in things that did not already meet that criteria. >> ok, but you knew customer funds were being used for that type of activity? >> for rule 125 eligible. >> you needed funds for what you thought was a correct use of investing customer funds. so, were you aware that margin costs were being made on a regular basis just prior to the end of october on the sovereign debt and investments? >> they were not a part of the scm, and the answer to your question was yes. >> where did you think the money came from? >> we run liquidity positions.

as i heard mr. abelow said, we also have access draws against our liquidity lines with banks. >> mr. steenkamp, you as c f review the financial condition of a company on a regular and daily business -- basis? >> i would review the consolidated financial statement and financial condition, and as i mentioned in my statement, we have various regulated subsidiaries around the world that have various rules and regulations under the specific jurisdictions that they operate in. with regards to the financial condition and operations of those entities, i would receive exception reporting as issues arose from the finance and other

offices in those entities. >> so, were you aware within the, let's say two weeks leading up to october 31, the regular margin calls were being made against one of the subsidiaries for the foreign debt investments? >> senator, i was aware on occasions that there were margin calls made at the variation margin, and at times initial margin changes happened related to those positions. >> as chief financial officer, where did you think the money was coming from to meet those margin calls? >> well, senator, as a global firm, we had some house money that we had raised over time that we could use for liquidity, and in addition, we also drew down, as mr. abelow and mr. corzine mentioned, on

the revolving credit facility available to west to meet liquidity needs as they arose -- available to us to meet liquidity needs as they arose. >> did you not check to see where the significant amount of dollar margin cost was actually coming from? what account? >> i would not have checked the exact account, but with regard to whether it would be coming from the client side, there were controls, for example, individual segregation calculations that had never indicated any issues. there was no indication for me. >> governor corzine, if i understand it correct, in order to reach into a customer's lockout, and to meet the margin -- account, and to meet the margin calls on sovereign investments, you would have to go out of one company into

another company? >> senator, you would not meet margin calls for our broker dealer. , not by -- you would not need them by reaching into customer funds. >> well then, my question is, how did that happen? how did someone reach into the segregated accounts, and transfer money out of those to do something with the money they should not have done? >> do not want to repeat, and i know it is frustrating, but it would be speculative on my part. i did lay out flows of transactions and ties of occurrences the need to be -- times occurrence is the need to be established by the facts been losing -- looking through these records. >> is that the guts of where we

are with mf global, trying to figure out who transferred the money and who authorized the transfer of that money out of segregated accounts? >> i think it is now in the fact-discovery stage of where the flows of money took place, and when those are then established, you could follow that back to, i presume, how it was authorized. >> chairman, i know i am over my time. since i am last, can i generate one more question i think will generate a quick answer? so, am i to understand, and i would like all three of you to answer this -- did any of you know that this money was being transferred out of the segregated accounts? >> senator, as a sudden all of

my testimony, until last sunday evening i was not aware that there was in this year's up -- a misuse of customer funds. >> mr. abelow? >> senator, i as well was learned -- shocked to learn on sunday that we had a potential deficit in our segregated funds. >> mr. steenkamp? >> senator, i had no knowledge that customer funds were transferred it to the broker- dealer until the sunday evening we were notified. >> thank you. >> thank you very much. we will reconvene at 2:15. i will indicate that we are going to do the third panel. we know this is a long day, but this is an important subject, and we appreciate your remaining with us. with that, the committee stands in recess until 2:15. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute]

>> this meeting will come to order. thank you for continuing with us. >> thank you for holding this hearing, and thank you to the witnesses for being here today. at the risk of the eliciting an answer we have had already, which is not going to help anyone here, i want to try to ask it this way -- the testimony, governor, and gentlemen, as ben that the controls were set up to segregate the funds -- has been, that the controls were set up to segregate the funds and use certified as such. i'm sorry to put words in your mouth, but in the interest of time -- nobody on this panel ever authorize any misuse of that money, and whether it should not be segregated, yet between 600 million, and $1.2 billion is somewhere, missing. is the impression we should

take that if someone had checked 10 days before this happened, this would not have happened, and something happened during the weekend of all of that stress that may have resulted in this? is that an impression we're supposed to have here? >> senator, i will take a first run at it. i think each of us have different perspectives. if that had been the case 10 days before, the policies and procedures would have said it would have been raised certainly, i think, to each of our offices, unless it was minor and $600 million, or $100 million would not be minor.

that is with regard to segregated funds. that was not the case, and we have to report every day to both the ftc and the cme. so, that would, i think, deal with the first part of your question. the second, i think you will hear speculation again on the multiplicity of transactions and accounts, which is what you will hear from me, because we would not know what those transactions were, and would have expected that if there were unreconciled accounts, there would've been a stop. >> do either of you have anything? governor, to that point, your testimony at the beginning of the hearing, as i understood, was that some of the final trades that were made, the firm or you still have not seen the settlement of.

we do not know what what price, or how they are recorded, or did i misunderstand where you are singing? >> senator, the prices were set. i did not recall those prices. i do not have records of them. the particular transactions i cited in my oral testimony, and there are more in my written testimony, were the $1.3 billion commercial paper which was the immediate cash settlement on thursday, then there were $4.5 billion worth of government agencies that were transacted for cash or immediate settlement on friday. >the prices of those are in the books and records, and while i do not know the ultimate

disposition, and there certainly are places one might want to check. >> right, so the -- we do not yet know what the proceeds of those transactions were? >> we had anticipations based on the prices the securities were transacted. >> thank you. i wanted to shift gears a little bit and get a question that was raised in both "the new york times" and "the wall street journal." it was reported that the former chief risk officers sought to warn the company and its board of of the firm's growing exposure to european sovereign debt, and the suggestion in the article is in january of this year the firm let him know that he was being replaced as chief risk officer. could you discuss, from your point of view, how the firms audit committee process

addressed the concerns the risk officer race, and looking back, how would you have improved internal process is when you received these types of warnings from some of the church youth risk officer? >> -- chief risk officer? >> senator, the context of an open discussion that he had with the board, and i presume the audit committee, although i do not have my calendars to confirm that, we encourage people to be able to speak their minds. it was in the context of asking for increased limits, a roughly this time of year ago. again, i am without records. i cannot be precise with regard to those recollections.

there were full discussions with the board about the point of view that michael roseman would have expressed, and that was in the context and not just of sovereigns, but exposures we have to those countries with clients that were involved in a structure, as well as investments we might have in other parts of the global operations. >> so, a judgment is a judgment, but that is not what i'm trying to litigate here. i just wonder whether for the benefit of our oversight there were other processes that could of been put in place, or just with the benefit of hindsight. >> clearly, with the benefit of

hindsight, there would not have been as much -- term reflection on the term -- long-term reflection on the term -- firm. if that came to pass in october. i am not trying to deny reality. on the other hand, the situation was entirely different from the perspective of the world certainly one year ago, than it was at the end of october. we encourage a kind of discussion and debate and the board level, and it was my view that i should advocate for what i thought based on the best analysis that i could make of what was the right direction for the firm to take on these issues. these issues were different than

mr. michael roseman's news. >> thank you. i am out of time. i appreciate you responded to the question, and madame chair, to a for holding this meeting. >> thank you very much. >> madam chair, let me also citywide for holding the hearing. it has been informative. mr. steenkamp, you have been sitting through the testimony. you're not been called on to much. you heard the other two gentlemen testified. is there anything in their testimony you consider not accurate, first of all? >> senator, it is tough to recollect and comment on every single comment made here, but i would say in general it is accurate to my recollection of events described, albeit i only became cfo in april of this

year, so some of the events proceed that. >> is there anything about their testimony that you feel is not a full disclosure, and you feel a need to tell the committee more fully what happened? >> nothing, again, specific to the base of my ability, jumps out at the moment. >> mr. steenkamp, i was reviewing your bio in preparation for this hearing -- a postgraduate honors in finance. were you top of your class? >> i believe i was in the top three. >> suffice it to say you are a very bright guy. you started your career in audit practice. you assisted clients in sec

regulation processes, listing none exchanges in the united states. that is enormously complex work, work that most people could not perform. you know where vice president of external reporting and accounting policy, senior vice president, chief accounting officer, global controller -- a remarkable resume, would you not agree with me? >> well, i guess that is not for me to judge. >> what was your compensation package when you joined mf global? >> off the top of my head, and i do not have the information with me, i believe my starting salary was somewhere in the region of 200 board 250.

i am assuming there were options or bonuses that pushed that up, would that be correct? >> no, when i joined the firm it was not a public company. >> last year, what was your compensation? >> again, off of the top of my head, i believe my salary as of april when i became cfo was set at $500,000, and it is all public record. >> during the time you were there, did you keep a diary, take notes during these meetings of or e-mail? -- meetings, or e-mail? >> generally in meetings i do not take copious notes, although i do at times have notes that are on presentations over various materials. if we are going for something

specific with an agenda, but i would not say i have a standard way of doing it. >> have you turned those notes or documents over to the committee? >> i am not sure what from a legal perspective has been turned over or not. i know the firm has ownership of all of my work materials. >> now, my understanding is that there would be separate accounts, or a separate account maintained for customer funds, segregated accounts, is that correct? >> it obviously differs, depending on which jurisdiction you are in, so each regulated entity, as i mentioned in my statement, had unique rules and regulations that govern how every facet of the business is run. with regard to mf global inc.,

there is segregated bank accounts, i believe, that are held. as i mentioned earlier, similar to all of the entities, this is managed by senior officers in those entities from an operational perspective. >> right. so, you have the separate accounts -- all the poor people that were here that have been beat up by mf global, thought they had their money in segregated accounts -- how would that money -- who had authority to sit take money out of this account and put it at risk for whatever investment? who in the organization, by name, would sign off on that. would you sign off on that? >> no, i would not sign off on client transfers. >> when did you first learn of that? >> the first time i learned of

it was on the sunday. as i mentioned, as far as i am aware we never had any segregation issues of client balances, so it came as an absolute shock to us that there would be an issue. this is also a process and controls said been reviewed and assessed for many years by regulators and our auditors, and at no point that i am aware of have there ever been any issues with regards to it. >> having been the head of a very large organization myself, when i would have learned of something like that, i would have asked a question like "who that?"ool that did-? -- did you guess that kind of question? >> as you know, into the weekend we were working around the clock on numerous things. when we found out about it, and

notify there was an issue with segregated monies, it was late on sunday evening. at that point, the original thought was it has to be a reconciliation issue, so we had a group immediately try to reconcile the segregation calculation. it is not actually think accounts. it is an actual calculation that is complex in nature, involves a lot of people, and determines whether assets exceed liabilities. we had a team trying to see where the reconciliation issue was that went on for a couple of hours. it was at that point in time, not been able to resolve the segregation issue, we had to let the buyers, part of the acquisition know, and inform the regulators immediately. >> madam chair, i run out of time, but i will stick around

for the second round. >> thank you very much. senator nelson peltz >> thank you, madame chair, for holding -- senator nelson. >> thank you, madame chair, for holding this hearing. i want to read a couple of lines i got from nebraska is. i operate a grain business. recently, a major fcm, mf global, filed for bankruptcy. it goes on to say how my going to get my money back? another one, "i am an attorney in nebraska. i represent the number of people who have commodity-related accounts with mf global." another one says my farm hedging account has been going through mf global. when i heard they were downgraded to junk i asked for my $75,000.

i received a check, deposited it, and it was returned. now i have made worthless check, and my account balances short by $75,000. i am sure you have all heard similar said stories. you are aware of what the consequences are for people if they are short on their accounts that they thought were secure, not expecting to have them have any risk other than what market risk they were taking, but they did not expect to have this appearance risk. -- disappearance risk. when your team took over, the company was largely a brokerage term, did not regulate sovereign debt for its own profit, and is not in a manner in which ultimately you did. i guess my first question is why did you feel the need to enter into large trading positions the

company had previously never taken, and did you think training -- trading the firm's capital in this manner was appropriate, affecting shareholders? >> senator, just for a matter of clarification, we ran a very global organization with one of our largest centers in london, which was a participant before i joined, in my colleague. maybe not mr. steenkamp. in my written testimony, i talked about positions larger than we ended up happening -- having. they were not in the repo

maturity category, at which we have long-term positions in in our u.s. subsidiary with regard to u.s. treasuries, u.s. agencies come in u.s. corporate securities. the genesis of this transaction was a hour examining, as a firm, ideas that we thought were applicable, appropriate, prudent, and i became convinced, and became the primary advocate of these positions. i do not want to dislodge any responsibility on that. but, it was consistent with the kinds of transactions we had taken on at other times. i will repeat, though, these were in our broker-dealer

operations, not in our scm. >> right. mr. steenkamp, you have some knowledge, as you indicated, of what the internal controls were. where the internal controls adequate to deal with the transactions that were undertaken previously, and most currently? >> well, senator, the controls are across various functions. >> excuse me, for each function, do you think the controls were adequate to deal with each different kind of transaction? >> that is very broad in the sense that you would have controls in many organizations that are -- that there are deficiencies or items that come up from the internal audit reviews that you then work on and you improve. with regard to the control specifics of the customer money

within mf global inc., as i mentioned, those controls have never in the past indicated any issue, despite going through numerous reviews. >> would you not think that controls like that would be adequate to release set off an alarm if somebody was now taking money out of those accounts? not out of the company accounts, but out of those account holder 's accounts? >> the control that we relied on was the segregation calculation. >> yes. >> that normally was prepared on the monday with regards to the friday, and provided to the regulators, and that was a calculation that was escalated to me as we discussed with the other senator on sunday evening. >> if the money is missing, it is not automatic that there was a violation of any law, or that someone has engage in any

criminal activity. on the other hand, the money is missing, and when it is missing, one does not know whether there is -- what the controls not be such that you would be able to know whether it was just money missing, or whether someone has accessed the money? >> senator, it is difficult for me to answer that because unfortunately as we sit here i do not yet know what went wrong. i do not know which control went wrong. i do not know where, i guess, the apparent breakdown happened, to be able to answer. >> but it would have to be some sort of a breakdown of the controls are set in place so that this should not happen. nothing is perfect, i understand. but, if it breaks down it is because someone intended to break it down, or because it is inadequate. is that accurate? >> not knowing what happened, it

is hard for me to answer whether it was a breakdown, whether it was a willful action -- it is hard for me to answer. >> in your opinion, will the investigation be able to determine, ultimately, which is the case? >> i truly, truly hope so. >> thank you, madam chairman. >> senator? >> thank you, madam chairman. mr. corzine, how could the customer accounts be short, if there were not transfers to the company accounts for the use of the company? how else could they be sure? >> well, again, i want to stay away from as much speculation as i can, but we have customers also withdrawing funds from the

firm. there are all kinds of transactions associated with that at this moment in time. there are possibilities in the repurchase agreement -- the proper use of rule 125 investments of repurchase agreements between these scm and the broker a deal that could have broken down. i think i indicated in my written testimony, and again this morning the commercial paper, the commercial paper sold on thursday, was ruled 1 -- rule 125 eligible securities, properly available for offsetting monies, and when

those are sold, there is always the possibility of other failures to deliver funds not crossing appropriately. >> are you not required to have controls in place that prevent the use of customer funds by the firm for the benefit of the firm, and that properly account for the transactions you just described? are you not required to have a system and controls to cover those issues? >> senator, the answer -- the short answer is yes. but, i want to make it clear that there are investments that can be made of customer segregated funds in the rule 125 eligible securities.

