sensibility. ben barber summed it up -- "jihad versus the world." reaction to too much market is a sort of pragmatism. you revert to tribalism. tribalism is very inconsistent with liberal democracy in which common humanity and common citizenship are taken for granted. >> i want to report that we have some votes for other "ms." we have one vote for "a metaphmetaphor," which i really. what do you think of the role language place in the way

leaders express ideas? we had two votes for "mendacity." dishonesty plays a key role, what about morals? the other vote -- america has a great tradition of assuming to be more than they are." i do think newt gingrich's 1 great contribution to the language of this year is his reference to "pious baloney." anybody want to comment on either mendacity or metaphor? >> metaph and myth seemed to be -- seem to me to be almost the same. but language, it is no use

ranting on about the deterioration of language. i tried in my last book. i made a stupid futile stand against the use of the word "folks." pointing out "folks" was never used in provincial addresses before 1980. i think the deterioration of language is inseparable from everything ee, but is is a subgroup of our dependence on an increasingly based mass media. >> this sounds like you want to pass a "folk" law. >> i do think that mendacity in politics -- politics is a great american tradition there are exceptional periods, i would like to think, or

politics or so much better. go back to the 19th century. you had long periods of otter mediocrity. barney fra got a great lot -- a great line of the other night. i was on a panel were i had to follow barney. he said, "if you tnk politics are tough -- if you take politicians are terrible, who elected these people?" he said the voters do not have anything to write home about either. [laughter] >> here is the briefest question. "the occupied wall street -- money, morals, or myth?" anybody want to take that on? >> i will. i have had a lot of arguments and conversations about occupy wall street.

it is not politics. it is not going to morph into, i a mass movement capable of changing america. all the other hand, it has already made an enormous contribution it has given us language, metaphor, which describes what should be the political access of our era -- the 99% versus the 1%. i think the people who are chronic -- trying to capture it and turn add to their own purposes, you cannot do that. they misunderstand the essen. on one hand, it is a very good

thing it is there, but the task of the vote -- -- the task of creating a political movement will have to proceed elsewhere. >> i just would sathis -- i think it is -- i obviously disagree a little bit with bob. i think it is more myth than anything else. it seems, just fromy perspective of trying to compare it with the movements of the 1950's, that the idea of occupying a geography, even if it is for the furtherancef an anarchist ideal, it seems to me a logical. politically speaking, it came

along at a convenient time for president obama and some democrats in the context of the amount of pressure the tea party was putting on republicans. is seen to be initially sort of a mass movement that seemed to be pushing back. but the tea party individuals -- think of them what you will -- they seem to have one or two spific ideas that they wanted the members they sent to washington to vote on or vote against. there was a stronger connection between the movement and the politics and the politicians. right now, the occupiers seem

to be getting more of a falling out between those who are occupying and some of the liberal democratic mayors of the cities. they have to make their own determinations, saying they cannot completely takeover public space. it seems at this point more myth than movement. >> it is -- is it possible our laziness is related to our common commitmento acquisitiveness, which serves as a social move in the absence of shared assumptions about matters of greater moment? >> that is a great question. i think the answer is yes. it has to be so when you look at

things like people lining up to buy the newest version of the eye from. it is great for ale's -- hone. it is great for apple's stock, but it makes no sense. i understand therere a few bells and whistles that are different. you can get along just as nicely with six month's ago iphone. there is something about possession itself. this particular company epitomizes that. but it is also a commitment of, not just in acquisitiveness, but the easiest forms of entertainment available i think that is where the laziness and the acquisitivess kind of come together. the more of this stuff we have, the less we have to do it to go out and entertain ourselves. there has never been an era in

which you had to do less. if i might add something else, i picked this gets to the very excellent thing that kuttner said about the decne of civic associations and the idea about bowling along. -- bowling alone. when i first came to new york, i used to sit and look and wonder at how all of these people avoided running into each other. it was a beautiful dance to watch. now i spend half my time when i am walking through grand central looking out for guys who weighed more than 200 pounds who have their heads buried in the iphone because they could do damage to me when i walked in. it seems to me this has something to do with the in acquisitiveness and the laziness, but a real breach in

the automatic awareness of others, which isuch a beautiful and human thing to see. [applause] >> any other thoughts on in quisitiveness? >> the marriage of commercialism and entertainment is fatal to civil society. maybe this is something that liberals and conservatives can actually agree on. any activity that takes effort, learned to play a musical empowerment -- musical instrument, learning to write something, or learning to do a sport as opposed to watching one on television mes you a more developed human being. it has restate poi -- it has

reached a point where politics and civic engagement is one more form of entertainment rather than something that exists in a totally different realm. is another way in which commerce is corrosi. we all love commerce, right? up to a point. it is a matter of balance. going shopping is great and fun. using an iphone is great fun. but there needs to be a balance. when one rm of entertainment, driven by commerce it drowns out everything else, you not only lose your civic society, but you lose individual pursuits that make you a more involved a

person who is more engaged with your capacities, able to develop them. i think the irony of the stuff, all the apps, all thehings you can do on the internet, it promises, and occasionally delivers, all kinds of conveniences' and new ways of engaging with the culture. it often, not always, but often falls way short. the thing itself becomes a kin of all-consuming downdraft. >> as we learned a few years ago,he possibility of an amazing -- amusing ourselves to death. what we have actually found out is apple was responsible for the

fall of a man. [laughter] i will say this -- the recent technology that has occurred over the last 10-20 years has also led to the creation of virtual communities. you may be somebody in idaho and you are able to talk and chat in real-time with somebody in st. petersburgh, russiam, or new york city. we are sick and tired of running

it to somebody who is not paying attention. we hate the fact that 10-15 years ago if somebody was walking around talking to the tether, you knew they were crazy. i think some of the technical project technological advances, while we are going through a kind of a change, there are a lot of positives. i was talking to a friend of mine a few months ago. both of her parents are deaf. she hears. she talks abo how the internet and internet-capable television have created these amazing

advances for the deaf, allowing them to communicate with their a -- within their own community. i will agree there is a downside and we can see people becoming too much -- there are many positive aspects to it that we should not be afraid of. [applause] >> i kind of want to make a case for morality myself, just to join robert, and suggest the following. when you looked at the origins the republic -- of our republic, there are a set of principles that, even if they are put in a category of a founding myths, they drive a lot

of behavior or, at least, people have to justify their behavior inerms of them. "all men are created equal" is one of the great sound bytes of all time. it has great meaning for our country. the pamble of the constitution bens with the words "we the people" and talked about providing for the general welfare and the common defense. the republican idea of civic responsibility and the democratic commitment whereby republic that really was not all that democratic at the beginning spent 200 years becoming steadily more democratic with the spread of popular elections, the inclusion of owners of property, wom, at and african-americans as full participants -- these are

serious national commitments that have had a lot to do with who we are as a people. what is wrong with that picture i just outlined belmont -- just outlined? >> what is wrong with it is when it becomes an empty formula justifying whatever if you want to justify. i see easily how extending the omen and blacks -- whether you agree witit or not, these things provide measuring standard, an ideal stdard against which you measure yourself. that does not mean when we talk about the principle embodied in the declaration of independence

and the constitution, it does not mean that people are going to -- there is some consensus, but not entirely. as i am always pointing out and many people do not know and if you include this in a school curriculum the texas school board would rise up and cut off your head. it begins with "we the people." the first document that attributes of governmental power to the people and not to god. this omission of god from the constitution was debated at every state ratifying convention and left out. not because all of the founders were deists, but because they saw the way religion operated in the state of europe and they

left it out. minister try to get not just a dodd amendment but a christian amendment. do you know how we got "in god we trust on our coins? because of lincoln was greeted with this. he said "i will take such action on this amendment as my conscience and my duty to country demand for "his action with to take no action at all. the secretary of the treasury came up with the idea that it would not require a constitutional amendment to put "in god we trust" on our first points. that is where it enters our iconography. there are lots of different ways of looking at what we think of as our founding principles. >> that just proves kuttner's. about what is important in the country. >> even theodore roosevelt got

called an atheist because he wanted it off the currency because he was not a devout -- because he was a devout christian and the objected as many devout christians did. >> obviously i agree with everything you just said. in fact, if you look, to reiterate the point i made earlier on, look at the declaration. it mentions "creator" as opposed to just providence. that foundational morality that is carved out there, as we have gone through htory and listed as examples, it shows that that foundational morality ultimately ends up trumping the certain

religious contemporary moralities of the day. while it is true that the abolitionists were infused with religious passion, there were also those who looked to the bible to defenslavery. ultimaly, after the civil war, you saw through the 13th, 14th, and 50 amendment -- you ultimately saw that the declaration's assessment of morality actually becoming law. even today while the current discussion over gay marriage -- even some conservates have

come to recognize that because the debate on gay marriage is argued under the rubric of marriage equality, ma ofhese conservatives realize that given what they have seen in the context of history, they are on the losing side. once an argument and of becoming a question of equality under the law, the traditional myth, the traditional religion ends up having to surrender the ground. >> e.j., you stated perfectly,

the sentiments in the founding documents at the time were aspirational. they were not descriptive of reality, but they were broad enough so that wcould grow into the founding sentiments. as the political community and polity have grown to embrace women, african-americans, pple without property, a day people -- at the same time it has been encroached upon and never by the forces of commercial light. this is epitomized by the citizens united decision, which harkins' backed to at one of the 14th -- which harkens back to a 14th amendment case. for 100 years, the courts

allowed congress to regulate. for the first time in citizens united, the high court said that it is true. who was it that said i will believe that when texas executes its fir corporation? >> there were a number of questions about citizens united and how we can and the corrupting influence of money and politics. we cou spend the whole time talking about that, but i do not ink that is que where we want to go. reversing citizens united -- divide >> i do not think that -- >> i do not think that is the case. monehas always been in

