losses. ...... . . . . .

>> tell us more about what is going on. >> we have been through a five- year housing crisis. it is showing some signs of stability. we are still experiencing enormous numbers of foreclosures. housing prices continued to fall. people are trying to urge the fannie mae and freddie mac to forgive principal. they want to take the mortgage value down, to reduce the amount of the principal outstanding to make it easier to pay off the loan.

this is a kind lot of loan modification. this is called a principal write-down or principal forgiveness. there are other modifications that work very well that fannie mae and freddie mac have been doing. you have these two sides, one side saying do the principal forgiveness, and on the other side you have people saying what about the taxpayer losses that will be associated with those principal write-downs? so that is the battle going on here. you obviously have people -- everyone is interested in the housing market coming back, but you have to balance that and consider the taxpayer losses that would be associated with this program. host: i am going to stay with barney frank for a minute because i have an exchange on videotape between congressman frank and mr. edward demarco that helps to set the

disagreement between the two. let's listen to that. [video clip] >> one of the questions was to stop the bleeding and preserve some function in the housing market without the losses that have preceded it. has that worked? you do not want to be sentenced to a lifetime as the conservator. has that worked out? >> i believe it has. we have brought stability to the marketplace so mortgage finances continue to operate fairly and effectively. host: gretchen morgenson, you described barney frank as the democrat who supported fannie mae almost to its collapse. tell us more about where he is coming from. guest: susan, what is interesting about these criticisms of mr. edward

demarco, they are very similar to the criticisms that were lodged at the same regulator, a different name at that time, when fannie mae and freddie mac were in full bloom and operating as private companies with shareholders to satisfy. the criticism lodged back then was any time it would try to rein in the companies, any time it would try to investigate, these critics would come out and say castigate the regulator. to me, it is an interesting return to the same tactic of really trying to criticize a person -- an entity who is trying to do their job and live up to their duty similarly to the way these critics went

after the regulator when it was trying to rein in the companies. the regulator during that time was effectively neutralized by these critics and the companies themselves. that is one of the reasons why we are looking at $183 billion in losses because that regulator was neutralized. i find that back to the old way of doing things. very interesting. host: we are going to open up our phone lines. our discussion is on fannie mae and freddie mac and their role in the housing recovery. some groups in washington want

on the first and leave the second intact, that is a gift to whomever owns the second because their loan will be more likely to be paid off. if you did a principal reduction program where both loans were written down, that is another matter. that is equality and fairness. when these people talk about writing down the first, they are not talking about making the banks write down the second. that is where it becomes a gift for whoever owns the second. host: this tweet from someone who asks -- is anybody going to jail over the housing market scandal? guest: boy, that is the 67 trillion dollar question, susan. my colleague and i at the time have written extensively about this. there has been very little in the way of accountability for

this mess. certainly very few criminal prosecutions. i can think of just one of a major mortgage lender whose ceo went to jail. they were not a major participant in the crisis. the ceo was sentenced to 30 years in prison. it was by no means central to the mess. everyone is wondering why there have been so few successful criminal prosecutions. a couple weeks ago, eric holder was up at columbia university saying a lot of the behavior was improper and wrong but it might not have been a legal. i think people -- illegal. i think a lot of people bring skepticism to the idea that a crisis this large that hurt so many people, billions of dollars in losses, there was no criminal activity involved.

i am not a criminal prosecutor so i cannot give a definitive answer as to why. but i do understand the suspicion and frustration. if no one is held accountable, this kind of an episode is very likely to happen again. host: our guest has been writing about financial markets for "the new york times" since may 1988. you also reference your reporting on the housing market. we are taking your questions for her. her book is still available. it is called "reckless endangerment." let's go to battleground, washington, sean is an independent there. caller: thank you for the very thoughtful interviews that you have given over the past couple of years. i wanted to take a step back

and look at the overall situation. we have an economic catastrophe, a foreign policy catastrophe, and an ecological catastrophe. it has been called a financial coup d'etat. i would like to know why is this not considered a threat to national security. there is a clear and present danger to the national security of the united states. i recently read a book by michael lewis and he was there at the very beginning of the mortgage products. what he captures in that book is a culture on wall street that is extremely predatory. i do not think people grasp the predatory nature. now we have high-frequency trading with collocating supercomputers.