when you transact in those, there is always a chance of operational breakdown, and i could the speculate whether that happened or did not happen unless i've looked at the records. >> but, you are responsible to have controls in place to properly account for that, track that, and report that? as the ceo, are you not required to certify you have those types of systems? >> senator, in all cases, i parwow enator stand now for our signatures with regard to their vacation in the order -- verification of our fiscal fourth quarter in march, 31, 2011, and those controls have to

be verified, both by internal auditors, and on an annual report have to be certified by the external auditors, so the answer is yes. >> all right. and, if those systems are not in place, and they're not adequate to do what they're designed to do, then when you are investing firm money in foreign bond currency transactions, or bonds denominated in foreign currency, are you in essence speculating with customer dollars if those controls are not accurate, and you do not make sure those controls are accurate? >> senator, i did not have access to the records, so i can not be absolutely certain, but none of us, i would think, what are you we were using fcm for the purposes of investing in

the foreign sovereigns. it was not an eligible security for client segregated funds. these positions had been in place many, many months, through periods of time, when we had gone through the process, so i think there is reason to draw the conclusion that the foreign sovereigns better talk about -- that are talked about were not in any identifiable way mixed up with fcm customer money. >> you had a responsibility to maintain those systems so that

customer dollars were not used in firm investments were you took a leveraged and, in fact, sped to a position. you also have a responsibility to make sure the customer dollars were not transferred to work for use of the firm, but clearly one of those two happened, where the customer accounts would not be short -- or the customer accounts would not be sure. >> i just want to say again what i said to senator chambliss before the break, and i think you could verify this from others, rule 125 eligible investments of customer money is appropriate with regard to the segregated funds. >> if the firm and directs those funds be used in that way, and if they did so, those are not the dollars they are short.

the dollars they are short were either move out of the account for benefit of the firm, where you have an accounting error, and have the responsibility to have an accounting system that properly segregate those dollars. >> as i said in my oral and written statements, there could've been breakdowns in those systems. we believe we had the people, the procedures, the policies in place to protect client segregated funds. >> what is your responsibility to recover those lost customer funds? >> my responsibility is to allow for the effects to be developed -- facts to be developed to find where that money has gone, just as it would be for any of us.

i actually have no authority with regard to mf global or the trustee today, but i believe that the trustee and the other investigations that are still on going, will be able to discover where that money went. >> is it your belief that we will recover the balance of those customer funds? >> i am hopeful, senator. i know the friday activities that were in the bankruptcy court, according to the representations i know about, get to 72% recovery for clients. i think i read that there is additional hundreds of millions of dollars held back, and there

is identified customer money in london. so, i am hopeful. i am not involved in that process. i think it was all of our expectations that we were not out of balance until we were all informed that sunday evening that we were, and, so, i will repeat, i am hopeful that there will be full recovery very quickly. >> and you would acknowledge they you have a responsibility to recover those funds? >> we need to make this quick to point. we will have another round. if he could quickly answer that. >> senator, i can only be hopeful. i now have no operating authority with regards to try to cooperate as a sit-in today, as

i have with other hearings. >> thank you very much. senator grassley. >> i give a short statement, then a couple of questions for mr. corzine. you of all the best repeatedly about where the money went and whether you authorize the transfer of hong the segregated customer accounts. i share -- transfer upon the segregated customer accounts. i am baffled the top three executives can not answer basic questions about what happened to the customer's money. you're supposed lack of knowledge as to what happened inside the walls of mf global it is alarming. i want answered, and iowa farmer's wants -- want answers. i'm not going to belabor the point since it is apparent none of you are able or willing to offer an explanation today. i guess we will have to see what

we learn through the ongoing investigation and subsequent proceedings. now, mr. corzine, i have some questions regarding some of the interactions with regulators of the time of mf global. it has been reported that you were not required to retake your series 7 where you're serious 24 exams before assuming your role with mf global and best -- mf global. investment professionals are required to retake these tests if they have been out of the business for two years. despite the fact you were out for 11 years, you have a waiver and did not take these tests. did you seek a waiver so you would not get to take your series 7 and series 24 tests? >> to my recollection, senator, my legal counsel made that request.

>> general counsel. >> so, through your legal counsel, you were granted the waiver? >> that is my understanding. >> ok. now, another question, trying to figure out how much involvement chairman gary gensler had in the early stages of the mf global problems, i have this question -- prior to october 31, did you have any discussion with gary gensler about the state of affairs mf global, and whether mf global was in trouble, and if you did have conversations, when were those conversations, and what exactly did you discuss? >> senator, chairman gary dazzler may or may not have been on some of the joint -- gary gensler may or may not have been on some of the joint budgetary

regional regulatory calls or i gave updates to a broad set -- regulatory costs, were i gave of its to set of regulators regard as -- with regard to what our actions were in reducing the size of our balance sheet and generating liquidity. to the best of my knowledge, he was only on that 31st general call. but, other than those postings to regulators, i am not aware of any conversations. >> so, then at least, you're telling me for sure you did not have a one-on-one conversation with mr. gary gensler the time? >> with regard to the activities in the last 10 days i have written in my written statement

everything that i can recollect about specific interactions. the july teleconference call, courtesy calls when i first took over at mf global. >> but not during this time of the last few days before bankruptcy the you have any one- on-one conversations with gary to answer? >> correct. ok. last question for you, then a question for mr. steenkamp. if none of you know what happened with the customers' money, could each of you give me or the committee the name of some mf global employee that can tell this committee what happened to the segregated customer accounts next there has to be someone there that can

give us the story. give us a name. joe blow, mary smith? >> senator, i would go to our treasury department, and the people who headed that are probably closest to the scene of the action. >> but that does not give us one name for sure that could answer the question. you are saying someone in that office, but you do not know who it really is. >> the outline of the structure, i think mr. steenkamp presented, starts with certain people at the very top of it. i happen to know the individual was on vacation this week, and the cfo of north american operations -- that team of people, and it is quite large,

would be one of those places that you might. >> ok. then i would have this question for steenkamp. who specifically told you that sunday that customer money was missing? >> if i recall correctly, i was in a room with a large group of people as we were working on the acquisition, and one of our folks from finance had been notified that there was an issue here, and just pulled me aside in the room and notified me. >> ok. what is his name? or her name? >> it was our global product controller, might ireland. >> ok. thank you, madam chairman. >> center thi -- senator thume. >> if i could ask any of you to

provide an example how $1.2 billion of customer funds could disappear without any laws being violated? it is a hypothetical scenario without breaking any laws or existing regulations to give us a hypothetical scenario that could happen without a break -- give us a hypothetical scenario without breaking any laws or existing regulations that that could happen? anyone want to take a stab at that? >> anything any of us could do but that would be potentially misleading, and certainly speculative. in my written and oral remarks i laid out some places i thought there were possibilities where the clearance and settlement system could break down. >> senator corzine, there are reports i have seen that indicate they you were in contact with chairman gary

gensler and the cftc regarding a proposed rule restricting traders from trading with restricted money in sovereign debt. the rule, which is now called the mf global rule, was delayed because of your opposition. why did you log the against proposed changes that would have -- why do lobby against proposed changes? >> sector, to my recollection, i did not speak -- senator, to my recollection, i did not speak with chairman gary gensler about the foreign securities aspect. particularly on that conference call on july 20, to the best of my recollection, i was speaking about the internal repurchase arrangements between subsidiary and the fcm, as i spoke to the

senator from north dakota about and others, and whether that would continue to be available large, or global organizations and large, but not with respect, to my recollection, foreign securities never came up in the discussion. the only time foreign securities were available to be invested in fcm's is if you took deposits from a client in foreign currencies. >> you have said, senator corzine, during the house hearing that you did not intend to break any regulations. what did you mean by that? >> i tried to clarify that in my opening statement here this morning.

i never gave any instructions to misused customer funds. i never intended to give any --tructions or a 42 suse customermisue funds. >> from a in down now, can you assure this committee that no regulations -- from what you know now, can you assure this committee that no regulations were violated? >> whatever the range of estimates about the segregated funds not reconciling, i do not think i can give that assurance. >> there is a "new york times" story that indicated some customer money may have been improperly transferred as early

as october 21. can you confirm that date? >> senator, i would be completely out on a limb speculating. no idea, and i would have to go back literally threw thousands of pages. >> i assume then you would not be able to give us an idea about when mf global began transferring funds out of the customer account? >> it would be speculative. i do not have the facts. i do think that the cme has testified that they did 85% or 90% check against the wednesday, the 26, and they suggested at least in that testimony with

reasonable testing of bank accounts that we were in excess. i really think that is a question the cme should answer. >> all three of you testified that to the best of your recollection, none of you gave any instructions to anyone at mf global to transfer funds from segregated accounts, yet it happened. prior to october of this year, whether to cover margin calls, or for any other reason, had there been any other incident of in proper or authorize funds transfers mf global, or is this the first time any of you are aware of anything like this happening? >> senator, from my standpoint, if there had never been anything like we found out on the evening of october 30, or if there had been, it would not

have had to rise to the level, the dimension and that evening. i think any of us would have been notified. if we had not been, the senator from north dakota with a been absolutely right. we clearly would not affect policies, people, and procedures in place. i am not aware of that. we have had many audits by external regulators and external auditors. >> madam chairman, my time is up. thank you. >> senator? >> thank you, madame chair. senator corzine, can you help me understand? there seems like there has been a lot of ambiguity about rule 125. can you help me understand what the eligible investments would be that could take place under that?

>> senator, i do not know whether you were here when senator tom harkin gave an introduction to his question to the first panel. i think he listed -- i do not want to be remiss in leaving something off of that list, but i have a general idea. >> you had a trading strategy. was there a -- a specific time -- mr. abelow, you said -- said your response by day-to-day, was there a specific time when the firm changed their line of investing?

we know there are a number of different ways of doing it based on rule 125, as the senator explained. >> senator, i apologize, in my comments my responses did not include oversight of trading. >> who was the person in charge of particular? -- of that particular? >> i am not certain. >> who would you guess? >> i think they're separate questions. the rule 125 securities, i believe, were in a portfolio overseen by the treasury department, and other types of trading activity had different types of oversight. >> in your firm, though, who is responsible for determining, you know, they have the latitude,

with rule 125 -- who made the decisions as to what they were doing? >> senator, the treasury operations, treasury functions, along with our internal audits would work to ensure -- assured that the investments were held using the customer funds, conformed to rule 125. s, i think has been stated, -- as i think has been stated, at least until that evening on the 30th, there had never been any indication that that had been ever not followed.

>> right, but we have a problem. at some point, something happened, and i guess it treasury is involved in that process, i guess my question is who directly in the firm interfaces with treasury, and makes those decisions? >> the decisions about whether you move the money is separate from what would be the investment decisions that you might take. the investment decisions that you would take against -- i should not say against. the investment decisions you would take had to conform to rule 125, and nobody ever disputed that, nor am i aware of any time that those investments did not conform to that rule. >> but, i am curious who --

again, i understand what you are saying, but knowing you have this smorgasbord of doing things in a certain way, who made the decisions as far as, you know, your strategy in the investments? >> the strategy at the highest level was reviewed at the board, certainly reviewed by myself, but the actual implementation was done by our treasury personnel. >> so, who is that? >> there are a whole series of people that were involved in treasury. >> i do not mean to interrupt. i guess my frustration, and i think senator grassley expressed it, too. we have this major problem, and you guys were pretty high in the organization, and yet, you know,

when we try and dig and find out what happened, who did what, nobody can really remember, or does not really know, so it is a problem i would like for you to help us understand who was involved specifically. i think you should have been in a position to know that. i yield back the rest of my time. thank you. >> thank you very much. i believe we have completed our first round of questioning. let me continue with our second round. thank you again for you all being here. let me talk more about treasury operations. mr. abelow, first of all, our committee staff has had a number of conversations with people at the operations level to gather

more information. is my understanding that the treasury operations are important to you, that you oversee that dept.. >> id is correct that i oversee operations. treasury operations report up through several chains to him. >> what is your responsibility in overseeing the responsibilities of the treasury? >> my responsibilities are to first and foremost in sure that we have an appropriate and professional personnel in place to oversee those functions and to ensure ongoing functioning of them. >> do you think they were functioning appropriately? >> other than the normal course of occasional incidents that are reported through operational

risks or audit findings, prior to the period in question, there was no evidence of there being any problem as a said earlier. the first that we learned about there being an issue with segregated funds was sunday, october 30. >> i would like to clarify it a little bit more about intended purposes, going to rule 1.25. i want to be clear that do you consider the investment permitted under that rule to be the intended purposes for customer segregated funds? that is not what we heard on our first panel in terms of what the farmers understanding was. loaning and bar when customer collateral.

could any of these transactions lead to the shortfall of customer funds? >> senator, my understanding is you are correct, that is, i never heard a conversation where anyone spoke about using customer funds or assets for any purpose other than investment in eligible securities. >> are there any other uses of customer funds that could of resulted in them being lost? i am not talking about unintended purposes. was mf global doing anything with customer funds that could lead to a shortfall? >> senator, i am not aware of it so it would be speculation on my part. >> let me ask more about real hypothecated, in effect using customer assets as collateral to

support financing for mf global. this practice puts customers assets at risk if mf global were to default. how common was it for mf global to be read hypothecate customer collateral? could this be where the missing funds wind? >> senator, i will start with i really do not have any knowledge about the term re- hypothec nation in this context. anything i say here would be speculative. 8 is not a term that we used at the firm -- it is not a term that we used at the firm. i am not aware of that taking place. >> mr. abelow? >> i am not aware e there.

i did not directly engaged in financing activity on the part of the firm. >> mr. steenkamp. >> that activity did not fall within financing in the context hypothecateion.applicati >> i have a lot more questions about this practice. i wonder if any of you would respond to why we should permit trades that in courage excessive leverage and create risk? are these trades in effect a legal way to violate a fundamental principle? >> >> senator,if the rule 125 investments of segregated funds

was followed, then those securities, based on the judgment of those who said that rule, should be available during the period when customers want their money back. that is the intent of establishing security positions can be taken far more conservative than what would occur in a broker-dealer or for house investments. those investments should be just exactly inside those constraints. if that were the case, those moneys should be available for clients -- protection of client

funds. >> that is why we are here. the concern is funds were not kept segregated. at this point, we are not going to be able to identify 100% of the funds that were customer funds which is one of the reasons why we are here. mr. steenkamp, you spend a lot of years in accounting and financial reporting, obviously very accomplished. i think this is a fundamental question. how is it that large sums of money can be moved without being elevated to senior levels of management? as a chief financial officer, how can this happen within mf global? >> not being able to investigate my cell, i am offering the same question. >> but as a general practice.

how can large sums of money move without senior management being involved or where? >> as a general practice, something like that should be elevated, escalated, and the movement of client funds. they should be elevated as general practice. the first time we found out about it was on sunday evening. >> thank you. senator robert it. >> -- senator roberts. >> thank you. what we are trying to get straight here it is that the three of you were in charge of your firm, amongst the eighth largest bankruptcy in the u.s., some somehow lost $1.2 billion of your customer's money and do not know where it went.

i want to go back to mr. abelow. you indicated earlier today -- you confirmed that the treasury operations -- apparently we need the treasury operations person here. he was the head of treasury operations. he could sit down in that empty chair i am sure. she was under your area of responsibility. you went on to say "but if somebody gave an order to move the money, would she know it? " you went on to say "well, she would report to the person in charge of global operations." who is that? >> senator, i don't know -- >> you don't know? you do not know who is in charge of global operations which comes under your area of responsibility. i just told you the name of the

treasury operations person. if someone gave it an order to move the money around, would she know it? >> i did not know she reported directly to the head of operations or whether she reported to someone who reported to the head of operations. >> how many heads of operations to we have to have around here before we finally drawdown and find somebody's name who knows what the heck is going on? >> i understand your frustration and the frustration of everyone in the room. i would like to know exactly what happened -- >> together a chart or something so we could finally get down -- a plan presented to the leadership was dependent upon the use of revolving credit

line. the credit line was already there. it did not sound like a contingency. what was the plan if you exhausted the credit line? >> senator, i have not looked at the scenario in more than six weeks, so i do not recall exactly what was in it. it was a scenario designed to -- >> now it is a scenario. >> it was designed to simulate what might occur if there was a loss of liquidity at the firm. >> was it a contingency? >> i believe initially it was done literally as that, to simulate what with the liquidity impact on the firm be -- >> it sounds like it was -- it

sounds like somebody made a decision at the top or somewhere that became operational. >> the intention was that the next step in that plan would have been to develop an operational plan. >> ok. i may return to a point made earlier. the final days at mf global were a classic run on the bank. you all had enough case to curb demand on friday the 28th. did you have enough cash? >> senator, i believe that at the end of every day that week, we believed to the best of my recollection we were advised that we did have liquidity on hand, but it was a run on the bank in the sense that liquidity sources or evaporated. >> what did you fall into bankruptcy?

