we all working through these issues. >> to have anything to add? >> it is very smaller. that is compared with many thousands of futures accounts. of the company did not report a sharp fall in the reserve we are of course not relying on the company. we are working closely to insure money can be recovered for the state, and we are looking at our rules to see if there are other things we can be doing differently, both to the integrity of customers. we have strong customer

protection rule that would allow customer funds to be invested in securities that are backed by the united states, but we have proposed rules with respect to requiring separate audits. they would also enhance examination authority and would require broker deals to file regular reports with respect to their custody practices, and there is no proposal but would greatly enhance reporting buyer broker dealers, so we are also working carefully to make sure there is more we can do. the company has filed to transfer the bulk of those accounts to another firm. >> staff participated in the agency efforts on the proposal,

but those adopted almost two months ago. when can we expect them to issue the proposal, and will there be differences from those issued in october? >> i would envision we would move forward with a proposal. it has been a capacity issue of bringing things forward with the commission. we also have a changeover of one commissioner retiring and another one coming on board, so

i would envision we could move forward with what other regulators have done. >> i do have additional questions about the oversights of the sec. >> according to the global bankruptcy trustee, as much as $1.2 billion or more of customer funds are missing. where have they been, and dino where the money is -- do you know where the money is?

>> we are not participating. >> why? >> that is a good question. they did not see a reason to participate. i said i did not want my participation to be a distraction. strikes are you not participating because of of our iron and -- >> are you not participated because of a prior relationship? >> i love 14 years of former -- i left 14 years before.

>> is in because of your relationship past or present with the chairman? >> i indicated that i thought i did not want it to be a distraction from the important matter. >> i asked you a question. did you recuse yourself from proceedings because of your prior relationship with mr. clore resigned -- mr. corzine 14 years ago? >> it might be broader. it was a distraction. >> he might have a conflict. >> what the lawyers told me is there was no reason i needed to not participate, but as it

turned into an investigation of these important matters to find out where the money was, i did not want 5 participation to be a distraction. >> since you have been chairman , as chairman of a mass global, regarding the regulations in any way? >> so you had a meeting. you called it a currency meeting. you had a meeting with the chairman, right? >> there was a meeting when he took the job. >> i do not mean to be rude. was the meeting at cftc?

was it after he became chairman? >> yes. >> what did that have to do with him taking the job and? >> he was ahead of an agency, head of a company, and he came by in the spring of 2010. >> did you ever have any dialogue or interaction regarding the regulation of what he could do or could not do? >> there was once a roll-call -- there was a call. >> tell us what happened. >> in july of this year they were reaching out as part of the 1100 meetings we have had.

one of them included staff about this rule of investing in customer funds. >> you had a meeting regarding the chairman? >> that is correct. >> my next follow-up is part of my first question, because my time is limited. the you know where the money is today? if not, why don't you know? >> we are working closely with the forensic accountants but have been hired to try to locate any missing customer funds. we try to continue to work through those issues, but we have not located all of the funds that are missing.

>> you and your colleagues have a complicated challenge implementing the volcker rule, and that is a broader issue with respect to how derivatives are going to be treated by the books of the major companies. it is complicated. that is why agencies do it, because the process of getting the opinions from the affected industry is something that we do not do as systematically, but the other complicated factor is there is an attack on the budget to the agencies so their resources are in question, and

we are also seeing a list of potential for challenges on administrative procedure with respect to economic analysis, and i find that interesting because it was not part of it. it was a consideration not a cost-benefit analysis. all of that having been said, and this time where it is difficult to employ an effective rules with respect to volcker or derivatives, the only fall back i think you have is capital, capital but will ensure the congress and the american public and they will not have to go in as they did in 2008 and provide

indirect financial support through the borrowing capabilities of the fed. is that your perspective? are you prepared to consider the additional capital these institutions must bear? >> as i indicated earlier, we have been proceeding with improvement across the board. with respect to trading, were the volcker rule has significant stallions -- salience, we are putting out regulations. secondly, when we did a capital review exercise earlier this

year, and as we have undertaken from early 2012, we have included a so-called trading bookshop, something that would essentially build on the 2008 shock to assets. this year we have also added a specifically european component, taking into account potential impact on sovereign's in the year -- in the eu. we need a dynamic as well as a static picture of capital. what we try to do is assume an adverse scenario, assume the bad things happen. we have a sustained costs and

still emerge sufficiently well capitalized to be an official intermediary. i realize i am a broken record. in definitely needs to be compensated. >> you do not have these other rose -- rules. >> we try to get how the requirements look to other regulatory arrangements. thus we would need to the death

potential losses. >> is a ton more of effective use of platforms bowman -- icloud firms? >> i find one of the ironies is that industries are fighting so hard against these. they may impede their ability to participate in the economy, and i guess the moral of the story is you cannot have it both ways.

you cannot undermine structure and expect to have low capital levels. >> to riskiness of a particular asset is affected by the regulatory asset. >> capital requirements will have to be higher. >> thank you, mr. chairman. >> this is the first time you have appeared before me. your participation makes less sense than the first time.

let me try to understand this. you work for the former senator 14 years ago. is that correct bowman -- is that correct? >> i work for goldman sachs for 18 years. >> up until the time you decided on november 3 you were not going to participate anymore, you have regulated mf global. correct? >> as chairman of the commission overseeing thousands of other registrants. >> it never occurred to you prior to november 3 that you should not be participating? >> i raised a question which

companies to be involved in or not, and they said there was no specific reasons to participate, but as this turns to an enforcement matter on halloween, they repeated that, but as we were getting closer to about friday's surveillance meeting, i indicated i thought it would be best not to be a distraction. the hard-working and excellent staff of the agency with regards to something that could be a specific investigation of that .ndividual as well >> why would you be a distraction? you see what it feels like up here, when this got uncomfortable, the money that is

there should be there, and you did not discover about until it was too late. every hard question you said, i am not purchase of trade-in. to me it looks like you aren't talking. i do not understand why you would be a distraction. >> i take the john barry seriously. i say it is paramount to our regime and the many energy merchants, because those are the people but really need to do use these instruments to hedge.

i would prefer to be able to address it, but this is not the first time i might not be involved in a specific investigation of individuals where there is an excellent career staff. there are voters and so forth to get the directions of excellent commissioners and not be a distraction with my personal involvement. >> as president truman famously observed, the buck stops with you, so after this hearing when farmers from nebraska, maine and -- nebraska called me and said what did they say about getting

the money back, my response is he is not participating and i have nothing to offer. he has got a good staff, and they are handling it, but we want a person to come before us and enter the hard questions. that is what your job is about, and it feels like you are not discharging responsibilities. >> i feel that i am. i am doing the best of my abilities, and it was not the first time it turned to an enforcement matter that may involve a particular individuals, and that was four years earlier when the work was done that i said to the general counsel and what do you

recommends, and how you not purchase of a so it is not a distraction to the american public? but critical matters we do share are ensuring money is accounted for and that people can have confidence in these markets. >> let me wrap up with this. it seems fundamental. if you have money from this account, you did not mix them, and you do not appropriate money from customers to do your own risky trading. cut seems to be basic, and this is not soft, -- not tough, and i

do not understand why he would not be participating in this. >> the law is clear. there were some exemptions in 2005 the yesterday the commission voted to narrow and take back, but there were exemptions in 2005 about landing customer -- about lending customer money, and in 2010 we proposed to dial the fax -- dial that back. we went through the healthy practice of hearing from the public as well. >> that is not what happened? >> senator.

>> 60 members of the public voted, well beyond a simple majority. it seems 5 is a rather extreme. it seems that they oppose the existence of an agency accountable in a dozen different ways under the law, and that is meant to help consumers verses large financial institutions. if republicans intend to continue to oppose a vote, can you explain what the practical consequences of not having a director means for middle-class

families for this agency? >> absolutely. as you said, without a confirmed a director, and the financial bureau will not have authority to enforce common sense consumer protection with response to pay lenders, student loan providers, and i think if you look at what the consumer board has done today, you see the importance of their efforts. they are trying to make clear credit card disclosure, clear disclosure for students who take out loans, trying to help service members get the information they need so they can make essential choices about

the products they want to purchase or not and what kinds of variations for those products, and we know the absence of that disclosure was an important effort of and what caused a financial crisis, so from my perspective we are talking about very tangible protections for everyday americans of all sorts with respect to some of the most important financial judgments they will have to make. >> isn't it true that community banks and credit unions will be under a disadvantage because they will have to live under the regulations but a universe of institutions that cannot be regulated unless there is a director to promulgate a. >> the consumer bureau has the authority to do this now.

we have the circumstance of banks being regulated in this way. >> in pursuing this line of questioning, i have heard a lot of rhetoric about regulations of wall street causing a loss of jobs causing a slowing of economic growth, but can you indicate any action in u.s. history the cause more slowing of growth in this economy back on when we allowed wall street financial institutions to largely do whatever they wanted running up to the financial crisis that culminated in 2008, isn't it a fact it was a cellular to regulate that caused the losses of millions of american jobs over the last several years?

