numbers and partly from sense about the ability of policymakers to address fiscal problems. it's very hard to predict when that will happen. a few years ago about the risk of a fiscal crisis, and one of the points that we made there is the uncertainty about how and when people will become likely to lend money to the government and start charging higher interest rates to do that. . is this the first opportunity you had to put explicit numbers on the economic impact of the budget control act sequester and in other words is this likely to add fresh panic on the hill of the crash coming at the end of the decade? >> well, so in the summer update -- [laughter] congress had -- >> yes or no question?

>> yeah, i've learned a bit about this job not giving that kind of answer. in the summer update -- the budget control act was passed so it was built in the to the budget projections but they were built in in a way that in a sort of neutral way because we didn't know whether this would be action by the joint select committee in the congress and what it might be or whether there will be small enforcement procedures. because the committee did not reach this agreement and no legislation has been enacted we moved following the enforcement procedures and the sequestration of some mandatory spending, the sequestration of cap and discretionary spending so the full flowering of that is seen here for the first time in a way it was not in august. but we've also talked about this with joint select committee.

we talked about it in a report we issued in mid september when we first laid out what we thought the enforcement procedures would do so i don't think it should be news but it is true that it is in our outlook. >> follow-up on that question. two related questions. first of all, do you assume the automatic cuts hit o.c.o. as well as other regulatory spending and secondly, can you explain why in your alternative scenario you assumed that the automatic cuts are repealed? >> yes. so the first question, just to bring everybody to the conversation, is whether there will be a reduction in the funding for overseas contingency operations, essentially the war in afghanistan and other places called o.c.o., and yet the -- so the sequestration -- if i

had this wrong -- the sequestration budget authority for discretionary programs for fiscal year 2013 applied to the overseas contingency operations as well as the rest of the budget. the o.c.o. funding is not capped but it is subject to this -- to a reduction. the second question -- you use the term o-5-o, it's a budget function for national defense which i am proud to say i learned. the other question you asked is what we include in this alternative fiscal scenario. so we have for sometime shown in our outlooks a menu of alternative fiscal policy assumptions so that members of congress and their staff who are coming from a different starting point in current law can see what would happen to the budget under that starting

point. i think as the last few years have gone on, and more and more aspects of the budget have either been enacted on a temporary basis or extended on a temporary basis we felt that the current law baseline provides a less and less useful guide to what the current stance of fiscal policy is. so we tried to lengthen the menu of alternatives we show because there are more and more different sorts of policies where people on the hill will say, well, we won't do that or we won't do this. i want to think about the budget in a different way. we've lengthened the menu. we try to pull together some of those tesht policies that many people in congress and outside of congress talk about as policies that will, yes, they are in current law but they are very different from past policies in a way that members of congress or others don't want to have take effect. so when we -- so, for example,

there is lots of tax provisions that were scheduled to expire this year. the budget control act congress explicitly decided last summer to impose certain caps on discretionary appropriations, and then i think they decided to have a process to depre on some larger set of changes. and this process was the special committee and the powers given to that committee. but congress meant by description of people in the congress as sort of threat to try to make -- propel this committee and the congress to take action. but i think many members of congress don't really want those particular cutbacks to take effect and we can see this in discussions on the hill. people say, well, we are going to find a way to not have those

automatic enforcement procedures to take effect. to be clear, we have no recommendation, we have no position on whether or not those things should be allowed to take effect. but in the case where a lot of our clients say they don't want this to take effect, and don't want other things to take effect, then we think it's useful for purposes to have -- [distorted audio] >> to follow-up on the question to make sure i understand exactly what you're saying about what the economy would -- how your forecast would look different if the sequester didn't take effect and the tax cuts were extended. the alternative. you said that in 2013 g.d.p. would be two -- >> by the end of 2013. so for people at this table and

people can -- to answer david's question. to -- table .2 -- on page 30. thank you, david. oh, there we are. so this summarizes the economic effects of the policies on the baseline based on the scenario. if you look at the middle column which is for 2013 we project that real g.d.p. under the alternative scenario would be between half a percent and 3.7% higher at the end of the 2013. so for my comments i just picked the midpoint of that range. we used the range deliberately because there is not certain business. i talk about g.n.p. and i talk about g.n.p. which we show in the bottom row of the table not much difference in the near term but actually is a fair bit

different by 2022. this is not just an arcane matter of national income accounting. this is a substantive and important difference. g.d.p. is a measure of what's produced in this country. some of income in this country goes to people overseas because they have either worked here or they have sent their investment capital here. similarly, we as citizens of this country collect money that -- from overseas, investments of ours that adds to our standard of living. g.n.p. is a better measure of the income earned by americans than g.d.p. is. one thing that happens is the country runs larger deficits is the greater demand for funds or less demand for funds in total or less availability of funds for the private sector in this country krause in some capital from overseas. that enables us to keep producing but we don't get the benefit of that.

it goes to people overseas. so we do estimates, for example, in our long-term budget outlook of the effects of fiscal alternative outcomes on the well-being of american citizens overtime. we can't focus on g.d.p. so in this case the numbers i used from the g.n.p. numbers from the bottom of the table and that's where you can see in 2022 a reduction between 1% and 3.7% and the midpoint is about 2%. about 2.5%. >> to follow-up. >> yes. [inaudible] you're projecting some very dramatic increase in growth. it's pretty darn healthy. what are the an lytics behind

that sustainability? [inaudible] >> first question, i think the way to think about in the absence of fiscal restraint, fiscal policy which is neutral we think economic growth would gradually strengthen as the effects of the lost wealth and runup in debt weigh -- way less than households as the overhangs of excess housing units is worked off. both greater demand for housing and the low level of construction. as businesses gain greater confidence. so we'd be looking for a growth that would be picking up. the fiscal restraint is to offset much of that in 013 when it takes effect. but then that fiscal restraint -- the effect of the restraint

wanes. it's there but consumption has already fallen and starts to grow again there. so i think what you're seeing is basically the absence -- the pressure of fiscal policy holding downgrowth in 2013 combined with the restoring forces of the economy that are of course very, very delayed in this case that we think will ultimately take effect. >> [inaudible] can you break it down a little bit for us? does it save the government a

lot of money? >> we have not gone full estimate of the effects of the affordable care act since early last year. early last year when we did the estimate of the effects of repealing the act. and we testified about that to managing commerce committee in the -- energy and commerce committee in the house. we will part of our march baseline be updating the estimates of coverage components of the affordable care act in a way that will be visible to you and others because those pieces sort of sits somewhat separately from the rest of what's happening in the budget. the medicare provisions, the changes that were made in the affordable care act are now interlaced with the cumulative history of the medicare program. although we update those projections and as i said before we will be focusing on the updating of the medicare and medicaid projections for

march, those new projections won't automatically give us the effects of the affordable care act itself. those projections will be based on the whole sum of law that's now in place. whether we do estimates in the future of the fkts of taking out -- effects of taking out certain provisions of the affordable care act and replacing them or not with other provisions are really up to the priorities of the congress. i don't know if and when we'll do that. jonathan. >> you mentioned the unsustainability of the alternative fiscal scenario. i was just looking on page 29 about the 2.1% smaller or .2% larger than under current law. that seems to imply we may run all these things and get away with it by 2022. do you think that's the likely part of that, whether it's likely or the end point of the

distribution and also, again, about the impact of the spending in the budget? >> ok. on the economic question. this is getting back in table 2.2 on page 30. upper right corner. we show the effect of g.d.p., the output to plus .2%. so what that means is a buyer modeling. it's possible that under this alternative scenario g.d.p. woosh slightly higher in 202 -- would be slightly higher in 2022. however, you have to understand the limitations of that estimate. the points that i made is we'll be producing a little bit more here. but the return will be going overseas. the standard of living of americans which is based on g.n.p. will be down in 2022 for any of the estimates that we -- any of the range of assumptions that we used.

moreover, the table went out further what you would see is plus .2% in that upper right-hand corner. >> is there a point it will be negative? >> yes. the reasons for that is there is essentially two opposing forces at work here. the alternative fiscal scenario we outlined here there are lower tax rates beginning in 2013 and going beyond the end of the decade. so those lower tax rates will by estimates boost labor supply and saving. the opposing force is there will be much larger deficits and that extra government borrowing will be crowding out increasing amounts of private capital formation. and the tax rate effect, more or less constant -- constant of the g.d.p.

it grows a little bit. not very much. whereas the debt is accumulating at a very rapid rate. so the pressing effects of that debt accumulation increasingly outweigh the positive effects of lower tax rates as we go out in time. so if you saw this piece by piece, force by force over the decade and beyond you would see the debt is being -- >> the stretch between minus 2.1 to .02 it would likely be a negative in 2022? >> yes, most definitely. 90% of that range. you asked the question about timing. so what we do every spring is we work on a new baseline, our march baseline, and we do an analysis of the president's budget. [distorted audio]

in april release the effects of the budget. the delaying puts us behind in that process. nonetheless, it is of very high priority for the budget committees on the hill and the congress in general for us to finish the march baseline which is the base we will estimate the effect of the cost of legislation throughout the year and complete the analysis of the president's budget. so we will work as hard as we can and we hope to release both the march baseline and the analysis of the president's budget by the middle of march but we can't be sure. we don't know what's in the budget yet. we don't know how hard it will be. we don't know what issues will confront in trying to do those estimates. we work flat out during this period on this effort. and we aim for the middle of march and -- but we can easily -- if we have more difficulties.

>> [inaudible question] >> well, the exact timing has differed from year to year. it's what we find in the budget and what congress is doing. if they move efficiently toward a resolution of these issues which the deadline is the end of february then that helps us. if they move there in a more rambling path then that's a lot more work for us. i don't -- i wouldn't -- i certainly would not -- >> there seems to be an argument the reason the deficit is out of control is the president is spending too much. and the taxes aren't high enough. and you're arguing that the problem is the aging of the population. can you explain a little bit more why the c.b.o. sees it that way and what the factors are being cited in the political realm versus what you're seeing in the

demographic realm? >> of course i won't speak to what's being cited in the political realm. but i can -- but i think if you look at the chart that's still up on the screen you can see the basis for c.b.o.'s -- on this topic. relative -- we clearly had a burst of spending, spending relative to g.d.p. has been typically high the last few years relative to our history. and as i said it actually receded a little bit in the next few years under current law. but the amount of spending that's -- that was undertaken in the past few years through the recovery act and other legislation is being -- that's happening at the backdrop of steadily rising costs for

social security and the major federal health care programs. the increases in the cost of those programs are not a surprise. analysts have been talking about them for decades. the aging of the population was pretty well foreseen. in fact, health care costs rise more rapidly than other sorts of things in the economy. it's been going on for sometime. so the general contour is one that i think probably the first director spoke about in this room. but the numbers i think are quite striking. given the -- i think this spark chart was trying to capture some of that. social security and the federal health care programs will represent about five percentage of g.d.p. more in 2022 than they have in average in the past 45 years.

5.5%. that's a tremendous increase for those programs. now, current law sets us on a path to try to offset in a sense some significant part of that through restraints in other programs. and the second set of bars shows how other -- all other federal programs put together will be a smaller share of g.d.p. this coming decade than they were on average in the past. that's not -- and you see that across a number of programs. defense spending -- the alternative fiscal scenario here, it takes away the enforcement procedures of the budget control act, the basic caps. defense spending would be nearly at the lowest share of g.d.p. that's been at in my lifetime when we get to 2022. nondefense discretionary spending will be the lowest share of g.d.p. that's been at

in my lifetime. all the entitlement programs except for social security and the health care programs will be close to the small share of g.d.p. there's a fair amount of restraint built in already in all the parts of the budget except for social security and the federal health care programs. but you can see despite the restraints in other places, total spending will be a larger share of g.d.p. and that's driven by those programs. the combrothe in those programs is driven by the aging population and rising costs for health care. so there really is a stark choice here. even with other parts of the budget squeezed -- of course, one can squeeze a little bit further. i am not suggesting we reach some limit, but given that all the federal programs together will be -- clearly the deficit

will not be brought under control without changes in at least one of revenues and social security and the large health care programs. and if one focused on trying to reduce the deficit to a manageable level in 2022, starting from this benchmark, focus on doing it through tax increases, it would require very large increases in taxes. just through social security and the federal health care programs, it would require very large reductions in benefits to those programs. even if one does it through a combination of revenue increases and reductions in those programs, the changes on both sides of the ledger would be considerable. so the gap that's opened between what we are used to getting from the government in terms of benefits per person and in terms of operations of the rest of the government and the revenue that we're used to giving to the government has

widened a great deal and going to widen further in the coming decade. bob. >> bob sanders, "washington post." can you go over the medicare spending? you said earlier that we're projecting to incorporate an assumption that spending per beneficiary will grow about 1% i think over the -- as opposed to the historic rate of 5%. and i'm wondering whether or not that differs substantially from your previous projections and whether the slowdown -- i think the point -- part of the slowdown is simply sort of younger people coming into medicare, but is that mainly driving this change or is the change being driven by the recent experience when medicare spending has been lower than expected and also the provisions in the affordable

care act that mandate the slower increases for some categories? >> that's a good question which i don't have equally good answers. we have not tried to decompose this slower growth quantitatively in the two pieces i described. we think both changes are important. the changing demographics of the medicare population. i don't know how much of the differences due to one or the other. i don't know there is a stark difference from the numbers in august. again, part of this is the restraint imposed by the affordable care act. if one looked back to before that you would see some additional slowing from that factor. but i just don't know the decomposition and important

factors. >> additional question on medicaid. one of the options that's being discussed among lawmakers is using some of the savings in o.c.o. and i know there were some changes. i was trying to figure out the math in here. i couldn't quite follow it. does -- you know, even though some of that has been added in the baseline, is there still enough there that could be used by lawmakers to offset $316 billion for s.g.r. in this update? >> so i think that the -- let me give you some facts and discuss the interpretation of those facts. so one fact i think -- catch me if i don't have this right -- our baseline projects about $1.4 trillion in budget authority for overseas contingency operations over the 2013 and 2022 period. then we show in table 1.6, the manual alternatives, the savings from reducing the number of troops deployed for

these operations to 45,000 by 2015. and no particular -- many alternative, different policies that could get you to those numbers. the particular alternative that we showed is to reduce the -- [distorted audio] amount that could be used for some of the purpose depends on what you mean used. this is money so the $1.4 trillion which i should maybe explain to people or remind people, the way we do projections of discretionary spending, apart from the parts of spending that are now capped by law is to take the most recent level of appropriations enacted by congress and extrapolate that over the decade with growth for costs. and that's specified in law on the way we should do this kind of projection two decades ago.

so the $1.4 trillion comes from taking the latest level of appropriations, which i think were $127 billion in fiscal year 2012, and growing that with inflation. however, whether we would spend that amount or less than that or more than that depends entirely on the challenges the u.s. sees in the world and how we choose to respond to them. so whether one could enact caps, for example, on this sort of appropriation -- those caps are below the level we project here when we did a wline projection next time -- baseline projection next time there would be a reduction in spending relative to those numbers, that might have occurred anyway without those caps simply because we decided we choose not to fight as much overseas. on the other hand, if in fact

some new challenges arises that congress decides requires of military response overseas, then presumably they would spend more than any caps they would set in place today anyway. so, you know, the caps do affect the projections that we make if we follow the law, but whether there are true savings there depends on what you think will happen in the absence of those policies. >> raise concerns that this update might show a significant reduction in the projected o.c.o. spending that would, therefore, not make enough funds to make up the difference for s.g.r. these numbers don't contradict that? >> no. the cost of freezing medicare's payment rates for physicians is a little over $300 billion. that's smaller than other projections of the o.c.o.

funding. other questions? ok. yes. >> so with the -- so with the projections of the outlays and tax cuts over the short term positively impacting economic growth but then those exploding the deficit, isn't it more likely with that kind of projection that people that congress can give a short-term boost to the economy and then just put off the sort of fiscal restraint that you're talking about? >> well, i don't know what congress will do. i think we're trying to lay out the consequences of alternative courses of action and it's been complicated in this case because current law imposes the sharper restraint that is negative for the economy in the short term but better for the

economy in the long run than extending all these expiring provisions and that's -- that makes the job of the congress more difficult and we're just trying to explain the consequences of the alternative courses they may take. thank you all very much for coming. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> the congressional budget office now saying that the projected deficit for 2012 will be about $1.1 trillion. you can read the entire c.b.o. report on our website. we've linked to it. at c-span.org.

director elmendorf will be testifying before the house budget committee. we'll have live coverage at 10:00 a.m. eastern. that will be on c-span3 and also on c-span radio. here on c-span the house will be coming back in session in about half an hour or so 2:00 eastern. lawmakers are expected to vote on appointing negotiators to work with the senate on federal aviation programs, a conference that's expected to get under way this afternoon. later this afternoon in the house at about 5:15, the house will begin work on a measure to repeal a part of the health care law known as the class act which provides long-term health care services. the obama administration says they won't implement that portion of the law due to a lack of funding. votes are scheduled in the house today at 6:30. >> with talk of possible legislation to improve the nation's cyberdefenses, former c.i.a. director discusses dealing with national awareness of cyberthreats from his aspen homeland security event. >> i have an alarming thought

about this, some discussion about cyber mirrors the bit of discussion we had about terrorism back in the 1980's and 1990's. there was a great deal of concern what we had to do it until we had 9/11 which crystallizes everything and we knew what to do and the nation moved forward. we haven't that kind of event in cyber yet. the attack on glapos. the attack on stratford where i lost my credit card, there will be growing public awareness that this is a serious vulnerability that i think will overcome some of the private sector reservations about working with the government on this. >> watch the rest of the discussion and more about homeland security online at the c-span video library, archived and searchable at c-span.org/videolibrary. >> the senate's in session today.