they can front run the tape microseconds before retail investors. so just an overall grand view of this thing, it seems like we need to go to some kind of world war ii style command economy to remove this plutocracy. richard wolf has been very emphatic about the whole notion that we cannot re-regulate the economy. it will accomplish nothing. they will undermine all the regulations in the future. host: thank you for your call. guest: i think one of the worries about so-called nationalizing which means you are asking the government to handle all of these very complex institutions is that the government's role was very central to this crisis. the fact that the regulators were asleep at the switch or

worse, that they were co opted by the institutions that they were supposed to be policing, has led me to believe that you cannot rely on these kinds of institutions to necessarily do their jobs. we had rules on the books going into this crisis that could have reined in these institutions, could that stopped some of the predatory lending that was going on as you describe it. and nothing was done. when certain regulators tried, like the fdic, when they tried to raise capital requirements or put in place things that might protect the taxpayer from these problems, they were brought back and battled back by other regulators. it was very difficult. so i do not have a lot of confidence coming out of this mess that the regulatory

framework in washington is able to really take on these very powerful institutions. if anything after this mess with dodd-frank, the law proposed to protect us from this episode, if anything, it seems to me the institutions have become more powerful. the banks are larger for the most part. they are still too big to fail which means they will be bailed out if there are problems. so i just feel like we'd have to have a complete re-thinking of our financial system. a first move would be to cut these banks down to a more manageable size. very few people are willing to talk about that in washington. host: let's go to a tweet.

jim at the lake asks about the concern on the gift to the banks, asking -- guest: that is the problem with any kind of printable write- down program. if it does encourage people -- any kind of principal write- down program. there is this program out there that allows a principal reduction. you can afford to pay it but default on it anyway. this is a big concern. it is a major concern for people like edward demarco and for people in the administration. you do not want people who cannot afford to pay their mortgages strategically default so the burden the taxpayer. here is a very interesting fact that i think speaks a lot to this point of whether fannie mae and freddie mac need to do

a full-scale principal reduction program. when i was reporting the column from last sunday, i learned that 75% of the underwater loans that fannie mae and freddie mac hold, meaning the mortgage is higher in value than the home underlying it, 115% or greater loan to value, 75% of those people are still paying on their mortgages. they are current on their mortgages. that tells me they are willing to pay, able to pay, even though they are under water. i think that is a very interesting statistic that indicates that perhaps this write-down program is not as necessary as some of the people are saying. 75% of people under water are correct on their loans.

-- current on their loans. i think that is a compelling figure. host: talking about the fallout for banks, moody's has announced -- here is one headline in the economic times. they will be releasing a new structure for 17 global financial firms including morgan stanley, bank of america, and citigroup. here is a headline related to that, that they are preparing for a possible credit downgrade coming up this spring. next is a call from pennsylvania. you are on the air. welcome to the conversation. caller: i am obviously not as intelligent or educated in finances as the previous callers. i have a problem with barney frank. i hold him and chris dodd

responsible for the crisis. i do not understand how they are allowed to have any say whatsoever in this area. i do not want to be punished because -- i have day say to keep my house. i cannot see why anyone else -- should be able to purchase a house they cannot afford without having to put an application in or having a job to pay for it. i think barney frank and chris dodd and a few others have taken it too far. where is the concept of working and waiting until you have money to buy a house? thank you for taking my call. host: gretchen morgenson. guest: i think there are a lot of people who agree with that consensus.

mr. frank truly believe that housing for as many people as possible was a noble goal but it was perverted along the way from the predatory lending that really was so prevalent in the boom of the 2000's. so it may be was a goal that was worthwhile but it went awry in a very large way and now the taxpayers are footing the bill for those bad loans. again back to the accountability issue, no one is held accountable including regulators and members of congress and members of the business community who made these loans. so, i understand the frustration. i certainly sympathize with the frustration. mr. barney frank has announced his retirement so he will be leaving congress.

it is an interesting moment and an interesting question. if it goes back to this issue of the people and -- it goes back to this issue of the people in congress who were supporters of fannie mae and freddie mac and the home ownership push that was launched in the mid-1990s. they were so integral to that push. now they are trying to push for the write-down of principal on these mortgages which would very likely increase the cost to the taxpayer. there have been no indication that it would not increase the cost to the taxpayers. it could encourage people to strategically default. i think that is one of the more interesting paradoxes. the same people who helped to neutralize the regulators are now attacking the regulators when they are trying to do their job. host: a tweet from someone who writes --

there is no such thing as predatory lending. two people enter a contract voluntarily. guest: unfortunately, the vast majority of loans that were made to first-time home buyers, immigrants, people who had never gone through the process before or people who did not understand these loans, they were very complex loans and in many cases had bells and whistles on them that made them very complex. we are not talking about your 30-year fixed mortgage. we are talking about mortgages with a pre-payment penalty that was very significant. you could get away with a small amount. the amount of the loan would ballooned instead of reduce.

