without meaning to be unduly critical, i do think the last portion relating to the disclosure act stands separate from the other provisions. i have concernts as to the potential first amendment issues. >> we had the authors of that amendment needs to happen. in your opinion, it is not necessary, or if you think is the direction need to go, we need to be very cautious about how that would be dealt with. >> i don't want to offer a conclusion as to whether or not it is necessary. to the extent you are asking my opinion, it seems to me that it

could be addressed separately. again, without saying whether or not it merits being addressed, i think it does stand apart from the other provisions of the stock back and maybe more prudent to address that in a separate approach. >> i appreciate it, thank you mr. chairman. >> that concludes the third panel and i appreciate your testimony. i do ask that you work with us over the next few days as we approach a markup, and you are dismissed. the chair notes that some members may have additional questions for this panel, which they may submit in writing. without objection, the hearing record will remain open for 30 days for members to submit written questions to these witnesses and displaced -- to place their responses on the record.

this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> on tomorrow's "washington journal, " we will talk with congressman tim walz, who is sponsoring legislation that would ban insider-trading. then republican senator jerry moran of kansas will discuss why he is opposed to recent proposals to extend -- new research on behavioral tax cuts. "washington journal, -- every

morning at 7:00 a.m. eastern. the house and senate homeland security commissions will hold a joint hearing. the discussion will include the shootings at fort hood. live coverage at 9:30 a.m. eastern on c-span3. >> gop presidential candidate mitt romney was endorsed by former vice president dan quayle in arizona today. that is next on c-span. then president obama in kansas talks about jobs and the economy. later, remarks from the palestinian liberation organization's representative to the u.s.. >> pay a dollar now for your labor, have no health care. that is the most expensive single element. have no pollution controls and no retirement, and you don't care about anything but making

money. there will be a giant sucking sound going south. >> ross perot spoke out about trade issues during the 1992 presidential debate. the billionaire businessman made two attempts for the presidency, the first time getting over 90 million votes, more popular votes than any third-party candidate in american history. although he lost, he has had a lasting influence on american politics. the contenders come alive friday at 8:00 p.m. eastern. to preview other video and see all the programs more serious, go to c-span.org/the cont enders. >> the rally was held in arizona at near phoenix. it is about 15 minutes.

>> welcome everyone. the american dream, you do not wake up one day and all your dreams become reality. in america, you have to earn it. that is the way that our country has made such great strides, not only of in freedom of speech, but economic freedom. this is what many of us who are now attracted to mitt romney understands. to be very a economy that has made america strong and kept us free must be preserved. when we look at the future of america and many of us see that it is uncertain and that we have a president to is wrong on the economy, we have so many

candidates who are seeking the office of president. there is only one that is where 25 years and the private sector that understand the essence of the free-market and about job creation. that is something that america needs desperately. at a time when there is uncertainty at a world, we look to leaders who have proven themselves not only an elective office but also in the economy and understand religious freedom and freedom of speech. and that we see our strength and the diversity of our race,

color, origin. that has been threatened. i want to introduce to you someone who many of us here who many of us are fans of a. we know that if there is one man to stand up to represent the republican party, a speech to the essence of freedom and economic freedom and understands that our american people, if we're on the same field as other countries, americans will win every time. [applause] i am introducing -- when he comes to the grand canyon state, we love mitt romney. [applause] we are going to be a part of that change of true hope that understand the proud history of america and will restore that help by putting people back to work and getting government out of the way and out of the private sector. i introduced you the former governor of massachusetts and the next president of the united states, mitt romney.

>> thank you. i appreciated. thank you. thank you, my friends. it is good to see you here today. old friends and new friends. thank you. i appreciate the chance to be with you. i know you're not here to see the. there is a favorite son of arizona that you want to see. i was surprised to see the president today in kansas giving a speech. he made an unusual comparison. he said he is like teddy roosevelt. i thought in what way? teddy roosevelt founded the bull party. one of those words apply. -- applies. this election will be a

fundamental choice about what path america is going to take. are we going to remain a nation which is a merit based opportunity society, where people by virtue of their education, hard work, a little luck, risk-taking, pioneering, and enterprising spirit are able to earn rewards and create a stronger and more vibrant nation? or are we going to take a course that president obama has outlined, fundamental change, where we have an entitlement society where rewards are taken from sun to give to all -- some to give to all? there's certain that everyone is equal but pork. -- poor. that is what happens in entitlements societies. will we have merit and opportunity or a nation of entitlement?

we have a government that is so strong that it manages our lives and enterprises and our economy? or will we have people so strong that they build their own enterprises? this is a nation and a place that is distinguished from any other in the world. this is a and unique nation. it is exceptional. the premise was written in the first words of the declaration of independence. we are endowed by certain unalienable rights. among them life, liberty, and the pursuit of happiness. it is not to have the government tell us how to do it. not for them to give us checks. it is to be able to pursue happiness. that is what makes us unique. our conviction that this is endowed by rights that did not

come from government or kings of rights that come from the creator himself. i love this country. i love the future. i am happy that people are recognizing how important this is and how it will be a watershed decision of which course we take. i take the course of freedom and opportunity. [applause] i happen to associate those values with a term you have heard time and again, conservatism. those who believe in the fundamental values and the fundamental previous that make america america. they are known as a conservative conservative, a person who is the conservative in his life and the values he lives.

i had the privilege of seeing his boss last week. what an inspiration they are. what wonderful people. what a wonderful man. what a wonderful man i stand next to, at a former senator, a former vice president. mr. vice president, dan quayle. >> thank you. thank you. welcome. welcome. thank you very much. welcome to the great state of arizona in this historic place. people know this very well. this is arizona. my grandfather lived about three blocks from here. it is down here.

what a place i have called home for a long time. today we are here to give our enthusiasm for the next president of the united states of america, mitt romney. [applause] step back just a moment with me and see where america is today. just last month, we learned that 300,000 americans dropped out of the workforce. unemployment is still at an all-time high. 80% of the american people say the country is headed in wrong direction. america around the world has lost respect and credibility. my friends, washington is a

mess. we need to send mitt romney to washington to fix the mess out there. under president obama's leadership, our nation's capital has become dysfunctional. we have to figure out to is the best person to go to washington and turn things around. this is not a washington politician. it is not a washington insider. it is someone who you have a balanced budget and comes from the private sector and knows how to create jobs and knows how to fix problems. there is one big problem in in washington, d.c. that these to be fixed. that is to get rid of president obama.

[applause] in selecting the next president of the united states, i think there are four important criteria that we should examine. first is leadership. second is character. third, a conservative philosophy. fourth, electability. let's take this one at a time. leadership. the governor romney has leadership in the private sector. he has balanced budgets, cut taxes, reduced regulations. in utah, he has a great record creating jobs. leaders make decisions. leaders have to have the courage to make decisions. you also have to have a vision.

but you have to have the tools to implement that. mitt romney is a leader. [applause] character. the most important virtue is its integrity. without integrity, you do not have integrity. if you do not have integrity, you do not have trustworthiness. the american people want to believe in their leaders. they want to see a man of integrity. he is here his whole life. he is mr. integrity. believe me. we need that more than ever in our nation's capital. conservative values. our values are the same.

we understand the importance of a limited government. we understand that reducing taxes create jobs. we understand the importance of a strong national defense. the values of ronald reagan, of my boss, who i spoke to the other day. he spent his very best. the conservative values need to return to the white house. mitt romney house those conservative values. -- has those conservative values. electability. who is our best hope to take on president obama?

mitt romney. i tell you one thing. the obama people believe he is the toughest competitor. they did not want to run against him. he is our best hope. he will change the direction of america. he will reach out to disenchanted democrats. to people from all walks of life. different religions. he will bring america together again. he is our best hope for the future. i am here today to give you my enthusiastic endorsements.

i am confident that you will be our nominee. i am even more confident that you will be the next president of the united states of america. >> thank you. that is quite a speaker. are you available to all over the country with me? thank you. i want to thank each of you for being here. i was very moved by the fis president. i hope to live up to his confidence. i look forward to be the nominee. i believe i can post against president obama. i believe i could represent the values we share. i will hold true to the values that americans love. i love my family. my faith. my country. i appreciate the spirit of enterprise and pioneering that keeps america economically strong.

i love our men and women in uniform. it is important for us to provide for them. the best equipment in the world. the best protection in the world. we owe them our greatest support. i am honored to be with you today to share this announcement. we have the vice president on our team. it is so good to be with you today. >> will have more coverage tomorrow. mitt romney, rick santorum, and jon huntsman. live coverage gets underway at 9:00 a.m. eastern on c-span2. later in the day at the same event, we mark some

presidential candidates newt gingrich -- remarks from newt gingrich, michele bachmann. >> hear what the candidates are saying from the campaign trail at the newly designed c-span website for campaign 2012. >> in my view, this is a time for america to get serious about our challenges. the big one that i started with is our budget and our spending. if your honor to brewers are not active, if investment is not landing in your marketplace, then it is landing somewhere else. capital is a coward, you have to argue. it will flee wherever perceives there to be risk in the marketplace picketed a am not a proponent of the fair tax. that is a very interesting concept. it is an interesting theory. it makes a lot of sense.

but to go through that debate right now and have a two-year debate on the fair tax, we need to do something now. >> read the latest comments from candidates and political reporters and linked to c-span media partners all at c- span.org. >> president obama was in kansas tuesday to discuss the economy and jobs legislation and extending the payroll tax cuts. the president also criticized republicans for blocking his consumer financial protection bureau nominee. this is about an hour. ♪ >> thank you, everybody.

please, please have a seat. thank you so much. thank you. good afternoon, everybody. well, i want to start by thanking a few folks who've joined us today. we've got the mayor of osawatomie, phil dudley is here. we have your superintendent gary french in the house. and we have the principal of osawatomie high, doug chisam. and i have brought your former governor, who is doing now an

outstanding job as secretary of health and human services -- kathleen sebelius is in the house. we love kathleen. well, it is great to be back in the state of kansas. i was giving bill self a hard time, he was here a while back. as many of you know, i have roots here. i'm sure you're all familiar with the obamas of osawatomie.

actually, i like to say that i got my name from my father, but i got my accent -- and my values -- from my mother. she was born in wichita. her mother grew up in augusta. her father was from el dorado. so my kansas roots run deep. my grandparents served during world war ii. he was a soldier in patton's army, she was a worker on a bomber assembly line. and together, they shared the optimism of a nation that triumphed over the great depression and over fascism. they believed in an america where hard work paid off, and

responsibility was rewarded, and anyone could make it if they tried -- no matter who you were, no matter where you came from, no matter how you started out. and these values gave rise to the largest middle class and the strongest economy that the world has ever known. it was here in america that the most productive workers, the most innovative companies turned out the best products on earth. and you know what? every american shared in that pride and in that success -- from those in the executive suites to those in middle management to those on the factory floor. [applause]

so you could have some confidence that if you gave it your all, you'd take enough home to raise your family and send your kids to school and have your health care covered, put a little away for retirement. today, we're still home to the world's most productive workers. we're still home to the world's most innovative companies. but for most americans, the basic bargain that made this country great has eroded. long before the recession hit, hard work stopped paying off for too many people. fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. those at the very top grew wealthier from their incomes and their investments -- wealthier than ever before.

but everybody else struggled with costs that were growing and paychecks that weren't -- and too many families found themselves racking up more and more debt just to keep up. now, for many years, credit cards and home equity loans papered over this harsh reality. but in 2008, the house of cards collapsed. we all know the story by now: mortgages sold to people who couldn't afford them, or even sometimes understand them. banks and investors allowed to keep packaging the risk and selling it off. huge bets -- and huge bonuses -- made with other people's money on the line. regulators who were supposed to

warn us about the dangers of all this, but looked the other way or didn't have the authority to look at all. it was wrong. it combined the breathtaking greed of a few with irresponsibility all across the system. and it plunged our economy and the world into a crisis from which we're still fighting to recover. it claimed the jobs and the homes and the basic security of millions of people -- innocent, hardworking americans who had met their responsibilities but were still left holding the bag. and ever since, there's been a raging debate over the best way to restore growth and prosperity, restore balance, restore fairness. throughout the country, it's sparked protests and political movements -- from the tea party to the people who've been occupying the streets of new york and other cities. it's left washington in a near- constant state of gridlock.