-- why did you fall into bankruptcy? >> after we had failed to engage in a transaction to sell the firm after we had discovered there was an apparent gap in our segregated funds, we no longer thought we were in a position -- >> governor, you state that during the week of october 24, you reduced the mf global match book by $10 billion and took steps to ensure that you were able to honor customer requests to withdraw funds or collateral. >> it is correct. >> you drew down your line of credit from jpmorgan, about $1.2 billion on october 27 due stated you sold $1.3 billion in commercial paper, over $300 million in corporate securities. is that about correct?

>> i think that is what my written statement -- >> during the week, you unwound hundreds of millions and sold the debt instruments. how much was that? about $900 million. so we have $1.2 billion from j.p. morgan, $1.3 billion in commercial paper, $4.5 billion in treasuries, and $0.9 billion a grand total of $8 billion. where did this on accounted $1.8 billion come from? could it have been loans from your customer segregated account? i am speculating. >> senator, i would have -- my

math may be poor, but $10 billion in a reduction in assets by reducing the matchbook. it would be reducing $4.5 billion on the asset side by the sale of the agencies, $1.30 on commercial paper. de-ou know, the rtm's were recognized. there would be liabilities that reduced 8 at the same time, both on every one of those assets. and the purpose of that whole process, except for the $1.3 billion in commercial paper, was to produce less in margin calls or less margin postings that

would be returned to the firm in each of those transactions. the commercial paper was rule 125 eligible and was sold for purposes of having cash so when the kind of people were here on the first panel asking for money, we would have the cash immediately for that purpose. >> i am out of time. i await the third round. >> thank you. senator conrad. >> thank you, madame chairwoman. what flummoxes us is how there can be about a billion dollars missing and no one knows where it has gone.

somebody watching on television from home -- "wait a minute. these are the guys are running the company and a billion dollars goes missing. how is it that they do not know where it went?" i have heard speculation and the referenced eight in my first round. when moody's had downgraded and all the sudden the stock price plunges and then you have to contemplate bankruptcy and therefore firms probably are not sending the money that owe you money so you are in a liquidity crunch even if those trades on european that were actually profitable trades which everything i see now -- all the reading i have done suggests these guys made a bunch of risky trades and lost money on them so

therefore that is the problem. everything i've read is that those trades were profitable trades at least until the roof started caving in. then you are downgraded so there is a liquidity crunch. are any of you -- do any of you know of an attempt in those final hours to get london to send you back $170 million that was loaned to them? >> senator, i have no input on that. >> you have not heard that there was a call that went from mf global, your headquarters in either chicago or new york, went to london saying that $170 million we thank you in a loan, we need that back? >> senator, the only thing that

i know about with regard to this is that there were overdrafts in london which it talked about in my oral statement. >> overdrafts on their accounts by them? >> overdrafts to j.p. morgan and london account. >> to your knowledge, was $170 million sent to london as a loan? >> senator, i do not know the amounts of transactions. >> would it surprise you there was money sent to them and an attempt to get the money brought back to headquarters? >> in the normal course of any day's transactions, and i am

speculating, on any business day, a lot of transactions are back and forth between london and new york. >> mr. abelow, were you advised that there had been a loan extended to london of $170 million and a subsequent attempt to get that money repaid. >> i do not recall any specific conversations about a loan to london. what i do recall, and forgive me because this was a hectic time, monday morning, october 31, post-discovering there was an apparent gap in client segregated fund, i recall a series of conversations of asking people to identify all cash and assets that may be outside of the control of the s cm in response to the surprise

to us on sunday night that there is now a problem. i do not recall a specific loan or any specific amount or account of being a part of that conversation. >> were the three of you talking during this time? i assume that you were. >> course. although we were all focused on different activities of emphasis as i have -- as i have said in my remarks, focused on selling assets and bringing the balance sheet down. had little less impact on selling on the firm although active in this dialogue with investment bankers and also working to our trading floors

around the globe to make sure that people were reducing positions, preparing myself for postings with regulatory agencies to try to gather information. i think other people were working on other functions. it was not as if we were standing next to each other on a minute to minute basis. >> let me ask you this because we have an obligation to try to learn what happened here. when you were told that there was this -- at the time, $950 million shortage, what did you say to each other? was there a theory? if it were me, and i heard of this shortage, the first thing

would come to my mind is how in hell did this happen? mr. abelow and mr. corzine, did the two of you talk and say, "what in god's name happen here?" did you have a theory? >> senator, that is probably a polite way of the response. >> i am scandinavian so we try to be polite. >> the reaction is -- i think you heard mr. steenkamp talk about it to find out where this money is and why wer are out of reconciliation and then step back and let the people who know how to read those of thousands of pages of records get on with the business.

concerned about our client, concerned about the available ability to deal with a rising sun and an opening of markets. >> ok. >> thank you very much. next, [inaudible] >> mr. abelow, you and mr. corzine have been close to the years, haven't you? >> we have worked for a number of years. >> you were his chief of staff. >> when he was governor of new jersey. >> mr. steenkamp, i have been watching your body language during this hearing and you just

seem like the odd man out. you seem very uncomfortable about what is going on. you have been mostly quiet. how long did you stay at this company after you knew that client money was missing? >> senator, i am still at mf global holdings as i mentioned in my statement. i am still trying to do any efforts that i can to help the trustee maximize value. >> so you have access to the records. >> no. i have access to mf global holdings information, the holdings company but i do not have access to either the personnel or the records of mf global holdings inc. for the most part because on october 31 when the trustee was appointed,

they were very clear boundaries put up. clients'ate did the money first start missing? >> on the sunday when we found out, it was reported to me that there was a segregation issue on the thursday calculation as well as the friday calculation. my understanding was that there's a calculation had originally not shown a deficit but there was subsequently a reconciliation issue which proved to be wrong. >> $1.2 billion, up by everybody's definition, especially somebody else's money, is a massive amount of money. never in the history, never in the history has cliente money ever gone missing.

there be some process or some person who had sufficient integrity in this organization to say, "oh, my lord, clients' money is disappearing. i need to talk to the boss." are you aware of anybody in the organization of that thursday, friday, saturday who said something very serious is happening or something like that and drew it to somebody's attnetion? whose attention was it drawn to? >> i was not aware of anyone until i was notified of its on sunday. >> so it did not come to your

desk until sunday. >> correct. >> so in this entire organization, although there must have been many people who knew that money was being drained out of client accounts, being transferred, no one stepped up and said to top management or at least to you there is a problem here? >> senator, apologies for repeating myself. there had been no idea of this until that son day. it was aftershock at week -- as we said when we found out about it for the first time on sunday. >> mr. steenkamp, do you realize how incredible it your testimony and the other two gentlemen how incredible that sounds to this committee? $1.2 billion, the first time in

history, can get drained away from customers and it does not come to your attention or somebody does not see your authorization or at least say, "by the way, what is going on here? " doesn't that strike you as incredible? >> senator, -- we found out about it on sunday. there were no issues i was aware of in regard to client asset being used in the broker-dealer after that point as far back as i can remember. our procedures were reviewed in detail by external and internal bodies. >> how would you get money out of a client account in this organization? did somebody have to authorize it? somebody in this organization

had to have the ability to say "take the money." >> as a global cfo, my involvement was not in the approval of client ballots movements. >we delegate those responsibilities to the senior finance professionals, the experts that do this on a day- to-day basis. treasury operations. >> who are they? >> every entity would obviously be different dependent on the rules and regulations existing in the entity. >> i am just interested in the u.s. >> in mf global inc., there were numerous controls in place that covered treasury -- >> you have said that. i want names. who would authorize, who would have the oversight? who would have the ability to

say, "take money out of client accounts?" >> senator, i do not think anyone would have the authorization to take money out of client accounts. >> you are dancing around with me. who would have the oversight of those accounts where that money has gone? i want a name. >> senator, i am not trying to dance are on the issue. i am not 100% sure of the exact person. i think there are numerous people. i am not sure who had -- >> i am out of time. i want to be respectful of the other senators. but as part of your testimony, i am requesting that those names be provided to the committee. i would like those people to be

sitting where you are sitting so we can ask them how did it come to be that $1.2 billion, first time in history, was taken out of customer accounts? will you do that? >> i will try my best, senator. >> thank you. >> thank you. let me say to your last question, our committee, our staff are interviewing numerous people and having conversations at various levels at mf global and asking for an accounting of the checks and balances and who was in charge so we can answer those questions. >> in regards to mr. steenkamp's observations, you do not delegate responsibility. you may delegate authority but you do not delegate responsibility.

every time you say you are responsible, you are responsible. that is why i think the senator is so keen on this. gives us a powerpoint, give us names, something. i do not know if christie would say "i delegated responsibility." we have to whittle down one layer after a while. it is u 3 sitting here. >> i very much appreciates the comment, and it is important that we get as specific information as we can. we thank all of you for coming forward and speaking with us. we look forward to continuing to ask these questions and get the answers as to where the money is and who in fact was responsible for the transactions. thank you very much. we will ask our next panel to

come forward. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> on capitol hill today, the senate just wrapping up their work of the year. -- is wrapping up their work for the year. they passed a two-month payroll tax cut extension, the unemployment benefit, and a disaster aid bill. you can always watch our live coverage of the house right here on c-span and of the senate on c-span2. sunday, republican conference the vice-chairman on how

in 2011 and his party's plans for 2012. >> i always knew there was a risk. i decided to take it because whether it is an illusion or not, i do not think it is. it helped my concentration. it stop me being bored and stop other people from being boring. it would keep me awake. it would allow me to have longer conversations. if i was asked what they do it again, the answer is probably yes. it is easy for me to say of course but not very nice for my children to hear. it sounds irresponsible. the truth is it would be hypocritical for me to say i would never touch the stuff

because i did no. i decided that all of life -- all of life is a waiter and that was going to wager on this. . i cannot make it, and the other way. by almost regret. it is impossible for me to picture of life without wine and other things in fueling the company and keeping me reading and traveling and energizing. >> thursday, a journalist, author, critic, christopher hichens passed away at the age of 62 from complications with his battlfrom his battle with c. >> next, weakly addresses.

president obama addresses the gratitude from the nation of those who served in the iraq war. then, senator john barrasso expresses his support for the keystone pipeline oil project. included in a bill passed, that the decision by the obama administration on whether or not to allow construction on the keystone pipeline. >> this week marked an historic moment in the life of our country and our military. for nearly nine years, our nation has been at war in iraq. more than 1.5 million americans have served there with honor, skill, and bravery. tens of thousands have been wounded. military families have sacrificed greatly -- none more so than the families of those nearly 4,500 americans who made the ultimate sacrifice. all of them -- our troops, veterans, and their families -

will always have the thanks of a grateful nation. on thursday, the colors our armed forces fought under in iraq were formally cased in a ceremony in baghdad before beginning their journey back home. our troops are now preparing to make their final march across the border and out of the country. iraq's future will be in the hands of its own people. our war there will be over. all of our troops will be out of iraq. and this holiday season, all of us can finally say, welcome home. this is an extraordinary achievement, one made possible by the hard work and sacrifice of the men and women who had the courage to serve. and there's a lesson to learn from that, a lesson about our character as a nation. see, there's a reason our military is the most respected institution in america. they don't see themselves or each other as democrats first or republicans first. they see themselves as americans first. for all our differences and disagreements, they remind us that we are all a part of something bigger, that we are

one nation and one people. and for all our challenges, they remind us that there is nothing we can't do when we stick together. they're the finest our nation has to offer. many will remain in the military and go on to the next mission. others will take off the uniform and become veterans. but their commitment to service doesn't end when they take off the uniform. in fact, i'm confident the story of their service to america is just beginning. after years of rebuilding iraq, it is time to enlist our veterans and all our people in the work of rebuilding america. folks like my grandfather came back from world war ii to form the backbone of the largest middle class in history. and today's generation of veterans, the 9/11 generation of veterans, is armed with the skills, discipline, and leadership to attack the defining challenge of our time -- rebuilding an economy where hard work pays off, where responsibility is rewarded, where anyone can make it if they try. now it is up to us to serve these brave men and women as

well as they serve us. every day, they meet their responsibilities to their families and their country. now it's time to meet ours, especially those of us who you sent to serve in washington. this cannot be a country where division and discord stand in the way of our progress. this is a moment where we must come together to ensure that every american has the chance to work for a decent living, own their own home, send their kids to college, and secure a decent retirement. this is a moment for us to build a country that lives up to the ideals that so many of our bravest americans have fought and even died for. that is our highest obligation as citizens. that is the welcome home that our troops deserve. thank you. >> hi, i'm john barrasso, united states senator for wyoming. as we begin the holiday season, we're reminded of those who are far from home serving our country in the military. we've welcomed many back home, but there are still men and women in dangerous places

protecting our freedoms and keeping us safe. this thanksgiving, i had the special opportunity to visit wyoming national guard troops deployed overseas. we talked about their mission and their hopes for the future. what these soldiers were most concerned about was whether they would be able to find a good job when they return. here at home, republicans are working on legislation that will make it easier and cheaper for the private sector to create jobs for all americans. for example, the creation of the keystone pipeline, a shovel-ready american energy project. it will create as many as 20,000 construction jobs and 100,000 indirect jobs and it will strengthen our nation's energy security. keystone would allow us to transport 700,000 barrels of oil a day from our northern neighbor canada to refineries in the united states. having a steady source of energy from our friend and ally here would make us less dependent on energy from the volatile middle east and that is

good for america. everyone from members of the united states chamber of commerce to members of labor unions support this project. but the president has threatened to veto this bill because the pipeline is opposed by a number of extreme environmental groups. these are the same groups who in the past have supported the president and he needs their support for his reelection. it appears that president obama is opposing these new american jobs in order to try to save his own job. it's time for the president to stop playing politics. after repeatedly saying, "we can't wait" for american job creation, the president now wants americans to wait on the jobs from the pipeline until after next year's election. canada has made it clear, if we don't build this pipeline, the united states will lose these jobs and canada will sell the oil to china. and we will be forced to get more of our energy from the

middle east. if the president successfully blocks these new jobs, it will only add to his long list of bad economic decisions for our country. while the president may have inherited a bad economy, he has made it worse. earlier this week, in a "60 minutes" interview, the president said that he has not overpromised. his record shows otherwise. his administration projected that his $800 billion failed stimulus bill would keep unemployment below 8%. almost three years later, under the obama economy, the unemployment rate is 8.6 percent and it has been over 8% for a record 34 straight months. he promised that he would cut spending. but in less than three years as president, america's national debt has increased so much that we have to borrow almost $3 million every minute -- a lot of it from china.

he promised that his health care law would lower premiums for families, but since his inauguration, premiums have increased more than $2,200. he promised to create a new era of bipartisanship in washington, and now he wants to veto a bill that both democrats and republicans enthusiastically support. americans deserve better. americans want real solutions and good jobs. the keystone pipeline is a real solution that president obama should embrace immediately to create new jobs across america. the house of representatives has now passed the middle class tax relief and job creation bill. this bill gives the president everything he has claimed to be for. it extends payroll tax relief for hard working americans. it helps those who are still looking for work. and it is paid for by actually

cutting government spending. most americans want their government to be smaller, not larger; they want their taxes to be lower, not higher. we are a strong and resilient nation. we will weather this storm. to get americans back to work, small business owners need a level of predictability that they just don't have with this president and this administration. we need more from the white house than threats to veto a bill that would create 20,000 jobs for americans. thanks for listening. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> today, rick santorum is holding a town hall meeting in iowa in the southeastern part of the state as a part of the former pennsylvania senator's campaign tour of iowa.

you can watch coverage at 4:30 eastern time. >> sometimes, i think it would be best for governments to take it completely out of sports. when congress get involved, the hearings are basically television shows designed to give the congressman and women involved exposure. >> and author and sports commentator on the intersection of sports and government. >> the flip side of this -- sports is a multi-billion dollar business in this country with a huge effect on the lives of people. people in terms of raising money for universities, higher education. there are some many different ways that sports affect our lives. stadiums are built with government funds. a lot of times i think the federal government to be more involved. >> you can watch the rest of the

interview sunday night on c- span's "q & a." >> now a hearing with the inspector general of the fhfa which oversees fannie mae and freddie mac. he questions the decision to award over $35 million worth of executive bonuses without conducting an independent review. this is about an hour. [gavel bangs] >> good morning. i would like to call this hearing to order. i would like to welcome the first inspector general of the fhfa, steve linick.