>> we know the financial crisis led to the destruction of an enormous amount of jobs and wealth and people to lose their homes. we know an important reason was not having a financial system adequate to the task. that is why this was so critical and that the implementation work my colleagues to the left are engaging in is so important so we have a system that is more resilience. concerned, i a as a qualified mortgage definition being worked out by several of year -- being worked out by regulators is not broad enough, and that it could hurt the housing market, especially

if you proceed in higher down payments. that is where the market is already taking itself. that is a universe of responsible borrowers but will be largely eliminated at the end of the day. i have been a responsible are hour over a long time. -- responsible borrower over a long term. why would you systematically say 20% or above is the mark? >> i am happy to start on the one. atheists and narrow definition -- it is a narrow definition. a basic requirement is to encourage risk retention and

securitization. the question is should there be exceptions, and the definition is drawn pretty narrow lead to identify mortgages but are so well under written that no risk retention is needed, but leaving spaces for other products to be provided within the framework along requires. it is one of the issues we have to confront. it is not intended to define what an acceptable mortgage is. it is one of the things we will be grappling with. >> there are a lot of uncertainties over whether your next step is to implement regulations.

can you assuage concerns by saying your plan to issue a proposal? >> that is a collective decision based on the comments. i think it will depend on how different a proposal we are looking at once we make a series of decisions based on comments. we will have to decide that collectively. >> there are many different ways by which we look at how risk is revered. i find 20% to be arbitrary. it is one factor that should be considered, but it should not seen the deciding factor. >> thank you nouri much. i do not think you can answer

this question at this moment. it is not necessary for your college to join us at the table -- for your colleague to join in a separate table. i thought they made a sensible reform yesterday. they altered investments for customers in those segregated accounts, and while that does appear to be sensible, i do not see the rule would have changed any of the outcome of what has transpired, and while they may have been doing things with the money this rule would affect, i read that we have a fraud. we have the taking of customer'' funds, and they are gone. i would like to have the cftc

explain to me why the change in this role may have been a tool that would have prevented what happened happened. no need to answer that, but if cftc could respond, i would appreciate it. let me ask chairman shapiro a question. senator warren and i are going to introduce legislation but will generate an entrepreneur .hare in this country's economy -- and generate entrepreneurship in this country's economy. we heard testimony about how it remains one of the most egregious the veterans to entrepreneurs accessing capital. new -- an egregious and opponents to entrepreneurs accessing capital.

of >> we share concern about access to capital with small businesses. we are working out all kinds of initiatives, including raising the limit. whether we should relax the general solicitation ban and a number of other things. i will say i have personally weighed in with concern about raising the exemption. it is currently $75 million, which covers public companies. to go to $1 billion, but would

concern me. and we have understood from investors consistently that the independent auditors is a very important investor, and the worst thing would be for investors to lose confidence again in the quality and integrity of financial statements, and the bigger the economic, the more concern i would have. we are looking at this carefully but exempting for these larger companies would save audit costs. we would be happy to talk with you in detail, but i do have some concerns, because investors tell us it is important to their capital. >> i think it is important we

have your expertise i think startup companies are a great idea for our country's economy, and i sincerely believe there is an impediment, but we have to find the right threshold for protection. my final question, and it was bob braun won three road -- it was a broad one. might take, and i was not at the table when dog-franc was signed into lawn -- when dodd-frank was signed into law, and regulators have authority to wind down businesses that are failing, but i did not hear anyone indicate dog for a reduces -- dodd-frank reduces

the number of businesses but are too big to fail a. i thought it was addressing reducing the number of firms that if they failed there would be a systematic risk. nothing since just up the concentration of economic power is in the last today or that there are fewer firms whose failure would cause a dramatic consequences to the economy. we have greater authority to wind down one of those firms, and we have a greater opportunity to prevent any of those institutions from risky behavior that causes them to fail. what of a higher mix -- what have i missed?

>> all of those things are true. >> they will make sure they are better offered. -- buffered. we have new tools to deal with failure in ways the are orderly and do not require taxpayers resources to deal with the situation, but i think it also make sure the firms are better protected from each other so the kinds of things and make it less likely for one firm to fail help make sure when a particular firm fails, other firms are better protected from those circumstances.

one key element is capital. it is all of those things. if is better make seashore firms are protected from failure -- making sure firms are protected from failure and dealing with that in a way that is protected from the tax payer. >> a number of the things we are talking about here, the disclosure we are doing, and all of those are a means to enhance

market discipline is a complement to regulation. there are two forms of systemic risk we need to be concerned about. one is what you highlighted, which is the number of firms that would cause a problem if they were to fail. the second is a set of activities that may be conducted by our broader number of not huge organizations, which would create some systemic risk if they were a shock to the volume of the assets, and that is what mbs was. when you talk about derivatives reform, you are talking as much about systemic problems that can

arise in non-gigantic firms, but i will say i think we will mean more work to make sure they are identifying those forms of risk and not allowing an arbitraged now out of one set of institutions out of another. >> senator. >> thank you. i want to start with a brief discussion on the difference between qualified mortgages, and when the qualified mortgage, which was a term used to define a mortgage to the need stability who pays standards. under the section for the qualified mortgage, the ability

to pay, a series of requirements are laid out, and those include the mortgage. meeting ratios and regulations or statutes from debt income. he abo -- two terms are used, one of which is to save harbor. the you have a sense of which way you are going to go on?

>> they have different purposes zero also some interplay -- purposes and also have some interplay but i think needs to .e worked throwugh we will offer our views, and we have a coordinating function the statute provides, but the regulators will make their judgments. it is distinct and different from risk no attention. there is a reference to the safe harbor. that was a discussion taking place among those of us emersed in trying to get rid of loans,

that you have a safe harbor. i wanted to turn to the search arch, and i believe earlier in the year-end you called for a surcharge of as much as 7%, which could bring the amount of to 15%. i think the fed adopted -- 3%. for most organizations it would only be 1% or 2%, so is it fair to say you lost and are still concerned about that? >> what i said in that speech was that the methodology we

pursued in trying to calibrate what an appropriate surcharge would be, that it would be between 1.5 % and 7%. it is obviously within that range. i did want people to see methodologies said say how can we compare that to do a medium- sized institution?

could it produce a surcharge greater than we intended to propose? this is relative to my response earlier. when one thinks about which number to choose, you want to take several things into consideration. how are you feeling about the underlying capital system? to what degree are there other regulatory structures which suggest you need to go higher or lower in the range, you got hamas -- the range you have got? the degree to which we can get agreement from our international counterparts to move in a similar direction, and personally, i would have been happier with of higher number,

but i do things the numbers are well within that range, which and politically we think will provide the kind of buffer support that is needed. >> i will close by noting the total amount of sulfur becomes much less than proposed, and this is in the context of significant exposure of european thanks -- banks and how the domino's line up, so i applaud your efforts to have this line of defense being robust and substantial. >> thank you for being here.

the consumer financial protection bureau has had a number of conversations about ipsa, and i have talked to the white house over the last several months. even the treasury's proposal have of board, and even the treasury secretary said, we felt there should be a board. i do not know if you enjoy being part of own game, but i would say basic checks and balances would cause the log jam to , and i ambroken up surprised you decided to take part in this political game, but i hope we will be able to have a

simple thing most people would like to steve. -- would like to see. everybody is having so much fun. in february, you came forth with a multiple choice of what could happen. i am surprise you have not come forward with any solution, and you do not have to go on forever, but explain to me why you have not. it is a basic issue. when we realized we did not have the aptitude to take it are, -- to take it on, can you tell us why you are not pursuing reform at the moment?

>> we are keenly interested in pursuing proposals. we have continued to work on refining what we think the right approach is and tried to be clearer that we are keen to engage in that conversation, so we have been continuing to work on plans. >> are you going to come forward with a plan? and at some point we will bring something forward. >> you were really coming into politics and -- into politics and are unwilling to take on the tough issues could really cause our country to be divided, and

really promoting other political stances. i do hope it might change. >> can i respond >> briefly. >> we have tried to take on many complicated things. >> you have not taken them on. you came up with a multiple choice but makes everybody happy, and you did not do what you said you would do during your three did what you said you would do. >> we have put out some very serious ideas. do we have continued to work on proposals, and we will work with whoever is willing to work with us. >> i do have some other questions.

i have to tell you it appears to me the people who care about mf global really care about not what happens running up to the time you recused yourself. it feels to me like you panicked. it is more about a career- enhancing. i do try to take on the tough them, and not dodd's i might not be coming back because of that. it appears to me you really took a career-enhancing position by trying to take yourself out of

this triggered it seems like now is a great time to be involved. it does not seem to me like it makes any sense at all and was done solely to enhance your career. and >> i feel like you have given me good advice, but really what happened is a turn to a specific enforcement matter that could involve specific individuals about compliance with laws, and there were some questions coming back thursday. i was testifying on position limits, but i reached out to the general counsel, and i said, i know you are saying it is 14

years ago or nine years ago, but my participation can be such a distraction, and i said, what do we do elsewhere? i appreciate what you are saying, because it is of balance. there is a balancing of very hard decisions, so i made a judgment that thursday. it is certainly not for the reasons you are saying. even not participating, it is a challenging subject. >> i know the treasury when volcker came out, my guess is there were people that thought, what in the world?

then the treasury first opposed volcker internally, and over time you figured out the best way was to make sure treasuries were exempt. all other trading and debt is going to become far less liquid. you are fully exempted treasurys. -- you artfully exempted treasurys. i wonder if you think about is an appropriate response. i wonder if you might respond about what that is doing by crowding people out of the private side and calling on people to focus on something that is highly liquid.

but parks i came and testified on behalf of of call volcker. -- on behalf of paul volcker. we wanted to make sure we excluded certain things from the provisions. how that gives workers through is not for the treasury to participate in, but i have a hard time imagining this is going to have a particularly important affect. >> with respect to liquidity through other instruments, a lot of this will depend on the efficacy of one of the concepts, which is to try to adjust the oversight for overall liquidity

of articular assets, so in an exception for underwriting and market making, it will be to evaluate what affirmed those we as what -- what a fir dom does opposed to making a market in 1400 -- fortune 500 equities, so we will try to minimize the effect on liquidity in markets by implementing market making and underwriting sections as sensibly as we can, taking into account.

five or six years ago, how the nature may have changed. it may be that a bunch of them may migrate to different firms. >> senator hagen? >> in your opening testimony, he devoted much of your opening to dodd-frank. the european begs hold large portfolios that would satisfy liquidity. they have certainly seen declines of value of these assets, and it is been reported in the bottle committee rated -- the basel committee could

approve these requirements. >> i should say at the outset that the interest in taking another look of the liquidity ratio began well before the current stress on european sovereigns. the federal reserve was one of the entity is the path to take another look at the ratio, and to be fair to those that came up with the original proposal, it was in large part because we never had a quantitative requirements before, so we thought it was particularly important step before putting

requirements in place there be a look at involved principals and regulators. one of the precepts was but if you are worried about liquidity of the firm, would you are really asking is how well the liabilities mash so that it can cover its needs so it can develop a plan for a longer run the survival. i thought 2008 gave us a very good real-life experiment to test what kind of instruments and related to remain liquid. that is one of the motivations

for the real thing -- rethink, and i think you will see some changes in rates, to try to conform the requirements more closely to the experience we actually have. >> let me follow up. the volcker rule applies exclusion for the purposes of the liquidity management. i would expect the committee because the definition of the stock of liquid assets and the trading account exclusions for bonafide of liquidity management would be closely linked. is that an upper bead expectation? -- and upper bead expectation? -- an appropriate expectation?

