current wave of democracy does not function. >> harvard law professor laurence lessig sunday night on

c-span's "q&a." >> credit union and small banks leaders told congress their organizations are adversely impacted by 18 rules. this is to 0.5 hours. >> the hearing is now in order. it is my intent to finish the hearing before we go to votes. i think we can manage this. this is a large the the has been referred to not only the financial services committee, but also the ways and means

committee and the agricultural committee. today's hearing will focus on the sections of the bill that are relevant to the financial services committee. i would like to thank chairman garrett for call hosting this hearing with me. this bill has been referred to his subcommittee as well. i would also like to thank mr. luetkemeyer for offering the bill before the subcommittee today. the first act is a thoughtful attempt to reduce regulatory paperwork and tax burdens on smallest institutions across the country. mr. luetkemeyer has been a terrific advocate, and his experience as both a banker and a bank regulator before becoming a member of congress allows him to provide critical insight to matters before the subcommittee. i commend him on the inside, and in good working has done for this subcommittee and for

tackling the issue of regulatory relief for small financial institutions. we offered anecdotal comments from committee bankers and one constant theme is the regulatory burden. the recent financial crisis did not emanate from small financial institutions, yet these same institutions are devoting more and more resources to comply with the ever growing regulatory burdens facing small institutions. during the first heeding -- hearing this year, a community bank from west virginia raised the question "how can i be out in my community helping individuals improve their quality of life or small businesses grow, if all i end up doing is deal with the aftermath of problems i did not create?" this raises an important question. we need small financial as petitions lending to small financial -- small businesses. if they are forced to devote

more resources to complying with federal regulations, they have fewer resources to devote to lending. the bill before the committee today raises a number of issues facing small financial institutions across the country, and i look forward to hearing from witnesses to hear more about their thoughts or concerns from the community first act. at this point, i would like to for thee tms. maloney purposes of making an open statement. i think that chairlady capito, chairman -- chairman garrett, and i welcome all the witnesses and look forward to your testimony. i understand that small institutions are concerned about regulatory burden and their ability to comply with regulations while still being able to provide their customers with a wide range of services, most importantly lending.

we know how important small bank lending is to small communities, for any community, to businesses, and to helping businesses go -- grow and create jobs. if there are some things in this bill if i could support. for example, the bill strikes annual privacy notices and what require them only when a bank shares consumer information. i think that is something that would reduce paperwork burdens, we can all agree, on small banks. many provisions are provisions that were enacted in the wake of financial accounting scandals, such as enron, and in the wake of certainly the worst economic crisis in my lifetime. provisions such as the sarbanes exemption increase, the shareholder threshold for banks that trigger sec registration, the sec cost benefit provision,

and the reviews standard provision are all things the financial services committee is examining separately in separate bills. i certainly would oppose, as i have on the floor and in this committee previously, the provision that would lower the threshold to the tell the consumer protection financial board rule. the consumer financial protection board is the only entity whose rules are subject to review in this matter, and the threshold should be high for the review. i am also concerned, as is the fdic, about sections to 05, and 2 06, both of which would have the effect of allowing smaller institutions to hold up capital and delay the ability of the fdic to work with these institutions before the situation becomes more difficult. they see this as a possible threats to their power to

prevent economic downturns, and to preserve the safety and soundness of how our financial institutions. i believe that these provisions, in some cases, fly in the face of our efforts to make our markets more transparent and accountable to the public, and to secure our financial institutions, and to strengthen their capital reserves. many say we had this downturn because we did not have strong capital reserves -- we did not have strong transparency and oversight. if i understand that both provisions are written as studies in the senate version of the bill, and i think that is probably a wise direction to move in. i know these two sections are top concerns for the fdic, and there are a number of other provisions in the bill i hope we can export today that i am concerned with. i look forward to the witness' testimony and i yield back the balance of my time.

thank you for what you're doing every day to help our financial institutions to get capital out to people who need it, and to grow our economy. thank you, and i yield back. >> thank you. i would like to recognize chairman garrett for two minutes for the purpose of making an opening statement. >> thank you. i would like to citywide to all the members of the panel. i would also like to turn my attention to congressman luetkemeyer. he has been an outstanding addition to our committee and to this congress as well. we are blessed to have him because of the experience he brings on a couple of different fronts, both on the banking industry, per se, and he is uniquely positioned in leading the charge and putting together this important legislation we are dealing with, and says

dealing with the over- regulation of our financial services industry, particularly the smaller, community-based institutions, those particularly ill-effected by the legislation that has come recently. whenever congress has an opportunity to review ways to reduce regulatory burden, financial institutions, specifically, or businesses in general, on main street, i think that is a good thing. it is even better when we look at facilitating capital formation, which is another way to create jobs. i congratulate the congressman for his legislation, this bill, and the courts relied discussion. i yield back. >> thank you. i would like to recognize mr. carson for one minute for the purpose of making an opening statement. >> thank you, madame chairwoman. during recess last week i had the opportunity to meet with my local community banks in

indianapolis. we discussed all economic conditions are still very weak with few positive trends in residential recovery and employment growth turned while low insists rates -- growth. while low interest rates and stimulus have the president and estimate it does not resulted in economy growth. i'm interested in how this act will help committee banks foster economic growth and better serve their communities. however, i believe missing from this destruction -- constricted conversation is those rising. this is a challenge with many consequences. many commercial real-estate loans are under water. vacancy rates are up, and rent is down. it further drive down the value of these properties. if there is a collapse in the market, caller community banks will be particularly from a

bowl. as we discussed helping community banks lend again, let us not forget there are still challenges that for most tremendous risks -- that propose tremendous risks. >> thank you. i would like to recognize another opening statement. >> thank you. the burden on small banks and credit unions is growing every day. small banks need to focus on two things, lending and deposits. instead, they have to focus have their time and money on compliance. we need to get rid of some of these wasteful regulations so businesses can get back to work. georgia leads the nation in bank failures with 73. this bill will not bring back those failed banks but it will

throw a lifeline to those struggling to survive. i urge all of my colleagues to join me in helping to pass the bill, and i yield back the balance of my time. >> thank you. i would like to recognize mr. scott for an opening statement. >> thank you. i want to congratulate you and our ranking member for holding this hearing that is very important. our banking community is going through a devastating. . not since said -- devastating time. not since the great depression had we had so many bank failures. nowhere has that been greater than in my home state of georgia, as my colleague just mentioned. we believe the nation in bank failures. a lot of this is due -- will lead the nation in bank failures appeared a lot of this is due to the housing bubble, and over- leveraging. we can learn from this, and we must move quickly to address this area. our community banks and our

credit unions, both of these, are at the front lines. they are the ground troops. there are the ones that we have to make sure are equipped to do the job of helping to bring our economy around, and our committee banks around. this legislation will provide regulatory relief for community banks, and we need that. the bill would reduce certain reporting and paper work requirements for many of these smaller institutions, and we definitely need that. in the current climate, community banks have struggled. they struggle to comply with stringent regulatory and accounting requirements that need to be addressed, and we need to find relief for them. as i mentioned in my home state of georgia, we just had this year all on our 23rd bank -- alone, our 23rd bankclose

nationwide, bank closed. nationwide, 83 have closed. for this reason i work with my colleague, and i have put forward the house resolution, which this house test, which instructs the fdic to study this problem to make recommendations and find ways to get help to community banks. i take this opportunity to urge the senate to move fourth and get this deadly needed piece of legislation -- badly needed a piece of legislation passed. it would provide relief for smaller banks, many of whom resembled a very institutions said recently been forced to close under tremendous financial strain. i agree that congress should act to provide targeted relief to small banks that will prevent further failure. i would be interested today to find out how this measure would

benefit the institution -- what the fed said sunday this legislation could have on customers, many of home are part -- what effects this legislation could have on customers, many of home are unemployed and rely on these banks. many businesses who rely on being able to get small lawns. is an important hearing, and look forward to it at >> thank you. i would like to recognize mr. luetkemeyer. >> thank you. thank you for your kind remarks. these banks helped americans for their dreams. regulatory requirements disproportionately burden community banks that do not of the resources to comply. the first act to help community banks to help foster economic growth, and give targeted

relief. some are concerned that the legislation is to broaden tries to dothe legislation must be brt in order to save our banks. community banks are consolidating our closing not based on weak assets or balance sheets. they cannot operate in the current regulatory environment. this is a reflection of the amount of regulation piled on community banks. community banks were not part of the financial crisis. the regulations that have come out of congress and this administration are crushing small businesses and community banks. i am fortunate to have my colleagues on both sides of the aisle as co-sponsors of this bill. it has the support of more than 35 state banking groups.

that includes the missouri independent banking association. i would like to submit for the record a letter of support from the missouri independent banking association. community banks continue to have the ability to attract capital and contribute to local economies. instead of inhibiting their ability to operate, it is time for washington to work with community banks. >> i would like to recognize mr. royce for one minute. >> we look forward to 2020. it shows we will have half of the number of community banks. we expect a number of consolidations if there is an economic downturn. many of the problems faced by these institutions are produced here in washington, d.c.

