outside of these individuals on the stage is that the people of this country really want to get america back on track. whether it is someone like you with the idea act, there are really good men and women in this country that want to get the country back headed down the track. this election is about the future of this country, one of the most important if not the most and we need to get it right. [applause] >> i always find a principal of leadership to be most interesting. as i look at the people on this stage, the each exhibit different qualities of leadership and they each exercise it in different ways. one thing about ron paul that amazes me is the only signs icy

art here are the ron paul people. -- i see out here. [applause] he denied the enthusiasm with a lot of people but is a very exciting to watch. in choosing a president, is the qualities of leadership that will make a difference. i happen to think i have the right positions, of course, or it would not have them, but fundamentally we know down the road what will determine who is a great president or not are their qualities of leadership in getting americans back on track. just as governor perry said, this is a time for real leadership of this country's going in a dangerous direction, a time when america has to return the principles that will keep us the shining city on the hill. the light has dimmed over the last three years and i will help restore it. [applause]

>> two people, one on the stage and one not. get out of politics for a while, do something else, be involved in health care, come back when you were too old and too experienced to win the governorship decidedly, and do a great job. [no audio]-- [applause] two other people, very briefly. rick perry got me engaged about three years ago on this 10th amendment and he has ignited a fire that will help change america. rick santorum's consistency and courage on iran. if we get anything done, it will be because of people like rick to have had the courage to talk about iranians for a very long time. [applause]

>> i have learned you should never give up on your opposition, because if you're persistent and present your case, they will come your way. rick, i appreciate it. [laughter] [applause] your open to the federal reserve. that is wonderful. i work under the assumption that freedom brings people together. it is braced on tolerance and non-violence. it should be bringing people together which is falling the constitution. we should not be fighting in washington. if we take the same oath of office, where does the fight, come from? someone is messing up somewhere. we can all prevail and come up with the right answers. [applause] >> i would agree with everything that has been said here tonight, but i would also add, again,

someone that i mentioned earlier, which is herrmann came. when he brought up the 9-9-9 plan, we cannot have a debate without mentioning it. one thing that he showed us is the power of being very plain spoken and reducing something to a very simple level so people get it. people were very excited about that plan because they can understand what it meant. right. that is a challenge for everyone. you can end up sounding like a big bureaucrat, and people do not want that. they want people from outside of washington and rightfully so. in this race, i am a proven consistent conservative and i will go with "win, win, win" rather than "9-9-9." >> we thank you so much and we thank the people of iowa.

24 days until voting begins. >> we will get too young to come a twitter, and facebook in just a moment. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> it their philosophy is simple. i am here to say they are wrong. >> if you want to move back towards a balanced budget or borrow billions of more dollars? do we believe in that? it is that big of a gap. >> my friends, washington is a mess and we need to send mitt romney to washington to fix the mess out there. >> read the latest comments from candidates and political reporters. this is all at c-

span.org/campaign2012. >> on newsmakers, mark kirk talking about what congress had and have not accomplished, the payroll tax, and his amendment for sanctions against institutions doing with -- dealing with iranian central banking. 6:00 p.m. eastern here on c- span. >> which part of the u.s. constitution is important to you? that is the question in the student cam competition. make a five-eight minute documentary entellus the part of the constitution that is important to you and why. include more than one point of view and video of seas and programming. entries are due january 20th, 2012. there's a grand prize of $5,000. for all the details, go to studentcam.org.

>> medicaid fraud victim richard west testified before a house oversight subcommittee on wednesday. mr. west, in a wheelchair and uses a ventilator, first noticed the brought in 2004 when new jersey officials suspended the benefits claiming he had exceeded his monthly capa. the recently agreed to pay $150 settlement, but the have not been barred from participating in the program. this portion of the hearing is about one hour, 30 minutes. >> welcome everyone to this joint subcommittee hearing on government organization, efficiency, and financial management along with the subcommittee of health care, senses, and the national archives. today, we look up the serious problem of waste, fraud, and abuse.

the medicaid program issues $21.90 billion in improper payments, higher than any program in the government, except for medicare. it is unknown how much of these improper payments or fraudulent or how much fraud goes undetected. the integrity of the program is responsible for identifying improper payments, educating about fraud, and providing assistance in order to combat fraud and abuse. the patient protection affordable care act in 2010 expanded funding for medicare integrity, but it also stands that it will increase medicare spending by over $600 billion between 2014 and 2021. d 2031. given the dramatic expansion.

better quality, excuse me, better quality is essential and reducing waste, fraud and abuse. in 2006 see amish initiated an attempt to the quality and access to read the gao issued the report finding that those in the systems were idequate and underutilized. giglio also could not find any evidence of financial benefits and implementing the new systems despite the act cms has been using them for over five years. there are also problems with state reported data. many states are not reporting all required data and they are often lag times up to one year between when the state's report data and when cms get eight. this makes it extremely difficult and often impossible to prevent the def rot before payments were issued and as i know we will hear the testimony today from one of our witnesses, the information is as old as 12 years, which is just unthinkable as a result of the data systems,

cms relies on contractors to identify fraud through audit work. cms spent $42 million on medicaid integrity contractors in 2010. however, gao has noted pervasive deficienciesin cms' oversight of its contractors and as issued numerous recommendatio to cms. most these recommendations have not been implemented. the office of inspector general has been on the front line of the investigating fraud for which work with the medicaid fraud control units. in the 2010 the units conducted 9,710 fraud investigations and recovered $1.8 billion. this work is essentials and becomes even more crucial as vindicate expands. but states is limited resources to combat the rising problem on medicaid fraud and there's also a question of the incentive states. health care fraud is sometimes

called a dictums crime and money lost as a result it can be easy to overlook what a devastating impact it can have on victims' beneficiaries who do not get the re they need and deserve. today we are joined by one such individual mr. rhard west a vietnam war mike veteran and dictum of medicaid raud. he and his lawyer along with his son testified here today of their personal experiences and their efforts to uncver fra with the medicaid program. it isn't just about money. it's about insuring that we do right by every american citizen who is in need of medical assistance and is a part of the medicaid program as mr. west will share it wasn't just the millions of dollars that was being stolen from american taxpayers. it was because the fraud that he is being denied care through the

medicaid program it's not just about money. it's about people. we will also hear testimony fro cms, oig and gao on the system problem with medicaid and what must be done to provide effective oversight and reduce fraud, waste and abuse in the medicaid program. i'm proud to recognize the ranking member of the subcommittee the gentleman from new york mr. towns for an opening statement. >> thank you very much, mr. chairman. let me thank mr. davis as well for convening today's hearing on fraud in the medicaid system. weeding out fraud is a bipartisan goal that all stewards of taxpayers' dollars should share so i truly appreciate this opportunity to explore. the witness on both panels joining us tod to discuss their views. i especially would like to thank

mr. west for sharing his story and for his service to the country, the vietnam war. mr. west, i salute you. there is no question that medicare provides a vital safety net for many children, seniors and disabled who truly need it. it is unfortunate, however, that it has become a target for bad actors seeking to game the system. there is some positive news though even in this era of budget cuts. cms and its efforts to undercover fraud or actually making money for the governmen and for tax plans. for every 1 dollar invested in detection, over $16 is actually recovered. much of this recovery came from cases like the case brought by mrwest. we need to be certain that we

are encouraging who become aware of these cases in the medicaid program to bring them forward. this administration has done an admirable job stepping up fraud detection in the medicaid and medicare programs. however, understand that there ve been a number of recommendations made by gao tha intends t address this issue but have not yet been adopted. i look forward to exploring the invitation that cms and hhs has so we can work together to further prevent undercover and recovered payments in the medicaid system. thank you, mr. chairman, for this hearing. i look forward to working with you come in and i yield back the balance ofmy time. 64, mr. towns. i enjoy it to the chairman of the subcommittee on the district of columbia census and national archives. the distinguished gentleman from

south carolina. >> thank you, mr. chairman. today the committee will hear from richard west with firsthand knowledge of how the commit programs are brought it and how the government all too often just doe't seem to care. mr. west exit responsible and contacted the social worker to the fraudulent behavior of his health care provider but none of the government agencies did anything. this is unacceptable and this is why people have lost trust in the institutions of government, and this is my fellow citizens have such little trust that we are spending their money as carefully as we would spend our own. mr. west kept track of the nursing care received andas able to provide his records and found discrepancies because medicate capped the monthly service is provided to mr. west he was not receiving the care he was entitled to. in other words, due to the fraudulent to cities of the company providing mr.est care he reached theap and medicaid

told him s services were suspended. so not only was the provider retain all taxpayers of the provider was also not providing the obligated surfaces to mr. west to read it is impossible to believe that mr. st's story is isolated. medicaid is designated a high risk program and is therefore highly susceptible to waste, fraud and abuse. manyxperts believe the rates for medicaid and medicare due to fraud equals about 20% of the total program funding. so perhaps as much as one-fifth of the money spent is wasted, that ignoring legitimate calls for investigations in the fraud would witness firsthand has a chilling effect on other like-minded peoplewho might be wiing to alert authorities to abuse. most of the fraud occurs when the providers bill for services never deliver the medicaid patients. cording to malcolm spero, a harvard university expert on health care fraud, the rule for the criminals is simple. if you wanto steal from dicare or medicaid or any other health care insurance

program, learn to build your why is complete. and for the most part your claims will be paid in full and on time without a pickup by a computer with no human involvement at all. one reason for the high reach of abuse might be that states do not appear to have an adequate incentive to root out waste and fraud. this is in large part due to the fact in large part of what is recovered st be sent back to washington. another reason the centers for medicare and medicaid services doesn't typically analyze claims data for over a year after the date the claim was filed. this lag time dicates cms needs to update tracking system used for the waste, fraud and abuse of the medicaid system also every tax dollar is appropriately spent is a concern, the magnitude of leased, fraud and abuse elevates this problem. our country now spends $430 billion on medicaid a year.

and cms projects that total spending on medicaid will double by the end of this decade. states are struggling to deal with medicaid's growth and medicaid is crowding out state priorities like education, transportation and public safety. i look forward to today's hearing and hearing from our witnesses and hopefully flushing out ideas for limiting the amount of tax dollars being wasted through the medicaid program. when folks like mr. west are being hurt and neglected due to fraud it's time to find solutions and our fellow citizens, the ones who trusus enough to let us be their voice in this town are increasingly losing confidence that we are not serious about tackling waste, fraud and abuse. we must reclaim their confidence. we do that one episode at a time and we might as well start with mr. west. with that i would yield back to the chairman. >> thank the gentleman. pleased and honored to yield to the ranking member on the subcommittee on health care district ofcolumbia census and national archives the government

of illinois mr. davis. >> thank you very much. chairman, ranking member towns, i thank all of you for holding today's hearing. reducing waste, fraud and abuse and health care is a rare and desirable policy share by republicans and democrats alike. it is disturbing that some entrusted in the most vulnerable populations seek to defraud the government by falsely billed in the services. it is the height of the corporate greed. in this era of budget shortfalls and cuts, we can no longer stumble upon the bad actos. we must be vigilant in locating and meting out the fraud. the proper resources must be dedicated to root out waste and abuse. our taxpayer dollars for the

question. more funds expended on the phantom services, delayed and extinguished the necessary health care program and services that people depend upon daily. as medicaiis determined to be a high risk program, i went to further encourage cms to further utilize and implement all of the tools available in the fight including the integrated data repository and the one program of integrity. these technological programs are invaluable in consolidating the the the nessary in fraud detection. the patient protection and affordable care act further provides the tools despite medicaid fraud. the messenger and background checks on providers and suppliers are a productive first step for the program integrity.

and the enforcement arena, the civil penalties created falsified information as evident that the federal different takes for a seriously. to that end, the affordable care act against $10 million annually for the scal year 2011 through 2020. simply put, fighting health care fraud is good fiscal policy. and i might add that i am totally opposed to fraudulent practices and medicine. especially involving the most affordable, the most unsuspecting and in many instances themost gullible members of our society. i have een firsthand low-income communities with medicaid meals where people were lined up to be taken advantage of.