as we wrap up the hearings for this year, i am pleased that the ranking member and i were able to agree to a plan for the hearings that the committee held this year and hope that we will be able to continue the bipartisan approach next year. the hearings were held this year applied some general principles i believe we hold in common that will get us going forward. small institutions that maintain some underwriting standards during the boom should still have access to any secondary market that is created. this is important for maintaining a strong, responsible home ownership opportunities in rural and under-served areas.

it should be the standard practice in any system going forward. clear rules of the road are essential for providing stability to the markets, but they transition should be a gradual one given the fragile state of the market. as committee's expiration these space of the topics has helped inform members to build a record on which -- legislative efforts. there are some topics that still need to be explored, but i am hopeful that senator shelby and i can continue moving forward on housing finance reform in the same bipartisan way we have conducted hearings this year. in nearly every hearing this year, the current state of the economy and strategies for

improving the housing market or topics of discussion. the need to reform our housing system and the need to improve the markets go hand-in-hand. the federal housing finance agency is the conservator and can play a significant role in improving the housing market based on reports from the inspector general's office. there are deficiencies at the agency that are holding back those efforts. i am concerned that the reports produced by the inspector general's office shows it egative trends in fhfa's operations at fannie mae and freddie mac. major, the gse's on decisions without any penalty clarifying the benefits to the

conservatorship or the tax burden. ars to y, the fhfa apper allocate resources in a manner that in forces directives and adequately overseas operations at the tse's. these two trends seem to restrict the ability to help stabilize the housing market and protect taxpayer dollars while also continuing to partner a relationship that fannie mae and freddie mac had with their previous regulator. despite their independence that is granted on a bipartisan basis in 2008, fhfa could be doing more to prevent losses and in

force required changes at fannie mae and freddie mac. as the regulator of two of the largest entities, is essential that fhfa prioritize oversight as one of the strategy is necessary to stabilize our housing market. this would benefit the taxpayers both by -- the state of the gse's and providing guidance and consistency to a large sector of the housing market to create stability for homeowners and potential home buyers. i look forward to hearing your recommendations for improvement and the reasons for the trends that you continue to see, inspector general linick. with that, i turn to senator shelby. >> today, the committee will

hear the testimony of the inspector general of the fhfa, mr. steve linick. this will be his first appearance before us. overseeing the regulation of fannie mae, freddie mac, and the federal home loan banks. ida have looked forward to hearing the testimony today from the inspector general about the status of fannie mae and freddie mac and the housing agency as well as how he plans to carry out his duties. i am interested in hearing how his office can help the fhfa oversees the conservatorship of fannie and freddie. unfortunately, before mr. linick was confirmed, the seat of the inspector general was vacant for two years. during that time, fannie and freddie were placed into conservatorship, and taxpayers

began to pay for their losses. so far, fannie and freddie have caused over $183 billion and counting. despite financial problems, their dominant role in the housing market persists as they back 71% of new mortgage-backed securities. mr. linick has a lot of important work to catch up on. first and foremost, i believe he must provide oversight of the federal housing finance agency's conservatorship of fannie and freddie to insure that taxpayer dollars are spent wisely. the office of the inspector general has already identified several ways in which the federal housing finance agency can do a better job of protecting taxpayers. for example, in the semi annual report, the inspector general

noted that fhfa did not effectively oversee fannie and freddie's negotiations with treasury on the administration's home loan modification program. according to the report, this contributed to gse's entering into a portly drafted agreement. there have been significant disputes between the federal housing finance agency and the treasury about how the gse's should run hamp. the report notes that hamp has undermined the ability of the gse's to perform their core functions. fhfa's acting director concluded in a letter, "hamp created a risk with enterprises and diverted staff and resources from other critical priorities." this report recommends that the federal housing finance agency better engage with treasury and

the gse's to clarify certain aspects of the hamp agreements including establishing a resolution mechanism. another issue mentioned in the ofort is that fhfa's lack analysis or compensation for fannie and freddie executives. according to the office of the inspector general, "fhfa had not considered factors that might have resulted in reducing executive compensation costs." to improve fhfa's framework for making executive pay decisions, the office of the inspector general recommended that fhfa use performance data and independent verification of compensation levels. taxpayers should never be put in the position of paying millions to executives of any company yet as long as we have had the gse's this has been the case.

the recommendations are intended to ensure that taxpayers spend only what is required -- what is necessary. the oig's workshop day lead on the issue of the cost rising from the administration's failure to propose a detailed plan to end the conservatorship of fannie and freddie. is been three years and 98 days since the conservatorship began. the conservatorship was never intended to last this long. nor was fhfa designed to handle the "conservatorship." it should not be surprising ;that the oig has found shortfalls including having too few examiner's overall to ensure the efficiency and effectiveness of fhfa's oversight of the gse's.

this is no small finding sense examination is the primary means by which the fhfa supervises and regulates the gse's. this section -- a serious problem here exists because the perceived short-term nature of the conservatorship makes it difficult for fhfa to hire enough qualified examiners. this is just one of many problems created by the prolonged conservatorship. the longer we will wait to reform our housing finance system, the larger these problems will grow and the solutions will become more expensive for the taxpayer. nevertheless, the majority decided not to tackle housing finance reform in the dodd- frank as many people in this committee recommended. at some point, however, the majority is going to find they can no longer kick the can down the road.

we need to work together on this. thank you. >> thank you. thank you, senator shelby. i would like to move to the executive sessions. deputy secretary, the department of housing and urban development. the assistant secretary, u.s. department of housing and urban development. the vice-chairman and a member of the board of directors, federal deposit insurance corp.. we have agreed to hold a recorded vote to have a voice vote on the other two nominations. senator shelby, do you have any remarks? >> go-ahead.

>> first, without objection, we will hold a voice vote for the nomination of mr. jones to be deputy secretary cannot department of housing and urban development, -- deputy secretary, department of housing and urban development. those in favor, say aye. those opposed? the ayes have it. the nominations are hereby ordered and reporter to the full staff. we will now have a roll call vote on the nomination for the assistant secretary, u.s. department of housing and urban

development. does anyone want to speak? >> thank you, mr. chairman. the fha, like other federal agencies, it is in serious trouble, underfunded. an independent evaluation said there was a 50% chance they will need a bailout costing between $50 billion and $100 billion. we were very concerned about the lack of vision to change the course of the fha, and in fact appear to be of the opinion that more of the same is a way to move that agency ford. i oppose her nomination. i think we need people in the administration with a sense of

urgency about the need to turn things around, reduce our debt, and avoid future bailouts. she does not appear to have that sense of urgency, so i urge my colleagues to oppose her nomination. >> mr. chairman, i had heard of the concerns, just about the insurance premiums that fha is charging what the losses. i had a conversation this morning with her and secretary donovan about the same issue, and i plan to vote her out of committee, but i will say that i am distressed, up frustrated, embarrassed that we have not yet dealt with the issue of gse's and housing policy as a committee. what i may do is hold her on the floor until i get some sense of the administration -- again, i had a lengthy conversation with sanitary donovan today about the fact that nothing -- i mean, a

multiple choice proposal came out last year. in number of us talked about forming a bipartisan deal with this. we became so frustrated, we just offered our own piece of legislation as a marker, but i think the comments that senator shelby and many of us on both sides of the aisle expressed during financial regulation and now, 1.5 years later having done nothing, i think a partial indication to me would be from this it in the region from this committee, some sense of when we may try to mark up a bill dealing with gse's. i plan to vote her out. she said today she was very open to insurance premium increases. i think they think that the losses are from old loans. the question is, you have insurance premium increases on loans now better probably money good, is that really the way to deal with it? my sense is that they're dealing

with that in a legitimate way. what we have not done as a congress is deal with the whole issue of gse's, and i am concerned about that. i think having a nominee like this coming fourth, it is a good time to talk about that. i don't know if the chairman wants to respond, but to me it is an important issue that we have left undone. i will vote for out today, but i may hold her on the floor until i get an indication of when they may deal with it. >> anyone else? we will now have a roll-call vote on the nomination for the assistant secretary, u.s. department of housing and urban development. the clerk will call the role. roll-call vote.

>> the vote is 13 in favor, 9 opposed.

>> the nomination is hereby reported to the full senate. in addition to the three nominees that we have a vote on to the committee today, we're also waiting on floor action of the fdic chair, and the comptroller of the currency. it is my hope, with your support, senator shelby, that we will be able to confirm them as a package, as well as the hud nominees by the end of the year. >> i will work with you on any of them. are there any other members who would like to make a brief

opening statement? thank you all. i want to remind my colleagues that the record will be open the next seven days, for opening statements, and other materials that you may like to submit. to i would briefly like introduce our up with us today. steve linick is inspector general of the federal housing finance agency. he has served in this capacity since october, 2010, having previously served in various senior positions at the department of justice. we welcome you here today, mr. linick, and thank you for your time. you may proceed with your testimony. >> thank you for inviting me to testify today. i will provide an assessment of our emerging trends based on the work we have conducted to date

and describe our operations. my office began operations after i was sworn in in october, 2010. over the past 14 months, we have hired a professional staff and have gotten the office up and running. today, we have published 10 audits and evaluations, commenced multiple civil and criminal investigations, it should our second semi-annual report to congress just two weeks ago. i want to tell you about emerging trends we have seen, which mr. johnson has alluded. that may begin with some of the positives for which fhfa deserves credit. we have eliminated golden parachute compensation awards to terminate fannie mae and freddie mac executives. fhfa has accepted our recommendations to improve its efficiency and reduce the vulnerability fraud and waste. on the other hand, are reports have also identified deficiencies reflecting two

significant and related emerging trends. at first, fhfa often the lot -- often relied on many of the independent reports, giving undue deference to enterprise decision making. second, fhfa's decisions about how to allocate resources may have affected its ability to oversee the gse. let me start with the first emerging trend. we have not independently tested these reports. the agency's actions appear to reflect the concern to delegate most business decision to enterprises. in four reports, we relied on reports already in place at the enterprise. however, we believe there are some matter sufficiently important to more greater involvement and scrutiny by the

agency. here are illustrations from two of the reports. on thet, fhfa's report repurchase claims with franchot -- bank of america. at the end of 2010, fhfa approved a $1.35 billion approval, relying on freddie mac's analysis of the settlements benefits. there was reason to question the settlement based on at a significant fall on the loan review process. before the settlement came out, a senior examiner questioned whether freddie mac cost process' accounted for housing boom loans. the internal auditors raised a similar question at the end of 2010, and in the middle of 2011. nonetheless, fhfa did not in the bentley test the assessments. according to the senior fhfa

examiner, he believed the flaw could be costing freddie mac a significant amount of money. in the wake of our report, fhfa has suspended approval of additional loans, management process, and has initiative for the study of the issue. second, i will discuss another example regarding fhfa's review and approval of executive compensation. in another report, we found in 2009-2010, fannie mae and freddie mac paid but their top six executives over $35 million of salaries and benefits over those two years. fhfa reviewed and approved those payments based on the recommendations made by fannie mae and freddie mac, but fhfa did not independently validate the recommendations. if given the amount involved, we concluded that fhfa should have done more.

for including a wider range of salaries for pay comparison purposes and to review of performance metrics use to judge the executives' compensation levels. the second emerging trend, fhfa's resource allocations may have affected their ability to oversee the gse's and enforce directives. we identified in four reports this situation where fhfa was not proactive, and adequate resource allocations may explain these failings. first, a report regarding fhfa's oversight. but news reports about foreclosure abuses and the foreclosure process by law firms began to surface in a big way starting in the summer of 2010. only after the news surfaced did that dodd-frank began -- did fhfa schedule examinations of this. before that time, fhfa did not

consider the risk to be significant. our report identified more reports of disclosure of these issues prior to the middle of 2010 that could have led fhfa to foresee the heightened risk and abuses. it had not acted on the issue before the middle of 2010 because neither the agency nor its predecessor agency consider the matter priority. the second illustration addresses fhfa examination capacity. fhfa believes that it has too few examiner's monitoring fannie mae, freddie mac, and homeowners. about only one-third of line examiner's our credit. our report concluded this may have contributed to fhfa's lack of oversight in it significant areas, such as real-estate properties. i would like to provide a brief overview of my office.

broadly, are all that's include reviews of the following its activities -- management of the conservatorship, including servicing and real-estate owned property, oversight of the federal home loan banks, and fhfa internal operations. we also offer a separate office of investigation, which has made significant contributions to investigations. we recently participated in the investigation, prosecution, and convictions associate with the taylor, been, and whitaker case. the defendants in that case perpetrated a fraud which has been described as one of the largest in history. freddie mac reported losses in that case alone of $1.8 billion. the office of investigations also operates the fhfa oig hotline that allows for confidential report of fraud, waste, or abuse, which can be reached at 1-800-793-7224.

in closing, with ford to continue to work with the committee to provide independent, relevant, and objective assessments of fhfa's operations and programs. fhfa continues to face significant challenges because of the fragility of the housing market and the key roles played by fannie mae, freddie mac, and the federal home loan banks. i hope the work by my office will be of assistance in meeting those challenges. thank you, and i'm happy with your questions. >> thank you very much for your testimony. as we begin questions, i will ask the clerk to put five minutes on the plot for each member. mr. linick, according to your semiannual report, fhfa and its predecessors have failed to enforce requirements that fannie mae it implements and

operational risk programs. does this brass -- does this lack of follow-through pose a risk to the conservatorship and taxpayer dollars in your opinion? what is preventing the agency, especially now that it is conservative or, from taking further actions to force compliance? >> senator, operational risk involves identifying losses caused by people, processes, and foreclosure because of operational abuses. it is support for corporate governance. good operational risk programs would require the enterprise it to self identify, report, and correct risks as they emerge. we found on our report was that for five years, fhfa and its

predecessor agency, between 2006-2011, had reportedly cited fannie mae for not implementing its risk programs. in 2009, it said it was a critical concern and issued numerous citations. despite these findings, fannie mae has not taken -- has not plummeted and operational risk program and fhfa has not required it to. it is of concern to us because fhfa's own examination shortages havei cost shortagesf fhfa -- have causedi have. is important that they be strong because they go hand in hand. that is why operational risk is a critical element to oversight and accountability. in terms of what is preventing the agency from enforcing this,

requiring fannie mae to develop an operational risk program? i don't know why. is rather shocking, since they have been telling fannie for five years they needed operational risk program. that have broad authority as a dancer for her. they can fire people, and as regulator, they can issue cease and desist orders and the like. they have promised they will implement an effective risk program by 2012, and we're monitoring that. >> can you give examples of areas where staff and resources are not being allocated to pareto's oversight, and how does it impact fhfa's ability to limit taxpayer losses? >> we have issued a report on examination capacity at the

agency. this report reflected what the agency told us about staffing shortages resulting in limited testing transactions, scaled- back examination, delays and examination. we heard from the agency. and part, involved the transfer of risk examiners to the program early on to follow the stressors on the examination program. the examination program is absolutely critical in assessing risk management at enterprises, and we have noticed as a result of these shortages there has not been targeted examinations of real estate owned property until very recently. there has not been examinations of critical business lines, such as multifamily housing, and there has been insufficient examination of the federal home loan banks. clearly, if they did not have the capacity to examine critical

programs at the gse's there is a risk of loss to taxpayers, and it is very important that the agency take steps to mitigate the shortfalls. >> does the fhfa have the resources and staff to provide proper oversight and examinations of the mortgage portfolio and entities responsible for supporting the majority of the $11 trillion mortgages? >> the staffing issue is a complicated issue, because there is no doubt that the agency, and our view, could do a better job prioritizing and allocating resources. but we have not done and across the board human capital assessment to determine whether overall the agency needs to step

up to address the conservative ship. we have looked at staffing in one area, and we concur with the agency that they need more examiners. we also are concerned because their operations have six individuals in it, and we're looking at that issue to determine whether that is sufficient. but staffing also relies on other considerations. bigger is not necessarily better foreign organization. for example, it is possible that the agency could beef up its conservatorship operations if their examination operations are not strong, or vice versa. the to seek and also ensure that operational risk programs at fannie and freddie have their house in order to compensate for examination shortfalls. clearly, more can be done to improve. we have recommended the agency study this issue to determine

