considering the combined commitment to italy and spain could well exceed the trillion dollars, we're talking about u.s. taxpayers they address for up to $200 billion. in assisting the potential risk , one has to consider that the risk of the on wrapping of the euro is a distinct possibility. were it to occur at in disorderly manner, it would have a devastating impact onhe outlook. imf loans to the periphery could reach levels that should be on presidentially -- unprecedented. lastly, and judging by the 2008 and nine experience with currency swaps, the dollar swap lines could reach $600 billion in the event the crisis were to intensify. what must pose that the risk

would be circumscribed by the fact that the main counterplot to those -- counterpart would be swapped. they could print the year rose to buy the dollars to repay those loans. thank you. >> thank you. >> members of t subcommittee, thank you for inviting me to testify. the eurozone is teetering on collapse. because of the problem is excessive government spending and leading to excessive government debt coupled with slowed gdp growth. the largest european countries are expected to have gdp growth at 1.3% for 2012. the imf has also produced a long-term rl gdp forecast in which they have discovered most

of the european zone will have less than 2gdp growth by 2016. if we take a book at the household and financial debts in europe, we find that the u.k.'s debt to gdp ratio including household and finances is over 900% japan is over 600%. the u.s. is over 30. they are dwning in debt. a recent article from economist at the european central bank says that there is a stick of again-up that the size of government onrowth. the european union will unify a break up or downsize regardless without spending too much money and taking on too muc debt to reduce the ability to pay for it was slow gdp growth.

additional debt is not the answer. it is the problem. the other solution is austerity. making loans to the central bank does not solve the underlying structural problem. it only makes the debt to gdp problem worse. it is a short-term solution for worsening gdp growth. if germany and france are successful in creating a fiscally integrated europe, there will be less of a rush to purchase u.s. treasurys. given that the fed is already the purchaser of u.s. treasuries, this could be a problem. u.k. and japan continue to increase their purchases. the u.k. and japan are not engh to pick up the slack of china purchases. the fed has been active in european blout starting in

2007. it pete in 2008. the largest european borrower was the failed one. we are still in the dark on the guarantees. the ecb dw $552 million from the fed. in november, there's an interest rate of 1.08%. the fed also bar the same amount in prior week. how long will they keep the swap line opened? well the cannot see it in real time, the evidence indicates a basic swap has a very short half light. it is able to drive down in great momentarily. this is ineffective. a recent disagreement was an immediate between the fed market

magazine, it the bloomberg market said they had 7.7 illion. that is almost the size of our national debt at one point recently. the fed disagreed and said it was never more than $1.50 trillion. whatever we're looking at, it ll impact these large numbers. the fed is attempting to bail out of the eozone. on the fed side, it is clear that the guarantees will be problematic. i do not see the story for improvement. it is difficult to mayor -- measure taxpayer exposure.

the imf is also active. they have a line of credit for the crisis funding in the amount of100 billion. there is little likelihood that deal continue to have problems. the arizona structural problems cannot be solved by look interest-rate guaranteefrom the fed. it could actually jeopardize u.s. taxpayers and is a perverse solution of the problem. the best way to protect this is to increase transparency to the fed. the under state spending cuts themselves in order toeduce the deficit. thank you. >> thank you. let me add my own thanks to you.

thank you for inviting me here today. i and economic steadier at the brookings institution. i am not representing the institution which is not a policy divisions. i commend you. the euro crisis is deeply worrying. there is significant chance that the crisis could go badly enough that your plunges into a deep recession that puts the u.s. into a mild recession. they will communicate itself to our shores strong way. we have $400 billion of exports to europe annually. $1 trillion of direct investments and our banks have almost $5 trillion. the good news is that the eurozone as a whole does have the resources to avoid that kind of disaster if the 17 nations together. europe is one of the world's largest economies.

the eurozone as a whole has a debt ratio similar to the u.s. spirits the situation can be remedied. i personally believe there is a three in four chance that europe will muddle through. political constraint leave us with a one in four chance of disaster. the crisis is likely to get worse before it gets better. ito probably take the imminent possibility of this to allow politicians to break through. it may be necessary for them to create a comprehensive package backed by $2 trillion euro. not all of them have been used in practice. they need to know there is

insurance for the emergency. they are unlikely to go back and supply some of the funds themselves. i believe the imf could play a very useful role in comprehensive solution. adding some imf funding to the mix would help reassure financial markets that the total resources necessary would be available. it would be a clear sign that the rest of the world stands ready to help europe for its troubles which it also be viewed positively by the markets. most importantly, at the imf is in the best position to impose coitions on lendi troubled eurozone countries. it is viewed as more dispassionate and less political about your situation. that would be true for a purely european institutions. it can provide a great deal of technical advice which is more likely to be taken when the imf is also a provider of funding. we all listen more carefully to

those for providing money to us. if europe produces a credible comprehensive plan that involves the imf appropriately, we should support that imf role. i do not believe that this would require additional u.s. funding of the imf but just the use of resources we have already provided. the imf has almost $400 billion of uncommitted resources. europe is planning to commit another 200 billion heroes to the imf with the possibility of some matching funds from certain non-european nations not including the u.s.. the risk to the taxpayer from imf lending would be small for a variety of reasons. the key one is that imf lending is and a legally privileged position that makes it much safer than the t.a.r.p. funds that were invested by u.s. taxpayers. imf loans are effectively senior in claims to all of their

borrowing. the t.a.r.p. funds were deliberately invested at the level of equity which is much riskier. this was done in order to stabilize the financial markets by protecting other suppliers of funds. in edition, even if everything does gorong, the u.s. there's less than 1/bit of the risk. -- bears 1/5 of the risk. our citizens are already at great risk. if it goes wrong, our citizens and the businesses the ellen will lose large sums of money. federal government will fall significantly, aventurine requiring taxpayers to pay more than they otherwise would have done. supporting imf intervention would reduce the total rest of america by much more than the quite modest financial risk that our shy of the imf funding would represent. sometimes the riskiest choice is

to take no chances at all. there are a few things american can do along the line of the fed swap facilities and the provision of technical advice. this is the european problem. they will need to provide the backbone. thank you for the opportunity to testify. i welcome any questions. >> thank you. thank you members of the subcommittee for inviting me to testify. to fully assess the rest to the united states in a proper role, it must first be clear what the crisis is and is not. it is not a bailout of population for the weaker european economies. the populations of those countries are being forced to give up portions of their sovereignty in name of austerity toward fisl union.

it is partially a bailout of banks of their stockholders and creditors into failing to gain significt access we need to be recapitalized by their host country governments. it is a transfer of losses from bank creditors on to the backs of ordinaryeople without requiring any cost to the banks whose practices help lead us to the problem. it is much a tell of over lending as it is of over borrowing. just as nobody should feel undue sympathy, nobody should feel for those in miscalculated their lending. the fundamental construct of the euro is flawed. it's basis depends on substantially different economies and a different levels of competitiveness among those economies sharing the same currency. to the economies have proven on able to rationalize their differences from the monetary union.

in u.s., we have a transfer mechanism allowing tax dollars to be reallocated to those less fortunate. the european countries have demonstrated an unwillingness to accept such. the solution is to either move forward with the fiscal union completely transfer of payments or break up. these are political decisions. there appears to be little popular support in germany, finland, and the netherlands for such a union. unless that changes, the result will have to shrink its membership or resolvthe dissolv. proper u.s. policy should support our values around the world not undermine them. we should support the losses first to equity investors and then to unsecured radars. we should no longer suppo

privatization of laws. in doing so leads to distortion of market incentives and for their risk-taking by those who have demonstrated an inability to properly manage risk. the european crisis demonstrates all too clearly that the problem is now well beyondoral hazard. a great many of theecisions being made now could name a crisis management and not be made by the elected representatives of the people of europe. they're being made by technocrats. the crisis is moving into a stage where they represent its. there's also the destruction of global markets. i urge you to consider whether this is the approach to crisis management that our country should be endorsing. in may 2010, at the fed reopened swap lines with the european central bank to bolster liquidity for institutions. it was costing. to increase the attractiveness,

they lowered the interest rate by half a percentage point. since then, lending to the wind incread fm $400 million to $50 million. well it may be consistent, they are being made in the near darkness. as the result, it is implemented largely by authorities. it was demonstrating and ability toecognize the scope of the problems and come to a consensus on how to address the crisis and prevent it from spreading. they saw to deny the problems and downplay the impact. they have chosen the messenger. are these proper policies to the united states to endorse? by providing unlimited swap

lines to be used, institutions which may be insolvent would allow the fed to direct u.s. foreign policy and in support of a single currency. as risk of the losses rise in the event of a break up, it they seem likely to commit as further to support that. the fed has expertise but such policy decisions should not be made about informing congress. i suggest that you consider whether the effort should be directed more towar quantification of the problem them providing technical advice to congress. dodd-frank require them to say which ones receive loans. why haven't ty required the ecb to inform them of the arrangement? what they're many more questions to be as, they suggest there are reasons for the fed concerned

about ongoing instability. there appears to be able rational basis for the actions they have taken toward short- term stability. we can believe the fed is acting appropriately. without more information, we do not know whether they're focused on a short-term stabilization properly aligned with u.s. policy goals. perhaps wehould support the union. they have deced in favor of continued pport. it seems fair to considered as such for policies decisio shoule made by the secretary of state, u.s. trade representative, and the secretary of treasury with support from congress. thank you. i will be pleased to address your questions. >> thank you. mr. ely? >> members of the subcommittee,

i appreciate the opportunity to testify today about the euro crisis and what it could mean for u.s. taxpayers. i wish i is the more positively about the situation that my fellow panelists. i cannot. europe would not be experiencing the crisis if it had never been created. the fundamental problem with the eurozone is that it ties similar a economies to a similar currency. the eurozone lacks the economic and language immigration that has long benefited the west. it greatly in paris of t sustainability of the eurozone. a key characterisc is that there are minimal barriers of services and later. these keys are not president in eurozone.

there are still many practical barriers in movement within the eu. this impair the efficiency of the eurozone countries. export goods produced these. this is especially true of the southern tier. the euro covers the gold standard witwhich the u.s. abandoned. it fixes the relationship between the currency accounts. because they of all that different rates, economic tensions develop among countries tied to each other by a common currency. the vix relationships become increasingly difficult to maintain and tell a breaking point is reached.