it's been the topic of heated and sometimes colorful discussion among the men and women running for president. but, osawatomie, this is not just another political debate. this is the defining issue of our time. this is a make-or-break moment for the middle class, and for all those who are fighting to get into the middle class. because what's at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement. now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia. after all that's happened, after the worst economic crisis, the worst financial crisis since

the great depression, they want to return to the same practices that got us into this mess. in fact, they want to go back to the same policies that stacked the deck against middle- class americans for way too many years. and their philosophy is simple: we are better off when everybody is left to fend for themselves and play by their own rules. i am here to say they are wrong. [applause] i'm here in kansas to reaffirm

my deep conviction that we're greater together than we are on our own. i believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, when everyone plays by the same rules. [applause] these aren't democratic values or republican values. these aren't 1 percent values or 99 percent values. they're american values. and we have to reclaim them. [applause] you see, this isn't the first time america has faced this choice. at the turn of the last century, when a nation of farmers was transitioning to

become the world's industrial giant, we had to decide: would we settle for a country where most of the new railroads and factories were being controlled by a few giant monopolies that kept prices high and wages low? would we allow our citizens and even our children to work ungodly hours in conditions that were unsafe and unsanitary? would we restrict education to the privileged few? because there were people who thought massive inequality and exploitation of people was just the price you pay for progress. theodore roosevelt disagreed. he was the republican son of a wealthy family. he praised what the titans of industry had done to create jobs and grow the economy. he believed then what we know is true today, that the free market is the greatest force for economic progress in human

history. it's led to a prosperity and a standard of living unmatched by the rest of the world. but roosevelt also knew that the free market has never been a free license to take whatever you can from whomever you can. [applause] he understood the free market only works when there are rules of the road that ensure competition is fair and open and honest. and so he busted up monopolies, forcing those companies to compete for consumers with better services and better prices. and today, they still must. he fought to make sure businesses couldn't profit by exploiting children or selling food or medicine that wasn't

safe. and today, they still can't. and in 1910, teddy roosevelt came here to osawatomie and he laid out his vision for what he called a new nationalism. "our country," he said, ",means nothing unless it means the triumph of a real democracy, of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him." [applause] now, for this, roosevelt was called a radical. he was called a socialist even a communist.

but today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign: an eight- hour work day and a minimum wage for women insurance for the unemployed and for the elderly, and those with disabilities, political reform and a progressive income tax. [applause] today, over 100 years later, our economy has gone through another transformation. over the last few decades, huge advances in technology have allowed businesses to do more with less, and it's made it easier for them to set up shop and hire workers anywhere they

want in the world. and many of you know firsthand the painful disruptions this has caused for a lot of americans. factories where people thought they would retire suddenly picked up and went overseas, where workers were cheaper. steel mills that needed 100 -- or 1,000 employees are now able to do the same work with 100 employees, so layoffs too often became permanent, not just a temporary part of the business cycle. and these changes didn't just affect blue-collar workers. if you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by atms and the internet. today, even higher-skilled jobs, like accountants and middle management can be outsourced to countries like china or india. and if you're somebody whose job can be done cheaper by a

computer or someone in another country, you don't have a lot of leverage with your employer when it comes to asking for better wages or better benefits, especially since fewer americans today are part of a union. now, just as there was in teddy roosevelt's time, there is a certain crowd in washington who, for the last few decades, have said, let's respond to this economic challenge with the same old tune. "the market will take care of everything," they tell us. if we just cut more regulations and cut more taxes -- especially for the wealthy -- our economy will grow stronger. sure, they say, there will be winners and losers. but if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. and, they argue, even if

prosperity doesn't trickle down, well, that's the price of liberty. now, it's a simple theory. and we have to admit, it's one that speaks to our rugged individualism and our healthy skepticism of too much government. that's in america's dna. and that theory fits well on a bumper sticker. but here's the problem: it doesn't work. it has never worked. [applause] it didn't work when it was tried in the decade before the great depression. it's not what led to the incredible postwar booms of the '50s and '60s.

and it didn't work when we tried it during the last decade. [applause] i mean, understand, it's not as if we haven't tried this theory. remember in those years, in 2001 and 2003, congress passed two of the most expensive tax cuts for the wealthy in history. and what did it get us? the slowest job growth in half a century. massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of americans reach and stay in the middle class -- things like education and infrastructure,

science and technology, medicare and social security. remember that in those same years, thanks to some of the same folks who are now running congress, we had weak regulation, we had little oversight, and what did it get us? insurance companies that jacked up people's premiums with impunity and denied care to patients who were sick, mortgage lenders that tricked families into buying homes they couldn't afford, a financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy. we simply cannot return to this brand of "you're on your own" economics if we're serious about rebuilding the middle class in this country. [applause] we know that it doesn't result

in a strong economy. it results in an economy that invests too little in its people and in its future. we know it doesn't result in a prosperity that trickles down. it results in a prosperity that's enjoyed by fewer and fewer of our citizens. look at the statistics. in the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1. 2 million per year. i'm not talking about millionaires, people who have a million dollars. i'm saying people who make a million dollars every single year. for the top one hundredth of 1 percent, the average income is now $27 million per year. the typical ceo who used to

earn about 30 times more than his or her worker now earns 110 times more. and yet, over the last decade the incomes of most americans have actually fallen by about 6 percent. now, this kind of inequality -- a level that we haven't seen since the great depression -- hurts us all. when middle-class families can no longer afford to buy the goods and services that businesses are selling, when people are slipping out of the middle class, it drags down the entire economy from top to bottom. america was built on the idea of broad-based prosperity, of strong consumers all across the country. that's why a ceo like henry ford made it his mission to pay his workers enough so that they could buy the cars he made.

it's also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run. inequality also distorts our democracy. it gives an outsized voice to the few who can afford high- priced lobbyists and unlimited campaign contributions, and it runs the risk of selling out our democracy to the highest bidder. [applause] it leaves everyone else rightly suspicious that the system in washington is rigged against them, that our elected

representatives aren't looking out for the interests of most americans. but there's an even more fundamental issue at stake. this kind of gaping inequality gives lie to the promise that's at the very heart of america: that this is a place where you can make it if you try. we tell people -- we tell our kids -- that in this country, even if you're born with nothing, work hard and you can get into the middle class. we tell them that your children will have a chance to do even better than you do. that's why immigrants from around the world historically have flocked to our shores. and yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. you know, a few years after

world war ii, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. by 1980, that chance had fallen to around 40 percent. and if the trend of rising inequality over the last few decades continues, it's estimated that a child born today will only have a one-in- three chance of making it to the middle class -- 33 percent. it's heartbreaking enough that there are millions of working families in this country who are now forced to take their children to food banks for a decent meal. but the idea that those children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work? that's inexcusable. it is wrong. [applause]

it flies in the face of everything that we stand for. now, fortunately, that's not a future that we have to accept, because there's another view about how we build a strong middle class in this country -- a view that's truer to our history, a vision that's been embraced in the past by people of both parties for more than 200 years. it's not a view that we should somehow turn back technology or put up walls around america.

it's not a view that says we should punish profit or success or pretend that government knows how to fix all of society's problems. it is a view that says in america we are greater together -- when everyone engages in fair play and everybody gets a fair shot and everybody does their fair share. [applause] so what does that mean for restoring middle-class security in today's economy? well, it starts by making sure that everyone in america gets a fair shot at success. the truth is we'll never be able to compete with other countries when it comes to who's best at letting their businesses pay the lowest wages, who's best

at busting unions, who's best at letting companies pollute as much as they want. that's a race to the bottom that we can't win, and we shouldn't want to win that race. [applause] those countries don't have a strong middle class. they don't have our standard of living. the race we want to win, the race we can win is a race to the top -- the race for good jobs that pay well and offer middle-class security. businesses will create those jobs in countries with the highest-skilled, highest- educated workers, the most advanced transportation and communication, the strongest commitment to research and technology.

the world is shifting to an innovation economy and nobody does innovation better than america. nobody does it better. [applause] no one has better colleges. nobody has better universities. nobody has a greater diversity of talent and ingenuity. no one's workers or entrepreneurs are more driven or more daring. the things that have always been our strengths match up perfectly with the demands of the moment. but we need to meet the moment. we've got to up our game. we need to remember that we can only do that together. it starts by making education a national mission -- a national mission.

[applause] government and businesses, parents and citizens. in this economy, a higher education is the surest route to the middle class. the unemployment rate for americans with a college degree or more is about half the national average. and their incomes are twice as high as those who don't have a high school diploma. which means we shouldn't be laying off good teachers right now -- we should be hiring them. [applause]

we shouldn't be expecting less of our schools - we should be demanding more. we shouldn't be making it harder to afford college -- we should be a country where everyone has a chance to go and doesn't rack up $100,000 of debt just because they went. [applause] in today's innovation economy, we also need a world-class commitment to science and research, the next generation of high-tech manufacturing. our factories and our workers shouldn't be idle. we should be giving people the chance to get new skills and

training at community colleges so they can learn how to make wind turbines and semiconductors and high-powered batteries. and by the way, if we don't have an economy that's built on bubbles and financial speculation, our best and brightest won't all gravitate towards careers in banking and finance. [applause] because if we want an economy that's built to last, we need more of those young people in science and engineering. this country should not be known for bad debt and phony profits. we should be known for creating and selling products all around the world that are stamped with three proud words: made in america. [applause]

today, manufacturers and other companies are setting up shop in the places with the best infrastructure to ship their products, move their workers, communicate with the rest of the world. and that's why the over 1 million construction workers who lost their jobs when the housing market collapsed, they shouldn't be sitting at home with nothing to do. they should be rebuilding our roads and our bridges, laying down faster railroads and broadband, modernizing our schoolsall the things other countries are already doing to attract good jobs and businesses to their shores.

yes, business, and not government, will always be the primary generator of good jobs with incomes that lift people into the middle class and keep them there. but as a nation, we've always come together, through our government, to help create the conditions where both workers and businesses can succeed. [applause] and historically, that hasn't been a partisan idea. franklin roosevelt worked with democrats and republicans to give veterans of world war ii -- including my grandfather, stanley dunham -- the chance to go to college on the g. i. bill. it was a republican president, dwight eisenhower, a proud son

of kansaswho started the interstate highway system, and doubled down on science and research to stay ahead of the soviets. of course, those productive investments cost money. they're not free. and so we've also paid for these investments by asking everybody to do their fair share. look, if we had unlimited resources, no one would ever have to pay any taxes and we would never have to cut any spending. but we don't have unlimited resources. and so we have to set priorities. if we want a strong middle class, then our tax code must reflect our values. we have to make choices. today that choice is very clear. to reduce our deficit, i've already signed nearly $1 trillion of spending cuts into

law and i've proposed trillions more, including reforms that would lower the cost of medicare and medicaid. [applause] but in order to structurally close the deficit, get our fiscal house in order, we have to decide what our priorities are. now, most immediately, short term, we need to extend a payroll tax cut that's set to expire at the end of this month. if we don't do that, 160 million americans, including most of the people here, will see their taxes go up by an average of $1,000 starting in january and it would badly weaken our recovery. that's the short term. in the long term, we have to rethink our tax system more fundamentally. we have to ask ourselves: do we

want to make the investments we need in things like education and research and high-tech manufacturing -- all those things that helped make us an economic superpower? or do we want to keep in place the tax breaks for the wealthiest americans in our country? because we can't afford to do both. that is not politics. that's just math. [applause] now, so far, most of my republican friends in washington have refused under any circumstance to ask the wealthiest americans to go to the same tax rate they were paying when bill clinton was president. so let's just do a trip down memory lane here. keep in mind, when president clinton first proposed these tax increases, folks in congress predicted they would kill jobs and lead to another

recession. instead, our economy created nearly 23 million jobs and we eliminated the deficit. [applause] today, the wealthiest americans are paying the lowest taxes in over half a century. this isn't like in the early '50s, when the top tax rate was over 90 percent. this isn't even like the early '80s, when the top tax rate was about 70 percent. under president clinton, the top rate was only about 39 percent. today, thanks to loopholes and shelters, a quarter of all millionaires now pay lower tax rates than millions of you,

millions of middle-class families. some billionaires have a tax rate as low as 1 percent. one percent. that is the height of unfairness. it is wrong. [applause] it's wrong that in the united states of america, a teacher or a nurse or a construction worker, maybe earns $50,000 a year, should pay a higher tax rate than somebody raking in $50 million. [applause] it's wrong for warren buffett's secretary to pay a higher tax rate than warren buffett.