how it can mitigate these mitigation shortfalls, and ultimately mr. demarco will have to find an optimal point of have to staff the agency in a way in which resources are allocated appropriately and strategically. >> senator shelby? >> thank you, mr. chairman. mr. linick, in addition to managing a brannon inspector general's office, you have a unique office. the conservatorship of fannie mae and freddie mac have lasted over three years, as i mentioned in my opening statement, at a cost of $183 billion, and a growing. in your position, you provide federal oversight of the fha, not only in its traditional role as regulator, but also now as a .onservativor

during your tenure, what will be a priorities, and what issues will you focus on specifically? i know there will be some that will pop up, but the overall substantive issues, and how you implement your agenda going forward as an independent inspector general at the fhfa? >> senator, as you mentioned, our role is unique, given that we have conservatorship and a regulator all wrapped into one. in terms of our priorities, our number one priority is looking at conservatorship management and enterprise oversight. we're looking at every stage of the mortgage loan process, from underwriting, all the way to deficiency judgments. we're looking at various stages of conservancy, from the beginning of servicing to the end of servicing, and we have

already issued reports on default-related legal services, how attorneys relate to the servicing process and foreclosure process and abuse. we have issued an operational risk report. we're also looking at risk management. the operational risk report addresses that, and we'll look at other types of risk management, and enterprise board governance, and how the $183 billion is being spent, just to name a few. we're also looking at the federal home loan banks, and they're also a number of issues associated with the management of home loan banks, as well as fhfa capacity and internal operations. >> and also the federal home loan bank risk to the taxpayers? that absolutely, the federal home loan banks are a number of issues we're looking at. we have a couple of reports in progress now, one on the four troubled banks, also advancing collateral management, and

looking at capital management as well. we also have a robust investigation division, which we would like to hold people accountable and institutions accountable for defrauding gse's and defrauding individual loans. our investigation section, combined with our audit and evaluation section, is how we plan to attack the issues facing the agency. >> in your testimony, you also mentioned the federal housing finance agency views operational risk. you alluded to it earlier as an important safety and soundness challenge to all of us facing fannie and freddie. get during the past five years, fannie has consistently failed to manage operational risk,

although the federal housing finance agency has the authority for such gse's failures, including removing personnel. the fhfa has chosen so far not to exercise this authority. i understand this means you will not in the future, i understand that. should they disciplines gse's for their failure to manage operational risk and why has fhfa not taken strong remedial actions and does the temporary nature of fhfa's role as a conserve order create challenges for the significant and ongoing risks, $5 trillion i believe the chairman mentioned? >> but the start with the question of enforcement. the operational risk report is just one report that we have

done on the issue of enforcement. but enforcement, in our view, is critical to ensuring that losses are mitigated and there is proper oversight. enforcement not only in the operational and ensuring the operational risk programs are automatic, but also enforcement servicing fraud abuses. we are the middle of a service id report now -- of a servicing report now, but standards alone are not sufficient. there is a current initiative being proposed by fhfa, and we are monitoring that, and that is a good step forward. what we want to see is not just standards, but compliance with the standards and enforcement by fhfa. >> what additional challenges have been created by the federal housing finance agency by the

uncertain nature of the ongoing nature of the conservative budget of the ongoing nature of the conservatorship of the gse's? >> uncertainty is always a bad thing. the uncertainty factor has created difficulties in the agency in recruiting qualified personnel to the agency. that has affected their ability to plan, how to staff resources, whether they should staff them in the conservatorship operation or regulatory operations. i think it has an effect on oversight as well, because one of the factors that mr. demarco has cited as the reason for employment delegated to conservatorship as the prospect of a wind down. >> sure. fhfa was created to be an agency independent of the executive branch influence, whoever the

party was in power. there have been multiple reports of the executive branch officials attempted to pressure the federal housing finance and toand the gse's employment programs with political benefits to the head of ministration. do you believe is important for the federal housing finance agency to continue to operate free from the executive branch influence, as mandated by the statute that created the federal housing finance agency? and second, how can your office most effectively ensure your independence, that your independence is not compromised by the executive branch? and third, do you believe and increased transparency requirements, that they are needed at fhfa and gse's regarding their interactions with the executive branch? that is a lot, but i just had a little time. >> let me answer the third

question. transparency is always a good thing. our role is to promote transparency in government operations, and we have recommended that the agency be transparent in a number of different areas, from executive compensation to of course no risk, what ever is. one of the reports that we issued is the treasury making home affordable act, where we looked at the independence of the agency. we believe is essential for the agency to be independent and act independently, and we found in that particular report that with respect to fhfa's role in negotiating the finance agencies that its independence was not undermined. the problem with that particular review was the lack of engagement by fhfa in

participating in those negotiations. >> what brought that about? >> well, fhfa decided to leave those negotiations up to the enterprises and treasury. >> that is not always a good idea, it is it? that is not a good idea. these involve five-year commitments to potentially modify millions of mortgages, and there were significant financial obligations, the enterprises were in conservatorship at the time. we recommended that fhfa be more engaged. this was another example of what the agency deferred too much to the enterprises. >> with that have been in a post-fhfa perhaps? a lot of the modifications? >> i am sorry. >> somebody had to pay for that. was fhfa going to have to absorb some of that? >> one of the issues we look at is whether or not the treasury was going to be paying for the

administrative efforts of the enterprises, and that was a point of contention that was never ironed out in the agreement. >> ok. well, we wish you well in your job. >> think it, senator. -- thank you, senator. >> you are very clear in your sept. evaluation the fhfa has too few examiners, which goes to the very basic ability of their operations. can you confirm that in fact is your conclusion? and second, what can they do to increase the examiners? otherwise they are under- resource and not effective. >> the fhfa told us they have too few examiners, and we concurred with that assertion. we have recommended a number of

things that they undertake to remedy that. number one, we asked them to study the issue, because as i mentioned earlier, the shortfalls and examination capacity may be mitigated by strengthening up a regional risk or strengthening conservatorship. we ask them to study that. the agency has taken a number of actions to mitigate that, and we have recommended that they increase the number of credit ring ner's, potentially highe contractors from other agencies, and finally to be transparent about these emanations and shortfalls, because congress and the american public needs to understand their ability to regulate fannie and freddie. >> but are they moving aggressively to fill your recommendations and correct this? and they have the resources to do it? >> i believe they are moving

aggressively in this area. i know they have reorganize the agency and made examination a priority, but it has been very difficult from what i understand based on my conversations with mr. to market to attract examiners. it is already difficult when you are not in a conservatorship, when you are not infinite to christmas. it is when you are. i think examiner's are reluctant to come to the agency because they did not know where their future lies. this has been very difficult. the agency has been putting out notices and advertisements. i am confident they're trying the best they can. from what i have heard, they're having trouble meeting their goals. we're continuing to monitor their work on this, and we will certainly breif you. >> you have identified the key fault line in the agency.

let me shift gears slightly. i think that we have been talking around this topic. the essence of the conservatorship is to maintain the value of the assets of the enterprises, at least that is my viewpoint, and there is a question today whether that is simply done by maintaining the status quo or by engaging in modifications of some of the mortgages, changes, all of that is at the heart of what these discussions are about. have you taken your office perspective on how well they are doing managing or maintaining the value of the enterprises, and have you evaluated whether alternate approaches like mortgage modifications, etcetera, would not week -- would not yield more value over time? >> senator, let me respond in

two parts to your question. i think the first issue is about monitoring the sale of assets and the modification issue. it's sort of underscores the tension that we see between the housing mission and safety and soundness mission. what we're doing is looking at the directive of balancing those missions as he promulgate policies and so forth. transparency is absolutely critical. we're trying to take a look at the rationale, the analysis that is being done, trying to ensure that independent judgment is exercised and not done due deference on the enterprise. -- and not dunue difference on

the enterprise. the second question, could you repeat the second question? i am sorry, i have lost my train of thought. i had two parts. >> and had two parts. at basically, the remaining question rests on this whole topic of how well they are doing maintaining the value as a conservator. and let me give an opportunity to elaborate just a bit, quickly. part of this is about where the housing market is moving. if the housing market starts appreciating, guess what, they will look like geniuses because they held on to these assets, or fannie and freddie held on. if the market keeps deteriorating, i think could make the argument they should have disposed of the assets, modify the mortgages, done all sorts of things, and have not done that. there is uncertainty based on market movement. the other complicating factor is

because of the sheer size of fannie and freddie, what they do influences the market. it is a very complicated, volatile situation, and again, from your perspective, are you trying to evaluate how well they are doing maximizing or maintaining? i guess mantey would be the better word, became the value of fannie and freddie, given the fact that the market future is uncertain and they influenced the market? it is almost like part of physics. it is complicated. >> got it. >> thank you. >> senator, we are looking at this issue from a number of different angles. our repurchase claims report is sort of one way that we address this, looking at how well they're doing in recovering taxpayer monies through the repurchase process. there are a lot of ways to do this. the other way that we started looking at this is real-estate

owned property. to me, holding that property or selling it quickly, obviously, it is a very important and tricky balance that needs to be made. if you hold a, you have carrying cost, if you sell it to quickly, it could affect the housing prices. we have an ongoing audit of that area. >> we go live now to republican presidential candidate rick santorum holding a town hall meeting in denison, iowa. you were watching live coverage on c-span. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> if you have not signed in, please do so before you leave.

and let us know if you would like to help and 2012. if he could do that. if you want to contribute in any way, there are forms there. i'm very happy to introduce our host who will be introducing our special guest. [applause] >> thank you, i am chuck. i have been working with steve keen sense back in the state senate days. but i worked on his campaign as chief of staff. first, i'd like to point out that the caucus is an enormous undertaking and the eyes of the world are upon us. how many caucus locations are there? >> 15. >> 15 locations, so we need a

lot of help and it is a lot of work. on behalf of steve kane, i like to thank you for all of your support. now we have redistricting, about 21 new towns. hopefully, you'll continue to be that anchor and fight the good fight in this 21 counties. thank you, on behalf of steve kane, for what you are doing. we are here to weeks, plus, before the caucus, and we are here obviously engaged in something meaningful, something important. just to back up, i am a campaign guy.

ole.ears finding the foxhal love the campaign. when a candidate comes through and shakes my hand and asks me for my vote, i respect that. that is what a campaign is suppose to be it like, right, nancy? i voted for rick santorum at the straw poll based on that one thing, he had trust in us to get this right. as the campaign progresses, there are candidates that will drop out, candidates that will jump in. these are the candidates in front of us, and i immediately got in the game. my heart has always been with rick santorum. it was an easy decision for me, but it was easy to come to that

conclusion for me because for those 25 years, i was in foxholes that rick santorum was jumping into. life, marriage, family, all of the social issues, fiscal issues, foreign policy issues. everything that is important to us, everything that we pour into the platform. that has never changed. the 99-county to fourur -- tour earned our respect, but that strong, fiscal, social, conservative platform that rick santorum fall for -- fought for, we know we have to fight for that. it is not over on november, 2012.

we do this every four years, every eight years. every election is critical. we are at a tipping point. we need a fighter. a year ago, and it might have been out the last time i was in denison, but maybe the last time i was campaigning, one year ago, i was the campaign manager for freedom that worked to boot the three judges out. there was one of the kennedy standing on the stage that came to iowa who jumped in the foxhole with us, and that was rick santorum. he was going around iowa, helping educate and campaigned to send a message to the judiciary and help us but those three judges. so i am in the foxhole with him because i believe there is just one candidate that matches our

platform through and through, one candidate who has the willingness to fight for it unwaveringly, through good and bad times, and a result one candidate -- and there is only one candidate who could take this fight to the left and when it for us all the values that we hold dear, and that one candidate is senator rick santorum. [applause] >> thank you very, very much, chuck. it is great to be here with you. chuck has been traveling with me the last few days, and greatly appreciate his help and support and guidance, frankly, throughout this caucus time. i have to admit, when there is a flat appear, i feel compelled to ask everybody to stand. if we could start our meeting by saying the pledge, and then go on with the town hall meeting. the pledge of allegiance?

i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation, under god, indivisible, with liberty and justice for all. thank you. thank you very much, everybody. thank you so much, gregg, i don't know how many times -- [applause] she has put together a fence for me here, and there was one time that you were not here and we had a very small crowd, and ever since she has put the last two events for me to gather in denison, we have done very well. so i know who is the power here in crawford county. i thank you so much for helping us out, helping all of the candidates. i really do appreciate the great work the folks do here to let this caucus work as well as it does. i for started coming here, the

governor who is running for governor at the time, talking about it, asked if he was serious about running. he said, yes, i probably would not have the resources of everybody else. he said, don't worry, you cannot buy iowa. you have to work. if your willing to work hard, and serving with chuck grassley, he is a matter of getting all 99 counties, i remember when i finally got this about a month or two ago, when i got the whole 99 counties -- i cannot drive through all 99 counties. i did not stop and wave, about 350 town hall meetings just like this. we talked for a few minutes, open up for questions, and let the people of iowa tell me what they're thinking. i said to chalk when i ran into him that one of the speeches, said, i have been to all 99 counties. he said, you have not been there

every year for 30 years, have you? i said, no, i have not. i was 20 years old 30 years ago. enough of that. i have had a wonderful opportunity to get around it and do almost 350 town hall meetings. we'll have that done by the end of this week. i have been feeling very blessed. i said it will be weird in a couple weeks. whatever happens, i will be out of iowa for a while, and it will be strange. goinggoing to the states, in there, state to state, a week or two at a time, and not having the kind of opportunity that you have here. i really think the people of iowa. i think they have made me a better candidate, i think it will make me a better president, and a better person. i really do mean that.

it has been a wonderful experience. i would not say that everybody should run for president, but it is a great experience to have and it is really something special about the folks in iowa. here we are come saturday afternoon, and i am sure you have a lot of other things to do, and you'll come out because you are concerned about the future of your country. you have a special obligation. the fight very hard. -- you fight very hard. the fight very hard to make sure you are first. i know that you take that responsibility seriously. here is what i would say to you, please take that responsibility seriously and did not the for your judgment to others. don't let national polls or some national pundits who has not set foot in iowa zero has not had spent -- or has not spent any time in iowa, were you cannot a chance to see much of anything except the moderator talking,

not the folks in the debate -- trust your own judgment. trust your own instincts. go with what you think is in the best interests of our country. that is why you fight for being first. you take the responsibility of learning more about the candidates than anybody else, personally interact with them. how many people here have seen another candidate in person in this race? almost two-thirds of the people in this room have said yes. i know several of you have met before. this is not the first time. i know i have seen several of you. you take this responsibility very seriously. trust your judgment. but i have 1 people for the people of iowa -- lead. tell the people of america, you have been ahead of the exposure, you have seen the candidates, measure them up, kicked the tires, looked them in the eyes, yet seen what is in their heart, they're sold. you take the responsibility of

leading, and did not deferred judgment to others. that is why we come to the heartland. we want to make sure the values of the heartland are represented. we have been our faith, family, and freedom torch, traveling the state of iowa, south carolina, and new hampshire, too, and we try to deliver a message about what is at stake in this country and what values are at stake. i know the number one issue in this country, without question, it is the economy. it is, it is the most important thing, and we've seen a lot of discussion about the economy. i have put forward a bold plan that balances the budget in five years. i know one of the sponsors of this event, cindy, i don't know she is back there somewhere, she will come out after we are done here and she has an educational

video for those who may not be familiar with the caucus process, working to try to help provide some educational support. that will be available after the town hall meeting for you to look at. but i pledged that i would commit to balancing the budget in five years. i have put together a road map of how to cut $5 trillion over five years. that is pretty bold. a lot of it will use. we will use the process improvements and the improvements that come for businesses to make sure that iran productive and efficient, because they have to compete with the rest of the world -- so they can run productive and efficient. if to compete with the rest of the world. we need to do better than that. i have signed on with most of the people in this race, that we would work to put process improvements and other types of efficiency standards in place in

the federal government. but also it is not just that, it is also reducing the role of the federal government. there are 72 entitlement programs. at 72 a couple of programs in washington, d.c. the vast majority of those, as far as money is concerned, are operated by the state government. why? because their state functions. yet for some reason or other, the federal government thinks they have a role in the state functions. we should say, no, the federal government does not have a role in these things, that we should eliminate federal control over these things, block grant money, cut it, caput, send back to the states, and what we did with welfare reform. i know that newt takes credit, and he should come he was speaker of the house, but i wrote the bill. i was working member of the subcommittee and a group of

folks who wrote the contract with america on welfare reform. when i came to the senate, and manage the bill on the floor of the senate. my first year in the senate. why? because i had written the bill and i knew a lot about what the subject matter was. i can always say that i did not write the whole bill, and were all sorts of things from other members. it was a collaborative process, like every bill, but i would make an argument there was as much of me in that bill as any other single member of the senate or house. we worked very hard on the floor to get a consensus to be about to get the votes necessary to force president clinton to alter the list be doing this bill and sign it. we got 70 votes. almost half of the democratic caucus voted to end a federal entitlement. block grant, ship it back to the states, change it to a program that we need to do with food stamps, and asian programs, all of these things should be time- limited -- they should be a

transitional nature. who has done this? i have. that is what we do. we were able to put together an effort that that bipartisan support to do something has never been done before or since, but we need to do a lot more than that. i have put together a plan to shrink the federal government, to get this economy going, made in the usa plan. with the only candidate out there doing this, talking about the manufacturing sector getting it going. yes, we need to simplify the tax code. i do that. it is a strong and bold plan. i love the people who say limited the ira's. ok, it will collect taxes? of course we need some form of tax collection agency. at a of people promising things they cannot do. we have to have a tax code and

collect taxes. i will not eliminate the irs, i would just make a simpler code is so that he did not have to worry about the ira's. we will have to rates, 10% and 28%. why 20%? that was the top rate under reagan, from 1986. good enough for ron reagan, good enough for me. he was able to get it through a democratic congress. looking at what can be accomplished, compact past, what is really transformational. we eliminate the existing code, replace it with five deductions -- children, charities, pensions, health care, and housing. notice i did all five without hesitation? [laughter] i have to tell a story. perry and i were asked which other, not the last one but before, and he was answering a question on the road and iran.