these were extremely complex and difficult to understand. the people selling them had no care about what happened to the loan because they were selling the loans to someone else. they would not be holding the bag when the loan went bad and was not repaid. i disagree. there was a lot of predatory lending. the contracts were agreed to. the banks have date responsibility -- have a responsibility to make sure customers understand what they are signing. this is the biggest financial transaction many people have in their life. it is not something that should be done lightly. it was all part of the big push for home ownership. that is my response to that tweet. host: kevin is watching us from new mexico. caller: i agree with a lot of

what has been said. people talk about the big banks and mortgage brokers. it comes down to individuals. i had a person say we will loan you 115% of value on a home. the reason you can do this and not the principal or interest is the value of the property will be going up. they should have disclosures on people in those professions like realtors who should be personally liable for the things they say and do. another part of this that people ignore is that i saw housing projects selling for $100,000. the unit would be priced up to $140,000 within six months. it is not just the big entities involved. it comes down to the builders and banks. it has to be looked at on the

micro and macro level. there has to be a way to punish individuals for the decisions they made whether it is a builder with a 50-unit complex for a mortgage broker who says those types of things. it has to go to that level. with information technology in place today, permits are pulled up the local level. why did they not role that information up to see all the buildings under construction? nobody even looked at that. can you address those? >guest: it was a mania, a free- for-all. it was built on a couple of failed ideas. one was that housing prices never fall. real estate always goes up. that was the first slot idea -- flawed idea. >> we will break away and take you live to the university of vermont in burlington.

president obama is in the second of two campaign fund-raisers today just getting started live here on c-span. [applause] >> hello, vt.. -- vermont. hello. [cheers and applause] thank you. thank you. this is a big crowd here in

vermont. [cheers and applause] it is good to be at uvm. it is. to begin -- it is good to be in vermont. out of all 50 states, vermont has gone the longest without a presidential [inaudible] the last time the president stopped by was president clinton in 1995. we decided that today we will reset the clock. [cheers and applause] i have a couple of acknowledgments i want to make. first, give them a big round of

applause for their introduction. [applause] you have got one of the best governors in the country. [applause] when flooding came and disaster struck, he was here every day working on your behalf. we could not be prouder of him. [applause] we have two outstanding senators. [cheers and applause] you have got an outstanding mayor elect. [applause] give it up for them. [cheers and applause]

i also want to thank caroline dwyer and the committee for organizing this event. i want to express my condolences to everybody who knew and loved melissa jenkins. i know some of the officials are going on to that funeral. she is a woman who by all accounts devoted her life to her community and helping to shape young minds. i know vermont is heartbroken. all we can do is live our lives in a way that pays tribute to hers by looking out for students and her son. michelle and i want to express our thoughts and prayers to everyone who knew her. i know that is a tough situations. [applause] i am here -- [cheers and applause]

you know -- [cheers and applause] maybe i should quit while i am ahead. [laughter] [cheers and applause] i am here not just because i need your help. i am here because the country needs your help. there were a lot of reasons many of you worked your hearts out for our campaign in 2008. it was not because it was going to be easy. it was not because it was a sure thing. when you decided to support the candidate named barack hussein

obama, that is not a guarantee of success. you did not need a poll to know there would be heavy sweating. the point is that you did not join the campaign because of me. he joined it because we had a shared vision of america. it was not a vision where everyone was left to fend for themselves. it was not a vision where rules are made just for the powerful. it was a vision of an america where everybody who works hard has a chance to get ahead. everybody. [cheers and applause] that is the vision that we share. that is the change we believe in. we knew it was not going to come easy or quickly, but we had

confidence and faith anin each other. we believe the americans make commitments to each other about a vision for the country that we can achieve it. there is no challenge we cannot overcome. here is what i want to report. in three years because of what so many of you did in 2008, we have begun to see what change looks like. [cheers and applause] . .

>> gm created 200,000 new jobs. the american auto industry is back and it is making cars that are more fuel-efficient and that is helping the environment, even as we are putting people to work. [cheers and applause] change is a decision we made it to stop waiting for congress to do something about our oil addiction. we raise our fuel efficiency standard and by the middle of next year come out -- the next

decade, we will be driving american cars with 55 miles a gallon. [applause] this will save the family more than a thousand dollars at the pump. that is what change is. change is a fight we want to stop handing $60 billion in taxpayer giveaways to the banks who are processing student loans. we decided to give the student loans to students. [applause] this means we can make college more affordable for young people who need it. [applause] that is what change is. that happened because of you. [applause] yes, change is the health care reform that we passed after over a century of trying. [applause] reform that will finally insure that in the united states of

america, no one will go broke because they get sick. already, already, 2.5 million young people now have health insurance who did not have it before because this law let them stay on their parents' plan. [applause] already, millions of seniors are paying less for their prescription drugs because of this law. already, americans cannot be denied or dropped by their insurance companies when they need care the most. [applause] already, they're getting preventive care they did not have before. that is happening right now. [applause] change is the fact that for the first time in history, you do not have to hide who you love in order to serve the country you love because we ended do not ask, do not tell. [cheers and applause]

change is the fact that for the first time in nine years, there are no americans fighting in iraq. [cheers and applause] we refocus our efforts on terrorists to actually attack us on 9/11 and thanks to the great men and women in uniform, al qaeda is weaker and osama bin laden is no more. we have a transition in afghanistan to put them in the week and start bringing our troops home from afghanistan. that is what changes. [cheers and applause] -- that is what change is. [cheers and applause] none of this has been easy.