[applause] and by the way, warren buffett agrees with me. [laughter] so do most americans -- democrats, independents and republicans. and i know that many of our wealthiest citizens would agree to contribute a little more if it meant reducing the deficit and strengthening the economy that made their success possible. this isn't about class warfare. this is about the nation's welfare. it's about making choices that benefit not just the people who've done fantastically well over the last few decades, but that benefits the middle class, and those fighting to get into the middle class, and the economy as a whole. finally, a strong middle class

can only exist in an economy where everyone plays by the same rules, from wall street to main street. [applause] as infuriating as it was for all of us, we rescued our major banks from collapse, not only because a full-blown financial meltdown would have sent us into a second depression, but because we need a strong, healthy financial sector in this country. but part of the deal was that we wouldn't go back to business as usual. and that's why last year we put in place new rules of the road that refocus the financial sector on what should be their core purpose -- getting capital to the entrepreneurs with the

best ideas, and financing millions of families who want to buy a home or send their kids to college. now, we're not all the way there yet, and the banks are fighting us every inch of the way. but already, some of these reforms are being implemented. if you're a big bank or risky financial institution, you now have to write out a "living will" that details exactly how you'll pay the bills if you fail, so that taxpayers are never again on the hook for wall street's mistakes. [applause] there are also limits on the size of banks and new abilities for regulators to dismantle a firm that is going under. the new law bans banks from

making risky bets with their customers' deposits, and it takes away big bonuses and paydays from failed ceo's, while giving shareholders a say on executive salaries. this is the law that we passed. we are in the process of implementing it now. all of this is being put in place as we speak. now, unless you're a financial institution whose business model is built on breaking the law, cheating consumers and making risky bets that could damage the entire economy, you should have nothing to fear from these new rules. some of you may know, my grandmother worked as a banker for most of her life -- worked her way up, started as a secretary, ended up being a vice president of a bank. and i know from her, and i know from all the people that i've come in contact with, that the vast majority of bankers and financial service

professionals, they want to do right by their customers. they want to have rules in place that don't put them at a disadvantage for doing the right thing. and yet, republicans in congress are fighting as hard as they can to make sure that these rules aren't enforced. i'll give you a specific example. for the first time in history, the reforms that we passed put in place a consumer watchdog who is charged with protecting everyday americans from being taken advantage of by mortgage lenders or payday lenders or debt collectors. and the man we nominated for the post, richard cordray, is a former attorney general of ohio who has the support of most attorney generals, both democrat and republican, throughout the country. nobody claims he's not qualified. but the republicans in the senate refuse to confirm him for the job.

they refuse to let him do his job. why? does anybody here think that the problem that led to our financial crisis was too much oversight of mortgage lenders or debt collectors? >> no! >> of course not. every day we go without a consumer watchdog is another day when a student, or a senior citizen, or a member of our armed forces -- because they are very vulnerable to some of this stuff -- could be tricked into a loan that they can't afford -- something that happens all the time. and the fact is that financial institutions have plenty of lobbyists looking out for their interests. consumers deserve to have someone whose job it is to look out for them. [applause]

and i intend to make sure they do. [applause] and i want you to hear me, kansas -- i will veto any effort to delay or defund or dismantle the new rules that we put in place. [applause] we shouldn't be weakening oversight and accountability. we should be strengthening oversight and accountability. i'll give you another example. too often, we've seen wall street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender. no more. i'll be calling for legislation

that makes those penalties count so that firms don't see punishment for breaking the law as just the price of doing business. [applause] the fact is this crisis has left a huge deficit of trust between main street and wall street. and major banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit of trust. at minimum, they should be remedying past mortgage abuses that led to the financial crisis. they should be working to keep responsible homeowners in their home. we're going to keep pushing them to provide more time for unemployed homeowners to look for work without having to worry about immediately losing their house. the big banks should increase access to refinancing

opportunities to borrowers who haven't yet benefited from historically low interest rates. and the big banks should recognize that precisely because these steps are in the interest of middle-class families and the broader economy, it will also be in the banks' own long-term financial interest. what will be good for consumers over the long term will be good for the banks. [applause] investing in things like education that give everybody a chance to succeed. a tax code that makes sure everybody pays their fair share. and laws that make sure everybody follows the rules. that's what will transform our economy. that's what will grow our middle class again. in the end, rebuilding this economy based on fair play, a

fair shot, and a fair share will require all of us to see that we have a stake in each other's success. and it will require all of us to take some responsibility. it will require parents to get more involved in their children's education. study harder. in -- it will require students to study harder. it will require some workers to start studying all over again. it will require greater responsibility from homeowners not to take out mortgages they can't afford. they need to remember that if something seems too good to be true, it probably is. [laughter] it will require those of us in public service to make government more efficient and more effective, more consumer- friendly, more responsive to people's needs.

that's why we're cutting programs that we don't need to pay for those we do. [applause] that's why we've made hundreds of regulatory reforms that will save businesses billions of dollars. that's why we're not just throwing money at education, we're challenging schools to come up with the most innovative reforms and the best results. and it will require american business leaders to understand that their obligations don't just end with their shareholders. andy grove, the legendary former ceo of intel, put it best. he said, "there is another obligation i feel personally, given that everything i've achieved in my career, and a lot of what intel has achieved were made possible by a climate of democracy, an economic climate and investment climate

provided by the united states." this broader obligation can take many forms. at a time when the cost of hiring workers in china is rising rapidly, it should mean more ceos deciding that it's time to bring jobs back to the united states -- not just because it's good for business, but because it's good for the country that made their business and their personal success possible. [applause] i think about the big three auto companies who, during recent negotiations, agreed to create more jobs and cars here in america, and then decided to

give bonuses not just to their executives, but to all their employees, so that everyone was invested in the company's success. [applause] i think about a company based in warroad, minnesota. it's called marvin windows and doors. during the recession, marvin's competitors closed dozens of plants, let hundreds of workers go. but marvin's did not lay off a single one of their 4,000 or so employees -- not one. in fact, they've only laid off workers once in over a hundred years. mr. marvin's grandfather even kept his eight employees during the great depression. now, at marvin's when times get tough, the workers agree to give up some perks and some pay,

and so do the owners. as one owner said, "you can't grow if you're cutting your lifeblood -- and that's the skills and experience your workforce delivers." [applause] for the ceo of marvin's, it's about the community. he said, "these are people we went to school with. we go to church with them. we see them in the same restaurants. indeed, a lot of us have married local girls and boys. we could be anywhere, but we are in warroad." that's how america was built. that's why we're the greatest nation on earth.

that's what our greatest companies understand. our success has never just been about survival of the fittest. it's about building a nation where we're all better off. we pull together. we pitch in. we do our part. we believe that hard work will pay off, that responsibility will be rewarded, and that our children will inherit a nation where those values live on. [applause] and it is that belief that rallied thousands of americans to osawatomie -- maybe even some of your ancestors -- on a rain-soaked day more than a century ago.

by train, by wagon, on buggy, bicycle, on foot, they came to hear the vision of a man who loved this country and was determined to perfect it. "we are all americans," teddy roosevelt told them that day. "our common interests are as broad as the continent." in the final years of his life, roosevelt took that same message all across this country, from tiny osawatomie to the heart of new york city, believing that no matter where he went, no matter who he was talking to, everybody would benefit from a country in which everyone gets a fair chance. [applause]

and well into our third century as a nation, we have grown and we've changed in many ways since roosevelt's time. the world is faster and the playing field is larger and the challenges are more complex. but what hasn't changed -- what can never change -- are the values that got us this far. we still have a stake in each other's success. we still believe that this should be a place where you can make it if you try. and we still believe, in the words of the man who called for a new nationalism all those years ago, "the fundamental rule of our national life," he said, "the rule which underlies all others -- is that, on the whole, and in the long run, we shall go up or down together."

and i believe america is on the way up. thank you. god bless you. god bless the united states of america. [applause] forever"and stripes brunh playing] ♪

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♪ [but remarks playing -- and a military march playing]

>> more road to the white house coverage tomorrow. live coverage gets underway at 9:00 a.m. eastern on c-span2. later in the day from the same event, remarks from newt gingrich, rick perry, and michele bachmann. that is live at 2:00 p.m. eastern on c-span3. the palestinian liberation organization representative to the u.s. and spoke of the national press club on tuesday. he said that palestine will not engage in any direct negotiations with israelis until israel and access the 1967 borders. this is about 50 minutes. >> i am not going to be able to cover everything in detail about the united nations and the current efforts, whatever are

left of the efforts that the united states are exerting to bring the parties back to the negotiating table. all but i want to say is that the opinion of the leadership in the palestinian people are right now taking a three-pronged approach to the situation between us in this release. -- and the israelis. one is the continuation of the nonviolent peaceful resistance to the israeli occupation to their actions on the ground, such as the continuation of the building of the wall, the security barrier, whatever you want to call it, which is manufactured from the resistance carried out every week, joined

by they international sympathizers, demonstrations, protests that that unfortunately have been met with violence by the israeli army, something we cannot understand why the of israeli army would resort to violence to quell such peaceful protests, but it is real indications of the commitment of the palestinian leadership and the plo to a peaceful nonviolent resistance. i know that many were concerned before we went to the united nations that going to the un is going to trigger a wave of violence inside the palestinian areas and it will encourage the palestinians to abandon the negotiating settlements, and that leads the palestinian people to resort to violence. and all of these expectations luckily and truck thankfully did

not materialize and the palestinian leadership remains committed to the continuation of a peaceful and non-violent protests against the israeli occupation. the emphasis will be on keeping and nonviolent. these are carried out by the palestinians under israeli occupation. at the diplomatic level, we went to the united nations in september and we submitted our quest for a full membership in the united nations on the 23rd of september. there has been a process. that process unfortunately was stalled after the request was deferred to a legal committee to

review the request of the plo. it is not a secret that the u.s. led to the delay in reviewing this request. i describe it as a hung jury. if they could not agree whether they should proceed with the request. the u.s. from the beginning indicated that they do not want this issue to go forward. and they did what they could to pressure certain countries who are members, not permanent members of the security council, not to vote in favor of taking the issue for a vote. it does not mean that we have abandoned our efforts to seek full membership. we will continue to pursue full membership at the united nations. and the leadership reiterated

that position recently. i do not know when we will try again but in january there would be a change in the composition -- or actually it has been announced that they will assume their responsibilities in january for the two years nonpermanent position at the u.s. security council -- at the un security council. as we go in between, as you well know, we went to unesco and we saw a full membership at unesco and we got that full membership. something that created an unjustified reaction from both the united states and israel. i personally do not understand what is the heart of the palestinians joining the united nations educational scientific and cultural organization, what kind of harm our week causing

the israelis are americans by doing that? and why would be punished by congress for joining an organization that is doing great things in different parts of the world? in the u.s. involved in that organization. -- and the u.s. is involved in that organization. we will continue our efforts at the un and we will choose the right timing to proceed and to pursue other venues current international organizations. the third area is the political, and following our official request that the un, the quartet met and issued this statement. they said that they expect both israelis and palestinians to submit their visions of a solution to the security and borders issues that we have been

trying to convince the israelis to be forthcoming and to engage us on these issues over the last two years. a three month period was given to both sides to do that, which will expire sometime this month, because this happened in september. the palestinian side, for those of you who do not know, has submitted a vision of how to achieve the security arrangements at the borders of a future palestinian state. we submitted that to the international quartet. until today, the israeli government has failed to reciprocate and submit a similar proposal or vision on how they achieve the security arrangements at the borders. this is basically the problem that we have been having with the israeli government. ever since the prime minister

netanyahu took office, he talked many times about peace. he made major statements about the solution to the conflict. but when the time came for him to produce concrete proposals so that we can engage in discuss, they always came in the handed. they refuse to submit -- they always came in at the handed and refuse to submit proposals for meaningful discussions between the two sides. this is something that the united states of a minister -- the united states of america is fully aware of. they know the palestinian side did not delay, was very forthcoming, and offered so many ideas and proposals to get the israelis, to entice the and israelis to come to the negotiating table over the last 2.5 years. unfortunately, we are confronting a similar situation now.