-- on the drone in iran. he said it was two things president obama could do, no, wait, there are three things to do. a standing next to him and thought, oh, no. i thought, please, god, let him get all three out. he is a nice guy, i have gotten to enjoy him. he goes through and it's all three. he ends the question, ask the next question. he leans over to me and said, i was taken quite a risk going with the third one. [laughter] and i said, i was praying for you. [laughter] pray for your opponent and good things can happen for both of us. anyway, i got all five. i lost my train of thought, i don't know what i was talking about. five deductions, that is it. we have simplified the code,

support the five pillars of what the tax code, most of the consensus believes will support this critical economic times. when the corporate side, cut it from 35% to 17.5%, and make a simple net profit tax with 20% research and development tax credit. because we are a knowledge-based economy. we need to continue to into said tobias -- we need to continue to is a defies research and development. when it comes to manufacturing, will eliminate the corporate tax. if he makes things in america, if you make things in this country, you will pay no corporate tax. some people would say, why will you tax cronk's cafe 17.5%, and the folks down the street the manufacture pay nothing. it is that fair? my answer is they will not take restaurant to china, but

they may take these manufacturing jobs and other places, and they have. we need to compete. we don't have to compete with restaurant business with mexico. mexican restaurants, but not mexico, right? we need to lecture that would compete. -- we need to make sure that we compete. we are not, and that is why we're losing jobs. the national association of manufacturers said if you exclude lipper costs, people say we are losing jobs because of the labor costs, if you take that out of the equation, are we competitive with the top nine trading partners with whom we do the majority of our business? the answer is, no, we are not. the national association of manufacturers says we are 20% more expensive than our trading partners and manufacturing. we are not losing just because of labor costs alone, we're losing because we have high

taxes, high cost of capital, higher energy prices, higher litigation and regulatory environments. what are we going to do about it? we will change it. we eliminate the corporate tax credi. i was right before the debate as a matter of fact. i was at the cattle company restaurant -- is that not the cattle company? right on 20. i did a little town hall meeting just like this. there was a table of folks having lunch. i said hello. they said they work a little of all manufacturing here. i said, would that help eliminating the corporate income tax? he said that would be great. we would have an opportunity to grow. acidy have an overseas

operation? they said we do. i said would you bring those profits back? they said we decided to leave them over there for now. i said what if we eliminated the tax and you invested your capital here. he said we would do it tomorrow. we would grow a plan here and create more jobs here. we would bring the money back -- and we would put it and plant equipment. number three is regulations. some day this week in the wall street journal they did an analysis of the number of regulations the obama administration put in place you can see clinton and bush are like this and then obama. the average under clinton was 50 a year. bush is 60 a year. i think with all, it is like 85. it is going up exponentially. it is supposed to be like 150

this year. these are regulations that cost business over $150 million each. these are the big and expensive ones. they are exploding because this president believes he can run your business better than you can run your business. he has an agenda as you heard in his speech in kansas the other day, he does not believe in the free market or capital nice anymore. he believes he is the great read distributor of wealth. we believe in equality of results, not equality of opportunity. it is not my vision or the a american vision. is not who we are or who we have ever been. that is the vision in france and england, it is not the vision of america. it is the reason my grandfather came to this country. he wanted a country that believed in him, not an

bureaucracies and kings and the bureaucrats. under my plan, we eliminate every obama regulation that cost over $100 million a year which would be almost every obamacare regulation. there is a clean-air regulation going into a factor now. eight democrats in the senate have said they want to suspend -- they want to stop from going in place because it will shut down 60 coal power. -- plants over the next few years. there is no way to get there by building more green energy. now i have figured out how they will get there. there are going to get rid of all the other energy and have less energy but have green energy be a bigger percentage. is that not a great idea for a cheaper electric rates and more reliability? this is a president that is more committed to ideology than he is

to you or to the american people. he does not believe in you. he believes in government. he believes in the ideology and he laid it out very clear. it is an ideology that divides in america. it pits those who have against those who have not. it is the 90 -- it is about 55/ 45, enough for him to comfortably when. ladies and gentlemen, i have a very good plan that will turn this economy around. cheaper energy and less regulation and manufacturing will explode. going to places like denison and the south was corner of the state. when i was down outside of hamburger which just cut 200 average job secured when i was in newton, we are seeing

manufacturing jobs leave small town i know what just like they've left my small town that i left -- that i grew up in butler, pennsylvania. i found this to be the case in iowa, now that i have been to 99 counties i have been to almost every small town. most of these towns were based on some kind of manufacturing economy. what happens is, not only did we lose jobs and we went from 21% of the people to 9%, not only did it affect blue-collar a america which has a 10% plus unemployment rate as compared to college-educated americans, not only will it help bring manufacturing jobs back that pay $20,000 a year more than the average job in america, it will also help small town and rural america. there's not anybody in this room that does not have a kid or grand kid that is living in denison who is living in the

morning or chicago or somewhere else -- why is that? because the jobs are not here. when they go to the city, and they go from main street and a small town america to big city america. whether we like it or not, the valleys of small-town america are carried different than big city america. look at a map of the united states, you will see all of this red accept in these little dark dense areas of blue. what we are seeing is those areas of blue getting lower and lower and more and more people in the areas of red stain read but with your people out there. it means the valleys of the americas is going to start to change because we do not have the economic opportunities out here in small-town rural in america. that is why i am particularly passionate about helping blue-

collar salt of the earth folks being able to live out here in small-town america and be able to do so to provide for their families. that is a that the reason we are promoting the made in the usa plan. final. and then i will open up for questions. the idea that we can have a small economy without -- a strong economy without families being strong in america is a fallacy. you have a rip -- you have a lot of republicans running around and the only want to talk about the economy. people say be need a truce of family value issues. you think about that. a truce -- that means it stop fighting. as conservatives, we want to stop fighting on the moral culture issues. 1.2 million abortions in america. we are only in the family. gay marriage has now been forced on the people in iowa as it has and several other states and is being forced in the courts of other places. if we have leaders will sit

back and let that happen. -- if we have a truce we will sit back and let that happen. the number of people married and a america -- a report, this past week. it is at an all-time low. it dropped 5%. 30 years ago 70% of people over the age of 18 were married, it is now 51%. the state of marriages and a crisis. let's have a truce. let's not do anything. let surrender. at the. we are in right now, tourists is a surrender and i will not surrender. -- truce is a surrender. it is important for the economy of our country. i am trying to remember the -- two people out of the brookings

-- if you did two things in a america, you could almost be certain to avoid poverty. two things that are very achievable. but what those two things be? graduate from high school. two, anybody know? get married. you graduate from high school and get married. isn't that what everyone did? they graduate from high school and got married. in many cases, right after they graduated from high school. what happened? the poverty rate in america among two parent families is 8%. the poverty rate among single heads of households -- single moms and single dads -- i am not

knocking single moms and single dads. i happen to think they are the most heroic people in american families because they are doing the jobs of two people. they are doing the job that somebody else walk away from work the problem that somebody is not participating in fully. they are doing the job of two people. it is harder than doing the job of a mom and dad and whether you are a bomb and a dad as a father, i would not be a good mother. they are different. you have to provide and nurture. one is hard enough, doing both is really hard. this is not a knock on single moms, but the bottom line is the poverty rate is approaching 40%. what does that mean? that means when families break down, or does that go? government.

poverty rates are higher, they need support. government has to get bigger to provide the support. the idea that we can have any kind of family structure we want anything will be fine, that has been the watchword for the past decade. all families are the same. anybody can get married. anybody can live together. do whatever you want. it does not matter. it does matter. it matters for children and mothers and fathers. you know the service, who are the happiest people in america? people who are married. we know all this, does the government do anything to support it? no, we do not. do we try to encourage in our law? >> no, we cannot. hillary clinton wrote a book, does anyone know what it was called? "it all takes a village."

i wrote a book in response to it called "it takes a family." i have written one book about the one thing i really care about. karen and i have been married 22 years. we have seven that we are raising that are a live. we feel very blessed. i know how central and important family is to america. i know how important it is for me and what i am able to do. i could not do anything. if i was a single parent, i could not do anything. run for president? i could not do that. the idea of what is possible because we have committed relationships. imagine if we had a government that nurtured and supported that. that actually encourage that. that actually celebrated that. what what the effect on society and the economy? i wrote a book about it.

i really do believe we are missing the boat. i know people say "you have to be quiet about the social issues." he will be labeled as a social conservative candidates. it is common sense, folks. americans are, i think, ready to hear the truth. ready to hear what is common sense and what works and america. we just have to have the courage to talk about it. you will have somebody that has the courage to do that. final point, there are two question that every i one has to ask right now. at least that is what i have been told. he the two things you have to decide is, number one, what is the first priority for you in this primary? you want to elect somebody that can -- number one, who is the best person to be au >> . no. two, who can restore the

country to the values and principles of limited government and free enterprise and respect for traditional moral values with a stronger america to protect and keep us safe. it is pretty much what we are looking for. who can do that? who will be able to do that? i would make the argument if you look at the field and there are some good people, there really are, i would say that any of them would be an improvement. the only person i would say who would not be an improvement is ron paul in national security. i do not believe he would be an improvement over barack obama, and that is a very low bar. but he would not. other than ron paul, everyone in this race would be an improvement over barack obama by leaps and bounds. it is not a criticism of them, but just a comparison. people said, rick, we like you.

they said, we like you and we are -- you are on our list. but you cannot win. who says i cannot win? the pundits because they never talk about you. they did not give you any time in the debates. he was last? herman cain with seven. that is because he list the last two debates. he was tied with them? me. because i was in every debate. huntsman was ahead of me. they're not giving you time to go out and an election cycle that has been very debate centered.

what are you going to do about that? what are you going to do? how would you convince people you are going to win? what is the way to convince you as to whether someone is going to be successful in doing something? maybe whether they have been successful in the past and doing it. american samoa performance is an indication of future success. if you said that on your perspective shoes, you would be thrown in jail. who in this field have one -- there are four folks who have run for congress. you ran for congress in a heavily democratic congressional district and one? any one of the four? need. --me. he was able to be a democratic

incumbent to win the first congressional race of the four? me. who was redistricted into a district -- by the way, a 14- year democratic incumbent. he was put into a 24-year incumbent in a 71% district and one their election? me. i voted as an 81% conservative rating in that district. here are two folks to win statewide elections. who was able to win an election in a democratic state as a conservative? he was able to win an election as a conservative between the three folks who have won statewide? me. he was able to win a swing state, a state that would be essential and possible -- impossible to win in order to win the presidency. me.

he defeated a democratic incumbent to win a swing state his campaign was managed by james carville? me. he was able to get reelected in a swing state after having a 93% conservative voting record, being the leader of all pro-life issues and the united states senate, where reforming the welfare system and ending the entitlement, and lead on national-security issues to strengthen our military. in a year that george bush lost by five and a person wanted michigan -- one by sex, me. -- one by six, me. i find it interesting that with almost 1 million more registered democrats than republicans against an incumbent and a tough challenge that i cannot win, but

all of these people who have never been a democrat, never won in a swing area or democratic area as a conservative, they have a better chance of winning. based upon what? they are more moderate. that is what they think when they say he can't win. it is that they are more moderate. they say that about 48 w. bush against ronald reagan. they said, we have to be for bush because he can win. in this election here is what we need. we need somebody who can present a clear contrast with this president. the national media and $1 billion in the obama coffers is quality toward whoever the republican nominee is for president and to what? in to a right-wing conservative crazy man. they are going to try to paint -- they made john mccain a

conservative. imagine that. if you can make john mccain a conservative you can make anybody a conservative. it will put this person to the far right. how about having somebody who actually believes the conservative ideas and fought for them and is willing to stand up and say, yes, that is exactly what i believe. not? and said, i believe this then and i believe that now and i am sort of here and there. that is what john mccain did. it does not work. people want somebody that they trust. in this election, people will say how did you and pennsylvania. not because people agree with me. a lot of folks did not agree with me. they trusted me. the trust that i would do what i was going to do. that is what i did. that is how we were able to win. with that level stop and be happy to take your questions. >> i have been looking for a job lately.

lucky said, most of the iowa jobs are gone. my brother in law as well as looking for a job. he just got laid off. his last day was december 16. nine days before christmas. the problem is, des moines is one of the biggest papers in the state and they are classified as -- about one-fourth as a page. my problem is all the jobs are out there in iowa, we have a lot of manufacturing people who are trying to find jobs and the only place to find jobs is a north dakota because of the oil. >> we could do what if we would build a pipeline which i am for and the president is not for. i give the congress credit. they look like they are going to stick that pipeline provision on every single bill that passes and they should. they should put it on every bill. as a dead man the president

makes a decision. he should not play politics with it. that is the amazing thing about the president. it is so blatant. i am going to pull the troops out of afghanistan. when? how about two months before the election. everything the president does is focused on his on political survival and a 10 dead. let's extend the debt ceiling. what should we extend it? how about past november 2012. if this was a republican it would be stringing him up. it would be terrible. the bottom line is, we have a president who is focused purely on his own reelection, purely on dividing in america. i have put together a plan and its manufacturing plant. the reason i put it together is because i think it is the best plan. i think it will help blue-collar america. i also think it will pass. it has the kind of support from

areas like michigan, ohio, pennsylvania that are important manufacturing states and processing states where there are democrats elected he will vote for a bill like that because that puts their people back to work. when i put these things together, i put bold plans out there. when you come from a state like pennsylvania, you cannot think as a purist. you have to think how can i take conservative principles and adapt them to get the support necessary to move the ball. the president does not think that way. he is an ideologue. he is driven by his own ideas. he was successful his first year because he did not have to compromise. says that first year went by, he has got nothing done. he has been unwilling to do things that reach out and try to

bring people together from a common point of view. >> my oldest daughter recently returned from her second tour in the gulf and my son had three tours. >> thank you so much. >> are supposed commander in chief is withdrawing our troops from the gulf. he is dismantling our missile program and hours base program. what message is that sending to our military and what message would be sent to our military? >> the first priority of the federal government is national security. it has to be. why? it is the only thing the federal government does that nobody else can do. can somebody else -- can the state provide health care program for its people? sure. education? sure. you look at all the other things federal government does, the state can do it accept national security. even border security, you could

say those states could do it. the one thing they cannot do is they cannot go out and organized militias to go out and defend the country. the federal government has to do that. chief function in the constitution as commander in chief of the country. when i talk to people and they say that the economy is the most important issue, it is now. it may not be by november of next it very well may be national security. if we have an explosion go often to iran, if it's as they have a nuclear weapon, this election will not be about the economy. it will be about what we are going to do to keep the country say if from a country that will be prevailing care. they have a nuclear weapon that could drop on somebody that could cause cataclysmic war.