we have had a little bit of resistance from the other side. [laughter] we have got more work to do. there are still to many americans who are looking for work. there are still too many families who can barely afford to pay the bills or make the mortgage. we are still recovering from the worst economic storm in generations. i love you, back. [laughter] [cheers and applause] but, over the past two years, over the past two years, businesses have added 4 million new jobs. [cheers and applause]. our manufacturers claim -- our manufacturers are creating jobs for the first time since the nineties. our economy is getting stronger. the recovery is accelerating. all of this means the last thing we can afford to do is to go back to the same policies that got us into this miss in the first place. [cheers and applause]

that is what the other side wants to do. they make no secret about it. they want to go back to the days where wall street plays by its own rules. they want to go back to the day when insurance companies can do whatever they want. they want to go back to the day when -- continue to spend trillions of dollars on tax breaks for the wealthiest individuals in america, even if it means adding to the deficit or cutting education or gutting investment between energy -- for clean energy. their philosophy is simple. you are on your own. you are on your own. if you are out of work, tough luck. you are on your own. if you do not have health care, that is your problem. you are on your own. if you are born into poverty, lift yourself up with your own

bootstraps, even if you do not have boots. you are on your own. they believe that that is how america -- they believe that is how america has advanced. that is the conception they have of liberty. they are wrong. [cheers and applause] they're wrong. in the united states of america, we are greater together than we are on our own. [cheers and applause] this country advances when we keep that basic american promise. if you work hard, you can do well enough to raise a family. on a home. send your kids to college. put away for retirement. it does not matter who you are, where you come from, what you look like.

that is what has created this extraordinary country of ours. [cheers and applause] that is what we are fighting for. that is the choice in this election. this is not just your usual run- of-the-mill political debate. this is the defining issue of our time. a make or break a moment for the middle class. that is what we have to fight for. [cheers and applause] we can go back to an economy that was built on outsourcing and bad debt and phony financial problems -- profits, or we can build an economy that is built to last. an economy that is built on american manufacturing. american innovation. american energy. american workers who are skilled. at the values that make this country great -- hard work and

shared responsibility. that is the vision i believe in. [cheers and applause] that is what i am fighting for. we have got to make sure that the next generation of manufacturers take root in factories in detroit and pittsburgh and cleveland. i do not want this nation to be known for buying and consuming things. i want is to build and sell things all around the world. [cheers and applause] i want us to stop rewarding businesses that ship jobs overseas, record companies that are investing right here in the u.s. [cheers and applause] i want to make our schools the envy of the world. . [cheers and applause]

that starts with the man or woman at the front of the classroom. [cheers and applause]. a good teacher can increase the lifetime earning of a classroom by over $250,000. and a great teacher can help a child trapped in poverty dream and then live beyond their circumstances. i do not want people in washington to be bashing teachers. i do not want them to defend the status quo. i want us to give schools the resources they need to hire good teachers. [cheers and applause] reward great teachers. i want us to grant schools flexibility to teach with creativity and passion and stop teaching for the test. i want to replace teachers who are not helping kids learn. that is what i want to see happen. [cheers and applause]

when kids do graduate, the most daunting challenge can be the cost of college. when americans owe more tuition debt than they do credit card debt, you know we have a problem. the first thing we have to do is congress has to stop interest rates that are currently scheduled -- this is a huge problem for a lot of people. i a party as congress to do it. they have not done its. they have not done it so far. colleges and universities have to do their part to keep tuition from going up. [cheers and applause] higher education cannot be a luxury. it is an imperative that every family in america should be able to afford. [cheers and applause]

an economy built to last is one that supports scientists and researchers and science. aboutether we're talking stem cell or climate change, we do not need science deniers. we need people to understand that america is always succeeding because of our belief in science. [cheers and applause] our investment in research. we have to make sure the next great breakthrough in clean energy happens here in the united states of america. [cheers and applause] we have been subsidizing oil companies for 100 years now. through taxpayer giveaways. i think -- i just talked about this yesterday. it is time to stop taxpayer

giveaways to an oil industry that has been rarely more profitable. let us double down on clean energy that has never been more promising. [cheers and applause] that is what we need to be investing in. we have got to rebuild america. our businesses and our people -- want them to have access to the best things. the faster high speed internet access. it is time for us to take the money we were spending at war, use half of it to pay down the debt and use the rest of it to start doing some nation-building right here at home. [cheers and applause]