the quartet telling the israelis, you have to submit this proposal as agreed by the international quartet, and now once again we are seeing efforts on the part of the united states and the international quartet to change once again the terms or the rules of the games. they want now this to happen during direct negotiations. we did not agree when we engaged in the international quartet after they met in september, we did not agree to go back to direct negotiations. the idea was to engage the two sides separately which the quartet did on two or three occasions and now once again after they have failed to make israel reciprocate and offer its own ideas and proposals, as we have witnessed in the past, let's change the rules of the

game. the palestinians, we want to ask them to come to the table and during direct negotiations, the israelis will put these ideas on the table. as if we have not been talking to the israelis for the last 20 years and we do not see why the israelis of the last 20 years did not come up with some concrete ideas about how they could see a solution. our position is clear. we're not going to engage in any direct negotiations with the israelis unless and until israel clearly announces its acceptance of 1967 borders as the future, as the border that will be the baseline for the future palestinian state, with minor reciprocal in quantity and

quality land swaps, and until israel accepts to fully freeze settlement activities in the occupied west bank and east jerusalem. israel continues with its policies on the ground, but they continue to demolish homes in east jerusalem. they are evicting bedouins and their controlling areas which are 60% of the total area of the west bank, an area that the palestinians have no access to, and they continue with all of these facts on the ground while at the same time they are delaying the political solution because there and is to preserve the status quo. our aim is to tell them that this status quo is not going to be preserved. the continuation of the israeli occupation must have consequences. and if israel does not understand that there will be

consequences for its continued occupation, they will have no incentive to move. why should they? when unfortunately countries around the world are providing shields to them and they are treating them as a state above the law. therefore, our objective is to change the political dynamic and to send a clear message to israel and the international community that the palestinian people cannot accept the situation to go on forever. we cannot accept this situation to continue at a time when things are changing so fast in the region, when the united states is supporting all arab nations in the region who are trying to change the conditions to have a better future, to live in a democratic, free society, and when it comes to the palestinian-israeli conflict, we

see this country acting totally, completely, in contradiction with its declared policy is in the middle east. the united states has always supported the underdog in all the conflicts except when it comes to the palestinian-israeli conflict. we are the underdogs. but we do not enjoy the support of the united states. i think this is a very short- sighted policy that will hurt u.s. national security interests and will undermine the role of the united states has an international leader and honest broker trying to resolve the conflict between the palestinians and israelis. thank you very much. [applause] >> yes, sir, in the back. >> please identify yourself.

>> i beg your pardon. [unintelligible] the country of iceland is the only country that has officially recognized the palestinians. in western europe, as i understand. -@ two-part question. would he think about the fact that iceland is the only country among all the european countries to step forward? and then, the second part of my question is about china. china has set on the record that it supports the creation of a palestinian state, yet it has not passed any legislation in that regard, what you think of china support and you think it will continue? >> first of all, on iceland, what iceland did is that they

took a step forward in europe. we have many countries who are willing to recognize a palestinian state. unesco france voted in favor of this. everybody is accepting and evaluating their interests. the rolde and the impact in the influence of the united states and europe is very much, it is not a secret that the united states has a significant impact in europe. but if you ask me about austria or belgium or about norway, if you ask me about spain, when the time comes, these countries will advance for recognition. they are trying to somehow prevent the situation from reaching its end -- i do not

agree with them -- that they recognize the palestinian state, they could complicate the situation because it has to be done through negotiations. they know if that there are not negotiations and the israelis do not want to resume negotiations. we welcome the decision of iceland and we think that many european countries will eventually recognize the palestinian state. on the issue of china, china has traditionally been a supporter of the palestinian people. we have had historic relationships with china. and the chinese government, the chinese people are strong supporters of the palestinian people. and we're not concerned about the position of china when it comes to that. >> thank you. the question is that in

hamas made that speech. there were some signals and because you're working on this negotiations on the ground, do you feel that because of this round of the financial crisis happened in the u.s. and spread oliver, do you field that has a real game changer for the future palestine? >> we have a small economy compared to the economies of the united states. and even israel, in comparison to his room. we have not been very much affected because of our economy being small. i do not think that in terms of support that we are getting from europe, from france, in the united states, other countries, that would be -- that we would

be very much affected by what is going on. we were thinking about this today reading the newspapers, the size of the support that we get from the donor countries is very small. so i do not think that in countries trying to use the support as a leverage, unfortunately congress in this country is trying to use that as a financial lever, when they cut off developmental aid to the palestinian people, they should themselves in the foot. most of the support they give us comes back to this country. other than using it as leverage, i do not think we would be very much impacted by what is going on. >> [unintelligible] >> what is your next move and

statehood in the general assembly? also, after ionesco, are you thinking of other u.s. of ordinance? >> i mentioned that earlier. we are still committed to pursue full membership at the nation's. when we set full membership, for the time being we're not contemplating going to the un general assembly. we will seek full membership which means going through the right channels that have been blocked, unfortunately for last month as a result of u.s. work, but we're determined to seek full membership. as far as other international organizations, we have done so at unesco, and it is something we would contemplate in the future. we will assess the situation, the political situation, and we will probably pursue that in the future, given that there will be no significant progress to reach

a peaceful solutions to the conflict. >> [unintelligible] [unintelligible] >> at icc, whether it is a nonporous state or a full member state to the un security council, which we're trying to do right now. icc, we cannot join that unless we elevate or upgrade our status right now from that of a observer entity to that of a state. >> a follow-up on that, could you pursue any other state invoking the icc against israel? you have some innate friends around the world and yet no one has invoked the icc against israel. >> we did resort to other

countries to pursue the human -- for example, the report, we did through pakistan which is a member of the organization for that is how we managed that. this is something that is a political decision by the palestinian leadership, and they have all these options available to us on the table once again. we are in a continuous mode of evaluating the situation, and we're not ruling anything out. >> go-ahead. paula. >> it sounds to me as set the u.n. process, which was criticized by many as being a public-relations stunt, this is not dragging out the negotiations for years and

years. what are you ultimately producing? you seem to be precluding a general assembly moved and you're stuck in the security council. what are you actually tentatively getting from all this? >> if you remember what i said earlier, we are taking a three- pronged approach to this situation. unfortunately i cannot divulge on what other options the leadership is contemplating. but we talked about political, diplomatic, and peaceful resistance. right now, maybe the diplomatic is the prevailing approach, but things are continuing on the ground in terms of peaceful nonviolent resistance to the israeli occupation. politically, we're still talking to the quartet and the united states. we have u.s. officials visiting all the time. we are in contact with them.

say you cannot say that the focus only is on the united nations and we're getting stuck there the same way the negotiations have gotten stuck over the last 2.5 years. this is excellent -- this is exactly what we are trying to do. we're trying to change the political dynamics by following the approaches in order to create conditions that will be conducive to resolving the conflict once and for all. gillette me ask it this way -- what are your precluding going to the general assembly? >> this is a misperception also about the united for peace, we do not need to invoke it. the palestinians have the right under certain special rules adopted by the united nations to seek a session for the general assembly at any time we want. when, again, this is something

that has to be determined by the leadership. we are assessing the situation, evaluating a. i am saying that we're not ruling anything out but i cannot tell you when this will happen. >> the man in the back. >> [unintelligible] >> many will agree that this is the time that the palestinians could make a significant progress in terms of peaceful solutions to the border. but in the meantime, [unintelligible] would you respond to that leadership question? >> are you talking in terms of the division that we have among the palestinian society? what you mean leadership question? >> even though there is an opportunity for the palestinians to move forward and make progress, people are not sure

whether the current government has enough leadership to really push forward. >> do they have a mandate? again, this can be also dealt with in terms of the existing divisions between the gaza strip and zero west bank, between hamas and fatah, something the palestinian leadership is also focusing on to in the division between the two sides. the meeting that took place between president abbas and the leader of hamas two weeks ago, they agreed tab a meeting on december 22 in cairo to try to resolve all outstanding issues into in the division, to group retreat -- to agree on elections in may of next year. it is important to us. we have not had elections and we need to preserve the democratic process.

we have only had elections twice since the palestinian authority was established. without a vibrant democratic process, the people cannot be involved in determining who will represent them and who will lead them. and so we are determined to in this division and hoped to hold elections in may of next year. >> could someone close the doors? it is so noisy. >> yes, please. >> i have interviewed and i have done profiles on a number of people in congress who are violently opposed. >> violently? >> yes. but when you put your slide out, it created a tremendous --

how do you deal with the people who say right away, no, no, no. how you deal with them when you lobby? >> of course we do go and talk. luckily not all people who treated the same way -- to treat us the same way, i think we do have friends on the hill. >> [unintelligible] >> i am coming to that. and we talk to influential members of congress who look at things differently than the people you mentioned. i think it is a big mistake on their part. for them not to talk to the palestinians. the age of not talking to the palestinians has long been gone. we talked to the israelis and to different segments of the israeli population, far right,

far left. we are here legitimately in this country. we are officially recognized by the united states and we represent the people who are struggling for independence. without the palestinians, there would be no peace and stability in the region. if these people think that by ignoring the palestinians, by listening to only one side and not the other side, they can make the right judgment about the situation, they are wrong. so they are only weakening themselves and they are undermining the role that they claim to be playing in bringing the israelis and palestinians together when they choose not to talk to us. this flag represents 10 million rhetoric -- palestinian people. this is our national flag, for them to come out and condemn that, i think it is an indication of political maturity.

-- political immaturity. >> anyone else. >> i will ask one and then i will come back to you. i was wondering if you could talk a little bit about the so- called arab spring, and how that has affected everything but for better or for worse. i presume it at one point raised expectations and hopes, but then so much was inconclusive and the world is focusing much on what is going on in syria at the moment, and prior that that project prior to that libya and in egypt and so on. has this been a good thing for the palestinian cause or has it created expectations that cannot be met? >> our situation is different compared to the arab countries. first of all, we are still technically, effectively under israeli occupation. we can i brag that we have a

state -- we cannot brag that we have a state so that our leaders will fight until death to stay in power, you know. we do not have that power to fight over it. therefore our struggle is with the israeli occupation. we do not have an internal -- internally, the palestinian people are focused on ending the israeli military occupation because this is our main objective. having said that, we said clearly that we are always on the side of the people's. and whatever error people choose in terms of their future regimes and governments, we are in support of the arab masses, because we the palestinians started popular uprisings against israeli in 1967 and 2000, and the arab people look up at us in order to be inspired about these uprisings. and therefore we cannot be back

on the side of the arab people. now this is going to be a long and protracted process. egypt, tunisia, they were peaceful, but we have seen things turned ugly in violence in libya. and in yemen, and to some extent in syria. one thing is important for the united states and the west to understand -- changes have to come from within. they should not try to influence change in the arab countries. it has to come from within. if we want to have real representation of the people in deciding the future of these countries. by trying to impact and influence the outcome of these movements, not we palestinians but the west is risking once again undermining these

important social cultural and political developments in the arab countries. yes, they have to watch it carefully, but they have to allow this process to take its due time. it could be a year, it could be two years, in some countries it will be passed and others long, but they should not try to interfere directly or impact a process that is going on there. >> did you have one? >> i just wanted to know, what with israel have to do -- what changes would have to make for the palestinians to recognize its role as a state? >> to recognize israel as a state? we did. >> identify yourself.