politics. always. even before citizens united, the obama-mccain race, when you added in all of the money, i think it was $1.1 billion or something like that -- ultimately, you cannot get money out of politics. if you want to go back all the way to rea -- we litigate a supreme court decision that said speech.ey equals free a limitation on people putting money into campaigns was against free speech. that was an early decision that

basically brought us in this direction. barack obama in 2008 using the internet, managed to bring thousands of average citizens into the process. people sending in checks. sure, he was still getting $100,000 here, $200,000 of their from rich friends. the internet also allowed average people to get involved in the political process in an immediate way that they were not able to do 20-30 years ago when you had to put your $25 into an envelope and send it in to your candidate, your party, or so forth. the individual does have an

ability to be involved in a financial way. of course, it is not the same thinas all of the super pacs. >> i would disagree with that. the importance of small, individual internet donations has been greatly exaggerated in both politics. i do a lot of writing about philanthropy. the same thing you said about politics has been said about philanthropy, but, in fact, a small internet the nation's amount for something like 2% of all philanthropy. i do not mean that an individual can send $5 on and -- on the internet has nothing to do with bob kuttner's market. . point.s -- bob kuttner's

my grandfather and was one of a inor dailley's war heroes chicago. they certainly used money, but it was used in a different way -- to turn out the vote. you show up, it is checked off, you are registered, your thanksgiving turkey will come to you. there was also a good deal of money spent by the old cook county democratic machine. if somebody got sick and was unable to work -- sick benefits when my grandfather started out in the 1930's were not very common, so youparty organization would bring money to tide you over being sick. you can call this bribes if you want, but i do not think it is quite the same thing. it is certainly not the use of money in the same way.

there are people who would say politics are cleaner today because rahm date is not breathing space giving turkey's to -- eomney is not bringing thanksgiving turkey's s to people. the use of a monday to bombard the airwaysith one-message after the other -- not to save money was not important in the past, but it was used in a very different way. i am not sure of the thanksgiving turkey that tides over the docratic voters who is sick, i am not sure that was not a better, more moral, if you will, use of money than the way money is used today. [applause] >> the first time i ever interviewed at barack obama was when he was a state senator.

he talked about the stage -- the change from old-fashioned patronage batuque what he called "pig-stped" patronage. >> if you go back in american history, this ebbs and flows. you have cycles of excess, such as the 1890's, followed by cycles of reform. under theodore roosevelt, they passed the tillman act which says contributions cannot contribute money directly to politicians. that held up for 100 years. we had watergate and a brief spasm of reform before the court started to undo it. the more you removed the constraints on money overwhelming politics, by definition increases the influence of very wealthy people. there is a wonderful line that says "the law and the majesty

prohibits the rich as well at the port from a sleeping under enate."dges of the s >> bill gates, their blue burke have a great opportunity to influence the next america -- mayor bloomberg have a great opportunity to influence the next american election. let me read some comments. i will read them all together. pick out the ones yowant to respond to. mention has been made of an american morality, or a specific american moral code. what would be the relationship of that code to money? next -- is it possible the u.s. founding myth includes a bifurcation of money and morality such that each can appear t be robustly operative in separate spheres?

i take that is a really impoant question. i think one of the major issues at any given time is how do you protect different spheres of life from encroachment by other spheres? if american essentialism is de myth, why is it america is always no. one when it comes to aiding afflicted by natural or social disasters? what is the nature of our society and our values that causes this? for mr. kuttner, is at the world's money enabled by the belief in democratic freedom? is it because of this believe we have the citizens united role? how did the topic of money, morals, and myth related the long, growing lack of comity in the senate and the house? >> there is a lot of comedy in the senate and the house. >> exactly. last week -- two others -- to

what extent does globalization and technology to contribute to becoming a market-driven country? lastly, and this is to bob kuttner, this goes against something you said earlier -- do you think the internet and its social culture can be the engine for a return to the solidarity you spoke of? all of you cannot answer all of those questions, but i think they all raised some interesting points. each of you pick up on the collection however you wish. >> the one that jumped out to me is the person who asked about american exceptional as some in the sense of us being the one to help conflicted nations, whether it is sending aid for some mommies, earthquakes, or what have you. i believe that, with the notable

exception of ireland, the united states has t highest percentage of regular churchgoers of a western democracy -- of western democracies. i do not think that is an accident. i think that does speak to the ongoing nature of spirituality, morality, what have you in the context of the united states and recognizing that we have been fortunate, that we are a wealthy nation. we are willing to do what we have to to help those in need when the moment arrives. again, i think that is connected to how we see

ourselves both from an exceptional stamp. and a spiritual standpoint. -- from an exceptional standpoint and a spiritual standpoint. >> i think the bifurcation point is very important. we talk about the traditions of block transactions -- prostitution is something that should not be bject to the norms of congress. the sin of simony. the sale of ecclesiastical office. you can go back throughout point to barriers that were erected for encroament. the separation of church and state is the separation of

market and polity. one-person one-vote it's ruined by the $1.10 vote. if we are going to have a polity, you cannot just turn the polity into a market. i am a bit of an internet pessimist. he did an essay on it. i think t internet is just as likely to lead to tribalism and fragmentation and separate hermetically sealed communities of affinity as is to broadening of community. >> i would like to take up both bifurcation and morality. i think the bifurcation issue,

the idea that it is possible for money and morality -- and this i am taking your position on -- how can you possiy talk about money and morality operating in separate spheres and n encroaching on each other? they are all mixed up together. thedea that one can operate independently of the other or that the influence can be terribly limited -- i think it is as ridiculous as something else i think is ridiculous -- the idea of separate magisterium for science and religion science should take care of science's business and religion should take care of religion of the business and never the twain shall meet. that is ridiculous. every time the catholic church -- it is not possible, for instance, when you are talking

about somethin scientific, like in vitro fertilization. if you are a scientist making the judgment that is a good thing, you are also making a moral judgment that is a good thing. in vitro fertilization, which ends up in the most intimate spheres of our life, is not merely a scientific question. in the same way, if you are the catholic church or any church saying i do not want to interfere in science, but in vitro fertilization is wrong because it -- you are making a moral judgnt that encroaches on science. it would be the idea of limiting spheres to one or the other. i take it is an exact analogy between money and religion. i do not know at this bifurcation is in the founding documents, but i know it will not fly today. i am also an internet pessimist. i certainly thinkne of the real tendances of the internet

is people only look athings they already agree on. if you have never had a column on the internet, i can see that very well. >> wait a minute. are you saying we should not try to prevent encroachment that ruin the norms of a spare where -- sphere where the encroaching party does not belong? church and state is what you are passionate about. what would be your example money does not belong in a certain sphere? what would be your example? >> i would limit campaign finance. i think it ruins politics. [applause] >> that gets into the idea of where the money escutcheon -- whether money is free speech or not. >> i do not think money is free speech. i am not saying we should try to limit certain encroachments, but

i am not talking about church and state. i think that is a legal issue where you can very clearlyimit things, but you cannot, for exampl much as i would like to keep religion out of politics, i would love to, but it is absolutely impossible. yes, of course there are lots of things i would like to do. i would like to place a limit on all campaign spending. >> i see a looming presence here. there are limits on what we can spend money on. there is an old story i heard in new york about the corrupt judge that was gen $10,000 by one lawyer, $5,000 by the other lawyer, and he said to the $5,000 a lawyer, if you give me another $5,000, we could have this trial on the level. my answer to the question, rules

out america is argument rules america. i have always been taken by the person who said we need to create the attentive society, which he said, is a place that -- leaves room for strong conviction, but acknowledges our need to bo give and receive help on the roads to truth. i want to thank everyone for lping us all along that road. [apppppppp >> in his weekly address, president obama urged his congress to pass his latest plan, that he unveiled last week. it would allow homeowners to take advantage of lower financing rates come even if they owed more than their homes were worth. then, pat meehan delivers the republican address, discussing the republican jobs plan that

includes proposals to produce more domestic energy and use revenue to rebuild roads and bridges. >> of the last couple of weeks, i've been traveling around the country and talking with folks about my blueprint for an economy built to last. it focuses on restoring the things we've always done best, our strengths. american manufacturing, american energy, the skills and education of american workers, and most importantly, loans to families who could not afford them. they traded them for phony profits. they drove up prices and created an unsustainable bubble burst and left millions of families who did everything right in a world of hurt. it was wrong. the housing crisis has been the single biggest drag and our

recovery from the recession. it has kept millions of families in debt and unable to spend. it has left hundreds of thousands of construction workers out the job. something more important as its stake. i have been saying this is a make or break moment for the middle class. the housing crisis struck a part of what it means to be middle- class in this country, owning a home, raising our kids, building our dreams. right now, there are more than 10 million homeowners in this country who, because the decline in home prices, zero more on their mortgages than their homes are worth. it is wrong for anyone to suggest the only option for struggling homeowners is to sit and wait for the market to hit bottom. i don't accept that. none of us should. we launched a plan a couple of years ago that has helped nearly 1 million responsible homeowners refinance and save an average of $300 each month. it did not help as many folks as we had hoped, but that does not

mean we should not keep trying. that is why i'm sending congress a plan that will give every responsible homeowner the chance to save about $3,000 a year on their mortgages by refinancing at historically low rates. no more red tape. no more forms. a small fee on the largest financial institutions will make sure it does not add a dime to the deficit. i want to be clear. the plan will not help folks who bought a house they could not afford and walked away from it. it will not help folks who bought multiple houses who then tried to sell them in speculation. this will help millions of response will homeowners to make their payments every month and who could not refinance because the home values kept dropping, or they got wrapped up in red tape. here's the catch. in order to lower mortgage payments for millions of americans, we need congress to act. they're the ones who have to pass this plan.