that is why we have to stop them from getting a nuclear weapon. number one, i would not cut the military budget. i would allow for wages and benefits to continue to rise at the rate of inflation. the rest of the military budget that would freeze for three years. depending on national security issues. if we are at a different position from the standpoint of iran and others, that may not be possible. from a budgetary standpoint, the last place i will go to cut is the military. when i say cut, i do not mean change. i mention strong america -- will put that in the defense department also. it is one of the things i signed on to it because it has proven to have savings that the defense department. we are going to put a priority -- anybody know what percentage we spend on defense roughly?

about 20%, as did we spend 50 years ago on defense? -- how much did we spend 50 years ago on defense? 60%. when ron paul says we have all this defense industrial complex, that is baloney. defense has gone down by two- thirds. we have to look at all of the other areas first. as commander in chief, we will protect -- defense is a priority. no. two, i will say to our men and women in uniform that i will deploy eu only where there is a national security interest in our country. not you got that or the condo, that is not a national security issue. -- not uganda or congo, that is not a national security issue.

does that mean we should not be involved in humanitarian purposes, of course we should. not with our military. if there is a crisis we should help, but never use our military unless it is in the national security of our country. the president has violated that twice. in libya and central africa. that is my second commitment to the men and women in uniform. my third commitment is we will be on the advance and offense and making sure our country is safe in the war against radical islam. i will name the enemy of like the president who has sanitized every document. the fort hood report -- remember forehead where he went in there and shut everybody up? in that report the word muslim, is long, the job is never

mentioned. --jihad, islam is never mentioned. this is the kind of political correctness that loses wars. in misinforms the public so they do not have the stomach to fight the war. i will tell the truth. i will tell the truth that every man and woman who serves in the gulf was. you asked e.g. hottest whether they are in a police war with america, what will they tell you? they will say, yes, they are. we may not be in a holy war, and we are not. we need to recognize that they are and what motivates them. we need to tell the american public the truth. i will do that. i will tell the truth to our troops. >> i told you at the beginning i saw you at the debate. i did not know if you got the

chance to answer the question or not, but i know rick perry did it out security. where is your stand on that? >> i commend the senator. he has been tenacious. i served with them on the finance committee when he was chairman. chalk is dogged. having them on your tail, i would not miss that -- and wish that on anybody. they will get to the bottom of this. the need to. they need to hold him accountable. it seems clear to me that he may not be being forthright. in my opinion, we have a track record of eric holder not being forthright. he was not for a threat on the clinton pardon of the sky mark rich or he seemed to lead --

misleading congress. he is performing his duty and one of the most partisan fashion is that i have ever seen. not enforcing laws -- selectively enforcing laws. he does it with emigration were they made selective enforcement of immigration laws. they are doing it with employment discrimination and other kinds of eeoc claims. there is only one type of discrimination, that is minorities being discriminated against. if you are right on a minority, you cannot be discriminated against. that is not written in our laws. it is with him he would not enforce doma because he does not agree with it. the problem is, he is doing exactly what the president wanting to do. he is not robust. i said the other nine that would fire him. -- he is not rogue. i would fire him.

i do not think he tells the truth. that makes it even more reprehensible. the more they can put on eric holder, the better as far as i am concerned. >> i do remember when he said that, i remember rick perry saying he would ask and to resign. he said he would fire him. >> there is no greater defender of the second to admit men in the congress and i was. i believe it is an individual right. having guns is not for hunting. a candy for hunting and shooting. i have been out hunting pheasant here. i was hunting the other day with steve king to. we talked quite a few pheasants out of the air. -- wheat not quite a few pheasants out of the air. we do not have guns for hunting, we have guns for self-defense. we have guns because that was

the right they give each of us to be able to protect ourselves and our freedom. that is why it is the second amendment. they did not put the right to bear arms down at the bottom. it is pretty important. the founders but these in order for a reason. it wanted to show how important it were to fundamental liberties. the bill of rights. they put freedom of conscience first as it should be. is the most important of freedoms. the things that come with freedom of conscience to be able to think and believe what you want to believe. that is fundamental. the second is to be able to speak, read it, and gathering people together to practice. the second is to have begun to make sure people cannot take it from you. -- to have a gun to make sure people cannot take it from you. you will not find anybody stronger on the second amendment and me. there are people in this race who are not strong including the

top two people in this race who are not very strong on the second commandment. i think that is a different differentiator in this. >> what is your stand on illegal immigration? >> eye in may stephen king republican on immigration. -- i am iowa steve king republican on emigration. we need to enforce the law. we are a nation of laws. i am a force -- a first generation of americans. my father can't do this country when he was 7 years of age. i grandfather came legally, worked here for five years, bought the rest of the -- brought the rest of the family over. he's left my father for five years. we have people now say, we should not separate families.

people separate from families of the time to come to america to have the opportunity to be free here. he did not come here because he got benefits. in 1925 there were no benefits. there was a huge benefit. it was freedom. the opportunity to pursue your dreams. by the way, it was a tough go. he worked in the coal mines. he worked in a company town. i do not know if you folks know what company towns are, i do not know if you had them in iowa. the mine operation owned the house is, of the store, you got paid in coupons, not cash. i grandfather figure out that was a dead end. he took less money for cash as opposed to the coupons. he worked hard to create freedom for me and made the sacrifice. the idea that somebody came across and was here for x number

of years, now he is saying 25 but it was a little look year before that. now it is 25. he is saying because somebody is here for 25 years we could not separate them from their family. if you are a 25-year-old eddie have three kids, you have been here 25 years and to break the law, if we send you to tell shall we not send you to jail because you have a family? if he broke the law should be feel compassionate for you and say we will not separate you from your family for five years because it would be cruel and inhumane? we would not need a whole lot of presence of that was the standard. the idea again as somebody who comes to this country -- i think newt said if there are working are paying taxes. if you are here in this country illegally and are working and paying taxes, what have you done? to have stolen somebody's social security number and are working

illegally. you are breaking the law again. the idea that we have somebody who is still at breaking the law, that is what you have to do. it put themselves in that position where they have to break the law to stay here. do not create this picture that they have not done anything wrong. that is why i said, i have compassion for them as well. there are laws and there is justice that has to be done. right now i do not think newt has a right on that. i give the president credit. he has enforced the law more vigorously than president bush has. but he has selective enforcement. he is not deporting everybody that the fine, only certain people. we need to be much more broadly based on this. we have to be tough. i will say steve king just introduced a new bill called a new idea. it says that if you are an

employer that employs somebody who is a legal and you do not use the verify, -- e-verify, you cannot deduct the wages and benefits of the person that you employ that was illegal. it is a pretty big fine for hiring somebody. it is a very big incentive to use the means necessary to find who is illegal in this country as a safe harbor against that penalty. anybody else? >> all the topics he talked about, i think you're stances are absolutely correct. you brought up family and social issues. no, if you look iran this audience i think you will see the age of most of us here have lived in a america -- it was a lot better than the america we know now. i think ever since the early

'60s, the moral decadence as continue to go down. there does not seem to be something that we talk about it lot. all of these topics, if they are all correct and one decade, two tickets, we do not get the morality of this country toward iran, it will all go for naught anyway. i have a simple question. i do not know if anything -- can anything be done with the movies, television, putting the sexual activity, the profanity, the filing, i think it increases the world decadence. can anything be done about it? >> interesting you bring that up. this is a topic i was interested and involved and when i was in the senate. when you have seven children in d.c. the sewage that flows into your house from the cable and

from the internet and you realize what damage it is doing to the moral values of your children. it is doing damage. not just physical damage, but is doing damage to their morality. it is doing damage to their having normal relationships with people of the opposite sex. it just destroyed is what god made as a beautiful thing and turns it into something ugly and sort of primal. i thought, could we do something? i worked with john mccain to try to pass a bill to try to do something to protect its on the internet. the supreme court said it was unconstitutional. i think the supreme court is wrong. i think they're dead wrong.

i can tell you i will do whatever i can to the executive order process and the regulatory process and i will fight the court. they can strike, regulations and i will fight them again. i think they are wrong on this issue. you do not have the right in my opinion -- the first amendment was not there to corrupt people in america with pornography and horrible violence and sexual violence and the things that are going on. that is not a protected right in my opinion. is a dangerous thing to a culture. i think the court has gone overboard on that issue. no. two, when i left the united states senate, one of the things i decided to do was to stay involved in this fight. i believe culture is up strength from politics. -- upstream from politics. he did not want to put things --

do not drink down stream from the herd. this is pretty basic thing. we are drinking downstream from the herd. we are getting some pretty rancid water. i try to affect the heard if you will, in the culture. i did that in congress the best i could and working with trying to encourage people of means, conservatives to get more involved in the culture and in the production of the culture in making movies, television, writing, plays, books, novels to have positive culture hard facts if he will instead of the negative ones. there has been some improvement in that regard, but we have a long way to go. there are artifacts and get things out there, are seeing more films that are family friendly and all of the pg rated films mpg, that are far better than the other films.

hollywood still makes them because they have their own agenda. just like they do on television. they have their own agenda and it is clear. the last has a big agenda that they're trying to change america. at string from project upstream from politics. we all know in many ways they have done that in many issues that have done that with. when i left the senate i decided i needed to stay involved and that. for three years of help from a little technology company that people said, have you ever have business experience. i have, and it was business experience was something i care very passionately about. it was a technology that worked on atr to provide the ability for parents at home to edit television contact -- content. if he wanted to play an episode of c s i, there were 40 different content descriptors that you could choose if you did not want to see it on your

television. let's say it graphic violence or different levels of comic violence. there are 10 different levels of violence from mary fought -- very mild to very severe. you could record would ever program on your tv are. he would send down data after -- it would identify the scene to do not want to see. when you replace it, too saw an edited version of the show. it would allow you if you had children to protect children from things both television content and commercial content that your children -- you do not want your children to be exposed to. that was a great technology. what i found out what the cable companies wanted nothing to do with it. they did not care. number one, it was a premium service we had to make money off of it. we wanted premium service from

the cable companies. they said it was not our market. i said what the you mean? what percentage of cable households have children under the age of 18 in the home? what do you think? what percent? 32%. they do not have the big cable bills. who has the big cable bills? single males. our cable companies are interested in -- they want to do the minimum. they said we have parental control. the way they consider to have parental controls. they do not care about protecting -- let me assure you. they do not care about protecting anybody from television content. they are in the business of marketing content. it want to be able to set a have tools for you to use and they do

not spend time, money, energy providing them. this and, if you want to charge $10 for that, that is $10 that will not spend on hbo and we have to have a percentage of that money, sorry. the company ended up going out of business. we had a bad time going out for money. we went out to ramp up in the fall of 2008. you may recall that is when everything crashed here and timing is everything in politics as well as business. we hung on for a while but could not make it go. it was a great experience for me. it is still a technology that is out there i am hoping somebody will be able to picked out and use. it is an important thing for us to -- for the private sector to find a solution. you have a president -- i say this all the time. i say this with respect to the family and marriage. i will say it with respect to the whole basic values. having a president who is willing to talk about -- i

respect michelle obama for going out and talking about obesity. it is a problem in america and she is creating awareness. marriage in the filth that is in our culture i think is much more detrimental to the health of our children as being a few pounds overweight or repeat -- or even a whole lot over with. because of the effects of not having a mom or dad in the home where the effect of not having that security or being exposed to that kind of filth and violence and television and the media, that could have an effect on the child's health as well. we ignore them because it is their friends in hollywood that produce it. i would not have too many friends in hollywood so i did not to worry about them not -- just so you know, i think so far not my name has been used

in the network produced shows. it was used in fictional content all negatively. recently it was just a couple of months ago on "the good wife." they used my name to, again, it was a derogatory reference. i do not have any friends in hollywood. one of the things you can learn about somebody is to their enemies are. please go find out who my enemies are. you will feel great comfortable voting for me. we have to wrap up. is that what you're telling me? are we still live? we are live on c-span right now. there are c-span cameras over there. he might not want to identify yourself if you are hiding from the law or something. >> is there still a silent

majority in this country that knows right from wrong or we pass that? >> "what i wrote > >it takes a family," i wrote about how the rate of forces against truth are getting pretty heavy. against the traditional values, the judeo-christian values of our country. the understanding of what freedom really means. i was talking in my book -- i used the term no-fault's a freedom to describe the freedom of the left. that is freedom without responsibility. freedom of those on the left and the far libertarian right is the freedom to do what you want to do. that is how people view freedom in america today. that is not our founders freedom. our founders freedom is the freedom to do what you ought to do. that is the freedom you have.

you never have the freedom to do what you want to do. if you had that, this world would be chaos. there are boundaries. as edmund burke said, the change that will constrain you are either change you put on yourself from within or chains that government will put on the from the outside. we will have the freedom to do what we should do and what we ought to do. i always talk about our founding documents, the declaration of independence. the heart of exceptional is and is in these words. if you went to public school before 1970 she knew these words. we hold these truths to be self- evident. all men are created equal and endowed by their creator with certain unalienable by the crater. rights come to us from god. what got a dike -- what god?

even the diaz will tell you that. and give each and every person in america rights. the amazing thing for our founders to do because they came from a country that did not believe that. the came from a country -- where did the rights kodak's it went to the kingdom. --where did the rights go? to the king. people subjected to the will of toking. you were servants of the kingdom. not in america. government served the people, not the people served the government. complete turnaround. that is what it was such a revolution. it was a revolution in the history of the world. that is what makes us exceptional. god-given rights to each and every person to do what?

what were the right? life, liberty, pursuit of happiness. think about that. the could have said happiness, liberty, live. why did they put that? it is the order. you cannot have happiness unless you are in life. life is the foundation all right. is life protected in this country? no, it is not. not all life. freedom to do what? to pursue happiness. what is the definition of happiness? to get back to the definition of freedom. what do you think? pleasure. enjoyment. something that makes you feel good. that is happy. that is the deficit -- that is what the definition is. if you go back and looked at the definition that -- definition and the time of our founders, he will find it to do the morally right thing.

the founders understood at that time that true happiness came from doing god's will. if you are out of order with god's will, what you ought to do is you will not be happy. these are biblical principles. we were a very biblical country back then. what is america? america is god-given rights to serve him and to do god's will. america is a moral enterprise. that is why we have been so successful yet, we have people in america today who -- institutions in america who are fighting against that truth. i lay this out in the book. it started with higher education, the secular left took over higher education.