>> i am working for the nbc news wire. -- npc newswire. i think i know some of the things that you would say, but what would it take for the palestinians to say, we recognize israel has a legitimate state? >> we did that in 1983. i know what you're talking about, you're talking about israel as a jewish state, that is what you're talking about. these are two different things. in 1993, when we exchanged letters, the plo and israel, mutual recognition, we recognize the state of israel and israel recognize the plo. in 1996, we convened the

palestinian national council and we invoke all the clauses in the national charter that calls for the destruction of israel. and then in 1998, according to prime minister netanyahu, the palestine national council was convened in gaza and we once again reiterated how revocation of all the clauses that called for the destruction of the state of israel. what israel is today asking us is to recognize it as a jewish state. and we said we cannot do that, because one, it will give their religion -- a religious characteristic to the conflict in this is something we try to avoid because we have forces within the palestinian society to believe that our stand is islamic, and no one has to negotiate and give up an inch of palestine because it is for muslims, for arabs, we should

not give it up. and this would create a lot of complicity -- complexities that we do not need. and their two important issues to be resolved before israel can call itself whatever they want. call yourself a jewish empire, it is not our business. you can call yourself what everyone but do not ask me to recognize you as such. you have to -- the issue of the refugees and it minorities living inside israel. and they have already discriminated against them. if i go to the palestinian leadership and recognize them as a jewish state, i am undermining the already undermined rights of the arab minorities there, and two, i am giving up my right to discuss the issue of the refugees on the table, something israel except it and all previous agreements

to discuss with us to resolve the final agreement. therefore this is the political issue. i know the israelis are using it because it stirs resentment among jews around the world. we're not against the existence of the state of israel but at this stage we're just recognize -- we are not recognizing israel as a jewish state. >> can i follow on that? as long as i have studied the middle east, the demographics to which you just alluded, they often -- everyone says, israel has to do certain things because of the demographic time bomb as some would say on that side. is that true? is there really any question on that? >> that has been used in the past to actually compelled both parties to move faster on the

political process. demographer likely -- on demography, if things are expected to go, and 2030, the number of non-jews will surpass that of jews. therefore israel claims and allegations that they want to have a homeland for the jews on the historic land of palestine to be undermined, and therefore this is something that even u.s. officials, president obama, secretary clinton, use this year at apec when they said that there is demography, and this is important. and this is exactly what israel is trying to do. israel has taken measures on the ground to try to reduce the number of palestinians, especially in jerusalem. in the past, israel would say that we are expanding, building

settlements in what will be remaining under our control in the future agreement. they call it jewish neighborhoods. of course there is no such thing. their settlements and i called them -- israeli settlements. and they are now going after palestinian neighborhoods that have been populated by palestinian arabs. .

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> our second panel is made up of roberts, director of division and enforcement. we welcome you and look forward to your opening statement. >> members of the committee,

thank you for the opportunity to provide testimony. on the subject of the application of insider-trading prohibitions to members of congress. insider trading threatens the integrity of our markets, depriving investors of the fairness that comes with markets that are open and fair. and all citizens of economic growth and stability that comes with markets and operate on a level playing field. prosecution of insider trading has been a top priority. 8% of the average they brought 53 insider trading cases against 138 individuals, an increase in the number of cases

from the previous year. we filed 57 actions against 124 individuals and entities, an increase of the previous year. there is no definition of insider trading. rather, they prosecute it under the general anti-fraud provisions most commonly section 10 b and rule 10 b5 promulgated under that section. it declares it is a marked fall -- unlawful to "use any manipulative or deceptive device or contrivance." there is no reason why trading by members of congress could be considered exempt from the laws

including the prohibitions in application of such trading is without just as an and the other car -- inquiry there are questions that would drive the analysis of whether securities trading or tipping by a member of congress, based on information learned in an official capacity violates the section. the first is whether the communicating information reached day to read code although there is no precedent for staff, there are laws from another context regarding misappropriation -- this precedent is clear that staff members oppose a duty of trust and confidence to their employer.

it is potentially liable for insider trading just like any other employee. with respect to members, courts have held that members have fiduciary duties of public trust by virtue of their position. such duties exist as reinforced by rules applicable to members which provides member should not use information obtained with duties for personal gain or private profit. this is on tested. member learns an unofficial capacity. commentator stiffer on the reach of such duties. there is a likelihood that an investor will be important in making a decision.

materiality is a mixed question that depends on all of the circumstances. in some it may be clear that a coming action would be material to a particular issue while it may be less clear and other cases. the third question is whether the information is non-public. the commission has stated that information is non-public one and has not been descendant -- disseminated in a manner making a public to be in for the republic. and the extent to which the information has been disseminated to the public. as with all issues of liability, the conduct at issue must be intentional or reckless or not in good faith.

it is hard to come to any outcome of a scenario. or staff is not exempt, our legal and factual issues that may arise in any investigation of such cases. for example, investigations into tipping by members of congress or staff could pose unique issues including those that may arise under the speech and debate clause. in light of existing precedent, and the statutory changes should be carefully calibrated to ensure they do not narrow current law and make it more difficult to bring future actions against individuals outside of congress. thank you for the opportunity to testify. >> thank you.

>> on the next panel we're going to hear from a professor. i read her testimony and she says that congress could use this current controversy to diagnose the entire melody through the enactment of a new definition of insider trading of all individuals. do you believe congress should enact such an insider trading law? >> mr. chairman, my view is that there is a simpler way to get to the same now come without risking some of the dangers that would flow from a general statutory inquiry that attempted to cover the entire field. the biggest issue is whether or

not there exists a duty and others the it their fellow members, the institution, the citizenry. that duty is essential in war for -- one form or another to bring in an insider-trading case. from enforcement, the simplest way would be to declare that such a duty exists that members have a duty for private personal gain. cases could be brought assuming they met the other requirements mentioned which includes nonpublic, etc. those concepts are well developed in the law and to not

need to be included in a prohibition. you might have two sets of standards. one for every body else. it could breed of litigation or attempts to interpret what congress did as a changing existing laws. from my perspective, that is the simplest way to go. >> are you available to work with the sponsors of this bill to review the legislation and make revisions consistent with what you just testified to? >> absolutely. we have been involved in extensive discussions on the details. we would be happy to continue to do that. >> thank you.

there appears to be some consensus that members are subject to the same rules on insider trading as others. many questions remain as to applications to congress. would that sec post authority continued to apply? if not, how when the authority deferred? >> if the act narrows existing law and in other cases expands it, while we would still retain our authority to bring our cases under existing law, the fact they passed a new piece of legislation means it would be

the source of our authority to bring cases against members of congress. if you compare it to the existing authority, there are a couple of instances where it narrows existing authority. as was discussed in the last panel, and insider-trading is limited to material nonpublic information dealing with pending legislation. information that a member of congress might obtain from a briefing from a regulatory agency would not be covered because it would not deal with prospective legislation. that is a narrowing of the current law. it does not address tipping which was discussed in the last panel as well. that says if you have a duty to keep information confidential and do pass it to somebody

else, you can be liable for doing that as well as the person receiving the information. it is not addressed that issue directly. for that reason, to have one uniform set of standards that apply to everyone, highlighting and establishing a duty on behalf of members of congress not to use their information for personal gain and declaring that a duty would be the simplest way to go. >> i yield back the balance of my time. >> i recognize myself for five minutes. do you know anything about that ethics procedures we have? i served on the committee for three terms.

that is as long as you can stay on it. it is an important part of the congress. does that cover what you now? as an enforcement authority, our job is to investigate and file cases based on the violation of the law. we cannot file on the basis of ethics violations. anything that enhanced the ethical obligations of members of congress not to use informational for private gain helps us because they helped to establish this a duty of trust and confidence. if i were to go to court tomorrow, i would point to the ethics rules as a basis to say a

basis exists but the benefit of the legislation is that the cannot guarantee there might to rule one way or another. but there if there were legislation that made it clear there was such a duty all of that ambiguity would be resolved. >> would that be enough rather than having legislation? >> i do not think it would be. there is a law this has such a duty exists? that is clear. that would reduce the uncertainty a court might not find. >> there seems to me a swell from some people that because congress is not a corporation or

a company that they are not subject to the law. put that altogether? >> hearings such as today should make it clear there is no such exemption. your subjects to the same laws as everyone else leaving aside the speech and debate clause. >> i yield back and recognize the lady from new york for five minutes. >> thank you for your testimony. i want to go over what you were saying that you think it should be expanded to cover meetings with other agencies. would you also include the no- action letters and other actions like an act? would that be broad enough?

>> that action letters, along with some other means are designed to carve out certain safe harbors or give individual persons comfort that what they're about to do will not violate law law. -- the law. members could skid advice from their own counsel. take other steps to make sure they did not do something that inadvertently violated the law. that would be an important part of any regulation. that option already exists. >> if we do have a fiduciary duty with the citizens and an ethics responsibility, how

would the sec investigate in this category? how would they change what they were doing? >>, i am not sure i would necessarily characterize it as a fiduciary duty. kellogg also recognizes what would be a fiduciary light duty, if you will. a duty of trust and confidence. my view would be it should be added as one of the examples of a duty of trust and confidence that the academics and others are better versed to discuss that night. there could be consequences to claiming that which could not be foreseen. that would be my personal view as the way to approach it. it would not affect our

investigation. there would be less of a risk that a particular court would not decide it existed based on current circumstances. the other thing record began that is an important part is the disclosure portion. without disclosure of trading on a timely basis, it is difficult to get notification of circumstances that might justify investigation. we get referrals by all sorts of persons from the exchanges and from other sources. we give that on a real-time basis. it is important to get the information fresh. memories are still sharp. steps have not been taken to cover up activity. prompt disclosure would be the

most important thing there could be done. >> are there other approaches that you are aware of in this area? >> they tend to break down in between the narrow approach like establishing the duty and leaving it to lot to address the other elements or a statutory prohibition that it tends to define all of the terms. that is difficult to do. it was tried in 1980's. people gave up because it is difficult to write a law that covers all the possible circumstances to make sure that no one who should be captured is left to the side. but then you end up not providing the specificity you might like because it is so general.

you did not want to provide a road map for people to understand exactly what line they have to tap against to avoid liability. >> my time has expired. >> the gentleman from missouri is recognized for five minutes. >> i am curious, one of the things that concerns me is we can promulgate a lot of rules and regulations. if we do not enforce them, we have wasted our time my concern is, we have had that mf global situation. i say they apparently broke the law. if that is the case, they need to suffer punishment. the rule is already in place.

my question to you is, the rules are in place right now. is there an enforcement mechanism? >> yes. >> if we pass this bill, is there a mechanism in place? >> the ability to -- >> you will be able to enforce this law. is there a difference between your ability to enforce a law and the penalties verses the rules in place right now? >> it reduces the risk that comes with a lack of clarity as to whether or not there is a duty between members and congress or the citizens or others. there is a risk that to ignore it -- no court has decided that the issue.