as anyone who follows the news can tell you, getting congress to do anything is not easy. i will keep up the pressure on congress to do the right thing. i also need your help. i need your voice. i need everyone agrees with this plan to get on the phone, send an e-mail, pay a visit, and remind your representatives in washington who they work for. tell them to pass this plan. tell them to help more families keep their homes and more neighborhoods a vibrant and coal. the truth is, it will take time for our housing market to recover. it will take time for our economy to fully bounceback. there are steps we can take right now to move this country forward. it is what i promise to do as your president, and i hope members of congress will join me. thanks and have a great weekend. >> hello. i am pat meehan, and i represent the hard-working people of pennsylvania's seventh congressional district. the need for washington to act on jobs is as urgent as ever.

the nation's unemployment rate has now exceeded 8% for three years running, along this stretch since the great depression. struggling families and workers want to end the gridlock and get our economy moving. house republicans have offered good ideas that would help create jobs. to execute them, we need leadership from president obama, and we need help from this region from his fellow democrats who control the senate. -- we need help from his fellow democrats to control the senate. we must pass a series of bipartisan jobs bills the senate has not considered, proposals to help small businesses grow and create jobs. it was promising to see the president come out this weekend in door several of our ideas. what would really be helpful as for him to urge the senate to actually vote on them.

one of our jobs bills would extend the payroll tax cut for full year, as the president requested. the republican-led house has passed this bill. the democratic-controlled senate has not. a bipartisan conference committee is working to change that, but time is running short. our democratic colleagues in washington have a responsibility to tell the nation what they are prepared to do to extend the payroll tax cut for a full year and give middle-class families and small businesses much-needed certainty. another jobs bill in the work is an energy and infrastructure plan that will support the creation of more than 1 million private-sector jobs, not by wasting your money on pork barrel projects and stimulus spending, but by removing government barriers that are getting in the way of american job growth.

this marks a sea change from the way things were done in the past by both parties who stopped highway bills with earmarks and drain resources from urgent projects to have a direct connection to economic growth. in 2005, i am sad to say, the republican-led congress passed the highway bill that contained more than 6300 earmarks, including the famous bridge to nowhere. john boehner was one of only eight members who voted against that bill. he is now our speaker. those days are over. instead of more earmarks, or new taxes, our bill will remove barriers to job growth by expanding american energy production, which will help lower gas prices and using the revenue to repair and improve our roads and bridges. repairing our roads and bridges is not just a safety issue. it is an economic one.

pennsylvania has more structurally deficient bridges than any other state, and a half a million people in the commonwealth are out of work. that is why our bill removes barriers to job growth and reforms the process by ending needless delays. it ensures resources go to projects that have a direct connection to our economy. this is another good idea that will help put americans back to work. it is built on common ground. the president supports improving infrastructure and recently echoed our party's call for an all of the above energy strategy. to learn more about the american and energy infrastructure jobs act and the republican jobs plan, visitsjobs.gop.gov. our economy faces serious challenges right now. gridlock in washington does not

have to be one of them. the house is acting on good ideas that with help from the president and democrats from the senate, we can get things done. the people we represent cent this year to find solutions and remove -- and move the country forward, not further divide it. thank you for listening. and, god bless america. >> republican presidential candidate mitt romney is the winner of the nevada caucuses in the republican presidential race. he is followed by former house speaker newt gingrich, congressman ron paul, and former pennsylvania senator rick santorum. the former massachusetts governor gave his victory speech to supporters at the casino resort and spa in las vegas. this is about 30 minutes.

♪ ♪ >> hello. it looks like we're missing a few of our kids. thank you, nevada. once again, i am here to make sure you listen to me this time and obey when i tell you, don't clap until i am finished. nobody listened to me last time. i do have to give special thanks to all the people that made this happen. by the way, the most people i

need to thank our all the, -- volunteers. thank you to all who have volunteered. our nevada cochairs, i want to also thank congressman mark enjay and mark hutchinson. many elected officials struck the state have -- state have been so crucial. of course, sara nelson, nevada's senior advisory, ryan irwin, nevada state finance director cor a christiansen -- cory christiansen. i want to give a special shot out to eva. your first lady from nevada from a few years ago, we became very good friends and she is been

helpful in this effort. we so mr. sweet husband. a shout out to my friend, too. [cheers and applause] observing things, as i tend to do, i have noticed that mitt as started to win in states that are so important for the general election. he won in new hampshire. that is going to be a very important state in the general election. it is a swing state. he did the same thing in florida. that is going to be a very important state for us to win. we appreciate that. also, this date will be an important state. [cheers and applause] you guys -- now that we have all of your excited, we will need you again next november. we appreciate that. maybe some of you are waking up

to figure out that our country is in trouble, we're heading in the wrong direction, and we're looking for a guy that can fix it and turn this economy around, and create jobs. we're excited to introduce the next president of the united states, mitt romney. [cheers and applause] >> wow, what a gathering. thank you. thank you, guys.

wow. you know, this is not the first time you have given me your vote of confidence. and this time, i have to take it to the white house. four years ago, candidate obama came to nevada promising to help. but after he was elected, his folks skipped coming here for conventions and meetings. today, nev. unemployment is over 12%. home values have plummeted. and nevada's foreclosure rate is the highest in the nation. i have walked in nevada neighborhoods blighted by abandoned homes and where people wonder why barack obama has failed them. well, mr. president, nev. it is

done with your kind of help. three years ago, a newly elected president obama pulled america that, if congress approved his plan to borrow nearly one trillion dollars, unemployment would drop below 8%. it has not been below 8% since. today, he has been trying to take a vow for 8.3% unemployment. not so fast, mr. president. this is the 28th straight week of unemployment at that level. if you take into account the people who have stopped looking, the real unemployment rate is over 15%. mr. president, america has also had enough of your kind of help.

[chanting] >> mitt! mitt! >> let me ask you a question appeared did obamacare encourage businesses to hire more people? did the national labor board encourage employers to expand here? did efforts to block the domestic production of energy and the keystone pipeline speed and job creation? and did those billions of dollars that he sent to his green energy buddies give anybody. job? mr. president, we recommend you good news on the jobs front. but because of the innovation of the american people and the private sector and not to you, mr. president.

[chanting] >> romney! romney! romney! >> this president's misguided policies made these tough times last longer. earlier in the week, he spoke with a woman from texas during an on-line event. she told them that her husband has been out of work for three years president obama said he found that interesting. [laughter] interesting, really? i have a better word. tragic. america needs a president who can fix the economy because he understands the economy and i do and i will. [cheers and applause] this president began his

presidency by apologizing for america. he should be apologizing to america. we will not settle for a president who tells us it could be worse. what defines us as americans is their conviction that things must be better. that conviction guides this campaign. it has rallied millions of americans to our cause, including tens of thousands of the veterans who gave me their support here today and i thank them -- tens of thousands of nevadans who gave me their support here today and i thank them. you know that our future is brighter and better than these troubled times. it is better than 15% real unemployment. it is better than $15 trillion in debt. it is better than the misguided promises of the last three years and the failed leadership of one man. our campaign is about more than

just replacing the president, however appeared this is really a campaign about saving the soul of america. president obama says he wants to fundamentally transform america. we want to restore to america the founding principles that made this country great. [cheers and applause] our vision for the future could not be more different than his bid president obama will grow government and a set -- and amassed more trillion dollar deficits. i will not grow government. i will cut it. i will not just squeeze the year maturity economy. i will reduce it. and i will finally balance the american budget. [cheers and applause]

president obama's brand of capitalism since your money to his friends companies. my free enterprise is to return entrepreneurship to the genius of consumer markets and the creativity of the american people. [cheers and applause] like his colleagues who think they know better, president obama demonizes and denigrates every sector of our economy. i will make america the most attractive place for entrepreneurs, for innovators, and for job creators. [cheers and applause] and by the way, like other people running for president, i know just had to do that. [cheers and applause] elected president, my priority will be about saving

your job and not my own. as you know, one of the most important and personal matters in our lives is health care. president obama would turn the decision making over to government bureaucrats. he forced the obamacare. i will repeal obamacare. [cheers and applause] the president orders loses organizations to violate their conscience. i will defend religious liberty and overturn any regulation that tramples on our first reading, our right to worship as we choose. [cheers and applause] [chanting] >> president obama is shrinking

our military and hollowing out our national defense. i will insist on a military so powerful that no one in the world would ever think of challenging it. president obama seems to believe that america's role as a leader of the world is a thing of the past. i believe the 21st century will be and must be an american century. [cheers and applause] [chanting] >> romney! romney! romney! >> our mission is to increase the freedom and opportunity of the american people and our blueprint is the constitution of the united states. we will build an america where hope is a new job with a paycheck and not a faded work on a bumper sticker. and i will not attempt to bribe

voters with promises of new programs and news of cities and ever-increasing checks from government. if this election is a bidding war, if you want to make this election about restoring america's greatness, i hope you'll join with us. [cheers and applause] if you believe the disappointment of the last two years are a detour and not our destiny, and i am asking for your vote. i am asking each of you to remember how special it is to be an american. i want to remember why it was that you or your ancestors sacrifice to come to america and overcome the challenges of life in a new country, why they came here. it was not for a free ticket. it was for freedom. [cheers and applause]

it was not for the pursuit of government benefits. it was for the pursuit of happiness. [cheers and applause] we still believe in that america. we still believe in america as the land of opportunity. we believe in the america that challenges us to be bigger and better than ourselves. this election, we must fight for the america we love. we believe in america. thank you so much and god bless you [. cheers and applause] your the best! thank you! [cheers and applause] ♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