-- until a breaking point is reached. abandoning the eurozone would be quite painful for a country. mortgages and bonds would have to be allocated and rewritten at in new currency to spare debtors being crushed by repayment obligations. owners of the year rose are being -- of the euros appear to be shifting them to banks. the recent attempt to fix it by amending the treaty is to impose greater fiscal discipline in e du. it will not work in the short term. fiscal problems are so deeply imbedded that they cannot be fixed with in a few years. it will be a decade-long process. my written testimony discusses

the problem. a weaker year is no country has much to do. how many will succeed in doing so is a huge question. a year of crisis could end the recession. the best dominos topple with in the eurozone european recession could trigger a global economic slowdown with the u.s. falling into a recession. a slowing u.s. economy would increase the already enormous issues. the u.s. economy would look like the most troubled european countries. it cannot be a pretty picture. the u.s. has few options. the best i could do is urge the

eu to address the problems and told the eurozone to gather -- together. i am skeical how much help the imf could be. given the financial weaknesses, at the federal government should not apply any threat to help them define the debt. i do support the u.s. dollar arrangements recently introduced. these arrangements provide liquidity for the financial system while the eu worked through their problems. i see no taxpayer risk. the u.s. should take it as another wake-up call. theyre reducing this with the rest of the world.

they are removing taxes. this is an enormous politically challenging task. we are not ready to be laid low. thank you for this opportunity testify. ielcome your questions. >> we will now go to questions. i recognize myself. let's begin at the beginning. the federal reserve has foreign currencies what the normal function of the federal reserve for quite a number of years. explain what that means. >> what it means is that the eurozone can actually swapped currencies with us. we standhe dollars to us. -- we shipcheap dollars.

>> white is it an issue? -- w hy is it an issue? >> it is not being done at parity. we are not providing the currencies that they market. it is a subsidized rate. we are subsidizing europe through the swap. >> the issue here is that we reduced the cost of this exchange and made it below what is the current market rate. therefore incentivizing the european central bank to transact this kind of a swap agreement with the u.s. federal reserve. what -- in light of that, i have to this question before. what are your chances?

what do you see the likelihood that the euro makes it out of here? that the euro actually exists as a currency in medium term? >> i think you need to distinguish between losing a number of couries and the cold euro hearing. it is very likely that in the next year we are going to see several countries exit the eu. we will see them be forced to leave the euro. the bureau itself as a currency between germany and like is likely to continue to exist. >> across the panel. do you agree? >> as i said, i do not think the

euro can be saved. we can save the court. the fantasy they can bail out the paybacks is mission impossible. it has to break up. >> it is highly likely that all 17 member states. >> it is likely in the medium term that the euro continues to exist. adobe difficult to have members exit. >> i am in general agreement

with this. if they leave relatively soon, despite the problems of transitioning back to their previous currency, this may actually be positive for the global economy. they will have cheaper currencies. their exportsill become more competitive. this may be better for those countries and the global economy if they leave sooner rather than later. they can go through the adjustment process. for the remaining countries, and they have to address the classic problem of any kind of common currency area. that is the policies are not too far out of synch from what they are in other countries in the

currency area. that is a huge long-term challenge. >> you have to remember part of the problem that we have watched is that they tried to avoid that default from occurring in periphery by any means. we watched it tends to come through their voluntarily. it is becoming a default in names. this is part of the problem. they do not want to allow it to be called a default. what that would mean creates a problem in timing. we delayed this. at the point when greece was recognized, there is a problem where it should have been valued at about 80. we're trying to get 50% writedowns. it is not even worth of that. the longer we wait, the lodger

the larger they will be. we're trying to do everything we can to avoid calling it a defaults. we will end up a disorderly default unless we recognize it. >> my time has expired. to the point here, why this is a discussion, in light of opening up a low market swap rates with the federal resve and the view that the survivability of the euro as it exists does expose the taxpayer to risk. that is the concern that we have. that is what you're trying to have this hearing today. i would like to ask mr. quigley for five minutes. >> you said something that does arisen going to ask. he said it might be better for the smaller countries to be forced out its. are you assuming that they are

going to get some of the get he. are they going to go through this adjustmen process? >> this is highly speculative. >> my sense is that they would not get much help. it would probably lead to the debt restructuring that-joe was just talking about. it would enable them -- their currency would be more competitive. this is just an increasingly draconianusterity.

it creates this problem. they go through the debt adjustment process. i think for some of these countries the only way they can do that is by leading the eurozone. >> if anyone else would like to time and that i want to understand why is standing alone would be good for them and what impact it might have on the united states. >> first is a background point out like to expand on. you are hearing political judgment here. you are hearing judgment as to whether the countries have the political will and capability to deal with their longstanding problems. >> sorry for interrupting. if you could add, it seems that they have the financial capability of solving this.

>> that is certainly my view. they have clearly the ability to deal with us economically. the question is, will they take the political actions necessary to do so? i am significantly more positive about that than my fellow panelists. one reason for that is i think too often we look at what has been agreed to date. that tells us what the ultimate outcome will be. this is like looking at the debt ceiling debate here a few days before the agreement, concluding there will never be an agreement because they're so far apart or looking at the current budget negotiations and assuming that because we cannot agree the government will shut down and never start up again. i think there are strong political wills with in europe to get this together. they made a lot of mistakes. i am not trying to say they have been brilliant. my view is when they get to the

edge of the abyss, they really will be likely to do what they have to do. >> i just want to throw my 2 cents in there. i think one of the only solutions for them is to write down the debt. that is politically dangerous. it is also economically dangerous and perhaps impossible. they just came out with a report stating greecis not following austerity. they're not moving fast enough. they're dragging their feet. e? that a surprise in fact no absolutely not. the banks are glad to have to take it on the chin. look at the debt load of germany and france. their massive social the state. they cannodo this in the long run. they could do it for a year.

for get over the long run. they are all too debt-laden. >> i think that the essence of the problem in countries like greece, portugal, and ireland is that they are not solvent. additional funding is not a solution. it is thought just a question that it is a problem. they cannot produce those imbalances within a fixed exchange rates. if they try to do massive amounts of fiscal austerity with in a fed exchange-rate system, you get the result we have seen in agrees with the country collapsing. they do not collect the taxes. the debt ratio at the start of the imf program was supposed to peek at 130%. the latest imf estimates are that it will peak at 190% of gdp.

this country is clearly in softens. it has to write down the debts and deal with the problems. if i might just add one. in connection with the swaps that they are making, they are providing cheaper credits. part of the reason for that is the united states money market funds have huge amounts of deposits on the banks. they are trying to repatriate that hope. by providing those, we are not simply helping the europeans. we're helping ourselves. we will eventuly have to break it like in 2008. >> mtime has expired. >> mr. cooper for five minutes. >>hank you.

i think perhaps the most important question is the simplest. is this a crisis of the year as some or a crisis of the west? most of you have pointed out that just the trade implications alone mean that we have a stake in in crisis whether we want wonder not. when you talk about taxpayer exposure, we have to remember that countless americans are shareholders. their shareholders in institutions that have lent maybe even trillions of dollars of two countries in the eurozone. it goes witht saying we share many cultural and other ties with this troubled area. sometimes unspoken is the idea that entire capitalist systems are built on confidence to some degree and leverage in trust.

just a few years ago, there is a prominent banker that had the famous doctrine that no sovereign country could ever defaults. he was not a creature of government. he was one of the preeminent spokesman of the u.s. private sector. things have a way of changing. >> if i could address that. he did not know its history. there has been plenty of sovereign defaults before he made that statement. we have seen them since. it is potentially a global crisis. when you look to japan and

china, each of them have some very serious problems. in japan for instance we have debt to gdp ratios that exceeds any country in europe. and china, people are waiting for that to blow up. it is more just a crisis of capitalism. i think it comes back to the issue of just too much debt. i think josh made that point. it is just too much spending on the global credit card. this is what has to be reined in the united states. >> these are all valid points. this is a complex issue. too much debt generally depends on the ability to repay. these are different factors. david walker pointed out that

fiscal responsibility is in the top 34 nations. the u.s. ranked 28 behind some of the country's in europe. there are different ways to measure this. none of us wants to be unduly alarmist. we clearly have a lot of work to do in on country. our own credit rating was threatened for the first time in modern history. as we approach these issues, the longer you wait to deal with it the more the contagion spread spirit the greater the risk to confidence. -- the more the contagion spread, at the greater the risk of confince. i wonder if the contagion could have been limited. the origin of all of this bemiseits promises that cannot paid. we often refuse to even if

knowledge the broad debt for our own country. i see that my time is expiring i recall that one person has called for competition to have the best idea to calmly about a sovereign nation to default are a sovereign nation to leave the eurozone. are you aware of any good ideas in that area so that the dismemberment can be managed in a sensible way if that is what it com to? >> i am the one that made that comment. there actually is a little b of historical experience with currency arrangements in common areas and the like comi unglued. nothing is the magnitude we have today. it is not going to be an easy

process. it comes down to the questions of the alternatives. this is potentially worse. they would delay the inevitable. before i looked at this, the sooner the problems our address, the better. >> my time has expired. >> pennsylvania for five minutes. >> thank you. i want to thank each of the panelists -- but for the remarkable capacity the you have to take these complex issues and put them down in and of themselves as a challenge. this is a sobering issue and i thank you for the work your putting into it. dr. sanders, you mentioned something, and a discrepancy in

whether some of these commitments were $7 trillion or $1 -- $1.50 trillion. where we not getting unanimity about something that fundamental? >> what this was about was the fed did not disclose the window of operations. and they still have not disclosed exactly fine details on it. and they have not disclosed their guarantee programs yet. but what happened was, with the freedom of information act, fox news and bloomberg as to when the inrmation was produced. but the fed and bloomberg handled it differently. >> i think mr. ross burk used the word opacity. why are they able to keep that kind of fdamental information, it is ing back guarantees for united states taxpayers, private?