and we have to make sure that we have a tax system that is actually fair. [cheers and applause] part of that is something i call the buffett rule. very similar. re-. -- very simple. if you're making more than a million dollars a year, you should not pay a lower rate than your secretary. [cheers and applause] that is a simple proposition. now, if you make less than $250,000 a year, like 98 percent of all families, your taxes should not go up because right now, folks are struggling to dig themselves out of this

incredible recession. if you are making more than $1 million per year, you can do it. this is not class warfare. this is basic math. [cheers and applause] that is what this is. look, if somebody like me gets a tax break that they do not need, and that the country cannot afford, then one of two things will happen. one, it adds to the deficit. or, we are taking something away from somebody else. the student has to pay a higher interest rate on their student loans because we have to make up the money somewhere. or that senior has to start paying more for medicare. the money has to be made up somewhere. or that veteran does not get the ptsd they need after serving the

country. or a family that is struggling to get by is getting less home assistance. there is no way of getting around that. i there folks like me are doing more -- either folks like me are doing more or somebody who cannot afford it is getting less. that is not right. that is not who we are. [cheers and applause] that is not what america is about. [cheers and applause] i hear politicians talking about values in an election year. i hear a lot about that. let me tell you about values. hard work. personal responsibility. those are values. looking out for one another, that is of value. [cheers and applause] the idea we are all in this

together. i my brother's keeper. i and my sister's keeper. that is a value. -- i am my sister's keeper. that is a value. the idea that we think about the next generation and we are taking care of our planet. that is a value. [cheers and applause] each of us is only here because somebody somewhere felt a responsibility to their families and to their fellow citizens. to our countries future. -- our country's future. the american story is not just about what we do our own. we are individualist and we expect personal responsibility and everyone has to work hard. but, we also have always understood that we would not win the race for new jobs and businesses and middle-class

security if we were just applying some you are on your own economics. it has been tried it has not worked. it did not work when we tried it in a decade before the great depression. it did not work when we tried it in the last decade. we just tried this. what they are peddling has been tried. it did not work. [cheers and applause] we know this from our own lives. if we attract some outstanding in person to become a teacher -- teacher byn bto be a giving them what they deserve and that teacher educates the next steve jobs, we all benefit.

we all do better. america rises. if we are providing faster internet to rural america so that some small business owner, someone can sell his or her goods around the world. that is good for all of us. if we build a new bridge that saves the shipping company time and money, everybody benefits. we do better. that is america became an economic superpower. this is not traditionally -- this has not been a democratic or republican idea. it was a republican, teddy roosevelt, who called for progressive income tax. it was light as an hour who build the interstate highway system. -- like eisenhower who builds the interstate system. it was president lincoln, who win the nomination

for the primary right now -- [laughter] [cheers and applause] you know, in the middle of the civil war, he helped make the transcontinental railroad possible and the national academy of sciences. he understood that we are in this together. we have to make and has been in our futures. it was with the help that fdr gave heroes, including my grandfather, the chance to go to college through the gi bill. [cheers and applause] that same spirit of common purpose still exists today. out here in vermont, and all

across america, it is there. [cheers and applause] is there when you talk to folks on main street and when you talk to members of our armed forces. is there when you talk to people in their places of worship. our politics may be divided, but most americans will understand that no matter where you come from and who you are, we rise and fall together as one nation. [cheers and applause] as one people. that is what is at stake right now. [cheers and applause] that is what this election is about. so, i know we have gone through some tough years. i know that for all the things we have done, we have still got some much undone. sometimes the change we thought for does not come as fast as we want it. when you see what has been going

on in washington, i know it is tempting to get discouraged. to kind of think maybe change is not possible. maybe it was an illusion. i want you people to recall, i did say that in 2008, real change is hard. it takes time. it takes more than one single term. more than a single president. what it takes is ordinary citizens who are committed to keep fighting in to keep pushing and inching us closer and closer to our country's highest ideals. [cheers and applause] you know something else i used to sit back and 2008? i said i am not a perfect man. michaud will tell you that. -- michele will tell you that. [laughter] i will never be perfect

president. i made a promise to you then. i will always tell you what i believe and i will always tell you where i stand and i will always wake up every single day, fighting as hard as i know how for you. i have kept that promise. [cheers and applause] i have kept that promise. i have kept that promise. if you're willing to keep going with me throughout the obstacles, through all the naysayers, if you're willing to keep reaching for that addition of america, -- that vision of america, the commitment you made -- we made to each other, i guarantee you, change will come. [cheers and applause] if you're willing to work harder in this election than the last one, i promise you, change will come. [cheers and applause] if you're willing to knock on some doors and make some phone calls, i promise you, change

will come. it we will finish what we started in 2008. fight with me. press on with me and we will remind the world once again just what america is all about. god bless you. [cheers and applause] god bless the united states of america. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] [cheers and applause]