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♪ >> after mitt romney's victory

speech, newt gingrich met with reporters. this is about 25 minutes. [applause] >> we thought on super bowl leaveve, instead of the usual, e would start and say that there's one story that came out today that i want to put to rest for the next few months. i am a candidate for the president of united states. i will be a candidate for the united states. we will go to tampa up. we have over 160,000 donors, 97% of whom have given less than $250. we have an obligation to them to

stand up for their values, their concerns and the reason that they have gotten involved. we will leave on monday to go to denver and then to minneapolis. then we will go on to four cities in ohio and we will continue to campaign all the way to tampa. actually, this week, several things have clarified themselves that have been very helpful. unlike governor romney, i care very deeply about helping the poorest americans. i believe that the declaration commitmentence's that the creator in doubt as with the pursuit of happiness extends to the poorest of americans. turning the self -- i think it is important to turn the safety net into a trampoline. i am not comfortable, as governor romney said he was, which simply allowing people to languish in the safety net. i think that is a very

fundamental difference between the two of us. i also believe that his proposal for indexing minimum wage is a bad idea, which will increase unemployment and every evidence we have is that it will increase unemployment. if you're a state like nevada, which has some 32% teenage unemployment, if you're in a country that has 43% black teenage unemployment, maybe you should not be suggesting a capricious increase on an automatic basis of a minimum wage which kills jobs and stops access for young people. there are very big differences evolving in this campaign. i think -- i believe that the vast majority of americans will want an alternative to a massachusetts moderate who has been pro-abortion, pro gun control, pro tax increase, and who ranked third from the bottom in creating jobs in the

four years he was governor. i suspect this debate will continue for a long time. our commitment is to seek to find a series of victories for the end of the texas primary. and then to see if we can actually win the nomination. tonight, he will do reasonably well. this is one of his best states. this is a very heavily mormon state, a state that he carried in 2008. i think we have early returns and we do not know yet how it will end up. the last time around, ron paul was in second place. anytime we are in a caucus state, mr. paul has a substantial advantage. i think will do better than john mccain did several years ago. we are very happy to be competing here and we will move on to compete first in maine, minnesota, colorado.

early voting has already begun in ohio and arizona and we will be competing later in arizona and in michigan and we will go on to super tuesday and beyond that. i want to set that so all of you can relax. every caucusis u, day, they send out a rumors that i will withdraw appeared that is their greatest fantasy. -- i will withdraw. that is their greatest fantasy. i will not withdraw. i look forward very much to opportunities to debate him, opportunities to draw the contrast, and opportunities to compete for votes. i would be happy to take your questions. >> [inaudible] we have not seen a lot [inaudible] >> i was worried that you would not have noticed.

>> what are some of the conclusions? >> we got together for very practical reasons. i was surprised by the degree to which the establishment has closed ranks and made quite clear that they are desperate over the prospect of a gingrich presidency. i was surprised by george soros, a cheerful explaining in davos that he was happy with either obama or romney because it did not make much difference in policy. i am surprised that the new york times article on the romney campaign's decision that they had to destroy newt gingrich. so we stopped and said, all right, if this is the objective reality of the campaign, the entire establishment will be against us. the scale of wall street money will be amazing and the campaign will be based on things that are

not true. then how do define the campaign for the average american so they get to choose if they want two george soros-approved candidates in the general election or would they like the conservative versus one george soros-approved candidate? we will be out-spent. we think we can communicate through the clutter and communicate how big the difference is. reagan had this challenge with john connally. goldwater had the same challenge with rockefeller. the establishment had massive financial advantages. reagan lost five straight primaries before he finally started winning in 1976. we will find a pro-abortion, pro-gun-control, george soros- approved candidate establishment

will not do very well. i am happy to have a debate with the governor romney. i will debate him one-on-one anywhere and anytime that he is willing to stand up and explain his record without the kind of gimmicks used in florida. >> looking past february -- >> everybody will get a chance. super bowl was not until 3:29 p.m. >> there is a report that some have been meeting with mitt romney and he said that he will help him financially. >> who? >> sheldon. >> i have no idea. >> with that bother you? >> first of all, i believe he is quoted as saying that, if i dropped out, he would be willing to support governor romney. i have said myself that the choices -- i have said myself that, if the choice is obama or romney, then there is no choice.

compared to barack obama, virtually anybody is a better candidate. so that the not bother me at all. >> are you looking past the february events. in're spending a lot of time ohio this week. can you lay out what the next month will mean for a super tuesday strategy? >> as you keep score, something you do not follow me on this. if i am on hannity or happen to be associated press or i am on one of the networks or even in open with the new york times," it reaches the whole country. so i run a campaign that i suspect will be the front-runner by the texas primary.

that really is a national campaign. i think this coming week we are in colorado, minnesota, and ohio. then reduce heat pack in washington. the following monday, we do three days in california. we tend to compete in every single state in the country and i think you can count on us being competitive in every single state in the country. >> nancy pelosi said came out and said that she stands with her fellow catholics who stand with president obama. >> fellow catholics meeting archbishop dolan, the entire hierarchy, every bishop, every priest -- those are her fellow catholics? you might want to go in as archbishop dolan whether the term applies to archbishop brolin?

but me go back for a second. the obama administration has declared war on religious freedom in this country. and people need to understand that. this is a decision so totally outrageous and an illustration of such radical secular ideology that i believe that the entire hierarchy will a ploy is it. it has to do with whether or not united states can tell the institution you have to give up your religious beliefs. that is what obamacare has come to mean. the right of a politician and bureaucrat to tell you you may no longer worship the way you

want unless you pay a penalty for doing so. i think the average american will be repulsed by the arrogance and the bigotry of the obama administration. >> have you considered voters are not buying what you're selling? you have been on the ballot in five states. you also talk about the debates but you have had 18 of them and you have been considered to done well. it is not showing up in the polls. >> i am not going to defend the outcome in a state where i was outspent five to one. you understand that the idea of taking a state where the other guy spend five times as much money and many of his ads were false, that maybe that is not an accurate measure. i was ahead by 12 points. when it was a genuinely positive campaign. i was a had about one week ago. in a few more weeks i will be ahead ago. >> is that ignoring the reality of the campaign? he has gone negative and is working. >> he has gone negative and it is working.

what i am asserting is that i do not believe the american people will approve of a campaign which suppresses turnout. it is amazing, if you look at florida, every county had an increase to turn out. every county carried by romney had a decrease to turn out. if the only way romney when's it's depressing turnout, how is he going to do that in the fall? if he can only outspent five to one, how will that apply against obama? i suggest there are underlying factors and i am happy to continue campaigning and i am amazed that the media is desperate for subscribing and excuse to ask me to quit. >> can you be successful with mitt romney in your head the way he is right now? >> first of all, i am not sure

if mitt romney is in my head. that is an interesting analysis on your part. with a psychiatric degree, that will give you a chance to get new clients. there is a clear contrast. the clear contrast is important. over time we are going to drive home that contrast in a way which will be to his disadvantage. i think the american people want somebody who is genuinely conservative, prepared to change washington. take his one comment this week about not caring about the poor. we know it was a mistake just like his comment about liking to fire people. a conservative who cares about the poor, a conservative who cares about every american, a conservative who says why don't we rethink the safety net so it

becomes a trampoline. it is jack kemp. a range of people who have been working on these ideas. ronnie's comments are a sign he does not understand conservative philosophy. that is important for republicans and conservatives to think about. nominating one more moderate like 1996, like 2008, i do not think that is a good future for the republican party. i do not think it is a good future for the country. >> [inaudible] how do you plan to deal with indifferently going ford? -- going forward?

>> go back and look at the second debate. i have never had a person stand next to me and be as dishonest as he was. look at what he said. you had larry sabato writing romney was being factually false. i did not have any mechanisms to turn to somebody who is being dishonest as a candidate for president. if you cannot tell the truth, which is a charge that has been made by mccain, fred thompson, huckabee. how can the country expect you to leave as president? -- to lead as president? i was stunned. i make no bones about this. in the second floor debate i had nothing to say because i had never seen a person who i thought of a serious candidate be that fundamentally dishonest. it was blatant and deliberate. i do not want to tell you now.

you have to give us a few trade secrets. >> [inaudible] >> this is a state he won last time. we will do better than mccain last time. >> and news reports suggest you had a greater involvement with freddie mac. [inaudible] >> i have not seen the reports. i will be happy to look at them. >> you said you are ashamed of the negativity. have you engaged in any negativity? are you willing to commit to give up any negativity? >> you cannot disarm in a world where somebody is aggressive. as you know, you might as well

withdraw from campaigning. >> you do not think you could win with a positive -- >> i tried that. i stayed relentlessly positive in iowa and i lost 22 points. i think it is terrible that the american system is reduced to negative ads, some of them false. i wish it was not happening. we would be better if it was not happening. but it is a fact. unfortunately, if you are not willing to stand up and fight you have to get out of the race. that is a sad comment. >> some have suggested you decided you want to go more positive but that does not match your news conference. what to you want to see about the tone? >> we're going to make a series

of positive speeches. i am happy to talk about turning this safety net into a trampoline and ideas we have for creating a better future in terms of tax cuts and less regulation. they gave this speech last night at a church which was positive about american exceptionalism. it is harder to get your profession to cover positive speech years. -- speeches. i can give hours and hours a positive speeches. that does not mean they will show up anywhere. >> is it a positive about america but-about romney? -- but negative about mitt romney? >> there is a positive future if we elect conservatives. i am happy to talk about why that is true and it is hard for

somebody who invented romneycare to be part of the future. >> are you hoping for other endorsements? >> i cannot understand those articles because nobody i knew thought he was going to endorse me. those of you who wrote those articles that should go back to your sources. it is a free country. there are few people better than manipulating the press and donald trump. he produced it -- proved it once again. >> the explanation is that you are the brain, the machine behind your campaign. to you think that if you -- are -- you talk about not responding fast enough to

gov. romney. addingou looking at consultants? >> it would not have been different. how is a consultant going to say to you in advance, and until i saw the new york times article about the discussion last sunday, it had not occurred to me you would have the level of dishonesty we saw last week. i have been around a long time. i have been through a fair number of fights. the language in that article is startling and a break with the american tradition. >> you are your own campaign manager? >> we have a lot of smart people but when it comes to what the candidate does and what the candidate says, i bear full responsibility. i do not get talking points or coaching in the sense governor romney did. here you have a guy who does a good.