>> remember, the lcr is only a betty-day window. you want to make sure the book is better matched, going well but beyond 30-days. good sound management will include of things other than the lcr. >> the proposed rule prohibits a banking entity from sponsoring a covered fund unless otherwise permitted under the rule. i wanted to ask your help to clarify certain aspects of what constitutes a covered fund. would the covered fund definition apply to funds such as mutual-fund or of the regulated, collective investment vehicles offered to u.s.

investors? >> it is hard to answer that. i will try. we started working closely with our colleagues. at the end of the day, this rule is about protecting the safety of the banks. we started with the provision given to us by congress, we worked to try to determine where that was over-inclusive and in some instances, under-inclusive. we came up with a tailored definition. comments are going to be important to us in refining this so we come up with a meaningful definition that does not create tests and the polls, but is not over-inclusive. -- create gas and loopholes, but is not over-inclusive.

we thought that was an area there should be covered. we have gotten a lot of push back. we will be reviewing those comments carefully. >> i was relieved to see a joint venture between a banking entity and operating company would be permitted to read to my knowledge, the term operating company remained and -- would be permitted. to my knowledge, the term operating company remains undefined. could you comment on what is meant by operating company? >> that is an example where we thought the statute was over- inclusive. we saw to create exemptions for plant ventures -- sought to create exemptions for joint ventures. some thought we did not make those broad enough. >> one final thing. i noted that the covered funds

that it originated on loans on a long-term basis were not exempted. would you agree that credit funds allow the banking system to share credit risk with investors? >> i do not have a good answer on that. we will look at that carefully. all of these issues, this is complex and technical. that is why the comments will be valuable to us as well as inputs from our colleagues. >> thank you. >> thank you, mr. chairman. thank you to all the witnesses. i have a broad concern with the notion of regulation. the general concern is that in trying to deal with too big to fail in this way, we are going to end up in bridging too big -- up encouraging too big to fail.

as an example, the two biggest too big to fail banks pay less than their rivals, has that factor been examined in terms of what will be the impact of designating these non-banks as systemically important in the market? is there going to be the consequence that some of them gain advantage? has that been examined in a rigorous weight? >> you are addressing me? >> i would love your reaction. >> with respect to too big to fail, it is not a bindery exercise. one does not go from being too

big to fail one day to not too big to fail the next day. what you have heard is a process is in place to try to change in a real way that perception of too big to fail among important institutions in the united states. that happens through the kinds of capital standards i was describing earlier. secondly, it happens through making market discipline real. when the fdic is able to develop a credible liquidation authority, what you begin to see are outsiders, including britain's agencies, saying there is not the level of support -- icluding ratings agencies, saying there is not the level of

support there was earlier. they have said this is not about the condition of the bank, it is how much we see -- think the government would spend. we look at market indicators to show us to what degree market discipline is becoming a reality for these firms. >> secretary. >> i would add this thought to the governor's, nobody is lining up to be bette -- designated. those who might be designated are lining up -- and pleased with the prospect. it comes with -- unpleased with the prospect. it ties into what the governor was sang with how we think about the ultimate implication.

more buffers, more standards. i do not think being designated is something that people see as an advantage. it will come with a more onerous set of requirements. >> thank you. a completely separate topic, chairman shapiro, the stanford case has been very important to me because of the number of louisiana of victims. a lot of folks are affected. the sec did take action in june. i thank you for that. it was very long in coming, conducted before your -- going back to before your tenure. you have been very engaged since then to get specific to do the

right thing and act. we have had many conversations about it. i also thank you for that. i am sincere but both of those things. having said that, this is dragging on, six months after your concrete action. i would just encourage publicly, the same way i have encouraged you privately, that i think the sec needs to take action again before the end of the year in a positive way. i am afraid that is going to mean suing. it seems to me that is going to be what is required based on my information and conversations. i hope there could be an of the more positive and immediate outcome. bottom-line, -- i hope there could be another more positive and immediate outcome. bottom line, i urge you to take the next step before the end of

the year. >> i share your concern and that we not take longer. that we try to get the best possible results for the victims. that is what we are working hard on. the commission is equally engaged in getting to resolution as quickly as we can. >> thank you. >> senator shelby has some quick questions. >> thank you. the sec, chairman shapiro, you opinion -- your tenure has been marked by failures. it appears in court, like the recent settlement decision. rulemaking barriers like the proxy -- failures like the proxy access rule.

management failures like the general counsel's involvement in the madoff case. and the continued controls identified by the gao. as head of the sec, the you take responsibility for any of these failures -- do you take responsibility for any of these failures? >> let me say that the sec had no material witnesses in its internal controls. for the first time in a long time. the agency has gone through many administration. we could both material weaknesses this year. i am cut of that and the staff work. the agency has had since the -- i am proud of that and the staff work. the agency has had some stumbles. you ignore the unbelievable amount of great work that has

gone on in the last three years, including the fact that we had a record year in enforcement last year. more rulemaking completed, more rulemaking completed through unanimous votes by the commission. we have worked hard to remedy many issues that had been of longstanding concern at the agency. i do take responsibility. i am proud of this agency's record. >> in your opening statement -- it gave the impression that non- bank lenders are unregulated. you know that is not true. explain to the american people how these lenders are currently regulated at the stake lovell and by the trade commission. >> i would say they are unregulated, depending on the

state and what kind of non-bank financial firm it is. i would say that what we have now is no federal regulator who is focused on the non-banking financial sector with respect to consumer protection. that leaves and unevenness. >> on behalf of the administration, are you seriously interested in talking to the republican leadership about how we can move forward on the consumer protection? we have submitted three recommendations to you, one of which he brought up, dealing with the treasury's initial recommendation that this consumer agency be accountable, have a board, and so forth.

are you interested in trying to negotiate with us on this? let us move forward where we can regulate these non-banks? >> we are interested in the senate considering -- that would provide checks and balances. it has got oversight by this congress, the gao, independent audits, its rules are subject to coordination with the regulators to my left. it can be overturned. in the end, con was determined -- congress determined the right structure for this entity. >> one must question. -- last question. to go back to the chairman.

you were involved in crafting the dodd-frank legislation. you crafted its statutory language. you said at the table during the agriculture committee marked -u. since the passage of dodd-frank, you have testified against changes and had been to europe many times. you will be meeting with foreign regulators on thursday. chairman, do you not think that if you had spent less time protecting your political turf and more time protecting customers and overseeing the it is lessmf global, likely they would be where they are today? >> i think it is about

protecting the american public. it is what we do every day. prior to dodd-frank and after dodd-frank. it is about insuring that uses and their customers get the benefit of these markets, locked in a price, and do what they do well. we rely on self regulatory organizations. we are only 10% larger than we were in the 1990's. >> making the larger does not make it better, it does it? >> we agree on that. we have to be more efficient. use the collaborative project with other urbanization, having mutual recognition -- with other organizations, have the mutual recognition. the hard-working staff is there

and i do take responsibilities for those things that do well and those things that do poorly. i do take responsibility and this job seriously. >> do you believe the cftc has failed the american people as far as mf global is concerned? >> let me answer it more generally. >> answer it specifically. >> when our legal system says to segregate funds, it means to said it funds. customers need to be able to rely on that -- it means to segregate fund. customers need to be able to rely on that every day. that is what our laws say. >> thank you. >> thank you all for your testimony. the senate will take another significant vote to ensure that

consumers have strong protections that they want, need, and deserve. i urge my colleagues to not let businesses trump the needs of consumers. mr. corbeil -- cordray is well qualified and deserves the vote. thank you all the hard work. -- for your hard work. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> a dollar an hour for your labor, have no health care, have no in by an adult controls, no pollution controls, and -- have no environmental controls, no pollution controls, and no environment. >> ross perot spoke out about trade issues during the 1992 presidential debate. he made two attempts for the presidency, the first time getting over 19 million votes, within any third-party candidates in history. though he lost, he has had a lasting influence. ofis the last psubject

"the contenders." >> december 7, 1941, a date which will live in infamy. >> this sunday, put 24 hours, american history tv looks at the japanese attack on pearl harbor, including the 75th anniversary -- the 70th anniversary memorial ceremony. live call-in programs at noon, at two o'clock, and 4:00. drug the day, first-person account. this week because of national -- throughout the day, first-person account. sunday ons coverage, c-span 3.

>> why could the congress as a matter of its appropriation fund the cameras in the united states supreme court with the mandate that they be installed? >> they could have a provision to fund them. the idea of whether they could make it if they can be used -- that is the difference. it is all but carolina-wrong. it is difficult to know ---- it is all about line-drawing. >> find this hearing on line at the c-span video library. you can learn more on our special web page. see articles and editorials from across the country. to c- also find a link span's youtube playlist.