the folks who do not believe interest who believe in the no fault freedom. then hollywood, the government, big labour. now big business. all of. bigs. -- all of the bigs. they are interested in what is best for them. as long as they have the power to make decisions. who stands 25 for the traditional values of this country? two institutions. the family and the church. what is the left trying to destroy in this country? that is right. i am very upfront about it. you need these two to get this. if you do not have these two, you will not have this, or any kind of understanding of what

freedom really is. understand we are in a very important election -- the most important election in your lifetime, i would say since the election of 1860. we better understand here in iowa how important your role is. we have an election in two weeks. a lot will happen in these two weeks. this risk is anyone's. i literally means -- i would not be surprised to finished first. the person right now and first could finished six. i think the race is that close and a back flip. do not do anything based on how you think will win. you decide who should win. you pick that person. you go out and work hard for them. we will ask you if you can fill

the carts out. here they are. a lot of folks are coming in around saying they need your help. they are lying. i need your help. we are running the campaign that is relying upon you. we put an end up in a little bit. somebody out there is running an ad on our behalf that i am grateful off. we are running a grass-roots campaign. 99 counties, 350 town hall meetings. we need folks who go out there to help us win this from the bottom up. if you want to send a message out of iowa, there is one candidate who will send a message. the candidates they have systematically ignored. the candidates they give no debate time to. they give no time on the networks. they don't write about it or talk about it. why? because i am the boss conservative candidates that can

win this election. i in the last person the what the republican party to nominate. you show them otherwise. you say, give him a chance. put him out there at the top of the list and give him a chance to show that he is the best candidate against barack obama. we have seen all of the other candidates rise and fall. people said, how would you get your -- i have said this from the beginning. the people of iowa. i am raising very little money. i am raising money to get a round and see the people of iowa. i was a trustee to give me the opportunity to share this country -- i am trusting you to give me the opportunity to show

this country that is the best way to win a campaign. people can support and get excited about it. i need you to fill out these cards. how many caucus locations, i forget. i need at least 15 people, one and at least each location. those to help us speak of the caucus. you all had a chance to interact with me. i've lost -- i will stick around and be happy to talk. if you can hang around, that would be a huge help to us. if you want to recruit other people to help talk defaults. you know a lot of people show up to these caucuses that are undecided. that is our key. we have three so far.

how many does that make? we need one dozen more. we will take all of you. if you can sign up and help us, i would appreciate that very much. there are signs out there. there are bumper stickers. there are all sorts of opportunities for you to be able to help us. two weeks. i am not asking for a huge commitment here. this is the most important election in our country's history. our founders pledged their lives to give us freedom. he know what was their biggest concern? whether we would keep fighting to protect the freedom. we would keep doing the job because it takes every generation to hold it. i am asking you if you believe this message and you believe i am the right person, great. i would like your vote. you are going to need to do more than that if we are going to be successful. i feel good about our chances and the momentum that we have.

we would greatly appreciate your help in crawford. i will turn this over to sheila for final word. >> thank you. my name is sheila murphy. [applause] my name is sheila murphy and i am truly honored to be on the staff r theick santorum in this election my brother is also on staff. we're working primarily in central and south-central iowa. we are asking you to go to the caucuses. you can go and talk him up with friends and relatives, and generally help us spread the message. you know rick santorum and what he stands for. we have no problem recouping supporters. we need your help with that.

we will be around to give you whatever materials are talking points you need to get that job done. we are there for you. we have friend-to-friend postcards. it isn't easy way to communicate -- it is an easy way to communicate. all you have to do is sign it and put a stamp on it. it is quick and easy. we have a lot of these out there. grab a handful. make good use of them. we have yard signs. do not just take one for your own yard. put them in busy intersections. you would be amazed how many people will let you display a yard sign. it is a very excellent tool. >> i was following -- someone sent me a twitter remark by one of the people covering another candidate in lion country.

we have great support up there. they said there were some from signs everywhere. this is santorum country. bumper cars -- bumper stickers and yard signs make a difference, especially in an election like that. people see that kind of public support. it does create a sense of momentum, particularly in the last week. it is important to us. if you can stick to a poster on your overcoat, so that every time you go out there people see it -- if you can put a bumper sticker on your car, it is only going to be on for a couple of weeks. you can tear it off them and put a new one on in the fall. whatever you can do -- every little bit. if you have a picture taken, you can put it on your facebook page. you can posted on twitter.

whatever you can do, we will help you. we will provide the information so you can help us do the contact with your friends that can help us win. >> pick up one of these. it has 10 different ideas that any of you can do to help us support the campaign. please pick it up. there is something for everyone in the campaign. i have to say it is very exciting. the momentum is growing exponentially, and we are having a lot of fun. it is very exciting. join with us, because we are going to save this country. let us know what we can do. >> sorry? "momentum is really good. we picked up the endorsement a month ago from that shultz, the secretary of state. we picked up a lot of state senators as well, as well as other elected officials in this state. we picked up several pastors. we will have an announcement

tomorrow of another person, a prominent pastor who is coined to, and support us. next week also, we have a couple of other endorsements lined up, but people who agree to step forward, conservative leaders in the state. we feel we are picking it up, and picking up the old-fashioned way, because of the grass-roots effort. people see this is the can that i like because i have seen him. i know him and i like him. you can add to that momentum if you put a sign of an couples out. i appreciate that. does anybody have anything else? >> i was quick to tell everyone that cindy durkman is the northwest iowa coordinator for strong american now. she is going to be here. she has a wonderful video on caucusing. it is 17 minutes. she will be here to show that. it is excellent. she will answer questions about

strong america now, a great organization. >> very good. thank you all very much. i appreciate it. thank you. thank you. merry christmas. here you go. >> thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> senator santorum had southwest after this aisle was stopped. he will be in logan, where he will be a featured guest at the harrison county republican christmas party. tomorrow, brunch with supporters in council bluffs, followed by a town hall in red oak. >> hear what the candidates are saying from the campaign trail on the newly designed c-span website. >> if you cannot live with a nuclear iran, and i cannot, you have to say what to do. >> if we took that seriously in washington, we would get rid of 80% of the government. >> the question is who is the

proven constitutional conservative in this race, and that would be me. >> who lead the latest comments from candidates -- read the latest comments from cannabis, all at -- from candidates, all at c-span.org. >> will look at the boats the senate took this morning with alexander bolton. how did they turn out? >> the first thing they voted on was a two month extension of the payroll tax holiday and unemployment benefits. and a two month extension of the jobs act, which is a temporarily scheduled cut to medicare reimbursement that passed overwhelmingly, by a vote of 89-10. then the senate moved on to a couple of appropriations measures. the highlight is a $1 trillion

omnibus spending bill, funding most of the federal government. that passed easily, with 67 votes, 32 against. in addition, the senate who addressed a couple of measures on emergency spending that were separated from the omnibus spending bill. one was about $8 billion in emergency spending to fund disaster relief, the bulk of it going to fema. the other bill was something house republicans insisted on, and almost 2% across the board discretionary spending cuts to offset emergency spending. that has been a fight since the beginning of september. democrats have argued emergency spending should not be offset. republicans say congress cannot

keep adding to the deficit. that offset measure, while approved in the house on friday, was defeated in the senate today. the emergency spending will not be paid for. basically, the house passed the offset to give conservatives in the lower chamber political cover for supporting the extra emergency spending. there is extension of the payroll tax cut and a $1 trillion omnibus spending bill. >> who are the winners and losers in that agreement? >> democrats are very happy with how they did. republicans say they are happy to. both sides are claiming victory. the only reason they got past on the first place. democrats are claiming victory on the standpoint that this is important economic stimulus, which is one of the president's highest priorities. the president has been in discussion with or in contact

with senate democratic leaders almost every day over the last month talking about this priority of his. the extension of unemployment benefits was another very high priority for democrats. republicans are not eager to expand the apparel tax holiday or the unemployment benefits. democrats can count victory there. republicans are counting victory in which the attached to the package that would speed up approval of the keystone pipeline, which would ship in oil from tar sands in canada. republicans said this would create about 20,000 jobs immediately. but it is strongly opposed by environmental groups. environmentalists are unimportant part of the president's base. he wanted to delay that

decision. republicans attached a provision forcing him to consider it immediately. so they are happy about that, because they know it is difficult for the president. they expect the president to conduct killing the project, because of pressure from the environmental community. that are then going to bash him for that politically. >> the house now has to act on the payroll extension bill. any word on when members might return to vote? >> i will return monday or tuesday. they are expected to sign off on it. house speaker john boehner was not directly involved in negotiations with leader harry reid on this. however, he was kept apprised by mitch mcconnell, senate

republican leader. senate leaders fully expect boehner to sign off on this deal. however, he first was to consult with his house republican caucus. when i return, one lawmaker i spoke to said he planned his return for tuesday, so that would be the day. >> talks in the bulletin with "the show." thank you for the insight. >> in an update from the hill newspaper, i want to let you know that russell berman writes that as the bill gets ready to go from the senate to the house, house gop members are voicing extreme opposition to the senate plan, which means the two month extension that passed the senate might not be a done deal. rank and file republicans say they are extremely opposed to the package during a conference call the help early today, in

which speaker john boehner brief them on the legislation and their options to withdraw. banner spoke of this as a win for the gop. the majority leader eric cantor and kevin mccarthy of california who criticized it. they said that with the exception of oklahoma and north carolina, speaker boehner was the only person on the hall to praise the bill. that is an update from "the hill" newspaper. >> that was a risk, and i decided to take it. whether it was an illusion or not, it helped my concentration. it would keep me awake. it would make me able to go on with a good, long conversation.

what i'd do it again? the answer is probably yes. i would probably quit earlier. it was not very nice for my children to hear. if i say i did that again -- but it would be hypocritical. everyone knows. i decided all of life is a wager. i will wager this bit. i cannot make it come out any other way. it is strange. i almost don't even regret it, but i should. it is just impossible for me to picture life without wine and other things puling company. it kept me reading and traveling, energizing the.

>> thursday, a journalist, author, critic, and "vanity fair" columnist christopher hichens passed away at the age of 62 from complications with his battle with esophageal cancer. watches interviews on line at the c-span video library. >> next, we will take a look at the weekly addresses. president obama expresses gratitude to the men and women who served in the iraq war, which officially ends this month. senator john barrasso expresses support for the construction of the keystone pipeline. the senate passed a two month extension of the payroll tax cut and unemployment insurance, and included a provision that would expedite a decision by the obama administration on whether or not to allow construction of the pipeline. >> this marks a historic moment in the life of our country and

our military. for nearly nine years, our nation has been at war in iraq. more than 1.5 million americans have served their with honor, skill, and every. veterans and their families will always have the help -- the gratitude of a grateful nation. soldiers began their journey back home. they are prepared to make their final march across the border and out of the country. iraq's future will be in the hands of its own people. all of our troops will be out of iraq. this holiday season, all of us can finally say "welcome home." this is an extraordinary

achievement made possible by the sacrifice of men and women. there is a lesson to learn about our character as a nation. there is a reason our military is the most respected institution in america. they do not see themselves or each other as democrats or republicans first. they see themselves as americans first. for all of our difference, all of or disagreements, they remind us that we are all part of something bigger. we are one nation and one people. through all of our challenges, they remind us there is nothing we can't do if we stick together. they are refinanced our nation has to offer. there will remain in the military and go on to the next mission. others will take off the uniform and become veterans. the commitment to service does not end when they take off the uniform. the story of their service to america is just beginning. after years of rebuilding iraq, it is done to enlist our veterans and all our people in

the work of rebuilding america. folks like my grandfather came back from world war ii to form the back of the greatest economic boom in history. we must attack and finding talent of our time -- rebuilding an economy where hard work pays off, responsibility is rewarded, and anyone can make it if they try. it is up to us to serve these brave men and women as they serve us. every day, then meet these responsibilities to their families and their country. now it is time to meet hours, especially those who serve in washington. this cannot be a country where division and discord stand in the way of our progress. we must come together to ensure that every american has a chance to earn a decent living, send their kids to congress, -- to college, and earn a decent retirement. so many of our brightest

americans fought and even done for this. it is our highest obligation as citizens. that is the welcome home and our troops to serve. >> hello. i am john barrasso, united states senator for wyoming. as we began the holiday season, we are reminded of those far from home, serving our country. there are still men and women in dangerous places, protecting our freedoms and keeping a safe. this thanksgiving, and it's -- i have the special opportunity to visit with troops deployed overseas. we talked about their hopes for the future. what these soldiers were most concerned about was whether they will be able to find a good job when they return. here at home, republicans are working on legislation that will make it easier and cheaper for the private sector to create jobs for all americans. for example, the creation of the keystone pipeline, the show

already american energy project. it would create as many as 20,000 construction jobs and 100,000 indirect jobs. it will strengthen our nation's energy security. it would allow us to transport 700,000 barrels of oil a day from canada to the united states. having a steady source of energy from our friend and ally here would make us less dependent on energy from the volatile middle east, and that is good for america. everyone from the u.s. chamber of commerce to labor unions support this. but the president has threatened to veto this bill because it is opposed by extreme environmental groups. these groups have in the past supported the president, and he needs their support for this election. it appears president obama is opposing new american jobs to try to save his own job. it is time for the president to

stop playing politics. after repeatedly saying we cannot wait for american job creation, the president now wants americans to wait on the jobs from the pipeline until after next year's election. canada has made it clear if we do not build this pipeline, the united states will lose these jobs in canada will sell the oil to china. we will be forced to get more of our energy from the middle east. if the president successfully blocks these new jobs, it will only add to the long list of bad economic decisions for our country. while the president may have inherited a bad economy, he has made it worse. this week in a 60 minutes interview, the president said he has not overpromise. his record shows otherwise. his administration projected that his $800 billion failed stimulus bill which keep

unemployment below 8%. almost three years later, under the obama economy, the unemployment rate is 8.6%. it has been over 8% for a record 34 straight months. he promised he would cut spending, but in less than three years as president, america's national debt has increased so much we have to borrow almost $3 million every minute, a lot of it from china. he promised his health care law would lower premiums for families, but since his inauguration premiums have increased more than $2,200. he promised to create a new era of bipartisanship in washington, and now he wants to veto a bill that both democrats and republicans enthusiastically support. american serve better. americans want real solutions and good jobs. the keystone pipeline is a real

solution that president obama should embrace immediately to create new jobs across america. the house of representatives has now passed the middle-class tax relief and job creation bill. this bill gives the president everything he has claimed to before. it extends payroll tax relief for hard-working americans. it helps those who are still looking for work. and it is paid for by actually cutting government spending. most americans want their government to be smaller, not larger. they want their taxes to be lower, not higher. we are a strong and resilient nation. we will weather this storm. to get americans back to work, small business owners need a level of predictability that they just do not have with this president and his administration. we need more from the white house than threats to veto a bill that would create 20,000

jobs for americans. thanks for listening. >> a look at the road to the white house now. republican presidential candidate michele bachman was in northwest iowa earlier today, as are a number of candidates. the first in the nation iowa caucuses are about 2.5 weeks away. here is a look at the meet and greet and central iowa. >> and winona, minnesota. do you know where that is? that is where i met my husband. he was a farmer. now, we live in minnesota, in stillwater. but we sure are loving being down here. this is nice, isn't it? good to meet you.

hello. how are you? what is your name? my name is michele. good to meet you. >> i am helen. >> you have already been doing your shopping. >> i have. >> you have your arce colo. good for you. is that herring? my mother loves herring. you bought it for your mom? you are a good daughter. good for you. that is nice. you were at the caucus last night. oh really? >> the plan on it. >> ok. we see it overnight here. it looks like you had a good breakfast. >> oh yes. we are excited to be here. >> really?

my goodness. good for you. you know the debates are going to be on again tonight. 8:00 tonight. >> oh yes. >> you can watch them. january 3, we are going to take the country back. everybody you know, bring them out. what is your name? thank you. tell everybody you know. hello, bill. good to see you. good to see you both. i heard they move people around. i am sorry if there was any confusion. what is your name? i am going to say you are an excellent student.

it will give you extra credit. how is that? but here you go. how are you? thank you so much for coming out on a saturday morning. it is so nice of you. what is your name? hi, larry. i am so glad you came out. thank you. going in nice? what is your name? mark hansen? the paint you very much. -- thank you very much. thank you. tell everybody you know, january 3,. we're going to take a picture. what is your name?

hello. good to me you. thank you. we are just loving it here. you should see my mother. thank you. i love making a 65-year-old woman feel good. >> thank you very much. >> i think this is your sharpie. >> actually, i took it from work. >> these are the wise guys right here. are you the wise guys? what is your name? >> gerald hansen. >> good to meet you. >> bill banks. >> hello, bill. i am michele bachman. nice to meet you guys. is it gery with a g r a j? -- is it gerry with a g or a j?

are you usually hear on a saturday morning? do we have a sharpie? there we go. [laughter] i am sorry. >> i needed your support when i was in -- >> were you there? good for you. it was a lot hotter there than it is today. oh, yes. >> i was impressed. >> thank you so much. january 3 is when it is all going to happen. come out january 3. we need your votes that date for the caucus. if you are not going to be running for president, what is going on? did you hear that? did you hear that?