it was washington that gave them hundreds of new regulations in dodd-frank. it was washington that decided to enact price controls and limit a critical revenue source. it was washington that propped up there too big to fail competitors and expanding the competitive advantage that those larger firms hold in the market. as a result, smaller institutions are spending more time and more money trying to stay afloat. for every 1.2 employees focused on compliance, there is one focused on banking. this number is only going to grow as the implementation of dodd-frank continues. one step in the right direction is the community's -first -- the community first act. this would free up much needed capital for small businesses by

raising the cap on member business loans or credit unions that meet that set of criteria. i yield back. >> i would like to recognize the chairman of the full committee for one minute. >> thank you. i thank the chairman for holding this hearing. i commend our colleague from missouri for bringing a reasonable approach to reducing regulatory paperwork and tax burdens on small banks and credit unions. this bill has gained the support of nearly 50 co-sponsors today. i am proud to be one of them. so many small banks and institutions have shared their concerns with us about the enormous cost of complying with the complicated regulations, especially the hundreds of new rules resulting from dodd- frank. we are 30% through with that

process and it fills two bankers boxes. there will be employment growth from financial examiners and compliance officers do to increase financial regulations. those are not the kind of jobs we are interested in creating. how can we expect small institutions to of sorgos costs? they have to pass them onto their customers -- how can we expect small institutions to absorb those costs? they have to pass them onto their customers. i am eager to learn how this bill will help community banks and credit unions create jobs and foster economic growth and serve their communities. i am pleased to support this legislation, be a co-sponsor. thank you. >> i certainly want to thank the

chairmen for holding this important joint hearing. i want to thank the witnesses for their important testimony today. help the credit markets are essential for job creation, business growth, and economic prosperity. our credit markets and financial institutions must be regulated. those regulations must be sensible and balance. they must account for meaningful differences between our broader array of financial institutions. our regulatory environment does not currently meet these reasonable standards. our current regulatory environment is hurting our credit markets. it is also hurting job creation, business growth and prosperity. it is a kit for small financial institutions because they must devote more of their financial -- it is acute for

small financial institutions because they must devote more of their financial resources to compliance. they are responsible for more than 2/3 of net new jobs in our economy. when our current economic challenges, all of us in congress are obligated to create a legal and regulatory environment that promotes job creation, this is growth, and general economic prosperity. an important step is helping our small financial institutions get some relief from overly burdensome regulations. the community first act moves us toward that objective in creating a regulatory environment for small financial institutions. we can make those changes without diminishing depositor and investor protections. i am happy to co-sponsor this legislation along with many of my republican and democratic

colleagues. the american people expect and deserve these smart bipartisan solutions to our challenges. i like to thank my colleague for introducing this legislation. i look forward to working on this legislation with him and with my colleagues on both sides of the aisle. i yield back. >> i will recognize ms. waters for one minute for the purpose of making an opening statement. >> community banks are vital to america's neighborhoods. they provide credit to communities throughout the nation, creates jobs, and encourage individual and family prosperity. i believe we should take a smart approach to the regulation of small banks. i believe the regulation is necessary to ensure consumer

banks are protected from harmful practices. i am open to looking at the regulatory challenges facing community banks. i do not want to see compliance john is used as an excuse to we can legislation -- to weaken regulation. reliance on external credit key contributor to our financial problems. i am also concerned about changes to the sarbanes oxley act regarding committed to banks. to all the witnesses today, thank you for taking time out of your busy schedule to come here

today. i yield back the balance of my time. >> thank you madam chair and thanks to my colleague for bringing this important communities first act to a hearing today. i represent the 23rd district of texas, which is engaged in farming and ranching. this is the only source of capital available in these areas. they have had to deal with wildfires and record drought. the economic impact has been devastating. credit has been frozen in a number of small towns.

the consequences are palatable as we speak to residents and business owners in these areas. the provision of the community first act go a long way toward lifting the burden from the shoulders of america also community banks. my thanks to the chairman of this committee and also my colleague for bringing this bill. >> that concludes by opening statements. i will introduce the witnesses for the purpose of giving a five minute opening statement. our first witness is salvatore marrance, president and chief operating officer of the independent community bankers association. welcome. >> thank you. i am the director, president and

ceo of a community bank in little valley, new york. i am priest to be here today to represent the community bankers -- i am please to be here today to represent the community bankers of america. this legislation is a top priority for community banks nationwide. we are grateful for the congressman for introducing the bill and those who have co- sponsored its bank. -- co-sponsored a bank. -- co-sponsored it. credit unions would benefit from a non of cfa provisions. it was crafted from the bottom up with input from community

bankers who know what will work on main street. most community banks are closely held institutions with liability directly tied to the economic life of the communities we serve. we have long-term relationships with customers who are also our neighbors. my bank has been in business for over a century answer by to the great depression. our longevity is a testament to the conservative risk management. because we are a low risk institution, our regulations should be distinct from large banks and wall street firms. cfa provides relief for smaller institutions so we can better serve our communities. it has become a serious and growing threat to community banks. some regulations are serious and necessary. others are redundant and unduly burdensome.

in communities like mine, regulation is an expense, burden, and a real opportunity cost. my compliance staff is half as large as might lending staff. cfa contains 26 provisions. it is brought endeavors because there are 7000 community banks of different charterer types -- charter types. i would like to highlight a few. highly capitalized community banks would be permitted to file a pre port -- file a report twice a year. this would reduce the burden on qualified community banks without compromising soundness. many rural community banks do

not have the resources establish escrow accounts in house. outsourcing is a significant expense. lenders have every incentive to protect the collateral of lawns held in portfolio. this provision would help keep community banks in the business of making common-sense mortgages. another provision would end the privacy notice requirement. i also want to inform my customers about my privacy policies. when the change in the privacy occurs, the annual notice is an unproductive expense for mike bennet. to summarize, increasing -- when the change in privacy occurs, the annual notice is an unproductive expense for my deck. i encourage you to reach out to the community -- for my bank.

it also is confident they would say yes. thank you for the opportunity to testify today and to offer our perspective on the community first act. >> thank you. our next witness is mr. o. william cheney. >> thank you. thank you for the opportunity to testify on behalf of the not- for-profit credit unions that serve 94 million americans. these credit unions and community banks operate side-by- side to meet the financial- services needs of consumers. committee banks and credit unions welcome the opportunity to serve those frustrated by the ever-increasing fees charged by the last banks -- by the large banks. in the lead up to the recent

bank transfer date, credit unions and community banks work together to let consumers know they had choices other than large banks. another area where credit unions and community banks should agree and work together is in the pursuit of regulatory relief. community banks need to spend more time and resources serving their members and customers and less time complying with regulations. we did not cause the crisis. the regulatory response has imposed a disproportionate burden on small institutions. the community first act would provide regulatory relief to community banks. our analysis of the provisions relevant to credit unions is included in my written testimony. we support several provisions of this bill. i would like to make two point. it would expand the shareholder threshold. we do not oppose this change.

the irony is of the bank lobbying for tax preference while lobbying to impose additional taxes on credit unions. they say the credit union tax status is an unfair advantage. this is not the case. the market data shows credit unions only have 6% of combined assets and only 5% of depository institutions. we see the banks using your tax preference to reduce these rates to benefit consumers. this is not happening. our analysis of our last 18 months shows that compared to a similarly sized banks, the other banks charge higher fees to the consumers and pay higher dividends to their shareholders. these banks do not use their preferential tax treatment to better complete -- to better

compete with credit unions. providing regulatory relief should be balanced. credit unions and community banks should benefit based on their ability to serve customers. credit unions would expect the inclusion of language proposed to raise the statutory business funding cap to well funded credit unions with ample business lending experience. business lending helps everyone in the community -- small businesses, credit unions, and banks. the ending more to small businesses would provide much needed assistance and relief to the small business sector. it would create 140,000 jobs in the next year with no cost to taxpayers. the combination of these the t- bills should be embraced. we know that it -- the

combination of these two bills should be embraced. the banks' opposition to a credit union legislation means that hundreds of thousands of jobs have gone on created. -- got on created. -- gone uncreated. many americans have gone without convenient financial-services. ability to grow has been shifted. shareholders may win but consumers and small businesses lose. in its current form a hr-67 is not. combine this legislation with the small business lending enhancement act.

credit news across the country believe that this legislation -- credit unions across the country believe that this legislation must not move through congress without similarly affected legislative relief for credit unions. the key for the opportunity to testify at today's hearing. >> thank you. our next witness in is john klebba. welcome. >> thank you. members of the subcommittee, i am be chairman and president and general counsel of legends bank in misery. i occasionally sweep the floors and shovel the snow. i would like to thank my congressman, a fellow missourian for this bill. legends bank is a small community bank with 10 locations

and 83 locations -- 83 in police. we are located in a town of 1450 people. we are located in towns of 300, which is not much bigger than this room. when i was a boy, i listened to my grandfather, one of the take the-founders, bank through the great depression. we were one of the few banks to survive. one thing that has not changed from the time of his leadership, to my father's leadership, to my own is that our bread and butter is committed to the community we serve. it our customers are not successful, our bank is not successful. our states are linked. we know from experience there is a cost experienced by the bank when we have to deal with more regulation. when there is an increased cost

to us, there is an increased cost to our customers. our primary customer base is small businesses, farmers, and folks trying to get by in these difficult economic times. several provisions of this legislation will provide relief my bank and other banks need to continue to serve our communities. there is a provision for p mortgage loans. in the small towns we serve, many customers do not want escrow accounts. we serve our customers quite well without offering them. our customers earned used to playing their insurance and taxes to the county collectors. think how easy it is to change coverage without be involved in of a third party, in this case, the bank. requiring a service our

customers don't want does not make sense. it adds significant cost to the bank and increases costs to the customers like higher fees and interest rates. on a mobile home loan, the escrow amount payment can be small, in some cases less than $20 a month. another bill i would like to highlight is tax relief for the banks. the interest on loans secured by agricultural property. this mirrors the exclusion available to the farm credit services. when i was in law school, one of the courses i took was tax policy. tax policy was needed fair nor just to pick winners in the economy. -- neither fair nor just to pick winners or losers in the

economy. when the government picks winners and losers, our community suffered the consequences. many of the world areas in this country are struggling. demographically, their population is getting older, especially with respect to individuals that own family firms. one of the main reasons for this is that it is difficult for young people to be able to afford the land and equipment necessary to get them started as farmers. the proposed tax relief for qualified agricultural lenders will level the playing field. i am concerned about the long- term viability of community banking. and on just -- an unjust tax policy is one of the reasons. after this is over, i would be happy to answer any questions you might have. >> thank you.