>> president obama spoke to reporters at the white house today about his nominee to head the consumer financial protection bureau. this was after the nomination was blocked, when 45 senators voted against holding a confirmation vote. this is 25 minutes. >> good morning, everybody. a couple of days ago, i said we were in a make-or-break moment when it comes to america's middle-class. we are in a country where everyone stands for themselves or we create a country where everybody does their fair share, everybody has a fair chance, and we ensure that there is fair play out there. to ensure fair play, one of the things i talked about was the importance of making sure we implement financial reform, wall street reform, that was passed last year. the key component of that was to make sure we have a consumer

watchdog in place who can police what mortgage brokers and pay-day lenders and other non- financial entities are able to do when it comes to consumers. this is a big deal. one in five people used these kinds of mechanisms to finance everything from buying a house to cash in their checks. and we passed a law last year that said we need this consumer watchdog in place to make sure that people are not taken advantage of. we have nominated somebody, richard coudrey, who everybody says is qualified. the majority of the attorney general's, republican and democrat from across the country, have said that this is somebody who can do the job with integrity, who has a tradition of being a bipartisan

individual who looks out for the public interest, and is ready to go. and he actually helped set up the consumer finance protection board. this morning, senate republicans blocked his nomination. refusing to let the senate even go forward with an up or down vote. this makes absolutely no sense. consumers across the country understand the part of the reason we got into the financial mess we did was because regulators were not doing their jobs. people were not paying attention of what was happening in the housing market. people were not the intention to who was being advantage of. there were folks making a lot of money taking advantage of american consumers. this individual's job is to make sure that individual consumers are protected. everybody from seniors to young

people who are looking for student loans to members of our armed services who are probably more vulnerable than just about anybody when it comes to unscrupulous financial practices. there is no reason why mr. courdrey should not be confirmed by the senate and be doing his job right away in order to carry out his mandate and his mission. i just want to send a message to the senate. we are not giving up on this. we will keep going at it. we will not allow politics as usual on capitol hill to stand in the way of american consumers being protected by unscrupulous financial operators. we will keep pushing on this issue. the second thing i want to make clear is that, with respect to the payroll tax, you have all seen our countdown clock behind us. this is about making sure that

everybody is doing their fair share and the middle class does not see their taxes go up in 23 days. we heard recently some informations -- some intimations from senate majority leaders and from the speaker of the house that they think we should do a payroll tax, but the question is what price will they extract from the president in order to get it done. i want to make clear that this is not -- they should not extend -- this is not about me. they should not extend the payroll tax cut for me. this is 63 million people who will see their taxes go up in 23 days if congress does not act. this is for 5 million individuals who are out there looking for a job and cannot find a job right now in a tough

economy who could end up not being able to pay their bills or keep their house if congress does not act. rather than try to figure out what they can extract politically from in order to get this thing done, what they need to do is be focused of what is good for the economy, which is good for jobs, and what is good for the american people. i made very clear that i do not expect congress to go home unless the payroll tax cut is extended and unless unemployment insurance is extended. it would be wrong for families and it would be also wrong for the economy as a whole. with that, i will take a couple questions. >> thank you, mr. president. let me ask you about a couple of important issues in the news. republican candidates have taken aim at your approach at foreign policy, particularly is real, and fuji particularly israel -- particularly israel.

do you think that politics trump's science in the case of plenty. >> ask osama bin laden and the 22 out of 30 al qaeda leaders who have been taken out of the field if i engage in appeasement or whoever is left out there. ask them about that. with respect to plan b, i did not get involved in the process. this was a decision made by kathleen sebelius, the secretary of hhs. i will say this, as the father of two daughters. i think it is important for us to make sure we apply some common sense to various rules

when it comes to over-the- counter medicine. as i understand it, the reason kathleen made this decision was she could not be confident that a 10-year-old or an 11-year-old going into a drug store should be able alongside bubblegum or batteries be able to buy a medication that potentially, if not used properly, could have a dangerous effect. i think most parents would feel the same way. the expectation here is that it is important to understand that, for women, for those over 17, this continues to be something that you can go in and purchase from a drug store.

it has been deemed safe by the fda. nobody is challenging that. when it comes to 12-year-olds 413-year-olds -- or 13-year- olds can we be confident that they can use plan be properly? her judgment was that there was not enough evidence that this potentially could be used improperly. >> do you support the decision? >> i do. >> the recess appointment of richard courdrey on the table? do you think that european leaders are stepping up in the way you have encouraged them to to clear up the debt crisis? >> i will not take any options off the table when it comes to getting richard courdrey in.

this is a law that was passed by congress that i signed into law that is designed solely to protect american consumers. i do not think there's any american out there who thinks that the reason we got into this big financial mess that we did was because of too much regulation on wall street or the financial services industry. i take it back. i am sure there are some folks in the financial-services industry to make that argument, but i am not sure that they make it with a straight face. the sticky very specific example. all the families that have lost their home after having paid their mortgage over and over again because they were told that they could afford the sloan they did not understand all the documentation -- they could afford this long, they did not understand all the documentation and did not know

they could make up all of these payments. now they are on the street because nobody was making sure that there was fair play and fair dealing in the mortgage industry. why would we not want to have somebody just to make sure that people are being treated fairly? especially when not only is that family affected but our whole economy? we have the congress for now, republicans in congress right now, who seem to have entirely forgotten how we got into this mess. and part of the reason was because we did not empower our regulators to make sure that they were ensuring fair play. that is what the consumer

finance board is supposed to do. we have general petraeus who has been working to make sure that our armed services personnel are not taken advantage of. they get transferred to a base. the next thing they know, they are taking out loans that they think are a good deal and it turns out that they are paying 100%, 150%, 200% interest rates. why do we not want to have someone in place to make sure that does not happen? it does not make any sense. the bottom line is we will look at all of our options. my expectation is that the republicans who fought this nomination will come to their senses. i know that some will debate and argue that we just want to make some modifications in the

law. they are free to introduce a bill and get that passed. but part of what has happened over on capitol hill is not just on this issue but on every issue -- they will hold up nominations of well qualified judges who do-vote. i have -- to do not get a vote. i have assistant secretaries who do not get in listed just so they can reverse a law that has already been passed. that is what has the american people so frustrated. they do not feel like this thing is on the level. on the european debt crisis, i am obviously very concerned about what is happening in europe. i have expressed those concerns repeatedly to president

sarkozy's and chancellor merkel and all the key leaders involved. they now recognize the urgency of doing something serious and bold. the question is whether they can muster the political will to get it done. europe is wealthy enough that there is no reason why they cannot solve this problem. it is not as if we are talking about some impoverished country that does not have any resources and is being buffeted by the world markets and they need to come hat in hand and get help. this is europe with some of the wealthiest countries on earth, collectively one of the largest markets, if not the largest. if they muster the political

will, they have the capacity to settle markets down, make sure that they are acting responsibly, and that governments like italy are able to finance their debt. i think that chancellor merkel is making some progress with other european leaders in trying to move to a fiscal compact where everybody is playing by the same rules and nobody is acting irresponsibly. i think that is all for the good. but there is a short-term crisis that needs to be resolved. make sure that the markets have confidence and that your stands behind the euro. we will do everything we can to push them in that direction on this because it has a huge impact on what happens here in the united states. they are our largest trading partner. we see some positive signs in our economy. but if we see europe tank, that obviously could have a big impact on our ability to

generate the jobs that we need here in united states. i will answer one last question. kristin. >> have you called on congress not to leave until they settle this issue of the payroll tax cuts? will you postpone your vacation until these matters are resolved? are you intentionally trying to ramp up the pressure on iran? are you considering some other options? >> no options off the table means i am considering all options. [laughter] >> can you tell us exactly what those options might be? >> no. but what i can say with respect to iran, it is important to remember, particularly given the political noise out there, but this administration has

systematically imposed the toughest sanctions on iran ever. when we came into office, the world was divided. iran was unified and moving aggressively. on its own agenda. today, iran is isolated and the world is unified and apply -- in applying the toughest sanctions affecting inside iran. iran understands that they have a choice. they can break that isolation by behaving responsibly and forswearing the development of nuclear weapons, which would still allow them to pursue peaceful nuclear power like

every other country that is a member of the non-proliferation treaty, or they can continue to operate in a fashion that isolates them from the entire world. if they are pursuing nuclear weapons, then i have said very clearly that that is contrary to the national security interest to the united states, contrary to the national security interest of our allies, including israel, and we will work with the world community to prevent that. with respect to my vacation, i would not ask anybody to do something i am not willing to do myself. i know some of you may have been looking forward to a little sun. but the bottom line is that we will stay here as long as it takes to make sure that the

american people's taxes do not go on january 1, to make sure that folks who desperately need unemployment insurance get that help. and there's absolutely no excuse for us not to get it done. keep in mind on the payroll tax cut, this is something that democrats and republicans agreed to last year with little fanfare. it was good for the economy. and independent economists estimate that, for us to not extend them right now, to not extend the payroll tax cuts and not extend the unemployment insurance, it would have a significant impact on our economy. right at the time when we should be growing our economy. when i hear of the speaker or the senate republican leader

wanting to bicker, wanting to see what they can extract from's in order to get this done, my response to them is just do the right thing. focus on the american people. focus on the economy right now. i know the suggestion right now is that somehow this keystone issue will create jobs. that is being determined by the state department right now. and there is a process. occurreds what i know however many jobs may be generated by the keystone pipeline, there will be a lot fewer than the jobs created by extending the payroll tax cuts and the unemployment insurance. get it done. if not, maybe we will have a white christmas here in washington. i look forward to spending a lot of time with you guys. [laughter] between now and the new year.

thank you, guys. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> and up next, attorney general eric holder addresses criticism of "fast and furious." then it is "washington journal." later, the center for american process looks at how the obama administration handles scandals. on tomorrow's "washington journal," we will discuss the consumer financial protection bureau. increasing number of independent voters, it will talk about the report's findings. and a look at the nation's infrastructure with patricia

whhu and john horsley. "washington journal" begins live at 7:00 a.m. eastern on c-span. >> pay a dollar now for your labor, have no health care, have no environmental controls, and no retirement and you deny care about anything than making many. there will be a loud sucking sound going south. >> ross perot talked-about trade issues during the 1992 presidential debate. he made two attempts for the presidency, the first time getting more than 19 million votes, more popular votes than any of a third-party candidate in american history. although he lost, he had a lasting influence on american politics. the contenders live at 8:00 p.m. eastern. to see all the programs from

our series, go to c- span.org/thecontenders. there is much more to the newly designed c-span.org. more video, making it easy for you to watch today's event. war features, our online scandal has a three network left -- more features, our online scandal has a three-network layette. for access to our most popular programs. -- more access to our most popular programs. more availability. see where a three c-span networks are available across the country. and for gift-giving ideas, click on c-span's products. at the all new c-span.org. >> on capitol hill, eric holder

addressed criticism of the "fast and furious" program. it allowed hundreds of guns to enter mexico and come into the possession of drug cartels. the attorney general was questioned about the program. this is just over four hours. >> the judiciary committee will come to order. i am going to recognize myself for an opening statement, then the ranking manner -- the ranking member and the gentleman from california, then the gentleman from virginia, mr. scott. we will proceed to hearing from the attorney general. attorney general eric holder appear before the house judiciary committee last may, and we appreciate his