members will be back at 2:15, back from their weekly party caucus meetings to continue working on a bill to make it illegal for members of congress to trade stocks based on nonpublic information. it's known as the stock act. we expect to hear from majority leader eric cantor about the house version of that. we'll coverage his news conference later. the senate live at 2:15 eastern. and also this evening the florida primary. it's under way. the associated press saying that a big turnout is expected today. more than two million voters from a record 1.9 million from the 2008 primary. the a.p. says that more than 600,000 floridians have already voted as of monday either by going to an early voting station or mailing in their absentee ballots. we will have coverage for you this evening of the results, the candidate speeches and, of course, your comments by phone, twitter and facebook . all of that coverage getting under way at 8:00 eastern on c-span2 and also on c-span

radio. this morning on "washington journal" -- we looked back 15 years to 1997 and the waning days of speaker gingrich's term on capitol hill. host: why did you decide to look back at the 1997 coup? caller: well, we decided to look back because it was used on the campaign so much in 1997. newt gingrich mentioned his term as speaker of pag a balanced budget amendment. we focused on the attempted coup of newt gingrich because it's back in the news that mitt romney and rick santorum has

used that coup against newt gingrich basically saying he couldn't leave the house effectively so he can't be the nominee try to defeat president obama to lead the white house because of his management style. we talked to members that are still in congress and also former members that are around at that time. host: bob cousack, managing editor of "the hill." take us to how things played out in 1997? guest: well, remember, 1997 came after the government shutdown of 1995 and 1996 where newt gingrich went toe to toe with then president clinton and basically came out on the short end of the stick. so a lot of the rank and file republicans at the time, including joe scarborough, now host of the msnbc show, "morning joe," they were frustrated. they started to meet about

their frustration. there was some exacerbation of newt gingrich about his record and how he was running the house. i talked to congressman peter king, a republican from new york, who is not endorsing the race but has been very critical of gingrich saying that his leadership style is all about him, he was self-centered. so this kind of was boiling over until basically some rank and file members started to meet and started to talk about toppling newt gingrich and eventually that made it -- made it up the change and leadership members of newt gingrich's team. newt gingrich's lieutenant started to embrace the idea and the plot was hatched to topple newt gingrich. host: you report that leadership has split with gingrich months before the coup over the issue how to handle a disaster relief bill. talk about the buildup. you mentioned the style of then

speaker gingrich. were there also policy debates at play? guest: yes, that was the problem. most of the policy was policy oriented which in a similar way with republicans now in congress, they're frustrated they had to compromise so much with president obama on a range of things. well, back then they were frustrated thrat republican congress had to find common ground with bill clinton. so there were other -- there's these small bills that started to show that gingrich's hold on leadership was starting to crack, it started in the spring with the legislative branch bill that funded the government. that's when the rang and file members bolted -- rank and file members bolted that down. and then later an emergency disaster relief bill, that's where gingrich and his lieutenant split and that was really just the precursor to the high-profile effort to get rid of him. gingrich eventually found out

about this coup attempt and it didn't work. a lot of people in retrospect 15 years later say it wasn't really well thought out, wasn't well planned. it hurt him significantly and after the election he was gone from congress. he was not the speaker. host: when you describe this event, this sflario, this coup event, -- scenario, this coup event, you are talking about a specific date in time. you talk about how it perhaps failed. one called it a keystone cop type of moment. guest: when you try to take down the speaker you have to have a well thought out plan. and the major players involved in leadership at that time were tom delay, dick army and bill paxson, all were -- armey, and bill paxson, all were in charge at the leadership level but they didn't put together a very effective plan. the other interesting thing and

another reason why we looked at it is we look at the role of john boehner. john boehner was in leadership at the time. he was the number four republican. and what we found out was that -- and going back to 1997, "the hill" sandy hume, was the one who broke the initial story and his reporting really stands up after 15 years, very consistent what we found. but john boehner was aware of what was going on, but he was not leading the charge. and that is something that a lot of sources told us. host: you report that of the 81 republican lawmakers who served with gingrich and are still in congress, only two have endorsed him for president. 22 are backing romney. and the now speaker, mr. boehner, who's remained neutral in the g.o.p. presidential primary last month denied he was part of the group of the rising republican stars who tried to remove gingrich from his post. has speaker boehner remained removed from this debate and

campaign at large? guest: it's an awkward position for speaker boehner, speerblely if gingrich was surging because potentially gingrich could be the nominee. and he would be the top republican in the house. so that would be a bit awkward. so he fried to distance himself from that event saying that was a rumor, just speculation that he was involved. but he was well aware of it because he was in these leadership meetings plotting. but once again he was not leading the charge. however, he was in the meetings on trying to get rid of newt gingrich. host: bob cusack, managing editor of "the hill." guest: thank you so much. >> the florida g.o.p. primary with coverage from tampa with mitt romney's speech there and newt gingrich and his campaign in orlando. all of that tonight at 8:00

eastern. the house is coming in at 2:00 eastern for legislative work. until then more about florida and the 2012 race from this morning's "washington journal." want to get your take on what is going to happen when the numbers come in from florida and specifically what you think that means moving forward to nevada and beyond. guest: well, good morning, john. i think it's nice to be here. we will see a pretty big win for mitt romney. the surveys, most reliable polls that we see coming out of the field have romney leading somewhere between 12 and 20 points. it's likely his margin will be closer to the 20 points than the 12 points because it feels like the race is breaking a little late.

newt gingrich had really tried hard to compete here, but coming off a south carolina wave it looked like he might have a chance to win the state. florida is important, of course, because this is the first real contest in which a big chunk of republican presidential delegates, the folks who will actually go to the convention and vote for the actual nominee, are available. florida will award 50 delegates and that -- and the winner of the state will get all of those delegates. so the person who wins tonight is going to end up as the leader among the -- in the delegate count, if you will. so mitt romney is looking likely to come out of today ahead in the delegate count for the first time in this race. host: that means -- with that 20-point win if it is a 20-point win, take us to a week from today in nevada. guest: not even a week from today. it's this weekend. the caucuses will happen in nevada. that's really the -- one of the very few contests that happened in february. we have a couple of primaries in -- caucuses, really, in

colorado and minnesota, and then it's a long sort of dry spell. maine holds their caucuses around the first week of february as well. long dry spell until the late in the month, the 28th, when arizona and michigan hold their primaries. the interesting thing about all of those races is they are all states in which mitt romney should do pretty well. arizona, colorado, even nevada all have large mormon populations. they all got -- they are all places where it helps to build a base, a foundation and an organization, something that romney has been proven very good at. at this point it's hard to see where a newt gingrich or rick santorum wins next. the person i think we'll do better than expected in february is ron paul who has proven to be better at convening caucuses than any of the other candidates. better at turning his people out over the course of his two presidential bids than any other candidate.

this is really ron paul's chance to gain those delegates. hard to see where gingrich and santorum find a big pocket of support. i mean, at the moment rick santorum is campaigning in missouri for a primary that doesn't award any delegates. it was only a beauty contest. so romney is sort of prepared to lead florida and go on the streak of wins in february that won't be as dramatic as the streak that president obama went on in february of 2008 when he beat hillary -- when he sort of established his firm lead over hillary clinton but it could be as defining of the race as obama's lead over clinton was back then. host: well, reid wilson from the hotline. i want to point out two stories. one from "the washington post," the g.o.p. presidential race could grind on and on.

guest: talk to us a little bit about a broker convention and how likely you see that at this point? guest: well, i don't think a broker convention is likely. the eventually nominee has to get 1,144 delegates. that's 50% plus one of the delegates that are available this year. romney -- whoever it's going to be -- likely romney -- is going -- got to roll through the supertuesday states. got to roll through the states that hold their contests in april, as late as june. we always make fun here at the hotline when we see a newspaper clip that has some local state saying, hey, our states a convention or caucuses or primary might matter. there was a great clip in california the other day saying

their primary as late as june might actually matter. but the bottom line these people -- one of these candidates is likely to get a majority. it's probably going to be mitt romney. a majority of the delegates by the time we get to the convention. ron paul, though, doesn't have to get a majority or even prevent romney from getting a majority to have an impact at the convention. what he can do if he goes to the convention he'll get members of his -- get some of his delegates on a bunch of committees and can do things like offer minority reports to the platform and say, hey, we wanted to put this on the platform but everybody else voted us down. that can get embarrassing for the eventually nominee, mitt romney. what is likely to happen is ron paul gets to negotiate and put some of his platform in the republican party platform at large, gets to put some of his guys on various influential committees. that i think is what we're going to see from ron paul's campaign. he's not really campaigning to win the 1,144 delegates that

are required to become the republican nominee, but he's going to have an influence. i think that shuned be -- shouldn't be understated. host: we want to open up the phones to questions on campaign 2012. we'll do on the standard line. 202-737-001. republican line, if you have a question or comment, 202-737-0002. independent line, 202-628-0205. if you're outside the u.s., 202-628-0184. reid wilson, we have something special for you. the c-span campaign 2012 is visiting the university of tampa in tampa, florida, where the republican national convention will be this summer. we have a couple of students helping us to ask you some questions today. we want to give a special thanks to eric cardin for preparing students for the program and brighthouse networks for sponsoring today's

bus visit. let's go to the c-span bus via skype. we'll start with a student down there. hamilton ryan. >> hi, reid. i recently read your article on mitt romney and his trouble getting the hispanic vote and more importantly just wanted to ask the question of how do you see his big win in florida today, and i know that's what it look like, a 14% lead over newt gingrich. today the nbc marriage poll had a 15% lead. so obviously it's looking like a big win for him tonight. i know that in 2008 mccain overwhelmingly took the hispanic vote by about 40%. but now you have mccain's endorsement after he wins here in florida as it looks like he may do, how do you see that panning out for the rest of the nation and how do you see the hispanic vote getting behind

mitt romney and the future? guest: well, thanks, ryan. the hispanic vote is going to play a huge role in florida's primary. about 12% of the electoral vote and 12% of the electorate in 2008 this time around probably going to be a little more because the hispanic population is rising so fast, especially in florida. you're exactly right, in 2008 mccain won white voters. but among hispanics he did very poorly. mccain took 54%. rudy giuliani took 24%. mitt romney only won 14% of the hispanic vote that year. he's got to turn that around if he's going to win tonight which i think he will. you cited a number of the surveys. a suffolk poll yesterday that had romney up 20. they see romney leading by

double digits. he'll make good in hispanic voters. he's had a hispanic language television ad running for about four weeks now. he dropped a couple mail pieces to his spanish-english, biling rale mail pieces. hispanic dominated houses down there in florida. he's got the support of the spanish establishment. congressman mario delart and former congressman lincoln diaz-by lart, ileana ros-lehtinen. it means a lot to that community and their support goes a long way. four years ago they were with john mccain. now they are with mitt romney. the question is how do republicans begin to relate to hispanics on a national level and that's going to become a big problem because hispanic voters have voted more for

democrats by increasingly larger margins. in 2004 when he was re-elected, george w. bush took 44% of the hispanic vote. and 2008, john mccain only managed about 31% of hispanics. with them growing so much as a portion of the electorate, that's only helping democrats by wider margins. republicans really have to find a way to talk to hispanics in a way that helps them communicate a little better. right now the hispanics aren't listening to the republican message unless republicans can find a way to change that, they are going to have real electoral problems in the future. host: a question from twitter from james talking about the conversation we had a little bit earlier. newt and paul need to stay in to get us a brokered convention. i'm not kidding when i say i'll vote for obama before romney. we have "the new york times"

earlier including that big day on the 10th of march, supertuesday. how many delegates are up on supertuesday, reid wilson? guest: supertuesday, you've caught me. it's somewhere between 500 delegates. 400 to 500 delegates. i can't remember the exact number. the funny thing about that is it keeps changing. texas, because their redistricting process has been so chaotic, they won't have district lines that will be drawn by that line. they have shifted both their congressional primary and presidential primary, i think the tentative date is june. depending how they can do that. meanwhile, ohio, who was scheduled to hold their primaries in april, has now moved up to supertuesday. states are still shuffling

around here. we have a concrete calendar now. something until a few weeks ago they were moving around there. host: let's open up the phones to todd from florida who is holding their primary today. todd is from braidington, florida. good morning. caller: good morning. i'm calling because i'm having a little problem with the media kind of ignoring my guy. i know. it's quite a problem for the media because they really don't like him. and i understand that. i just don't understand how it is we can have a media that is supposed to be for the people and really like a fourth wing of the government and really to be able to do this to us. host: and your guy is? caller: ron paul. host: ok. caller: i feel it's people like c-span -- i've always -- i've been a life-long supporter of the republicans. i've watched c-span for 20 years. never seen bias. and suddenly you can't see ron

paul anywhere. but the reason i'm calling -- the main reason i'm calling, i've been watching youtube to try to get my news because i can't get it on the tv anymore. and i found that florida has a voter fraud problem and a guy named -- had created a program so he could make a voter fraud from the computer. and tom feeney, former speaker of the house in florida, hired the man to make this program and the program, what it does is it makes the vote come out 51/49 and they can pick the winner. through the years i always noticed, why is it always 51/49. host: let's give reid wilson a chance. first talk about ron paul and where you see him going forward? guest: i do want to talk about

ron paul. the reason todd is not seeing him in braidington or anywhere else in florida is paul has skipped florida. he's made a strategic decision. he doesn't think he can win the state so he moves on to other places. he campaigned in maine where the caucuses are coming up later this month. some caucuses are already happening in maine. then later this month, today, he's in colorado which is going to be -- holds its caucuses later this week as well. so ron paul is pursuing this very strategic, sort of path, to establishing a real contingent of delegates for the convention. he has -- i think he's pursuing probably the smartest strategy for his own political sake. this is the same way that president obama, then senator obama, established a big lead over hillary clinton, by understanding the rules of the game better than the other guys.

if they understand the rules of the game better than the other folks, it's mitt romney and ron paul. they know how those delegates are allocated. they know where to submit their signatures and how many they need in every state. ron paul and mitt romney feel complete slice of delegates in all these different states. paul is doing a pretty smart thing here in sort of picking and choosing his spot. it's not going to be in florida but you are seeing him in three different spots in colorado today. the other thing about ron paul is i think it's hard to overstate the impact he has had on the language of the republican party. one thing you hear a lot when you go to various events, talking to the average republican voter, the only person they don't want to vote for is ron paul. one of the first things they'll say is, well, the only one i can't support is ron paul because i disagree with him on this, that and the other. take a listen to how mitt romney sounds, rick perry

sounds. a commission on whether or not to go to the gold standard. that is ron paul's message. that is his sort of fundamental talking point. the republican candidates are talking about auditing the fed now. they are talking about all these things that -- just four years ago were cookie ideas that only ron paul had. now -- cooky ideas that only ron paul had. he has had an impact on the way his party speaks. host: again, we are being joined by reid wilson, former editor of hot line. in 2008 covered the 2008 cycle for real clear politics blog. realclearpolitics.com. reid wilson, want to go back to the c-span campaign 2012 bus in

tampa university. one of those students is carter with a question for us. >> good morning, it's a pleasure to be talking to you. i was reading an article in the economist and it listed the student loan debt in the united states to be upper $550 billion. president obama is promising to include this group in a list of bailout recipients along with the current instability of the national economy and global economy. is this a feasible challenge for the president to undertake and if so would it be wise to do so during election year where 7 % of nationally registered voters listed the economy as their primary concern? guest: i think it's slall the right thing for president obama to do. he's trying to help people with their debt. that's what americans want to hear right now is solutions

from washington, d.c. the problem, though, it's not terribly feasible from an actual legislative perspective. nothing much happens in an election year. i was just -- i saw a clip this morning. said there were 984 roll call votes in congress, in the house last year. only 12 members, by the way, voted on all those votes. this year it's likely to be a lot lower. there won't be a lot of actual legislative packages moving through congress because it's an election year, tensions run so high and it's just the way things work here in d.c. in an election year. >> follow today's "washington journal" anytime on c-span.org. we are taking you live to the house. chaplain conroy: let us pray. loving god, we give you thanks for giving us another day. bless the members of this assembly as they set upon the important work that faces them. help them to make wise decisions in a good manner and

to carry their responsibilities steadily with high hopes for a better future for our great nation. may they be empowered by what they have heard during their home district visits to work together. may they realize that each of them represents voters who side with their opponents and that there are millions of americans who voted for their opponents as well. the work to be done must benefit all americans. give them courage to make difficult choices what they are faced with them. may your blessing o god, be with them and with us all this day and every day to come. and may all we do be done for your greater honor and glory, amen. the speaker pro tempore: the chair has examined the journal of the last day's proceedings and announces to the house his approval thereof.