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♪ >> president obama is the first president since 1995 to visit for month. two more fund-raisers today. the president making the decision to move ahead with tough new sanctions aimed at squeezing iran's oil exports after determining there is enough crude on world markets to take this step without harming u.s. allies. it allows the u.s. to go forward with sanctions on foreign banks to continue to purchase oil from iran. elsewhere on the trail, the attention is pretty much focused in wisconsin with republican presidential candidates mitt romney, santorum, and newt gingrich all with campaign event today.

mitt romney this afternoon in milwaukee. later today, santorum has a rally in a chip off false. a fish fry in weston with newt gingrich. visiting his campaign headquarters in green bay, also. here is the tally on republican delegates. 1144 needed to nominate. mitt romney is halfway there with 584. rick santorum, to 95. -- 295. ron paul, 86. newt gingrich, 135. the primary in wisconsin and maryland and the district of columbia on tuesday. we have live road to the white house coverage with your reaction and results tuesday night here on c-span. >> ronald reagan was leaving his hotel after delivering a speech to the afl-cio. the agents are surrounded him. he should six shots. the first in his press

secretary. the second one hits a d.c. police officer who had turned around to check on the presidents progress. he was hit and falls down. now, the path is clear. wide open. he has a range of 20 to 30 feet. he can hit stationary targets 20 to 30 feet. >> march 30, 1981. six shots are fired. this weekend, rawhide down author on the race to set a precedent. sunday at 7:00 p.m. and 10:00 p.m. on c-span3. >> this is the korean war memorial in d.c. this morning, we spoke with the south korea commander for the u.n. and u.s. combined for says. he testified earlier this week on capitol hill about security in the korean peninsula.

host: meet michael greene. he served as senior director for asian affairs at the national security council. he is senior adviser at the center for strategic and international studies. our focus with him is going to be on north korea. i am pointed at the most basic question -- which americans care about north korea? guest: it is a country without whom we are still technically at war. in south korea. the demilitarized zone is the most heavily fortified region in the world. it has rockets aimed at seoul. of the last 15 years, they have been developing nuclear weapons. later on, they developed a nuclear weapon capability. north korea is now also developing missiles to deliver them -- to fire them at the u.s. eventually.

host: what do we know of the new administration there? guest: kim jong un is the son of kim jong-il, who died in december. 29. he went to boarding school in switzerland. he has been rolled out at the great successor and the great general to replace his father and grandfather. they have given him what looks like plastic surgery, haircuts, and make up so that he looked like his grandfather, who led north korea until 1995. few people have met him. one japanese sushi chef met him and described him as having cruel and evil eyes. people who went to boarding get to know him. oddly, his parents never showed up our parents' weekend. it appears that he is very much

his father and grandfather as the great successor, the great general, and trying to show a the outside world. host: the president was at a nuclear facilities summit that was held in seoul, south korea. that puts the focus on the relationship between the north and south. we would like to open up our participate in the discussion. let's spend a little more time on what is known of the nuclear threat. guest: the north has declared that in 2012, the 100th anniversary of the birth of the first leader of north korea, that they will become a full-the clear weapons state.

it is pretty clear what that means. they have plutonium that they have harvested from facilities. probably in the far 6-12 nuclear weapons. they have tested by blowing up two devices. the challenge for them will be to turn them into weapons they can put on missiles. they also have, in complete international committee, have been working hard on a clandestine program for enriching highly enriched uranium, another way to make nuclear weapons. it is not clear how far they are. most estimates say they are years away from having capabilities. then there are the missiles. the missile they threatened to launch in april will be three- stage.

it does not working. they have had problems with it. it is aimed at the west coast -- hawaii, alaska, or australia -- but they have two-stage missiles that can range to japan. we have bases in south korea and possibly guam. host: april is significant because of the war anniversary? >> the 55th anniversary of the of the birth of the great leader. they are like gods. they are worshipped like gods. it is a stalinist system with a cult-like worship of the leader. this is a very auspicious and important anniversary for them. host: wednesday, the general responsible for un-u.s. combined forces of the korean peninsula testified on capitol hill about

security threats there. his testimony. this talked-about the ballistic missile launched by north korea and the international response. >> is it a general perception that if they launched a ballistic missile towards our shores that we would respond in kind? is that not a general perception? >> i would just say to you, i do not know what our response is would be on that. >> i was not asking you that. i asked you what the general perception was of this process between our two countries? is there a general perception that they blocked a nuclear weapon towards our shores that

kind? what fuels the anxiety and the concern over the north koreans has to be dealt with in some manner. host: pick up this game a bit more. it is a concept between two states have both have the technology, it produces a standoff. guest: the north koreans have not got much. and half collapsed. most of the population is near starvation level. meanwhile, the south koreans, their cousins they have been promising to liberate, is one of the richest countries are in the world. north korea does not have much to. 2.