willingness to appear today to address many issues, including questions about his previous testimony. while i am pleased to welcome back attorney general holder, i am disappointed in the department's repeated refusal to cooperate with this committee's oversight request. inconsistent statements from department officials about who knew what and when have only raised more concerns. i am also disappointed in how the department has responded to my oversight request regarding justice cadence involvement in health care legislation and related litigation wallace she served as united states solicitor general. despite claims from obama administration officials that the then solicitor general kaydin was off from discussions

regarding the health care law, recently released e-mails indicate there may be more to the story. on march 21, 2010, an e-mail from the deputy solicitor general boarded to solicitor general taking contain information about a meeting at the white house on the health care law and asked, "i think you should go -- no, i will, regardless, but this is litigation of singular importance. solicitor general kaydin responded back asking for his phone number. we also know that she personally supported the legislation's passage. in a march 21 exchange discussing the health care legislation, ms. kaydin explains "i hear that have the votes come up larry, simply amazing." these e-mails revealed inconsistencies with the administration's claims that then solicitor general kagan was walled off. to clear up confusion, i wrote

to get additional documents and conduct staff interviews. it took nearly four months before the department sent a one page response that denied my request. the department did not assert any legal privilege over the requested information, but simply refused to comply with the request. that is not a sufficient answer. health care legislation was passed by the senate on december 24, 2009. on january 8, 2010, ms. kagan told the deputy solicitor general that she definitely like the office of the solicitor general to be involved in preparations to defend against challenges to the pending health care proposals. ms. kagan found out she was being considered for a potential supreme court vacancy on march 5, 2010. so the issue is how involved was chic in healthcare

discussions between january 8 and march 5? just as president nixon had an 18.5 minute gap, does ms. kagan have a two-month gap? the office of attorney general -- it was the duty of the then solicitor general kagan to participate in meetings and discussions regarding legal defense strategy for the president's health-care proposal. it would have been a surprising departure from her responsibilities for solicitor general taken not to advise the administration on health care bill. the law clearly states that justices must recused themselves if they participated as counsel, adviser, or material witness concerning the proceedings or expressed an opinion concerning the merits of a particular case while they worked in a government capacity. the public has a right to know

the extent of justice pagans involvement with the legislation -- justicekagan's involvement with the legislation. the nfl would not allow it and -- issue as part of the team that put the health care mandate into play, she should not officiate when it comes before the supreme court. if the department has nothing to hide, why not provide congress with the requested information? the continued refusal to cooperate with legitimate oversight inquiries only heightens concerns that she may, in fact, have a conflict of interest. obama has promised an open and transparent government. unfortunately, we often see a closed and secretive justice department. i know all members of the committee look forward to asking questions on these and other issues. i will now recognize the gentleman from michigan, mr. conyers.

>> thank you, and chairman smith. a hearty welcome not only to the attorney general of the united states, eric holder, but as well -- this is the most numerous number of police chiefs and department of justice officials that i have seen in this room at one time in quite awhile. all of them, but particularly to the detroit police chief who is here, i sent a special welcome. chairman smith, would it be appropriate that our colleague, a former member of the committee, adam schiff of california, said on the day is with us? >> we normally don't do that,

but in this -- we can have him sit up on the dais with us. we certainly welcome his presence of here. >> i thank you for that courtesy. adam, come on up. >> if he can find room. >> there are two parts to my comments this morning, members of the committee. the first deals with what are the problems underlying the reason for the hearing, and the second, more specifically, deals with a career and contributions of the attorney general of the united states.

i have the privilege of putting the solutions i would like you to consider out in my opening statement. we can go over the details ad nauseum if you would like, but i would refer everyone to the november rate, 2011 hearings in the united states senate committee on the judiciary, in which chairman pat leahy, with more than a dozen senators on that committee have plowed through this, and have been going over and over it for the last couple of days, but i think you want to have that as a basis for anybody that is

particularly interested. the problem of gun trafficking in the southwest is a serious problem, and i recommend to my judiciary committee colleagues, with whom this whole subject matter is the jurisdiction of this committee, that we commit to maintaining the new rule requiring the reporting of multiple sales of semi- automatic weapons and shotguns, rifles, by individuals in the southwest border states. there have been a number of programs that have dealt with this subject, but i think that is probably number one on my

recommended list. secondly, we must see to it that we confirm a director of alcohol, tobacco, and firearms. it has been operating under acting directors for the last 5.5 years. the senate has failed to act on the nominations, not only of the current president, but of president bush as well. so if we are going to criticize atf, i think we must work to revitalize it, not to tear it down, because it is too important a source of protection and a way of ending violence in this important part of our country.

last, we must enact some legislation to prohibit gun trafficking. the transfer of multiple guns, when we know they will be transferred to those who are legally prohibited from carrying a gun, or people who intend to use guns illegally, must be further prohibited by legislative and congressional action. i commend our new york colleague, carolyn maloney, who has sponsored a very good idea in this regard. so i conclude, mr. chairman and members, by telling you i have never encountered an attorney

general more dedicated and more professionally effective than the current occupant of that chair, eric holder, who has achieved impressive results across the full range of his mission, especially what has happened in the civil rights division, and i think the questions today here are appropriate. i think the hearing is fair. i think we have a chairman that will make sure we proceed in a manner that will make us all proud that we attended and participated in this hearing today. but we also know that letting

guns rolm around this country is something that all of us have a great responsibility to make sure that that is diminished or comes to an end as soon as possible. thank you, mr. chairman, for this opportunity. >> thank you, mr. conyers, for those comments. the gentleman from california, chairman of the oversight and government reform committee is recognized for an opening statement. >> i would first like to ask unanimous consent that the following document be placed in the record. i thank you for holding this hearing. we are beginning the process of getting to the bottom of fast

and furious. i take exception to my colleague on the other side of the aisle, mr. conyers. what is too important is the second amendment, the idea that regulations without any approval of congress have been added to create databases in the southwestern states, including california, arizona, new mexico, clearly shows that in fact, this administration is more interested in building databases, more interested in talking about gun control that actually controlling the drugs and guns that they had control over. whether it is money-laundering or in fact is the flow of guns, knowingly. just one individual was allowed to buy under the auspices of the justice department, 700 weapons, knowing exactly who they were going to before they ever went. our discovery has shown that

this was not an accident, and that this project was failed and plot from the beginning. it is not just atf, not just the eea. in fact, it includes the departure of homeland security in a task gordon of did not respect the safeguards of the american people. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

. .

-- back to fast and furious. and then we'll be able to connect those trace weapons to mexico. but to date i have not received that information. >> thank you. i'd like to shift a little bit. i know the last time you were before this committee was may 3, as best i can recall. you've answered most of the questions in writing we had as of october of this year. so i'd like to narrow in on that a little bit. because of the pick ford farms issue, you cited the authority for justice and presumably usda to negotiate with black farmers that the authority in the farm bill, and you cite the sections of the bill. and i will just tell you in this committee, i had the

conversation with the committee on the way to the floor to vote for this, it will open up the door to $1.3 billion in additional pick ford claims. his response to me was no, that $100 million capped the settling on all outstanding pick ford claims. i had the secretary of agriculture cite the same part you cited. and i have it before me and would like to have it introduceded into record but it said should not exceed $100 million and shab construed to its purpose of giving the merits of the pick ford claim previously denied that which was the language that opened up pick ford two. -- all outstanding pick

flagstick ford claims and we have a claim going back to congress for additional $1.15 billion and i have no letters to tell me how many claims you have and what the attorney's fees were from pick flagstick ford one. >> we'll get you that information. >> and anything that's current. >> whatever information we have with regard to the questions you have asked, i will make sure we get those answered passed along to you. >> gentlemen continues to be recognized for final question and then given time to respond. >> thank you, mr. chairman. i would just ask that we know there were negotiations according to your letter, that took place between the department of justice, usda and representist of the black

farmers which sounts to me in their response to be multiple organizations and multiple entities. so i would ask you, you personally had -- with entities such as pick flagstick ford and this that i think goes beyond the $100 million that was authorized. >> i certainly talked this over with he responsible for the case tom per reallyy. there have been a variety of organizations and individuals that were engaged in -- we were trying to work out a settlement short of litigation so potential plaintiffs were part of this conversation to reach this agreement. >> thank you, mr. king? >> gentleman from tennessee, you are recognized. >> thank you.

i have an understand of this issue, some. but it's a great tragedy this agent was killed, and it will be a year next week, as i understand it. and it was a fast and furious weapon that he was killed by, as i understand it. is there any great difficulty in metroplex dough for folks who are part of these drug cartels or folks that get guns? are guns rather plentiful in mexico in general? >> i think we can safely say that they are. readyly available. and part of the problem with their ready veil billty is the fact that so many guns flow from the united states to mexico. 64,000 weapons traced to the united states were found in mexico. those were only the ones that were traced.

there are undoubtedly many more that have not been traced. >> so is up decision as i assume the individuals that committed this act, this violent act and it resulted in the death of the agent, they would have probably had weapons anyway? >> you can never suppose. but it's always hard to determine. but i don't think that's an illogical conclusion that the people who were involved in that senseless, tragic, awful murder could have had access to -- >> i kind of remember the president of mexico saying that most of the guns that come there come from the united states and most of the marketing from the from mexico comes from the united states, too. so i assume we supply the guns

and the market for marijuana. we could drive the market up, i assume. but -- >> the justice department works with our partners at d.h.s. to try to coum come up with ways in which we inspect cars that are going from the united states to mexico. we have teams of ooths who work together to try to determine ways in which we can stop the flow of guns. we use a variety of intelligence flow methods. but i can't really get into whether cartels are trying to bring into mexico huge stashes of guns. but we also need to use things on this side of the border. and that's a reason why the long gun rule is so important. if we see substantial numbers of these long guns being purchased, it gives the a.t.f.