the practices we cannot, should not and must not tolerate. therefore i applaud the tireless efforts of mr. richard west. he serves as an example to others he saw the wrong and tried to make the righ so we'll thank you, mr. west. i look forward to your testimony and the testimony of all the witnesses and i think you mr. chairman. i yield back. >> we've also been joined by the distinguished ranking member of the full committee on oversight and government reform governor from maryland and i recognize him to the estimates before mr. chairman. i would also like to thank mr. west for taking the time to come to capitol hill today to share his experience so we might apply the lessons learned from the case the future policy and law enforcement. lester medicaid provided critical health care to an

estimated 56 million americans in need the vast majority of whom are senior to individuals with disabilities and chldren. sie so many americans rely on this planet is imperative that we rid of fraud because every dollar squandered is a dollar that does not go to the critical health care services f these abominable americans. today's hearing focuses on the case that was brought to light by richard west. a medicaid beneficiary who assert his rights under the false claims act to prosecute fraud against the medicaid system by maxxam health care service. mr. we's lawsuit retreat nearly $150 million for united states taxpayers. we need to support efforts by people like mr. west to ensure that american citizens are empowered to take on the corporate wrongdoing. the written testimony of the

witnesses on the second panel also make clear that we need better coordination and between state and medicaid programs and the centers for medicareand medicaid services to reduce duplicative efforts and better aligned resources. fortunately the affordable care act provides funding to fight waste, fraud and abuse in medicaid. it also contains a number of provisions designed to improve data quality and prote data sharing between the federal agencies in the states and health care providers. to fight against the companies like max on health care requires mo resources, not less. when we invest in the fraud prevention, government spending more than pays for itself. that is one reason why the affordable c.a.r.e. repealing and cutting medicaid's enforcement budget would be very shortsighted and indeed

counterproductive. i look forrd to the testimony of the witnesses today and i hope the recommendations will he reduce fraud and waste and abuse and create a strong medicaid program for those who rely on it and with th mr. chairman of i yield back. >> thank the gentleman and i yield to the distinguished gentleman from virginia for an opening statement. >> thank you mr. chairman and for your leadership. the medicaid prepense contributes directly to the long-term health of the seasonal health care programs to really appreciate the subcommittees holding the hearing on the different anti-fraud programs for medicaid and medicare seices. while hhs and cms or devoting unprecedented attention to reducing medicaid fraud, it's clear we must do more to reduce improper payments and protect the economic security of individuals such as richard west, who lost benefits to burleigh as a result of attacking medicaid and medicare frd. as the written testimony for the hearing makes clear congress and

the administration promoted a great deal of effort to reduce in the public image of the lost decade. in 2005 congress passed the deficit reduction act to sell which the medicaid integrity program at mit provide states with technical assistance to idenfy and prevent fraud which is appropriate since the states administer medicaid to read the deficit reduction act also requires cms to work with medicaid integrity contractors for payments and educate the fraud prevention. cms uses this and other data for the medicaid statistical the information system which includes eligibility clas information across the country by maintaining the central database cms can conduct in all this is what to identify the possible fraud or in areas where the fraud is likely to occur it also works with the agencies to duplicate best practices and has identified two of them that could be replicated all across the country. despite these efforts made clear

more can and must be done to reduce fraudulent medicaid payments to read as the testimony of mr. west today demonstrates cms hasn't always been responsive in its reports really look forward to learning more about what cms is doing to prevent such negligence from occurring in te future. the robust implementation of existing policy is essential because they must implement the reforms enacted under the affordable care act. as noted in the testimony the affordable care act sometimes referr to as obamacare significantly strengthens anti-fraud programs these include elementary reforms as requiring service providers to supply douments orders paid the affordable connect also still is the medicare recovery auditor contract program to create incentives for the contractors to reduce fraudulent payments and in conjunction with psychiatry sebelius the affordable care act designed to

identify and proper payments before they are issued by cms to reply to this testimony illuminates the progress we have already made an additional administrative and her friends which wouldn't reduce edicaid fraud. we should consider more stringent punishment for mpanies and individuals who systematically defrauded medicaid. mr. west suggested in the testily to consider partial penalty. thank you mr. chairman for holding this important hearing as a part of a series of getting at the so-called improper payment for the federal government which totaled $125 billion a year so there's plenty of work to be done. thank you. >> thank the gentleman. thank all the witnesses and guests. we gave our opening statements but now we are going to move to why we are really here and hear from the witnesses and we are honored in the first panel to have mr. richard west who served the nation not just in uniform

during the vietnam war which we are all internally grateful to for that service the also mr. west service is a private citizen who corrected and when government didn't take action he did so mr. west, we are honored to have you here with the attorney and your son, adam, as is consistent with the rules of the committee will need to swear in all three of you before we have your testimony. ms. west and adam, if you would stand and raise your righ hand to you solemnly swear the testimony you're abo to give the committee will be the whole truth and nothing but the truth? okay. with the record reflect all three witnesses have affirmed the aoth. dtc to commit on behalf of mr. richard west who will save his voice fr questions and you're going to have his son

adam read his opening statement. adam? if you are ready, please begin. >> thank you, chairn. ranking member towns, ranking member davis and distinguished members of the subcommittee for inviting me to discuss medicaid fraud. i received home health care and other services to the community resources for people with disabilities medicare waiver program. as a ventilator wheelchair and oxygen independent person might qualify for the government-funded program that provides medicaid benefits of to 16 hours per day of in home nursing care. there's a limit on the services under this program each month and benefits may be sspended or reduced the monthly cap is exceeded. beginning in march of 2003i received home health care through maxxam health care services under this program. maxxam ability some care services to medicaid which paid for them with both state and federal funds. september of 2004i receive a letter from the new issues the department of disability services. the home and community service is telling me that i have exceeded my cat and that my medicaid services wereeing

temporarily reduced as a result. this prevented me from attaining the needed dental care. i complained to the seat of new jersey. a complete to medicaid and to the worker assigned to me telling them that medicaid had been billed for nursing care that i had not received and none of them did anything about i. since none of the government agencies i contacted about this did anything i hired a private attorney, robin west, no relation of baltimore maryland who filed on my behalf to whistle-blower lawsuit of false claims act that triggered an investigation. some decided to make a profit of my disability and ripoff the government. that was wrong. the right thing for me to do is expose it. but because the case the government investigation i couldn't talk about it. sometimes i had trouble getting nurses and i suspected word got out alive was a oublemaker. over the course of the government investigation viruses meat meal. each day when i sat alone in my home and the owners can i get sicker and sicker. i was afraid of dying and leading my son with a legal mess. i fear if i were no longer alive the case might be dismissed.

meanwhile the government investigation carried on in investigators kept governing more and more dillinger and propriety. finally, after seven years, the government reach a settlement with maximum the case went public. ex mex and pay and islamic of approximately $130 million in criminal approximately $30 million. this is the largest home health care fraud known in history. yet maximus still permitted to do business with the government and none of the executives want to deal to be a congealed. details are available at www.homehealthcarefraud.com. ..

the settlement received coverage in many folks ask me why this was. hausa company takes billions of government dollars is not entitled to -- wallace shoplifter of a few hundred dollars will be sent jail. it is commendable the company did take on maximum until executives receive harsher penalties i do not think we will see the frauds. having the corporation pay some settlement money is just the cost of doing business for the fraudsters. the settlement money not even coming out of their own pocket. sending executives joe might make a brought. how many companies got away with fraud for the last seven years? how many people saw this and did nothing? how many were free to be losing their health care for being a troublemaker? that is what happened to me. at this time i'm being told my medicaid will and because of the

settlement. my whistleblower cover is being paid over eight years with -- in the intervening years that will not be to pay for my in-home care. i will go broke or die. this is the price of doing the right thing. do i know other companies that do fraud? yes. can i tell and when? i can afford to lose more services. i thought if youdid the right thing things would work out in the end but maybe not. i'm a vietnam veteran and never took or asked for services i didn't need. i lived a productive life and raise my son. this brogue remoulade meets with in my home and graduate high school and college and now he is living on his own. as someone who is willing to steal from an old sick that i would think th government would help. if i had an hmo who would help should i call theceo? it took seven years but i have the full weight of the united states government behind me. many folks are not as fortunate. came to thathearing hoping to help congress and the other people who need help. thank you providing me to testify and i look forward to

answering your questions. >> thank you mr. west. ms. west you can share your testimony. >> thank y chairmanplatt, chairman gowdy, ranking member towns, ranking member davison to sing which members of the subcommittee for inviting us to discuss medicaid fraud. i represent richard weston the medicaid fraud lawsuit that resulted in the $150 million settlement with maxim. for the past 20 years i have fosed on bringing cases such as mr. west's to recover money the government has lost to fraud. i'm also t author of a book on the subjecpublished by the american bar association entitl advising the whistleblower. and examining accountability of medicaid, it's helpful to look at the process we followed in bringing mr. west's fraud lawsuit. as he

we should have a number of hours maxim had built medicaid exceeded significantly the number he received. in addition, we give the government permission mr. west had learned in discussion of various nurses that led him to believe maxim was doing it on purpose. receive 60 days and if he

needed more time he must request it from the court. this is different from hot lines that are not the same as tips. it is different from contractors and oversight that exists pteridophyte improper payments and fraud. this costs the government money, sometimes more than their recover. for example cms's senior medicare patrol program feature seniors and others how to review medicare notices and medicaid claims for fraud and what to do about it. over 14 years from 1997 to 2010 and save $106 million. its current annual budget of $9.3 million leads to the question whether it is even saving what it cost? the incentive of earning a false claims act whistleblower reward on the other hand mobilizes private individuals and their attorneys to do the work without the need for any overnment

program. the sca model also outperforms the medicare recovery audit contractor rack program which although it pays contractors a percentage of the improper payments they recoup still dips into the recouped funds to pay those contingencies. not so with the sca recovery, not one dime comes from taxpayers to pay for these recoveries because the statute allows recovery of triple damages from the fraudster so that the government can be made whole for the cost not only of the whistleblower rewards but also the investigation, prosecution and lost interest over time not to mention the savings caused by deterrence. there is no doubt the case is whistleblowers are bringing to the government are high-quality. as shown in this graph baseon department of justice statistics, recoveries from whistleblower initiated cases by far outpaced those in government initiated cases. more than 80% of the false

claims act cases now being pursued by the u.s. department of justice we initiated by istleblowers and the amounts of the recoveries are in the billions each year. in closing one aspect of . west's case i would like to highlight is that the waiver of program tapped his benefits in a monthly amount that if exceeded triggered a denial of further medicaid benefits so when mr. west went to the dentist he was informed that he could not get treatment because he had supposedly exceeded his cap. in most medicare and medicaid or other federa and state health programs that wod not happen because there is no cap that stops benefits from being paid. en if medicaid beneficiaries notice suspicious biling they have no incentive to spend time questioning them because their future medicaid benefits are not at stake and this is one reason i believe we have not seen more health care fraud cases initiated by medicare and medicaid beneficiaries. thank you again for inviting us

testify and i look forward to answering your questions. >> thank you ms. page. we appreciate all three of you being with us to share your insights and experiences you have had in helping to protect the american taxpayer dollars as well as ensure citizens like mr. west get the care they need and deserve. we will now begin questions and would yield to the subcommittee chairman mr. gowdy for questions. >> thank you mr. chairman. mr. west on behalf of all of us i want to thank you or your service to our country both on this and -- we are indebted to to you. it strikes me mr. west that you brought this to the attention of every single person that you could reasonably have known to bring it to and nobody did anything. you had to go get a private lawyer to do what either the state of new jersey or some

social worker should have done. is that correct? >> yes. the social worker asked if they backed up my paperwork. they said yes so she had some power to audit, so i tk it to the state and the state had been monitoring in august, 2003. i told them i was not getting --

[inaudible] they did nothing. the person running the program retire the other person sitting at my dining rom table and everybody st goes on. people are not held accountable. both maxim and state and federal workers, so there was nowhere for me to go. >> that is exactly what i want to ask ms. west. do you have any criminal pracce at all to go along with your civil practice? have you ever done criminal defense work? for those of us who are not smart enough to do civil work and had to do criminal work it has ways struck me that nothing gets people's attention quite like the fear of going to prison, and poor folks who steel

company to prison. rich folk who steel have the corporation pay a fine and then they continue to participate in the medicaid program. how in the world does that happen? >> it's much more difficult to prove a criminal case. the standard is guilty beyond a reasonable doubt. it takes a lot of resources to investigate these cases. >> well let me stop you right there. you have a vietnam war veteran witness who says that this work was not done on me and you have a document that says that they were billed for it. i think even i could win that case. i mean, i guess their cities different standard of proof that there, if there is a different standard of proof bunol from the cases. >> someone in the government is making this decision. >> do you know who that is?

>> the u.s. attorney's office. >> in new jersey? >> yes. >> do they want their civil division to reach an agreement, pay a fine, the shareholders pay. none of the corporate executives go to jail and then they continue as part of the settlement to be able to reinstate the medicaid program. that is just outrageous as anything i've heard in 11 months i have been here and i have heard some outrageous things. let me ask you, there have been civilizations that have been formed at less than seven years. what took seven years for this case to be resolved? >> the investigation started locally and then itexpandedto the state of new jersey and then it expand to the states be on new rsey eventually expanding nationwide. during that time there were numerous audits going on of the documents. there was an independent audit company that was hired t determine what tpe of document

qualified as a proper claim and what was in the improper claim. maxim's attorneys were involved every step of the wy. they were allowed to have input into this process and then at the end, because fraud is difficult to quantify, the settlement had to be reached and it is often likened to making sausage because there are so many elements that have to be brought together that so many people have to agree on and that is what also took a lot of the time is the agreement on the various aspects of the settleme and there was a criminal component to it as well. >> and the criminal component went away as part of the civil settlement or did anyone go to jail as a result of this? >> my understanding is that there were nine indictments, eight of whch were maxim employees, not executives but managers. >> did thy go to jail? >> i don't know. >> i thank the gentleman. i yield to the gentleman from

illinois, ranking member -- >> thank you mr. chairman. mr. west let me again thank you for taking time to calm to capitol hill to testify. i also think -- thank you for your services to this country during the vietnam war. the coalition against insurance fraud estimates that 80% of health care fraud is committed by advisers. 10% by consumers and 10% by others such as insurance companies or their employees. i applaud you for your diligence and maintaining records and keeping such a close eye on the actual number of ours you were receiving home health services and the number of hours medicaid what i want to ask you is when

you receive notice that your services had reached or gone beyond your monthly cap and your medicaid services were being temporarily reduced or suspended, how did you feel when you read that letter or got that information? >> i was in -- and this program allowed me to live in my own home and in three months, i knew what they were doing. i had always been an advocate for people with disabilities, and so when i got that notice, i

knew that it wasn't me. it was all the other peole. they were going to take my service and i am going to fight them. other people can't do that. i am just too stubborn and arrogant to give up but if you are the average person, you can't fight. you are helpless.

you are being abused, so how i felt? i was being abused and i will stand up for everybody. >> and you knew that you weren't going to take it sitting down. >> i started this as an advocate and through the seven years it he came more -- 's. >> thank you very much. ms. west let me ask you, you indicated you have handled any mber of cases. what is the typical climate of a person who comes to you with a situation and asks for your asstance? >> more often it is a person who works in the company that is

coitting the fraud. someone who sees something that seems on this and they will go to their supervisor and say hey why are we doing this and the supervisor will try to brush it off and oftentimes they will escalate it to another superior and eventually ofttimes they get fired for being nosy, at which point they will come to me. close to the end of that process. >> so they will calm, i mean the whistleblowers who themselves have been abused in terms of losing their jobs. >> exactly and also in terms of being asked to do things in the job that they know are not right and as mr. west pointed out, many of their co-workers know the same thing but they won't come forward because they e afraid of losing their jobs and their health care. >> thank you very much mr. chairman. my time has expired.