our next witness is mr. fred becker. welcome. >> thank you, madam chairman. i am testified today on behalf of nafcu. i have served since the president -- i have served as the president since 2000. while credit unions did not create the financial crisis, credit unions have been adversely impacted by the ongoing economic up people and is suing regulation. -- economic upheaval and ensuing.

many of the provisions in community first act provides regulatory and tax relief for community banks. there is language that will lower the threshold needed to override rules issued by the consumer financial protection bureau. we are pleased that such a prohibition has already passed the house. such an exemption should be made for all credit unions. we are disappointed that the legislation continues to adopt a $10 billion dividing line in many of its provisions. the community first act focuses on a relief to community banks.

they remained the most heavily regulated of all financial institutions. passage of the new financial reform in recent years has also increased the regulatory burden on credit unions. every additional dollar is spent on compliance. that is a dollar that could have been used to reduce costs or provide additional services to a member. there are a number of areas where we would like to see belief that would enhance credit union service to their 94 million members. this includes raising the arbitrary member business lending cap. providing the ability for all types of credit unions in underserved areas. allowing credit unions that -- that convert to community charters to maintain their employee groups.

and allowing us to establish longer maturity for certain credit union loans. combining these provisions with those saw by community banks would strengthen the legislation -- sought would strengthen the economicion and aid recovery. the small business lending enhancement act has over 100 bipartisan co-sponsors. we believe this legislation to raise the member business lending cap would create over 100,000 new jobs in the first year alone. the demand is out there from small business. credit unions are ready to heed it. with the recent influx of new regulations, our institutions

are in need of regulatory relief. as our nation continue to strive to recover from the great recession, every effort should be made to strange and the access and improve the availability of low-cost financial-services to all americans. in keeping with that spirit, we believe the community first act can be strengthened by providing regulatory relief to credit unions. this would create a comprehensive reform bill that would create more jobs, help communities, and garner further bipartisan support. i will welcome any questions you have. >> our next witness is a professor of law from george washington university.

welcome, professor. >> thank you and good afternoon. thank you for allowing me to participate in this hearing. community banks play a crucial role in providing credit and a disservice is to financial- services enterprises. they have long served as a provider of credit. the provide economic growth for the united states. they provide half of the worker output and account for more than 1/3 of all private-sector innovations. the survival of the community banking sector and it servabiliy to service communities --

the percentage of banking assets held by the 10 largest banks rose to 55%. there were several emergency mergers that produce even bigger banks. as a result of those men the mergers, the four largest u.s. banks control -- as a result of those mega-mergers, the 10 largest banks control 75% of assets. community banks also suffered disproportionate harm during the financial crisis because of the preferential treatment given to the federal government -- given by the federal government to the too big to fail mega-banks. they gave little help to the

small banks. each bank has more than $100 billion in assets and receive $220 billion in assistance. the federal reserve provide $1.20 trillion of emergency credit assistance, mostly to large domestic and foreign banks. when a half of this assistance went to the 10 largest u.s. commercial and investment banks. the federal government explicitly guaranteed that none of the large 19 banks would be a large -- would be allowed to fail. the treasury department would provide any additional capital needed to ensure the capital of the top 19 banks. they said they would not impose regulatory sanctions on the top 19 banks under the regime

established in 1991. the regulators imposed public enforcement sanctions on hundreds of community banks and allowed more than 300 of those institutions to fail. after the massive too big to fail protection, it is not surprising that those banks enjoy a decisive advantage over smaller banks. the fdic chairman pointed out that in the fourth quarter of 2010, the average funding costs with banks -- for banks of more than $100 billion in assets was more than half of the assets of community banks. the past ability decades have made clear that community banks and big banks followed different business models. community banks provide a relationship based lending and personalized banking services

and wealth management and services -- wealth management to consumers. big banks provide highly automated lending programs and focus on complex, high-risk transactions in the capital market. congress should reject a one size fits all rate in the tory policy and adopt a tailored policy that is -- regulatory policy and adopt a tailored policy. several provisions have the potential to help community banks in these areas. i would be pleased to answer your questions iabout those provisions. thank you for allowing me to participate. >> our next witness is mr. damon silvers. >> good afternoon.

in addition to the introduction i just received, i should note that i served as deputy commissioner of the oversight commander -- oversight committee for tarp. in listening to the testimony of my fellow witnesses, is for reminded of my experience on the congressional oversight committee holding field hearings focused on cultural lending. we looked at the problems of commercial real estate. as a result of the things we learned through that experience, the congressional oversight panel warned that if steps are not taken to aid smaller banks

more aggressively, the united states was in serious danger of repeating the japanese mistakes of the 1990's. they failed to function in the most basic way. our financial system was in danger of failing to provide operating capital to businesses. we are living in a world of week small banks, over leveraged households, consistent high unemployment and growth so sluggish there is no sign of job creation on the horizon. this situation cause of our aggressive policy responses to end the double standard and recapitalize weak larger banks and to rebuild business lending and restructure business loans so businesses are not trapped in

a downward spiral. we are addressing a bill that has many provisions in its that as a whole seek to extend the bad practices of regulatory forbearance for the big banks to the small banks. and rather than asking big banks to live up to the same standards, we ask small banks to live by them. that is not to say there are not ways in which the bank regulatory system could be intelligently and wisely crafted to address the differences in business models that were addressed, which i concur with. the testimony we heard from mr. marrance seemed to be quite common sense ago. that is not all this bill does. this bill allows banks to hide the losses the company foreclosing on american

families, effectively creating a regulatory subsidy for throwing people out of their homes and driving down housing prices. the bill on does the financial principal -- undoes the principle of the financial accounting standards board by only approving rules that tell good things about small banks. banks with assets up to $1 billion, increasing the risk that such banks would oppose the fdic. the banks must have accurate internal controls adequate to ensure the accuracy of their financial statements. hr-1697 weakens consumer privacy protection for all banking

companies. it seeks to suborn the protection of the american public to the interest of the public. it undermines the securities laws. it does not require basic disclosures. it seeks to make banks more reliant on credit rating agencies. over time, i have been impressed with the capacity to name regulations that are dishonest. there are common sense provisions that allow witnesses rightly seek for their banks. they are for the benefit of big banks. is no more desert is the name community first act than did tarp itself.

the let's make believe at some spring did. -- let's make believe sounds pretty good. thank you. >> hours final witness is adam levitin, an associate professor of law. >> good afternoon, members of the subcommittee. i am and a professor of law at georgetown university. as you have heard, there is a probable sense that the way the u.s. senate to regulation has proceeded is fundamentally unfair. lars financial institutions behave irresponsibly during the housing bubble and were bailout. small financial -- large

financial institutions behave irresponsibly during the housing bubble and were bailed out. small banks and credit unions are paying for the problems large banks created. small banks and credit unions have become second-class citizens in the financial world. the community first act is the wrong solution to this problem. the bill contains provisions that are quite reasonable. them -- theyll tell them that they don't have any privacy. even less is accomplished when privacy policies have not changed. reducing this regulatory burden is quite sensible. there are several extremely troubling provisions buried in the bill that do much more harm

to communities and the economy than they do to help community banks and credit unions. the captain treatment for lost recognition would be changed. the bill would enable banks to delayed loss recognition at inflated values. not only do these provisions in courage to do -- encourage voodoo accounting. the community first act will result in families being thrown out of their homes. it hurts american families and communities. it will result in your constituents losing their homes. if you are going to have this bill, you need to take out sections 205 and 206. the fdic would be required to conduct a cost benefit analysis.

this provision would cover small banks and large ones and all public companies. the requirement would destroy gap accounting by petrifying accounting standards. it would render american firms less competitive in obtaining funding. there is no way to scientifically calculate the cost of benefits from the change in accounting treatment or the treatment of financial leasing. these things are not quantifiable so you cannot do a cost-benefit analysis. it is a complete information ecosystem by making information transparent to market. you cannot pick and choose on financial transparency. imposing cost benefit analysis does not reduce the cost of added -- cost of auditing for

banks. it means less lending for small and medium-size businesses. section 107 of the bill would lower the standards needed to veto bills from the consumer financial protection bureau. the cfpb was created to protect consumers. the fsoc veto was intended to avoid unintended risk. the standard imposed by the community first act would enable fsoc to veto rule-makings. safety and soundness means bank profitability. a bank that is not profitable is

not safe and sound. that is axiomatic. there is no public policy in the level of bank profitability. it would elevate bank profitability over the protection of the american family. committed to banks and credit unions have become second-class citizens in the u.s. and enter regulation. they are important institutions that provide deluge to our financial system. the community first act is not the solution. it has seriously destructive provisions. it will not fix the problem of small banks being treated as second-class citizens. if you want to fix the problem, tackle the problem directly rather than approach it through a mist named bill that pokes banks ahead of communities. -- today -- through a misnamed bill that puts banks ahead of

communities. >> i will ask the first question. we are having problems with this. this is a problem in georgia and across the country. how do reasonably appraise property when nothing is sold in the region? the suggestion is that you do an appraisal value over five years. you drop off the low and get an average. you have an opinion on that? >> it is a five-year rolling average. the purpose is to eliminate the immediate dollar debt troubles so many banks and regulators.