pursuant to clause 1 of rule 1, the journal stands approved. the pledge of allegiance will be led by the gentleman from texas, mr. burgess. mr. burgess: ask all of our visitors to join us in the pledge to the flag and our country. 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. the speaker pro tempore: the chair will entertain requests for one-minute speeches. for what purpose does the gentleman from texas rise? mr. poe: madam speaker, i request unanimous consent to address the house for one minute. the speaker pro tempore: without objection. the gentleman is recognized for one minute. mr. poe: madam speaker, the stock act -- stop act will prohibit members of congress and federal employees from using nonpublic information for their own personal profit. and help prevent insider trading. representative timothy walz of minnesota has introduced this

legislation in the house. the senate has already voted to move forward on the stock act. i join a bipartisan group of 217 members in supporting this legislation. several media reports have indicated that insider trading is a problem in the halls of congress. madam speaker, we work for the american people and cannot lose their trust. the stock act or similar legislation is needed because it brings more transparency and oversight. insider trading any way you look at it is not only illegal in the united states, but it is corrupt and morally wrong. in washington and in congress, things must not only be right, they must look right. and that's just the way it is. i yield back. the speaker pro tempore: for what purpose does the gentleman from american samoa rise? mr. faleomavaega: i ask unanimous consent to address the house for one minute. the speaker pro tempore: without objection.

mr. faleomavaega: madam speaker, as required by our constitution last week president obama addressed our nation in his annual state of the union message before a joint session of congress. president obama outlined his blue print for an america built to last, a plan that begins with american manufacturing. president obama noted in his address to the american auto industry is back. the president's decision to provide emergency loans to the auto industry saved more than 1.4 million american jobs. this decision by president obama also prevented personal income losses over two years of more than $96 billion and helped make the big three auto makers, cries chrysler, general motors, and ford all profitable for the first time in years. after taking office, president obama signed the recovery act to get our nation back to work. as a result, the u.s. has seen 22 executive private sector job

growth, adding more than 3.2 million jobs. last year we added the most private sector jobs since 2005. madam speaker, i commend president obama for his vision and leadership. i commend his bold action work. most of all his commitment in serving our nation in these difficult times. i yield back. the speaker pro tempore: for what purpose does the gentleman from texas rise? mr. burgess: ask unanimous consent to address the house for one minute. revise and extend my remarks. the speaker pro tempore: without objection. mr. burgess: madam speaker, this year the support -- supreme court agreed to hear an issue decision on the affordable care act. i'm eager to see what happens and i'll follow the case very carefully as will millions of americans. but important steps will need to be taken depending how the court rules. right now we do not know if the court will rule solely on the individual man date -- mandate or the entire law is unconstitutional. either way this house must be prepared. the house conservatives have been working for at least the

past three years, well before the affordable care act was even passed, to craft policies that focused on patients instead of payments. that focused on quality instead of quantity, innovation instead of stagnation, and affordability as opposed to just being cheap. i'm fully committed to continuing this work and producing alternative legislation that will benefit the american people without putting an undue purd on the economy. the congressional health care caucus discussed this issue today at a briefing. james capretta, thomas miller discussed shared ways we can be prepared in the coming months with specific who say ideas. although no one has a clear idea how the court will rule, we do know we need to work together to craft policies to take care of the american people when the decision is rendered. i yield back the balance of my time. the speaker pro tempore: for what purpose does the gentlewoman from tennessee rise? the gentlewoman is recognized for one minute without objection.

mrs. blackburn: thank you, madam speaker. it is so true that to whom much is give much is retired, especially when it comes to ensuring the blessings of creation for our children and grandchildren. 75 years ago a group of concerned citizens came together to offer their time, talent, and treasures to protect waterfowl population and protect wet lapd habitats. ducks unlimited as a purpose at the beginning. during the 1937 dust bowl, drought plagued water foul populations were at unresidented lows, recognizing the water foul is dangerously near to unrecoverable populations, a small group of sportsmen organized themselves and got to work. over the past 75 years, the members of ducks unlimited have worked to conserve, restore, and manage habitats, essential to the well-being of our contingent's waterfowl populations. through public-private partnerships and the hard work of ducks unlimited volunteers throughout the country, more than 12 million acres across

north america have been preserved. madam speaker, it never ceases to amaze me how the citizenry bound together by common dedication, determination, focus, and not by government fiat can change the world. ducks unlimited has spent the last 75 years improving water quality, mitigating the effects of floods, safeguarding -- the speaker pro tempore: the gentleman's time has expired. mrs. blackburn: they are to be commended for 75 years. i yield back. the speaker pro tempore: the chair lays before the house the following communication. the clerk: the honorable the speaker, house of representatives, sir. pursuant to the permission granted in clause 2-l of -- 2-h of rule 2 of the rules of u.s. house of representatives, the clerk received the following message from the secretary of the senate on january 31, 2012, at 10:00 a.m. that the senate passed, senate 1236, that the senate agreed to senate concurrent resolution 34. with best wishes i am, signed

sincerely, karen l. haas. the speaker pro tempore: for what purpose does the gentleman from minnesota seek recognition? >> madam speaker, i ask unanimous consent to take off the speaker's table h.r. 658 with the senate amendment thereto, disagree with the senate amendment, and agree to the conference requested by the senate. the speaker pro tempore: the clerk will report the title. the clerk: h.r. 658, an act to amend title 49 united states code to authorize appropriations for the federal aviation administration for fiscal years 2011 through 2014, to streamline programs, create efficiencies, reduce waste, and improve aviation safety and capacity, to provide stable funding for the national aviation system, and for other purposes. the speaker pro tempore: without objection, so ordered. without, the chair appoints the following conferees for h.r.

658. the clerk: from the committee on transportation and infrastructure, for consideration of the house bill and senate amendment and modifications committed to conference, messrs. mica, petri, duncan of tennessee, graves of missouri, shuster, mrs. smith, messrs. cravat, rahall, defazio, costello, boswell and carnahan. from the committee on science, space, and technology for consideration of sections 102, 105, 201, 202, 204, 208, 209, 212, 220, 321, 324, 326, 812 title 10 and title 13 of the house bill and sections 102, 103, 106, 216, 301, 302, 309, 320, 327, title 6 and section

732 of the senate amendment and modifications committed to conference, messrs. hall, palazzo, and ms. eddie bernice johnson of texas. from the committee on ways and means for consideration of title 11 of the house bill and titles 8 and 11 of the senate amendment and modifications committed to conference, messrs. camp, tiberi, and levin. the speaker pro tempore: pursuant to clause 12-a of rule 1, the house will stand in recess subject to the call of the chair.

>> the bomb says it won't implement that portion of the law due to a lack of funding but debate on that will get under way this afternoon. votes this house this evening at 6:30. we'll have live coverage on c-span. also this evening florida voters heading to the bowls today and they'll begin to close at about 7:00 eastern, and we will have our coverage starting on c-span2 at 8:00. we'll have the results for you obviously and also speeches from the victor tonight and also concession speeches as well. that's all of that is on c-span2 and on c-span radio. with just a few minutes ago majority leader -- house majority leader eric cantor wrapped up a news conference just outside the capitol brief news conference talking about what's known as the stock act, a bill that the senate's working on, their version of it, which would make it illegal for members of congress to trade stocks based on nonpublic

information. majority leader cantor looking to apply that to the executive branch in the house version. here's what he had to say. >> good afternoon, i guess outside day, in january. who would have thought? there's been a lot of talk about fairness over the last several months, certainly political campaign heats up, and i can tell you there is a sense among people in this country that they don't have a fair shot when they see things that have transpired whether with their investments in the financial services community, at all levels of government, beginning to hear stories about potential conflict of interest on the part of the people that they elect to represent them. that's why i'm here today is to say, it is unacceptable for

anyone, any member of congress, anybody affiliated with this level of government or any other, to profit from insider information or from information that is not available to the public. period. and people of this country, because there is this sense out there of untoward behavior, people of this country need to know that members of congress are living under the same rules that they are. i am glad to see that the senate is taking up the stock act. i hope that they will take the opportunity this week to strengthen the bill, to expand the bill, and to make sure it works. depending on what the senate does, if the senate produces a bill that we believe is strengthened and something that is workable, that certainly will be something well received by the house. if it does not, it is my intention to move a bill to

bring a bill to the floor in february that does accomplish the goal of ensuring the public that they have can have confidence that their elected representatives and their voices in washington are not using their positions to personally profit. so with that i'll be glad to answer some questions. >> can you go through how you think the legislation will be defended? >> sure. i can tell you, first off the bill does not adequately cover those connected with the federal government in the executive branch that are in positions with access and are privy to information that could be used to personally benefit those individuals. so we are looking at ways that hopefully the senate can work on that language, strength yen -- strengthen the language so the same rules apply to the executive branch personnel that

have access to that type of information. >> what do you say to the symbolic vote that members already took -- [inaudible] >> i have begun to read the book that i think gave rise to some of the broadcast on this issue. and certainly i think that there is activity that exists that could certainly be characterized in a negative light and lend itself to the public's believing that their elected representatives are operating in a way that benefit themselves. so if that's the case, i think we need to make darn sure that people across this country know that members of congress and others are not using

information that they gained because of their position for personal gain. again that's what i would say to the people who may say this is not a necessary vote. then let's make it clear. let's make it the law that there will be and is no insider trading going on or trading on information for personal gain. >> some people say we have ethics rules. what about that gray area where someone has this information because they follow things around here and they say that bill is probably going to move, that bill is not, that amendment won't make it. not proprietary information. are you concerned about that gray area and opening up a can of worms? >> i think that the senate bill if you look at the manager's amendment, the language in the manager's amendment, it does speak to the potential misuse of that kind of information, untored activity on the part of not members of congress but others that are in the sort of business of monitoring

washington. i think that in advocating a -- in putting forth a directive to get underneath that kind of activity to really begin to determine what it is is something that is helpful. all this should be geared to ensure the public that the trust they put in washington is not being identify violated. >> why not ban all trading on the market? why not have a bill that prohibits members from dealing in stocks? >> one of the things, dave, is to make sure that the public is aware of what goes on. and if you read some of these books and the one in particular, it talks about the lack of timeliness of disclosure. i have always been one for whatever the subject is is to make sure the public is enjoying its right to know. and if you've got to wait a year to know what your elected representatives are doing from financial transactions standpoint, i don't think that that is a timely enough

schedule for the members of the public to realize that right to know. thank you very much. >> why now? [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> meanwhile over in the senate they are back to work on the stock act. a bill that would make it illegal for members of congress to trade stocks based on nonpublic information. they just gaveled back in for the afternoon. you can watch the senate live on c-span2. meanwhile, the senate banking committee met this morning. they heard from richard cordray who says he believes in the

validity of the recess appointment as director of the consumer protection bureau. in their first semiannual property to congress, they say they have received more than 13,000 complaints over the last six months related to mortgages, credit cards, and other financial products. he previously served as ohio attorney general. the hearing from this morning is an hour and 50 minutes.

>> good morning. i call this hearing to order. before we begin, i'd like to send my best wishes to senator mark kirk for a speedy recovery. senator kirk is a valued member of this committee and he is a

ranking member of the milcon-v subcommittee and appropriations which i chair. i have no doubt that with his strong will and determination he will be back at work as soon as humanly possible. our thoughts and prayers are with him and i look forward to his return. today marks a first banking committee hearing of the year. i am confident that we will have another productive year in the committee as we build on the foundation set in the first session. our committee tackled an aggressive agenda last year and i thank all of my colleagues for their contributions. in 2011 we held 72 public hearings and executive sessions, including 60 oversight hearings. of those, 26 were subcommittee

hearings, and i want to commend each of our subcommittee chairs and ranking members for their leadership. initially we held over 70 bipartisan staff briefings. i'm proud to say that we were successful at finding bipartisan positions more than a few times of the the committee reported out favorably 26 nominations with the you will full senate confirmed 17 of those nominees. we were also unanimously approved two long-term re-authorizations for the national flood insurance program and for the charter at the expert-import bank of the united states. senator shelly, i would like especially to thank you for working with me last year to plan bipartisan hearings to lay the foundations together for

housing finance reform. i'm hopeful in 2012 we can continue to work across the aisle and i am encouraged by the partisan markup scheduled for later this week. on thursday i expect this committee to approve bipartisan bills re-authorization and national transit programs and increasing sanctions on iran. looking ahead to the rest of the year, my priorities will be to oversee implementations of the wells spring to continue building consensus on housing reform and look out for the interest of rural areas and the smaller financial institutions that serve them that threaten national security, to act an the president's nominees and pass critical programs'

re-authorizations. the committee will also continue to closely monitor the situation in europe as well as explore new issues such as the development of level payments. in the coming weeks we'll take a closer look at the state of the housing market, examine some of the proposals for addressing housing stock surplus, and hear from the federal reserve on the upcoming monetary policy report. based on the bipartisan successes we had last year and the continued economic challenges that face our country, i remain optimistic we'll find common ground again this year. let me turn to an issue we should all agree on. how well the consumer financial

protection bureau has felt on its mission. i would like to welcome richard cardray, the newly appointed director to the committee, to provide testimony in the bureau's first semiannual report to congress. i would remind my colleagues that we are not here today to debate his appointment. our job is to roll up our sleeves and provide meaningful oversight of the bureau to make sure it is doing its job of protecting consumers and fostering an open and efficient consumer financial marketplace. the act gave this committee an important tool to help ensure that the bureau is a credible to american consumers. by requiring the director to report to this committee at least two times a year. it is our job to help make sure

that the agency is doing its job effectively and efficiently. so to my colleagues that don't believe that the consumer bureau is credible, i point out the simple fact that it is and that is why we are here today. mr. cardray, i know you share my strong commitment to transparency of the consumer bureau. in fact, this is the 13th time since it became law that a bureau employee has appeared before our committee of congress. and your agency's operation at that stakeholders and rule making process has been applauded across the board. it has been six months since the consumer bureau officially opened for business, and only four weeks since it acquired all of its powers.

yet in that short time bureau employees have been hard at work. they have finalized the role on consumer remittances and are currently looking at 20 proposals. they have to work on the programs which were meant to simplify mortgage and credit card disclosures. they are developing a certain loan work sheet to help citizens and their families shop loans. they have also rolled out supervisory and examination programs launched depository institutions, and nondepository institutions. mr. card ray -- cardray, we look forward to hearing from you in greater detail about this ongoing work. recently you made comments about the cfpb's role in

reducing regulatory burden on small community banks and credit unions. this is an important issue to the consumers and institutions in my state of south dakota. i'm interested to hear more about the bureau's plan to ensure that in rule making the right balance is struck between consistent protections for consumers and regulations for small institutions. finally, i would like to hear about two areas that the committee reviewed last fall. consumer protections for service members and older americans. although you and your staff of the consumer bureau are faced with the difficult task, i have confidence that you are all up to the challenge. i look forward to your testimony in working with you to enhance our consumer financial markets. now i turn to ranking member

shelby for his statement. >> thank you, mr. chairman. today the committee will hear from richard cordray, the director of the consume of financial protection. since the bureau was first proposed i expressed my grave concerns about its lack of accountability. i did not think then and i still maintain that it is inconsistent with our constitutional values to have so much power vested in the hands of one bureaucrat without adequate supervision about the elected representatives of the american people. nevertheless, the dodd-frank act intentionally designed the bureau to be free of even of most basic checks and balances. unfortunately the president has now circumvented one of the only remaining checks with this recess appointment of mr. cordray. i suspect the supreme court will ultimately decide the constitutionality of the president's action. until then, he's indicated that he will exercise the full authorities of the bureau.

because of the structure of the bureau, this means that he will have unfettered power over the operation of the bureau. his decisions alone will determine how the bureau approaches its work. if he so chooses, he does not have to answer to anyone. this is not a choice any bureaucrat should have. since his appointment, he has indicated that he intends to proceed cautiously and prudently when he exercises his authority. the real test, however, will be whether this caution finds its way into the bureau's actions. unfortunately, the bureau's early history is not encouraging. over the past year, actions taken by the bureau have repeatedly been inconsistent with the promise of its leaders. for example, under dodd-frank, the bureau is required to convene panels of small businesses to discuss the impact of proposed regulations. he himself has stated that the

bureau would convene these small business panels and i quote, not just because the it tells us to do so but because we recognize it will help us do our work better. since its inception, however, the bureau has yet to convene a single small business panel despite having issued multiple rules. moreover, the bureau has indicated it has no plans to convene these panels for some of its most important rule makings, including rules on mortgage, underwriting standards. officials at the bureau have said that it will comply with the administrative procedures act. they have even pointed to the a.p.a. as one of the checks on the authority. yet the bureau has repeatedly evaded the intent of the a.p.a. by issuing interim final rules without asking for public comment before the rules become effective. consequently, the bureau has been able to impose costly regulations on the american

economy without providing the american people with any opportunity for comment. listening to the rhetoric coming from the bureau's leadership, one would think that the bureau would have gone out of its way to actively seek public comment on its rules. in its speech last year, the cure row's deputy director outlined how the bureau would approach its work, he stated, and i quote, the bureau will invite public input to provide a fact-base to help the bureau evaluate the cost, benefits, and impacts of those rules, and to suggest alternatives. those were his words. he also stressed that the bureau was, quote, going to be fact-based, pragmatic, and deliberative. the bureau's recent rule making process suggests that they like to give the appearance of listening to the public but believe the bureau knows what is best without much public interference.