>> thank the gentleman and i yield myself five minutes for questions and again, the case that you share with us mr. west and your attorney should not happen and our focus here is to make sure doesn't happen again in the future. if i understood your red testimony and your responses here today, when you reached out to the state of new jersey, medicaid, social worker, that other than if i understood with a social worker it looks like they looked at maxim's records and said they have got paer to back up saying they provided you service and they basically took the company's word over your words. is that a fair statement? >> right. >> and the social worker, did the state of new jersey or medicaid itself even get to that point or did they just pretty much do nothing? >> they did nothing.

governor corzine, senator menendez, they sent the paperwork to the same people. >> so in addition to your own contacts to the state and medicaid, contacting your elected officials, the governor and u.s. senator. they contacted those entities and still nothing happened? >> correct. >> it is just as mr. gowdy said somewhat unbelievable that here you ve a citizen trying to do the right thing and protect taxpayers a he receives his services and the government collectively failed you terribly. when they were denying your claim of fraud and failure to act on at what was their response as far as how that

related to your care because of that being denied dental, where they saying, we don't believe you that there is broad but we are going to provide you care? >> they don't come out and say, we don't believe you. they just -- >> they didn't do anything. >> they will not answer the letters and don't respond to e-mails. you are a burden to them, creating paperwork for them. it's easier for them to do nothing. >> push you to this site. >> correct. >> how about on the fact that fraud was denying your services?

did they correct that and ensure that you got the dental care or coinue to -- >> eventually i got the dental care. died but at that time i had nothing, seven hours a day, seven days a week. three nights a week, totaling 18 hours, i lost those 18 hours for seven years. so, if you turn off my ventilator, i have a hard time breathing but if you let me sit there and slowly deteriorate because i am not getting the care i need, --

>> i want to make sure i heard you correctly. while the investigation was going on for seven years, they were denying y the services, saying q. were not entitled to it because of the fraud? >> right. >> outrageous. thank you for persevering an weathering the terrible care and treatmenthat you receive. ms. west, a question and i am not sure, as a lawmaker, how our federal whistleblowers were seeking to strengthen the whistleblower protections provided to federal employees because we want as you reference more often than not as an employee comes forward with a no is oing on in their company and their office. we are trying to strengthen outlaw. we pass egislation out of this

committee, out either the full oversight committee and now working for a flow vote -- floor vote to get whistled blowers more protection. if a federal employee came to you, i assume they are impacted diffently going to you for this type of case and because they are a federal employee. is that correct? >> historically in my experience the government has been less receptive to intervening in whistleblower cases brought i fedel employees. >> do they keep it more internal? >> is hard for me to understand the reasong that goes behind how an intervention decision is made. i don't know why that is. >> but your experience over 20 years is less common for them? >> it's more difficult for them to be accepted as an intervening case. >> so, unlikely given that for a

federal employee to pursue this type of case because they are less likely to perceive? >> yes, more difficult, yes. >> my time has expired and i yield to the gentleman from new york. >> thank you very much mr. chairman. let me again thank you mr. west for coming and sharing your storywith us and of course i regret that you had to go through so much in order to make the point but we appreciate your time here day. let me begin by, can you tell me about the process you went through and trying to contact various agencies? can you talk just a moment about the process that you went through, trying to reach the agencies? i know you said you sent out letters and e-mails and phonecalls. can you just talk about the process processes just briefly?

>> the social workers would come to the house once a month so once a month i am telling her i am not getting my services and telling her in between those visits, saying the nurses aren't showing up and i'm having to depend on family and friends. estate workers, the county workers -- to the state workers. they didn't follow through and the state program was telling me i had to have a caregiver in my

home but the nur didn't show of. my son was in high school getting ready to graduate and i wasn't about to put that burden on him because the nurses were not doing their jobs. sows the state, they wanted to have a meeting in home. they all came down, sat aty table and said tell me what your services are? i am not getting the nursing you are telling me i am getting. and the state workers said, you

need a -- and you don't have one so maybe you don qualify for the program. and i said, i am not going to have a caregiver. she said you are not compliant. so i said, arrest me. she did not appreciate that. and the county social rker told me, there is an uncertainty. [inaudible]

when the county and the state wouldn't do anything, i went to the hotline and called them. they said, we will look into it. never heard a word. so i figured, i have to get out of the state of new jersey because i have no idea who is involved, whether they are involved with maxim or their own program. so i went on the web, and that is where i found out there is a whistleblowers lawsuit. i had no idea. and i read a portion of

recovery. i said hey, maybe i will get $5000 the first person i called was from alabama, a whistleblower. she said if it's not $10 million i don't even want to talk to you. i said i am a whistleblower who lives in california. she said, send me the documentation you have. she called me back and she said i think you have a pretty good case but you need an attorney closer to where you are. then i found robin on the

internet and that is how we proceeded. >> so you found someone with the same last name? >> when i called, her secretary said, who is calling? i said richard west end west end there was a silence. [laughter] >> thank youery much. mr. chairman iasked for 30 seconds. i want to ask ms. page to submit something to us. in your written testimony you indicated that false claim act is both unusually effective in covering fraud in the health care system. if you would be kind enough in writing to summarize your top three arguments for why this law is effective, and so i'm interested in that because we would like to strengthen or to improve its so if you would be

kind enough to submit that to us in writing, seeing my time s our. >> three reasons why it is effective? >> yes, and i thank you. >> thank the gentleman. the gentleman mr. desjarla is> thank you mr. chairman. mr. west admiral bowens this past year was quoted as saying the biggest threat to our national security is our national debt, so not only did you fight for our country in vietnam, you are fighting for our country again against a big threat which is spending and debt so i alaud you for your courage and taking the time to come here and speak with us today. i just wanted to ask you a few questions about your relationship with the people that spend a lot of time caring for you because with your condition, with the trach ventilator, i'm assuming you had a respiratory therapist?

you have home health nurses? >> i had nurses. >> i'm assuming you had nurses aids aides to help with activity with daily living to help you address. they he to help you eat and help you maintain your residence so it is to it is safe so they have spent quite a bit of time in your home. >> correct. >> did you ever feel like you got close to any of these people? where they caring people? did you talk to them on a first name basis? did anyone, say an aide, stay with you for several months at a time or what was it different aides on difrent days? >> i have a nurse now for four years. over the course of the seven years, there have been different nurses, different agencies but many have been there for an

exteed time. >> so you knew them very well and they knew you ry well and it was generally friendly and cordial? did you like them and they like to? >> yes. >> when you first started noticing the fraud were you able to talk to them about this and share your concerns? >> they were part. >> i'm sorry? >> they were part of the fraud. >> did you talk to thm and asked them? did they try to make excuses or did they say they would talk to their managers? >> no. they were telling me they were being paid and they were putting in, in my home, putting in four

additional hours and the company, the nurses told me on several occasions that the maxim office managers work on bonuses so the more profitable they are -- >> okay so these people despite having a relationship they like to any like them, and they felt that they were aware of the fraud going on? >> they new. >> did you feel like they -- you are returning them in a sense when you had to go over their heads to try to fix this situation? >> no, you can't betray somebody who is abusing you. >> i guess i just wonder how mrs. west how many other

beneficiaries have come to you such as mr. west? >> very unusual. a handful of people have even inquired and if memory serves mr. west is the only beneficiary case that i have taken. >> okay so given the success by whistleblowers why do agencies and officials typically ignore people like mr. west? whatould be your opinion on that? >> i don't think it's so much that the false claims act is in serving em and the government isn't picking up the cases. i think it is that there are not that many beneficiaries who are coming to the false claims acts attorney's. >> why then when someone like mr. west to obviously have jena claims and were proven legitimate why do you think

medicare avoided it. i will ask you you that and asked mr. west that. >> mr. west is an extremely unusual person. very tenacious, very intelligent, very persistent and quite often medicare and medicaid beneficiaries who are sick cannot ring all those qualities and have the stamina to figure it all out and bring it to a lawyer, and i think that is basically the issue. they are not aware of it. they are not aware of the incentives and they don't necessarily have the skill set to put it all together and follow through on that. >> i will just say and i know i am about out of time and if you will and those me for a few seconds. as a primary care physician for 18 years working in the congress i have dealt closely with home health. there are a lot of issues of fraud and abuse in the '90s were people who did not have near your level of disability who had aids and whatnot, that was kind of reined in a little bit in the '90s but i see that

it tends to be alive and well as we have moved into the next decade as well. so again i applaud you mr. west for your efforts and clearly i think that cms and medicare we have on the next panel will have an opportunity to see why people like yourself are being adored and thank you so much for stepping fward and fighting against it. >> may i add that people in my position don't have to be -- the support once they turn people in. if i was a government iformant for a case, you would take care of me. but, when i wentto the special people in charge and asked to

have nurses so i could continue through this case, there was nothing he could do to help me. so, why would most people turned somebody in, knowing that they woulddie. you have to give support to the patient or whatever you want to call me, so he can bring the lawsuit. what is the incentive? there isn't.

>> i thanked the gentlem and along the lines of what you just expressed it sounds as if, whether a need for legislature change or regulatory change that if you have a beneficiary and in this case the government makes the determination they are going to take on the case, and go forward, that that decision should maybe include a provision that a lot of the cases being pursued one year or seven years in your case, you are given the services you want on a individual basis. again otherwise you have a disincentive from reporting it for being risk of further losing care. >> that's correct. >> i thanked the gentleman and yield to the distinguished ranking member of the full committee. >> mr. west i thank you also f being here and i agree with you. these folks needed to go to jail and it's interesting that i have

now done a little research to see what happen i want to follow up on some of mr. gowdy's concerns. they did go to jail. one went to jail from maxim and he got, this was the highest sentence of eight or nine people five months in prison and five months of home confinement. most of them got a fine and home in prison and. that is what they got. now, 40 miles away from here represent baltimore, and in about six months ago i had literally thousands, thousands of young african-american boys, many of whom may have done something wrong or whatever and they have a record mr. west. they have a record. do you know what? they can't get a job. if they lived to be 99 years old they will not be able to get a job but here we have maxim come

a company that has basically stolen, stolen from the american people, maxim, a company that has taken away the services not only from you but so many others but get still they are in a position to continue to make millions. something is absolutely wrong with that picture and i agree with you. in his people from cms and ig, they have to explain to us and every member of this panel, every member of this congress should be saying maxim should be put out of business with regard to doingbusiness with the federal government. it is ridiculous how a young man in baltimore can steal a 300-dollar bike and not be able to get a job for a lifetime but maxim can steal millions and continue to do the same thing over and over again. yeah they got sentenced that this sentence is simply a slap on the wrist. if you can pay

150 million-dollar fine, this is just the cost of business and so you know i am very concerned about this and i want to intrude entered into the record mr. chairman begin i attorney's office district of new jersey basically their summary of the sentencing dated november 21, 2011 and i would ask that be made part of the record. >> without objection. >> and the reuters article dated and i asked this be made part of the record too, dated monday september 12, 2011 and it says in part maxim settled with the united states department of justice and in 41 states. the prosecution agreement with the justice department under which it will pay a 20 million-dollar fine. of maxim meets the agreements and requirements it will avoid charges and the government said it was willing to enter into an agreement with maxim in part, in part to cousin of its cooperation and significant

personnel changes it has made since 2009. that is all well and good. thank you very much. that's all india but if you are paying people bonuses to screw people and miss them over you are right, there are people who are sitting in wheelchairs right w looking at this right now who feel helpless and many of them are going to die. that is why i cannot understand for the life of me, how every member of this congress should not want to put maxim out of business at least with regard to its business with the federal government. now to you ms. west, midwest he stated in your wrtten testimony that you have over 20 years of experience in bringing cases such as mr. west's to the government's attention. can you explain how the false claims act helps government work better and save taxpayers millions of dollars? i'm sorry, did not mean to get

so upset but this made me want to. go ahead. >> the false claims act gives the government a birdseye view into t fraud. without the whistleblowers that government really has no way of knowing how the fra is being committed. every time there is a fraud protected the government learns about it and comes in and shuts it down but then there's a new fraud that pops up and it's a constant never-ending thing. there more creativity behind fraud because there is so much money to be made by it and that is why the false claims act is so effective becau it reaches out to the people seeing the fraud and understand the part in giving them an incentive to tell about it and explain to the government you know how to stop it. >> ms. west you think there are too many laws claim act lawsuits and what disincentives are there for bringing a frivolous false claims lawsuit? >> well the disincentive for bringing a frivolous false claims lawsuit is there is a provision in the statute that allows the defendant to recover

his attorney's fees from the relator if it are shown that the suit was brought for purposes of harassment. in addition it's difficult to bring a frivolous lawsuit because the lawyers work on contingency and if we don't think a case is really good we are not going to bring it. only abot 20% of the false claims act cases of faud or intervened in by the govement so we are looking at a very tiny window and we are looking for the very best cases to bring to the government's attention. >> i see my time has expired and again mr. west i want to thank you very much, you and all others who will benefit from what you are doing. >> tha you. >> i take the gentleman. yielding to the government -- senator from virginia. ms. west the example of having a birdseye view the beneficiary goes on the front line for false claims act and in the second panel we are going going to hear a lot of expenditure money for new technology and analytical

programs and things. is it is fair statement to characterize your experience here that rather than the investment of all this money new programs if we had simply better listened to the beneficiary we would have prevented the fraud? >> yes, ithink so and malcolm sparrow who has analyzed this and feels the money should not be paid out first. it should be paid out properly, not paid out and followed after. >> right so being more upfront is supposed to recovery type audits to focus up front? i yield to the gentleman from virginia mr. conley for questions. >> cannonmack mr. chairman i want to thank mr. west particularly for his courage both serving his country and serving a second time in and trying to make sure taxpayers investments are protected and made secured and for the courage of persisting when many others might have been daunted and discourage. i also want to say to our

colleagues, i guess mr. gowdy said here but mr. gowdy is serious about criminal prindle -- penalties he will find allies on the side of the aisle. parts of the committee have pointed out th there are every year $125 billion in improper payments. sometimes it is innocent, mistaken bill when somebody gets paid to should have forgets double paid, somebody was not qualified and gets a benefit but a lot of it is pride. i know you as attorney's offices are consumed with medicare and medicaid fraud. the u.s. attorney's office n boston is now a 3 billion-dollar recovery. that is one out of 99 u.s. attorneys offices so we know it's out there. if we eliminate in improper payments by the way, we could give a christmas gift to th supercommittee of $1.25 trillion