theno does a good job and they fire him? the only debates romney has done well he was coached by this guy and then they fire him. it is kind of weird. you have the last question. >> can you discuss financing? >> it does not fit our internal numbers. i don't understand where that report came from. some clever person went back and changed their interpretation. >> [inaudible] >> that is the one state we messed up again. -- messed up in. i have been honest about that. we hired the wrong person. we will be in 49 states and we will be competitive in all of them. i hope you have a great super bowl. take a few hours off and try to enjoy life.

thank you very much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> is my son in law who, for christmas, give my daughter one share of packer stock. we had a serious conference call and we concluded that we should be for the team that beat the packers. it was painful, but i am for the giants. period. there you go. >> for more resources come use the c-span campaign 2012

resources. >> sunday, democratic congressional campaign committee chairman rep steve israel of new york on the strategy to win 25 more seats to take control of the house of representatives this fall. that is at 10:00 a.m. and 6:00 p.m. eastern here on c-span, sees an rea, and c-span.org -- c-span 2 radio, and c-span.org. >> congressional lawmakers continue their investigation of the collapse of amf global. -- of mf global. it filed for bankruptcy protection on october 31. the ceo, john core design, resigned in early november.

this is the fourth congressional hearing on the mf global collapse. >> the committee will come to order. we will have opening statements and we have previously agreed that there will be 10 minutes for each side. mr. gramm and mr. royce have joined us today. they're not members of the subcommittee. they're members of the full committee. i ask unanimous consent that the members of the financial services that the non-members

can join us today. so good morning. this is our second hearing on the collapse of mf global. the purposes of these hearings is really to try to find out exactly what happened, why a very old company ended up in bankruptcy. creditors and shareholders and, unfortunately, customers lost money. we may have additional hearings. we continue this investigation. one of the things we hope to accomplish from these series of hearings and from the investigation that we have been conducting is to publish a report to give a time line and some findings of how these customers lost their money, how a company that was allowed to kind of slip through the regulatory groups with them not

being knowledgeable about some of the problems going on there, we will here from some people today who were inside the organization. we will hear today from people who were outside of the organization, ratings agencies. risk officers are here today who were inside the organization. the bottom line here is to try to figure out what happened. what we sense is that what we have seen in other problems that we have had in the marketplace is that there those who were saying that, if we had dodd- frank in place for some regulation in place -- one of the things that happens is that people done to conclusions. we want to get to -- people jump to conclusions. we want to get to the bottom

here. when we look back at the 2008 crisis, a lot of people said that it was the fact that we had lack of regulation. but the truth of the matter is that, if we take the time to ascertain what happened, what we have found is that 2008 happened not because we did not have enough regulation. in many cases, maybe we had regulators not doing their job, behavior that was not acceptable. the purpose of this hearing and the hearings we have had in the past is to get to the bottom of that. so i look forward to hearing from our witnesses today. with that, i would yield to my good friend mr. copcapiano. >> thank you. everybody i know, including

myself and all my colleagues on the side, are simply asking some questions. for me, as a supporter of dodd- frank, i have no idea whether it would have a difference in this issue. for all i know, it may be simple basic criminality. for all i know, it may be excessive risk. i do not know yet. i have not talked to anybody yet who has drawn a conclusion. i did not come here, either today or the last year or even the next hearing, with those conclusions. that is why i am here. i have lots of different questions. i still feel that we may be ahead of the curve, which it is a good thing, for a change. we will have a whole bunch of questions, let me did last time, that cannot be answered. i think it is important to ask them to continue this investigation to see not just in this instance -- i will

continue to say that it is always bad for a company to lose $1 billion. it is a bad thing. if there is a criminality aspect to it, someone misappropriate funds, that is not the job of congress. that is the job of the department of justice. assess if're here to others are doing it, whether there is a hole in regulation, if there is need for enforcement or regulation or not. that is what i am trying to ascertain current we hope to reach a few more steps in -- to ascertain. we hope to reach a few more steps in that. thank you. >> of believe this issue requires are persistent attention because there were many failures that have already been exposed. among them, the failure of the ceo and the board to heed warnings from their internal managers, a clear failure in the major credit agencies to identify the massive risk that

mf global had taken on. the reason why they want the attention of congress is that it affects our constituents and their money. i have a female constituents -- i have an e-mail from a constituent just this morning who has substantial missing funds. the three credit regioratings agencies are major market movers. it is not a coincidence that when it downgraded mf global, that it then collapse. but the actions taken by moody's and s&p hastened the results. i expect it to be argued that the financial troubles that mf or identified as soon as possible and the fact that the situation was so precarious validated the abrupt actions of the agencies. but there is a demonstrable pattern of this happening again and again. enron, lehman, worldcom -- they

cause major market disruptions. bad companies and debt securities have been rated favorably bright until the house of cards have collapsed. if we can avoid shocks to the system, our financial system can be sounder and our investors can be more confident. it is our responsibility to examine how it happened, carefully consider reforms, and, most importantly, make sure it does not happen again. i appreciate you facilitating this hearing. i yield back. >> thank you, gentlemen. now, mr. royce is recognized. >> thank you, mr. chairman. this is three months after the initial hearing and still we have most of the questions unanswered in terms of what happened to the $1.2 billion of customer funds. i think the most pressing public policy left unaddressed in all of this is, of course, the

breach in segregated customer funds. i think the shocking part is that the rules on this has been around for 75 years and, according to the regulatory community, they are not rules that are difficult to understand or particularly difficult to enforce. there are the foundation of the protection regime. one question is how did the cftc fail in this task. despite what some have said and might say again today, i will just give this perspective from the cftc commission. the perception that mf global happen because of lack of regulation is mistaken. both are governing statute and our regulations require mf global to segregate customer

funds. they have also called for specific like coverage for the swap markets. i think this would be a mistake. expanding the state yet to this large market would compound the problem that is already present throughout our financial sector. there are several steps that can and should be taken. the focus must be on improving market discipline and ensuring the most basic regulatory functions are met by these agencies. i thank you, chairman, for holding this hearing. >> i think you, gentleman. >> i have a little bit of a different perspective on this. there is no question that customer funds being transferred -- i think it speaks for itself pick it never should have happened. the law is clear. but on top of that, it is further compounded by one of the biggest travesties a mark --

travesties in market history. who made a decision to allow this bankruptcy to be a simple checker to say and not under the commodities bankruptcy laws? someone stole their money and then those customers who had their money stolen got hit even worse because the bankruptcy laws would work against them. that is one of the biggest travesties definitely in market history and undermines the entire u.s. market, certainly commodities and futures. with that, i yield back. >> thank you, gentlemen. i believe those are the opening statements. remember, members, that the opening statements will be made as part of the record. now i will introduce the panel today. mr. michael rosen, former financial chief officer atmf

global holdings ltd. appeared before we proceed, i will ask you to raise your right hand. do you solemnly swear and affirm that the testimony that you are about to give will be the truth, the whole truth, and nothing but the truth? thank you. without objection, your written statements will be made a part of the record and you will be recognized for five minutes to summarize your testimony. mr. roseman. >> my name is michael roseman, former chief financial officer for mf global group. thank you for the opportunity to testify today. i hope that my comments will be to continue to build on your knowledge of the events atmf global. >> i will ask you to pull your microphone a little closer to you. >> is that good?

thank you. regarding my background, i started my professional career as an aerospace and engineered after graduating from the university of delaware. as an aerospace engineer. in 1994, i received an m.b.a. from the university of north carolina and pursued a career in financial-services. i first joined financial products with the responsibility of the risk analysis function. the following year, i'm co- manage the u.s. dollar otc portfolio. for a number of years, before returning to risk management. in 2001, i joined the bank of montreal as the head of u.s. risk oversight from trading, underwriting, and investment activities in the united states and with the mandate to strengthen the risk-management activities and capabilities in the u.s. in 2004, i joined new edge as

the chief risk officer again with the mandate to elevate the risk-management capabilities to fully supports a growing brokerage business. in each of these experiences, i coordinated significant efforts to implement new practice policies, systems, analytics, and controls in support of businesses and to bring full transparency to and governance to the risk to organizations. in august 2008, i joined mf global reporting to the ceo. i also had a mandate to elevate the risk-management capabilities to support the future objectives and address the risk management recommendations made by two consulting firms that had been hired by the company. as a c o zero, and provide leadership for and oversaw -- as the coo, i provided

leadership for and oversaw the management team and provided regular reports to the board. over the next two years, i coordinated closely with the sick of management and the board to implement a new comprehensive enterprise risk management framework, including the establishment of a new risk- management committee and a board-approved risk-appetite categories of risk. i coordinated the efforts to enhance the rest systems, implement new analysis of risk measures, strengthen the 24-hour global risk monitoring, and enterprise-wide controls across the organization and establish a culture of sound risk management throughout the company. as a key part of my responsibilities, i reviewed the firm-wide exposure involving risk. i really examined them in the context of executive management

and to the board. both the executive management and the board receive a monthly enterprise risc report that detailed firm-wide exposures against risk appetite and limits. i also presented the board limit requests from executive management along with their associated risks. regarding the sarin depositions, mf global had country-level credit limits and specific sovran limits in place to control exposure of all activities in all countries -- and specific sovereign limits in place to control exposure of olive trees in all countries. with respect to italy, spain, portugal, greece, and ireland, prior to mr. clore resigned joining mf global. i believe the positions of march