moreover, it suggests that the bureau's own agenda will not be impeded by procedures or the need to collect facts and public comments. the bureau's recent rule on recommitance transfers provides another example of the die version between the bureau's rhetoric and actual operation. the leadership of the bureau has said that it will seek, quote, to make regulations more effective at achieving intended benefits for consumers while lowering costs for lenders. the bureau's remittance transfer rule suggests that lowering costs is not high on its priorities. the primary purpose of the rule is to lower the cost of remittances. yet the bureau's own analysis revials that compliance with its rule will require more than 7.6 million hours. that means that more than 3,800 full-time employees will be required to work on compliance for this single rule. so rather than conduct the cost

benefit analysis to determine if this rule is justified, the bureau has indicated that it will impose the rule and examine its impact after the fact. ironically, we were told that the bureau would be data driven via data driven agency where research was there for its work. in contrast, it is suggested that when it comes to basing its rules on a thorough examination of facts and data, the bureau isn't all that interested in living up to its own rhetoric. early last year, 44 of my colleagues and i sent a letter to the president stating that we would refrain from considering the nomination of any person to be the bureau's first director until certain changes were made to the bureau's structure, not its authorities. during the september hearing on his nomination, here, i stated that i believe that these changes would help to preserve the system of checks and

balances embodied in our constitution. his recess appointment has shown that the president is not interested in any constitutional checks on his power. my democratic colleagues seem to share the same opinion. the bureau is budgeted to receive a total of $329 million in funds from the federal reserve board this year. this could grow to well over half a billion dollars as early as next year. so by design these payments were made directly to the bureau without any oversight through any congressional appropriations process. it's also my understanding the bureau has already hired 800 people and it has been reported that the bureau hopes to hire as many as 1,000 people by the end of this year. some making more than 225,000 a year. how have my democratic colleagues in the senate responded to this incredible bureaucratic expansion?

they have resisted. every republican effort to make the bureau a more accountable to the american people by changing its structure. to make things worse, they have also cut this committee's funding. this committee, by 25%, making it even more difficult to oversee these massive bureaucracy that are growing in power and size under dodd-frank. as i said many times, things are not getting better, just bigger and more unaccountable. in fact, our financial regulators have become bureaucracies that are now too big to oversee and it's only getting worse under the democratic rule. our financial regulators now resemble the financial firms they were created to regulate. the consumer by row is the most recent iteration of the same problem. it tells the public one thing but delivers another. it evades the law by relying on tentities and small print. it ignores consumers while advancing its own special interest. and it operates behind the facade of accountable when in

fact exercises unchecked power in the marketplace. just as financial firms need to be held accountable, so do financial regulators. i believe that the bureau's shore history has only made the case of reform even more compelling. thank you, mr. chairman. >> thank you, smart shelby. are there any other members to which to -- who wish to make a brief opening statement? thank you all. i want to remind my colleagues that the record will be opened for the next seven days for opening statements and any material you would like to submit. with that, mr. cardray, you may proceed with your testimony. >> thank you, mr. chairman. ranking member shelby, and members of the committee. we want to thank you for this

opportunity to present the first semiannual report of the consumer financial protection bureau detailing the bureau's work in its first six months. before i became director, i promised members of congress in both chambers and both sides of the aisle, including a number of you, that i would be accountable to you for how the consumer bureau carries out the laws you have enacted. i said that i would always welcome your thoughts about our work. i stand by that commitment today. i'm pleased to be here to tell you about our work and answer your questions. the people who work at the consumer bureau are always happy to discuss our work with the congress. this is the 13th time we have testified before either the house or the senate. and my colleagues and i look forward to working closely with you with the businesses who serve our customers and consumer financial markets and hundreds of millions of american consumers themselves. i'm honored to serve as the first director of the new consumer bureau. i'm energized and inspired by the many talented people who

work at the bureau and i'm driven by the challenges and responsibilities of our mission to protect american consumers. our mission is of critical importance to making life better for americans. consumer finance is a big part of all our lives. mortgages allow people to buy a home and spread the payments over many years. student loans give young people with talent and ambition the opportunity to get an education. credit cards give us immediate and convenient access to money when we need it. these products enable people to achieve their dreams. but as we have all seen in recent years, they can also create dangers and pitfalls if they are misused or not properly understood. during my years in state and local government, i became deeply engaged in consumer finance issues. i saw good people struggling with debt they could not afford. sometimes those people made bad decisions they came to regret. sometimes an unexpected event like a loved one getting sick

or family member losing a job overwhelmed even their most careful planning. still other times i saw unscrupulous businesses who obscured the terms of loans or engaged in outright fraud. causing substantial harm to unsuspecting consumers, even ruining their lives and devastating their communities. i'm certain that each one of you hears every day from your friends, your neighbors, and your constituents who have these kinds of stories to tell. these people do not want or expect any special favors. they just ask for a fair shake. and a system of consumer finance that actually works for consumers. and a chance to get back on track toward the american dream. one of our primary objectives at the consumer bureau is make sure the costs and risks of finance products are made clear. people can make their own decisions and nobody can or should try to do that for them. but it is the american way for responsible businesses to be straightforward and up front

with their customers, giving them all the information they need to make informed decisions. that is good for honest businesses and it's good for our economy. a particular quote caught my eye recently which embodies this view. it goes, free men engaged in free enterprise build better nations with more and better goods and services icks, higher wages, and high standards of living for more people. but free enterprise is not a hunting license. that was governor ronald reagan in 1970. i agree with what he said and it's shared by the people who work with me at the consumer bureau. another key objective is making sure both banks and nonbank competitors receive the oversight necessary to promote a fair and open marketplace. our supervisers will be going on site to examine their books, ask tough questions, and fix the problems we uncover. under the laws enacted by congress and with the director now in place, we have the ability to make sure this is true across all financial products and services.

the consumer bureau will also make sure that violating the law has consequences. through our field examiners, direct contact with consumers and businesses, and our highly skilled researchers, we ever multiple channels to know the facts about what is happening in the marketplace. we plan to use all the tools available to us to ensure everyone respects and follows the rules of the road. where we can cooperate with the institutions to do that, we will. when necessary, however, we'll not hesitate to use enforcement actions to right a wrong. as we move forward with our work, we need to hear directly from the consumers we protect and the businesses who serve them. we do this on our website, consumerfinance.gov. where customers, consumers, and business can tell their stories. we make it a point to get out of washington regularly and hear from people firsthand. thus far we held town hall meetings in philadelphia, minneapolis, and cleveland, and field hearing in birmingham. we are hearing from thousands of americans about works and what doesn't. we are listening closely and we

hope many of you will join us at these events when we come to viss the your communities. accomplishing our mission will take time, but as you can see from our semiannual report, we are taking important steps to improve the lives of consumers. thank you, i look forward to your questions. >> thank you very much for your testimony. as we begin questions, i'll ask the clerk to put five minutes on the clock for each member and hopefully we will have two rounds. as director, you will be expected to be independent, exercise independent judgment and act independently from the white house and the treasury department. are you prepared to act independently and use your own judgment? >> mr. chairman, yes, i am. and, yes, we are. we understand that our role under the law is to be an independent federal agency and our job is to carry out the laws that congress has enacted

and protect consumers in the marketplace. we will, though, stand with public officials of both parties from all over the country, federal, state, and local, who want to work with us to protect consumers that will help us do our work. >> you have talked about reducing the regulatory burden on small community banks and credit unions. how will you ensure that the right balance is struck between consistent protections for consumers and your suggestion for regulation for small institutions in the consumer bureau's rule making? what other actions can the agency take to minimize the impact of regulations on these institutions without sacrificing protections for consumers? >> thank you for raising that issue, mr. chairman. many people raise that with us, many of the members of this panel have raised that with us. first of all, i can say that i have made a promise openly at

this committee hearing when i was up on my nomination that we would work to reduce the burdens of our work on community banks and credit unions who i firmly believe and have said before and will say constantly had very little to do, nothing really to do, with bringing on the financial crisis. and have a traditional model of doing business that is customer service oriented, is community oriented, an is the kind of model we want to encourage in this marketplace. i have told the community banks that i'm going to create a special advisory panel of community banks to speak directly to me and to the bureau about the work we are doing, to raise their concerns with us, and to inform us about how we are doing and what -- how what we are doing affects them. i have also pledged to do the same with the credit unions. we also are going to be mindful of that in each of our rule makings. the remittance rule, which was mentioned earlier, which we have finalized the beginnings of that rule, includes also a

proposed rule where we are considering further in seeking broad inputs on whether we should set a threshold for that rule so that community banks and credit unions below certain threshold can be free of its burdens, where the burdens really outweigh the benefits to their customers and institutions. so that's something we will continue to consider in that case offer the next several months. we are going to take a similar proach wherever it's feasible, makes sense to do so in consultation with the community banks and credit unions. >> the g.e.o. released its annual financial audit of the consumer bureau's fiscal year 2011 financial statements. the g.e.o. gave the cfpb a clean audit, the highest rating that not every agency receives. what steps will you take, director cordray, to ensure the bureau continues to lead by example with its own finances?

>> mr. chairman, we were gratified to get a clean audit and a strong audit from the g.a.o. as you know, we are subject to multiple audits per year and also to oversight by the inspector general of the federal reserve. as a public official, it has always been important to me personally that we be able to show a strong record of audits in my offices as a county treasurer, as a state treasure, as a state attorney general. in each of those offers i inherited problems in the prior audits that we cleaned up and we had clean audits during my time there. i expect an intend and it's important to me personally to try to maintain a similar record here in this federal agency. >> how will your recess appointment impact the work of the consumer bureau? >> i don't know that it will impact it at all, sir. i understand that i have been appointed as director. that gives me responsibilities under the law to carry out both

myself and the bureau. it feels that my legal responsibility is to do the best job i can at that. and that's what i'm totally focused on doing. >> is an important part of the consumer bureau's authority. it should provide consistent protections for consumers and regulations for all institutions that offer similar products. many people are waiting for the rule. that rule will also provide businesses which will now be regulated by the consumer bureau with some legal certainty. when will the rule be finalized? >> the larger participant rule will be finalized on the statutory time frame which is by this summer. we are under way i believe we

have already put out a notice where we have asked for comment and we have received many comments already on what we might propose as that rule. we will be bringing out the proposed rule soon. it will be subject to the notice and comment process and we will transnorment that -- transform that into a final rule on the statutory deadline we have been given by the congress. >> senator shelby. >> thank you mr. chairman. mr. cordray, as i noted in my opening statement recreptly you stated that the bureau will convene small business panels as part of its rule making. and your quote is not just because the law tells us to do so, but because we recognize it will help us do our work better. it's a good quote. however the bureau did not convene a panel before publishing the final rule on remittance transfers. i understand that you believe you are not legally required to

hold panels for this rule because the federal reserve board proposed the rule but the intent of congress was, i thought, was pretty clear regarding the potential effects of your rules on small, medium-sized businesses. i'm concerned that you have already displayed a propensity, perhaps to use technicalities to achieve your own goals. perhaps i'm wrong. could you explain your actions or the actions of the bureau? i know you haven't been there long, regarding the small business panels and your intentions in the future? we think that's important to comply with the letter and the spirit of the law. >> yes, senator. i agree. and let me clear up the record on that. appreciate the opportunity to do so. as i said the small business panels i meant it then and mean it now are both required by the law except in certain instances, and they will help us do our work better. with respect to the remittance rule, that was a rule that was

proposed by the federal reserve before we became a bureau. we inherited the rule and took it through to completion. in the law, the timing that congress created on small business panels that they are to be convened and we are to get their input prior to proposing a rule. so for the remittance rule, that time had passed before we gained any authority over that rule. what we did do was we solicited broad input from all comers, including small businesses and others, and we took that into account in proposing the final rule, which has been adopted, and in further proposing the rule i mentioned a moment ago, which is to set a threshold below which we may well find it appropriate to exempt smaller institutions entirely from the busheds of that, that's -- burdens of that. that's appropriate. we do intend with our next rule, which is the consolidation of the forms on the mortgages to convene small

business panels. in fact, that is under way now. the process for doing that. and we will do it as the law first in every instance. again, not just because the law tells us to but because it's a good idea. >> would you look at the possibility of revisitting it if you thought it was necessary or other people thought it was necessary the rule that you just passed regarding remittances? i don't know the details of it. i know it's going to cost a lot of money to comply with. >> it's a, i guess, needs to be put in perspective. our understanding it will cost a quarter for every $100 of remittance transfers. it is -- >> saying 25 cents. not a quarter of the $100. but 25 cents. >> 25 cents per 100 dollars. or quarter cent per dollar. it's a price to pay but a small price for the fact there's never been consumers protections for people who sent

money overseas often to loved ones and family members where they couldn't tell who was received. it was on them to have to take the burden of any errors made. these people deserve consumer protections. >> i want to get in the area of safety and soundness in the federal deposit insurance corporation. the dodd-frank act does not require you, as director, to consider the safety and soundness of institutions or the potential for bank failures when you engage in rule making, supervisory, or enforcement actions. in fact, the drafters of dodd-frank were adamant about this. they argued that a safety and soundness check on your actions would see lentionly ooshoosh would essentially, quote, gut your agency. you stated that the federal banging regulators, i'll quote you again, have safety and soundness as their primary concern. we have consumer protection as our primary concern. how do you intend to reconcile your actions at the bureau

where i presume you won't give no consideration to the safety and soundness of institutions? with your responsibilities as a board member of the fdic where there you must consider the safety and soundness of individual and institutions. it looks to me like it should be a balance there. because safety and soundness is important, but so is consumer protection. both. i don't think you have one without the other. if you don't have safety and soundness, you might not have an institution. you won't have. >> i agree with that, senator. i think it is a balance. what i said was their primary responsibility of safety and soundness, our primary responsibility is consumer protection. i think it would be highly irresponsible if we were to pay no attention to safety and soundness. we are going to be consulting and coordinating with the other banking agencies at all times. that's why i believe congress put us on the financial stability oversight council to work with them. i agree with you. it would be irresponsible to think you can protect consumers while you're killing off

institutions that are serving consumers. that does not fit together. >> there's got to be a balance. >> i agree. >> you are going to try to have a balance? >> and we will do that by listening closely to our fellow banking agencies who have that as their primary mission. i serve on the board with them. yes, we will. >> the area of too big to fail, very important to a lot of us. and i hope to you. during the senate's consideration of the dodd-frank act, it voted down an amendment by senators brown and coffman, which would limited the size of banks. under the amendment no bank would have been permitted to hold more than 10% of the total amount of insured deposits. and a limit would have been placed on nondeposit liabilities of each bank at 2% of g.d.p. this amendment would have ensured that the failure ofal single financial institution would not bring down the entire system. i supported the amendment. do you support limiting the

size of banks as proposed by the brown-coffman amendment? if not, what steps would you take to ensure that banks are not too big to fail? >> senator, my understanding of our authority at the consumer bureau is we do not have any authority over those issues. we do not have any authority to limit the size of banks. we don't have any authority to set interest rates or the price of financial products. i don't know -- >> it's not on -- >> i am on the fsop. >> that is a consideration too big to fail. so you do have some -- maybe not the bureau, but because of your other placement of where you serve, right? >> yeah. fair enough. i would say just to be honest with you, sir, i don't know that i have enough perspective at this point to assess the pros and cons of that amendment. >> dr. volcker stated here before, perhaps if they are too big to fail, they are too big

to exist, maybe. you got to think about the taxpayer. thank you, mr. chairman. >> senator, menendez. >> thank you, mr. chairman. for calling this hearing. the worst financial crisis in generations consumers were not protected from the traps and federal regulators were often more concerned about the interests of wall street than main street. and we now have an obligation to hold both wall street and nonwall street lenders and providers of financial services accountable for whether they treat consumers fairly. and it could be done by laying down clear rules of the road. so that's why i look forward to your work at the agency. let me ask you a couple of specific questions. i want to ask you about prepaid

cards, something that i have been pursuing for such -- for a while now. a product whose use has exploded in the past few years, especially among under advantaged consumers. since credit cards, debit cards, and gift cards have been regulated to some degree, prepaid cards remain one of the few largely unregulated products in the marketplace. and as for the fees consumers pay on them, there are a wide range of undisclosed and i believe in many cases unreasonable fees and they certainly don't come with fdic insurance or protection against theft or loss for the consumer. so we have introduced legislation, the prepaid card consumer protection act. what progress has the bureau made in analyzing this issue and moving forward on consumer protections on these cards?