real-time leads to find out if in fact they are legitimate purchases or purchases by people intending to have those guns shipped to mexico. >> coming home, which is where i think the real issues are, not to say that they are not important about the border and all. but in our cities we have a lot of youth violence and gangs, and i want to commevend you on having a -- on youth violence and can you give the committee information on what you've done to help fight youth violence and gang activities? >> well, the five police thiefs behind me from charlotte, philadelphia, and boston, have all embraced, and we've learned from them, the way in which we deal with this issue of youth violence. it's not simple a question of doing what is traditional law enforcement. we have to come up with ways in which we deal with underlying

problems which that affect our young people. our police chief has been forward-leaning and we have tried deal with these underlying causes and particularly important to have our lead inertia law enforcement identify with and -- and in addition to all the great things they do on the enforcement side, what you are demoing memphis is an example of the kinds of things we are trying to do in the obama administration. >> i would like to comment that the gentleman from philadelphia recognized you and i knew you from when you testified before this committee on the bill to allow folks who had gun permits to travel from state-to-state based on federal edid as opposed to state and at the time i was on the committee that ended up passing and

because of your testimony, i changed my position and voted against the bill. y0ur testimony was effective, and it's nice to stee see you again, and i thank you for that. i yield back the remainder of my time to you. >> thank you. >> >> thank you, mr. chairman. and thank you attorney general for being here. we do appreciate the law enforcement being here. we have had multiple of our democratic friends point out their presence, and we do appreciate the job you do. and everybody needs friends, and i'm glad you're supporting the attorney general. i thought about inviting the law enforcement furious over fast and furious, but there's not room in this building, so i didn't do so, but have you read the opinion from the fifth circuit court of appeals on the holy land trials that came out

yesterday? >> i had not seen that. >> well, we know from prior documentation that there's been a relationship with care and the justice department. is there any ongoing relationship or reach-out still at this time to care? >> well, we certainly reach out to a variety of muslim groups. >> i'm talking specifically about care. >> i'm getting there. but i don't think that we have any particular outreach efforts that the point with care. >> you know there was a partnership between the f.b.i. and care, and in 2009 it was temporarily suspended. i didn't know if the there was still informal outreach to care. because we do know from this opinion yesterday and we know from the prior fifth circuit opinion when care and others tried to have their name struck as named co-conspirators that

were unsuccessful of the circuit basically saying there's a case there to prove and then as we know -- you decided not to pursue those or your department did, as we talked about before. a decision yesterday, the court said that the palestine committee created not only a hole in the foundation but a number of other is lap i can leaders in the u.s. and subsequently created care, council on islamic and american realizes, we know there was massive documents, massive number of documents being furnished to the defendants in that case. a lot of documents. but i would like to ask that we get copies of the documents that were provided to the five

defendants who are now convicted and affirmed by the fifth circuit with the justice department make those documents available? >> i i would much rather know which documents you are talking about if they were provided in litigation and if we can, i'm sure we w0u8d. i don't know if there are documents provided in discovery that we don't have the ability. >> they have been furnished by your department to the defendants in the case. those defendants have now been found guilty of providing support to terrorism. there's no question in my opinion mind that those documents are now in the possession of terrorists. and so we have had trouble of getting production of all the documents that we have desired and requested. and i didn't think there should be any problem with privilege or anything of that nature citizens defendants are convicted of supporting

defendants. and i just felt like it would be a good idea for congress to have them. >> under the -- >> i hope we will have as good a standing as the terror ills supporters that have been convicted. >> i'm familiar the judge has a massive litigation and m.d.l., about 100 of these are -- letters. but i want to ask you since you said before in your department you asked the -- to investigate this fast and furious matter and requested it be sent to law enforcement prohibiting such tactics, and in this stack is not an email or letter or transcript of the speech, nothing from you. i would ask where they are? if you did those things in february or march, where are they? and not only that, you testified may 3 in here that

you had just learned about fast and furious weeks before and now you say actually in february or march you made these orders when was the first time after may 3, that you began to suspect that you may have actually taken actions in this case? >> werks i actually took action way before may 3. february 8. >> well, unless you're misrespecting the facts of may3, then at some point you begin to wonder, gee, i believe i issued some orders in this matter. we have not seen the orders. all we have are the transcripts here. we know you're capable of mistakes as you verified. where are the emails? leters? orders from february or march? >> well, there are a couple of things going on here.

i happy, i didn't play any role in the drafting of the february 4 letter. >> so you are -- >> the time has expired. you will be allowed to answer your last question. >> what i said on -- about may 3. i said when i first learned about fast and furious. i learned about fast and furious when this became a matter of controversy, i think some time at the beginning of the year. in the middle of february it would have been about 10-12 weeks before i said a few weeks. i could have said a couple months. maybe i should have been more precise, but a few weeks from my perspective was accurate then and still seems to be accurate now. 10-12 weeks i think is encompassed in that description. >> i ask that he be allowed to actually tans question of whether or not he is the one who actually ordered the inspector general to investigate that and if so, where are the documents on that? that was my question. >> and has the a.g. answered or responded?

>> i i was the one who ordered and ordered the information. yopping i did that in any written form. i think that was transmitted from me either through my chief of staff department attorney general to i.g. there might be a writing in that regard, but i don't think i signed off on anything actually -- ive a good relationship with the inspector general. the inspector general's office has looked at this whole question of gun trafficking before, and it seemed logical to ask them to expand their inquiry and look into fast and furious. as i said, i don't think there's any writing from me. but i can check. i don't think there's any writing for me with regard that would exist. >> we would certainly ask for any copy of things like this. >> thank you mr. chairman. and there's been a lot of discussion on a lot of topics today.

i noticed that the chairman took the opportunity to discuss health care and since we don't get you in front of you that often, i'm going to raise an issue that's not fast and furious. that's the second amendment. there's an amendment that comes before that, and that's the first amendment, and that's the subject of my inquiry. as you know for over a year, ice and the department of justice have been ceasing domain names on dozens of websites. once a particular domain name was seized, the jazz 1.com. a very popular blog that was dedicated to hip-hop music. just today the news is that -- it was detailed that the seeds your which i thought raised troubling questions at the time about the government's conduct in the case really creates due process and free speech as they

my to research. the owner filed a request for the government to return it to them. and under the law, the government has 09 days to initiate a full forif itture proceeding against the domain or it has to return the property. however in this case the deadline passed with no action and when the website's lawyer asked from your lawyers he was told the government filed a an extension under seal without notice to them. they had no notice or opportunity to respond and according to the news reports, when the lawyer asked for any sort of proof that the extension actually existed, your department's lawyers reportedly said, you -- he would have to trust them. >> then they received two additional letters and they refused to release the court

order, according to the press report. then as of today, the last extension was filed and the government finally admitted it did not have proximate cause for the forif itture in the domain name was returned to the website owners today. in short, identical to the first amendment protection to a newspaper or a magazine, they have the same first amendment rights, were shut down for an entire year by our government with no due process, no contested hearing. no written orders. and i just think, if these reports are true, that's just an outrageous violation of the first amendment. so my question is. i assume that you believe that the first amendment does allow and athrow government to go in and shut down the press for a year prior to your

>> i guess this is question, do you think that's consistent with the third, fourth and fifth amendments to the constitution, and if the facts -- i'll give you the article i read today -- if the facts are as recorded in this article, what will you do to make sure that the wrongdoers in your department are no longer in your department? i mean, there has to be a sanction for someone to do this . if we took a sign and locked the door and said closed and refused to deal with them for a year, people would be outraged but since it's a blog and a hip-hop artist. seems to me the hip-hop people do have the same -- >> i'm not familiar with the reason why the domain name was

seized. tore facts of his case. i will certainly look into that, and we'll get back to you with whatever information we can. you're right. what the subject matter is of this particular blog is obviously entitled to first amendment protection. there may be other reasons why, i don't know. but i can tell you my daughters are watching this hearing having heard from the hip-hop news story. my daughters will be on me about this. >> i wonder if you could give a commitment that the facts as we have outlined that you will take appropriate action in your department to make sure those who violated the law within the d.o.j. are dealt with and it becomes a well-known sanctionible type of activity in your department.

>>ly certainly look at it, and i certainly hope there's an acceptable reason why these actions occurred if they have been accurately described and to the extent someone's acted inappropriately in the department, i'll make sure they are held accountable. >> the gentleman from arizona, mr. franks is recognized. >> well, thank you mr. chairman. thank you general for being here. i guess to lay the groundwork here, you understand that perhaps reason this issue has gotten so much attention is that in the simplicity of the overall project here, it appears that the american government, american -- department of justice, through their department and subsidiaries, have orchestrated a program to get american gun dealers to sell guns to straw

buyers, to then run those guns to mexico, and give them to drug cartels. around 2,000 high-powered weapons. with the understanding that that takes grave risk for innocent human life. i mean, at this point we know that one of our own agents were killed and probably 150 or more mexican citizens were killed. now that's a pretty scary scenario by itself. but i think the thing that would really concern the american people is why this was all done. on the one hand, if it was something that was a sincere effort that went wrong or gross incompetence, that's one thing, but mr. icea mentioned some internal emails that i think were pretty significant. because if the american people learned the motivation for all this was to somehow make a case to deprive them of their rights

or further the department's or further regulate the gun rights within the united states, that would make them very angry, general. so let me just read a couple i mails again. i want to be clear on this. on july 14, 2010, the a.t.f. headquarters received an update on fast and furious, and the head of the a.t.f. phoenix office was emailed. quote bill can you see if these guns were purchased here and at some time? at the same time? we're seeking to stop the sale of multiple -- in other words they were trying to use this tragedy to build a case for these demand letters. >> well done yesterday bill in light three this case could be a strong supporting factor if we determine how many multiple

long gun sales occurred during this case. it seemed like they were trying to rely on the sales to justify his report. known as demand letter three. you've already testified that you hadn't read these emails, correct in the >> i'm sorry what? >> you already told mr. icea that you hadn't read these emails, is that right? >> that's correct. >> but then you then told him that it was out of context. and how would you have 19it was out of context if you hadn't read them? >> because he read part of the email to me and i was able to listen to that, and understanding what he said or read from the email and knowing what happened here, as i -- >> i'll accept that. but do you read -- i know you said you don't oftentimes read letters from your own staff. do you read major letters from the oversight -- duperronly

read those letters? >> i can certainly say over the past few months that everything senator icea or senator grassley has said, i have read. >> well on july 12, 2011 which was a letter they both sent to you, the emails i just read to you were attached to the letters. >> well, i might want have read the attachments. these things come in, and i read these things from congressman icea and senator grassley. i take seriously their -- >> it's hard for me to -- anyway, let me skip to ask you one more question here. mr. isa also asked if i had given all the pertinent emails here and noticed none of them had your name on them. none of them. and this probably is one of the most significant scandals facing your tenure over the justice department. and not one email, general, was

from you? not one of them? >> well, we have produced a really substantial stuff around the january 4, letter. but with regard to document thoose go dwhrooned from that time on, those materials have not produced them. >> so the answer to his question would have been no that you hadn't given him all the pertinent emails it's just very simple in my mivende that either if there are no emails from you that had been given to mr. isa, we're left with three options. either it's not that big a deal to you, which i know it is or you for some reason for particular reasons that you don't write emails, because you don't want for there to be a record or you just won't give us what we asked for.