over the next few years without breaking a sweat, without affecting anyone's benefits without having political drama, without having any unnecessary investments. i yield to the chair. >> thank to the gentleman for yielding. as you well stayed the fraud of improper payments and again we don't know how much is fraud at the improper payments of medicaid we are discussing it and as you know from ur previous hearing on medicare these two programs alone account for about $70 billion a year of that 125 so over 10 years you are talking $700 billion i yield back. >> thank you mr. chairman and of course as you know some of that money was cited in the financing of the affordable health care act. some criticized us for that is if we were gutting the program but in fact we were simply trying to recover either

improperly made payments for illicit payments. i want to make sure we get the narrative on the record mr. west if you don't mind. i have heard mr. west. when did mr. west first discover something was wrong and how? >> he testified -- to speak if you could speak into the microphone. >> three months after he came out of the nursing home he realized something was wrong. >> what made him realize something was wrong? >> that he was not getting the care that he was entitled to get under the program. he was getting fewer hours of nursing care. >> okay and maybe initially he thought at was a mistake. >> actually, i thought they were having a hard time servicing my case but then it became apparent

they were -- who they wanted when they wanted. >> the testimony submitted on your behalf by her attorney says you attempted to bring the matter to the government's attention to contacting this day. what stayed with that? >> new jersey. >> new jersey. the medicaid prague and the celts he went to a local office and your social worker. >> correct. >> the testimony says all to no avail. meaning what? they ignored it? >> yes. >> okay. so you then decided this isn't right. i'm not getting anywhere and i'm ever going to turn to a private attorney and you used actually something congress did well, the false claims act. which gave you a vehicle for redress, as you put it, --

ms. west if you could describe for us what was the reaction of the medicaid official when faced with this potential fraud, at least on your initial contact? >> are you asking me? bsi ps i'm asking you miss wes. >> i filed a lawsuit under the false claims act so my first contact was with the u.s. attorney's office. district of new jersey. >> gotcha. did medicated any point react to the filing of a lawsuit or the claims contained therein? >> again come i didn't have any contact with anyone from medicaid. i was coming in through the department just as. >> did your client have any contact with medicaid in terms of reaction to the filing of a wsuit or the claims there therein? >> once we filed a lawsuit it was under seal and aren't allowed to talk about a. >> even with medicaid?

>> if they would set up a meeting and medicaid officials would be there but there was nothing like tat. >> and presumably you made repeated attempts with the medicaid office mr. west, and i know my time is running out, to try to alert them to this and get them to act? ps. >> and they were indifferent? >> correct. >> we look forward to their testimony. thank you. my time right now. i thank the gentleman. >> before we conclude i yield myself the final minute and mr. west my understanding is you were in giving an interview, you shared an example of the lack of cooperation you had in you try to correct this. you were in front of a judge or an adjudicative setting where you were told that well, there is evidence that they did provide these services and they were not agreeing with you are

believing you and you made the statement that you would bet that while you were in front of this individual that maxim was probably falsely revealing services to you. could you share that? >> we went to scranton to the federal courthouse. i picked up robin at the train station and i believe -- and a special agent. i said, i'll bet maxim bills for a nurse and my home while i am sitting here with you. i left my home at 7:00 in the

morning. i went to scranton, met with the prosecutors. i said, i'll bet they bill for this time. fay said how could they possibly do that? in january i sent them an e-mail, and i said, i told you so. they build 47:00 to 3:00 for an r.n. in my home and i didn't get home until 5:00 that night. th also build christmas day when we were in pennsylvania, the next state over, and this

particular nurse was reading my mail, and i had to tell my attorney. do not send anything to my home. sent updates through e-mails and don't mention who they are from or what they are about. i had people spying on me while they were stealing from you. >> one more example of how you were being victimized by very unscrupulous company and its employees and the fact that while you were sitting in the

investigators, they are falsely billing service to you epitomizes the outrageousness of this case and again you reference having westerholm at a quarter to seven in the morning and not getting back until 5:00, another example f your persistence and willingness to do whatever it took to bring justice on behalf of the american people, the taxpayers and to ensure that you are properly provided the services you have earned and deserved especially as a veteran of our nation's armed forces. i thank each of you again for your testimony here today but more so than just your testimony here today, your reference over almost a decade of trying to bring justice on behalf of your fellow citizens. adam i think it goes without me saying but i imagine you are a very proud son to be richard wes's n and know that he is a true servant of this nation. god bless each and everyone of you and we will recess for five

minutes while we reset for the second panel. >> may i have one minute? >> yes, you may. >> today is pearl harbor day, and i would like to say my dad served in the pacific. my mom worked in a -- during that war. they worked together for the country. we need that now. we need people like me and people like you to sit down and fix the government.

>> well stated mr. wes. >> thankyou. i am honored to be here. >> god bless you. thank you. we stand in recess. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> freshman republican illinois senator, mark heard, on " newsmakers." he will discuss the payroll tax, a year-end spending bill, and his amendment against institutions of business in the iranian central bank. today at 6:00 p.m. eastern on c- span. >> to route my military career, i prided myself on not being afraid -- >> throughout my military career, -- i prided myself on not being afraid to tell people what i thought. that maybe we should look at something from a different perspective. people's lives were at stake. we had an obligation in a duty to be good stewards of the resources that the public

entrusted us with. sometimes, you have to be courageous in a meeting where everyone else's bed is going up and down and you think you have a different perspective. >> major-general marsha anderson, the highest-ranking female african-american in the u.s. army. tonight, on a "q&a." >> this week, on "prime minister's questions," david cameron discussed -- discusses safeguarding the u.k. interests while protecting brussels. they are a member of the european union, though not the euro zone. tonight, o'clock p.m. eastern, on c-span. >> the house financial committee held a hearing on tuesday to consider legislation that would prohibit members of congress from buying or selling stock based on insider information.

the bill was reintroduced in the house and senate after a new story reported that members of congress are not legally bound to report profits from day trading. this portion is about one hour 10 minutes. >> the hearing will come to order. today we will examine an issue that has received a significant amount of attention in recent weeks. the american people deserve an answer to the questions about whether insider-trading laws apply to members of congress and their staff. they have the right to demand that the people elected to represent them in congress conduct themselves according to high standards and do not seek profit from their positions. during this hearing, we will address this concern.

we will seek to learn whether a member of congress, or any citizen, is exempt from a lot. we will discuss hr 1148, the stock trading on congressional knowledge act. we will hear from several witnesses today, including the sponsor of hr 1148, our colleagues at the securities and exchange commission, and other experts. i thank all the witnesses for appealing -- appearing today. i look forward to their testimony. i would like to thank representative jones for joining us to talk about the bill by sponsoring it. i will now recognize a democratic member for an opening statement. >> the chairman is on his way.

i am very pleased to welcome our witnesses today. mr. jones, ms. slaughter, mr. waltz. i look forward to your testimony. i look forward to hearing from my colleague, the first person to introduce this bill when she discovered that a staffer was making trades from within her office. i am proud to be a sponsor of h.r. 1148. i am pleased to see that we are moving with great speed to address this issue and hopefully pass it into law. a elected officials should really be like cesar's wife in avoiding the appearance of impropriety and the potential for trading on insider information in these halls is undeniable. we need to move to address it. while the sec has recently said that existing insider-trading

laws apply to members, i cannot remember the last prosecution under any existing laws. guidance has been that house rules prohibit members and their staff from entering into personal transactions that trade on confidential information. and we need to ban this. it remains clear to me that the need to expressly prohibit this activity in statute cannot be overstated. this bill is needed. action on it is long overdue. i have a series of editorials from across the country that i would like to place in the record, all of whom support this bill and say that we should have passed it yesterday. thank you, colleagues. i yield back. >> thank you. [inaudible] >> before we debate any given

policy, we need to deride the principles that apply here. number one, with the exception of statutory compensation, the american people have to have confidence that members of congress will not profit from their office. second, with the exception of the speech and debate clause within the constitution, our constituents deserve to know that members of congress will be living under the same laws that apply to them. people need to know that these principles are inviolate. it is clear that "60 minutes" still enjoys pretty good ratings, as i heard about this issue several times over the weekend. but constituents also deserve the facts. i think it is fairly clear to everyone following this issue

that congress did not exempt itself from insider trading laws. i also know that members are expressly prohibited from using their official positions for personal gain. the subject matter of today's hearing is very important. before we prescribe a remedy, let's make sure we have identified the right problem. the challenge might be lax enforcement or inadequate disclosure. it may lie in vague statutory definitions. it does not appear to live with a congressional exemption. wherever it lies, the american people rightly deserve accountability. i yield back the balance of my time. >> [inaudible] mr. scott, three minutes? >> thank you.

i want to commend our fellow members of congress that have taken bold leadership on this. you are certainly to be commended. thank you for holding this hearing, mr. trott -- mr. chairman. it is very important that we honor the trust of the american people, which has been placed with members of congress. and barring them from profiting from information that has not been publicly obtained. the stock act would direct the commodities and futures trading commission to prohibit someone from buying or selling a commodity for future delivery or swap while in possession of material information. very important, it should be the

case. currently, insider trading is not forbidden by law. there have been reports of members of congress and their staff engaging in day trading of securities. i find this very troubling. i believe that my house colleagues and staff should be subject to the same rules. although there seems to be a consensus, some question the legislative narrow scope. mainly the application to material for non-public information and the omission of the executive branch. and i would be interested in finding out today, from our

witnesses, how they view the legislation and discussion. and what should be done to increase this narrow focus? if we feel is necessary. and thank you very much, mr. chairman. again, the american people are depending on us to play by the same rules that the other american people play by when it comes to trading on the exchanges. and >> thank you, mr. chairman. i want to see us strengthening the laws that apply to insider trading. many people look at the government today and see that it has entered into every facet of the economy. we have the government intervening in the economy on behalf of some forms and not

others. with that increase the size and influence, there is a heightened sense that political poll, is that perception that threatens the free enterprise system and the public. it is that perception that we have to address in congress. washington has to be held to a higher standard. whether this is achieved through a stop gap, i believe that the end of the day, now is the time to act. i look forward to hearing the witnesses this morning. thank you, mr. chairman. i yield back. >> thank you. i want to express my admiration for my colleagues.

during the four years that she chair -- that they chaired the committee, i did not see it incorrectly as an issue. it seemed inconceivable that members of congress would be doing that. i accept now that it has been happening and it is a matter of right and why the country correct it. i thank my colleague for persevering. the best thing to do is to be quite cautious. to some extent, there will be elements of knowledge that we have to capture under the law and our prediction about how they both may go. it did not have the commitments signed in your pocket, there is something that should not be there. and what occurred to me some

time ago was a potential issue. i resolve to the best i could. my potential investments are massachusetts municipal bonds. which have also been pretty good lately. ratings agencies underestimate the commitment of the states. i have been urging the ratings agencies to reduce the risk component to municipal bonds, which would make the interest rate cut down. i am getting an unduly high return because of the nonexistent possibilities that they will default. i also thought that allowing the bonds of the state, and joining to represent the minimize the argument of a conflict of interest. to the extent that i would undermine anything for the fiscal soundness of the state that represent, i would assume it to be ok. it is important that we pass

this legislation and i think my colleagues for doing it. i am skeptical of the blind trust with a last-minute entry. mandatory blind trust, there is a problem with being more or less blind. i believe that the approach is a very thoughtful one. i will be working to sharpen the legislation. for those who argue that it is not necessary, i will rely of my most important legislative from simple. redundancy is clearly preferable to ambiguity. some of those are telling us that this is done mess it -- this is unnecessary. others have argued that it is immediately to ambiguous. thank you. >> thank you.

mr. duffy, two minutes? >> thank you, mr. chairman. i think that there is a cloud over members of congress and the trades that they make. whether or not that is a just perception or there is wrongdoing, i do not know. i think that this is the first step in the right direction. i think that we should take the first step and leave no gray area with what members of the house, senate, or judicial branch do regarding trades. it is house bill 3550. there, we mandate that each member has a blind trust. if they opt out, they cannot for disclosure of trade within three business days. i think that if we do that, it

will shed light on any trades the golan with members of senior staff. three days later, two days later, we would be able to see that. i think that that kind of immediate transparency is imperative for legislation. if we take only half of a step, there will be too much gray out there for members of the public to see that we could skirt around the new rule. my new bill goes the difference and makes sure that there will be no doubt, in the minds of the american people, that members of congress, the executive branch, or the jeep -- or the judiciary will use inside information. >> thank you, mr. chairman.

i want to thank the distinguished panel and sponsors of this legislation for coming forward. i certainly think that recent revelations have created out. whether or not members are capitalizing on inside information through the legislative process, i am a co- sponsoring and i think it should be addressed. i think we need to do it quick end in a fashion that restores america's confidence that we are operating aboveboard and not taking undue advantage of our position. with that, i would like to congratulate the sponsors of this bill. thank you very much. i yield back the balance of my time.

>> thank you. today's hearing focuses on a specific piece of legislation, but i feel that the greater discussion revolves around the public's perception of washington and the current lack of trust the voters across the country have in their elected leaders. as members of congress work off of material -- public information as defined for private citizens that trade off of such information, there should be penalties and accountability. keep in mind that it does not make for justifiable allegations for members of congress. i feel that the stopgap is a completely unworkable solution. the bill would likely lead to political witch hunts. judging by language in section 3, it could disallow members of congress from getting before there again.

further eroding the public's trust in washington. i feel that there are better ways to address this issue. it is why i introduced house resolution 480, requiring every member of congress place their assets in a blind trust, disclosing their trading activity on a monthly basis for the public to see. it bars insider-trading for members of congress and grants powers to the house committee on ethics, avoiding the constitutional problem of having an executive agency interested in exit -- investigating the branch. i feel that this would be an important step towards washington regaining the trust of the american people. with this in mind, i look forward to the hearing and yield back the balance of my time.