>> let me say a couple things in response to that, senator. we appreciate your particular interest in this subject and the legislation you have introduced on the concerns you raised both disclosures and transparency on this product and also protections for the money that people have in effect on deposit with the product as opposed to with the banking institution. there are two phenomena at work here. number one, prepaid cards are an example of the tremendous innovation that occurs all the time in the financial markets. just in my generation when i was a kid credit cards were new and exotic. now they are almost universal in our economy. . debit cards are now widespread and in common use. prepared cards are one of the newest products but also on the cutting edge of finance, more and more people are beginning to use them so we need to look and make sure there are appropriate protection for

consumers there. sometimes it takes the law and the regulatory scheme time to catch up with innovations. i'd also say it's reflective of the fact that regulation can push usage around in the market. as you said, there's now protections and constraints on credit cards and new ones recently on debit cards that is pushing the market toward prepared cards which are not subject to that. products are offered to consumers not some sort there is differential regulatory scheme. >> when you see a regulatory process that goes regulated an unregulated is because it's profitable. the circumstances which that profitability is achieved it is at the expense of the consumers in a disproportionate fashion. is this an area the bureau will be looking at? >> yes, it is an area we are looking at.

it's an area of concern for both the reasons i stated. we are aware that the congress is looking at it and a few who legislate on the subject will carry out the laws as you enact them. >> you mentioned in your opening statement about simplified rulemaking particularly for smaller institutions. that's something i think that is welcome to a lot of members' ears. can you tell the committee how your agency will craft regulations and provide regulatory guide abc in a way that makes -- guidance in a way that makes nonsmall deposit regulated entities? >> sure. and i'll say two things about the work we're already doing. we are trying to be highly inclusive in going about this. it was mentioned earlier that maybe the bureau has given the impression some thought that we know best. what we find is we will know better as we hear from others, both the people who operate in these markets, the financial institutions themselves, and the consumers who tell us about

impact. so the know before you owe impact allows us to streamline, simplify and render more transparent the kind of disclosures here. we've already published a public federal register notice asking people broadly for their ideas about how we can streamline those rules, cut down burdens that all right delivering benefits to consumers and we'll have comments back sometime later next month. and then we're going to set to work at seeing what we can show people that we can streamline rules and be an agency that is mindful on the burdens of financial institutions as well as delivering value to consumers. >> if i can ask one more question. one of your mandates is to facile fate innovation through transparency, and after 100 million adults cannot find $2,000 in emergency if given 30 days to do so, has the bureau

or does the bureau intend to look into how to meet the credit need of those very large and undeserved population? >> yes, senator. we actually started -- we had a field hearing in birmingham a couple weeks ago which was our first beginning look at the market where it is clear in this country, as you say, there is a clear consumer demand for short-term small-dollar loans to help people get through crises where they don't have a stash of money or have a friendly relative who's willing to pony up that money for them. there are a number of products out there that are serving that need. we want to make sure that those products are actually helping consumers rather than harming them. it is a problem that has been unsolved in this country, i believe, is there is this demand. we need to fulfill this demand, and we need to spur competition to fill that demand, and that's something we're thinking about

very carefully. we don't have all the answers on it frankly, but over time we are going to be trying to figure it out working with industry and consumers to understand. >> we look forward to working with you. thank you, mr. chairman. >> senator corker. >> thank you for having the hearing. mr. cordray, thank you for coming. i appreciate the time you spent with us in our office and on the phone and the conversations that we had. the title of the hearing is interesting, holding the cfpb accountable. in this role -- am i still here? who is it exactly that you do report to? >> well, i would say that we are on the same level with every other independent federal agency in the federal government and particularly with the other banking agencies. ultimately in my view we report to congress. you're the ones who -- >> but who exactly do you

report to really? i mean, there's no board or anything. who do you report to? >> in my view i report to congress. i was in the house oversight committee to report to them at their request. i am here in front of your panel at your request. i'll be here as often as you'll be or meeting privately so you know exactly what we're doing and you have input into what we're doing. >> and each year when your agency needs funding and kinds of questions, like our chairman asked, about being efficient and all that stuff, who is it that you seek those appropriations from each year? >> well, under our law, which is what gives us authority congress enacted we follow, we receive funds from the federal reserve. >> so no one? >> we'ri quiff lent to all the other banking agencies who do not go through the congressional appropriation process, but we're subject to being brought up here and having you grill us and talk to us about exactly your thoughts

about how we're spending money. >> let me ask you a question. regardless of how people feel about the health care legislation that passed, i don't think there's any question but yet some of the constitutional challenges that are going to the supreme court have sort of muddied the water irregardless how you feel about it states are not sure exactly what they're going to do. have y'all had conversations, especially over the last couple of weeks within the agency about the fact that there's no question that most of the rulemaking that you do or meant much of willing challenged constitutionally because of the way things have occurred that have nothing to do with you but they just occurred? have y'all had any conversations regarding that whatsoever? >> we have had consideration of it. i've been thinking about it myself. it feels to me that i've been appointed as director. i understand there are concerns and issues people have about that. having by appointed as

director, though, i have legal responsibilities under the law that you all enacted that i have to carry out. i am going to do that. i am going to do the best i can with that. >> i understand that and i appreciate that. i appreciate the way you answered many of the questions today. but what i think you've said is you have had internal conversations with your staff as rules are made there's no question there's going to be constitutional challenges to those which in many ways instead of creating predictability out of the consumer market and out of predict ict out of the consumer market there will be challenges i predict many will rise to the level of the highest court in the land. so it's an interesting place that you find yourself, again, not of your choosing. let me ask you this, moving on to policies -- risk-based pricing is something that's been very much a part of our financial system. those people who pay late pay more and those people who pay

on time typically get credit at lesser rates. we had conversations with someone who was going to be potentially in your position prior to moving on to senate races and those kinds of things and it appeared to us that they didn't really believe in risk-based pricing. i was wondering if you could really clearly state to us when people pay late, when they have a lesser credit do they pay more for credit? is that a concept you are going to reinforce in the consumer agency? >> senator, i believe that's the way the market works. i mean, when you price a product you have to take into account costs. one of the costs that you have to take account is risks of default, risks of loss. they can come from many different sources, not just the fact that someone on the other end of the bargain doesn't follow through. but that certainly is something i think any responsible businessman would have to take account in pricing their product. >> i notice that you send out emails.

i get them regarding if i heard any stories about things that have happened. please share them when somebody's been -- had problems. by the way, i hope we have a consumer leader like yourself that will do those kinds of things. i think all of us want to ensure if we have bad actors, and we do. we have bad actors from time to time that need to be prosecuted. are you also with equal vengeance, though, sending out those emails to people who know borrowers who committed fraud, who purposely, you know, turned into the wrong income statements and those kinds of things, are you going to be rooting that kind of activity also? >> well, we don't ourselves have criminal authority, as you know, but we can make referrals. over the years when i was attorney general and at the local level i saw bad conduct by some businesses and i saw bad conduct by some individuals and consumers. and in the real estate market

the flipping and other types of scams and frauds involved, you know, both types of parties. >> so you're going to pursue both? i haven't received any of those emails, by the way, but i look forward to seeing them. i just close with this -- you know, both chairman and ranking member brought up issues of cost. i do hope -- i think one of the concerns that people have with the agency being set up as it was and not being concerned about the financial system itself, i do hope you'll pursue the aggregate cost of credit. i spent my life -- i spent my civic life prior to being here focusing my issues on to low-income citizens. that's why i am in the senate today. i find out a lot of times when we think we are doing good in terms of credit what we actually do is limit credit for people who are less fortunate and have lower incomes, and i hope as you look at this you'll take that into conversation, the aggregate cost of credit in

general, especially those at the lower income and i thank you for your service. >> senator akaka. >> thank you very much. good morning, mr. cordray. welcome to the committee. >> thank you. >> for the first time in history we have an agency with the singular consolidated mission to provide a voice for the consumers of our country, to protect consumers from the predatory lending practices that contributed to the economic crisis from which we are still recovering and to empower and educate consumers to make informed financial decisions. mr. cordray, i am very pleased to welcome you here to this hearing and i'm confident that you will make the consumer financial protection bureau a strong defender for consumers.

so i look forward to working with you. some senators have expressed a view that eliminating the director of consumer financial protection bureau and creating a board instead would improve accountability. this promotes accountability, having a director, efficiency and effectiveness. the government accountability office has repeatedly emphasized the importance of focused sustained leadership to tackle complicated challenges. director cordray, can you describe in your view the bureau will be held accountable to the american people? >> thank you, senator.

i think we're held accountable in the law in a number of ways. i have said there are different bodies and independent agencies that are structured in different ways. some have a board. some have a board and a director. some have a director. there are examples of each and they often work well. i do think in our situation the law that we are carrying out provides for a single director. that means there's one person, in this case myself, who sits here and is responsible to you to answer your questions and if can't give you a satisfactory answer i am responsible to get that answer and bring it back to you. there's no passing the buck. there's no i'd like to say this but others might say something else and diffused responsibility so there is something to be said for that. but the accountability here as i said before i think lies from our bureau to congress. you're the ones who passed the laws that give us the only authority we have to do anything. you are -- we are responsible to you for how we carry out

those laws. you can bring us here to testify any time. you can have us come to meetings and brief your staff, as many of you have done, and we will listen closely to you and try to make sure you know exactly what you need to know about the work we're doing and have input into that work. >> director cordray, a government accountability office review of the financial -- federal financial literacy efforts received significant attention last year. however, contrary to media's inaccurate reporting, g.a.o. did not find evidence of overlapping and duplication among the 56 programs and did not identify cost savings that would result from consolidating financial literacy programs. according to the g.a.o., this issue was examined by the previous administration which found that each program was

targeted to a specific audience such as students and veterans and carried out by an agency with expertise for a given topic. as a result, g.a.o. noted that fragmentation of financial literacy efforts makes coordination essential. specifically, g.a.o. recommended cfpb coordinate closely with treasury to clearly define financial literacy roles and activities to make the best use of resources. my question to you is -- what steps is the bureau taking to address this recommendation? >> it's a good question, senator. it's critically important there be coordination. the law has provided that there is the financial literacy council called fleck and set up the director of the consumer

bureau to be vice chair of it and working with other agencies. it goes beyond other agencies. there are a lot of nonprofits. there are private sector banks and others who provide financial literacy efforts. there is no need for us to reinvent the wheel. when we worked for financial education in our schools in ohio and eventually got law passed that changed so every high school student in ohio now has to have personal financial education before they can graduate, i think that's a good model for the nation. but there's lots of curriculum. there's lots of material out there. a lot of it is very good material. and if we coordinate with one another we can -- we can save resources and be more effective and more efficient. that's what i think the financial literacy council is sfwending to do and that will be my -- intending to do and that will be my approach to it as vie chair. >> thank you. thank you very much. >> senator johanns. >> thank you very much. mr. cordray, thank you for being with us today. today i want to visit with you

about some thoughts i have about your appointment. not necessarily to revisit that and stir that up, because i think that's going to happen. i think there's going to be litigation that will make that happen. but in my mind, your being here today raises some very fundamental questions about the constitution, about the interrelationship of the president with congress and ultimately at the end of the day the extent of your power in this position. now, my views on this are not isolated views. let me, if i might, reference some people who served as united states senators, some

whom i have great respect for. then senator barack obama, when a recess appointment came out of the bush administration, referred to recess appointments as the wrong thing to do. he referred to a recess appointee, not necessarily that specific appointee, but a recess appointee as damaged goods. that's his words. and then he referred to the situation the country would find itself in and he said, "we will have less credibility" because of that recessed appointment. the majority leader, minority leader at the time, described it as an end run around the senate and the constitution. called it an abuse of power. senator john kerry, again, a gentleman that i've worked with, have a lot of respect

for, referred to recess appointments as an abuse of power of the presidency. sometimes in this business there's a certain amount of political push and shove that goes on obviously. i don't think that's what they were talking about here. i think they were talking about genuine issues of constitutional power. now, in your case if we accept the premise of your validity in this position, then we accept the premise that our ability to offer advice and consent basically disappears because the president can determine when we're in recess and when we're not in recess. and just appoint whoever. and then we don't have a constitutional provision for advice and consent of the senate.

now, i've been through that process. i have a tremendous amount of respect for that process. i think i benefited greatly and i hope the country benefited greatly from me going through that process and seeking a vote in the senate and i had no idea when i started it whether i'd win or lose. now, there's even a greater challenge here. we took the opportunity to do some research, and there's not a lot of cases out there, as you might expect, on the issue of what impact does this have on your power. but back in 1989 when congress created the office of thrift supervision there was a challenge to the director, and i want to read something from you. judge lambirth, i think it was the u.s. district court for the u.s. district of columbia found

that the company that was raising the challenge, and i'm quoting here, was subject to regulation only by individuals with legal authority to act. then goes on to say, because the director was not properly appointed, he has no power -- he has no power or right to exercise the director's appointment powers than this court does. and then says, olympic has the ability to seek an injunction to restrain, to stop the director. so not only do we have this constitutional issue, which i think is fundamental to our power of advice and consent under the constitution, but if you are successfully challenged would you agree with me that your actions will be invalid during the time that you are in

this position? >> senator, i don't know that i believe that's a clear cut one way or the other. it is also not clear cut by any means that this is not a valid appointment. i believe it is. i have read the justice department's opinion, which i thought was persuasive. but in any event, i do take your point and your concern. i know you went through a confirmation process to become a cabinet officer. you appointed numerous people when you were governor who went through confirmation processes. you're very familiar with the process. as you now i was in this process, was nominated in july, came up, had a hearing here, met with many of you, had the opportunity to meet with you and ultimately went to a vote so i benefited by months of that experience and understanding over the course of it the value of hearing from

and having input from the senators who took the time to spend time with me and give me their views about my appropriate role. i have been appointed as director. there may be issues about that. i understand people have different points of view about that, but i now have legal obligations. i'm supposed to carry out for this bureau. i am going to do that. we are going to continue to walk straight ahead one step at a time trying to fulfill our legal responsibilities and that's -- that seems to me be the best i can do at this point. >> i've run out of time, but i'll wrap up with this -- i can't imagine how anybody could maintain under the circumstances that your appointment and your service is valid, and i can't imagine then based upon the precedent that i see how the actions you're taking will be upheld. and i think that's a very, very serious consequence for our nation. thank you, mr. chairman.

>> senator brown. >> thank you, mr. chairman. i just simply can't believe we are still having this debate. the job of richard cordray's job is so important. we know what all kinds of people said. the american financial services association, the trade group for consumer lenders says there's a recess activity by the cfpb that's very refreshing. they want to get it right. the american banker association said it was pretty good news. the independent bankers called the process for -- was refreshing. was clear, more to the point and a substantial improvement. the cfpb had its banks audited by g.a.o. which found their financial statements are fairly presented and all material respects. the acting comptroller of the currency, has said last week that some attempts the over-the-counter derivatives

market might be -- all of this speaks to the effective of this agency. the fact we're still having this debate -- and let's lay out facts before people continue here to play this inside baseball game the country simply doesn't care about, that president obama's overstepped his overreached. president bush made 171 recess appoint jd. president clinton made 170 recess appointments. president obama made his recess appointments in large part because one political party, the other political party has blocked time after time after time even bringing these to a vote. we weren't saying to our colleagues on the other slile vote for rich cordray -- side of the aisle vote for rich cordray, we said give him a vote. this is the first time in american history where a political party has blocked a

nominee simply because they don't like the agency. so if their precedence would -- if the other side would get their way on that and that precedent would stand, next time there's a commissioner appointed for the f.d.a. are we going to say we are not going to support, approve him until we can food safety laws? is that how we are going to operate this place? we can't operate this federal government when somebody says we won't confirm somebody because we don't like the agency over which he will minister or regulate. in the end we know that the other side was simply doing the bidding of wall street. that's what they've always done. that's what they're doing today. that's what they'll continue to do. but this agency has important work to do. you can see already their effectiveness when people whom you wouldn't -- from whom you wouldn't expect implements like that are saying those positive things. so let's put that aside and talk about rich cordray, what the consumer bureau can do,

when skip humphrey talked about what they're doing for seniors and holly petraeus steffed how we protect veterans. that's what we are here, to protect them against the kind of financial service abuses that too many veterans, too many seniors have been subjected to. in my last minute or so, i'd like to ask mr. cordray a question. every year i invite college presidents from around ohio, about 55 or 60 of them, two-year, five-year public schools to come to washington, we spend a day, day and a half talking about issues that affect them, whether it's their graduates finding jobs, whether it's student loans, whether it's affordability, generally, whether it's training, scientists, all the things that our college universities do so well. one of the issues we addressed recently is the rising cost and the strain lieutenant loans are putting on middle-class kids and works class kids that

graduate from college with far too much debt. that's why i had a student loan apple budsman office that was included in the cfpb. tell me what the bureau has done to address the rising level of educational debt in the country, what are your future plans as you begin to run this agency and figure out how to protect students in these kinds of situations. >> sure, senator. first off you are pleased to know we hired a terrific individual to serve as that private lending student ombudsman. the know before you owe project, we reached out to the department of education trying to work in partnership and we developed a student aid shopping sheet which is now being promoted around the country to simplify and clarify for young people and their families who very often it's the first time they've undertaken an obligation of this size and magnitude and

will be critical to the future of that child and their opportunities exactly what they're getting into, exactly what the terms of their loans would be, the repayment terms, their costs, the interest rates and the like and we are also working to further promote clarity around the repayment terms of student loans. we have a calculator tool on our website that people can use. young people who often don't appreciate the difference between federal student loans and private student loans don't understand the difference in terms. don't understand the timing in repayment. and we're going to look for more opportunities to try to positively affect this marketplace. it's too important for young people. you and i both know many young people who cannot get a college education or higher education. community college with vocational training if they didn't have help in loans and they can't get it from their family and they need to understand the choices they are making so they can make good