2010 were less than $500 million in total across these issuers. in june-july 2010, received a request from sovran unit and business units. i review them in detail with the business heads and with mr. karzai could i expressed my cautions on the requests, outlined the credit default swaps market, along with the political uncertainty in developing countries. while mr. core design and i had a difference -- while mr. had a difference i of views. during this time, i expressed increasing concerns with regard to potential capital risk associated with growing positions and began to express caution on the growing liquidity risks. additionally, around this time,

it was given a profitability of the transactions and the importance of generating earnings. at this point, i indicated to that we needed toorzine consult the board's risk appetite. the decision was made to consult the board to discuss risk and sovereign limits were presented to and approved by the board. in late october, recalled positions were approaching $3.5 billion to $4 billion. i was then presented another request from the board to increase the total sovereign limit to $4.75 billion appeared at this point, not only was i concerned with the capital risks, but given the size, was concerned with liquidity risks

relative to the risk appetite and taking into account the liquidity risk held by the company. i began to discuss my concerns about positions to mr. corzine and others. however, the risk scenarios presented were challenges being implausible. at the end of november 2010 board meeting, i presented the new request along with a detailed analysis of potential liquidity risks and stress scenarios. these scenarios were presented at the individual sovereign levels and the liquidity levels among all sovereigns and other parties. i highlighted a the significant capital risks given the star run default risks in europe -- given

the sovereign default risks in europe. these scenarios were debated as not being possible. a ultimately, the board approved the request, conditioned on the limits being evaluated began in 2011, which is when i left the company. i would be happy to answer the committee's questions.

s&p analyst at sought to obtain additional information and were told by executives that they were "in the strongest position ever as a public entity." mf global reported a quarterly loss the next day. it frightened the markets even

further. although mr. corzine stated that mf global was on strong footing , the company stock price fell by nearly 50% the day of the earnings announcement. one day later on october 26, s&p mf global under review for potential downgrade. this action affected as the p's view that most interest -- interest rates could -- we also noted that the firm's exposure and increased risk profile. the report concluded by stating that at the peak may lower at mf global's rating depending on the execution of strategic plans, which included the short-term sale of certain operations. on october 31, to about 11, mf global filed for bankruptcy

protection. s&p downgraded them to d. the collapse was not caught by the exposure to the rtm portfolio are down spiraling confidence, we questioned the firm's transparency and the ability to generate revenue. i will be happy to answer any questions you have. >> i thank the gentleman. mr. kantor, you are recognized for five minutes. quite good morning. i am richard cantor. i am the chief credit officer for moody's investment services. i lead the credit policy group. i share the credit policy committee. we are responsible for the approval of moody's ratings. thank you for this opportunity to address you today. long before the collapse of mf global, moody's regarded the company as they franchise that

was reliant on customer and counterparty confidence. our rating reflected our view that its credit profile -- for several years, moody's viewed mf global one of the riskiest credits. one -- today i would describe the ratings actions before the bankruptcy, which was broadcast on by the revelation that customer assets were -- -- which was brought on by the revolution the customer assets were missing. moody's credit ratings are forward looking opinions that seek credit to credit risk. it means that issuers aside a higher level are less likely to default. some creditors expect to default at every credit level, but no

one can predict which particular level will default. if that were possible, moody's would use a two-step rating scale. moody's expresses its opinion as to the market not only through its ratings, but also to the publication of ratings indicators and through written research. when we announced that a credit rating as a negative outlook, we are indicating that the issuer's rating is more likely to be downgraded that upgraded under time. placing a rating of under review meeting is likely to change in the near term. moody's viewed mf global credit resist as not particularly strong as reflected in its negative outlook. moody's subsequently downgraded mf global's rating. by the end of 2010, it had a negative outlook communicating

downward pressure on the rating. moody's reassessed mf global's profile last february in light of the company's high leverage to similarly rated peers. we identified three areas of concern. earnings, leverage, and risk, which would concern -- which would affect the next ratings action. in august of last year, moody's once again communicated it would likely downgrade mf global if performance did not improve in these three areas. on october 21, we met with mr. core design and members of his management team. -- corzine and members of his management team. mr. corzine made clear that the security transactions were purely proprietary trading positions. moody's had understood based on discussions that the company was increasing its principal

trading activity for the purpose of facilitating customer transactions. mf global also revealed that it had reported a significant quarterly loss. as a result, mf global's performance had deteriorated in three areas of concern that moody's had identified. earnings, leverage, and risk. moody's once again downgraded mf global's rating and placed it on review for a further possible downgrade. the following day, mf global announced a record quarterly loss as the crisis of confidence and liquidity gathered pace, moody's downgraded the rating and said the credit on review for another possible downgrade. when mf global filed for bankruptcy on october 31, moody's downgraded the credit rating. moody's withdrew its ratings on

mf global all together on november 15. thank you. i look forward to answering your questions. >> mr. gellert, you are recognized. >> i would like to thank the chairman the ranking member and members of the subcommittee. james gellert, chief executive of rapid ratings. story. its bankruptcy follows the trends of other notable financial failures in one way. agencies paid to provide professional opinions -- professional opinion spelled to give warnings. mf global carried an investment- grade rating. rapid ratings provided two years of warnings as mf global as a

high risk investment entity. we are a user-pay, not issuer- paid firm. we have no contact in the ratings process which management, bankers, investors, or advisers. we use of our at fault -- software system. our ratings have an impressive record. our financial health rating system evaluated income statements and balance sheets. the product is a highly complex modeling process that measured variations in the financial help of any company and how well it can withstand an internal or external shock. over the past 20 years, 90% of defaults have occurred at 40 or below on our scale. we had mf global rated at 23. they were rated a 29. those ratings are in our high

risk category and well below investment grade. these ratings have a rough equivalent of ccc-. the fhr system is agnostic to qualitative judgment unless their actions affect the company's financial health. mf global is a simple story of a firm's declining performance, including revenue performance, profitability, debt service management. in 2007-2011, mf global's -- mf global's revenue declined. net profit declined by 132%. in the last 16 quarters, mf global had 10 quarters of reported losses. the last four saw losses grow by 68%. the most recent for look -- quarterly report showed a record

loss of 191.6 million. mf global is unmistakably in declining health. s&p and fitch barely moved over this period. management will try hard to keep and get the best ratings. if ratings analyst did not properly collected what they are sold, the ratings will be optimum. the big three looked to the cycle, the ignoring the short to medium term performance of ability to capture a firms underlying fundamentals. barriers to competition are still great despite reform efforts. ratings are still firmly embedded all over the financial system. the big three hold little to no accountability when things go wrong. the mf global story turned to

the question of the timings of ratings. agencies need to be careful when downgrading a company. it could affect market behavior. these are real concerns. they pale in comparison to the damage done when ratings are downgraded to late or not at all. we do not advocate ratings volatility. we support a better ratings industry. congress has a bill the response to this point directly. the market has no way of knowing when the big three are proactive, behind schedule, are being inattentive. while we regularly outperform the big three, we do not believe the rapid ratings system is better than others. we believe in open competition in the ratings business. those who had early warnings on

mf global or better service than those who relied exclusively on the big three. we need more accurate ratings of more competition. we cannot rely on traditional ad agencies who promise much solitude deliver and defend much less. thank you. >> we now go to questions. the chair recognizes himself for five minutes. mr. cantor, in moody's jan. 78 letter responding to the subcommittee with reference to the rtm trades, they said the analyst did not have an understanding that mf global was exposing its own capital until october 21, 2010. in the 10k filed and published

on may 20, 2011, moody's did not know about it according to your own letter until october 21, 2011. how you explain that. >> of course, all financial services firms are at exposing their capital applicable levels to the assets they hold on balance sheet. they have a variety of derivatives exposures that can also be viewed as exposing your capital. the entirety of the set of obligations would be some significant multiple of its capital. in this case, we were talking about a specific set of

transactions, which we interpreted based on our discussions with management in the past as the transactions that had been undertaken with the intention to facilitate customer-based transactions, which would imply that either they would be liquidated over a short period of time, or they were being used for some other purpose rather than taking a part -- proprietary trading position. >> we understood that was your response, but we talked to some other people who look at that 10k. based on bringing mr. corzine in and his stated goals for this company, they were adding proprietary trading, becoming a

full-service investment banking company. a lot of folks think if you did not understand it, you should have followed up. as you are aware, in august they filed a 10q. did your analyst review the 10q filed in august? >> the 10q or the 10qa? >> they did a 10q in september, which was related to the european rtm trades. >> that was a one-page document. that was not reviewed by the analyst at that time. >> would that have been a flag

for an analyst to say what is up with this? we should take a look at this? >> i do not believe so. what that document indicated was the cash capital that was being required by mf global's regulator was being breached because of the different interpretation that was being given to the exposure. it was not new information about the exposure, but rather capital treatment and the change in capital requirements was not a particularly significant amount from a credit perspective. >> did your analyst -- does your analyst read financial newspapers? >> yes. >> "the wall street journal" had an article on october 17, 2011, the details they have been asked to put up additional capital. there were concerns about the company. does it -- did your analysts

follow up on that? >> we had a meeting already scheduled with mf global. back topic would be discussed. >> what was the date of that meeting? >> the 21st. i'd think there was prior discussion two days before that. >> fault -- four days after the wall street journal. you did not pick up the initial 10k that came up in march. the subsequent 10ks -- they had been asked to put up additional capital. did you read "the wall street journal" and decide you needed to see what was going on? >> no. this was in the context of a regular quarterly meeting we had with mf global and other issuers in the market. we would be reviewing in that