>> [inaudible] >> i will try one minute. let's see how it goes. ifthe 1960's, when asked government officials could be counted on to do the right thing, americans overwhelmingly fought yes. they did not question the motives. they thought that the people who held responsible positions in their democracy were patriotic. that trust is now gone. in polling, americans overwhelmingly do not think that of those who hold positions in government. we cannot survive as a democracy unless there is more confidence in the elected officials than there is now.

part of that has been discrediting everything that the government does. part of that as a result of the financial crisis and what happened to most americans. everything done in the financial crisis was done to help specific institutions and people, not the economy. part of that is the result of another story on 60 minutes, although it has been widely reported, the failure to prosecute in the face of what appears to be clear evidence of criminal misconduct. certainly, in a democracy, no one can be too big to prosecute. there has to be -- it has to be true that people in responsible positions are not using those positions to enrich themselves. we have got to restore the trust of the american people in their democracy.

the first step in restoring that trust is restoring that democracy. >> we have completed opening statements. we have three colleagues here to a dent -- to testify. you are free to make an opening statement at this time. walter? >> thank you. we are living in a time when the american people do not trust congress. since the bailout of wall street, bernie made of, and other indiscretions, the american people have been frustrated and disappointed in these financial issues. "60 minutes," recently escalated speculations, not

playing by the same rules. according to many experts, those at the top of the financial world that manipulated information for the american taxpayer and investors great and small. it is our job to follow a strong honor code. the american people should never, ever have the slightest perception that we are using our office to patriate our own pockets. that is why i believe and support the act. it is for maintaining the integrity of commerce -- congress. the purpose is, and i quote, to prohibit, the state of securities trading based on non-public information related to congress for securities

transactions and for other purposes. while there might be some technicalities to this legislation that need to be addressed, i believe that h.r. 1138 is a great starting point for this congress. too many people today think that financial markets are a big casino in which investors cannot win and insiders virtually cannot lose. why should they not think that? here are three headlines from last two weeks. "the secret fed bank gives $13 billion." the second bloomberg report, "henry paulson gave hedge funds the advance word of 2008."

mr. chairman, this is why the american people are so disenchanted with congress. "m. f. global prove is that the too big to fail banks are even bigger. phony accounting is still being used. financial institutions still continue. just yesterday, i was asked by a constituent applied banks that can -- received a bailout continued to give billions to their employees. it makes no sense, mr. speaker. that is why the h.r. 1148 stock that is so important. proving to the american people that if there is a problem, those of us in congress will fix it. it is of the utmost importance that we maintain these

institutions. we are given the privilege and an opportunity of serving the american people. they deserve to trust those that they'll let to represent them in washington. mr. chairman, i hope that this committee will use this bill as a vehicle to expand and build the american people in this institution, -- american people lost confidence in this institution that they have lost faith in. tim walsh has picked up the ball and is running. let's score a touchdown for the american people. thank you. >> chairman slaughter? ranking members water? >> what ever. and good morning, everyone. thank you, chairman. ranking member frank, thank you for acknowledging the lead in

this legislation. you will be missed when you retire at the end of this term. i look forward to looking -- working with you and the chairman to get this passed. another historic reform will be added to this committee's legacy. the stopgap has been around for five years and never gained more than 14 co-sponsors. brian baird and i introduced it after increasing reports that members of congress and staff were abusing the status of a private game. intelligence firms, the part that never gets mentioned -- i want to talk about that later. using non-public information to gain knowledge in the stock market, a study where members of congress performed better than average. the bill was reintroduced in

the 110th and 111th congress. i testified in 2009, before the committee subcommittee in a hearing in which the bill never advanced at all. the bill, supported by a broad base of groups for the citizens for responsibility and ethics in washington, common cause democracy 2021, and the sunlight foundation. in leading up to the report from "60 minutes" -- we only had nine co-sponsors -- we did have wanda jones, for which we are grateful. thank you for the support you have given us. we have 171 co-sponsors in accounting. every single day, it is truly a bipartisan bill. not one, but two senate counterparts in the hearing. to make up for lost time, the

senate held the hearing and committed to the mark up before the end of the year. i encourage members of this committee to work in congo -- concert with the other five. congressional approval, as we all know, is that 6%. it is hinted that thousands of people across the country have been peaceful protesting. congress is capable of reforming its operations. failing to pass it will send a clear signal to the american people that they have no interest in gaining that approval.

members of congress have a unique opportunity to change our economy and the world. there is an obligation that we do not betray our obligation for private gain. i believe that the members of the committee and congress serve the best interests of their constituents. by prohibiting the improper use of information, it will be taking an enormous step in providing transparency at strengthening government and the democratic process. some people do not believe this is necessary. they might argue that the current ethics rules and the sec rules could be applied to cases of trading using congressional

material and non-public information. we have never seen these rules apply to congress. the public rightly questions the accuracy of the rules. that is why the act as a provision to aggress insider- trading and remove ambiguity about the issue. house ethics explicitly ban such trading and provide new enforcement rules. i cannot emphasize this piece enough. it requires the registration of political intelligence firms similar to what is required by lobbyists. this legislation has been totally ignored.

let me tell you something about the importance of this. this is a group of people who survive on political intelligence. the route this current economic crisis, the so-called political intelligence firms had operated quietly in the background without any regulation or oversight. recently, this industry has been bringing in $100 million a year. these firms are not influencing congress, but using congressional information to influence their clients' stock portfolios. let me read from the web page of one such group. this is terribly important to me. open up your ears. "providing this service for clients who do not want their interest in an issue publicly known is an activity that does not need to be reported under the lobbying disclosure act

thus providing an additional layer of confidentiality for our clients." how can we possibly allow that to continue. when we pass the stock at, we will be requiring all such lobbying firms to sign up with the house and the senate and for the first time since the 1970's, we will have some idea of what they are up to. the stock at does not ban politically intelligence arms, but requires that they be as transparent as the rest of the lobbying industry. i regret that that part of the bill has gotten so little attention. it is a major if not the major part of it that we need to pass. chairmen and ranking member, thank you for holding this hearing. it is an important step forward. i look forward to working with you and the wonderful people of

this committee and in other interested parties who and at this critical legislation in a timely fashion. >> thank you for having us here on this important issue. thank you to the congresswoman and congressman john for being so engaged in this. i was a high school social studies teacher and enlisted in the national guard. i came to congress for the same reason all of you did, to make a difference and serve our country and make things better. coming to talk about the issues the american public was frustrated about, not just policy, but how the system worked. the rampant cynicism and the 9% approval rating. it is a disgrace to all of us who worked hard to build the democracy. if i got here and started talking about things like

disclosing earmarks and that became a common practice, i was approached by the congresswoman. they started explaining to me about the idea of trading on knowledge. like most americans, i could not believe it. it seems like they will -- there would be a loophole. the studies that were done seemed to show that members of congress outperform the stock market by 10% on a regular basis. that may be due to the infinite wisdom that reside in these halls. it could be something different. it could be the possibility that there was insider knowledge. my point is that the idea of serving in congress is the single greatest honor your neighbors can bestow on you. our responsibility back to them is not to have them agree with the people in decision -- decision, but to have them believe we are doing it in their best interest. if they believe we are doing it

for the right reasons, the faith in democracy is solid. i got onto this bill and spent countless hours with sec, with professors of law and with our is being retired colleague. we need to know something. if you think 9% approval rating is bad, did not pass anything on this. drag it out and do not do anything. watch what happens. that is not about political elections.

it is about the american people become cynical in the british system of governance in the world. i encourage you to take a look at this stock at. this is the bare minimum. i am with you. i agree with you on this. the first step took six years with seven co-sponsors. we need to get something done now. this is from the former sec chairman. investors put their capital to work and their fortunes to risk

because they trust that the marketplace is honest. they know our securities laws require free and fair transactions. our market is a success. our democracy is a success. it is not a witch hunt. it is not about trying to get involved in the sec response. it is trying to clarify to the american public that public severance are held not just to the same law, but we need to hold ourselves to be higher standard. we may need to make -- we need to make it perfectly clear that they can differ with us on the substance, but not our motives. i am it will that you are taking this up. i look forward to working with

each and every member to approve an effect in this bill. i cannot stress enough that we have a senate counterpart. >> that was an articulate statement. it is absolutely essential that we restore the public trust. there have been serious allegations. i am personally aware of them.

i am perfectly willing to schedule a markup. >> when it comes to scheduling a marked up, you can speak for the committee. >> i usually have to consult the ranking member. >> looking suspiciously at the political intelligence. that is an important thing now. >> corny, it is too important.

-- for me, it is too important. >> the senate has no jurisdiction over our rules and vice versa. there are first to mimic considerations. there is regulation of these activities.

i want to comment with my colleague. as a result of this committee's actions, the power under which the federal reserve makes loans has been abolished. section 13-30 of the federal reserve no longer exists. i believe the fed acted appropriately. going forward, they will have to be done under more constraints and reporting. secondly, as a result of the legislation, no transaction between the federal reserve and any private entity will go unreported. there will be a time delay so that you will not have a market impact. i think what happened was constructive. you mentioned too big to fail.

current expert opinion is that we went too far in the legislation. there are complaints that it has become too hard in the case of a crisis. in get -- we are never able to do anything right. either too much, too little. we have gone from being accused of not reading too big to fail to being too stingy to bail. we cannot build people out anymore. we knew that and that is appropriate and it will affect their behavior. the one last point i wanted to make. the gentleman from texas was talking about the full faith and credit clause. congressional leadership going back as far as i can remember was inclined to overuse people's

faith and credit clause to shelter us. there have been arguments made by house counsel supported by the leadership of both parties. the full faith and credit clause had great purpose in the 1500's. it was to prevent king james from prosecuting members of congress who said things they did not want them to set.

in addition to what we are doing, it is important for the members to be ready. we need to have a session without our leadership. people should not be prosecuted for the things they say on the floor for survival or other reasons.

i keep saying full faith and credit. i meant full speech and debate. i asked for immunity for having made that mistake. >> i must tell you how much i appreciate your comments. we no longer have the necessity for protecting the list 0-- journalists from stalling. >> people argue that it immunize people from being prosecuted for taking bribes. we do not want to do that.

we have a tendency to overreact. >> within 90 days, people would not have the knowledge of that. we seem to have an awful lot of myths about congress. i go back to the district and people say, you did not have to pay social security.

we have to be careful that we do not overreact. bringing this to our attention is good. we have to be careful that we spell out specifically. this is congress. an unusual thing. if anybody would like to respond. >> i could not agree more with you. i take no joy in this. my biggest frustration with the "60 minutes"story was that if we

had passed this thing, we would have it. people i know have integrity are being drawn into things that are ambiguous. when we overreact, we give the impression that everyone is acting in an improper manner. that is not true. there is a cynicism that when it is on television, they are going to do something. there have to be a strong desire that this will be put into place, make the transparency be there. i am more than willing that it is -- if this is the vehicle, make the changes to approve its

-- and improve it. we are open to those suggestions. i agree with your sentiments wholeheartedly. i want to be clear about this. i am not about bringing a house like of shame to congress. look at it that members who are doing it correctly and doing it right. that restore state. thank you for those comments. >> i thank you and i yield back. >> our colleagues have graciously agreed to answer questions from the committee in different of the demands on their time. we have two panels to get to today. i am hoping we can exercise restraint. >> i want to thank you for that. i am supposed to testify before transportation in 10 minutes. >> is there anyone else who would like to ask questions of this panel.

>> i just picked up a book. i am reading these accounts of insider-trading by members of congress. is there something to be able to separate out in a birch and actions from a pattern of practice that can be identified by a member. that is what concerns me.

how does this legislation deal with that? >> it just as we will not do insider trading. as i pointed out awhile ago, the most important part of this bill to me is what we have done for this whole industry called political intelligence. they lobby and they give confidentiality to their clients. it is worth $100 million a year. they will be forced to register with the house and the senate. we do not go into separation of who does what.

it may come as a great surprise that we are not supposed to do this. a staff person would be a delightful dinner companion if we allow people to go to dinner. thank goodness we do not do that. they could tell everyone what is going on in the committee, no matter how innocently they do it. other people could make money off of that information. it is something that should give us pause. >> this is a question i asked. the witnesses calling us that our experts -- there is ambiguity on how the law is written. some of it is to make sure that it is pure chance that you are not putting someone under jeopardy of prosecution or something that was not insider- trading even though it may have been looked at from the outside. it goes back to the point to overreact and create a criminal

action where there is not one. that is not the intent of this law. they have assured us that the stock at has that ability to separate those in and merchant acts. >> i yield back the balance of my time. >> no one is questioning the intent or motives of the legislation. it is fine with me. the issue is the disclosure. the disclosure act that we fill out our clients every year bliss' stocks and transactions. who is missing from this -- lists stocks and transactions. who is missing from this panel are the people who handle mutual funds. by mutual funds are held at a house. i do not choose which funds it

put the money into. every 90 days, i get a report as to what the transactions were that took place. >> this is your personal trading. what a congress person does or what the staff does. all of us have account exposed in mutual funds. we are not expected to account for every trade they make. if you told them that asbestos will not be punished, therefore the price of asbestos will go up. i am assuming you are not doing that. that was one of the cases. >> what most members of congress do is to put money into mutual funds. i have a house in rockford. i own one stock that is worth about $2,000. the rest is mutual funds.

the issue here is on compliance. we still out the annual form. we get from our investment house the transactions that took place during the course of the year. i do not have a problem with it. functionally, we get the 90 day statement after 90 days have run on the beginning of those transactions. are you with me? >> i am with you. >> we do not have anyone here who runs an investment house. we should have mutual-fund people here to be able to take an ordinary portfolio to see that these are the functional problems that could happen with regard to disclosure. >> thank you so much.

[inaudible] >> i am always hanging around the hall. anybody can reach me any time. [inaubdible] >> you can go ahead. >> the people who handle the transactions have not been on the witness list. you cannot think of everything. my question is would you be willing to have another hearing as to the people that would handle the portfolios to make sure that they would be able to follow this legislation? i do not have a problem with the intent or the nature of it. just the mechanics. thank you.