when an appraisal is written down immediately, is taken off of the books. it affects your ability to lend in your community. i do not see a safety and soundness issue there. this is for regulatory purposes only. this is something we are willing to work with and discuss. is an issue for many community banks in certain parts of the country. in western new york, we have never had any type of real estate boom. we did not have a bust. appraisals are not an issue. >> that is my entire state. you have an opinion on that? >> an appraisal is one person's

opinion on one particular day on what the value of a property is. the objective should be that we are coming up with long-term values. i think the real issue is when we go through a real estate bubble and a real estate decline like we have now, what is the real value of that property? it has been, in some situations, very unfair for banks. if we have large gains in our portfolio, we have particular securities on a hold for maturity. we do not write those up. there is an argument that it should be put forth in terms of real estate. if you are holding these real estate loans to maturity and everything else is looking good on them, is it fair to the bank to write them down immediately

or should you have a standardized real estate values for your particular area? >> you touched on a subject i am extremely interested in. i do not have the statement here. it is in your statement, but i did not find it. he said the largest banks are holding 75% of assets. that is up from what? >> historically, it was 25% in 1990. , 55% in 2005 and 75% in 2009. there been have been around since 2009. >> the reason i want to focus on this -- salvatore marrance mentioned bank consolidation. we mentioned too big to fail.

we have argued about whether to big to fail has been ended. we will leave that for another day. my concern is that we look at regulatory burdens without scraping out the old regulations that are not useful and are no longer serving their purposes. even secretary geithner testified to that in this committee when i asked him. is further consolidation going to occur because of the inability of the smaller institutions to cope with what they are going to have to cope with in the regulatory environment? >> you would call them funding costs and operating costs. people will put more of their money in the largest banks at lower rates if they think the government will not let those banks fail.

if you look at the bailout in europe recently and you look at the approval of the transfer of derivatives portfolios, those are signals that big banks are going to be supported at all costs. that drives the supporting -- tries the funding costs. the underside is operating costs. it would be appropriate for congress to urge regulators to start adopting a two-tiered approach. the fed is interested in doing that. it has not happened so far, but that would be a good initiative to start. >> that overstates my time. ms. maloney for five minutes. >> i think all of you for your

excellent testimony. i was struck when you talked, mr. klebba, about your bank stay open during the great depression when the majority of the banks closed. how did your bank survive? did you have more capital? how did you survive when so many close during that time? >> they were conservative. good old german catholics. they did have a lot of capital. it was a family owned bank and it was their money they were lending. it was not somebody else's money. there was a self interest in that. i remember him talking about going around on sundays with his long list in his pocket and calling on these families and seeing how they were doing. it was not just a banking

relationship. it was a personal relationship. i remember him saying that people would come in and say, i can do this anymore. he would say, you need to stay on at farm because you can feed your family. once you move off, what are you going to do? it was really compelling, the stories he had. a really interesting guy. i could go on for hours. >> thank you for sharing that. when we did done frank -- when we did dodd-frank, we tried to go back to that. you had skin in the game and you worked with people in the traditional way your father did. in trying to help people keep their farms, we are trying to help people keep their homes. the loan amortization and loan

appraisal sections -- i want to wilmarth. it gave a great description of the committee banks during this time. they were the rock. i hear stories from my state and across the country that the only place anyone could get any help our response was from community banks. one of the criticisms of this section has been that being able to advertise these over a long period of time could incentivize banks to pursue foreclosure rather than modification. obviously, there is a social policy to what modification. i would like to ask you, since you spoke on its, do you agreed -- and she spoke on its bank, to you agree or disagree -- since

you spoke on it, do you agree or disagree. can you comment on that particular section? >> i suggested that provisions 205 and 206 could be used in the context of the forbearance program established for agriculture and energy banks in the late 1980's. that was all be extended to prove the managed banks. it was carefully overseen by regulators. it was a successful program. you could build safeguards into 205. you could get regulators' discretion as to what did the amortization process was being abused. i certainly think that 206 should be limited to smaller

banks. i do not think larger banks have the same needs for this. many of their properties are in larger areas where there are more opportunities for refinancing. these provisions are needed in smaller, frozen markets where there is no capital coming in to refinance properties. banks could work with customers in the way that has been explained. >> others have said that it might basque -- it might mask the difficulties of addressing the problems. >> as a community banker for over 30 years, i categorically deny that it would encourage foreclosures. that is not the business we are in. it would do the opposite. it allows time for me, as a

banker, to work with that borrower and find a solution to their financial problems or the economic problem in our area. this was proven in the agricultural crisis in the 1980's. i would like to respectfully point out that this only affects regulatory capital. it does not that the books with the bank. it does not affect my investors looking at the bank. it only applies to highly rated banks. we are in no way justified or jeopardize its safety and soundness. it helps out the consumer that needs help at that time. my bank celebrates its 110th anniversary in january. we look to the next two quarters. >> let's start off with that

point. let's go back to section 20 fiat and 206. the testimony was that -- go back to sections 205 and 206. in a situation where a bank or credit union has someone who is not paying and is not up to date, what is better for that bank or credit union to be in? to try to facilitate a workout with them or would it be better to go through the foreclosure process from a bottom line perspective. >> my main office is in a town of 800 people. i live with these people. they are my neighbors. iselin not in the business of taking people out of their home. the last thing i want to do is to take somebody pose a home or their car. we have clear underwriting standards -- take somebody's

home or their car. the first thing we do is sit down and talk with that person or family and try to find a solution. in my state it takes almost 18 months, and lot of things happen. the last thing i want is somebody is health. >> doesn't that cause other community problems when a number of homes are in a foreclosure or moving through foreclosure at that period of time? not only uncertainty for the marketplace but for the community itself to have that number of homes in foreclosure? >> there is no question nobody wants a home when it is abandoned. when there is a situation and we do end up for closing -- i am talking about two were three loans, i am not talking significant numbers, that house is abandoned. it is a blight on the community. >> what we are trying to do with legislation is get rid of

outdated regulation and try to improve on that. that is the same thing secretary gunnar was talking about. -- secretary geithner was talking about. are you optimistic about this that this is going to occur and the secretary as far as getting rid of unnecessary burden some regulations? >> in terms of through the euro or -- bureau or -- i am not optimistic. what i found coming out of washington is at least in the 20 years i have been in the banking business is there is more regulation, not less. >> going -- this one i may disagree with you all.

they would say we are just creating the rules to have a uniform system of accountancy here. if there is a problem for financial institutions with how the regulators to apply the rules, that is a problem that we should be taking up with the regulators and not having an impediment as it does in the bill to go through sec. do not give us any bad accounting standards under fats be. is there an appropriate response to not put a restraint and also have the regulator apply those rules? >> i think uniformity for uniformity is at stake is a nonplussed. that is not where we should be he should have rules that make sense that are just and actually are reflective of

reality. i think that is clear -- that is what they were trying to argue that are trying to do. it is for the it -- it is the same for the big as it is for the small. how this may impact on your requirements for your institution may be onerous. that is up to the particular type of banking regulators to step in and say we are going to apply this kind of standard to you and how we are going to change the capital requirements because of that. as far as an act investor is concerned, they can open up your books and say standards are the same but this is how regulators will apply it to the institutions. does that make sense? >> i understand where you are coming from. this is not a reflection on what you are publicly reporting. it has to do with how the regulators aren't dealing with

you. >> i see my time is up. at thank you. >> thank you very much. to our presenters here today, i am very pleased and i wanted very badly to cooperate with the opposite side of the aisle to do something for the small community banks and credit unions. i want to make sure we are not inadvertently doing something that is going to be too big to fail banks. i want to make sure we are working for our community banks. i know many community banks are having challenges raising capital.

were you able to use this program before it closed? i understand currently, there are restrictions on business lending for credit unions. i am very much involved in this issue. how will this relax this cap and increased loans to businesses? >> it will raise the cap under a very well crafted piece of legislation that does not allow credit unions to immediately go wild and member business lending bought slowly increase it. there are requirements such as they have to be doing it for

five years. there are requirements they have to be well-capitalized. there were studies that show credit unions would be able to increase their member business lending as a result of that cap. there are credit unions that are worried about getting into the business because of their size. >> i understand. i want to know if they have worked this out together on how this is to happen. >> we have not worked this out. >> i think we are talking about two different things here. >> it would be great if you could mix the apples and oranges and come out with some good effort so we could all be behind what you are trying to do we get caught up in this disagreement between the community banks and the credit unions. we support both of you. i will beyoncé any more.

-- i will not say any more. i need you to a elaborate on how it will increase fdic risks. >> section 4 of the sardine oxley act requires that public companies have control in the edit -- independent of the tour's fund finds that to be a true statement. they find the statements are actually what they report to be. everything from line employees working out the door with depositors cash to chief financial officers requiting he but to make them as they wish they could be -- >> i get that. let me ask the community banks. how do you make sure there are controls.

who would like to answer that? >> if i may. we strongly support internal controls for banks. we strongly oppose internal controls for small banks. we are already regulated by the fdic. >> tell me how you do it. what is your system? >> let me start at the top with the board of directors to have a responsibility and then it comes down to me, the c e l as a british irresponsibility. we have an internal control. we have unqualified audit. we have a full -- >> i hear you. that is a problem that needs to be worked out. you know that section 2 05 will lead families to be kicked out of their homes. can you explain how the bill will hurt home owners? >> if you look at section 205 --

it covers all modifications. if they could a principle right now, that can be advertised over time. section 20581 refers to other real estate owned. as our foreclosure properties and nothing else. it allows losses on foreclosures to be amortized over time. section 2 05 is fine. with 2 0581 and there, and it encourages foreclosures. >> you are talking about your oreos? >> yes. that is a loss recognition event. at that point, normal accounting rules of citibank has to recognize the entire loss at that point. this would allow banks to stretch it out over 10 years. >> thank you for this hearing again. i would like to say to our friends and community banks and credit unions, i think we are onto something, but i think we have to work out a few things.