a judge might say it does not exist where is a we had legislation, it would be eliminated. >> have there been enforcements of the rules in the past have there been cases broths? are they referred it to you by the ethics committee? by their outside groups? >> the come from all sources. from the exchanges, letters and e-mail and cooperating witnesses and things we read in the newspaper. >> he made the comment with regard to some things that could broaden or narrow your ability to do your job. i hope authors of the bill will work to make sure that happens. my comment from the standpoint that, while the american people are outraged at things that they

perceived, the enforcement of existing rules and laws is critical from the standpoint that if somebody does something wrong, there has to be punishment of some kind. the waiving of the want of forgiveness is not necessarily the way it should work. i am curious as to your perception of how you see this happening. your ability to enforce this and working with everybody. i appreciate your views. >> the gentle lady from new york, mrs. mccarthy. >> thank you for giving your testimony. in your testimony, you note that we have statutory changes needed to be crafted to ensure they do

not narrow. you talked about that in your opening statement, making it more difficult to pursue future violations of insider-trading. it requires your agency to help. how'd you envision them working together as well as ensuring the rules do not have an adverse effect on enforcement? how you pick somebody up that has done inside trading? one of the signals? >> have you detect the violations? they come from a number of sources. analyticsge's have a and software in which aberrational trading pops out of the systems so that if they see a spite that will jump out of

the system. then investigation will be done to trace back to see who is trading and whether or not those persons have connections to the source of inside information you'd expect to see such as the bankers are the lawyers or the insiders of the company. do they have a neighbor who worked for the investment bank that had the mandate of the deal? it is a painstaking process of tracing and layering together trading and events leading up to a corporate event and then the telephone calls and the meetings and you put it all together and you hope you put together a circumstantial case. you can then reach a region -- reasonable conclusion.

this person had a conversation and look what they did. they had never owned anything other than a mutual fund and all of a sudden they bought $20,000 worth of options. the day before the announcement. that is the kind of circumstances that they acted wrongfully. and other occasions, as we did with raj, the criminal authorities and work with us where we can detect conversations in real time or you capture the inside information being passed. we have witnesses to, maybe there are the -- they are in trouble. we have a whistleblower program as well. it comes from all sources. it is a piece by piece building of the case. >> to follow up on that, someone

who is calling their brokers to make these trades, you have two people? >> if the client making a phone call has material information that they are trading on, they will have violated the insider- trading laws. the broker has to know the information is coming in breach of duty. if all the persons that was by 100 shares of ibm, it would not do it. if they said 10,000 money options before noon, because i just heard something from my friend who works on the board, that is a different story. >> how do you see your agency working together to do this? it is confusing for many of us.

i am sure almost every member here puts in the same kind of hours i do. whether we are here or meeting with constituents. my concern is that we do compliance once a year. if they want to do $1,000 trade, we would have to report that. is it easier to report to it every three months instead of having -- i have no idea of what to the budget is or anything like that. we get statements once a month. that would mean i would have to go through every trade? >> it depends on -- that is

standard practice. in many situations, the disclosure is done not chronically. in some sense there is no greater burden to the file of $100 and the $5,000 trade. you can file electronically with your brokerage statement getting sent directly to whoever is maintaining the data base. i recognize the burden is associated with it. i want as much information. >> if it came to whoever maintains, whether it is ethics or whoever it might be, it would have to have the capacity to do that. it would not cost any more money for the brokerage. that would mean hitting a button. generally we would not get it

directly. >> i hope you will be able to work with the members. pulte lui will do something that is great. my personal belief is that this becomes a witch hunt and the majority of the members here are not out to make a quick buck. but they keep for your testimony. i yield back. >> thank you, mr. chairman. thank you for coming here and answering questions. on this very important issue. i personally am particularly concerned about section 3 of the stock act contradicts the speech clause. as you indicated in your testimony, the case of gavel versus the united states stated that the speaker debate clause

was designed to ensure coequal branch of government widespread demand -- why freedom of speech and deliberation without intimidation or threat from the executive branch. as members of congress go before cnn or msnbc or cnbc and other networks, at all times section 3 of the stock at could bar them from publicly saying anything that may or may not move markets in stocks. which really gags them from commenting on very important legislation for the american people. you feel that section 3 violates the debate clause? >> the speech and debate clause is for me a separate matter that will exist in respect of of what is done and with respect to the establishment of duty are passing legislation for insider- trading.

it is something that we have to navigate through and both respect -- oh, i'm sorry. thank you, thank you. i am probably not the best person to opine on that. i am happy to consider that and give back to you with the response to there's a marius where the speech and debate clause application is clear in their other areas where it is less so. i guess i would ask for the opportunity to get back for you -- to you on that. >> thank you very >> all the insider-trading laws require a intent. that is the single biggest thing that protect the unwary from being tracked in a violation that inadvertently occur. you have to be acting with corrupt intent, knowledge, or

recklessness. if you back in good faith, you cannot be guilty. >> which is the definition there. does the fec has a -- does the sec have an opinion on how they could determine exactly which public companies could have their trading affected by members comments and how would you determine this? >> in a typical insider-trading case, that really speaks to the issue of materiality. was the information's as defined in the car lot -- >> let me interrupt you. with regard to section 3 of the stock act, which is if i go out there in front of the microphone and tv and tell them what bill i am contemplating to push through the floor of the house? >> well, if that is all that you did as part of your congressional duties and acted in good faith, i think it would be a difficult case to make from

an insider-trading point you, particularly as you disseminated the information broadly to a wide audience. let me clarify this. section 3 states that a member or employee shall not disclose material nonpublic information relating to any pending or prospective legislation action relating to any publicly traded company if that member or employer has reasonably that the ever mission will be used to buy or sell. and that would include any kind of comments with regard to bills that are coming before the congress of the united states or that you're contemplating using under section 3 as a stock act. so aside from the fact that if i know some -- assuming that i do not but i do -- if i know something that is happening with some bill and i go back into my office and call my broker and say buy or sell or short or go along, that would obviously be a

part from section three. i am speaking specifically about speaking in public about a bill that could move the market. >> that is one of the reasons why, i think, that there were clearly defined duty with respect to that affirmation -- that information, that would clarify the law in this area and make it clear crosses the line and which kind of conduct not appeared in with respect to section 3 of the stock act, which is getting out in public and talking about a bill or legislation coming up. do you think is the duty of the sec to go out there and police 535 members of congress? >> no. looking for people that violate the law. >> and is a workable within the sec's enforcement office --

operations to go out there and oversee a and a 35 people of congress as to what they say publicly that may or may not move markets? >> note, i mean, our job would be to either identify our have brought to our attention trading that looks suspicious and then determine whether not all the elements of the offense had been satisfied. >> but i am speaking under the stock act, assuming that it is made into law. >> i do not think we would be generalizing and conducting a policing information of what 535 members of congress were doing. >> thank you very much. i see that my time has expired. and mr. scott. >> thank you, miss chairman. dealing with the stock market, trading on the new york stock exchange, is sort of like the

cornerstone for our entire economic system. and it is basically based upon seeking pertinent information. when you are trading in stocks, it is sort of like trying to be and the right area of listening to the right gossip about what is going on at the right time. as of the question becomes, how do you enforce this? how will we really enforce this? give me an example of what is nonpublic material. that is the core of this. where would i go wrong? give me an example of a member of congress -- gimme some examples of what i would be doing which would be in violation of this act. >> well, in general, if there is

a member of congress became aware of the accompanying -- a company that was going to be -- you learn that it would be subject to a piece of legislation that would have significant impact on their business, and as a result of an information, which was not public and a sense that it was only known to a small group of people and not shared generally with the public -- >> could you give me an example of what that information would be? >> let's say you learned about a contract that was to be awarded to a certain company. if you were to learn about legislation that might greatly restrict the business opportunities of a certain company, if you are going to do something to the fda drug approval process that might make it harder for companies to --

specific companies that have drug approved, that have significant impact on the price of a company's stock. if he took that and then -- if you took that while it was non- public and traded on that information, you could have violated the insider-trading prohibitions. >> and under this legislation, what would happen to me? what would be the penalty? what is the real ax this legislation if i did that? >> and penalties from the sec's perspective are well- established. you could be subject to obviously an enforcement action filed against you, and you could be required to him to disgorge all of your ill-gotten gains or profits, and you could be assessed a penalty of up to three times of the amount of

that disgorgement. if you made $100, if you have to get that $100 back and be analyzed $300. >> so there are no criminal sanctions are misdemeanor or felony. you do not go that far with this project and we do not because we do not have criminal authority. however the department of justice in insider-trading cases on the same statute. they could charge a person under those circumstances. in which case, jail time and restitution and other remedies could be available. the criminal authority at a higher standard of approval. they have to prove beyond a reasonable doubt. we simply prove by a preponderance of the deference -- of the evidence. in this bill opens up another area that we need -- >> this bill opens up another area, the concept of political

intelligence. what is that? to in my understanding is that firms in the business of his finding clients to pay for their intelligence, which they in turn gathere from mining various sources about what is going on with respect to pending legislation and other developments in congress and in the federal government. >> and in -- at what point with a member of congress know -- what a member of congress know that what he was saying are responding to a constituent or anybody, which we do, he is engaging in political intelligence? >> if you are having a conversation with such a firm and just talking about what is going on, if you cannot have any insider-trading exposure if you are acting in good faith and you

did not purchase or sell securities on iran. -- on your own. i do not think it would be a chilling affect on a modified a legitimate conversations. -- on bonafide political -- gillette -- legitimate you could set up a member of congress and say, i got this bad here -- unbeknownst to the member of congress that he had been used. but the text that member of congress? he thinks he is doing a job of responding to a constituent. >> under those factors, you generally would not have liability for insider trading. you may have had -- passed some non-public information and that may have other repercussions, not from an enforcement perspective, and i am not

familiar with them, but from what you're insider trading perspective, that would not render you exposed to insider- trading liability. >> thank you. >> thank you, mr. chairman, and thank you for being here. if i stand right, i tried to be a good listener. today currently congress and their staffs are not exempt from the federal securities laws including insider-trading prohibitions, and this is from your testimony, and so today as it stands, congress is not exempt and their staff is not exempt from any insider-trading rules. >> correct. >> ok, with that being said, this bill that we are talking about really -- and i heard you saying this earlier -- just clarifies that. >> no, i think what i was saying is that the approach that i personally might prefer would be a narrower bill that simply declares that there is such a

duty by members of congress to keep information that they obtain in the course of their congressional services confidential and not use it for private gain. that is a simpler approach which accomplishes the same end. the stock act high tens of broader prescription to try and find the elements are many of the elements of insider-trading and i think in some cases, it may be at odds with the law, over inclusive are under inclusive. there is some danger in having that law exist as well as the law as currently developed. that is why i was saying that would clarify that. >> we could clarify this whole bill and another sentence that you just take it that when narrow it into a simple focus. >> are made to replace it. >> ok. the other thing this bill does is require quarterly reporting

of transactions of $1,000 or more. but every member of this congress today is required to report every stock transaction of $1,000 or more already on their annual report. so they are already reporting that very question i would ask is, where is that going? if every member is reporting it and they have been reporting for the last whatever, 20 years, what are you doing with that information? are you looking at it? he gets back to some of my colleagues that we can report everything we want to report but that there is never any enforcement, what the enforcement mechanisms when a member of congress reports every transaction that he has had for the last year? >> i think that the disclosure would be greatly beneficial from a pure enforcement perspective if it were made on a timely basis and was made electronically and searchable. it just creates ease with which

we can identify trading and determine whether or not any investigation is warranted. if it is not reported, it is just there is a long passage of time before you might have access to the information. members grow stale. and i do not mean to interrupt. it is reported every year. and every transaction you can pull off the internet. >> so those transactions of every congressperson already reportable and on the internet and can be picked up and looked at. >> a year or however long after the events in question. and what is normal with insider trading. you could still pick up insider trading is on file a report in april and you did something with it, you look at the report, all the members, and you saw unusual transactions in april of last year or june of last year. you could say, let's do an investigation on that. is there anything being done in

that regard? >> you could. it's just that investigations that take place as close in time to the events in question are just as a general matter more effective. members are sharper, information is easier to obtain, and there are fewer opportunities for concealing what took place. >> but if you're not looking at the 535 reports done today on an annual basis, are you going to look at the 535 times for reports that are done? that is what i'm trying to do if you already have those reports and you are not doing that, what would four reports * 535 people do for you? >> some of the trading would still potentially the referred to as if it took place on exchanges refer to us for the normal process that we get through the exchanges where the trades occur.