>> we can explore all sorts of different things. >> mr. scott? >> i think it might be helpful if you could comment and get some clarity on the narrowness of the application of this legislation. if you can give us an indication of how this works and while there is an omission of the

concerns of tipping members of congress and their staff and why it is limited only to non-public information and material on pending legislation? do we need to strengthen that? >> thank you, mr. scott. the questions you are bringing up are exactly right. that is why we look to the wisdom of this committee. the types of behavior is that were deemed to be inappropriate.

they might be protected by the speech and debate clause wrongfully. we narrow in on the key aspect of what does a member of congress benefit on that could be translated into trade. it was that knowledge that the public would not get. that becomes a difficult question. i assume every piece of information i get here that i would not have gotten in that classroom teaching geography would be knowledge i gained from the job. that is easy for me to say. you are poor and do not trade stocks. it is not to jam someone up. not to make it so they cannot do what they need to do. the american public trade stock. if we are representations of the american public, it would make sense that they would be here. biased doing it in au

matter. -- unbiased manner. on the issue of tipping and tippee. this is where the political intelligence firms and the information going down -- this issue of tipping is where the real problem might lie, up inadvertently saying something at thanksgiving dinner that your brother-in-law was able to use and how would that come back when there was no intention by the member of congress to profit by it but the affirmation was passed forward and how the sec views that. >> the omission of the tipping in your view does not limit the effectiveness of this bill >>.

those who are under the impression that they are purposely coming to gather that information to use that information they are paid to gather for someone else, that is the tipping that is suggested under that portion of its. what you are talking about is a broader issue. they are not a political intelligence harm, but information was passed on. that issue of tipping amongst fiduciary irresponsibility, the idea that if i have that responsibility, that is already in the law. this clarifies and uses the enforcement of the existing sec to apply here. >> that makes sense. the tipping from my understanding is that the tipping cannot be effectively enforced with legislation.

that is a behavioral -- how the police that. -- how do you police that? >> i was struck by the ambiguity of the original law. we looked at course cases. a clear-cut case of a law firm using information on stock trades. it is a difficult one. we are trying to set the bar higher for members of congress. let the public know it will be difficult to do this. it is done, there are repercussions for it. it does not get into the sticky point of how deep down the rabbit hole of insider trading can you go? >> let me read the list on the republican side. we made a mistake and called on -- that would put mr. posey next.

mr. duffy? >> i appreciate your passion and your leadership on this bill. i want to run through the thought processes of what is included and what is not included in the legislation. we have a $1,000 trigger for the reporting period is that $1,000 per trade? is that a threshold amount. if i do two $950 trades, what i

have to report? if i trade apple stocks in a day, i don't have to report? >> it is per trade. >> i could trade $50,000 in a stock if i keep every trade under $950. is that right? >> theoretically. >> the leadership here is fantastic. it goes back to the reporting requirements. we do the zones for ease. your argument is well put. >> the american people want sunshine. sunshine disinfects. we should let that light shine into every corner.

i am open to suggestions for improvement. is there reason why we picked $1,000? >> i think it was the same reason we do these zones on the reporting requirements. the paper work on this. if we went to the pure 48 hours at ceo's on wall street have to abide by, the problem is we do not have the staff to handle that. part of that was that that was the threshold level. from a theoretical argument, i am with you. one should be enough. i think it makes sense. >> you did not include a blind trust aspect. in the bill i drafted, i included a blind trust. if you want to take it out of the hands of members, members want to protect themselves. they can take their assets and

put them in a blind trust. >> this is the bare minimum. it took us six years to get seven people. if we had gone to that level, we would have gotten the same seven. we tried to pass this before it became an issue. we tried to bring it to a committee where it was palpable leading it open to suggestions from the committee. we need to be careful. i did not want to incur a fee on a blind trust because i do not need one. i think that is what this committee should do. >> if we are going to do it, we should do it the right way. a lot of ideas permeate the wrap these buildings and don't come up for years. when there is a movement to move a bill, we should get the best possible. it sounds good and it feels good. it does not actually accomplish the goal. we look back a couple of years

ago, people are still getting around the stock at because it did not have -- >> i think it will work. it was not crafted overnight. there were a lot of conversations. it has been around for six years. i am willing to approve it. >> we have a 90 day time frame. things moved quickly. a three day time. . within three days, reported to the house. if there is big news and you are trading against the big news from the wall street journal and you are going in a different direction, are you meeting with someone? that kind of transparency -- >> you are preaching to the choir. my concern is that we have the house and the senate. the president has a blind trust. he is not required. is that comes into insider information just like his staff.

why isn't executive branch included in this bill and the judiciary as well? we should include the judiciary and their staffs as well if we are going to do this in government? . is it consistent with what you propose to? a 90 day disclosure rule? >> if i could quickly interrupt -- i will be quick. this is why this hearing shows exactly why we have an opportunity. i appreciate your bill going in and your resolution going in. if nothing else comes from this but meaningful legislation that the congresses of next year know what is right in what is wrong, the american people will win. thank you for what you are doing. let's come together and make this something we can all join

hands -- join hands and be proud of because the american people can see that we care about integrity in the congress. >> i am open to find ideas that will work. let's do the right thing. let's do the best bill possible. >> we are 170 stronger than we were last week. we are ready. >> thank you. any other questions by members. >> if not, the panel is excused. >> thank you mr. chairman. >> illinois senator mark kirk

talks about what congress has and has not accomplished in 2011. he will talk about the payroll tax and his amendment or sanctions against institutions doing business with iran's central bank. "newsmakers," today at 6:00 p.m. eastern on c-span. >> to ensure that such tactics are never used again. we will continue to feel the effects of the slot operations for years to come. guns lost during this operation will continue to show up in the crimes on both sides of the border. >> it is time to rewrite the clean water act and the safe drinking water act. there are federal laws about water. they are great, important, and out of date. they need to be written. >> many transactions occurred in

those last chaotic days. i am not aware of all of those, nor do i have the information to be able to look at those transactions. >> with hundreds of hours of new public affairs programming available each week, the c-span video library is your online resources to find what you want when you want. it is washington your way carry it on thursday -- it is washington your way. on thursday, eric holder testified before congress about fast and furious. in the process, hundreds of ira arms were allowed to cross the border and worked out at various crime scenes in the u.s. and mexico. this portion of the hearing include opening statements and first round questioning by members.

>> this lack of cooperation is evident in the department's handling of inquiries related to the fast and furious operation and the death of brian terry in december 2010.

any inconsistent statements had only raised more concerns. i am also disappointed in how the department has responded to my oversight request regarding the involvement in health care legislation or related asigation while sshe served the united states solicitor general. despite claims that kagan was walled off in the discussions of the health care law, reason e- mails indicate there may be more to the story. on march 21, 2010, an e-mail from the deputy solicitor general to solicitor general kagan contained information about a meeting at the white house on the health care law. it asked, i think you will go -- you should go. this is litigation of singular importance.

solicitor general kagan responded by asking him for his phone number. she personally supported the legislation passes. -- legislation's passage. ms. kagan said, i hear they have the votes. simply amazing. these e-mails revealed inconsistencies with the administration also claims that solicitor general kagan was walled off on the issue. to help clear up any confusion, i wrote the justice department 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 does not assert any legal privilege of the request of information, but simply refused to comply with the request. that is not a sufficient answer. health care legislation was passed on december 24, 2009. on january 8, 2010, kagan told

the deputy solicitor general that she definitely would 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 by it -- or a placental supreme court -- for a potential supreme court seat. the office of the solicitor general is responsible for defending positions of the government. it was the duty or to participate in meetings and discussions involving the strategy to defend the president

also health care proposal. it would have been a surprising departure or her not to advise the administration on the health care bill. the law clearly states that justices must recuse themselves if they participate as material witnesses pertaining to proceedings that express an opinion on a specific case while they work in a government capacity. the public has the right to previouslye kagan's stated legal opinions about the legislation while she served as solicitor general. the nfl would not allow a team to officiate its own game. 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 inquiries only heightens concerns that she may in fact have a conflict of interest. president obama has promised an open and transparent government. unfortunately, we often see a closed and secretive justice department. all members of the committee look forward to asking questions on these and other issues. i will recognize the gentleman from michigan, mr. conyers. >> thank you, chairman said. a hearty welcome to the attorney general of the united states, eric holder. this is the most numerous number of police chiefs and department of justice officials i have seen

in this room at one time in quite a while. particularly the detroit police chief, who is here. i sent a special welcome. chairman smith, would it be appropriate if a former member of the committee, adam schiff of california, said on the dias with us? >> we usually do not do that. but we would be pleased to have him sit on the dais with us. we welcome his presence of here. >> i hate you for that courtesy. -- i thank you for that courtesy. adam, come on up.

there are two parts to my comments this morning to members of the committee. the first deals with what are the problems underlying the reason for the hearing. the second deals more specifically with the career and contributions of the attorney general of the united states. i have the privilege of putting the solutions that i would like you to consider out in my opening statement. we can go over the details ad nauseum if you would like. i refer everyone to the november

8, 2011 hearings from the united states senate committee on the judiciary in which chairman pat leahy, with more than one dozen senators on that committee, have plowed through this. i had spent going over and over it for the last couple of days. --i have been going over it for the last couple of days. the problem of gun trafficking in the southwest is a serious problem. i recommend to my judiciary committee calling it, with whom this whole subject matter is the jurisdiction of this committee, that we commit to maintain the

new rule requiring the reporting of multiple sales of semiautomatic weapons and shotguns and rifles by individuals in southwest border state. there have been a number of programs that have dealt with this subject. i think that is 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 five and a half years. the senate has failed to act on the nominations not only of the current president, but of president bush as well.

if we are going to criticize atf, we must work to revitalize it, not to tear it down. it is too important a source of protection and a way of ending violence in this important part of our country. 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.

they must be further prohibited by legislators and congressional action. i commend our new york colleagues, carolyn maloney, who sponsored a good idea in this regard. so i conclude, mr. chairman and members, by telling you that 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 lethal range of his mission. especially what has happened in the civil rights division.

i think the questions today are appropriate. i think the hearing is there. i think we have the chairman, who will make sure we proceed in a manner that will make us all proud that we are attending and are participating in this hearing today. we also know that letting guns from 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 for those comments.

the gentleman from california. >> i would like to ask that the following document be placed in the record. december 7, an article by cheryl. i thank you for holding this hearing. it is deja vu all over again. we are beginning the process of getting to the bottom, to the truth of fast and furious. i take exception to my colleague on the other side of the aisle, mr. conyers. what is important is the second amendment. the idea of regulations without any approval of congress have been added to create databases in the southern southwestern states, including california, arizona, mexico, new mexico, texas, clearly shows that this

administration is more interested in building databases, more interested in talking about gun control that actually controlling the drugs and guns that they have control over. whether it is money laundering or the flow of guns knowingly. one individual was allowed to b 700 weapons. gun discovery with the help of senator grassley has shown that this was not an accident. this project was failed and flawed from the beginning. it is not just atf. it is not just the dea. it includes homeland security. he is dead today because of this failed program. even today, we will not hear

them taking responsibility. they will talk about the guns recovered. it is inconclusive. this justice department is not looking for the intermission. that is reprehensible to the fivfamilies suffering from the nativneedless murder. it was a new operation building on the failed operation under the previous administration. the difference from the previous administration was that there was coordination with the mexican government. they made a real effort to pass off a small amount of effort -- weapons. the drug cartels allowed them to go to the stash house.

mr. attorney general, i hope you will not point fingers today and say that somehow this is not organic. there is nothing more organic them lot of the law enforcement officials being gunned down because of failure to protect inside the department of justice. there's more organic in dealing with congress being lied to. my committee was systematically lied to by your own representatives. there is a likelihood the individual was deliberately duped. he was duped by people who still work for you today. the president has said he has full confidence in this attorney general. i have no confidence that a president who has full confidence and an attorney general who has now terminated or dealt with the individuals including key lieutenants who

had full knowledge knew enough to stop the program before terry was gunned down. there has been an attempt to find scapegoats. many people pointed to do share in the blame. the blame must go to your desk. you must take the responsibility. why have you not terminated the many people involved? why are we still hearing about inconsistencies that do not take direct responsibility for border patrol agent brian terry's death? i respect the fact that you said you gave truthful testimony, but i would like to hear when a few weeks becomes months, are we to have confidence the president says he has in new -- in you and the other people who saw the

operation and let it happen. many people caused him to bring false testimony to the committee. it is unheard of for letters or testimony to be taken back. they have had to be taken back because of the people who still work for justice. thank you for your indulgence. i appreciate the opportunity to speak. i would ask that a member of my committee who has been intimately involved in the investigation be allowed to sit under the same terms. >> is a member of congress? >> is a member of congress. >> is a freshman from taxes. he is impacted by the gun- control regulations. he is an attorney. he is a freshman from texas. there is no room right now but we will consider it.