nuclear-weapons are pretty much indispensable part them. they also, i think, view nuclear-weapons as they wait to do something. where at ahead we have a they can make a lot of demands of us. for a country that does not want to open up, there are things they want -- money, food, things like that. they can use the capabilities to show how strong they are. with a start a war with a nuclear weapon? it would mean the destruction of their country. it is a hypothetical question, but that is clear. i do not think they want to fight a war, i. legitimacy. host: this is milton in philadelphia. caller: with all the problems and north korea is facing, would and and maybe the two

koreas will ever kirk unite and become one korea again? guest: that is an interesting question. under the current president has started talking more openly about unification. a lot of south korean looked at in germany and how complicated that was and how expensive it was. they look north and realize a larger gap between north and south korea. they got pretty nervous about unification. the general review is the south put it off. the current president started saying we need to think aboutit may not be something they choose. it is possible the regime because their economy has collapsed, because their leaders of resistance -- could itself fall apart.

if they collapse, the presumption is they become unified with south korea. it is possible. i think the u.s. and south korea have been preparing as much as we can for that to happen, just because the north starts to fall apart. host: the next question, from caller: good morning. thank you. i am interested in the same question, about the people there starving to death. wouldn't it be better that we do not give anything to the government because they do not give anything to the people? the other question is how strong is china.

are they really interested in korea versus the americas? or do they have their own interest? guest: your questions hit on two of the hardest problems managing north korea. the north koreans do try to take food aid and any kind of aid and try to channel it. we try to come up with food for children or supplement for old people but it is hard to monitor it. the tough question is should we be giving food to the north korean people who are starving. they are afraid and easy to intimidate. should we be punishing those people by withholding food? i think it is a moral principle, that we should give food to people when they need

it. china probably now provides somewhere around 80% of north korea's food and fuel, so the chinese could pull the plug on this country. they will not do it because they fear chaos. they do not want millions of north koreans pouring across the river into china. they do not want north korea and south korea unifying to become one country. so the chinese play a diplomatic role trying to encourage diplomacy but there is a limit how much pressure they are willing to put on the north korea to collapse. host: when the president was at the nuclear summit, one of the most widely published photographs that came out of it

was this one. the president looking through binoculars at the north. this question from twitter asks -- guest: this is a question that students often debate about a country like north korea. is the problem that they are too scared? maybe if we were gentle or less threatening, they would feel more comfortable. the problem with that argument is that north koreans fear ultimately their own people more than they fear us. the threat to the regime is they have no legitimacy, and people rise up against them. so that means they are going to want nuclear weapons and the

way. they fear china, south korea, japan. we have tried over the years to try and reach out to the north. and reach some kind of understanding that we are not a it pretty much goes know where. the north koreans have made their own decision that they need these nuclear weapons. they want them to blackmail us and others to get more aid. florida, good morning. caller: good morning. i have travelled extensively worldwide. one of the things i am curious about is the fact that maybe the cold war never died and we still have the war of words that we have.

i was listening to a lecture on china. i could appropriately to this philosophically with florida and cuba. how much do you feel that travel and commerce will open up in north korea since south korean how much do you feel travel, education, and more openness will ever occur with the west? i will leave it there and let you respond. guest: my own view is some exchange of peoples, academics, and so forth is probably a good idea. why? because i do not think this regime is going to exist forever. in the next decade or two, we

could see the north koreans collapse. then we will see them unified. so i think it makes sense to help north korea understand the world and so forth. o lackthe effort will be very limited because the north koreans do not want their society opened up. they do not want their own people to understand that the better life. they will very narrowly control and the exchanges like this. -- any exchanges like this. they need to keep this control and propaganda to convince their people that their system is the only alternative. yes, we should try these things. we should not give technology that the regime would used to strengthen its control. in the long run, it is a good

move. the problem will be the government will constrain that so they do not understand the world to maintain control. host: this question on twitter asks -- guest: not quite actually. one of the many cracks in the north korean system is coming from the army. they have over 1 million soldiers. over 100,000 commandos trained in special missions. but they cannot feed themselves. when the north koreans do level military maneuvers, even the commando unit -- when someone is at rappelling down a cliff and they fall and break their leg, they are immediately discharged because the north koreans do not want to take care of their injured.

some of the army units have been ordered to forage to extract food from the people. so they cannot really feed the army except for the most elite units. the chinese, by not asking where their food aid is going, it is making it easier for the north koreans. the rank and file soldier is undernourished. the average soldier is very short due to malnutrition. host: let's pull up another clip from wednesday this week. this is about cyber security. [video clip] >> working hand-in-hand with the military on the protection of our networks and particularly looking at interoperability. i have come to realize that

cyber is a key domain and is important as our air, maritime, and ground operations. so, yes, we have raised the awareness on that and is something that we are looking at on a daily basis with iraq military. host: what do your studies and what is the common thinking about their cyber capabilities? guest: i think the south koreans, the japanese, and the u.s. have been surprised about how quickly the north koreans have developed this cyber capability. as far as i know, hardened and protected cyber systems.