i hope that we can because i want to make sure that community banks are able to operate and provide services. i am tired of what we have gone through with too big to fail banks. please work this out. >> thank you. >> i also believe community banks and credit unions are really the livelihood for entrepreneur to will credit the majority of our jobs. we need to make sure they are able to get loans out. in saying that, i have listened to all of the witnesses and the sections here. it appears some of you all agree there is a section -- i think there is on the one witness who said he does not agree with any of these sections. i think he did agree with a couple. i was thinking mr. silver's did not. >> i agreed with many of the provisions. >> that is good. what i am trying to get at,

there are a couple of provisions i am trying to get my hands iran. first mr. garrett when he talked about 104 and 105. when you do have an outside entity that is bringing a standard it to the table. why would we want somebody else to interject into that standard? i am confused why you would even want that. keeping everything in uniform is good to be able to evaluate things. i would like to hear from anyone on this side that would tell me what you do not want uniformity. >> regarding section 104, what comes to my mind is market issues. mark to market issues for a small community bank is just eight different business model for it than 148 trillion dollar bank or whoever it may be.

we hold our securities to maturity for the most part. we hold our mortgages to maturity. it would be hard on the asset side of my ledger -- my loan portfolio. how'd you mark to market a one- family home in rural western new york? >> is that not up to an explanation on how you would judge market value purses -- you are saying your bank would be different because you hold your assets for a longer period of time and it probably is not a good market comparison. i am concerned about saving the -- that is something other than the uniformity. that is what is confusing here. >> what is forced on a medibank that is one trillion dollars in size is forced on my bank. it does not work the same way. >> if i might offer a perspective. they are fundamentally different because credit unions are not

for profit as you know. they have no shareholders prefer a non for profit credit union to follow the same principle, one- size-fits-all across the board actually makes it more difficult for a credit union member to understand the financial issue of the credit union. for a performing loan to have to be marked to market as has been proposed in the past, it does not make it easier. makes it more difficult if that is going to pay the maturity, it makes sense to write it down part way through the process. i do agree that it does not make sense to apply the same rules to smaller institutions as a test to larger institutions. >> you do agree it ticks consistency out of it when you can hear from one bank to one asset. >> when there are different types of entities, i think one size fits all creates more difficulties than it solves. >> i am going to move on to

section 102 also because i have a problem with this section. i want your help to try to help me out with it. i am a cpa. i have audited banks. i understand that internal controls are important a matter what size your bank is. the internal control problems you have today is that the cost is too high. when costs are too high and getting these procedures taking care of, that is my assumption. you would like to eliminate them up to $1 billion mark that is in this piece of legislation. my question would be if it is the cost that is the issue, maybe we should have a steering mechanism. --teiring mechanism. would you not agree with that? "i would agree with that. i think in terms of banking, one of the things you have to

understand is nobody gets looked at more than we do. i do not think there is any industry in the sense we have the fdic and our state regulator and our own auditors. we have lots of people. >> it did not mean to interrupt you. i understand that. internal controls are something that has an auditor, i can tell you many times i would rather see an internal control of it than a full audit. if i can make sure your internal controls are in place, the audit is not as important to me. thank you for your testimony. >> thank you. >> thank you. i ask unanimous consent to submit into the hearing record a letter from the state community banks association expressing

their strongest support for the communities. >> without objection. >> thank you. i want to thank all of you on the panel for your testimony on coming to the first act. the goals stated goal is laudable. it is time to enhance the ability of that community banks to foster growth and serve their communities to boost small businesses and increase individual savings. my understanding is that at this legislation -- this legislation is not intended to give community banks an advantage over other financial institutions. it simply increases the ceiling on the asset size for community banks to be accepted for various provisions of existing laws and regulations. recently, we held a congressional hearing on legislation to increase commercial lending limit for credit unions.

arguments were made that the current limits are too low. credit unions are approaching those savings quickly. many soon will surpass their levels. i was not convinced by the testimony i read and the responses received after questioning the interested parties on the legislation -- i want all of those present to know i remain committed to requiring credit unions to be subject to federal taxation if it were to increase their commercial lending limit. seeking an increase without providing data, proving it is merit to it is not good public policy. i recognize the important role credit unions play in our financial services sector. credit unions are doing a good job and help out considerably

during the economic crisis adding added liquidity to that provided by the community banks. it was an excellent synergy. however, i am not certain that the performance of credit unions suggest they will be able to manage an increase in commercial loans or even close to surpassing the 12.5% threshold. with that, i want to ask my first question of mr. salvatore bronco. --miranca. let's see if i can get my papers straight. i have them out of order. how will this legislation, h.r. 1697 come up benefit my constituents economically? will that increase jobs? >> the answer is yes to both. you mentioned a about the

business lending proposed legislation. that is an expansion of the powers legislation. cfa is a regulatory burden relief act. it will allow me and thousands of community banks to do our jobs better. we have had a snowflake effective regulations. i have been in the bank over 30 years. prior to that i was a bank examiner for 10 years. the regulations has never stopped in four decades. it is in a cumulative effect and is about ready to cave in the brief with the a cumulative snowfall. over 10% of my budget right now is on compliance issues. that could be allocated towards serving my customers better whether it be a product or a loan products. i mentioned i have one half of my staff on compliance that i have on lending. there is an opportunity to this. there is a real cost to this. let us do our business. we know how to lead the

community banks. we know how to let conservatively and we know how to lead to our people that we trust and we know. it will create jobs. we are there to service small businesses. 100% of my commercial loan portfolio is too small businesses, many mothers, fathers, family, and so forth. not one i have is to a stock owned publications. small business is my bread and butter. let me do my job and we will corrode jobs. >> a i comment as well? -- we will create jobs. >> before i started working at a trading association, i worked at a credit union. i am familiar with your district in south texas. i think there is misunderstanding about how hr 1418 can help small businesses in south texas. people like to say that somehow credit unions making small-

business loans is different than our original mission. the earliest credit unions in the early 1900's made a business month. credit unions were tasked with promoting thrift and making loans for purposes. i cannot think of anything more provident and a business slump. it is constraining credit business lending. is costing jobs all over this country including south texas. i respect your opinion that by all means. i just ask you to think about how we might be able to create jobs in south texas as well. >> my time has run out. i yield back. >> thank you. >> first i've wanted to ask -- this is to who ever has an extra teeth and is powered by understanding with daughter of frank is one ever certain things -- dodd frank, if you have to

set up the impact accounts. can anyone explain to me what happens? >> i am not familiar with that. >> i am not sure i understand your question. >> that would be a budget mortgage from the old will be understood? "under dodd frnak there is what is called a higher price markets predict the fallen to the higher price mortgage, certain requirements come into effect, one of which is you have to escrow for that particular account. >> what is the mechanic to decide is a higher priced mortgage? >> basically rate. >> credit worthiness? >> no, sir. is just great. >> i believe it is 1.5% over the current fannie and freddie rates. the high-priced mortgage in today's environment be under 6%.

>> if i had a 6% on in that particular case, you would not allow me to pay my own insurance in my own taxes? >> what i have the option to do that. we would have to do it ourselves. >> and our credit unions set up to provide that type of service? are you contrasting it out? how do you do that? >> escrow accounts are in compliance burden. i think one size fits all does it sometimes create unintended consequences. this is another area where i agree having flexibility would help smaller institutions and ultimately would allow more resources to be devoted to serving the community than complying with regulations. >> i think is important to note that got frank allows the federal reserve to make exemptions to the escrow rule. what is being proposed here would be to require an extension. >> t know if any of the

exemptions have been -- >> i am not aware of the federal reserve -- >> i do not think they have issued the rules again. under the restrictions, it is going to be a minute number of institutions and loans are to be subject to the extension. >> one of my reasons -- that one just popped off to me. i used to be a large county treasury. we had 1 million and a half taxpayers to sit clatter of collecting the bills electronically. he would be amazed how often we would have trouble with small lenders. you have a credit line, other things, but there are multiple parcels. you are paying all the taxes except for one. a couple of years later, i am as obligated selling tackling on that. who ends of carrying the liability? is it the old shifting of responsibility? it often has and i didn't -- unintended consequence. is it in the long that much safer and better?

>> i can tell you as a testify, we went 97 years and never had escrows trade never provided escorts even to those few individuals who may have expressed an interest in them. our foreclosure rates for practically 0 per >> a spent force as much time on that as i wanted to. will you tell me if my friend who is involved in a community bank in arizona is completely -- if this scenario makes sense. he is telling me he has a client to they have had a lot with for a very long time. it is a small strip center. has credit or the tenant. they have a terrific cap rate. they have a very consistent payment system. a strip center almost across the street went through foreclosure and sold at a dramatic discounts. he has had to do a capital call to the owners of the performing strip center even though it is credit where the tenants. is a long time with its

payments. has agreed payment history. the regulator is saying no because our market example across the street, irrational scenario is that set the fire from the regulator? >> it has never happened to my bank, but i would not want it to happen to my bank. if i have a relationship with an individual for many years, i understand the property -- why do i have to write that down? that is a force for a town that does not accomplish anything. -- a forced write-down that does not accomplish anything. >> >> thank you witnesses for

appearing. mr. schleicher was engaged in something that i found quite interesting. let me ask you about these escrow accounts. do you agree that there are some people who benefit from the escrow accounts and -- i hate to

use the term need, but they find themselves in better shape at the end of the year than they would be if they did not have the escrow account. do you agree there are some people who benefit -- i would agree with that assertion. the question is whether they are required to provide eskers. under the dodd frank act, we are required to provide that. there are some individuals who have a hard time budgeting. if you are in a for family, that becomes an underwriting issue. are those people qualified to get into a home if they cannot budget enough for their insurance and taxes. i do agree with you that there are some people that really do need escrow. >> if we adhere to the request

anise save the rules, would you have it available -- if we adhere to the request and it saved the rules, would you have available >> i will use the word option for a bank and not a requirement. keep in mind this is only for the high-priced loans. i think many banks would devolve to that. it would be a management choice. an internal control and choice. setting up an escrow account is not easy. it is expensive. it is difficult and you need expertise a trip i cannot go to a bank tomorrow and say i want to set one up. it has to fit your business model. it should be an individual bank decision. >> how would you help your client who says i really do need a --