>> i think they are worried about bank runs. they do not dclose the discount window and there is not information out there. although, i would argue the exact opposite. i would say if there is a threat of a bank run, i would want to know that information. i think the fed should not be putting american taxpayers at risk. although, they have lowered interest rates so low that many are getting pummeled, but that is a different issue. and again, i think chairman bernanke will defend the fed being secret. a lot of these problems will be settled down if we made them transparent. they really should be. >> mr. rosner, you used the word opacity. i was struck by that. why isn't e european central bank being td to tell its

loans. or you can respond to my first question. >> part of the problem is that there is a huge difference between illiquidity and insolvency. one has to wonder whether part of the reason for the capacity is to protect those who are seen as illiquidity from being shown to be insolvent. >> what do you see as the difference? >> if you have short-term funding issues, but the assets on your balance sheet actually allow you to be well capitalized or the longer term, you are solvent. if you are fundamentally insolvent, no amount of liquidity will repair that. it will just smooth over the market impact over the short term. this is part of a problem going on, that the europeans have taken the step after step to make claims over -- of solvency over institutions that are fundamentally insolvent and ask

it in illiquidity, or liquidity problems. >> italy is the country -- >> no, i think it is also the core. you have had problems ataxia, commerzbank -- at dexia, at commerzbank. it is not just that is the liquidity problems, but it seems to me in some cases it is in solvency problems. we also have to recognize that part of the fiscal district -- discipline that everyone is talking about and everyone is calling for includes getting government out of the business of providing funding for creditors benefit on institutions that are fundamentally insolvent. that is a commitment of fiscal resources toward private creditors, as opposed to allowing market discipline to force losses to be recognized. >> what do we do then to make

those predators, who i guess, are passing on at risk so to speak, how do we put them back into their report replacing line so that they are the ones to accept both the benefit of the risk, but the impact of the downturn? >> by some degree, it is -- to some degree, it is by stepping away. it is not what the truck in ireland, which is to force the irish government to recognize the insolvency of the banks as a way of having to take losses on those obligations. >> would iran on the banks be an overall run -- would a run on the banks be an overall run on insolvent institutions? orix if regulators stepped in the head of that run and shut down -- >> if regulators stepped in and had of that run and shutdown those veterans of and,

we would have off the bank runs, as opposed to what we are doing. which is giving leadership to the european market and telling them where the problems are, and the leadership does everything to avoid that coming out. weought a bank stress test in europe in 2010 saying that only 91 institutions had real problems. we have seen since then that the stress test was deeply flawed and inaccurate. we have done quite a bit to cover up in solvency issues in the name of liquidity issues. >> thank you, mr. chairman. i yield back. >> thank you. inhe american financial system in your book at "reckless endangerment," which is quite a read, you talk about this. mr. welch for five minutes. >> thank you, mr. chairman. i thank the panel.

is it basically consensus that more information is better? is that a point that you all agree with? >> no. >> do the others agree with it? >> yes. >> yes. >> i agree that more information is better, but the key question is, how do people andow do policymakers' specifically react on it? what counts is not what is spoken, but what actions are taken. >> is that de "you can handle the truth"? >> it is to a great extent. >> usain no. -- you say no. it sounds like, as long as we confuse the voters, it is all right. but voters do not like that. mr. bely, -- mr. ely, you seem

to say that keeping these obscure is was better. >> it is a question of balance. in the middle of a crisis, it is very hard to tell the difference between illiquidity and insolvency. the is a fear that, for example, if you publish the discount window borrowings in the short term so people know very quickly that if a bank does bar or out of the discount window, which is secured borrowg -- they bring good efforts generally to get that money -- and if they do that, which is important for liquidity, they will be seen a potentially insolvent. i think most people agree that the discnt window, if you do publish it, you at lst once a delay of time. >> the difference in your view, if i understand where you are saying, -- what you are saying

about the changing information in a crisis where a market may react emotionally on a hair trigger, but what about having systems that allow markets to digest over time, in real time, what is going on? >> i think if there is enoh of a gap of time, that i'm definitely comfortable. the figuring out what the right calf is -- what the right gap of time is is hard. >> i don't have much time. >> corporations have an obligation to show -- an obligation to shareholders. and how can we argue against the disclosure of that information on the belief that there is no such thi as a rational investor who can read a balance sheet and understand and income statement? >> thank you.

>> i see mr. elliott's. . however, if you look at many major banks around the world, they would all be insolvent. that signal is already out there. under those set of circumstances, i don't see the necessity to the fed keeping everything blind. >> very quickly, i think that in this day and age it is naive to think that you can keep the markets ignorant of what is going on. this is an enormous amount of chatter that takes place in the money markets and with the analysts. but the real downside of trying not to disclose information in a real-time basis is that rumors develop. people may make judgmen and see false negatives in the sense

that that -- that they may assume that made the problem is more widespread when, in fact, it is not. then you are not disclosing information. >> thank you. doctor? >> in the european context, the problem is a lot deeper. the europeans have allowed the banks to keep the solvent debt of the periphery on the banking but at 100 cents on the dollar, which is agency not correct. we get the particular results that we had that was mentioned that says we have a stress test. if we are assuming that it is impossible for any of their country to default. i think they are not doing a service by being very opaque and actually encouraging the perpetuation of some sort of myth that these debts are going

to be paid back. >> thank you. i yield back. correct my colleague will now step -- start a second round. i recognize myself for five minutes. the question is, how large do you envision the swap line? how large a you think it could get? in the crisis in early 2009, we had about $600 billion. dr. lachman, what is youriew? >> i think you could quite easily go up to 600 billion euro. you're talking about a european banking system that is huge in relation to that of the united states. you are talking about an economy that is one-third of the globe. the banking seor is very important. the chances of getting to $600 billion, i'm just thinking in terms of the amount of money in the united states that money

market funds have parked $1 trillion. and getting up to $600 billion would not seem to me to be a stretch. >> i agree with the doctor. i think we could get above that amount, of to the $1 trillion level, or perhaps even higher. and because we are not seeing what is happening in real time, i know that chairman bernanke said he has no plans to bail out europe. but since we cannot see the balance sheet, iould say that they are probably going to expand the swap lines. >> the short answer is, i don't know. i'm not deeply worried about it. the european central bank has very, very good credit. >> i do not think you can know unless you have a consensus of how the two are going to move forward to recognize the crisis and if we continue on this trajectory, i do not disagree with either dr. sanders or dr.

lachman. but it is unknowable at this point. >> i agree that it is a noble, but the longer these, problems continue, they continue the uncertainty abouthese banks and their apparent government. one can easily see the amounts on the swap lines going up and up. i would worry as much as anybody else about the prolongation of it. when is the fever going to break? when will things start to turn around? one wilbanks be able to resume or be able to fund -- when will the banks be able to resume or be able to find themselves more? until we get to the point where there is greater market confidence in the banks, we will see substantial amounts. >> let's say the fed goes beyond sply the swap line,

ich they had in the last crisis. we are basing it on now the survivability of europe and the eurozone as it is currently constructed. what if they go beyond that? what policies do you believe the fed has in the event of even greater stress in the european financial markets? what are some scenarios that you envision? >> the scenarios that i am going to drought are extremely unlikely, and -- throw out are extremely unlikely, and i do not think we want them to do it. i have not checked, but i think the fed could legally do the same thing that the european central banks are doing, which is to find a way to get some money into the imf, for example. or to find a way to loan money to t european stability fund, or something like a dog. but i do not think it would be desirable for the fed to beat

putting -- to be putting money in these rescue funds. mostly, the fed, t limit of what it can do with regard to europe, obviously, it could do more monetary stimulus here over concerns about europe. but i do not think there is a lot of room to do things. >> european banks that have a presence in the united states already have an open line with the fed as it stands now. but they're open market function -- because they, too, our banks. -- our banks. -- are banks. could they have european assets held by carl banks? >> i believe they could. it would have to be other banks selling the same kind of assets. >> but there would have to be in excess there.

-- a nexus there. could you imagine the selling of european bank assets? >> if the asset our usf, yes, i could imagine doing another version of the telf. if they are european-based assets, it is hard for me to imagine that. ofi'm just asking because the range of options of what we saw the fed do in the last crisis. enter dr. sanders point, the question about whether it was $7 trillion or $1 trillion or $1.50 trillion, the average -- the point that the average american citizen has is, what is the fed doing? the lack ofnformation means that many americans will simply fill in the blanks on what happens in that black box. to mr. rosner's point, as the

stock holder of a bank, it is hard to tell if a bank is doing great or awfully, or what the range in between is. the lack of information, that is at least what i want to have some scenarios. so that we are not completely surprised by the fed. >> in the short term, it does not seem like the fed is going to have to take a lot more action than they have done with the swap line, in part because again, in an attempt to kick the can down the road we have seen the european central bank offer 1% money for three years to their banks. it is increasingly likely that they wl deal with sovereign debt auctions next year as banks within each sovereign nation being called for on to be large purchasers, which has ramifications for economic

growth and the overall economy. even as much as they are helpful in the short term. but i think that their approach to kicking the can will in the short from ameliorate more u.s. involvement. -- in the short term ameliorate more u.s. involvement. >> because they are going to do what is necessary or because the policy makers are kicking the can? >> because the policy makers at the c.b. at this point are trying to step back from -- at the ecb at this point are trying to step back from the fold and they will be stepping back in a large way. >> my time has expired. i now recognize mr. neehan for 5 minutes. >> thank you, mr. chairman. where do you jump in with all of this? we are talking about monetary policy in the current situation. is there anything being

implicated here by a failure of these countries to really adopt austerity measures that may be able to address some of this? or do we need to continue this imf the support, and otherwise to sustain it from a meltdown? anybody can jump in on that. >> i will start. bear in mind that commerzbank is in deep trouble in germany. also in france. if we have any of these write- downs, it will just think european banks. it will result in the question of who is going to come to the rescue. there are riots about austerity. i do not think it is solvable. it isot an a lilco -- it is not a liquidity problem. it is definitely a problem that

they are all insolvent. if the titanic sank -- i mean, the titanic sank in a highly environment. >> if we kick the can down the road, where is the day of reckoning? >> the trouble is that the road is getting shorter. if we cannot keep kicking the can down the road. my view is that we are going to come to some resolution fairly quickly. it is difficult to see how you can string this along for another year, given the state of the economies, given the political resistance to adopting different measures. the point is, a number of these countries are insolvent. the second point i would make, if you are talking about huge amounts of debt in question -- if we just look at portugal, greece, ireland, we arealking about $1 trillion. if you add in spain, you are

talking about another $1 trillion. if you add in italy, you are talking about another $2 trillion. we're talking about $4 trillion that will have to be written down at some stage. that will have a huge impact on the european banking system when that occurs. given the connections between the european banking system and the s. banking system, it is difficult to see how the u.s. avoids a financial crisis if you get your up paying out a bad way. >> what would be the -- get europe playing out in a bad way. >> would be specific implications for the u.s.? >> the specific impact on the united states is that the u.s. banks would be put under a huge amount of stress. you have a credit crunch in the united states the u.s. would go into a meangful recession that would compound the problems. the way to look at it here is, like what occurred in the u.s. during the limon crisis --

lehman brothers crisis, the same way that ricocheted around the world, now what would be happening is that we would have a crisis that originated in europe. the world's third largest economy. that would have reverberations throughout the globe and the u.s. would be impacted. >> mr. elliott and mr. rosneft. >> i think that much of the panel that -- the countries that much of the panel thinks are insolvent are not truly insolvent. greece is clear. but italy, for example, they will run a surplus this year. that means that absent the interest payment, it is actually in surplus. it has had a number of years in which the surplus was 4% or 5% of gdp. >> what is that attributable to?