>> well we have always produced materials and acted in a way with regard to all other email material in the way that all other attorneys general before me have. and on that basis, there are emailed materials that we have not and will not -- >> i understand. our time is up. i appreciate that. without insulting you, that's one of the first clear answers that you have agreed you haven't given the chairman all the pertinent emails and don't plan to. so for that i appreciate that. >> thank you mr. chairman. >> for those of you keeping score at home, one side is using this horrible screw up to justify a policy. the other side is using this horrible screw up to justify not funding a.t.f., not giving

the a.t.f. a -- continuing to make tracing guns difficult and making statistics difficult and for allowing continued extraordinarily lax policies for the violaters and purchases of straw weapons that will be used long, long after this hearing today, to purchase weapons and to endanger mexicans and americans and our dea agents. to congress it's nothing more than a moving violation. so mr. chairman now that i've got the score card up to date. let me congratulate you. i cannot forget i am from the area where congressmen -- i

want to commend your office for its work. i just wish we didn't give you toward that end, we did manage to get a bill out of this committee dealing with repair services, and i'd like your reaction on where we need to go on that. as you know, the supreme court struck down that act, many provisions of it, and they're a necessary tool. so given where we are in chicago, but across the country, where, in your mind, do we need to go to deal with official corruption? >> well, i thank you for the compliment. it's not something that i should be complimented for, but many women in the u.s. attorney's office in chicago deserve the credit. they've done a wonderful job, and they've got a great staff. i also appreciate the efforts that and you congressman sensenbrenner have -- the effort you have made in trying to help us deal with that

supreme court decision. the honest services provision in title 18 is a title tool for us as we try to fight official corruption cases. a number of cases over the years have been made on the basis of the use of that provision and the to extent that we can work with congress to have that provision formed in a way that it can withstand constitutional muster. that will help us. it will give us another tool in our arsenal against official corruption, which is a priority for this administration. >> and obviously the bill has not passed the full house and/or the senate to the extent that your agency can or will participate in making sure that we do this right, we'd like this one to stand up for some time, we'd certainly appreciate your help in that matter. >> we'd be glad to work with you in that regard. >> thank you. i yield back. >> we now recognize the

gentleman from texas for five minutes. >> thank you, mr. chairman. the way i see the fast and furious operation based on all the information that i've received is that the united states government, justice department, a.t.f., we're aware of a situation where guns could be bought in the united states, serious weapons, automatic, semiautomatic, sniper rifles, bought by purchasers who were observed by federal authorities , wanted to watch the guns go to mexico, go to the drug cartels, and see where they ended up. here's how it ended up. 2,000 weapons, based on the information that we've received from your department, 600 of those weapons are accounted for, the vast majority are not accounted for. we don't know what country they're in and who's got them. but this operation is serious

to me because people died with this ill-founded decision. we talk about the two americans , the two agents, one, brian terry in mexico, the two agents, but at least 200 mexican nationals died too because of the united states watching these weapons, knowing where they were going, and lose those weapons. mexican government had a hasn't said a whole lot about this, other than at least 200 mexican nationals. those mexican nationals that were murdered because of our watching this illegal conduct are just as important as the two americans that were murdered as well, and that's why this is a serious discussion. you're the attorney, you're a lawyer, former judge, prosecutor, you're the head guy in the united states when it comes to the justice department and law enforcement.

my understanding is you didn't really know about the operation . the memos, you might have gotten the memo, didn't read the memo, didn't read all the memo, not sure about that, but you're the person in charge of this, and believing that you are unaware of operation fast and furious requires, to coin a phrase, a will suspension of disbelief much it's hard for me to believe that you were unaware of this operation that went to mexico. my question is very simple -- who is the person in the united states government that made the decision of an operation fast and furious to facilitate the guns going to mexico? who is that one person? >> we don't know yet. >> so you don't know who was responsible for the conduct of these thousands of guns going to mexico? we don't know who that is? >> we know that the case was opened in the a.t.f. office in

phoenix a month or so before it was opened in the u.s. attorney's office in phoenix. we know that it was given status sometime after that. but we do not know as yet who the particular people, persons was to the extent it is a person, in either of those offices that said this is the way in which this operation, this flawed operation should be conducted. so we -- >> so we don't know the person who signed off. i know how the government works. everybody's got to sign off on something, especially something like this. but we don't know who that person is? >> with all due respect, i'd be surprised we're going to see a document that said you can let guns walk. i'd be surprised if we see something like. that >> would you agree that -- >> and i don't know. i don't know. >> we don't know? we don't know who was in charge of making that final, it's time to send the guns to the enemy of mexico, the drug dealers? that's phenomenal to me.

little a violation of international law to allow gun trafficking to go between two countries. do you agree with that? >> well, it would depend. >> people in one country are smuggling guns to another country. isn't that a violation of international law? >> well, i was going to say, if you look at operation wide receiver, if the governments agree that weapons can go from one country to another, i would not think that violates international law. >> if they agree? that's the key. did the mexican government agree to operation fast and furious? >> not the way in which it was -- not the way in which it was actually carried out, the way it turned out. >> would you agree this operation is reckless, was a reckless operation on the part of the united states? >> i mean, i think the way it was carried out -- i would certainly say it was flawed. yeah, i'd probably agree with that. it was done inappropriately and it had tragic consequences. as i said in my opening statement, it's going to continue to have tragic

consequences. >> more people are going to die probably. >> unfortunately, i think that's probably true. >> a person recklessly causes the death of another person, under many state law, including texas, where some of these guns were bought, it's manslaughter. it's a crime. it's my belief that if the united states government helped facilitate reckless homicide, reckless killing of other people, this is a serious matter. there may be people in our government, that if they help facilitate reckless conduct that caused the death of an individual in the united states or mexico by sending these guns down there, they should be held criminally responsible for that conduct. are you going as far as the attorney general to make sure that criminal violations were committed by anyone in our government that you're going to prosecute those people? >> if we find there were criminal violations connected

to the conduct of fast and furious, i will commit those -- we will take those findings seriously and that people will be prosecuted. now, when i said reckless before, i was talking about the way in which the operation itself was conducted. i don't want to cast too wide a net here and say that, on the basis of what we know now, that there's a basis to conclude that people connected to fast and furious, either the a.t.f. in phoenix or the u.s. attorney's office in phoenix would necessarily have the requisite state of mind or done things that would bring them under the imbit -- >> that's what i was saying. i was saying -- >> this submits further questions to the attorney general, have answers in writing.

>> mr. attorney general, before i begin with my questions, i'd like to thank you for the anti-crime accomplishments in my district of los angeles. earlier this year, the department took down organized crime groups that were involved in wide spread criminal conduct in los angeles, miami, and denver. these were violent and fraud-related crimes, including kidnapping and drug distribution and also in recent years, the department has gone after san a gabriel valley-linked gang related to ecstasy tablets. your office also engaged in the takedown of cocaine suppliers to some of the most violent street gangs in los angeles, so i thank you for all of those efforts. it has truly helped our area. and i'd also like to commend

future work your department's done in regards to voter rights. your office has handled 27 new cases this year and opened up 172 investigations in this area . we all know there's been a large number of unprecedented legislation suppressing voter rights, and i'm happy to hear that your office is vigilant about not letting that happen. can you provide some examples of what the department is doing to ensure that newly enacted state legislative efforts on voter identification are implemented in accordance with the voter, the voting rights act? >> well, we have a special role to play under the voting rights act, our civil rights division, which is ablely led by tom perez, has been very active in this regard, and to the extent that changes are made in covered jurisdictions, we reviewed those proposed changes and where we think something

runs afoul of the voting rights act, we note that and do not pass on them, where we think that they are consistent with the voting rights act, we approve them. we have changes in voting schemes. >> and what steps are being taken to ensure that jurisdiction and the public are aware of what is permissible and not permissible with these types of laws? >> we've tried to -- assistant attorney general perez has spent a lot of time on the road trying to educate people, especial until those areas covered by the voting rights act about -- and we've interacted with state officials as well to let them know about ways in which things can be changed, consistent with the voting rights act.

i'm going to talk about this at a speech next week on monday or tuesday. >> very good. well, i want to also thank you for something else, which is that there is an issue about offensive materials about muslims that was used in some f.b.i. training, and that i know in the senate judiciary meeting last month, you acknowledged that this has stopped. it was when the f.b.i. was conducting counterterrorism training, using materials that included inflammatory statements about islamic beliefs and offensive stereotypes about muslims. so, at that senate judiciary meeting, you acknowledged that it stopped, and i would like to know what the status is of the situation and the steps that have been taken or any investigation that's been opened up about the use of

these trainers and materials. >> well, the person who was responsible for the use -- for using that material is no longer going to be used by the f.b.i. we've also enhanced our efforts to make sure that we review all the materials that are used in the training of agents, lawyers, personnel within the department of justice to make sure that that kind of mistake doesn't happen again. this is something that the f.b.i. director, the heads of the other law enforcement agencies within the department, as well as i and the leadership in the department are committed to making sure it does not happen again. i mean, that was totally inappropriate, and it's a mistake that we will not allow to happen again. >> thank you. i yield back. >> thank you. the gentleman from utah is recognized. >> thank you. thank you, mr. attorney general, for being here. have you spoken to secretary napolitano about fast and furious? >> no.