and is not a former member of the judiciary committee. we appreciate his expertise on the subject. let's wait until we have room and we will take it up at that point. the gentleman from virginia is recognized for an opening statement. >> today we have an opportunity to discuss the positive steps to protect our citizens from illegal firearms. i am heartened that this attorney general recognizes the smartest way to protect ourselves from crime is to prevent it in the first place. there are steps that we can take to reduce the toll of the injured and murdered. their steps we must take to enhance the ability law enforcement to effectively

investigate crimes that have already occurred. it is often said that the best strategy when you are in a hole is to stop digging. unfortunately, the house passed a dangerous bill that would require each state to accept concealed handgun carry permits from other states, even if the permit holder would not be allowed to carry or possess a handgun in his home state or the state where he is traveling. actions like this make the hole deeper and do not make us safer. with reference to the problem of gun trafficking on the southwest border, we know the rule that went into effect in august requiring the reporting of multiple sales of certain assault weapons is an important

tool to help law and for -- law enforcement by the strong purchasing -- fight the strong purchasing. this committee voted against funding to implement the reporting requirement. if the measure had been included in the final version, the prohibition against the reporting requirement had been included, the atf would not be receiving these reports today. they would be denied information that is helping them investigate stock purchasing -- straw purchasing. it includes acts of arson and bombings. we must make sure this agency is capable of fulfilling its important mission. it needs strong leadership. we need to encourage our colleagues to confirm the

nominee to be director of the atf. we have learned we need to give prosecutors a critical additional tool to fight gun trafficking. we need a statute that specifically prohibits the transfer of multiple firearms into the hands of those legally ineligible to possess them and to those who intend to use them to commit crimes. i hope this committee will take action on legislation in this area in the near future. these are things we need to do to address the real problem. those who want to focus on fast and furious, i would note that these tactics initiated in the atf investigation under the bush administration. in the 2007 memo, it refers to the fact begun walking -- that gun walking was beginning under

the bush administration. attorney general holder should be praised for saying they were unacceptable and referring the matter to the inspector general soon after he learned about them. the attorney general for repairing and for his testimony. >> we're pleased to recognize eric holder. on february 2009, he was sworn in as the 82nd attorney general of the united states. attorney general holder has enjoyed a long and distinguished career in public service. he first joined the department through the attorney general honors program in 1976. he became one of the 1st attorneys to serve in the newly formed public integrity section. he went on to serve as the judge of the superior court of the district of columbia and the u.s. attorney for the district of columbia. he was named by president clinton to be the deputy attorney general. prior to becoming attorney general, he was a litigation

partner at a washington firm. mr. holder is a native of new york city. he is a graduate of columbia university and law school. we welcome you and look forward to your testimony. >> mr. chairman, i move that the witness be sworn. i am going to ask the gentleman was drawn up for two reasons. the attorney general did receive a letter from the committee reminding him that he is testifying under oath. we do not need to go through that necessarily. that is assumed by anybody who does testify before the committee. >> point of inquiry. is it true that a false statement to congress bears a different criminal violation than a sworn statement? >> i believe the answer to that

is yes. thatwould once again aske in light -- >> if the gentleman will yield. >> i misunderstood the question. the answer was no. it is as if he is under 03 now. >> it is exactly as if he swears under our rules. then i withdraw. >> if the attorney general will proceed. >> thank you. i appreciate the opportunity to appear before you today to describe the action we have taken to ensure the fog tactics used in operation fast and furious and earlier ones are never repeated. i have been privileged to work with this committee to strengthen national security and law enforcement. i am proud of our record of achievement. the department employees have

made historic progress in protecting the american people from a range of unprecedented threats including terrorism, as a fraud, human trafficking, and more. we have disrupted terrorist plots, successfully prosecuted scores of dangerous terrorists. the department efforts on behalf of the most vulnerable among us, including the victims of civil rights abuses and hate crimes have never been more effective. the partnerships we have built have never been stronger. it is a privilege to be joined by several of our key public safety partners. these five police executives of baltimore, boston, charlotte, detroit, and philadelphia have been leaders in developing and

implementing effective crime- prevention strategies. they have worked closely with the department is dancing critical efforts to reverse the alarming rise in law enforcement fatalities in recent years. the work we do along the southwest border is influenced by the efforts they have undertaken in their own cities. in the cities they serve and in communities across the country, this work is a priority. in our ongoing efforts to protect the american people and our brave law enforcement personnel, a critical area of focus will continue to be gun violence on the southwest border. the department has devoted significant resources to this fight and to addressing the unacceptable rate of illegal firearms trafficking from the united states to mexico. in the pursuit of that goal, and acceptable tactics were adopted as part of operation fast and furious. as i have repeatedly stated,

allowing guns to walk is unacceptable. the use of this misguided tactic is inexcusable and must never happen again. soon after learning about the allegations raised by agents involved, i took action designed to ensure accountability. in february, i asked the inspector general to investigate the matter in march, i ordered that a director recent -- directed the ascent prohibiting such tactics. the new acting atf director implemented reforms to prevent the tactics from being used in the future, including training and stricter oversight procedures for all significant investigations. the department has taken steps to ensure such tactics are never used again. it is an unfortunate reality we will continue to feel the effects of this flawed operation for years to come. the dense lost will continue to

show up a crime scenes on both sides of the border. as we work to identify where errors have occurred and ensure that the mistakes never happen again, we must not lose sight of the critical challenge this flawed operation has highlighted. that is the battle to stop the flow of guns to mexico. of the 94,000 tons recovered in the last five years, more than 64,000 were sourced to the united states. the trafficking of fire arms across the southwest corner has contributed to approximately 40,000 deaths in mexico. the reforms with undertaken did not make any of the losses of life or burble for the grieving families. the tragedies do portray the exceptionally difficult challenges that law enforcement agencies confront every day and working to disrupt illegal fire arms transfers. operation fast and furious appears to be deeply flawed effort to respond to these

challenges. as we work to avoid future losses and mistakes, it is unfortunate that some have used inflammatory and inappropriate rhetoric about one particular tragedy in an effort to score political points. nearly one year ago while working to protect fellow citizens, agent brian terry was violently murdered in arizona. we should all feel outrage about his death. as i have communicate directly to his family, we're dedicated to pursuing justice on his behalf. the department is working to answer questions the family has raised, including whether and how far arms connected to fast and furious in up with mexican drug cartels. i expect the acting expecting -- acting inspector general to answer these questions. i a understand that congress wants answers. justice department employees have been working to provide

relevant information to the committee and two other committees investigating fast and furious while preserving the integrity of our ongoing criminal investigations and prosecutions. the department has fully -- been fully cooperative and responsible in its dealings. i have answered questions in the house and senate concerning this matter. we have provided almost 5000 pages of documents for congressional investigators to review. we have scheduled numerous interviews and testified at public areas. leillast week we provided unprecedented access to documents to explain how inaccurate information was initially conveyed to congress. the documents demonstrate that personal reply on communications -- personnel replied on communications from supervisors. we now know some information provided by the supervisors was

inaccurate. in subsequent interviews with investigators, these supervisors have stated they did not know at the time that the information provided in a letter to congressional leaders earlier this year was inaccurate. the documents produced also belie the remarkable notion that this operation was perceived -- conceived by department leaders. it is my understanding there were not informed of the inappropriate tactics employed until those were made public. they turned to those with supervisory responsibility to learn the facts. it is clear that disrupting the dangerous flow of firearms along the southwest border and putting an end to the violence that has claimed to many lives will continue to be a top priority for the department of justice. this year, we have led successful investigation into the murders of united states citizens in mexico, created new

prosecutorial units, and secured the extradition of more than 100 defendants wanted by u.s. law enforcement, including the former head of the tijuana cartel. we build capacity on both sides of the border by developing new procedures for using evidence gathered in mexico to prosecute traffickers in u.s. courts, training thousands of mexican prosecutors and investigators, successfully fighting to enhance sentencing guidelines, and pursuing coordinated investigations of gun trafficking rings. despite the progress, we have more to do. each of us has a duty to act and rise above partisan divisions and politically motivated games. the american people deserve better. it is time for a new dialogue about important issues that is respectful, responsible. this will require us to employ

the tactics for security every day. atf agents brought the misguided tactics of operation fast and furious to light. they also sounded the alarm for more effective laws to combat drawn -- gun trafficking and enhance public safety. it was explained that the agency's ability to stem the flow of guns suffers from a lack of effective enforcement tools. one critical first step should be for congress to provide the tools and authority it needs. unfortunately earlier this year, the majority house members voted to keep law enforcement in the dark when individuals purchase multiple semi-automatic weapons. we hope we can work together to

provide law enforcement agents with the tools the desperately need to protect the country and ensure their own safety. for their sake, we cannot afford to allow the tragic mistakes to become a political sideshow or series of media opportunities. we must look forward and we commit ourselves to our shared public safety obligations. i look forward to working with you in this effort. i look forward to your questions. >> thank you, mr. attorney general. other members will ask about fast and furious. i am going to pick a different subject and ask about the extent of justin k. -- justice taken -- kagen's involvement. did the in-solicitor general kagan express an opinion on the health care legislation? >> as i testified last month to

the senate, we took steps to physically exclude or remove her when conversations -- >> when did you start excluding her. >> i am not sure when that started. my memory is that solicitor general taken was not present -- kagan was not present. >> she testified she first became aware of the possibility she might be considered in early march. you would not have excluded her prior to early march? >> i do not know exactly when the events occurred. i do feel comfortable in saying that in terms of the conversations that occurred in my conference room about the health care legislation -- >> would you have had any reason to exclude her or wall her off

prior to the time she was considered for the supreme court? >> with regard to the conversations that occurred in my conference room about the health care bill, i do not remember her being there. >> would you be able to check your records to find out the date when you started telling her she should excuse or recused herself from those discussions? >> i will attempt to do that. i am not sure that information exists any place. to the extent it does, i will provide it to you. perhaps we do have a record of any meetings she attended? -- >> would you have a record of any meetings attended? i assume that would be on your schedule. >> the schedule for our 9:15 meeting lists of people expected to be there. i do not know if we list the people who are actually there. >> i do not believe you have any reason to exclude her before she

was being considered for the supreme court vacancy. she would have a duty to be involved in conversations regarding the health care bill. let me go to another question. this goes to what i wrote you asking for documents and to interview staff members. are you claiming legal privilege in failing to comply with my requests about her involvement with the health care legislation your letter did not assert any legal privilege. >> the department has released documents related to the matter. those are available to members of the committee. the documents we have released are consistent -- >> are you a certain legal privilege? is that why you are refusing to give me the documents? >> is our view that in trying to determine the answers to

questions you have, those are questions brought by those involved in the litigation. >> you are not asserting legal privilege? >> it seems to be that there are separation of powers concerns given to members of congress are partners in the ongoing legislation. i would have some concerns there. >> what would be the legal privilege you would be asserting if you were a certain one? you are not asserting legal privilege. is there any reason i should not get the documents or be able to interview the individuals i requested to interview? >> federal law provides for the resolution of these recusant questions. each justice has to make that decision. >> i am not asking about what the supreme court justice might do. i am talking about my request for documents. i cannot imagine any good reason

why he would withhold them until you were to assert legal privilege. then we could discuss that. i have not heard you say you are asserting legal privilege. >> the documents you requested have been released. those documents are available. >> the documents are requested may or may not have been released. we're trying to find out if the documents may exist. we've requested to interview two individuals. you are not agree to let us interview those individuals. if you are not a certain legal privilege, i will move forward with scheduling the interviews and look forward to the documents. >> we have not expressed legal privilege. we have expressed constitutional concerns about the nature -- >> concerns do not rise to the level of legal privilege. i am expressing concerns today. if you are not going to assert legal privilege, i did not see why i should not get the documents and conduct the interviews.

mr. conyers is recognized for his questions. >> thank you, mr. chairman. you have chief godby, lots of other police chiefs and law enforcement people behind you. tell us how you partner with them to fight violent crime, particularly gun-running with state and local police officers on the front lines. >> the gentlemen who sit behind me and the people they represent are essential partners in our fight against violence and gun violence in particular. we rely on our state and local partners who are in the front lines of the fight. we try to support them in ways that we can. we try to come up with programs that protect their lives.

the reality is -- that is why i think these five gentlemen are so good to have to date is because they come up with innovative programs we tried to support and expand across the nation. they are great partners in the fight. what they're doing in their cities are things we're trying to replicate in other cities and the work we're doing along the southwest border. >> thank you. tell me, where is the mexican government in all this done running -- gun-running, violence, and drug epidemics that go on? it usually starts in mexico but eventually gets to the u.s., southwest area. what is the mexican government role? how do you work with them?

>> they have also been good partners. president calderon has courageously committed his government to fighting the cartels. he has done so in a way that has had a great political cost. it has cost the lives of many mexican law-enforcement officials who have been part of the battle. 40,000 people in mexico have lost their lives over the last five years in connection with this fight. the mexican government is committed to eradicating the cartels. we have worked with them in unprecedented ways in terms of expediting -- extraditing people to united states and sharing information. we have moved resources to the southwest border. we have linked up task forces with our mexican partners. our interaction with the mexican government in dealing with the

cartels is unprecedented. >> i mentioned several things we ought to do in terms of getting on top of the drugs, gun smuggling. you are our chief law- enforcement officer in the nation. i know you are relying on state and local law enforcement house will -- law enforcement as well. what are the big issues? what is the big picture in terms of what we might want to consider in the congress to help in on top of this and to help you and the department of

justice get on top of the drugs and guns? >> there are certain things that would be very helpful. there is no gun trafficking statute or even an express prohibition on straw purchases. >> far too low for the serious nature of the crimes. it is far too easy for criminals to get their hands on weapons. congressional support for the regulation that we put in place along -- in those four border states to deal with the long guns that can be purchased there. regulation that is consistent with what we already do with regard to handguns. something that congressional

support would be important for. so the possibility of having ways in which we could have a good dialogue about effective measures that would reduce the flow of guns to mexico, make this nation more safe, protect the lives of people in law enforcement in this country, and respect the second amendment at the same time is something that i think a meaningful, good dialogue with members of congress would be very productive. >> i am glad you mentioned the second amendment so that my friend and colleague, darrell issa, won't be nervous about other strategies that you will be using. >> i will still be nervous. >> i thank you very much, general holder, and i return the balance of my time. >> thank you. >> thank you, mr. conyers. the gentleman from wisconsin,

mr. sensenbrenner, is recognized for his questions. >> thank you very much, mr. chairman. mr. holder, i deeply appreciate your coming here to talk largely about fast and furious, and the way this has been handled within the justice department i think has put the justice department as an institution under a cloud that has not been exceeded since the infamous scandal of the 1970's. you are at the top of the justice department. do you think the buck stops with you? >> i am ultimately responsible for all of the actions that occur within the department, but i think as you look at what happened with regard to fast and furious and try to decide what kind of performance i have done in this regard, you have to look at what happened -- what i did once i learned of these matters. >> that's a question of when you learned it because there have

been inconsistent submissions to congress. you yourself testified that you had only heard about it a few weeks earlier, and then in november you said it probably was a few months. as late as october 7, in response to allegations that you lied on may 3, you wrote to congress your statements on fast and furious have been, quote, truthful and consistent. then your underlings on february 4, the assistant responded to senator grassley and that letter ended up being withdrawn. as mr. issa has said, lying to congress is a federal felony. i don't want to say that you have committed a felony, mr. attorney general, but obviously there have been statements so misleading that a letter had to