>> you say we put an automatic deduction from a deposit or an automatic deduction into a savings and checking account. that money will be there and we will make sure the money is therefore with the tax bill comes due. we can work with a bar were on an individual level and customize the mortgage for the borrower. this is being held in my portfolio. it is in my best interests. >> do you find the system of having the automatic deductions less difficult to? is that what you are saying if you have a system for escrow accounts? >> it would depend on the size of the bank. we have community banks in our association that would make two mortgages enough. we have small banks, community

banks, and very rule parts that do not have the volume to set up a escrow account. i would use the word again to customize it to make sure that person -- we can fulfil the dream of that person to get them into a house and it off -- and not hurt them in the future. >> would it provide for the person who falls into the circumstance we just discussed? something that would encourage the bank to work with the person? i believe you are right. i believe the bank would work with people. there are times when some people find it difficult to get things done. if the bank would have some means by which you could seem what is an informal escrow account to are sitting up, would that help? >> i am sure any banker would work with congress for the right

written procedures. i only hesitate when the say another piece of legislation. >> i would not like to have any legislation at all. unfortunately, that might lead back to something we just went through. legislation is not a bad thing. we are trying to do as best we can and the balance this. in balancing that, we want to do what is good for the consumer as well as the banks. i tended to have a lot of consumers to visit with me. they make a difference as well. let us try to look at this from both points of the key. thank you very much. >> thank you for your great testimony purity are doing a great job. very quickly, there were some statements made a while ago that were made something to the fact that the legislation jeopardize is the soundness of our banking institutions. would you like to address that

for a second text to you feel it does or does not? "i totally disagree. >> they made some remark that it jeopardize our ability to .ervice our customers trad "i totally disagree. i think it allows us to work with our customers even more so than in the past. >> i think it goes to the discussions we had already with loan appraisals. i think sometimes we are getting some of the context of accounting verses regulatory stuff mixed up. there is a big difference here. from the standpoint of the regulators, is -- i would like your input on this when they come in and day analyze your loans and they look at your files, if they only have -- if appraisals on the five-year

rolling average -- if that is all they have to look at is the current market which is in the doldrums here and there is their recent sales. all you have this foreclosed homes, how does that impact your loan portfolio? >> first of all, the fdic fund is fully funded by banks. for those of us who are surviving, at the last thing we want to do is see a dead and continue to go on. "we don't want is viable banks to be closed prematurely. i think that can happen sometimes one of markets temporarily decline if you have to mark to market on some of those loans or you have to write bonds to appraised value. >> at the same time, these appraisals that they look at, it is a very arbitrary and subjective way of looking at

something. i am sure you don't agree with everything they look at when they analyze your bank. you don't agree with everything they come up with. i am sure john and south -- >> i have not had an experience where i agree with everything yet. >> if it is arbitrary, the case could be made that for a five- year rolling average it gives a boart fair assessment of what the rest would really be in that particular line. would you agree with that? >> i think we need to get back to normalize the valleys. not to the deflated bellies we are seeing today. >> real-estate was up and down. it takes the highs and lows. it puts a little more consistency in there. would that be a good thing to help stabilize things for you and your bank? >> i think it would appear >> there is an important point that needs to be made. this provision applies to

compare plans. they may be liquidated within a year. it includes the heights of the average in 2006 are now. it is arbitrate -- >> with regard to that, i would remind you that that is still an arbitrary figure that is discussed between the banker and the fdic. this is not a finite to definite way -- we need to recognize the fact. i know he had a couple of questions with regard to -- it is interesting we are looking

at a billion dollar of assets whenever the dodd-frank bill has a for all companies. we are looking at the assets versus the capitalization which the average bank in this case and be a 7.5 billon dollar -- and $1 billion bank leverage that 7.5%. i do not see -- no? good. i also think -- i see my time is up. i will yield back. >> thank you. mr. scott. >> as i mentioned in my opening statements, i represent georgia trade my concern is how we can help the struggling banks and try to prevent bank failures. let me just ask these banking individuals, do you feel the

legislation will be effective in any way in aiding struggling small banks and helping banks not close? "i think there is a lot of provisions in here. most provisions that would assist small banks especially those struggling from failure. >> could you tell me how. >> he would have less regulatory cost. they are overwhelming in our industry right now. we have had to hire additional personnel. and worse than that is that virtually everyone in our bank is involved and what extent or another in complying with regulations. it has taken a way from their ability and their resources to work with our existing customers and also to go out and solicit new customers and help other people. the compliance burden is huge. i think this will would significantly reduce it. secondly as i testified before,

the tax burden on us relative to some of our competitors and credit unions are a huge burden for us and it makes it very difficult for us to compete -- especially with respect to very attractive loans that we just can't compete on the right side because the cost structure is different. that is very good to have established that it will help and be effective in aiding struggling small banks and preventing them from closure. the other thing is will it help banks continue to land? that is another problem. getting banks to lend money to small businesses. >> i can tell you from our perspective and the perspective of a free bank around -- i had an opportunity in the past 12 months from last june to travel

throughout the state and talk to banks. other than those few who are very troubled and having the issues and the need to shrink, every bank has excess liquidity right now they are trying to land. it is not a question of turning down loans, it is a question of getting both consumer and business appetite for taking on new loans secured >> in two critical areas and we can safely say that this legislation will help prevent struggling banks from closing. it will also help them to be able to lend to small businesses. let me ask, let me see, the rep with the credit unions. i believe that is mr. becker? and mr. cheney. how will this legislation help credit unions? >> primarily it will not affect

credit unions. there are a few small provisions that will affect credit unions. we think a more balanced approach would be to add other items. >> you are supportive of the legislation? >> we would like to see an all encompassing bill that would help on the credit unions and banks. my colleague john next to me, i would more than invite him to join two other banks that converted to credit unions. i would be glad to help him. i am sure cheney would be glad to help me help him. >> you are not actively oppose to the legislation? >> we would like to see regulatory relief for credit unions. i believe the congressman said the purpose of this is to help americans realize their dreams. there were not part of the problem, they were part of the solution. that sounds like credit unions to me as well. >> i will take that as sort of -- you are ok with the

legislation accurate >> there has been a lot of discussion about the man. a lot of talk about -- a lot of talk about demand. we have seen demand for credit unions and small business lending. we have seen them make small loans to banks they were not able to make. i am aware of one small community. i've was in the northwest where there were four community banks and one credit union. one is being processed -- what is in the process of being acquired. the other three are under how do we tell the small businesses in that community that is good policy not to raise the cap when they are about to run out of any capital? there is demand, maybe not in every community, recessions to limit the demand. the only way out is to create jobs. this is a way to create jobs.

we would like to see a balanced approach as mr. becker said. "i don't know if you have time -- do i have time? "i think we need to go to the next question. we are pushing up against the votes. >> you mentioned something in your testimony that caught my eye. you state that rural borrowers would be hurt by consolidation because large banks do not serve rural areas. i represent a large portion of west texas. as i said in my opening statement, and a lot of small towns of my district depend heavily on local community banks. could you provide us a little more color on the affect of consolidation on rule -- rural communities given the conversations you had with bankers? >> my role as chairman this

year, i have said over and over a again that when you are gone you are gone. whether it is regulatory of fact, the accounting effect, or the economy, when you work on you are gone. my what hundred 10 year old banks, there are three communities. i have a branch on an indian reservation. an honest population. population density of my county is 67 people per square mile. this is not an area bank of a barca is interested in. if i ever had to sell or merge my bank my customers lose it because of the personal service, the relationships, and the ability have that for what hundred 10 years to meet the credit needs of our community. it is important across mystery and a america that main street banks continue to do what they have done for generations. we are the only country in the

world that is the foundation of 7000 community banks. there is no other country that has that. we cannot lose that. >> may i add something to that? on phase two of our testimony, i point out how different the canada and the united kingdom are. these countries that are dominated by large banks and have few community banks, consumers are not well served. the report that just came out of the independent commission and banking in england in september advocated more of a breakup of big banks because they said we are not getting adequate service for local communities and small businesses in england. >> thank you. if he were to prioritize some of the provisions in the community's first act, which won the you feel are the most important to community banks and should take precedence? >> i cannot choose one, i would

choose two. loans residential lawns and very small communities, i feel it is very important to us. it also allows us to get a little bit closer to credit unions in terms of taxability. a family of four -- an average family of four pays more in taxes than a credit union does. their tax burden is zero. ours is significant. we pay close to $1 million in federal taxes last year. it is a significant cost differential for us. the second is the regulatory burden and the fact is would recognize for smaller banks like

ours who are in smaller communities, the fact that we live with our customers. we go to church with our customers. proceed those people on a day to day basis. i do not think there is near the regulatory concern or should be for our size banks as there are other banks. it is getting to be a tremendous overwhelming cost for us. >> i think if you ask 1000 bankers, he would get 1000 different answers. the tax provisions makes a real difference for my bottom line. in the last 90 years, i have paid over two million dollars in taxes. i could have put that money to capital. the small business potential new regulation -- the small business reporting is a concern of mine for a another regulation that would burden my bank and by people. then you get into things that are just a waste of energy and time.