>> in the past decade or so, they have managed their deficits much better than they have historically, and certainly, far better than us. in the last decade, they have had deficits -- and these are not primary. these are actual deficits as we look at them. " they have had deficits lower than germany over the decade. lower than france. my point over the politics earlier, assuming that italy is insolvent, it assumes that their political system is so bad that they cannot figure way to pare a few points of gdp off of their deficit. >> you have to remember that in talking about the problems of europe, we're talking about the backdrop of the past three years having decent growth in the eurozone. and that is over. they're heading into recession. even the court will be suffering that.

secondly, it is important remember -- to remember that the european stress test, the agreements raise capital court to 9% next summer. that will be even more damaging to growth. and it will put more risk -- >> because there will be more capital out in the eurozone? >> we are giving the banks enough time that they're going to try to get their by reducing their books, by do leveraging. and that the leveraging is going to create furer problems and shrink growth further, as opposed to forcing dilutive equity raising. that is where the capital should be coming from the markets, regardless of place right n. i would point out to our crisis. had we forced freddie mac to raise equity in january and

febrry of 2008, and not accepted their arguments that those would have been highly dilutive capital raisings, we might not have ended up where we did. instead, we allowed it to string along and that had a zogby institution that was fundamentally increasing -- zombie institution that was fundamentally increasingts risks rather than returns on those risks. we were covering it up. instead of allowing european banks to get their house in order by reducing credit availability to the eurozone, instead of forcing them to dilute shareholders' -- >> that is going to have an impact as well on the overall ability of the economy to -- >> absolutely, which is why i find it so offsive that we are supporting policies where we put the burden on taxpayers rather than on the equity holders,

preferred holders, some of debt, unsecured creditors -- sub-debt, unsecured creditors, rather than allowing it to negatively impact the economy in another way, which is the de-leveraging. >> if i could put another angle on this, the problem of europe countries is not just the current level of debt and the debt to gdp ratio, but the ongoing deficits. many of which reflect structural barriers in the economy coming entitlement programs, early retirement, and so on. these countries are in a situation where they not only have a high debt level, but is continuing to rise. they not only have the challenge of rolling over existing debt, but also having to borrow more and me in order to finance the continuing -- >> that was my question about austerity. >> it gets worse than that.

when the austerity start kicking in, unemployment starts rising. you have a shrinking gdp. you have a shrinking government recede -- shrinking government reseat, increased spending what we are starting to see is increased interest rates on government debt as they try to roll it over. when some of these countries hit the wall and simply cannot roll over all of their debt, that is the question. where i think the real crunch comes is when the country has debt and it simply cannot roll it over at any interest rate. the markets won't buy it. it is much like a bank when it cannot roll over its debt and then we get an honest to god government debt default. >> and we g super high

inflation? what will be the result? >> i cannot -- i do not think we can have hyperinflation because government cannot make more current. but what would happen is governments, i would think, would be in a situation where they have to pay -- cut back on the payments they make, wther it is social security or pension payments or whatever. that is when you start to see the riots. i think that is very serious concern, when these countries cannot roll over their debt and also cannot finance their deficits. >> is fascinating discussion. mr. rosner, you mentioned in your testimony and a number of

times that many of these european banks are insolvent. to that point, the ecb aually levied a penalty in order to force european banks to pay off the fed swap line. would that be an indication of insolvency, that they are using short-term paper for long-term debt? >> it could be. but on the other side, that could just be quidity. it depends on the funding of assets. it depends on the assets. it is unclear, which again, is part of the reason why it would be nice to see who is trying so you could take a better look at the assets that they have. >> at a time when the fed -- >> and by the way, it would be nice to be assured that the fed knows who is drawing on the swap

lines d what the assets are that the ultimate borrower has. >> actually, to that point, mr. elliott, you agree that the disclosure of those swap lines would be helpful? >> i am of mixed minds about it. our swap is with the european central bank. that is our credit risk. it is up to them what they do with that. the reason i might agree is that -- that it would be useful is to help them with their policy deliberately. to knowsee desireing what they're doing. >> even our u.s. banks have ri, but counter party risk in association with that? >> obviously, we wou want to know that in general. we would want our banks to have reasonable knowledge about the

situation of their counterparties. but there are multiple ways to get that information. it is not necessarily have to be knowing whether and when they have been using the swap line. i might also add that the dollar the world currency. >> it would be helpful to retain that. >> i would love to retain that, too. the fact that there are european banks who have trouble gting enough dollars in this environment, as josh was saying, it might be a problem of solvency, but it might easily not be. i would worry, again, about the stigma issue. in this environment, investor managers who want to keep their jobs by just not taking chances with look and say, ok, good, those guys use the swap line and i'd better just stay away from them. because staying away from them will not hurt me very much. if they go under, i lose my job.

>> the fed discloses two years after the fact. is it a year? is it six months? >> i do not have a problem with something like two years. i thought you were talking about like in this case with the ecb -- >> we do not even know with the $600 billion at the height of the crisis, we do not even aware that when. that is really the crux ofhis discussion. >> i wanted to say whether the fed discloses this information or not, i cannot imagine why the fed wouldn't and shouldn't demand of the ecb to know who is ultimately drawn upon those lines so the fed can see if there swap lines, which are intended to provide liquidity in dollar funding markets are being used to prop up insolvent institutions. whether that is to disclose broadly or not to the public is

an area that deserves debate. i know where i fall on it, but i can understand the argument on both sides. the fed should want that information for their own analysis -- that the fed should not want that information for their own analysis and their own purposes internally does not make sense to me. >> american financial systems exposure to europe -- because the question is, if we have extraordinary exposure, then there would be an extraordinary policy desire to build them out in order to save our institutions. >> the bank international that our banking system has about $2 trillion of credit exposure of various kinds to the eurozone -- or $2.70 trillion i think. i usually roll the u.k. into this because it is so closely

tied into the eurozone. >> even though they are trying to extricate themselves. >>xactly, but if you combine them it is about $5 trillion. >> in terms of what i would call rect exposure, what i want to call is an indirect or macro exposure. if europe really blows up, and i certainly hope it does not, but if it does and they get an enormous economic contraction in europe, that will have global effects on the macro economy, and certainly on the united states. then yousk what kind of new problems that creates for the u.s. financial system and for the banks, for instance, with regard to house prices. we have rising unemployment. -- will we have rising unemployment? we have to be cognizant of not

only the direct risks, but the macro economic indirect risk. >> the dollar strengthening will have a negative impact on export markets. on the other side, it will have a positive impact on some of our domestic asset prices. ms. capital flows back into the country. -- missed capital flows back into the country. when we point out this multi trillion dollar number, we also have to remember that is the exposure you need to get out of private capital and private capital structures, which i think are there with a priority of capital. that capital may end up being wiped out and it needs to be backed out of those assumptions, it isse i'm not sure isn' necessarily prudent for uso consider obligations that the governme goes. >> back to the point that mr.

rosner raise, but i think is critical, the imf has estimated the number on the balance sheets at something like $300 billion. what that is producing, because of the way in which they are letting the banks get to the capital ratio of 9% by june, they will have a capital reduction. it will be reducing credit to the tune of something like $2 trillion over the next year. when you have that kind of creditontraction at the same time you are asking for countries to engage in massive fiscal tightening, it is the equivalent of tightening monetary policy, tightening fiscal policy in the middle of economic weakening. that is a recipe for a deep recession. that is the reason i do not think this can work.

>> to build on what dr. lachman said, the ecb announce his re that they will modify capital requirements for the banks in europe? -- in europe. why? because they see a contraction as being very serious. that will require less capital, which makes the financial institutions more risky, which will eventually put the american taxpayers at more risk. this is kind of a never-ending game. >> they are thinly capitalized going in because basel says if you are holding sovereigns, there's no risk associated with it. it is kind of a fascinating situation. there are so many questions about this. dr. lachman, you -- you mentioned exposure to money markets. we had one money market, one fund that brooks about.

most investors do not quite understand what a money market fan -- a money-market fund is. it is not as the id -- fdic inred. what is that exposure to the european financial system, our money market funds to the european financial system? >> if the rating in june by the fifth raising agency suggested that the moneyarkets are running about for a% of the european banks, the money market in history is something like $ 2.7 trillion. if you take a percentage of that, you are well over $1 trillion. they brought down that expure to 35%, but that is still a very large exposure.