choices about nair future. and the bureau stands -- about their future and the bureau stands ready to make this clear and transparent for them. >> senator moran. >> mr. chairman, thank you very much. i had no intention of going down the path of your confirmation process except i'll respond to my colleague from ohio. whether or not mr. cordray was confirmed had no effect upon the consequences of dodd-frank to wall street and to suggest -- at least i had not confirmed mr. cordray because of my protection to wall street i find unfounded and i cannot find a constitutional issue about what article 2, section 2 of the united states constitution means when it says the president can make appointments when the senate is in recess. so that issue is certainly presents itself -- i don't

think it presents itself today. it has presented itself and will present itself in court. i didn't intend to use this hearing in order to rehash this issue. i want to respond to the gentleman from ohio to indicate i had simply disagree with his premise about those of us who found fault, not with mr. cordray, but with the confirmation or the lack of confirmation and the president's appointment. mr. cordray, you responded to chairman johnson about community banking and i appreciate hearing that. i would indicate to you in my short period of time as united states senator trying to get a regulatory environment in which community banks can lend money to credit worthy woreoers has been a cause of -- borrowers has been a cause of mine and the regulatory environment which they operate is oppressive and uncertain. so your suggestion about appointing an advisory group of community bankers of lenders to

advise you, i certainly don't disagree, would suggest that's valuable, but i'd only point out at every opportunity which i had to question witnesses from the o.t.c., the treasury department, the fdic, they've all done the same thing. they have those advisory committees and yet the growth and regulations continue and the sense of community bankers they are not understood still prevails. i don't discourage you from doing that but from my perspective understand that's probably not sufficient. it will depend upon your atude and approach. and in that -- your attitude and approach. and in that thing, community banks and lenders need clarity. not for their own sake but in my view to grow the economy. i think there is reluctance on the part of many small business

men and women to make decisions because they don't know what next is coming from washington, d.c., what the rules are going to be. and in regard to financial institutions, the phrases that have been around for a long time are pretty well understood -- unfair, deceptive. but to bankers, to us a new word called abusive. and my request of you is that before you find something to be an abusive action by any financial institution that you take the full steps of defining what the word abusive means beyond whatever my view, minor deaf nations, lack of substantive definition there is to that word in the drank -- dodd-frank legislation and ask that you have time for public comment. i've seen examples in just recent days in which financial regulators have determined a

practice until that point was never considered to be inappropriate but then go ahead and criticize a financial institution for that conduct. and so my request of you is to do what due process requires, if nothing else, fairness requires, define what abusive means before you find some practice to be abusive. >> so thank you, senator. we will be careful about that and to return to the issue of community banks and credit unions, i have a track record on this. i have was a state and local official in ohio. i worked with the community banks and credit unions in ohio. they know me well. they have spoken to the fact that they found me to be a pragmatic and listening person who was -- cared about and was mindful of their business model and how we can preserve it. i would say the thing that hurt the community banks as much as anything was not so much too much regulation of them as a complete and lack of regulation

of many of their competitors in the mortgage market who didn't adhere to the same standards. sometimes people would commend asking them for -- who would come in and asking them for a loan and they would go down the street and get a loan from someone who weans licensed, wasn't regulated and would sell it on to someone else. they would be right about the loan and it didn't matter and they lost market share to those people. our leveling the playing field between the banks and nonbanks and mortgage market in particular is very important to protect the community banks and credit unions. beyond that we will be, as i have said, we will be mindful of burdens we're imposing on them. we will listen closely to what they tell us about the effects on their operations and we will do our best to take account of that. but the other thing that hurt the community banks and credit unions as much as anything in my lifetime was the financial meltdown, the credit crunch that toppled the credit unions. if we could have headed that

off by a more sensible approach to these financial markets 10 years ago, community banks and credit unions could have thrived. their model to me is a winning model. it's a customer service model. it's one we want to preserve and encourage and that's my personal background and viewpoint on it. >> mr. cordray, thank you. it is what you point out is accurate and it is the community bankers who believe in most instances had nothing to do in causing the problem but yet are still in the bull's-eye for additional regulation. my time has expired. i'll indicate that i'm the ranking republican on the appropriations subcommittee for financial services where we have responsibility for determining, at least initially, the appropriation for the s.e.c., the cftc, the treasury department. while you are not subject to our subcommittee's jurisdiction, i can't speak for mr. durbin, i'll express a willingness to have conversations about the appropriations process through

the federal reserve and your funding if you're willing to visit with me. >> be glad to visit with you and glad to have our staff come and speak to your staff and make sure you know everything you need to know about what we're doing. >> mr. cordray, thank you. >> senator. >> thank you, mr. chair. i thought i'd focus on the remittance fee that has come up. it's not addressed in any detail in your report. i assume your report was covering through december 31 and the rule was completed in january. but i just want to state my understanding is when people seek to transfer money internationally this rule says they need to be told upfront how much money is actually going to arrive. no hidden fees. you see the full impact of the exchange rate that's being assigned to it. and in addition, if the money doesn't arrive or the money arrive is different than what the person was told, there is a

way to fix that. is that the essence of this rule? >> it is, senator. if i could say when you or i and i venture to say everyone sitting in this room, when we write a check or make a bank transfer or use a credit card, we are entitled to some basic consumer protections. we expect that. we rely on it and it's appropriate. in this market, though, for people who send money overseas, typically to loved ones, it's one of the most steadfast loyal acts i can imagine. people taking the little i have, dividing half of it and sending money back to mothers and fathers left behind. they're entitled to consumer protections too and that's what this rule embodies. >> i think this type of rule is compatible to a competitive marketplace. if i am sending money overseas and can't get the firm set of fees are i can't compare vendors and there is no rewards, predatory practices but with this rule it rewards the services to the economy. am i correct in that?

it empowers the consumer to shop between vendors. >> that's how i see it. that's how the bureau sees it. i believe that's how congress saw it which is why it required us to adopt a rule of this sort. >> i appreciate you have done so. i hope in your next six-month report we will see an evaluation of the implementation. if there are ways to make the enforcement to be more cost-effective, more efficient, certainly that will be appropriate. i was getting some numbers on the cost of a $200 transfer. estimates are that the cost ranges from 3% to 13%. that's a 10% spread. now, some of that may be a difference in destinations but some may be a difference in the embedded exchange rates and practices of the veppedors. certainly within that 10% spread, the quarter that you refer to, that is one quarter of 1% on a $100 transfer and may be a lower amount on a larger transfer since it's spread over the cost of

enforcement over larger sum, seems like -- it seems like a small price to pay for creating a competitive marketplace and ending predatory practice and creating fairness and if somebody just rips you off and never delivers the money, you have redress. it seems like a small price to pay for a fair and competitive marketplace that will produce all kinds of efficiencies and will offset that fee. >> that's the judgment i understand congress to have made. we are to carry out the law regardless. i do think that's right. as i said we are further proposing to see if there's an appropriate threshold we might set for community banks and credit unions that don't do these transactions in the normal course of business that won't be subject to the same burdens and we will be considering that over the next several months. >> when you speak of the same burdens are you speaking of the enforcement strategies, are you speaking of providing pricing

upfront, fair pricing so would that also disappear? >> that's something we're going to try to consider what an appropriate threshold would be. i think the protections for consumers, you know, the argument there they should be the same. but if there's very few transactions and plenty of other places consumers can go and we made it easier, as you say, for them to shop, which is very important in this market and as you say it's a not a transparent market, then we might be able to exempt some of the smallest institutions that don't need to do the same kind of compliance as large institutions have been doing very, very few transactions. >> well, i certainly applaud you for this rule, for fairness for american consumers and the fact that you're setting the rules to the road for an effective, competitive marketplace that is so important in our capitalist system. i do hope in the next six-month report we will see an analysis as you work to continue to make

it operate in the most effective manner. i wanted to turn to page 28 in your report where you mentioned that you -- the different between credit scores sold to consumers and those provided to lenders. this is a new issue to me, one i hadn't heard of. can you kind of summarize how this came to light and what is it, is it appropriate under the law? why is there a distinction, so forth? >> so in the law, which, of course, is the minority we have, there were two studies congress asked us to do by last summer. the first one had to do with remittance transfers and to what extent that information could be used to help create credit reports and credit scores for individuals who otherwise not have enough data for us to score them accurately. the other one was we were asked to issue a rorm on the sort of variations that people have seen but don't quite understand

among different types of credit scores. so for example, when you ask for your credit report and your credit score you may get one number from the credit reporting firm and yet when a banker, some financial institution asks for the same data to sort of judge what interest rate is appropriate to set for you they may get a sirch set of data or may be affected you made the request. there are lots of little things that we're not well understood that might affect us. >> i am going to cut you off here. i now recognize i am over my time. i'll read your report. i'll be understanding it. >> be happy to follow-up with you. >> senator shoumer. >> well, thank you, -- >> senator schumer. >> well, thank you, mr. chairman. i'm happy to see he's fulfilling his duties of this historic bureau, one that i and several members of the committee fought hard for and

will be the lasting legacies of dodd-frank with a real chance to directly impact the lives of virtually every person in america. and, mr. chairman, i can't help but note that we had a healthy attendance in committee this morning and a healthy debate with strong views on both sides of the aisle. i was heard there wanted to be a boycott on the hearing. several members were absent from the hearing but the plans of a mass protest appear not to have gone over with many members on both sides of the aisle, of course, including the other side, and that strikes me as a good thing. but also an admission that continuing to hold this nomination hostage until we agree to gut the bureau that we

just passed, notwithstanding a few of the comments, for instance, of my colleague from nebraska, means that my colleagues have dialed down some of their opposition on this issue. it's a losing fight politically for them. many on the other side wisely don't want to continue the fight because they know it's on the wrong side of consumers. and the bottom line is we need an agency to guard the rights of consumers. i learned over my years in trying to simply get credit card disclosure, even though the fed had the best of intentions, they were so busy with so many other things that they never got around to doing it. it took me 10 years to get disclosure. then it had all the intended effects of bringing interest rates down. and so i want to thank my colleagues, and he's not here now, but particularly my friend from tennessee. i read his comments last week suggesting that other members should give up on the idea of mass reprisals over the

installation of you, mr. cordray. mr. corker said, "i don't think anybody is going to consider that to be very -- a very astute and very tenlt thing to do," and i agree with my friend from tennessee and appreciate his remarks. we need to address these issues. the idea of how to protect consumers should be on the table. the only way is for mr. cordray to be in his position. the president had no choice because we can no longer have agencies close down not because people disagree with the views of the nominee or the ethics of the nominee or anything else but simply because they don't want the agency to exist or have any functioning and we know without a chair you couldn't do many of the things that we have to do in terms of issues like payday lenders and mortgage brokers and abusive credit card practices. so these are vital issues to the american people. it makes no sense for senators to go awol on these consumer

issues. i welcome the debate that we could have here. let's move on. there are -- mr. johanns is right. the courts will decide this. i believe they will decide that the agency is the right -- is constituted properly. i believe they will see when you just try to block a nominee for the sake of blocking a nominee, you don't get anything done. i hope we can end this idea of a boycott. i think the attempts to boycott by dugging opponents is losing steam and i hope we can get on with the debate. people are tired of obstructionism for the sake of obstructionism. and everyone on both sides of the aisle, no matter how strong their views, participated in this morning's hearings understand that. i hope as the year goes on we're able to convince our colleagues that it would be better to rejoin the debate on the playing field rather than just take their ball and go

home. particularly on such an important issue. so that was my statement. i appreciate your being here, mr. cordray, and look forwarded to working with you to bring consumers some rights. >> thank you, senator. >> senator haggan. >> thank you, mr. chairman. and welcome to the committee, mr. cordray, and i, too, am pliesed that you are with us today -- pleased that you are with us today. i wanted to ask about -- well, much of the debate over the ability to repay under dodd-frank seems to be if the mortgage is a rebuttal presumption. and the concerns expressed that a rebuttal presumption would have a legal standard that will result in overly cautious, underwriting and less consumer access to credit. can you share with me your views on the safe harbor rebuttal presumption? >> sure. so the ability to repay rule as you know and mentioned is one of the rules congress has

required us to adopt to try to fix what were seen as a regular problem in the mortgage market. i mean, you would think you wouldn't really need to have a rule where the lender pays attention to whether the borrower will be able to repay the loan before making a loan. but securitization practices and other things created misaligned incentives in that market so we are to adopt that rule. one of the issues we have heard maybe most about and maybe with respect to that rule thus far, and we aren't even to the proposed rule stage, although it is a rule we are going to be working on over the course of this year. we have a statutory deadline at the beginning of next year. it intersects with some other rules that agencies are writing so we know we need to move it along, and yet at the same time be careful. one of the things we heard most about from institutions is they would like to see this rule, whatever the criteria are, there be some sort of safe

harbor, that it wouldn't create litigation issues and issues for them as it relates to rebuttal presumption. people have taken their views on it. we received hundreds if not thousands of comments on already. we are going to be looking at it carefully and trying to weigh those issues. i don't have an outcome for you today. as i said, we don't even have a proposed rule at this point, but it is something that is very much on our minds and we will appreciate any input or thoughts that you and your staff want to give you as we go forward with this. >> we will continue the dialogue on that. >> gentlemen. -- yes. >> senator akaka mentioned this, i have been concerned about the lack of financial literacy being taught to our students. so when i was in the north carolina senate i also required that students get that. i think it's a sound basis that you need to get buy in the

world today. you have to understand debt. and with that i was also pleased that the cfpb recent released its examination procedures for payday lenders. it appears there are a handful of banks making high-cost payday loans directly to their customers. the center for responsible lending has indicated these loans are marketed as short terms but keep them in debt for 175 days a year which is in average of 16 payday loans per year. i understand the rate is somewhere over 300%. can you say a little more about what the cfpb is doing to address this sort of sustained use of payday loans? >> yes, senator, and as i mentioned earlier, this was the subject of the first field hearing that the bureau conducted in alabama recently, and the examination procedures that you mentioned we have put

out, they apply equally to nonbank payday lenders and also to banks that may be now offering a product that is similar to a payday loan and a number of respects called a deposited advance or sort of nomenclature around that phrase. we will have the same issues and the same concerns about any of the products in this realm. there is a legitimate need, and we heard a lot from our field hearing, about short-term credit availability for people, whether they have bank accounts or unbanked. there are also a variety of products that are offered. it includes pawn brokers, car title loans. some have advantages and some of which have disadvantages. what we are trying to do is assess those products and make judgments about whether they are in compliance with the law or not. we will like to see a robust

competition in this realm. small dollar loans are needed by people. in a different era and maybe in some places still now they would go to loan sharks. it was dangerous as well as being difficult. nobody wants that. we will want to have products be available. we want them to be products that help consumers and not harm consumers. there is thinking that some of the banking products may be offered on more favorable terms because there may be less risk when they're dealing with their own known customers but we're -- we will see over time how that develops. >> do you have a time frame? >> i do not. >> ok. i do not. >> one other question. one practice i'm concerned about is the manipulation of the order in which checking account transactions are posted for overdraft purposes. consumers consistently state that they don't want their transactions posted highest to lowest. is this the sort of practice the cfpb will be taking a look at? >> it is. >> ok. thank you, mr. chairman.