but the problem is that they are not -- if they are not reported over the long period of time, it is more difficult, and frankly, in addition, if you are trying to do, for example, track the process of a particular piece of legislation and understood when people knew certain things, it is much harder to do over the passage of time. and yet it would be more burdensome to do it four times rather than one. and for us as well, but potentially more effective more affected, but if there is no enforcement procedures in place today, maybe what we need to do is get the enforcement procedures in place, and use the information we're getting already. that is all i am getting at. if we give you four times the information and you do not have procedures to do checks and balances, it is no better than giving it to you one time. i am ok with the way that this act reads if we clarify more. i am not sure throwing

confirmation to you that you are already not using is appropriate for that is the question i am trying to ask. >> thank you. mr. green, i'm sorry. >> i thank you, mr. chairman. i think the witness for appearing today. using to be indicating, sir, that a single sentence can replace this bill. is this correct? >> i was not necessarily suggesting a single sentence but statute that defines and identifies the duty. >> that duty -- may use the phrase confidentiality? >> more effectively, a duty not to use information obtained in the course of congressional service for personal gain or private profit or words to that effect. >> as you have been performing your duties, and you assumed that such a duty consists -- incest, or have you been

performing investigations presuming the lack of such a duty? >> vf sooon -- we assume that one exists. we would not file the appropriate case simply because there is some ambiguity in the current law as to whether not such a duty exists. but we also has to recognize that because it is untested and uncertain, a court may not agree with us. and that is why there is some risk associated with such a theory. >> let me restate my question had you prior to this moment in time perform your duties assuming that such a duty exists? your question simply is, is there any investigation that you would not have pursued because you are not sure that a duty existed crush margin note. >> so as you perform your duties, you have assumed that the duty for congressional

representatives exists, not to disclose this type of information. true? >> that is correct. >> ok, so this is true. it is fair to assume that you would not perform investigations in the future to any greater extent than you do currently because you currently assume that it exists. >> well, the into that to be -- the answer that would be as all the disclosure aspect may encourage more investigation. and i understand aside from that -- >> the gravity of your testimony appears to be the duty. there are other things that are important, but the bottom line is the duty. if you have been proceeding assuming that it exists, i am just trying to ascertain whether

or not there would be some different behavior of your investigation in terms of how they are triggered, for example. you have indicated that your investigations are triggered by eight trade generally speaking. is that a fair statement? >> correct. >> and once you have a trade, you try to ascertain, a trade, one that stands out, once you have this trade, then what you try to do is ascertain whether or not the person who made the trade had some sort of insider information or communicated someone -- unique it with someone who may have had in sutter reformation, correct? >> yes. >> with this change if we codified the duty? >> no cumming would still take the same general investigative approach when you inquire into the facts of what happened. >> before my time expires, i need to say this for edification

purposes. i believe that no one should be above the law by virtue of their station in life. so -- and no one should be beneath the law. all law should apply to all equally. i am trying to find out whether there would be some change in the way that you conduct your investigations once this duty is established. i think i'm hearing you say not likely. i will give you some wiggle room. final comment. perhaps a question. when you perform this investigations, and this was triggered by something you said, my question, you indicated that the -- you check with nabors and phone records, you checked email, and do you do this with the person that you have focused on having knowledge of what you are doing? do you do this with a warrant? had the perfect the searches such that you can acquire the intelligence necessary to prosecute properly?

>> well, unfortunately, as a symbol of authority, we do not have the legal ability -- as a symbol of authority, we do not have the legal ability to conduct searches bridging -- civil authority, and we do not of the legal ability to conduct searches. and one cases, where wiretapper use, he were engaged in both types of activities and we get the benefits of some of that investigation. but for us, our investigations, although we are trying to change this as much as we can, are often overt. which means, we have to question witnesses with the knowledge -- with our target knowing that we are doing that. in can you use of litigation? didn't yes. >> and subpoenas. >> yes. >> i think you mr. chairman and i yield back.

>> thank you, mr. chairman. one of the questions that i have about a legislation is is there anything in the legislation that is not against law right now? in other words, we're just restating things -- is not legal for members of congress to do insider-trading, is a gross margin no, not in our view. >> anything in the bill knew that does not already exist in law as a prohibition? >> it changes some of the -- it narrows in some cases and expands and some other cases terms that are currently in use as the insider-trading laws are applied terrie >> could you tell me exactly what you're saying there? >> for example, is limited to material nonpublic information dealing with pending

legislation is the release such a restriction in the law in general. so in the case of members of congress, you have information from the executive branch or regulatory agency, it would not be covered by this legislation. it is limited to securities him or the swaps of certain issuers which means it does not cover options, it does not cover extreme traded funds or mutual funds. those things would generally be covered in insider-trading laws as it currently exists. there is no explicit provision. >> is there reason for this piece of legislation? >> again -- >> would you take this legislation in go to work on members of congress who have been getting by with things? with this open the door for you that you will not take, now

because she did not have enough power? >> no, i do not think that is the case. >> ok, what would you -- one of my suggestions is that the white house and the administration are completely not mentioned in here. they have far more impact -- in other words, the replacement technology on coal fired turbines, mack followers, those things have far more affect on the price of stocks that much of what we do. is there something in law like this that prevents members of the administration or members of the cabinet from doing the same thing for german because of regulations have greater immediate impact on stock prices than anything than 90% of the stuff that passes through this body. >> i do not know if there is anything on the at the goal

rules or other aspects that cover the executive branch or others. but we have brought cases -- we just brought and bridget we brought a case against an fda chemist who was trading on drug approval announcements, and that was based on primarily his agreeing to ethical rules where he agreed -- >> should we have something that specifically prohibits this? what possible actions by people in the congress and their employees? was it taken all washington because frankly the people of hong to not identified the congress and the senate been a problem. they see that washington is the problem. they see all rolled up. yes, no, maybe? didn't we do not draw any distinctions. >> when i consider abuses, i look back at global crossing. did you all do anything? there were a lot of people

making a lot of money, about $700 million appeared to have evacuated out of the price of that stock. that was not necessarily just members of congress but it was people who were associated with members of congress and people in the party structure. have you all ever taken a formal look at that? >> congressman, i have only been with the commission since march to a dozen 9. >> could you give me an answer on that? this is probably seven years ago. also, when you were here previously, i appreciate what we're trying to do to get transparency year, i am still wondering about the big fish are we doing anything on madoff? are we investigating him or putting him in jail? is he gone? did in the criminal authority -- >> he is serving a lengthy prison term. we have continued to charge a

number of individuals associated with him. >> my question though was inside the agency a lot of people were looking the other way. i know that we got mr. madoff, anything inside the agency? that is what i have never been able -- i say that my time has elapsed. if you could get with my office, we have asked this question before. what has happened internally? i know we got him. what about the part of the agency. i yield back. >> the gentleman from missouri mr. cleaver is riverside -- recognized for five minutes. >> thank you for being here. you know, this body in washington always overreacts to everything, and the way the system is designed is when someone enters as a bill like this, even if it is bad, people look for it, because they do not

want to be accused the next morning as being unethical and slam baggish -- that is my word. [laughter] we do things that create this never moving cloud that hangs over washington. not long ago, a member of this committee hold a fund-raiser and the bank appears before our committee, which also attend the fund-raiser, a sudden someone files an ethics charge against him. and he ashley end of voting against the measure. you mentioned it there is a difficult case you are responding to members, you say a difficult case to make. that is irrelevant in this situation.

because all that is needed is for someone to make an allegation. we are in congress. somebody makes an allegation, it is in the newspapers, it isn't irrelevant about whether it is a difficult case to make. is the allegation that the damage. and it ends up in the newspapers, and so political enemies use it to talk about how horrible washington is. it does not matter that they will spend several million >> trying to join washington. [laughter] we have another member they got into trouble because his staff did something and the committee said that he should have known. i sit in this committee and i get information and i am talking to congressman john doe, and i tell him what just happened in the committee, and he tells somebody and they end up taking advantage of some information,

and so then somebody is in trouble. right? someone goes and takes advantage of the information and now they are in trouble. am i right? >> u.s. the source of information, would you be in trouble in those circumstances? legally, no. again, because you have to of acted with corrupt intent. >> not if you are in congress. not if you are in congress. all you have to do is be in congress. >> i cannot speak to the court of public opinion. i can only speak to the legal court. but i understand your concern. if we're careful, our investigations are confidential and we do not make accusations of all we have done a full investigation. >> budget would -- i am sorry. that assembly. -- that is impolite. >> we understand the power of accusations and that is why we are careful about

confidentiality. >> is there another way for congress to deal with this issue? without passing a law that in my opinion is flawed and is going to create problems and then everybody -- look, we're going to vote for it because, if you know, that is what we did. we vote for things that probably the majority realize is as bad and the media is going to say is good. anytime you can do anything that holds people more accountable -- i'm just afraid dead this is one additional deal we're piling on ourselves that is flawed. and everybody knows it. and few are willing to say it. it is flawed. i hope that there's another way of doing this you know, if we're

going to do this and i do not know if a blind trust is the deal that we have to do, or -- i do not know. sec, no action is better, something, i think, it would be helpful if you could suggest something other than something that i think and others believe to be terribly, terribly flawed and will create problems for the image of congress. because there is no way that we can end up not talking about this issue among ourselves. thank you, madam chair. >> that gentleman from ohio is recognized for five minutes. >> thank you. i appreciate your testimony and i think we all take this issue very seriously. i think it is important that we address it in the proper manner.

i want to follow up on some statements and questions that mr. that others had -- that others had. can you state for the record that members of congress are exempt from insider trading laws? >> bair not. >> thank you. we need to keep this as simple as we can. i do have a concern for the constitutionality of section 3 of the stockact with regard to the speech and debate act and enforcement is really important. you have given us a solution earlier in your testimony and in your questions by just creating a duty that says that members of congress and i hope the administration would be included in that as well to not use information gained for other personal gain or private profit. do you think a duty like that would conflict with his speech and debate clause? because i do not think it sounds like it does. and again, i am not an expert

but i would not believe so. >> with regard to testing, because that is the other piece that might be worth addressing here, wouldn't be easy to add to that duty some responsibility not to tip others as to the purpose of personal gain or private profit? >> you could easily draft language like that but that kind of -- the tipper/tippee liability has already established a lot. to establish another conflict in my view would that you have the legislation and you basically include in a savings clause orlando to that would say that this was not intended to affect other laws. >> ok. so simple legislative change that would create that duty and then make sure that we enforce

laws that are on the books, and i want to get in to enforcement in the second, it would not change or conflict with the insider-trading laws on the books today, correct? >> i think that is right. >> isn't there some risk of creating dual standards that no one knows how to enforce or what applies to whom? >> i think there is some risk of that. >> so let's get to enforcement for a second. do you think that you have enough -- you talked in the beginning of testimony about some of the statistics of your enforcement and how it is going up in your obviously doing more of it. do you have the resources you need to do the enforcement that is necessary to clean up insider-trading, whether it is a member of congress or someone else gore's remark >> -- or someone elspeth's? >> we do not have that power to do across the border enforcement of the security laws.