>> have you spoke within secretary clinton about fast and furious? >> no. >> have you spoken to president obama about fast and furious? >> i don't think that i have. i see the president -- >> that's ok. if you haven't, you haven't. have you spoken to the president of mexico about fast and furious? >> no. >> have you spoken to the attorney general of mexico about fast and furious? >> i don't believe so. >> you have routinely argued you've been oblivious and disengaged in this operation, and i buy that to a large extent. >> i'm not sure i characterize -- >> put we have a dead border patrol agent. we have 2,000 missing guns. we have 200 deaths in mexico. we had dead government officials in mexico. we have a mexican helicopter with troops in it that shot, three of which are wounded back in may of this year. we have 50-plus members of congress calling for your resignation over this, and you've never spoken to any one of these people about this operation? >> well, first off, the notion that i am somehow oblivious to

this matter is totally belied by these inconvenient things called facts. >> you took five days to go to the caribbean. you didn't have 15 minutes to call secretary clinton, napolitano, talk to the president or your counterparts in mexico? >> understand something with regard to secretary napolitano. our agencies have been in constant touch with each other about this issue because we are engaged, both of us, in the prosecution of the killer -- >> so, if you were intimately involved and engaged in this, remember, agent terry was killed in december, mid-december, and then we had jaime who was killed in mexico, two officers shot, february 15. on february 16, you and secretary napolitano issued a press release that's titled, secretary napolitano and attorney general holder form a joint task force to assist mexico's investigation into yesterday's shooting of two ice agents in mexico.

at the very beginning of this press release, secretary of homeland security janet napolitano and u.s. attorney air holder met to discuss this issue. and how is it you say you never had any discussion about fast and furious? >> the press release that you talk about is not a fast and furious matter. yeah, understand something the way washington works here, ok? the reality is that when it comes to matters that are understand investigation -- >> but the death of jaime was highly likely -- it was highly likely that that came from fast and furious. in fact, from testimony that we took from one agent, and i'm going to read from this, from january 2011, "and there was a sense, like every other time, even with miss giffords shooting, there was a state of panic, oh, my god, let's hope this is not a weapon from that case, and the shooting down in mexico, i know that again that

state of pan that i can they had, like, please let this not come back." so the agents on the ground were so concerned that this is going to happen. you and secretary napolitano have a discussion, and there's no discussion about even the possibility of fast and furious? >> there is -- the meaningful conversations that happen between d.h.s. and d.o.j. happen at lower levels t. >> but when you and -- what did you and secretary napolitano talk about if you didn't talk about fast and furious and it's the day after jaime, and you were very quick to issue press releases. >> you're making an assumption that that is a fast and furious case. >> we didn't know at the time. you didn't know at the time. nobody knew at the time. isn't it a reasonable assumption to suggest that it may have been guns from fast and furious that happened, that caused that death? >> given the fact that over the last five years, 64,000 weapons have gone from the united states to mexico -- >> i have a hard time, mr. attorney general, with all due

respect, my time is short, twice the president of the united states has gone before the american people and said that you had nothing to do with this, you weren't involved, that you weren't engaged, yet you said you've never spoken to the president. how is it that he would know that you haven't been -- you weren't involved in this and he could make such a claim if you've even spoken to him about it? >> well, the president gets information from the justice department in a variety of ways. we interact with the white house counsel's office very frequently. i don't know exactly what the flow of information is within the white house, but he can find out about my involvement of matters without speaking directly to me. >> let me move on to -- you have access to obviously the emails of dennis burke. on wednesday, november 24, 2010, he sent an email, it said, "some of the weapons bought by these clowns in arizona have been directly traced to murders of elected officials in mexico by the cartels. how is it that you've never had a discussion with your

counterparts in mexico about this? in fact, in los angeles, a "los angeles times" article this year, "at no time did we know or were we made aware there might have been arms trafficking permitted n. no way would we have allowed it, because it's an attack on the safety of mexicans." it goes on in the article -- actually, the paragraph before, qutsdz u.s. officials have not withdrawn the operation, nor have they apologized. what is unacceptable is you and everybody in your organization know about this investigation, you don't have 15 minutes to pick up the phone, and we have still never talked to these people in order to solve this problem. because, as you say, it's going to go on for some time. >> we have taken steps, i have taken steps to solve this problem in that. i've ordered an examination of this to determine exactly what happened. i have issued directives that this should never happen again. we have put in place measures at a.t.f. so that this kind of thing won't happen again.

what todd jones has done with regard to the reforms he has put in place i think are going to be extremely effective. i've made personnel changes with regard to -- >> you haven't fired nobody. nobody's been fired. >> the gentleman's time has expired. does the gentleman want to respond to the last question? >> i was trying to say that i have made personnel changes with regard to the agencies that have been involved. these are initial determinations that i have made. it is not all that i am possibly going to do. there is an impatience here, and in some ways i understand it, but the reality is you have to do these things on the basis of evidence, on the basis of findings that are factually grounded. and when i'm in that position, i will take the appropriate action. but i want to assure and the american people that people will be held accountable for the mistakes that were made in fast and furious. >> mr. chairman, point of

inquiry -- >> thank you. recognize the gentleman from california. >> a point of inquiry -- do political appointees of the presidents serve at the pleasure of the president or the attorney general, or do they need to have to be fired for cause? >> that is not actually a parliament inquiry -- >> though it may be a legitimate question. the judiciary committee will recess until immediately after the series of votes. we expect that to be about 2:30.

>> the judiciary committee will come to order. before we resume our questioning, i'd like to welcome the newest member of the committee from the secretary district of colorado. the congressman was just appointed yesterday to fill a vacancy on the committee, and we are happy to welcome him back. he was on the committee for several years and is back on now. he also serves on the rules committee and the house democratic steering and policy

committee. and at our next meeting, we'll even go into more details about him, but we welcome him today and we'll be recognizing you immediately for questions. >> thank you so much, mr. chairman. i'd like to draw your attention, mr. attorney general, to the issues surrounding the regulation of medical marijuana. i wanted to first clarify, there's a memo dated october 19, 2009, from david ogden. i'm sure you're familiar with that memo. the contents is advisory to the states -- or still enforced, is that correct? >> yes. >> ok, thank you. and one of the issues that was later clarified in a memo by james cole is what we're talking about when we're talking about caregivers, who your memo instructs should not be an enforcement priority. one happens to have a definition of caregiver. it's further defined in our colorado statutes.

i wanted to see whether i can get your assurance that our definition of care giver in our state's constitution would be given some deference by the u.s. attorney general's office. >> i'm not familiar with the provision, but what we said in the memo, we still intend, which is that given the limited resources we have, and if there are states that have medical marijuana provisions, and if you take into account the cole memo, if, in fact, people are not using the policy decision that we have made to use marijuana in a way that's not consistent with the statute, we will not use our limited resources in that way. and so i don't know -- i assume that -- i just don't know about that provision. >> and again, in the case of colorado, we do have definitions of some of the terms in your documents in our constitution, and i would hope that this u.s. attorney general for the state would look at that. now, as you know, the department of justice recently

announced a crackdown in california. now, part of the issue there, it's my understanding, they did not have a functional state level regulatory authority. colorado does have an extensive state regulatory and licensing system for medical marijuana, and i'd like to ask whether our state regulation, our thoughtful state regulation passed a strong, bipartisan majority in both chambers of the legislature, provide any additional plecks to colorado -- protection to colorado from federal intervention. >> i'm not familiar with, it but i'd have to look at it. but again, our thought was that where a state has taken a position, and people are acting in conformity with the law, and again, given our limited resources, that would not be an enforcement priority for the justice department. >> thank you am i'm grateful for that clarification. one of the issues that many of the legal regulated medical marijuana shops in colorado have brought to my attention is

their inability to open bank accounts at most fdic institutions. that makes the industry harder for the state to track, to tax, to regulate, and, in fact, makes it prone to robberies because it becomes a cash business as well. is there any intention of the department of justice to prosecute bankers for doing business with license and regulated medical marijuana providers in the states? >> again, i would think that consistent with the notion that how we use our limited resources, again, if the bankers, the people seeking to make the deposits are acting in conformity with state law, that would not, again, be an enforcement issue for the department. >> with regards to internet piracy, the judiciary committee recently held hearings on sopa, stop online piracy act. i had many concerns with this bill, including the definition of infringement. as you know, there's a lot of content on the internet. in fact, as an example on

youtuba lone, there's 100 hours of video that's uploaded every minute. many of this, many of the videos that have been uploaded contain some type of rights infringement, with no intent for commercial gain. i ask substantial new powers be granted to the attorney general's office under sopa. what type of resources would the department of justice need to handle the hundreds of millions of prosecutions that would be necessary and indicated under sopa? >> well, you have to look at what powers we would be grand and then how we would use -- not every matter, though it might be a technical violation of a statute, is something that we are going to use our resources going against. if there's a youtube upload of something that is not intended for commercial use and we don't think there's any great harm, that's not the kind of thing we're going after. >> so gin the absence of tens or hundreds of billions of

dollars of resources to go after everybody, there would be selective enforcement from the attorney general's office? >> well, selective enforcement, a prosecutor can get a little nervous saying that phrase, but it would be an appropriate use of our resources, taking into account what the harm is and always with the thought that what we're trying to do is to protect the abuse of copyrighted material. >> i thank the gentleman, and just note with regard to the selective enforcement, there's not currently criteria in the bill, so that would be at the discretion of your office to decide what type of selective enforcement of that law and the new powers would be given to the attorney general, and i yield back the balance of my time. >> thank you. the gentleman from south carolina. >> thank you, mr. chairman. mr. holder, assistant attorney general ronald white wrote a letter to a member of congress, february 2011, a letter which

was demonstrably false. your department withdrew that letter 10 months later. when did you learn that that letter was false? >> well, i would say it contains inaccuracies. >> well, it carried material demonstrably false statements, agreed? >> no. >> you don't think they're demonstrably false, when you represented a.t.f. makes an effort to interdict all weapons going to mexico? you don't think that's demonstrably false? >> not in the way you use the word. >> well, how do you know what way i used the word? >> i'm listening to you. >> is it false? can i demonstrate that it's false? >> well, you said materially false. you're using legal terms there. you're a lawyer, so we're in that realm. and you said materially false, and that's a fundamentally different thing -- >> all right. do you think it was demonstrably false