>> it was as recently -- if i recall 12 for 18 months ago -- over 60%. a lot of that was peripheral economies. there's almost no exposure to peripheral economies at this point. it is almost all the core, until recently with some smattering of spain and italy. >> i do not take much comfort in that argument. if the banks in the core are exposed to the periphery, then so or the money market fds exposed to the perjury if they have deposits on the court. -- to the periphery if they have deposited on the core. >> i agree, but i would just like to point out that this is not a pipheral problem as much as it is being spun. it is a problem of the core banks as much as anything else. >> mr. elliott, you mentioned i your opening a three out a

fourth chance -- a three out of fourth chance that europe will survive, to paraphrase you. what is your view on greece remaining in the euro? give me your percentage chance that they are still in the euro in a year, what are the time freeze you want to choose. -- what ever the timeframe you want to choose. >> sure, and to clear up, it is a quantification of and intuition. because this is very hard to know. but what i meant was more than just bureau of surviving, but that there would be no default beyond greece. in terms of grease stain in the euro -- greece staying in the euro, i think is rather likely that they will stay.

they will do whatever it is caed. there are a lot of advantages to staying within the bureaeuro. i know dr. lachman very much disagrees with that, but most of the people i talked to agreed that they will try very hard to stay in the euro. >> greece as a modern country, in the last 150, 70 years, they do not have a great record on pay people back. >> there's no question they are defaulting. i am saying that is a diffent qution than pulling out of the euro. >> it is a question of what they call it and when. >> i do not think there is any question that the greeks are going to pay back theirebt. we know that is not going to happen. there has been this rather dangerous thing of trying to arrange it so it does not get

into the act as a default, which i think has done terrible damageo the credit defaults swaps market. >> everybody agrees with that. does anybody disagree that the harm to t credit default swap market is serious when we have this type of action? ok. about greece, is a question of everybody agreeing that they are going to default. is that true? what they call it and when it happens, is that really the question? >> and how much. and i can add to that, to what extent the issues of c going to have to taka loss. and then you get to the question of dominoes toppling in terms of where the risk is on the german debt, and how those losses are going to hit and who they will hit. i assume it is not just banks,

but insurers and other types of institutional risk takers. >> i think, when you are discussing reece defaulting on its debts and having these orderly defaults and may be writing down the debt -- the debt by maybe 70 cents, 80 cents on the dollar, you also have to take into account the contagion effect that will have through the rest of the periphery. the european central bank for the past year and a half has been trying to fight the idea of default because they know that if greece defaults, what will happen is the greek banking system will be wiped out, you have capital runs on banks. it will set an example for depositors in portugal, ireland, and so on. it is very likely that if you do get a disorderly greek default, you will get real pressure on the rest of the periphery that

will cause a chain of defaults and that is because of the reason that the european central bank has been putting up this ght, which i'm pretty sure that in the case of greece is a matter of time. we are talking about months, if not weeks before this event will occur. >> i have heard one theory that is absolutely in their national interest -- international interest to simply walk away from the debt, as long as they can cash flow their government, in essence. is that similar to your point of view? >> the question that greece is not in a position to pay the debts -- what is occurring is that over the last two years, byece's gdp has contracted 12%. their economy is literly now in freefall. that is eroding the tax base.

they cannot meet the budget target. they have got to do more austerity and the people are out of the street. greece is not in a position to take more fiscal measures. at that stage it is difficult for the imf toeep throwing more and more money at a country that is probably insolvent. that is the point at which greece defaults, and we are not far away from it. there is a new government. there will be new elections are around the end of february. i would expect it are around that time that you will see greece leaving. >> with my accent that what some might doom and gloom. you make it sound more upbeat. i'm only joking. mr. elliott, you believe the imf does need citalization. treasury can authorize another $100 billion for the imf and the

administration would simply have to make that decision. your ideas that the imf is fully capitalized to take on this crisis. >> that is my view, and the sense that i believe this has to basically be solved in europe. it is useful to have the imf bring in enough funds to bring -- be a serious player, but i do not think it is and to be it's a serious resources. >> was the dollar amount? >> i have $193 billion available and will have more to contribute to the imf. >> does anyone on the panel disagree? doctor? >> if you look at the amount of the -- of money that the imf would have to provide to italy and spain and that they did the same thing as they did in

portugal and ireland, you would be talking about $750 billion for italy alone. the imf simply does not have the kind of money. the onus of shortages -- sorting this out should be europe, not the american taxpayer. there would have to loan money to the law, which means they would have to get the imf on their playbook for 70% of whatever the loan is. i think that should not be permitted. >> the idea -- the opportunity for china to inject themselves into the imf and put forward the equivalent amount in order to take on that sort of crest, another $200 billion let's say,

is that in your range of options are likely. >> that could very well occur. if china has a claim on the imf and then the imf rose and uses that money for italy and the taxpayer is exposed to that loan to italy as a shareholder at 70% of the loan made to the imf. the wido should be made is administered through an account where the imf is just a conduit and it does not expose the shareholders to any risks of those loans. >> one of the things that we have to do is step back a little bit and realize that you

essentially have governments either directly or through the imf becoming founders of the deeply indebted countries. you still have these ongoing deficit in these countries. all it does is keep the ship afloat for a little bit longer. we are bailing faster, but the ship still has big holes in it. the question is, do we have enough time for this liquidity provision to enable this government to make the structural reforms they need and get back on track? i do not think liquidity can keep things afloat long enough for these countries to make these changes. plus, we are seeing cksliding in greece, as was mentioned earlier.

are we really solving anything? or are we digging a deeper hole with now the taxpayers not just in the united states, but elsewhere, increasingly at risk. with the government's becoming the private creditors to these countries. >> thank you. after this next line of questioning we will finish. >> thank you for your very interesting testimony. mr. ely, what you were just lachman g, didn't dr. in his testimony more last suggest that the combination of austerity and a growing challenges in greece make them incapable of taking on more right now?

we are starting to potentially see those same demands as we talk about austerity moving into our land. is this a cascading effect? is that we are seeing? >> i think that is a very serious risk in thmost whobted of the country'ies are experiencing the greatest degree of austerity. there is rising unemployment and declining tax receipts and increased government spending. it just means the current deficit in these countries continues on and they have to borrow more and the debt to gdp ratio goes up. the question is, how high can it go before they cannot resist any more debt and fund next month's deficit? >> the problem certainly extend beyond greasedeyondgreece.

countries like -- the problem certainly extend beyond greece. countries like portugal and italy and ireland conceptually have to do the sam thing that greece has to do, which is tied the budget by large amount -- we are talking about 2% of gdp in italy in 2012, 2013, and again in 2014. they're having to do it in the context of a credit crunch and where there is a deterioration in the external environment. it remains to be seen whether countries like spain and italy can withstand many years of fiscal austerity, declining growth, rising unemployment, calls for more austerity. the social fabric does not hold up well to this.

we have seen five governments fall in the five affected countries. i am not sure they can stick to this road of austerity and poor economic outlook for a very long time. the reason they're doing this is to keep the banks in germany afloat. >> each of the governments that fell was replaced by a government that was more venerable to the austerity measures. >> i just really have two other questions. but we have talked a lot about this in the context, as i have been following this, europe having to deal with its internal crisis and its relationship back to the united states because of our involvement in supporting the imf. and therefore, we are assuming some of this responsibility. i also take from this that we are worried about the

recessionary implications on our own economy if we have problems in europ how about other economies? the asian economy. south america. are we watching them being isolated in any way? or are they similarly going to be impacted by this? effectively, are we seeing the front end of a global recession? >> i think that is an important point to raise because that is another piece of it. large portions of the chinese economy are funded through european banks. europe is obviously china's largest export market. much of the south and central american economies are also funded through european banks. it-financially is a global -- it is by definition a glottal economy.

some parts will be different than others depending on the outcome. but as far as more just a european crisis, eecially since to many of those economies to which we exporto the degree that we do get their funding from europe, that will determine the effect. the text not just for china, but so a social unrest potential -- >> not just for china, but also social unrest potential. they export so much in europe. if they have a slowdown in europe, it will have a negative impact on china and on its level of employment. i have already been concerned about china being somewhat of a tinderbox. it is amazing how often you read about local disturbances in china. there is a fabric here that is not a socially strong in this --

as socially strong in this country. we have to think about those secondary and tertiary effects. specifically ichina because it is an export driven economy. >> my last questions relate to points that i s not ableo fully i understand. as i was listening to american exposure, it was largely discussed in the context of our participation in the imf. how about some of the other institutions? and how does that relate back t the typical american investor, you know, the guy who buys into a money-market fund, whose retirement is dependent to some extent on these kinds of things? how does the everyday american who has some portfolio of investments going to be impacted by these things? and do we havimpacts on our pensionunds, or any other kinds of insurers, like we had

with a.i.g. that are not being discussed as much, but may have a genuine exposure? this is the last question i have. >> i will take a stab at that. ultimately, individuals are the owners of the economy. on the various levels of financial institutions. he rattled off insurance companies, pension funds and so forth, to the extent that there are capital losses bymericans, that will, in turn, reflect on things like corporate pension funds, union funds, a broad range of financial intermediaries. but ultimately, that loss will come back to individuals and families in this country. it is unavoidable. there is no someone standing

behind a curtain that will afford those losses. the come back on to us, everybody in this room. >> let me emphasize a point that bert made earlier. the indirect effects are larger. if you think about going through a recession, that will be an even bigger effect on the direct marketing pact. >> if you look at my figure 11 in my presentation, the fed is literally out of bullets. we are notoing to have a great ability for the fed to step in and provide any sort of intervention. th is not affecting gdp anymore. we are kind of numb to further government intervention. now we are between a rock and a hard place. >> on that bright note, mr. chairman, i yield back. >> i thank my colleague, mr. meehan.

thank you. i said that with the end of the questions. i have one more, if you do not mind. we will start with mr. ely and go across. tomoow, we have president dudley of the new york fed appeared to have the individual of the federal reserve board downtown here who deals with international markets. we also have a representative from treasy. treasury. they are even closer than the fed and certainly closer than york. but what questions would u.s. tomorrow? what questio if you had to boil it down, would you ask in tomorrow's hearing? >> how will this play out of the next six months to a year? i do not expect you to get a very candid answer, but i do think that that is the question. what are the various scenarios as to how this situation will

play out over the next two years? and what will be the feedback effects on the u.s. economy? >> i've provided specific questions in my testimony. >> what is the no. 1? >> what comfort they have that 17 cntries, each with different political dynamics at home will be able to come to a solution? what is the purpose of their policy tied to that? short-term? medium-term? long term? what is the effects policy in the environment where, most of the 17 leaders do have what they would like to see happen, they have very different social dynamics in their home countries with their populations'

constituents making it impossible to do that? so what is there view of the policy in terms of the single currency? >> ok. mr. elliott? >> i think i have one question. i would ask them to talk about the solvency versus the idity question? do the weaker countries who are suffering from a liquidity problem or is it a solvency problem? i assume they will sesay liquidity. the following question is how you come to that conclusion? >> i would ask, if you have one bullet left, would you use of for the american economy? not to shoot ourselves, but to help us out. [laughter] i want to hear their assessment -- i had this same calculation