we have made great strides in terms of the number of cases, the quality of cases, particularly the case is over 80 individuals and entities, 40 ceo's and senior objectives. we're doing a lot of great things. but it is a significant challenge, given the additional thought frank burden, and just the numbers. we're 1300 people across the nation in the enforcement division in we are responsible for 35,000 regulated entities. broker-dealers, transfer agents, and others as well. any citizen that might choose to violate the law. resources are real challenge for us. we put more into insider trading, it is less somewhere else. it is a zero sum game. >> let me ask you about what happens to the ill-gotten gains that you are able to get back thru the process of insider trading, and is there a way to help use those the way that we

do drug profits, to go back into enforcement? >> it does not -- i mean, as a general matter in security cases, we often take disclose when of ill-gotten gains and penalties and returned it to the armed investors. we'll return $3.6 billion to harmed investors in the last three years. in insider trading, it is harder to identify the victim or it was to someone else on the side of the trade that did not have the information and because the amounts are so small, those numbers often end up going to treasury rather than being distributed to people on the other side. >> we only have 15 seconds left. what you think about the idea of insider trading using some of those gains to help you with your enforcement? >> a lot have -- we attempted to get self funding and it did not happen. we have some additional means man -- now. our budget does not come at the expense of other government agencies because it is funded by transaction fees and other

fees by wall street. i think that is appropriate. i would not want to see us funded directly from penalties or sanctions. i think that sets up a bad incentive. tirest tenement's expired. the gentleman from of a soda is recognized for fought -- that gentleman's time has expired. the gentleman from minnesota is recognized for five minutes. >> there was a big story on 60 minutes, a lot of people were probably given more attention than they wanted and the type of attention they did not want. and we came up with a bill and here we are. of course the billing system long before. i do not want to imply that it did not. i was intrigued by the idea that you think that this is already -- members of congress already cannot use inside nonpublic information in order to enrich themselves. can you expand on that? >> i think the point is that law carly prohibits insider

trading and there is no special exemption or carve out for members of congress. >> right. >> i think the point was trying to make is that while that is true, there is some legal uncertainty about how those principles that currently exist would be applied to the special situation of members of congress and that is why establishing this explicit duty would be very helpful. >> yes, and in that same vein, yet -- as members of congress, as you make the point, we have a public duty and our responsibility is to pursue the public interest. if we are doing something to pursue our private, narrow interest at the same time, it puts both of those interests at odds. and in the 60 minutes peace, of course, i do not want to attribute that as being absolutely accurate. it is media and entertainment, too. part of what they're saying is that one member was supposed to be stabilizing the economy at the same time they were

purchasing equities or options that could enrich them if the economy went down. if that could be believed or prove, there is already ample stuff to say that you cannot do that. specifying it may be degraded vantage and that is why my co- author of a stock aact. i think that the things that this news broadcast brought out, you cannot do already. let me ask this. how to the very designations of this term confidential information among member offices and committees affect the determination of material nonpublic information that it did disclose? >> how to the various definitions?

>> yes, how did that varying designations of confidential information among member offices in committees affect the determination when material nonpublic information has been disclosed question margin if there is an explicit agreement that the information is confidential, then that generally establishes the duty of trust and confidence between the teeth of partisan made that agreement. one of the parties who has that ever mentioned then turns around and uses that information for private gain, they have violated that duty of trust and confidence. >> do you think there is a problem with perhaps mobile understandings of how this term might be applied in various circumstances? you think their rules are you think one of the things we need to focus on is how weak, with perhaps a standard understanding? >> a more standardized -- the more standardization, the better. it may not be possible but it is

correct. >> yes. what kind of information would be regarded as relating to a commodity and futures contract within the context of members of congress? what kind of information would be regarded as related? >> what kind of insider trading? if you're talking about certain commodities, any legislation that might impact companies involved in the commodities business would certainly fit the definition. >> ok. and under what circumstances would a member or an employee of congress be considered to have reason to know that in person -- any person requesting the information would use the information obtained to trade securities or futures contracts? >> if that were the law, the new look at the circumstances. if you had a friend who was a

day trader and you secretly whispered to them some information in the course that you learned about some non- public legislation, you have a pretty good basis to say you should have known that this person was going to take that information and trade on it. other cases would be less clear. >> yes. at what point do prognostications as to the prospects of legislation become political intelligence? >> i am not sure -- that would be a difficult question to draw without knowing the facts and circumstances a particular circumstance. >> i am out of time and thank you for your cooperation. >> thank you. the tournament from michigan -- the gentleman from michigan is recognized for five minutes. >> thank you, madam chair. we are running out of time with

my colleagues across the lake here. maybe we can pursue that a little bit. as i was hearing that interchange, something struck me. it is called the farm bill. be realing to authorizing this thing soon. and whether it has to do with ethanol or indirect subsidies are payments or any of those things, it seems to me that this may cause some huge headaches for not just members but a number of others who are involved and engaged in the legislative process dealing with a major portion of our economy. it is not just wall street. this is main street, grain elevators out in michigan and nebraska and wherever else. we can keep unpacking got a little bit along with the whole notion of political intelligence

information, is it really just a judgment call what is or is not on your part? explain that a little bit, if you would. >> well, when something -- whether or not it farm bill legislation or corporate takeover -- at what point crosses the line from being just a very preliminary, at what point it crosses the line to be material, which means that it is an important matter to a reasonable investor and and investing decision, it is at the end of the day in a determination based on all the facts and circumstances of what happened. yeah, that is why in the course of our investigations, we spend a great deal of time trying to tease out every fact and every event to make sure that we

understand what had occurred and make our professional judgment as to whether not that factor has been satisfied enough as everything else was as well, as a matter of the case that we would file bear the same is true for intent. you have done -- you cannot look into someone's mind so you have to look at the circumstances under which they may have passed the information. he did it put down a taped telephone line and say it of yourself on and ask someone to call them back on and on tape of line and beat -- and speak critically or take some steps to conceal what they had done, you look at all these things to figure out whether or not people have acted with bad intent and whether or not it is material in order to decide whether or not you ever got the sufficient basis to file a case. >> to you see any problems with what we're trying to do here? i do think that this is a good idea, but let myself and a

number my colleagues, we have had previous lives. they follow was here. my family happens to be involved in construction back in michigan. i have real estate, i on a gravel co., i have three employees. but if i vote on a highway bill which means we're going to be using more concrete and suddenly sandstone is more expensive, and i somehow benefit from that, is there a pitfall here that would be unintended consequence to something like that, but i see that with the farm bill and the number of these things that are regular order and regular business here that may cause some problems. there is one proposal out that when you got elected to congress, you have 90 days to liquidate everything in the only thing you are allowed to hold would be a government treasury bill.

i can tell you, that is not something i would be interested in doing especially in this real estate market. how do we strike this balance? i think there is a real need here to make sure that we have transparency and that we are not unduly using information that is coming to us. >> there are a number of protections. proposed legislation struck openly becomes public. therefore if you are to discuss it, not nonpublic, therefore it would not give rise to any sort of liability. again, you have act without bad intent. if you hit me all those elements, you simply discussed proposed legislation with a group of people, and a wynn often traded and you were doing it consistent with your duties and obligations as a member of congress, it is hard to see how that would give rise to case. in some talking at the local rotary is not going to get

someone in trouble when suddenly they gives them an inside. thank you, madam chair. in the gentleman from colorado is recognized for five minutes. in thank you for sitting through this for so long. i am generally supportive of the legislation as it has been proposed. i bring the same concerns to the table that you do. in trying to define this, you end up by their exaggerating one piece and for getting another. you focused primarily on legislative activities of the congress. in the legislative arena, we have to the parts. we make policy and we either funded are we do not. we have oversight. of your organization and every other organization of the federal government. in which case, either in a public forum as today, you provide us with information and

in certain instances, we maybe have private briefings, a secretary comes to someone's officer whatever. then we have legislative family of oversight, and then we have constituent relations, which is what he was talking about, speaking to the rotary or someone comes to my office, and says, they are thinking about black last week, tracking -- we worse speaking about this last week, fracking. i know the sec is having to deal with subject like that. we have every subject under the sun, from farming to par in policy, etc.. -- to foreign policy, etc.. in trying to define all of this, i fear that we forget the activities that we face here in congress. any comment on in?

>> i would probably give the same answer that i gave previously. i think that there are a lot of protections that are inherent in the insider-trading law that prevents it from becoming a trap for the unwary because of the various legal requirements that have to be satisfied. and maybe that there are -- that that is not sufficient. you need some sort of carve out or no action letter that would you give you -- it would give you comfort going forward if you met the requirements. it would protect you from any sort of liability. i realize that it can be a challenge, and frankly a challenge on the corporate side as well, where you have corporate officers who are responsible for all sorts of communications and outreach to their shareholders and others.

and do not mean to underestimate the challenge but i hope that conscientious people can come together and figure out a solution. >> i think that the day we had tarp on the floor of the house of representatives, and that was one where you're going to pass it or not. now under this bill, that what the public because it was as public as possible, of that everybody here was transacting business on the market could see the war we going to pass a car were not. -- were we going to pass it or were we not. what if they are counting of votes and they realize it is not one to pass, and he realizes this is not going to pass, and he goes and sells whatever. what happens then? >> i would not want to speculate about particulars.

>> i know that you cannot but we are in a legislative arena and you have to. we have to look for things like this. and that is why this is a legislature as opposed to the judiciary. we have to look at the broad expanse. >> that set of circumstances, that would give rise to a case because it certainly was material to investors, and if the vote was that close, or there was uncertainty about it, certainly would be non-public and to trade on that could in fact be a violation. >> i could see that one as being, well, what we do now? it is right in front of everybody at the same time, this guy counted the votes an hour ago. >> it could also be the speech and debate clause that occurred

on the floor as well, i challenge on the grounds. >> in just a close, you're going to work with the sponsors of this bill to tighten it up? >> yes. in that would make me more comfortable. thanks. >> the tournament goes back. the judgment from delaware is recognized for five minutes. -- the gentleman from delaware is recognized for five minutes. >> not many questions that have not been asked. i have a few and i appreciate your forbearance for this long hearing. i am trying to understand your testimony. you said earlier that you would prefer -- i am a supporter of the bill and a co-sponsor and i was surprised that members of congress may not be conquered -- covered by their rules for insider trading. you say that you assume that they are. that we have some duty. i accept that and have the same assumption. i also think that members of congress ought to be held to a

higher standard. what ultimately passes, i hope it will set up a system that does all this to a higher standard just because we have a special trust with the public and the duties that we do. so do you think -- a narrow bill or the simpler approach is the better approach? >> i do, because i think it accomplishes everything that needs to be accomplished to make it clear and to eliminate uncertainty as to whether not such a duty excess, but at the same time avoids -- >> for use the big question is to eliminate the uncertainty. and we had a back-and-forth with mr. green about whether it would change anything that you do. have you prosecuted any of these cases, actually taken them to a court and had a prosecution to find out what might happen? >> my time with this has not

been a cloud case about a member of congress for insider trading occurred there have been cases against the members of the executive branch, fbi agents, and others, but now members of congress. >> given the attention that this case is gone right now, and it is purchased the reputation of this institution further which should be the people's house, and they should have trust in it, it is an opportunity to do something to improve that. how would you do that? and i appreciate the fact that you will work with the sponsors to do that. >> a couple of ways. one is the process to work on the legislation to clear these issues in the second is when any sort of special -- suspicious trading your activity is brought to our attention, insider trading or any aspect of the federal securities laws, we take a look at that and we conduct our inquiries and determine

whether not there is a basis for a violation of law. >> if i understood your testimony coming your coming through disclosure practices. this would require a 90-day disclosure compared to the one year annual disclosed that we do now. you mentioned in reference to the corporate directors what is inappropriate and what kind of trade would you be talking about for that kind of disclosure? >> what kind of what? our preference would be we would like to see the shortest time between the trade and the disclosure so that we have a better chance of getting the information and have it done an electronic format. we do look at trading if we have

a reason to look at this. he cannot search the database without a complaint. the aegis search it -- you just search it. paper would have the ability to combine the information to make your increase much murrah currently. >> it was not included. could you elaborate on that again? >> it is speaks to nonpublic information.

they see how non-public it is. >> be mention certain transactions. >> it is limited to swaps of issuers. it would not include this. >> no. would not include an e.t.f. that was traded by a dealer. mutual funds are diversified. it is not issued by investment companies. those would all be exempt. insider onesany and mutual-fund. options are typically insider trader first choices.

the offer great leverage opportunities. >> my time has run out. thank you for your testament. quite some members may have additional questions. they can cement n writing. they have responses in the record. thank you some much. thank you for giving us the time and the expertise. with that, i will call of the next panel. -- up the next panel.

i recognize the third panel. >> then you be recognized for five minutes and first we have mr. jack mass kell. have mr. jack. he is a legislative attorney. professor donahagy and robert walker with council llp. thank you for your patience. >> thank you. >> thank you.