if i may, sir, i wanted them all. >> let me add this. i have 15 seconds left. i hear the same priorities from every single one of my community banks. i represent a huge district of texas from san antonio to help pass up. he are voicing from missouri to -- >> new york. >> i thank you very much and i yield back. >> i appreciate everybody's testimony today. i will state i have a bias in this. i passed a bill -- we passed a bill out of the house and to the senate's last year which allowed -- you did not have to have a media capital infusion that some banks could not come up with that led to their clothes are. in colorado we have had a couple

of banks closed. i have to look at some principles. more competition, not less. help the innocent, or the less guilty and less culpable. eye in not for liquidations or foreclosures if they can be avoided. i hold for the long term and not the short term. based on those principles, there is a lot i liken the sponsors a bill. there are some things that are problematic in my point of view. having said that, you and mr. silver's were some of the most aggressive against the bill. i will have some questions for you, too. one shop that is paying as agreed, the other across the street is in foreclosure.

they have lousy management. who knows what it was. now, we have an accounting issue. do you mark that down to the foreclosure press across the street 42 a lot the income to establish with the parking -- market price is? he has an accounting component to it, and you were the mark to market peace to this. you were concerned about that. that is number one. maybe i am speaking. -- missed speaking. my feeling is the small banks and the credit unions did not cause the mess we are facing today. i want to give them a chance to work their way out of this along with their customers. my people in colorado say that nobody is lending. not enough, anyway. .f you have a reaction

>> currently has drafted, it applies to all real estate. it is not just a commercial real-estate provision. if you narrowed it to commercial real-estate, i think it is much less problematic. if you narrow it to commercial real-estate, it really brings it some focus to what the problem is. commercial real-estate are not going to come back until consumer spending comes back. there is no way to fix the commercial real estate problem and asset prices without fixing consumer spending. that brings you to -- >> the need for jobs. we needed jobs. >> you need to get rid of the 700 billion and negative equity debt 11 million consumers have that. >> i think that 206 is most applicable to commercial real- estate. i think you could also limited

to smaller banks and not the huge ones. i think you could put some regulatory safeguards on it. for well-managed banks, you could look back to the 1980's forbearance program and get some pointers from that. i think the goal should be what you identified. where markets are frozen, and there really is no reliable market value available, the properties are still performing can support loans, it does not make much sense to force a drastic right into their situations. >> or give the bank a chance. or a credit union. i think these things apply across the financial stratosphere. it does not have to be the big banks. we already infuse capital. we did not let them have time to work it out. we give them the money. work it out. they did. they obviously have a major role to play. now, what about the little guys?

i want the competition. >> an observation about marked to market. historically, we have asked firms and all kinds of institutions to mark assets to market when there are readily tradable, there is a price to can get. there is some possibility the might be sold. his has been important with relation to banking because banks, big or small, have demand deposits so that there is a possibility that people could wanted their money back. here is something around a bias in banking toward mark to market. it is interesting with the extent with the faults of happiness with that in banking. pension funds who do not have demand deposits but very long fixed obligations have been

asked to rise marked to market now. >> i know my time has expired -- >> can i just -- in response to your question -- >> hold on. he has generously offered to yield your time. i yield him whenever time he needs. the response to your question, what troubles me about this bill is not realizing it the loss that occurs in a foreclosure with the bond is turned into a bad assets. but just a bad loan, but a piece of property. >> thank you. i appreciate all the witnesses testimony. i certainly sympathize with the plight of our community banks and credit unions who are trying to comply with laws that were

intended for folks to fix a crisis that you guys had nothing to do with. i know it is increasing your costs. there have been a couple of bogus claims i want to address and ask some questions about. i have a couple of concerns i would like to dig into a little bit. my first question is for mr. -- mr. cheney. is there any way for a bank or a credit union to profit from foreclosures? to say yes or no. >> i would love to find a way. it hurts the community. it hurts the banker. >> i am just asking a yes or no question. >> know. >> we agree. >> can you tell me on average how much each of you -- how much each foreclosure costs you? on average mortgage? >> average size of my mortgage

-- which -- average size is about $75,000 per ton against the foreclosure, we probably right to down at least two- thirds of that. let's bring it down to uh $25,000 loss. >> i do not have the numbers with me for credit unions. we can get that to you. >> that is fine. anyone who has them give them. >> i would have to answer two ways true for commercial foreclosures, it is all over the place. >> let's talk about residential. the claim was people were going to be thrown out of their homes into the streets. >> i think we have had two or three foreclosures in the past couple of years. they have cost $5,000 to $10,000 per >> the small banks are talking about can amortize that lost over five years, will it

result in those banks having more money to lend and wanted also result in keeping them from having to raise capital exactly at the worst time? >> yes, sir. >> i agree. >> thank you. i do want to get to appraisals, but before i do i have a question. he talked about the cost benefit. are you a ph.d. in economics? >> i am not. >> do you have an accounting phd or in statistics are mathematics? >> i do not. i do however -- >> the you have a background as a business analyst? >> i do not. >> i understand why you cannot do the cost-benefit analysis. have you consulted with economists, mathematicians, or business analysts about whether they can do is cost businesses analysis? >> in fact, i can. i can speak to you specifically about what the people at the ftc who have ph.d. is an economic

think about the benefits of doing cost analysis. i do want to point out something about foreclosures which i think you misunderstood. the issue is not whether banks lose money on foreclosures. of course they do. the problem is the banks have a choice. the make a choice between trying to restructure the loan and foreclosure. it is which of choice is more attractive to them. is not where the profit, where today lose less. by allowing them marked his asian over 10 years, you are making it relatively more attractive option. i do not need a ph.d. to understand that request to you feel like the community banks make every decision on the bottom line dollar? says they do not ever look at the community or the lender, the borrower? >> the relationship is part of the bottom line. they do owe a duty to shareholders to maximize the value. that means kicking somebody out

of the house, that is what they should do for shareholders. >> that is not true. >> de you understand youdodd frank already requires cost- benefit analysis? >> i am sorry. >> for a lot of things including any role making a trip >> i understand is not just dodd frnak. this is a general problem. >> i do want to quickly deal with the appraisals. i got that subject has come up already. i have heard from a lot of ohio banks that they have been forced to not just the capital, but to actually write down their loans based on appraisals of performing loans. the results and their ability to put less money out to lend it. at any bankers heard of that? >> i have heard that

consistently across the country. >> i have heard a number of stores to the same defect. >> we have a vote coming at about 4:15. d winter remaining minutes for questions? >> yes. i appreciate you having the hearing today. like others on the panel today, i am sympathetic for some of your concerns with respect to be a key militate to be cumulative a fact of regulations. we have heard about often outdated regulations. this represents a compilation of those representations the re- regulations that are troublesome for community banks. is that true? it is a start. >> are there others? >> there are many others. >> i hear complaints about

regulations that get in the way, whether environmental or other things. they are caught not being able to respond directly. the reason i ask because this is the forum to do that. i appreciate you bringing this forward. do the credit union organizations have a similar list we should be considering as well? >> it is in line opening statement. >> i will take a look at that. like my good friend in ohio, i am a stickler for standards. i need to understand how a change is important to the business you do. the three folks at the end who, with a little more objective point of view, can you explain

to me your objection to sections 205 and 206? >> if i may -- >> yours with respect to residential. >> in particular, that is where it is most problematic. one is a general accounting principles problem. congress should not be encouraging voodoo accounting. >> is is voodoo accounting, or is it trying to find a way to address a particular business model? you are shaking your head. you have a different view. >> it is supposed to be tailored to the kinds of situations we are dealing with. >> is it tailored enough? can you explain why you do not think it is tailored enough.

>> let me reiterate professor of levitin's comments. this is for residential real estate. >> you do not have serious concerns about the commercial application? >> i have less serious concerns. there are problems related to the basic accounting system. when it comes down to what kind of behavior we will be incentivizing and the implications of our economy, it is more in the residential area. how might one tailor its bank. as the professor -- how might one tailor it? if you look at losses, it creates less of an incentive issue. it also does less violence to the accounting regime. and impaired loan is not a

realization the bench the way a foreclosure is. those types of considerations could get you to something more reasonable. >> let me ask one more question. do you three agree with the other provisions of the bill? do you think they are reasonable changes? >> there are a number of provisions in the bill. the bill is laced with extremely disinterested things. >> we have been called for votes. i have a few more folks. >> thank you, madam chairwoman. mr. silver, do you think there is any such thing as over regulation? >> i am sure there is.

as i just said, i think the three items- mr. marranca emphasize in his opening testimony -- the three items that mr. marranca in his testimony, there are -- >> do you think there is a such thing as overregulation? >> yes. >> the critical thing is not the amount of regulation. it is whether it is good regulation or bad regulation. the question is not the number of regulations. it is whether they are smart

regulations. >> so you do not think there is a such thing as bad over regulation. >> there is bad regulation. if you have too much of that, that is bad overregulation. i am not trying to play with semantics. i am tried to make the point that the problem is whether these are good regulations or not, not the share of -- the amount of regulations. >> we have people coming here to talk about regulation and have never acknowledged that there is a thing such as overregulation. every member of this committee has been condensed over the last couple of years than there is significant over regulation. i can assure you that despite your inference to the contrary, there's not a single member on this committee that wants to

harm american families. every member here wants the same thing. they want the american dream to be available for everyone in this country. we have differences on how to get there, occasionally. no one is trying to harm the american family, i assure you. that is my time. as to the handling of loans, by local community banker, where i bank, had to fail to renew a loan to a businessman because regulators said if you modify this long, its modest that it -- it automatically goes on non- accrual. that would have caused his bank significant losses. the man became delinquent in his home loan. he put the keys on the bank manager's desk and said, it is yours. i cannot do it. they did not want a house back that was empty. he hung in there with the guy

until he got a realtor to sell its for him -- sell its bank -- sell it for him. some opinions have been expressed that big banks have greater ability to do this. they are less willing to do its . big banks are -- community banks are much more inclined to give that kind of attention to individual business members. with the exception of the veterans administration, which has a loss ratio of 2.5%, in the rubble for any lender anywhere. that is attributable to the fact that they qualified their people. if there are problems, they spend their time to work it out with them. they are not handicapped by a bunch of monolithic bureaucrat-

written regulations. i see my time is running out. i would ask any of the other four that i have not ask questions of yet, you have 36 seconds. >> i would invite the academics at the other end of the table to come to my bank and i will show them regulation. >> i will move to mr. sherman for three minutes. that will conclude the hearing. i will go vote. thank you very much. >> there is over regulation. there is under regulation. there is smart regulation and dumb regulation. small businesses want capital. any of you have some extra launch to make too small businesses in san fernand of bally, see me. i will talk to you.