>> it requires certain levels of participation in the enrollment and process. i'm pleased to continue to hear comments from stakeholders that the consumer bureau is going beyond that. would you please describe the process that the bureau has found and how it improves your rulemaking? >> i'm sorry, mr. chairman. i kind of lost the record. >> it requires certain levels of participation in the rulemaking process. i'm pleased to continue to hear comments from stakeholders that the consumer bureau is going beyond that. would you please describe the process that the bureau has found and how it improves your rulemaking? >> ok, thank you, mr. chairman. and actually similar to the questions we were addressing back and forth, senator shelby,

there are certain requirements in the law as to how we go about rulemaking and we obviously are bound to fulfill all those requirements. it includes a very robust notice and comment process so we issue a proposed rule, then we get notice and comment sometimes from -- depends on how many people are interested. sometimes a few dozen individuals. sometimes thousands or tens of thousands of individuals as with our know before you owe mortgage forum consolidation project. we are required by law to sift through those comments, to weigh them, to evaluate them, to consider the pros and cons, to address them in our rulemaking process and then to develop a final rule. some of the things we have tried to do and, again, the know before you owe is the most outstanding example of this because mortgage markets are the most important market by dollar figures for consumers, is to aggressively go out and seek lots of comment even before we propose a rule, we

are not required by law to do that but we knew it would help us do a better job. we've done a lot of consumer testing. there are apparently procedures and processes that researchers are familiar with that give you a better sense, not just your judgment about how things really are, but how people actually respond in fact to these things and to different terminologies and to a shorter form and the like. we are also going to be trying to continue to use technology so that our rules and our proposals and the issues that we're addressing are out there. we're going to encourage people to participate that through our website and other means and we're going to be continuing to try to press the envelope for how we can use modern technology to encourage broader participation, therefore, broader perspectives, therefore broader -- from the industry participants who are affected

in their operations by our rules because it needs to work by both sides. it's something i think it's very interesting the work being done by the bureau and we hope it will continue to be on the cutting edge. >> in a response of questions, i asked your agency, a colleague of yours wrote that the cfpb would require robust safeguards for consumers and clear guidance for financial service providers without imposing undue burdens. will the cfpb fully consider the cost and benefit to your rules, ensuring you take a spot in streamlining regulatory approach while protecting consumers? >> mr. chairman, we are required by law and not just by the a.p.a., but specifically in our law to consider the burdens, costs and impacts of any rule that we're developing.

we take that seriously. not only because it's the law but because it's good public policy. we intend to and that's why i'm setting up some advisory panels to hear broadly from the financial industry about how our proposals may affect them and how they may actually work in practice. at the same time that we're hearing from consumers and groups across the country about what benefit it might bring to the consumer public. as i mentioned, we inherited a lot of rules that we didn't write and we had the opportunity to go back and think afresh about them and there may be occasions where we can streamline those rules, losing no benefit to consumers and reducing the burdens on financial providers. we hope and expect to be able to do that. >> senator sheldon. >> thank you. mr. cordray, i'll try to move on. you've been very patient here today. i got several questions. we've heard that there is some concern that documents subject

to the attorney-client pliverage that are turned over to the bureau -- privilege that are turned over to the bureau will not remain privileged. privileged documents will remain privileged when they're given to the federal reserve board, the office of the comptroller of the currency and the fdic, which you serve as a member of the board. the drafters of dodd-frank did not include the bureau in this law, which is troubling. would you support an amendment that would apply the same privilege protection for documents given to the bureau as currently existed, documents given to the other federal banking regulators and if not why not? >> yes, we would support an amendment to correct what we believe was an oversight. >> ok. >> i have told the banking trade association that and we're happy to work with them and you to get that fixed. >> you talked about the

definition of abuse and so forth. during the discussions that led to dodd frank, it became clear that some people wanted to ban some nonbank services, are there any products that exist now that you would ban? sit possible for an identical product to be abusive for one consumer and not for another? is that possible? how would you make that determination, if yo saw that? >> let me try to address both of those questions. i don't think in term os of banning products. it talks about us addressing unfair, abusive, deceptive acts which i think is a better way to look at it. in terms of whether -- >> you don't think you'll be in the business of trying to ban products, but to make things stronger and more transparent and so forth for consumers? >> that's the approach and

vantage point i take on it, senator. yes. >> by virtue of your position on the fdic board of directors, you'll have to make some important decisions about the basel capital regime, both basel three and the dodd-frank act eliminate tier one capital treatment for trust preferred securities. while dodd-frank provides a measure for grandfathering trust preferred securities for small banks with assets of less than $15 million, basel three has no such exception. because many small banks have trusts -- trust preferred securities, this will impact banks and their communities throughout the country. how do you plan to resolve the approaches of small banks taken by dodd-frank and basel three, you've gotten into that yet, and would you give your views on basel three, including

whether it effectively prevents another economic crisis and prevents banks being undercapitalized. the hope for us is for banks to have more capital, which makes sense to me, and to have liquidity, which makes a heck of a lot of sense. >> i do think the decapitalization of the banks and the provisions that we've made domestically here in the united states as well as what basel was trying to accomplish are healthy to the overall system. the american banks now have more capital that they're keeping on hand than european banks by comparison, for example. >> perhaps not enough, huh? >> that's a hard thing to to -- to measure in the abstract. i am a member of the fdic board. iffer great colleagues on that board working with me to get up to speed on these issues. i happen to be fortunate because the deputy director of the board is a banking expert

and both investment banking and commercial banking and he's working with me on these issues. so we will address them as they come but these are fascinating and important issues, not just to this country but to the world and we want to make sure that our banking system is strong. i know you want that, we want that as well. >> mr. cord ray, do you know of any -- mr. cordray, do you know of any financial institutions that have been well capitalized, well managed and well regulated that have failed? >> i think that only happens, senator, when there is some extreme dislocation in the country at large. >> it's very unusual, sit not? >> yes, i would say the great depression and the financial meltdown we suffered in 2007 and 2008, that may have happened to some banks that did not deserve it. >> "the washington post" recently reported that a program by the district of columbia government to local community groups to subsidize

mortgages for first-time home buyers in the district district of columbia resulted in mortgage -- mortgages that many buyers could not afford. i know they meant well but the article found that nearly one in five borrowers participating in the d.c. program are now behind on their mortgage payments. do you believe that the lending practices used by nonprofit entities, although meaning well, that helped put consumers in mortgages they cannot afford, are within your purview? and are you looking into this particular program? because i'm not saying it's abusive but maybe it's lack of, i don't know how you define all of that, but lack of judgment. because you want to help people but sometimes if one out of five are failing, they've got to be reviewed. is that part of your deal or is that not in your purview? >> that's the person -- first

time the program you mention has come to our attention, it may be a local d.c. program. we had a lot of problems in the mortgage market in the last decade, we had a lot of practices that in retrospect weren't very sustainable even though, as you say, many of them were well intentioned, though some were not well intention at all, they were just fraud and greed. we need to be careful about what we're doing. the congress is requiring us to do a number of things to try to clean up practices in the mortgage market. we take that role very seriously and we will continue to be glad to have your input and counsel as we do that work and as you're hearing from your constituents, we're hearg from many of the same people, but that helps us with our perspective. >> thank you. thank you, mr. chairman. >> for the record, senator reid of rhode island would have been with us today but he is away at a funeral. mr. cordray, i thank you for

your testimony today and for your willingness to serve our nation. regardless of whether one agrees with the president's decision to recess appoint richard cordray, the fact of the matter is that he is now director of the cfpb. his time for us all to -- it is time for us all to put politics aside and work together to protect consumers and have a strong consumer marketplace. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> polls in florida are open for another four hours or so. republican official there is are expecting a big turnout, some two million voters, up from a record 1.9 million in

the 2008 republican primary. so far, more than 600,000 floridians have voted as of monday either by early voting or absentee ballots. polls closing tonight at 8:00, our coverage gets under way at 8:00 p.m. eastern, that's on c-span2 and c-span radio. we'll have victory and concession speeches beginning at 8:00. coming up in just over an hour, the house returns at 5:15 eastern and begin work on a measure to repeal part of the health care law, the part known as the class act which provides long-term health care services. the squad mrgs said it won't implement that portion of the law due to a lack of funding. live coverage here on c-span. the senate continues debate on a bill that would make it illegal for members of -- members of congress to trade stocks based on nonpublic information, the so-called stock act. they're working on their version of it. meanwhile, majority leader eric

cantor talked about the house version of it which has yet to come up on the house floor. he held a brief news conference outside the capitol and said he'd like the house version to apply to the executive branch as well. his congressmens with reporters, just over five minutes. >> good afternoon. it's a nice day outside today, in january, who would have thought. there's been a lot of talk about fairness over the last several months. certainly as the political campaign heats up. i can tell you that there is a sense among people in this country that they don't have a fair shot when they see things

that have transpyred, whether it was their -- transpired, whether it was their investments in the financial services community and all levels of government beginning to hear stories about potential conflict of interest on the part of the people they elect to represent them. and that's why i'm here today, to say it is unacceptable for anyone, any member of congress, anybody affiliated with this level of government or any other, to profit from insider information or from information that is not available to the public. period. and people of this country, because there is a sense out there of untoward behavior, people of this country need to know that members of congress are living under the same rules that they are. i am glad to see that the senate is taking up the stock act.

i hope that they will take the opportunity this week to strengthen the bill torque expand the bill, and to make sure it works. depending on what the senate does if the senate po deuces a bill that we belief is strengthened and something -- if the senate produces a bill that we believe is strengthened that will be well-received by the house. if it does not, it is my intention to move a bill, to bring a bill to the floor, in february, that does accomplish the goal of ensuring the public -- assuring the public that they can have confidence that their elected representatives and their voices in washington are not using their positions to personally profit. with that, i'll answer some questions. >> can you go through how legislation needs to be expanded? >> sure. i can tell you first off, the bill does not adequately cover

those connected with the federal government and the executive branch that are in position with access and are privy to information that could be used to personally benefit those individuals. so we're looking at ways to hope -- that hopefully the senate can work on that language, strengthen the language, so that the same rules aply to executive branch personnel that have access to that type of information. >> [inaudible] >> i've begun to read the book that i think gave rise to some of the broadcasts on this issue. certainly, i think that there is activity that exists that

could certainly be characterized in a negative light and lend itself to the public believing that their elected representatives are operating in a way that benefits themses. so if that's the case, i think we need to make darn sure that people across this country know that members of congress and others are not using information that they gained because of their position for personal gain. that's what i would say to the people who may say, this is not a necessary vote, let's just make it clear, let's make it the law. that there will be and is is no insider trading going on or trading for personal gain. >> there are already basic ethics rules, what about the gray area where someone has, they follow things around here, they say, that bill is probably going to move that bill is not,

that is not proprietary information are you concerned about that gray area? >> well i think the senate bill if you look at the manager's amendment, the language in the manager's amendment, it does speak to the potential misuse of that kind of information, untoward activity on the part of, not members of congress, but others, who are in the business of monitoring washington. i think that in advocating, in putting forth a directive to get underneath that activity torque begin to determine what it is, is something that is helpful. again, all of this should be geared toward trying to ensure the public -- assure the public that the trust they put in washington is not being violated. >> why not just ban all trading on the market? why not prohibit members from dealing in stocks? >> one of the things, dave, is to make sure that the public is aware of what goes on.

if you read some of these books, one in particular, it talks about the lack of timeliness of disclosure. i have always been one for whatever the subject is, it's to make sure the public is enjoying its right to know and if you've got to wait a year to know what your elected representatives are doing from financial transaction standpoints, i don't think that's a timely enough schedule for the members of the public to realize that right to know. thank you very much. >> majority leader eric cantor, mid afternoon today, outside the capitol. shortly after that, senator leaders spoke with reporters following their weekly lumplings. they spoke about the bill the majority leader was speaking about, and majority leader harry reid talked about which bills are likely to be next on the senate agenda. this is close to 20 minutes.

>> i'm glad we're now on the stock act. it's too bad we had to have a cloture to allow us to go to the bill. that's really unfortunate. here's a bill that everybody has all this happy talk about what a great, bipartisan bill this is, i had to file cloture to get to where we are. there are some who will say, do we really need this? the answer is yes. because even experts say, even though people are being prosecuted now who are part of the administration branch of government, the justice department feels clearly they have the right to go after members of congress. but there are some who feel that's not the case so we're going to make sure that there's no hesitation in going forward because we want to make sure that any questions about whether or not a member of congress can do inside trading, that's going to end. because they can't.

year not going to allow that to happen. i also think it's important that the executive branch of government play by the same rules. so what we do here, the executive branch of government should do also. now this legislation, i hope, is going to be an example of how we work together to get things done. we had 93 senators vote to invoke cloture. i hope that my republican colleagues keep this in mind as we move forward. the american people want us to work together. find common ground. we've seen the poll that the republicans commissioned for themselves, a republican poll, commissioned by republican the poll showed republicans' unfavorable ratings have risen to 64%. why? a republican pollster said, because their approach to turning every issue into an

all-or-nothing fight. 2/3 that is of the american people are telling republicans to drop their "my way or the highway" strategy and start working with us, democrats, to forge common sense solutions to america's problems. especially jobs and the middle class. we have lots of work to do to get our economy growing at a pace we need to continue creating jobs and get middle class in -- families in nevada and around the country the security they deserve and don't believe they have now. we hope that as we move forward, the republicans will stop listening to the tea party and start listening to the american people. if they do, i have no doubt we will be able to meet the challenges we face. >> the speaker has suggested that it may go on the

republican bill dealing with oil provisions. >> as i said last tuesday, i'll say again this tuesday, the bill, as written, says that the oil will be sold to some other country. i will not support that. if they want to have keystone, i'll take a look at it, where oil is not sold to other countries, i'll take a look at it. until then, i think i and other democrats feel the same way. >> the president is said to be supporting the stock act legislation to shift focus from his policy. is that what is happening in the senate? >> using that logic, the republicans here in the senate, with all their outward support are they doing that to take the focus away from how much obstruction they've done here

in the senate? if that logic is valid, then maybe that's why the republicans did it. >> there were signs of improvement last month. the economy showed signs of improvement but the housing markets still shows signs that -- of trouble. has the president done enough? >> there is no better example of how the housing crisis has been a real, real burden to economies. nevada understands that, we've led the nation in foreclosures for a long time. secretary donovan was there, he did a good job he met with hostile groups and did an outstanding job of responding to some of their concerns. some of the things we have done have been helpful. but none of them have been real helpful. and that's why i think it's important that we look at the president's legislation that he talked about in the state of

the union and get that passed. he's doing just about everything that is possible with doing it administratively. until the housing market stabilizes, the economy will never be on fire. >> [inaudible] >> no, but i'm working on that. we have a number of issues facing us right now, i'm looking at that intently. we have to get rid of this, get rid of and pass the stock act. we have f.a.a. conference report coming in a matter of a few days. we have the highway bill, the finance committee is going to mark up how that is going to be paid for next week. we have the postal reform, we have to do that. the answer is, i've kind of laid out some of the things we need to do in the immediate future. >> what issues in the payroll tax conference, the idea of

making it difficult or impossible for illegal immigrants to claim the refundable child tax credit. it was rumored you object to that in discussions with senator mcconnel. >> i object to that. >> can you give your position on that? >> i think the child tax credit is working just fine and there's no need to punish children. that's -- we're supposed to be trying to help them. we're going to have some amendments, we'll see in a day or two how many are really interested in improving this bill, how many amendments are germane or relevant, and we'll look at it in a day or two. in the meantime, i hope we start having some votes. >> [inaudible] >> no, never have. we have an obligation as members of congress to fulfill our constitutional duty. one of those duties is to make

sure we do congressionally directed spending. i object and do not believe that all these decisions should be made at the white house. whether it's obama as president or whether it was one of the bushes as president, i do not accept that. we have an obligation. i have done earmarks all my clear. and i'm happy i've tone earmarks all my career. it helped my state and helped different projects around the country. i repeat, i will not stand by and be driven down this path that i think is one that is taking us away from what the founding fathers wanted, three separate, equal branches of government. i do not believe the white house has the authority to tell me how i should spend money in nevada. thanks, everybody.

>> goods afternoon, everyone. as you know, we are now on the stock act. the majority leader indicated it's open for amendment and we certainly hope that the provisions of the bill will equally apply to the executive branch as they do to the congress. i think that's extremely important. most of our members believe that if there is any insider trading going on in the government, most likely that would be in the executive branch and we want to make sure that this new law applies equally to both. with regard to jobs and the economy, we once again will spend the week not addressing

either one of those issues. the issues that the american people care the most about. we all believe in our conference that the level of deficit and debt we've been running has a direct impact on jobs and the economy. c.b.o. has indicated we will run a $1 trillion, at least, deficit again, making it every single year of this administration we have had at least a $1 trillion a year deficit. we all know we now have a debt the size of our economy, that alone makes us look a lot like greece. we're all watching what is happening in western europe. it's important to remember, the president got everything he wanted the first two years. we're living in the obama economy. and what he wanted the first two years was to turn us into a western european country as rapidly as possible. and i've seen no retreat on his part or on the part of the senate majority from that pathway toward a western

european economy. with that, let me turn to my colleagues. >> the leader pointed out, the c.b.o. update we got today is a reminder of how important it is we focus like a laser on jobs and the economy. c.b.o. is forecasting that by the end of this year, the unemployment rate will be up to 8.9% and by the end of next year, it will be up to 9.2%. at the same time, the leader mentioned we've got the fourth year where we're running over $1 trillion deficit. that is the obama record on the economy. you've got higher fuel costs, higher health care costs, higher tuition costs, you've got higher debt by about 43% over what it was when he took office. chronic unemployment, massive amounts of debt, that is the obama economy. that's why it's so important, and we've repeated before, that republicans here in the senate are ready to work with the president and the democrats on

pieces of legislation that will actually create jobs. and if you look at how many bills have passed the house of representatives, there are over 20 bills that have come over here to the senate that are awaiting action. i offered an amendment to the current bill on the floor today that has broad bipartisan support, passed the house of representatives 411-13, that we ought to be taking up that would make it easier for small businesses and entrepreneurs to get access to the capital they need to grow their businesses. those are the types of things we ought to be working on. unfortunately, that doesn't get to the floor of the united states senate, it gets put on the shelf. we're not talking about the kind of things that will get people to work, that's what frustrates the american people and that's why i hope the democrats with ill change their ways to address the basic, fundamental core problem, which most people recognize is

getting people back to work and growing our economy. >> when you take the time to look at the congressional budget office's report that came out today, what do you see under the obama economy, growth of the economy will slow further, you see that unemployment rates will go up. you see that the debt will go up. and you additionally see that the social security disability insurance fund as well as the medicare hospital insurance fund will both run out of money. this president inherited a bad situation and he has made it worse. i want to find ways to make it easier and cheaper to get americans back to work. >> you -- you know, everybody else in the house chamber last week in the state of the union, i was surprised to hear the president say he was for an all-of-the-above energy strategy. i truly see no evidence of that anywhere. i tried to look and see last week, is there any evidence of

this? maybe the president needs to tell the director of the e.p.a. and secretary of the interior that he's for all of the above. one of the ways to grow this economy, one way to emerge from an obama economy that hasn't worked is more american energy. he must know that or he wouldn't say he's for that. but there is no evidence he is for all of the above. that's why people who have been for all of the above stood up for one of the rare moments in his speech and applauded that concept. the problem is, there's nothing to back it up. i challenge the president and the people who run these energy agencies to, let's put some evidence on the table that we're for all of the bf bo -- all of the above, the quickest way to grow the american economy, the quickest way to grow an economy that's overburdened by regulation, concern about utility bills, health care costs and taxes, is more energy. the president must get that. let's do something about that.