meeting all of the financial leases -- releases that occurred since the previous meeting. we would be discussing that issue as well as others. to recall, there was not a lack of knowledge of the european exposure, but rather a different view about what that exposure entailed and how to interpret that exposure. it was not discussed in either of the documents that you mentioned. >> obviously s&p figure that out a little earlier than moody's did. we hear from mr. gellert, they have been concerned about the company's capital for some time. mr. gellert, i was going to ask you -- the rating is 23 in your firm? >> 29 going into october. at the quarterly financial release, we downgraded it again

to 23. >> that is only skelp from what? -100.10 anything in the 23, 26, 29 range is a significant concern. >> i yelled for 5 minute. >> mr. parmelee, would you agree or disagree that a ddd is not a good rating? "it was a ddd-. it was in the middle of art scale. it to the lowest investment- grade rating. >> would you invest in a bag with that rating? >> sir, it is considered to be an investment-grade rating, but

it is the lowest investment- grade rating. cantor, your da2, pretty low? >> we have a lot of issuance -- do line > >> when you get that rating, you damn well what a good one. we know the difference. you do not? >> i meet with issue is very regularly. some are please. you mean at your ratings do not mean a damn thing? quite there is a $1 trillion market. every day there are junk bonds issued. what does it matter what rating you rate them? why bother. i do not want to go down this

path. you can avoid the question of up to a point. i will get you in a minute. mr. cantor, you stated that you did not know that there was proprietary trading until october 21, 2011? do you know what that tell us? no one confirmed the 10k. is that a fair conclusion? you did not read the document in may 2011? >you missed the fact that they were proprietary. >> we did not understand -- the size of the position was a proprietary -- >> that is not your statement. your statement is you did not know it. honestly -- i want to get down the road to these 10ks.

mr. parmelee, you stated that the 10k was the first time you learned of the rtms. is that a fair statement? >> we did not know about them. >> the team was aware. i did not learn about those until probably the october timeframe. >> mr. cantor did your company know about the off-balance rtms? if you are giving a lot of money to read something, you would think you would actually read it. the reason i am asking this, the off-balance sheet think bothers me to no end. the fact that neither of you could have known -- it did you know about the rtms before the

10k? >> no. >> the problem i have, i understand allowing these off- balance rtms is ok according to accounting rules. let me ask you a question -- if accounting rules -- these are off-balance because they are allowed to be counted as safe. i do not understand when you have these rtms why they are not recorded as a wash, maybe even a liability. if the accounting rules require them to be put on the statement, do you think it would have

affected your ratings earlier mr. parmelee? >> no, sir. we were aware of the portfolio. our analyst read the financial statements. it is part of our procedures. they told me they did. we believe all the information route that portfolio were factored into our ratings. >> when you first learned of the multibillion-dollar off-balance sheet risky investments, it would not change your opinion at all? >> it is not whether or not the balance sheet or the investment itself, our evaluation of the rest is made up of five european sovereign bonds -- those tended to be a highly rated european sovereigns. >> it did not bother you at all that somebody who was supposed to be telling you everything had not bothered to tell you this?

it did not strike you as not good? >> we believe that transparency is a very good thing. we would push for more transparency in financial reporting, absolutely. once we learned about it, we factored it in as well as other information and believed that our rating continued to be appropriate. i can comment a little bit on why we were not so concerned relative to our rating if you would like. >> mr. cantor, would it have affected your ratings if you had held a little bit earlier? >> i am not sure we were present much earlier than the disclosure -- the line >> according to testimony, your president four months before that.

>> a few months, yes. as i said, there are a number of things to consider. as the other panelists said, the inherent credit risk of those transactions was fairly modest. if we were talking about an a italian rating agency, it would be a aa rating. we would not think twice. the positions themselves were not inordinately risky, however, the trading strategies that they represented that the firm was taking on a very large proprietary that outside of its traditional business was a break from the strategy we understood they were taking. >> i am a politician. i understand fully well, but i actually agree with you. if you walk into my office and you do not tell me something,

that is not transparency and i will say the next time you walk into my office you will not be received quite as well as you were previously. >> i agree with you. we fell that we learned -- we felt that we learned something we did not know before add that the firm had engaged in a large proprietary that -- >> if you had learned that earlier, would it have changed your opinion earlier? if the accounting rules required more transparency in this situation, would it have changed your opinion? >> i do not think the accounting rules would have been able to reveal to us the strategy that lay behind that particular position. i think that would have required conversations with management. >> the same management that you now say did not tell you that they're dealing proprietary.

what would meetings with those kind of people involved? they would not have told you something else. i guess what i am getting at, i think that is what it is all about. letting investors know. the kind of let the world know that this is a significantly risky investment. that is what it tells everybody in america and you know it. the fact you are now telling me if you knew more you would not have changed your opinion now take -- now raises questions about your opinion in the first place. i was about to give you guys credit are actually being put in front of this. now, i am not so sure. one of you apparently did not read the 10k. now you are saying it was perfectly fine. do you know something? that is really not a good answer. i am way over my time again. >> i give to the vice chairman

of the committee. >> can you discuss a little bit your surveillance machine? what do you look for, what do you rely on? just talk to us about how you do it. >> i am happy to take that. in this case, we downgraded mf global about six month before this disclosure. at the time we pointed out the fact that we expected the firm would be taking on more risk, including more proprietary risk. that was factored in. in terms of our survey but policies, it is an ongoing basis. everytime there is new information put into the marketplace, the asphalt -- the analyst is responsible for knowing what that information is, to ask questions, and to act

on it. it is regular daily surveillance that -- based on activity in the marketplace. >> mr. cantor? >> we look at a lot of things on an ongoing basis. of course, we reviewed the financial filings. we often meet with the firm. in the case of mf global, i think we met with the firm 15 times in two years and reviewed financial results and asked further questions. >> you indicate that you met with mf global 15 times in a couple of years. was that specifically to review the ratings? >> yes. there was a number of higher frequency meetings towards the end, but we would certainly meet at least on a quarterly basis. >> if out by both moody's and s&p debye your ratings and you're at methodologies? >> yes, sir. >> yes.

>> do you feel confident enough in those ratings to personally stand by them? >> yes. >> so as the chief petty officer and managing director, would you at any given time state any given trading is precise opposite could be based on the most updated information available to your company? >> in some ideal world, everything can be improved. we are always seeking to improve our processes. i always look to improve the quality of our ratings overtime. >> given that the european sovereign debt beauvais -- holdings of mf global were disclosed as early as may 2011 and at the market did not respond at the time. in retrospect, the league this would lead to a downgrade six months later, would you say that this is perhaps surveillance

failure? "i do not believe so. i think we have laid out very clearly three areas of concern for the firm. we laid out a time line over which we will be evaluating performance. three benchmarks. when we learned that the firm was not meeting those criteria we laid out, we took immediate action. it is important to recognize that while the profile had deteriorated and reflected in ratings downgrades, the bankruptcy of mf global appeared to be caused by something very different from what we are talking about right now. it was caused by the missing funds. >> we heard from the previous pal that the chief risk officer -- previous panel that the chief risk officer did not really say anything. is that typical for the kind of review that would be going on at

that point? >> i am -- i do not know what was discussed at the meeting. i have a copy of the presentation. all the issues the were critical for the ratings action but was taken immediately after were quite amply discussed. >> mr. parmelee, do you feel confident and not in the ratings of your company that you would stand by them. >> we factored all relevant information into the ratings. >> mr. gellert, you went to great lengths in your testimony to chart the ratings that your company assigned to mf global. you included some description of your methodologies. do any of these ratings reflect information that is not available to the nrsros? >> we generate all of our

ratings based on the disclosure financials. we are not privy to any additional information. we do not have any contact with management, so we are not counting questions or ideas off of them. >> thank you. >> i does want to follow up on one thing. you believe the reason that mf global went bankrupt is because of missing money? >> it is my understanding that they were seeking an acquisition partner and they were close to reaching agreement along those lines, which fell apart when the customer money was missing. >> process, mr. chairman. just a few general accounting questions. if a company as a commodity a

scout -- commodity account, is the value of the cash or treasury bills in a segregated customer account assumed to have full value? yes or no. >> yes. >> yes. >> i do not know the answer to that. >> we have made do not know from mr. parmelee. a yes from mr. cantor. >> our system takes care of that. >> assets on a balance sheet can appreciate or fall in value, be sold, or transfer. do you agree? potentially, they can also be stolen. do you agree? let the record show they all agree. have any of you ever heard of them being "vaporized?"

>> no, sir. >> no. >> let the record showed they all say no. >> how the treaty -- trade balance on an active sheet if those -- how do you treat assets on a balance sheet that they have been stolen? >> i am not sure i have never faced that experience. >> stolen assets i would put on the balance sheet at zero, but there might be a potential of recovery. >> we have never faced anything like that, but we would probably handle it very similarly. and mr. gellert agree. mr. parmelee, you do not know? >> yes, sir. >> i in your dealings with mf

global, was [unintelligible] involved in your work? >> i am not aware. >> all say no? she is considered to be an expert on legal issues are a commodity and derivatives trading. would you -- do you agree? >> i do not know specifically about her background and expertise. i cannot speak to that. positiondy i'd better could potentially have expertise in those areas? >> i could assume they would. >> i really do not know anything about her. >> do you know who she is? >> no, i do not. >> mr. gellert? >> we do not have no contact with them. let the record showed nobody knows nothing.

in rating mf global, you assume they would conduct their business in accordance with all the laws and regulations and not that they would lose their customer's segregated accounts for their own benefit. is that a correct assumption? >> that is correct. >> did you assume responsibly it -- the responsibilities to audit and verify the proper protection of those assets? >> that is correct. >> would you all have done the same? >> yes. >> did you confirm with mf global global auditors that they had verify the controls on a place to prevent fraud and unauthorized transfers? >> no, sir. we did but speak directly to the auditors. typically we would not expect an auditor would be able to share information about a third party. they would have a confidential relationship with their client.