-- $4 trillion is what it takes to bailout italy and the peripherals. if we are talking about an additional 200 billion, is that throwing money away or will this end up a much bigger amount? i do not want to say that will never happen. we have already seen a lot of bad things happen. >> i would suggest a couple of questions. one would be a variant of the solvency vs liquidity question. why do you expect imposing fiscalusterity on countries at a time of economic weakening and at a time of major credit crunch in europe will not leato a big recession that will unravel the public finance systems of the countries involved? the second question is why do

they think that a policy approach to italy and spain that they have tried and has failed in greece and portugal and ireland -- why it would work this time around? how will they be safeguarding united states taxpayers' money from these loans that the europeans are making to the imf, which is putting the u.s. taxpayer on the hook? >> ok. quite a number of questions. i thank you much for being here. this is very helpful, very useful information, and a very wide ranging discussion. i thank the panel's willingness to engage in that conversation. what is clear is that there are enormous -- there is a number of

questions about fed policy and about this administration policy out an exposure to the european financial crisis that they're facing. dr sanders, in your opening, this was about excessive government speing and excessive debt. this was about over-lending and over-borrowing. one is more focused on the government and the other is more focused on the banking and institutions. but the economic risk is real to the american taxpayer. it is a question of the magnitude of that risk. our exposure to europe is real to the american taxpayer and these institutions, such as the imf, as well as to the american worker. and their ability to get a job

and the growing economy. there is some consensus about the likelihood of a greek default. the question is what does that look like? when will it hapn? and what is the rock cost in terms of -- the raw cost in terms of currency? there's not a consensus on how the euro will last in the medium and long term. i appreciate your time. members will have seven days to submit opening

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] in a few moments, john bryson. then an oversight hearing on the nuclear regulatory commission. >> in-house oversight committee will examine the impact of the european debt crisis on the u.s.. witnesses include representatives of the federal reserve and the international monetary fund. it is on c-span3.

>> this weekend, members of congress profits from insider trading he contends and used political influence for political gain. this is setting night it 8:00 and sunday at 10:00. robert use the chief travel on the internet making it easier for immigrants to stay in touch with their home country. it fosters innovation and economic growth worldwide. watch it every weekend on c- span2. >> there's much more to the newly designed c-span.org. it is making it easy for you to

watch today's event. use our handy channel finder. click on c-span products for dvd's and books. >> commerce secretary john bryson says that the u.s. cannot continue to except china violating trade rules. in his first major speech as secretary, he urged american citizens to invest and hire workers. from the u.s. chamber of commerce, this is a half hour.

>> good morning, everybody. thank you for joining us this morning for our policy insiders event. we are very pleased to welcome john bryson, the new secretary of the u.s. department of commerce. secretary bryson was appointed by president obama to be the 37th secretary of commerce. he was sworn in in october of october 2011. prior to the commerce department, he served as president and chief executive officer of edison international in california for 18 years. before the private sector, mr. bryson served as president of the california public utilities and chairman of the california state water resources control board. he was also a partner in the law firm of marsen and foerster.

at the commerce department, secretary bryson will play an extremely important role in president obama's economic team and will work to implement policies to address to the administration's economic priorities, including job creation. this morning, secretary bryson will discuss his agenda for the department of commerce, including issues related to international trade and manufacturing, increasing investment in the u.s., and, of course, job growth. ladies and gentlemen, please join me in welcoming secretary of commerce john bryson. [applause] >> good morning to all of you. it is such a pleasure to be here. many thanks to the chamber of commerce. it is a pleasure to look across

the room and see so many wonderful friends, business people. i will name only one business person in the room, but it is kind of a special case. greg bachman. he served on our manufacturing council. most significantly, he was recently named the connecticut small business person of the year. greg, where are you? >> right here. [applause] >> i want to recognize a very special person who makes a real difference for us. he is the house ranking member. without you, the commerce department could not do the great work we do. thank you very, very much for that support. [applause]

and i want to acknowledge an extraordinary person, our deputy secretary at the commerce department, dr. becky blank. and along with becky, and our bureau heads, substantially home are here today. this is an extraordinary group of people. i have not been there for long, but i know. really smart, really hard working and doing everything they can to make a difference. would all of you who are here please stand up? one quick stand. [applause]

let's see if we can find a way to get this a little higher. >> as we gather here this morning, one challenge stands above the rest -- putting americans back to work. this has been president obama's focus since the first financial crisis since the great depression. it will be our focus everyday at the commerce department. americans cannot find work when they cannot find a career path. it ruins lives. nearly every american has a family member or a friend who is without a job. they know how hard it is. high unemployment is not just that for individuals.

it is bad for business. high employment will damage to the profitability and even the viability of many businesses, large and small. we as a country must act now to maintain america's hard position as the strongest economy in the world. the challenge to this urgent requires leaders in washington to put aside business as usual. that is what the american people expect and it is what they deserve. the world that i just left, the world that all of you business people are in, is about results. business leaders are judged by their ability to manage challenges and to take reasonable tough-minded risk to grow their business. i remember well the biggest challenge i face as ceo at edison international.

that was the energy crisis of the years 2000-2001. market manipulation reduced the supply of electricity. the electricity prices jumped as much as 800%. california is expected their utility to fix the problem. they did not want to hear whose fault it was. they did not want to hear excuses. it was not easy. but we worked day and night to keep the lights on. the availability of power in that year and half literally changed every single hour. if we did not succeed in keeping the lights on, businesses would close and we would fail our customers.

we acted with the urgency because that is what our customers and our shareholders rightfully demanded of us. when i hear business people express their frustration about washington, it is the lack of urgency and the lack of focus on results that bothers them the most. as you and i know, business people are generally pragmatic, not partisan. what they care about, what gets you all, all of us up in the morning is finding new opportunities to strengthen and grow businesses and to solve problems. business people do not see the same intensely focused practical results in washington. they get frustrated. i get this frustration. so does the president.

that is why president obama has recently taken a series of actions to get people back to work and back on their feet. the president knows, as every american knows, that we cannot just do nothing for this congress to act. the president is not giving up on the congress either. he will keep urging congress to pass critical elements of the american jobs act, including the extension of the payroll tax cut. and he will also continue to push the important priorities for the business community, including building a tax code that is more competitive internationally.

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[captions copyright national cable satellite corp. 2011] >> i think we have taken probably too long to get to the point where we can actually get out and start having the staff do their work to really engage directly with the licensees. i would have hoped we were farther along at this point, but we are where we are. >> just to follow up, i believe the commission has stated it hopes to complete and implement all the lessons learned from the fukushima accident within five

years. i think that was by 2016. based on the progress so far, do you think the nrc is likely to meet that goal? >> i think it is difficult to say. i think at this point we haven't really laid out a clear enough path, i think to get to those five years. give yep that everyone has expressed an interest, i am confident we will get there, but i'm not sure i've seen a plan that will get us there in five years. >> do you agree with those timelines? >> i agree that there are not detailed timelines yet. with that you could have a better degree of assessing whether or not it can be done within five years. i still think it is a reasonable target.

some plans were found to be not clearly delynnated. while some thought the chair was not as clearly -- the plans were not as clearly delineated as they could have been. my belief is after the three-mile island accident president carter was granted powers for emergencies and for the authorities. not every chairman has elected to fully use those powers. my understand sg that the champlee has decided to use those powers where others have chosen not to. i think back to the times in my own life, maybe other colleagues can also, when we had the authority to do a certain thing and chose to do something just a little differently. because of the interest in

building team cooperation and civility, and i would ask going forward that you keep that in mind, mr. chairman. the other thing i want to say is a question. a colleague of ours said during the election campaign, "what doesn't kill you makes you stronger." i would imagine what you are going through yesterday or today is something that you will remember fondly. but it is not going to kill you. it may make you stronger. my question is, will it make you a better leader? will it make you a better chair? if so, how? >> as i indicated yesterday, some of these things that are a concern of my colleagues i found out about yesterday and i have offered to reach out and talk to them and for us to meet as a group to discuss these issues

and better understand where my interpretation of the statute or where any of my actions have caused concern on that part. i think if they are willing to engage in that dialogue it will make the commission stronger. in the end, my leadership is defined on how well the commission functions. i will say that, in the end, i'm committed to safety. i would always prefer a commission in which we all agree, in which there are no conflicts or disagreement. i don't think that's realistic. i think where we have to continue to work is to figure out a way to disagree without there being personal accusations or things of that nature. >> there's a -- i have a friend

who has a bible study group, and it is something that the seven of or eight of us who need the most help show up. he reminds us as leaders of sth country that we're supposed to be humble. that we should practice and try to challenge humility. he reminds us that we are servants, and we need to keep that in mind. most of all, he reminds us to treat others the way we want to be treated. he describes the golden rule as the cliff notes of the bible. it is certainly good advice for the people sitting at this table. every one of you, particularly the chairman, i would ask that you take that to heart as we try to every week. thank you. >> thank you, senator. we will turn now to senator alexander.