>> according to gallup, this president is the most poll-rising president in history in the third year of office and it's not surprising when you go back and look at his record. we will be having the anniversary of some important events that happened during his first two years of his presidency, when democrats controlleded both the senate and the house. february 13, we'll have the president release his proposed budget. you remember what happened last year when our democratic friends wouldn't even put it up for a vote, we did and it failed 97-0. not receiving a single democratic vote. then there was the three-year anniversary of the failed stimulus, february 17. if you go back and look as i did at christina roemer's projections, the white house projections, they said unemployment wouldn't rise

above %, and they said it would be at roughly 6% in the first quart over 2012. obviously a huge addition to our debt and no real resolution of unemployment. then there's obamacare enactment, the two-year anniversary, we'll have the supreme court argument in march on challenging the overreach on the individual mandate and of course the -- this year's deadline for passage of a budget and after more than 1,000 days before senator reid -- since senator reid has allowed a budget to come to the floor, i hope this year he will allow it so the american people can see us perform our most basic responsibility, that is, to determine how do we live within our means and how do we quit spending money we don't have. >> [inaudible]

>> i think there's broad, bipartisan agreement that we ought to extend the payroll tax holiday through the end of the year. we had basically that agreement in december, the difficulty was, our friends on the democratic side of the senate don't want to cut very much spending in order to pay for it. so those issues will still be there in the conference. the conference is going to be meeting shortly and i'm confident and optimistic they'll resolve this matter. you know, we're not going to talk about the conference out here. you're familiar with the moving parts in that, we discussed them add nauseam in december -- add nauseam in december, i've appointed people, the speaker has appointed people who know how to get the job done, we're hoping to have enough cooperation to finish that up.

i'm confident we will before the deadline which will occur at the end of february. >> it looks like the primary contest may go on for a while, newt gingrich said he'd like it to go to the convention. how will that affect those runs for re-election in the senate? >> they don't need advice from me. it will end when it ends. at that point, we'll have a candidate who is very competitive. we are all watching, like you you are, the drama associated with this contest. it is reminiscent of the contest between obama and clinton on the other side in 2008. obviously that ended at some

point, i think it was about june, and it doesn't seem to have done them in harm in the general election, i don't think this contest will do us any harm either. thank you. >> the senators are in session this afternoon. the house will return to work at about 5:15 eastern and begin work on a measure that would repeal part of the health care law known as the class act which provides long-term health care services. we'll have live coverage of that debate at 5:15 here on c-span. and this evening, we'll have results from the florida primary, the primary today under way. the results at 8:00 p.m. eastern, polls close at 8:00 in florida. we'll have your comments, of course, and speeches, all of that getting under way on c-span2 and c-span radio at 8:00 p.m. eastern.

in this morning -- on this morning's "washington journal" we were joined by a senior republican strategist for a look at what's ahead today. guest: good morning. host: the polls are showing mitt romney with a lead. how important is it he wins, versus wins by a significant margin? guest: i think it's important that ehe wins. the polls show he will have a significant margin, although in florida it's always difficult to predict what will happen, as you know. we have a history here of strange things happening on election day. we have to wait and see in several hours what happens. but i think the significance of florida is so great in this primary contest, we are the largest of the early primary states, the most diverse in terms of our electoral makeup and also the first closed primary, which means, of course, only republicans can

vote in the florida primary. so this will be a true test for these candidates of who luns -- republicans want to send to face barack obama and who they want to see in the white house. >> we're hearing some -- host: we're hearing talk about newt gingrich and how he's ranking among women, how they're perceiving him. politico has a story about five thins to watch in florida and they're asking how newt gingrich will be received by florida g.o.p. women. what's your read on that? >> i think he has trouble here with women. there is a concern that, of course, the romney campaign has focused on over the last 10 days since the south carolina primary that he's not electable and somewhat erratic. that shows up among women voters, you see him being challenged in that area. again, i think it's very difficult to know what the margin will be, how large of a victory romney may have here, although we do anticipate a romney victory if the polls

stay true. we'll just have to see. women are a significant portion of the electorate here and certainly active in driving campaigns and turning out voters and volunteering for candidates, so their vote matters. it will be interesting to see where this breaks down tonight. >> are you seeing it as essentially a two-man race at this point? guest: i think it is. i will tell you, my sense is santorum had a strong debate performance in jacksonville at the last debate, i think he may overperform his number, which may make it more difficult for gingrich to convince republicans he should leave the race. if santorum finishes ahead of where he's polling, there could be an argument for him to stay in the race longer an see how he does in caucuses and primaries coming up in february. host: let's take a listen to not gingrich, one of his most recent campaign ads.

[video clip] >> fraud, well, never hind. after a 3 1/2 year examination, the internal revenue service, bill clinton's i.r.s., issued an official finding new york violation of tax laws. critics said the course was too political, a scheme to use a tax exempt educational foundation to promote a republican agenda and elect republican candidates, but in a 74-page memorandum, the i.r.s. said otherwise. quote, the course taught principles from american civilization that could be used by each american in everyday life, whether the person is a welfare recipient, the head of a larm corporation or a politician. it said the course was not biased toward particular politicians or a particular party. the facts show the class was much more than a political platform.

it turns out, he was right and those who accuse him of tax fraud were wrong. brooks jackson, cnn, washington. host: that was a campaign add by newt gingrich. we're looking at a website, talesofmitt.com. this is put out by gingrich supporters, it takes apart mitt romney for the sake of boosting newt gingrich. tell us what you make of this an some of the negative campaign adds, the -- as, the tone the debate has taken. >> first, don't you love the music in that ad? you hear that more in this context than you would on television. one of the challenges newt has had coming into florida is that this is such a large state and it is so expensive to campaign

here. we have 10 media markets, we have a dedicated hispanic market, we have four million registered republican voters. that is so significant, particularly in comparison to the other early contest, iowa, new hampshire, and south carolina. so i think a thousand points of television costs about a million and a half dollars statewide to run. this is one of the challenges gingrich has faced. and there is a real question about whether his momentum in south carolina has been able to carry him through the last 10 days of this primary contest. we certainly saw it have an impact in the beginning days, when the shift from south carolina to florida occurred, but very quickly, because the romney campaign had greater resources, they were able to stabilize the race and begin to turn it around. you are now seeing gingrich use some of the resources that came in as a result of his victory in south carolina, as a result of that momentum.

the question today is, is it too little, too late. those are effective ads, negative advertising works, reacting and responding to advertisements quickly works and then getting back on message. is it too little, too late? gingrich didn't purchase television advertising here until, i want to say, thursday or friday of last week and that may be too late to get messaging to voters. so although i think his ads are effective and humor is used, it's questionable what impact they will have in terms of the numbers we'll see later today. host: sally bradshaw, a florida g.o.p. political strategist, she's lived in the state over 20 years and served as advisor to mississippi governor haley barbour exploring his run for national office last year. she also served as advisor to

governor mitt romney's 2008 presidential campaign. she also worked for governor jeb bush and has had a number of other rolls in national and florida politics. if you want to call us,, the numbers are below. before we get to the phones, tell us about your involvement with mitt romney's campaign four years ago. you are not coming out and supporting him this time? >> florida is a secret ballot, i'm not working for any candidate, i'm not going to reveal who i vowed for, i did rote absentee already. we had 600,000 requests for

absentees out there. a significant number of people have voted early or voted absentee. pretty significant return on the request, 41% of those who requested absentees have voted absentee ballots. i did vote, i did work for governor romney in 2008 in florida. it was a very different campaign. governor romney was not as well known as he is now after four years of being visible and campaigning for president. the task in florida was very different four years ago. we needed to create an environment where people would be willing to listen and learn more about governor romney. we were very effective in getting some early endorsements but i think what has been significant for the romney campaign this time, they signed up people like speaker allen bends from panama city, a former speaker, very well respected in the republican party, john thrasher, former state party chairman, now state senator from the jacksonville area, very involved on behalf

of governor romney in 2008, a former party chair here, now president of the union was involved with the romney campaign, particularly recruiting the hispanic community. our task was to get the governor known here and make people amenable to listening to him. one of the challenges in 2008 were that the resource were not there. it made it much more difficult to campaign in a state the size of florida. this time new york 2012, i think the romney campaign wisely planned to invest resources in florida and did so early. the romney campaign was actually running paid advertising in florida three to four weeks prior to the florida primary. so before the south carolina contest, they were on the ground, they were running advertising, they were organizing, they have a top-notch team here led by a former aide to governor jeb bush and had all the people -- pieces in place to run a

successful effort, particularly when you're tested, as they have been by gingrich. host: a comment on twitter -- romney has been running since 2008, anyone who doesn't know him has been living under a rock. and now to andy. caller: my grandfather cooked for 12 presidents of the united states, he was a chef at the white house. and he took my sister there one time, she was like 6 years old, jacqueline kennedy came down in a bathrobe and she didn't want him to cook for the president, she wanted to do the cooking. these are lovely people. but -- what we're dealing with now in florida is people that are very dedicated, firemen, policemen, and they're cutting their salaries, i walked into a gas station the other day and i see a fireman working in a 7-eleven because he can't

afford to feed his family. and we're going to vote for people like you? you've got to be crazy. they want to cut out medicare, social security, what are people going to have? guest: i think you're talking about republicans, and what you're seeing everywhere is tremendous challenges financially, we have not seen the job growth president obama has promised, we have not seen responsible fiscal budgeting the president promised. in the state of florida and in states, we have to balance our budget. we're required constitutionally to do that. at the federal level we are not. so there are cuts occurring in states that have been very difficult to make but we've had no choice. that said, i think in the state of florida, and i can't speak to other states, our republican-led legislature and our republican governor have been very responsible in traying to prioritize our funding to public service

providers torque firemen torque policemen, to critical needs industries. this year in particular, we've seen a cut in years past in education spend bug governor scot has come out and asked for $1 billion in new money for education. what you have to do in an economic downturn is prioritize resources. i think republicans have done a much better job at that than the president and democrats have been willing to do. i think there are a lot of reasons to look at new fiscal management in washington that means a republican president, regardless of who get ours nomination. >> our guest is a member of the florida state board of education, which oversees the k through 14, lower, middle, and high schools, and also community colleges. former senior advisor to the florida republican party and g.o.p. political strategist joining us from the sunshine state. let's go to florida, philip son the republican line. caller: good morning.

i have a comment and a quick question. my comment is, i don't think ron paul has gotten any type of positive news media on the national level whatsoever. i mean, he is running, and i've already voted early, absentee ballot and i vowed for ron paul. my question is, i thought that florida moved up their primary last election and we lost half of our delegates. how long are they going to continue to take half of our delegates for moving the primary? guest: that's a great question. i hope you're having good weather for people who have not yet voted so they can turn out. we did move our primary up in the last cycle and we worked -- were penalized, half our delegates were taken, but those were restored by senator mccain when he became the nominee. we did seat a full delegation at the convention four years ago. my hope would be our nominee

would do the same. florida is a very diverse state. we are much more representative of the republican electorate and the larger general electorate as a whole than any early primary contests. while i respect the role that iowa, new hampshire, and south carolina have played in this process, i think tonight's results will send a much more definitive signal about where our party is in this contest and the interest of republicans in beginning to take the race to president obama as opposed to leaving it in a primary stage. so it would be fice for the republican national committee to be -- to begin to recognize we are significant, we do have a role to play. in addition, we'll host the republican national convention this sumner tampa, so there's a thsh this summer in tampa, so there's a role for us to play and we need to move beyond the pettiness that seems to go on at that level in taking away delegates or punishing us by sending us to a bad hotel in

the convention. host: our caller mentioned ron paul, we have a couple of other people weighing in on twitter. guest: it's interesting, ron paul himself has sort of taken himself out of the race in florida. while he appeared at the debates, he's not actively campaigned here in the last 10 days. that's been a bit surprising. he's made a decision to go to other states. there certainry are ron paul supporters in florida, we do have an independent-minded electorate, it tends to be a conservative one, you can't predict what our electorate is

going to do. i'm a little surprised by his decision not to campaign here. this is a hugely expensive state in which to play and paul has not had the resources others have and may have made a calculated decision because of the cost of running television or radio advertising here to save the resources for other contests. he's the one who has chosen not to campaign here lately. host: let's go to tallahassee, danny on the independent line. danny, turn down your tv and go ahead. caller: i appreciate you taking my call. i think, you know, with mitt romney, you know, when he tours around, makes all this money, puts it overseas, that's not -- politicians aren't working for the middle class and the poor. it's time to get that, both parties knead to get together and start looking for -- working together for the good of the country instead of just

them, and when it comes to social security, nobody mentions that the government has taken like $1 trillion from social security and never paid it back, it started with kennedy. i think it's about time that politicians start working for the good of the country. guest: it's interesting, when rick perry brought up social security earlier in the race and called it a ponzi scheme, there was a huge outcry from pundits and commentators about how he could say that. but the fact is, there are huge problems with the social security system and in florida, where, in the republican electorate alone, over 55% -- i'm sorry, over half of our voters are 55 or older and either retired or moving toward retirement, that's a particularly significant issue. so far, there have not been many, i think, who have come out with solutions that will work in that area or have been willing to confront it. with respect to bayne capital,

that's been an angle of attack against governor romney, he's seen it brought up over and over by newt gingrich but in the republican party, i think voters tend to err on the side of wanting americans to be successful. at whatever level. to be able to go out and do well, to work hard and reap the benefits of that. governor romney is trying to make that case, that he was successful, he played by the rules, he's paid more than 40% of his income either to taxes or charities, so again, i think we'll have a real feel for how voters have responded to those issues after the results come in tonight. host: joanne in san diego, california. caller: sally, since you're familiar with the romney strategy than their campaigners, my big concern as a conservative is to defeat president obama and -- does anybody in the romney campaign have the ability to reach out

to the tea party voters when this is over, reach out to the these young ron paul supporters, because we know that negatives, you know, obama will spend $800 million or so on negatives -- negative campaigns and that will drive down turnout. we cannot take the -- it for granted. guest: absolutely. yeah. you know, i certainly hope so. obviously i'm not working for the romney campaign right now, but there are a lot of bright people who are part of the romney effort. i know that they understand the need to pull the party together and to begin to recruit not only independents and democrats to win but some of the people in our party who have perhaps been disgruntled or not as happy with the romney candidacy. i've always been frustrated by the way the tea party has been labeled in the media. the fact is, the tea party, represented by republicans just

like you and i, who believe the federal government has spent too much of our money. and that it's our money an not their money to spend. an they need to be more responsible. so one of the dwigs within our party has been created by the mainstream media and certainly governor romney understands the need to pull our party together, to bring in supporters of congressman paul torque bring in tea party activists to move forward. we'll have to do it or we'll lose the yen election. this is by no means going to be easy, despite how vulnerable the president is with his own re-election numbers. we have -- there are fewer republicans than threr democrats, certainly in a state like florida, although the margin has gotten much closer. we're still outnumbered by about 500,000 registered voters, democrats to republicans. so there's a lot of work to be done. i think that would be the romney campaign's argument if they win florida decisively, that it's time to pull the party together. host: let's hear from ralph in

chicago, independent call. good morning. caller: good morning. thank you. doesn't ron paul deserve more votes in florida as he is protecting the elderly from the inflationary dilution of the dollar, a disaster for public and private pensions and from exploding health care costs by protecting people from color from enforcement of drug law the new jim crow an protecting israel from its oil-rich rivals by having hemp marijuana oil as fuel, preventing further balance of trade deficits and dilution? guest: that was a long list. perhaps you should work for his campaign. that was a litany of things. i have been surprised that congressman paul did not campaign here over the last 10 days. there are certainly republicans

in florida who are advocates of congressman paul or at least components of his message with respect to the economy. there are a lot of republicans, even those who perhaps have not supported him, who agree with his message. i'm surprised he has not campaigned here that may impact his turnout. it may impact how many republicans he's able to get to go to the polls today to support him. but i think he will see support for congressman paul just not in the numbers necessary to win the primary here. host: let's look at an email that came in. host: do you feel the primary is damaging to candidates not just among republicans but also potential independent voters? and you mentioned a guest we had on yesterday on washington

journal, head of the american conservative union, lives in florida, he's been quoted as saying the fighting teen the main rivals has to stop because it could be damaging. guest: it's interesting that you bring that up, and that al brought that up. governor bush was quoted when he described what is going on in the republican primary as a circular firing squad, that can't be helpful to our potential nominee or our chances at the white house. i do think republican primaries have a purpose and place, it is to weed out issues of importance to voters. what are going to be the issues that the nominee focuses on in a general election and takes to voters and tries to move independents with? so i think we'll see that start to taper off here some after florida. again, one of the advantages to having florida so early, scran 31, is to having -- january 31, is to have a big state,