i want to support this bill so that small banks and community banks in my district will have the capital to make lawns. at the same time, there are credit unions that are unable to make loans because it prohibits them or limit what they do. mr. klebba, the credit union witnesses have suggested we go with this bill but allow business lending from credit unions. is there a reason why i should tell people in my district to try to get a loan from a community bank and if they say no, do not go to a credit union because congress will prevent them from making the long jump should we try to have both kinds of institutions make small- business loans? >> 95% of the credit unions in this country are nowhere near

their business cap. >> many of them have not gone into business lending because they cannot gear up to do it. they cannot hire a loan officer to make $1 million in small- business loans. we want to have all credit unions making small business loans in the san fernand delaware valley -- san fernando valley. there is an easy way for them to make as many business loans as they want. >> then they become a tax paying entity. >> i am waiting for my republican colleagues to convert the democrats. it is not that hard. mr. marranca, small banks would

like to be able to besub-chapter s. to bea or need- -- ter s.b-chap >> it is a piece of misinformation that sub-chapter s does not pay taxes. >> i understand sub-chapter s very well. can you join hands the way i join hands with my republican colleagues? >> we are not opposed to any ways to find more capital for any of those banks. >> does the senator hills back?

back?ld >> yes. >> you say you represent more than 50 million people. that is 1/6 of the american population. that is an average of 200,000 people per organization. are those numbers correct? >> i think they are mathematically correct. it is not 250 organizations with a couple thousand members. there are small members and big members. >> ok. you represent 1/6 of the american people. that is a pretty big job. mr. levitin, in your statement use say the community's first act will destroy communities --

communities first act will destroy communities. you were on the tarp committee. is that correct? >> let me explain to you what tarp did. destroyed communities. it cut neighboring property owners and it hurt local government. when you gave the money to the big banks, or whoever did, they started holding companies. they straightened out the books of these big banks. they had absolute auctions on these houses. somebody may have bought a house two months before or three months before. you had a builder building next door.

suddenly, he cannot sell his - for 40r 4040 cents -on cents on the dollar. the community banks had to write down some of these loans because of the fire sale that tarp allowed the big banks to do. paper losses. these acquiring banks come in, destroying neighborhoods, lowering the value. they do not have any incentive to work out these loans. when they do, they come out from under the loss-share agreement. what do they do? they foreclose. they fire sale the property.

then what happens? more community banks closed because of the market to market. they have plenty of liquidity. they cannot raise capital. it cannot get rid of 20% of their real-estate portfolio because of the way the market is. if you want to talk about something that sucks the wealth all of the committee, you let a community bank close. these community banks are being closed and they have no legal recourse against the fdic to try to find out why they got close. they had liquidity. to me, that is not right. it is more than a question. i have a statement. my statement is that some of this stuff in here, if you were associated with tarp, you took part in destroying some of these communities.

as a result, unintended consequences. >> i think it is critical that you understand. the congressional oversight panel did not create tarp or administer tarp. it was incredibly critical of tarp. i am in no way responsible for tarp. >> as a result of the mark to market -- >> the mark to market should be defended. that is market transparency. >> mr. cheney, you said communities -- credit unions go into underserved communities. what is your definition of an underserved community? >> i do not have a statutory definition with me. >> could you get that to me?

mr. becker, you said 13 million people need to get commercial loans. why can the bank loan the money? >> demand fluctuates back and force at berries -- back and forth at various times. there is a report -- it depends on the particular circumstances. there is a report from the fda that goes into this. >> i used to be a member of a credit union. some of my family members are in a credit union. if you go to a corner and there are banks on three corners and a credit union on one of them,

they are not underserved. >> there is a statutory definition. >> i would love to see that. >> the members might have additional questions. they will submit those in writing. the record will remain open for 30 days to replace -- to place responses on the record. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> president obama wraps up his ninth day trip through the asia- pacific region this weekend. he gave his weekly address from indonesia and announced trade agreements that will increase american exports and jobs. he also talked about the importance of the region to the

u.s. economy and why americans must invest in high-tech manufacturing. after that, the republican address from pat toomey. he is on the committee for debt reduction. the committee is charged with reducing the nation's debt by $1.20 trillion over the next decade. >> today, i am speaking to you from indonesia as i spanish up my trip from the asia-pacific. -- as i finish up my to the asia-pacific. the progress we have made in boosting exports here will help create more jobs and more growth in the united states. i was proud to join leaders from some of our nation's top countries as they announced trade deals that will support 130,000 american jobs and increase american exports by up

to $39 billion. boeing will sell plants in indonesia that are built with parts from 39 states. this will reach my goal of doubling american exports by 2014. we can rebuild an economy that is focused on what our economy has always done best -- making and selling products all over the world with three proud words -- made in america. we became a country relying too much on what we bought and consumed. we did not create many jobs at all. if we want an economy that is built to last and compete, we have to change that. we have to restore america's manufacturing mike. that is why we chose -- manufacturing might. that is why we are investing in

the next generation of high-tech american manufacturing. building an economy that lasts is not just about making things. 95% of the world's consumers live outside our borders. no market is more important to our economic future than the asia-pacific region. that is why we recently signed a landmark trade agreement with south korea. it will support tens of thousands of american jobs. that is why i hosted leaders from all across the asia- pacific. we want to make it easier for american companies to do business overseas. i met with president megadeath in russia to -- president medvedev in russia. medvedev in russia. we may be going through tough

times. as i have said time and time again, the united states still has the world's most dynamic economy, the most innovative companies and the hardest working people on earth. we can compete against anybody and we can win. as president, i intend to make sure that happens to give american workers and businesses the chance to succeed. >> i am senator pat toomey from the great state of pennsylvania. it is so pleased to have this opportunity to share a few thoughts with you today. i am deeply concerned about the two problems facing america today. after three years of failed stimulus programs and government takeovers, americans are rightly asking, where of the jobs?

out-of-control federal spending over the past three years has resulted in record breaking deficits and a $15 trillion debt that grows daily. if we do nothing and allow the status quo to prevail, we do not have to look far to see what the consequences will be. across the atlantic, we are watching a fiscal disaster unfolding in europe. financial markets are imploding and there is emmett bankruptcy. this is the inevitable result of -- and there is imminent bankruptcy. this administration is pursuing the same policies. with record-breaking spending, this administration has put us on a path to your webb's destination. -- path to europe's destination.

we have time to avoid the crisis europe is struggling with today. i have the good fortune of sitting on a committee that has the opportunity to make progress on both of these two priorities -- restoring economic growth and bring our deficit under control. the best way to revive the american economy is to reform our broken tax code. we should replace it with a system that will lower tax rates for every single american, simplify the code it and get rid of the special interest tax breaks and loopholes that make this code the 70,000 pages mess it is. every bipartisan commission that has looked at our deficit crisis has come to the same conclusion. pro-growth tax reform is a vital part of the solution. that is why we republican members have proposed a plan that replaces our current tax code with a simpler and fairer version that will encourage

small businesses to expand and hire new workers and encourage created hard-working americans to open new businesses. this reform should be permanent so that job creators across america will know that they will not be subject to the biggest tax hike in american history that is, the looming only 14 months away. republicans are so committed to this job-creating tax reform and reaching agreement with our democratic colleagues that we have offered to use this tax reform to generate revenue for deficit reduction. even the second highest ranking democrat in the united states senate has described the republican proposal as a breakthrough. in addition to kickstart in our economy with tax reform, our proposal which start with cutting spending. the problem is not that american is -- americans are under taxed, but that our government is overspending. let me be clear. we have identified several

trillion dollars in sensible, responsible spending reductions that will resolve all our fiscal crisis. in the face of intense democratic opposition, we have scaled back our proposal to $750 billion, less than 2% of what our government is projected to spend all but the next 10 years. shortly our democratic colleagues would agree that a government that has grown by 25% in the last two years can tighten its belt by 2%. the hour is late. our work on this committee must be completed this coming week. i remain hopeful that we can meet our goal. i encourage our democratic colleagues to join us in this effort. we have a once in a lifetime opportunity to pass legislation that will generate millions of jobs, create a simpler tax system and put our government on a path toward said -- toward

fiscal sanity. we can continue to be the land of unparalleled opportunity and prosperity. the 21st century can be another great american century. the american people will make sure of that if we in washington will let them. i am pat toomey. >> an update on the joint deficit-reduction committee. roll call reports talks remain stalled after an early-morning round of conference calls failed to make a breakthrough. they want to get a plan to the congressional budget office by monday for approval by the official deadline on wednesday. the talks are in a holding pattern after democrats rejected a proposal from john boehner. if the committee fails to reach a deal, automatic cuts will go

into effect starting in 2013, including heavy reductions in defense spending. you can see more on the talks here on the c-span network. >> this week on c-span, senator tom coburn. >> was the super committee a good idea or was it a mistake? >> washington's answer is kicking the can down the road. >> watch the entire interview on "newsmakers." >> o weekn "the communicators," our guest is brian