be withdrawn. i think that some heads should roll, and i do agree with senator grassley that the assistant attorney general for the criminal division should be fired, and i know that that decision is not yours, but it is the president's, but i think that merely getting the head of the a.t.f. director at the time is not sufficient since it's obvious that there was now within the justice department. what are you going to do to clean up this mess? >> let me make something clear. nobody in the justice department has lied. >> why was the letter withdrawn? >> the letter was withdrawn because there was information in there that was inaccurate. the justice department letter of -- >> tell me what is the difference between lying and misleading congress in this context. >> well, if you want to have this legal argument --

conversation, it all has to do with your state of mind and whether or not you had the intent to come up with something that could be considered perjury or a lie. information that was provided in that february 4 letter was gleaned by the people who drafted the letter after they interacted with people who they thought were in the best position to have the information. >> ok. the wagons down the street are in a pretty tight circle, mr. attorney general. the american people need the truth. they haven't gotten the truth from what has been coming out of the justice department in the last year, and they were relying on congress to get the truth. you are here today, and again i appreciate your being here today as a way to get the truth. but the answers that you have given so far are basically saying, well, gee, somebody else did it, and there is really no responsibility within the

justice department. you know, the thing is that if we don't get to the bottom of this, and that requires your assistance on that, there is only one other alternative that congress has, and it's called impeachment, where our subpoena powers are plenary and there can't be any type of legal immunity or privilege that can be asserted on that. now, you know, i have done more impeachments than anybody else in the history of the country. it is an expensive and messy affair, and i don't want to go this far. but if we keep on getting pushed down the road and the can keeps on getting kicked and we don't get closure to this, what is congress to do so that we don't spend all of our time in court arguing privilege, which is not a way to get at the truth? >> well, the justice department has released facts, and i think

that's what we need to focus on, facts. , with regard to the creation of the february 4 letter, i made the determination that we would release things that the justice department has never, ever released before, core, deliberative material about how that letter was put together, information that clearly could have been withheld and has always been withheld by my predecessors and i expect by my successors as well. the inspector general pursuant to my request is conducting an investigation of this matter and i suspect will have a great many more answers than we presently do. i don't have the ability to do a top to bottom investigation at this point out of deference to the investigation that is being done by the inspector general. that does not, however, preclude me from taking action that i think appropriate based on

information that comes to my age tension in spite of the fact that the inspector general has an ongoing investigation. >> well, you won't have an independent counsel, and we end up having the justice department investigating itself in the absence of an independent counsel. having gone through interminable hearings, with all due respect, mr. attorney general, you got to get this done much more quickly than plugging the holes that they ended up showing existed in the department at that time, and i yield back. >> chairman, i have a par larmentary inquiry. >> for what reason does the gentleman from texas -- >> i seek clarification. the gentleman indicated impeachment. i was not sure which official, which person he was speaking of in terms of impeachment. >> the gentleman from wisconsin was referring to the fact that while he was chairman of this committee, he oversaw the

impeachment process. >> continue my inquiry. >> the gentleman -- >> only alternative is impeachment. >> the gentleman from california, mr. berman, is recognized. >> clarification -- >> thank you. thank you, mr. chairman. i would like to yield a little time to the ranking member on this issue. >> thank you, mr. berman. i merely wanted to clear the record with jim sensenbrenner. i have had far more impeachment experience than he has. >> will the gentleman yield? >> only if the chairman allows my time to be extended. >> the gentleman is recognized for a full five minutes. that's correct. >> thank you, mr. chairman.

we have heard a lot, some of it quite unbelievably overblown. i would like to give you some of the truth as i see it. you are on record as admitting that the fast and furious program was a fundamentally flawed program. fast and furious is only one program in many undertaken by the u.s. law enforcement authorities, not only to limit the harm of illegal gun trafficking but also the broader goal of protecting u.s. and mexican citizens. there has to be a little perspective on what is going on in u.s.-mexico relationship on this issue. what president calderon made the historic decision to take the fight directly to the drug cartels, law enforcement both in mexico and the united states became more complicated and more

dangerous. and the fact is, and i see it from a foreign affairs committee perspective as well as from this perspective, that u.s.-mexico law enforcement cooperation and general cooperation is wider and deeper today than it has ever been in the history of our two nations. the department of justice has apprehended and extradited an unprecedented number of criminals, including some of the most dangerous cartel leaders. they had successfully committed crimes against mexican nationals, trained hundreds of mexican prosecutors and police officers, many of whom work side by side with u.s. counterparts on these shared goals. the level of intelligence sharing and cooperation is unprecedented at this particular time. we also have to acknowledge the

negative impact caused by the significant stream of guns going into mexico from the united states. every day thousands of guns are smuggled across the united states border into mexico, making citizens of mexico and the united states less safe. the southwest border states, texas, new mexico, arizona, and california, are the top four source locations for firearms received and traced in mexico back to the united states. general holder, i am wondering if you could develop -- i think you got into this a little bit with ranking member conyers. what could the congress be doing in terms of funding, in terms of passing laws to help make this a successful endeavor? i would like you to just expand on some of those specific issues. are we giving you the resources

you need to make this cooperation produce the goal that both countries' governments share? >> frankly, no. we have sought additional legislative enhancements to our abilities to deal the gun trafficking problem, as i indicated to the ranking member. we have also sought funds to increase the number of a.t.f. agents to operate in these teams along the southwest border. i think we requested funds so that we would have 14 of these teams. that number was reduced based on the funding level that we got to about seven or eight, which decreased our ability to interact effectively or as effectively as we might with our mexican counterparts. so there are funding issues. there are issues with regard to the confirmation of an a.t.f. director, a permanent a.t.f. director. there are legislative statutory tools that we could use from congress and that we have

proposed. all of these things would help us in our fight against the gun trafficking problem that you have i think so rightfully identified. >> the only thing i would just chose with the simple statement that as we pursue responsibly our oversight responsibilities on a program that you have stated was fundamentally flawed, that we keep in mind our obligations as a congress to help something that i think there is a broad consensus must continue, must expand and must achieve the goals that our two governments are committed to and to have some perspective on what is going on. that seems to have been lost in some of the rhetoric that has come in recent months. i yield back. >> would the gentleman yield? >> do i have time? >> you do. the gentleman has five seconds left. >> i yield. >> i would just make the point that fast and furious is not a program. we have been told it's less than

a program, just an operation. >> the gentleman is recognized for an dirbling 30 seconds. -- the gentleman is recognized for an additional 30 seconds. >> i take your point. i just don't understand it. >> the gentleman from california has the time. >> would the gentleman continue to yield? >> i thank the gentleman. the point that i am making is that there is a wide question of a lot of things that go on at justice. i agree with the gentleman that we need to look at the overall management of justice, but this small operation and the refusal to give us the truth early on has -- >> i appreciate the time. i would love to hear about congress' agenda to make this cooperation truly as effective as it could be, funding the legislation regarding the paper trail on guns and all the other things that the general mentioned that we should be doing. >> thank you, mr. berman.

the judiciary committee will stand in recess until immediately after this series of four votes. i do not expect to take a lunch break. so when we return, we will proceed until the next series of votes, about 1:15. we stand in recess until after these votes.

>> the judiciary committee will come to order. the gentleman from north carolina, mr. coble, is recognized for his questions. >> thank you, mr. chairman. good morning, general. >> good morning. >> general, the f.b.i. operates under attorney general guidelines for all of their investigative activities. the objective of these guidelines is the full utilization of all authorities and investigative matters consistent with the constitution and the laws of the united states. it furthermore ensures that activities must be lawful and

respect liberty and avoid unnecessary intrusion into the lives of law-abiding citizens. they enable the f.b.i. to perform its duties with effectiveness, certainty and confidence. the purpose of these guidelines, it appears apparent, is to establish consistent policy in such matters. general, does the a.t.f. and/or other department of justice law enforcement components operate under these guidelines? >> there are general guidelines that exist within the department and that control the activities of the various investigative agencies that are part of the department, the marshal service, a.t.f. and f.b.i. there are some that might apply specifically to the f.b.i. that might not apply to the other components. >> i think you may have already answered this one, but are they

identical guidelines for identical investigative activity or may one agency do something that another cannot do under similar circumstances, and if they differ, how do they differ from the guidelines that the f.b.i. -- under which the f.b.i. operates? >> there are general guidelines that handle or control the way in which investigations are to occur. for instance, if we are looking at fast and furious, those are outside the guidelines certainly that apply to a.t.f., but they would also be outside the guidelines that apply to the drug enforcement administration as well. one of the things that we have tried to do in this reform of a.t.f. and under the leadership of mr. jones is come up with a whole set of new policy changes and rules with regard to how a.t.f. itself can handle and conduct investigations. >> general, if i had two words to describe fast and furious, it would be reckless at best and a

disaster at worst. but firearms, i am told, sold under the fast and furious program were included in a.t.f.'s statistics on the retail sale of firearms and related regulations. now that we know that a.t.f. apparently skewed the statistics , particularly by long gun sales, will these statistics be scrapped or abandoned? >> i don't know if that in fact is true, but the weapons that were involved in fast and furious should not be counted as part of that overall number, and to the extent that is true -- i don't know if it's true or not. >> general, have you implemented any policy to end programs such as fast and furious, and are these changes permanent or temporary? >> in addition to the things that todd jones has put in place that deals with certainly the

problems that are most egregious about a.t.f., he talks about the way in which surveillance has to occur when you are monitoring gun trafficking operations, i released in march of this year a field directive through the deputy attorney general that indicated that gun hawking is prohibited and made sure that every agent in the justice department, every prosecutor in the justice department understands that. so it is clear that gun walking is not acceptable, was never acceptable, but is certainly not acceptable after my policy pronouncement in march of this year. >> general holder, earlier this year, august, i believe, you named todd jones as the new director of a.t.f. this appears irregular because he currently continues to serve as u.s. attorney for that area in minnesota, while at the same time -- he wears two hats.

is this irregular? >> it is irregular. we have a very qualified person who could be the head of a.t.f. i thought a management change was necessary at a.t.f., and in the absence of a confirmed head, i had to go with who i thought was best for the organization. todd is a very experienced prosecutor. he is a great u.s. attorney, but you are right, he is in fact wearing two hats. he is working extremely hard, but i think he has made meaningful changes at a.t.f. he has lifted morale. he has put in place a set of regulations that would prevent the mistakes from the flawed fast and furious operation from ever occurring again, but you are right. it is irregular. i would rather have a confirmed, permanent head at a.t.f. >> thank you. i see my red light has illuminated so i will yield back. >> thank you, mr. cole. another gentleman from north carolina, mr. watt, is recognized for his questions. >> thank you, mr. chairman. mr. chairman, i had hoped the

way my colleague from north carolina started his questioning that we were going to treat this as a general oversight hearing, which is the way my memo said it was going to be, rather than an inquiry into one single subject. so i want to spend my time asking about some other things unrelated to fast and furious because there are a number of other important things going on in life, and some of those things the attorney general and his staff have made tremendously good decisions about. one of those is to have all these police chiefs sitting behind you today, one of whom is from my hometown of charlotte, north carolina, and for the members on the democratic side, they will certainly get to know

chief rodney monroe when they come to charlotte for the democratic national convention. so i want to applaud the work that he is doing to prepare us for that significant national event. perhaps the police chief from tampa is behind you also. i don't know him. he will be doing that don't part work for the republicans at the republican national convention, but that is a massive, massive undertaking, and i know that the attorney general's office, the department of justice, secret service, all of the federal authorities are working well based on everything i have heard to prepare for those big security events. i want to say publicly how much

i applaud that. second, there are a number of things going on, on an issue that we are dealing with or trying to deal with in this committee, dealing with on-line piracy, and we have some proposed legislation. i won't ask you to comment on that, but i would ask you to comment briefly on the extent of the problem and briefly on what the department of justice is doing to try to combat on-line piracy until we get the bill passed. i say comment briefly because i got one other subject that i want to get to related to redistricting and voter suppression and the preclearance process under the voting rights act. perhaps those issues, voter

suppression in particular, may not be as important to some of my colleagues on this committee as fast and furious and guns, but for a number of people in this country who would like to have the opportunity to vote, they are very serious issues. so why don't i just ask you to comment on what is happening in both of those areas, on-line piracy and the voter suppression, redistricting, and preclearance process. >> we have been i think very aggressive with regard to our law enforcement efforts concerning intellectual property concerns. in february of 2010, i established the dew point's task force on intellectual property. i traveled to china sometime last year, was at the white house two weeks or so ago to announce the program where i cut some radio spots in addition to

television spots that were done by others to talk about the whole question of piracy. we have to understand the significance of it. it is a moral and legal problem, but it's also a job killer. when things like intellectual property are stolen by other countries, by other people in this country, inappropriately, it costs jobs. it inhibits creativity, and so we have looked at it in a variety of ways. i worked with the head of the white house effort in this regard, and this is a priority item for us. i would certainly like to work with you with regard to the bill that you mentioned and see if we can come up with a way in which we put more teeth into our enforcement efforts. with regard to the whole question of voter suppression and challenges, we have filed a number of lawsuits with regard

to changes under districts covered by the voting rights act. i will be giving a speech on monday talking about this in a more fulsome way. the justice department has the responsibility under the voting rights act to look at proposed changes in voting schemes that are in areas covered by the voting rights act. there is only so much i can say there because we have to act in a neutral way or almost act as judges in that regard. i can tell you, though, that i am concerned about some of the things that i have seen without getting into specifics. i was a prosecutor and i investigated and prosecuted voter fraud cases when i was a young prosecutor, and i am concerned that some of the changes go far beyond that which

exist in terms of vote fraud. the arc that we have seen over the course of this country has been to increase the number of people who have the ability to vote, whether it's after the civil war enfranchisement of women, we have always tried to make it easier. i am concerned that the recent efforts are going to have a negative impact and i think that's not good for our democracy. we want as many people as we can to have their voices heard in the most important way and that's by casting votes. >> i prided myself on telling people what i thought. the worst thing you can do is let a senior leader head down the wrong road if you are thinking, maybe we ought to take another look at this. maybe we ought to look at this from this perspective because people's lives could be at stake