>> it is currently not operating, it is shut down. with the exception of that facility, all the plants are otherwise operating safely, with varying levels of successful performance. >> thank you. and that includes the 23 boiling water reactors that are like the reactor that was in fukushima? >> right now, again, we have all of those plats are generally

operating within our safe levels. >> in trying to understand the discussions about recommendations, do you agree that some of the recommendations are different from others and there ought to be a priority in addressing them? >> the way i look at priorities, i try to step back and figure out constraints. you prioritize in a situation where you have constraints. >> i'm asking, is it appropriate to put some ahead of others? >> i think there are -- we would act on all of these on the same level of dispatch. >> by acting you mean set up a process to deal with them. that is correct? >> no, i think by acting on them, getting us to the point where plants are making modifications. >> it was said it is complex and

too long to complete. do you agree? >> it is more of a philosophical discussion that will deal with events. i think what the task force is saying, is that over the years, we have dealt with those types of events in our regulatory frame work. we have just never given them a label. i think it's something we can move forward on. >> united states code 5841 says, quote, each member of the commission shall show equal responsibility and authority in all decisions and actions of the commission shall have full

access to all information. can you provide the commission with information? >> that is from the 74 energy -- >> still the law, correct? >> it did change that provision, senator. >> our general counsel. >> the information requested by the commission shall have full access to information. >> the end of that provision states for ensuring that the commission is going about

matters in its functions. that is, i think, where the tension exists where the commission clearly all information can't be provided to the commission. the recommendations. >> senate colleagues were asked if they thought these ideas were unreasonable. i listened to them, and in some cases i felt i might have been. at least provided a way to move forward. it is an extraordinary event when four members of the commission, three appointed by the current president, say they are not able to do their jobs because of the way you are doing your job. madame chairman, i would hope

you would reconsider your thought that this committee, whose job is oversight, should not keep an eye on this. your responsibility to straighten it out. i think that starts with the chairman and i hope that happens. >> what i said was, we're not going to have a witch hunt. what i said, is we're going to have hearings every three months. we have to keep track of this. when we hear from the chairman, and i didn't hear anybody else dissent, that we're not on track , then that's a problem. we absolutely will have a hearing and people can ask whatever questions they want.

>> i don't think anyone on this committee. >> someone crit sidesed an employee of the nrc published by congressman of a member of the house.

now, he may not like that, he's entitled to his opinion, but to criticize someone working for the agency to say republish something published by the united states congress, that doesn't make a will the of sense to me. >> let's -- >> this is what the markee -- markey report said, and this is what was -- this was what was asked by the reporters to read, it said the reactors at fukushima left a regulatory meltdown that left america's fleet at risk making it difficult for them to do what they want to do.

i don't think there is minute anyone that would think that is an appropriate thing for them to build to the media to have them believe before a hearing takes place. >> in all do respect, senator inhofe, i think you and your staff have asked reporters to look at some information on global warming that many of us think are beyond comprehension. you are entitled to your views. ed marky is entitled to his view. you have every right in the world to disagree with hem. all i'm saying is i don't see anything outrageous or wrong for someone to hear the report published by the united states congress. maybe i agree with it, maybe i don't. i don't know. i haven't read it. let me get back, if i might, madam chair, where i wanted to

do. by think what we have here is philosophical disagreement. i do not criticize the integrity or honesty of any member. decent and good people can disagree. let me get back to -- let me ask the chairman a question. there are 48 reactors in this country that do not comply with fire safety records in this country to ensure fires do not threaten back-up powers that can prevent a meltdown. this year, as i understand it, four commissioners voted to approve a delay until 2014.

you, mr. chairman, did not. can you tell us why you did not, and where your differences of opinion are with the other four members? >> i think the big difference is whether we should ensure enforcement process with those provisions. i felt after all these years if plants weren't going to move to that regulatory system, they should be subject to having our violations counted in our enforcement process. i thought that would be a strong way to ultimately get plants to ultimately complying with this new regulation. i believe this new regulatory prm or structure should be mandatory.

that way i think we would get in the business of adopting these new standards. >> after the tragedy at fukushima, as i understand it, a senior officer made 12 recommendations for improving the safety of nuclear power plants in the united states. as i understand it. you asked your colleagues to make a final decision about what changes the nrc should make so that action could be taken. as i understand it, a majority of the commission instead asked for the staff to provide even more information p. some -- information, some of which could take years to develop before making any decisions.

why did you vote one way and a majority vote another? >> i think i had enough information to appoint the recommendations. i also provided the commission how we could solicit takehold erin put before we made a final decision and how we could solicit additional input from the staff as well as our advisor committee on reactor safety. i felt a responsibility having established that commission. i felt a responsibility to support their recommendations. their recommendations have with stood all the other reviews

>> madam chair, thank you very much. >> thank you, senator. we now turn to senator sessions. >> thank you. thank you, senator for your wise advice to all of us. >> the former chairman declared openly that he was changing programs after 9/11. he assigned his fellow commissioners specific duties and tasks so they were fully involved in all aspects of this. would it be fair to say that you know a thing or two about crisis management -- i think it would be fair to say that you know a thing or two about crisis management. did you make any formal announcement that emergency powers have been exercised while he was doing so?

>> i think the information p.l.o. of what was having in japan was appropriate. i did discuss this with chairman yasko and expressed there was a lack of -- >> when there is a chain of command, that should be clear, should it not? >> from my information, yes, sir. >> chairman, do you believe that under the reorganization act of 1980, the chairman is allowed to withsholed or delay information

from certain members? >> there is certain information that in particular the information has been on budget information. that as the chairman aformulates and develops that, that it is not provided to the commission, that's been established in our commission procedures. so there are areas in which there is information not provided to the commission. if there is ever an area of doubt, the commission has the right to including those voting measures. >> i hope you understand that the commission says, each member, including the chairman, shall have equal responsibility and authority and shall have full access to all information. do you agree with that? do you think you are not bound by that? the chairman can decide what he wants to reveal to the other members and screen information

going to the other members. >> as i said, the reorganization indicates that the commission is fob kept current and fully informed about the information in its functions. so there is some information within the agency that was not within a function of the commission. that information is not routinely provided to the commission. >> is there any other information data that you think you have a right to deny the other mebbeds? -- members? >> as my colleagues have stated, i think, twice in front of congressional hearings, they have had all the information they needed in order to carry out their voting responsibilities. where i think, again, there are areas where we can work and better understand the situation

in those areas not routinely in the commission, providing that information has been a result of dispute. >> i think the problem with the dispute is, you don't realize you have a full duty to respond to the commissioner and share with him any information you have on any matter related to the commission. if you don't acknowledge that, i think we have a real problem. i don't believe it is a personality problem. i believe it is a question of management according to the law of the united states. isn't it true that the inspector general said --

>> i believe it was not a specific finding of the inspector general. i would have to check the record. >> let me ask the other members of the commission. do they have concerns that the chairman -- >> another round of questions. we move along. senator? >> thank you, madam chairman. >> i want to ask chairman >> i didn't want anything to be misunderstood. you pushed the commission to make recommendations for

improving the nuclear safety in the wake of the fukushima disaster. was it hastey? >> i don't think it was hastey. we asked them to complete their work within 90 days. the bulk of the report was written. it was a thorough and readable report. they had done a tremendous amount of research and recommendations to get to the conclusion. i thought it was reasonable that the commission to review that information and respond to it within about the same amount of time, in 90 days.

>> i am reading from the report. it goes on to make an accusation that -- i give it to you without the provision. that is, inspired by the other senior n.r.c. staff to delay the release after the n.r.c. near-term task force report on fukushima. so what -- so this policy difference, can you imagine why it is they thought that more time could be destroyed and not

rush along >> i think there was no question of delaying the formation of the task force. the only discussion i recall is for the commission to read the report before it went public. so the only conversation ever had with the commissioner was whether it made sense to release a report the day it became available versus giving us a couple days to read it. >> is that where one of the most serious criticisms lay? that is, is there a couple days difference, do you think that the chairman was hastey in

moving to get the report done? >> no, of course not. >> it is characterized as a blemish, and i don't understand why that is. >> when you were nominated, there were over 100 letters written that your key interests are in the relevant many of nuclear powers promotion, not its regulation to protect the public safety and environment. when you were being sworn in, the n.r.c. report makes a point that you have a distinguished

career in the nuclear field public service. but it also points out you serve four years as its associate director for technology and program. it is a fairly high comfort level. i wondered if you were -- >> we had some programs engaged with the agency. it was not the principal area of work that we had. outside of that, my industry interactions were limited. we worked on the vast technology research cooperation.

>> sorry, senator. we'll have another round, but we have to move. i'm sorry to interrupt my friends on either side of the aisle, but we have to move. >> "fellow n.r.c. members accused of bullying tactics." i would like to introduce this. >> sure. >> "the new york times" article in exchanges that ranged from testy to caustic, four members of the nuclear regulatory commission told a house demee that their chairman had reduced female employees to tears, and was producing an atmosphere hurting the agency's ability to

function. so i ask the chairman, in the hearing the commissioner referred to three career women at the n.r.c. who were, quote, brought to tears and felt humiliated by your actions. i think these are the same incidents that commissioner -- that the commissioner called outbursts of rage by you. the democratic member cummings of that committee yesterday said he was concerned of a father of two daughters about hearing about these incidents. his exact words were, it concerns me. he asked if the allegations were true. i don't know if the answers were clear. i want to know, also, are these allegations true? yes or no? >> no, i was shocked and i have to say mortified to hear those statements. >> i have a wife. i have a sister who had a daughter 12 days ago.

i have interacted with a number of women at the agency, including a number of women, and i have never intentionally bee rated or threatened any member of the staff. i can at times be passion dwrate or tense in my questioning, and if that has ever led to an emotional reaction by someone, woy want to know that and address it immediately. >> commissioner yesterday you spoke about a growing cancer at a work environment. you talked about verbal abuse by the chairman. the white house is recommending that a third-party mediator should try to work things out between the commission and the chairman. based on your i don't know experience, is that the type of solution the private sector would do to respond to charges of harassment in a hostile work environment?

should we bring the accuser and the accused and say work it out? >> i think the private sector, likely not. but this is not the private sector. the solution here can be more complex. whatever happens going forward, it is my determination that i will continue to serve my role as a commissioner best i can under the circumstances. >> mr. chairman, yesterday the congress of utah asked a simple question whether you did anything wrong. and another congressman asked the same question. didn't feel there were a clear answer to those. are any of the charges made from the four other commissioners or the nrc staff true?

piff not seen a situation in which people are afraid to raise their views with me. i can be passionate and intense. i'm committed to the safety job that i have. if that's been misconstrued or misinterpreted i want to know that immediately so i can assure people it is simply not the case. i would note i have had for 2 1/2 years the same group of score staff. i have had 15 or more staff working in my office, 10 of whom at this time are women. i think they very much enjoy working for me.

the question is, did all of you believe when you signed the letter to the white house agreeing that you were fulfilling your oath of office to the american people by signing the letter? >> thank you, senator. we will now turn to senator sanders. i'm so sorry. senator udall, you will be the next democrat. >> thank you, chairman boxer. "the new york times" article that was just read talked about withholding information. has the commission received all the necessary information to implement the task force recommendations? if not, what additional

information is needed? >> yes, with one exception. the paper presented on july 12, 2011, did not contain the detailed recommendations how to proceed. >> have you received those now? >> we received those. there are a number of different versions of these.