>> we did not speak directly. we did recognize they had signed their audit opinions, which we did review. >> we have no contact with them. >> i see -- are you aware that some of the 2011 pilot may have been backdated and, otherwise, adulterated. >> i am not aware. >> i said may have been. >> i have no awareness of that. >> just following uppe, in moo's letter to congress its stated that they did not learn about the large trades until october 21. i am just wondering like

everyone else, just how that is possible. >> we were aware of disclosures. we read through the 10k so we were aware of their positions as reported. but we became aware of on the preferred what the motivation for the position and how they were being managed. at that point in time, that description of that type of activity changed our view of the firm country risk appetites which along with the two other measures were tracking let us give the act -- take the action we intended to take if we saw weakening performance along those metrics. >> could anybody come close to assuming it was an oversight? >> i do not understand what you are saying. we had talked-about in all our publications that they are taking a multi-quarter approach

to evaluating a long these dimensions and executing along that plan with the action we intended to. >> i recognize the gentleman from new mexico, mr. pearce. >> mr. parmelee, is your ratings system mathematical, objective, subjected? how do you come up with the ratings? could this be more into the microphone? >> the ratings incorporate both qualitative and quantitative assets. we take a look at the underlying business and make an assessment

and then we assessed the financials. based on how risky the business is, that drives the pineapples. >> i am looking at your ratings for the firm from 2008-2011. were your ratings higher or lower than your friends next to you. >> we wrote our ratings in november 2010. that took it to a level lower than our competitors. >> what was it up until 2010? bbb? is that higher or lower? >> our highest rating is bbb +. it went down to bbb-. >> who is richard more? >> i do not know richard more

personally. >> you might know that he was working for mr. corzine. he was also on your board of directors? >> i did not know that until the immediate report came out. media report came out. >> you did not know that. ok. >> in ticket is an accounting issue. what is important is not whether or not the off-balance sheet, what is important is understanding the risk in the trade. >> you are saying it really did not matter? >> i think transparency is important. >> was this firm transparent about its off-balance sheet stuff? >> i think that mf global could

have been more clear to the marketplace. >> yes or no. or they transparent about the off-balance sheet stuff? >> i take they could be more transparent than they were. >> with a transparent enough for you to know what was going on. >> once they file their 10k report, then we knew about the off-balance sheet exposure. >> if they had been more transparent -- mr. gellert, you took them down to a 29, which is equivalent to a ccc. what was your concern? >> drops in three of our sixth performance categories. their sales performance was dropping dramatically. their profitability performance was dropping dramatically. and they're leveraging. we saw significant warning signs

across the board. a dramatic change in that business over the past few years. >> mr. cantor, how about your viewpoints on this epochal or non ethical question about balance sheets? >> i do not think it is unethical to have off-balance sheet reporting. >> if i file a claim with the federal election commission that declares my net worth is different because i have some off-balance sheet stuff, you would not a pet is unethical? >> i will not comment on that. i believe this exposure was closed -- disclosed in the footnote. it was pretty transparent. >> except that you all did not

have a clue. >> i do not agree with that. >> are you telling me they did not do anything off-balance sheet before you got the word? >> between quarters? quite the removing stuff in and out so they could drive the leveraged up and down. what he is doing it is selling whatever the day before the filing closes. you feel like it is normal everyday activity? >> mf global had weakening earnings, rising leverage, and it had a risk appetite that have the potential to grow given the change in business strategy. all three of those things were affecting risk. the taking on of european debt positions at that point in time itself is not a highly risky credit judgment, but the

decision to maintain such positions on a prayer -- proprietary basis even though the risks themselves were modest was not consistent with the stated business strategy, which was more minimalist in its risk and kitchen that had been described to us. >> if i could make a comment that i am seeing where the downgrading goes way south in about seven days and you are wanting us to believe the performance of the company was transparent. there was nothing really obvious to anybody except mr. gellert who came to was something under his magic formula that you did not see. it stretches the belief capability. thank you very much, mr. chairman. quite the ranking member is recognized for five minutes. >> thank you, mr. chairman.

on page 76 and on page 17, proprietary activities, one of them is in bold. collateralized financial arrangements in connection with proprietary activities that -- disclose our company to risk. they go on to say later on that they may not readily have. mr. parmelee, your testimony on page 9 you say "we believe mf global -- who question the firm country transparency." what transparency are you referring to? >> we believe the loss of confidence occurred because of a number of issues. one, concerning transparency

around the portfolio at a time when european sovereigns were under pressure. certainly there was a lack of significance. there were credit downgrades. >> just the transparent the part of that. about it not concerned when you learned it in may when they were -- had never turned you -- had never told you about it before. >> we thought there should be more transparency about it. we placed the ratings on creditwatch on october 26. >> you said it is because the lack of transparency. if there is a lack of transparency, it was revealed to you in may. it took you from making until the day they filed for bankruptcy to put them below investment grade. it took to almost six months for that lack of transparency to all of a sudden be concerned.

-- b. a concern. >> beginning in early september, confidence was undermined. >> i get all of that. you said it was mostly the lack of transparency. i happen to agree with you. my concern is that same lack of transparency, which eventually fell apart, existed in may. once somebody lies to you, does that not to use something about that person? maybe they may have lied to you about something out or maybe they might continue to lie to you, yet it took you six months. >> we talked about expectations for higher risk. >> but you did not change your rating. i do not know which one of you i should be upset with. the one who took to -- the one who took six months or the one

who did not catch it in the first place. both of those answers. both of those actors tstink. mr. gellert, would you agree or disagree the 10k told about the proprietary language? >> art computer polls the numbers and processes them. if there is a question of transparency, it is relative to the shift in the business model. if it is a stated objective of management to change the business model, it is incumbent upon anyone has a relationship with management to ask the questions. >> here is my problem. i was here for the enron thing. we heard about offshore off balance sheets. a major accounting firm went out of business because of that.

we had a crisis in 2008. our major banks talked to us about off balance sheets investments. they call them "special investment vehicles broke nobody knew about them except for them. am i being told it is ok to have off balance sheet, significant investments, significantly risky investments off the balance sheets? are you telling me that is ok for your rating? it is perfectly acceptable for you? >> if you are creating off balance sheets for lack of transparency, i agree fully there ought to be more transparency. >> mr. cantor, would you agree? >> i think it would be helpful to have these types of transactions on balance sheets, but there is already transparency. the information is in the

footnote if you identify it as to whether that is on the balance sheet or not. the information is transparent. >> you think everything is perfectly fine. >> again, you can have a lot of assets on your balance sheets. you need to interpret what are those assets, what are the rest of those assets. >> your interpretation would be utterly wrong. you're telling me now you had enough information to make a judgment. fine. your judgment was wrong. >> that was not the only thing that was important to the rating. one thing that was important to the rating was whether the principal positions that the firm was taking on represented a significant increase in risk appetites or whether it was facilitating -- >> $6 billion off the books. >> again --

>> . my problem. i came to the theory is prepared to give you guys credit. your ratings are not that good. but what you are telling me, you just turned me around back to where i started. i am not sure sure -- not so sure i could trust you anymore. you think it's okay to have off balance sheets. mr. gellert, do you think that it's ok? >> ipad we could use a lot more transparency. -- i think we could use a lot more transparency. >> i am walking away from here thinking the major credit agencies think brigstink. that it is ok for you to tell the public "here is our rating."

i yield back. >> i want to go back to the basics of the rating model that you used for mf global. would you put this company in the same category as goldman sacks? -- goldman sachs? would they be in the same business category? mr. parmelee? >> we rate them with a securities industry methodology. they are broadly embraced by the sector. obviously the firms are very different. "basically the same parameters you would look at goldman s achs? >> the starting point, yes.

>> mr. parmelee? >> we apply our bank methodology to goldman sachs. >> where i am going with this, they were trying to emulate using the goldman sachs model. i am wondered if you let them as the old business deal, or the sense that this is the company broadening their activities, they are getting into proprietary trading? would you lookit them differently? it does not appear you were doing that. >> as a bank goldman -- bank holding company, goldman has an access of window that is something imf would not have had. under our bank methodology, our

stand-alone credit rating on goldman sacks was bbb +. that would have been two notches above mf global. >> we heard the risk managers say he was concerned that this expansion of business probably really stretched their capital. thisof your firm's had company rated basically just inside the rope are investment grade. did it not concern you when you look at the 10k and say this is a company that is maybe marginally capitalized. one of the factors is capital. they are expanding the rest of their company -- risk of their company -- did that not ring a bell somewhere?

>> we did talk about that in our public documents. when we downgraded the company, it was part of the reasons you point out. jon corzine was emerging toward a strategy of being an investment bank. we're concerned about the a chemical risk. we noted that in november we downgraded them to the bbb- level. that was months before the portfolio was made public in the 10k filing. >> after you read the 10k, did you ask for detail on the off- balance sheet activities? >> i did not personally. i am not aware at the analyst asked that question directly. >> you now testified that you did read it. did you ask them for detail on

that off-balance sheet activity? >> no, we did not. >> it looks like i have run out of questioners. i am sure that is ok with the missus. we appreciate you coming. one of the things you'll probably hear from my colleagues is that we are concerned about every aspect of this, but certainly there is a responsibility, we believe, in the ratings community to make sure that if people are going to continue to have confidence in the system that we feel like, and more importantly the public feels like, and inappropriate manner -- an appropriate amount of due diligence is done on your part. we also concerns about that. we thank the witnesses for being here. we remind all members that you we remind all members that you have 30