other than that, i believe i received the recommendations i needed. >> that's something my colleagues have expressed concern about. i would note, there was a paper provided that did not contain specific recommendations. i felt it mischaracterized my discussions with staff, because the entire staff had not had their views sought about the recommendation. i felt it was not properly characterizing the situation. i actually notified all my colleagues in person that i was going to have that paper withdrawn and replaced with a straight cover memo transmitting the recommendations. at that time, none of my colleagues expressed a concern about that course of action. >> thank you. chairman, the n.r.c.'s task

force issued 12 recommendations for nuclear plant safety to be improved. when you look athe recommendations, they are very greet things. order the necessary seismic examine flooding protections. strengthen mit indication blackout protection. have these resmations been fully implemented? what's been done on the ground at this point? mind you, everybody should know that march 11 was when the incident took place. we're approaching an anniversary here in a couple months. >> we really haven't done much

yet on the ground from a direct regulatory perspective. the industry, to their credit, has begun to do some of those things on their own and are meeting with one of our advisory committees just a few weeks ago. in fairly direct terms, in terms i have not heard from an advisory committee, he stated we have done the last eight months talking and it was time to get down to doing some actual work. i think that was a good wake-up call from the commission that we need to get on with the business of getting these recommendations into the plant and getting changes made in the plants. i think we're at that point now where we can begin that, but we still have some work to do to get there. >> when do you think that will happen? what is your sense of the timing right now? >> what the staff told me at this point, is they were targeting for may or june. i told them they have to come

back and think of a tighter time frame. i haven't heard yet what the result of that is. >> thank you, very much. >> senator thank you, madam chair. mr. chairman, i vm' concerned, as i stated about many of these specific suggestions that have come up. and i wanted to revisit it. did you ever have a discussion that led to that staff breaking down in tears? >> not in my presence, no. >> did you learn of that outside of your presence? >> i only learned of the

possibility of these events in the last several days prior to the hearing yesterday. >> so you learned of that. how many incidents did you learn of? >> i learned what is stated by the commission. i did not have staff come to me and tell me specifically there has been a problem. i would welcome that. >> if they were driven to tears, you might understand why they may not approach you. does this learning concern you? >> absolutely. >> what would you do about those specific instances? >> i would be more than happy to discuss it with the individuals if they want and remedy in whatever way is appropriate. >> i certainly would want to understand what in my approach led to that.

much course, i would not want to take any action that would lead to that reaction. >> do you know of such instances? >> i'm aware of three executive service females that have been yelled at by the commissioner, and one of them has told me directly she was utterly humiliated by that interaction. >> i have not had a personal experience of this happening. >> i'm aware of these events. >> commissioner, how many events are you aware of? >> i'm aware of three events. >> as i discussed yesterday, certainly there is three, i have had personal contact with a woman involved and talked with them about the incidents.

>> my guess is these women do not want to have a conversation with you for obvious reasons. in light of that, what do you want to do in terms of those events and maybe more importantly in terms of future behavior? >> again, without knowing more specifics, it is hard for me -- it is certainly something i would be happy to talk to my colleagues about and they can perhaps give me more specifics about what caused the concern. and of course i will do whatever i need to do. >> and right now you have no guess what caused this reaction? >> as i said, i can sometimes question people very intensely. that's something about my style. >> are you going to change that style? >> i work on it every day to do it better.

>> i received a paper. it had four options.

>> i'm here as long as you want. i'm a fair person. we are going to have a second round. i'm giving up my slot to senator sanders. i will take mine at the end. >> i'm not comfortable with the direction in which this questioning is going. i think the door was open by mr. barasso. we were asking the chairman to comment on issues he was not aware of. the door was opened by senator barasso and the other senator, so i'm going to ask another question.

>> this is what huffington post said, "in an effort to overthrow the chairman of the nuclear regulatory commission, and its most likely successor if the move was successful served as the -- the company that owns the nuclear power plant in fukushima, obtained by the huffington post." another comment, "when magwood was nominated in 2009 to become the commissioner nearly 100 environmental groups along with the government and project oversight urged his defeat to the group tasked at reregulating it."

"magwood has watered down regulationed in those made public following the feekshumia disaster. they have made an effort to increase safety standards. an effort being watched closely by nuclear companies across the globe." let me ask -- we have to ask some questions as well. this article suggests that if for whatever reason he was forced from his job, you are ready to take it over. are you prepared to tell us as a member of the commission that that is not the case? that if he left his job you would not take the position as chairman of the n.r.c.? >> well, as i mentioned yesterday, when i was asked a

question about whether the chairman should be removed, i gave the opinion that my role and responsibility was to provide the truthful information as i saw it. it is not to make personnel decisions. i am not going to make a recommendation. >> that was not my question. so i would not make a comment about what my role would be either. >> that is an interesting point. it is an interesting point. because according to the article, and i'm not saying it is right or wrong, according to "huffington post" you have been involved in a coup to get rid of mr. jazko. will you tell us that is not true and that you will not accept the chairmanship if mr. jascko left? >> let me say, i don't think my

character zation as a coup leader is correct. we worked a lot about sending this letter to the white house. i don't think there was a coup leader. why i can -- why i have been singled out, i can only guess. i am not even the senior member on the commission after mr. ja zcko. >> see, you are not answering my question. i am not saying this happened. you did not answer my question. my question is, if he, as a result of political pressure, was forced out of his job, will you tell us now as a member of the commission who some suggest -- i'm not suggesting it -- were involved in that action, are you telling us now that you are not interested in becoming chairman to replace mr. jazcko? >> i have never expressed an interest in being chairman.

it is a very time-consuming job. i did not come on the commission with that in mind. i am also not saying that if the president asked me to take that role, that i would turn it down. >> i finte find that -- i find that to be a very interesting answer. thank you very much. >> the president will be making that -- making these decisions. the secretary reports to the chairman. is that correct? >> i'm sorry? >> the inspector general reports directly to the chairman, that's you. >> it is a very loose reporting. >> ok. i understand from the changes there. i would aconsume you would say yes.

at any time did you seek to delay his investigation? >> no. >> if i understand, and i know the process here, but i think you have to explain t i understand a new applicant sent a letter to the n.r.c. asking they waive an administrative delay for the approval of a new plant and its date. i understand the n.r.c. presented a paper addressing retention of the delay. is that correct? >> yes, that's correct. >> that delay really is a benefit to the applicant to give them time. >> let me answer the question we were trying to get to when time ran out. the paper the senator was referring to with respect to the staff recommendation being different of what we thought it was going to be, we are talking about the same paper.

the staff told us there was no new collar safety issue. once this register photo is given to the office of management and budget, it was the office director's recommendation at that point in time that the effective date of this rule be tied to the time period of transmission to o.m.b. that was the recommendation the commissioner and i were referring to. >> so both the director of nuclear reactions agree -- agreed to this? >> yes. >> new reactors. that's correct. does this administrative delay have safety impolitics? >> no, sir, it does not. >> if i understand you correctly, chairman -- no, i will go ahead and yield my last couple minutes to senator vitter because he wanted to get the remainder of his time.

>> i appreciate that very much. picking up on the information flow. mr. chairman does the whole commission not vote on a budget or budget issues? >> yes. at a high level, yes, it does. >> so i don't understand your previous comment that budget information -- detailed budget information should not be provided certainly upon request to the commission. >> based on the statchtri history, -- statutory history, the chairman is solely responsible for the budget. >> this is a voting matter. would it not be reasonable for any budget matter requested by a commissioner, for that commissioner to be able to get it, which apparently he or she can't? >> actually, that's not true. last year's budget there was, i think, a misunderstanding on my part about how information was provided, when the budget was transmitted. so with the budget submital i

provided all previous draft versions that was actually provided to each commission office when they received the budget to begin their deliberations. >> what was the instance where they asked you for budget information and it was not provided? >> i don't recall what the instance was. but they are provided all information about the budget. the budget itself. >> so any requests made about budget issues? >> the issue there is more about timing. i think there has been a tradition to -- you know, a budget development is, as we say, a sausage-making process. there has been a tradition to give the chairman an opportunity to do some of the sausage making and present that to the commission. >> and ask the other commissioners to chime in about issues that they think still exist here if any? anyone?

>> senator, like i said, if they are not getting information timely, i think that's in many cases the same thing as not getting information. i mean, time is of the essence. >> it is my understanding that the n.r.c. staff quickly act on the implementation of strengthening implementation. i believe this will widen levels of pools at reactors which was an issue at the fukushima crisis. for some reason that recommendation was not included in the recent actions by the commission. can you both quickly explain why.

>> it was not included in the ones that were supposed to be acted upon without delay. >> subsequently it was. >> it is included. >> oh, was it? commissioner, is that your understanding? >> i was looking at section 110137 which has the priortization, a tier one, two, three approach. the staff did add spent fuel instrumentation to that list and it has been approved by the commission. >> thank you very much for that clarification. >> may i make a comment? >> yes, briefly, please. >> this is a good example of how competent people have different views. i was talking to members of the

committee, why do you want to do that? it does not include safety. if you think in terms of con traints, resources, the chairman mentions that, they didn't feel this was of paramount importance and had to be done without delay. between twally we -- eventually we said, yes, do it. but i think it is an example of how competent people can have different views. i was surprised when they told me that. >> thank you very much. >> with the work on the fukushima report and the reported discord between our commissioners, has the day-to-day staffwork been compromised? >> i'm not aware of a compromise that the staff suffered. >> let me ask the commission, where is the commission on the licensing processing of new

reactors and the rely sensing of current reactors, please? >> well, for new reactor licensing that is under deliberation, we have a final decision, and we also have a possible decision on licenses for the summer sites. license renewal is continuing at a pace, we have a number of hearings ongoing for license renewal cases which are either in front of the commission or in front of our licensing boards and then the routine staff acks with regard to licensing is ongoing. you know, in the interest of candor, this may be an area in which, if we have resource constraints as a result of the fukushima activities, we may look at license renewal as an area to pool resources