you can do a lot of damage to a country by attacking their cyber infrastructure. north korea has maintained criminal syndicates throughout asia. they export drugs, counterfeit money, and are involved in all sorts of criminal activities. galtit would not have been too hard for them to get the expertise from criminal syndicates on how to do hacking and cyber warfare. the north koreans have used and the advantage to try to-- any advantage to try to throw the west off their guard. host: there is a number of skeptics among our twitter community. here is an example of one who writes --

guest: well, they have not all been starving to death. millions of north koreans have been kept at the starvation level because that makes them easy to rule. they have been developing nuclear weapons, missiles, and upping criminal syndicates around asia to keep their cash flowing in. in some ways, it is a cult or a criminal gang. that is a serious threat. the north koreans in 2003 threatened to -- in 2007, they bombed a reactor in syria built by the north koreans. the north koreans were helping the syrians build nuclear reactors. gas, they are a threat. -- yes, they are a threat.

the fact that much of the country is at a starvation level does not stop the elite from developing nuclear weapons. that is why it is such a moral dilemma. it is a tough moral problem. specialist michael green. good morning. margaret korea -- i am sure you have gone bettincourt of robert but krona car armistice. horrible awe these years. which the military and the. of alarmed over the development of of of the chief?

event the he did not take them out because they are not developed to the the entire city of seoul would be destroyed? effect. it is hard to believe in out. we reached an armistice, aand the soviets and the chinese kept north korea in check for call war.

forces in korea and japan so the north koreans would not think of attacking. from that point on, the north tunnels, lots and lots of tunnels. into seoul. without starting a war. ability to quickly detect wherein terms of neutralizing them quickly, their capability really has been built up. to take out their artillery and

missiles would certainly provoke of vlad region. a r a v four seoul. have an of the vanc-span junkie asks -- is this figure right? the liberal it for an account there and not fearful of becoming a out with a figure right that it could've it will call ofgive us more background. we had a large base, our headquarters, in downtown seoul. articleimagine a large army base in the middle of cleveland or

wheeling, will law west virginia, or d.c. rui and rigell lin our forces to a new base. could we use that money at home? absolutely. but at what risk? that when we pulled back and pull inward, we invite others to expand and increase the possibility of war which cost much more in the long run. we learned it before the korean war. right before the korean war, our defensive line, our interests in asia run on this red line. we did not want to have to spend money maintaining forces in korea.

it was an open invitation to attack the south and we ended up losing 50,000 people. you have to weigh the risks and to buy down the road. i think the troops that we have in south korea have been a very good investment. it is a really dynamic democracy not only in asia but bring in world. there are a clear at thehost: a question on twitter asks -- relationship was bad. what we demanded was we have monitoring. a lot of thought the food was getting to people.

we stopped at one point because the north koreans refused to do that. what we had to do to ensure they giving it to the army. on the fuel, in 2003, the administration and the japanese heavy fuel. we had an agreement in 1995 that we would give them feel. papait was basically a bribe, in exchange for them freezing a of vidicon who ran for her, any time. we discovered a secret we discovered a secret uranium enrichment program. we told them we knew this. they said you were going to have to pay more.

it was a violation of the agreement so we stopped providing the fuel. some people think we should have not stopped bribing them. if they are cheating on the deal and developing nuclear weapons, we are not going to keep paying these subsidies. host: the next call is from steve, an independent from new york. caller: good morning. my question should take about a minute. influences upon kim jong. i understand he has an influential on goal and an older brother who was passed over in succession, but my question will be focusing on his sister who is some sort of a four-star general or something. if my information is true, u.s. intelligence really does not know much about her. thank you.

guest: the kim family would make an intriguing, humorous, and a somewhat terrifying said, in the u.s. it is pretty dysfunctional. -- and somewhat terrifying sitcom in the u.s. he was arrested in tokyo about six years ago traveling with some girlfriends to go to disney world in japan with a peruvian or a brazilian passport. he talks to the press and tells them what is going on in north korea. he has been caught gambling and party in. even though he is the oldest son, he cannot be the guy to take over. the uncle is basically running the country, people think, because the great successor, the great general, is too young.

his aunt has been made a four- star general and we do not know that much about her at all. we do not have summit meetings with the north koreans. we can piece things together from defectors and from some propaganda and from other leaders who have met them. we do not know a lot. host: two questions about influence. we are going to start with this tweet. guest: i am not an expert on unification church. i do know that initially they were hard line on north korea.

the unification of the two koreas under south korea was its goal. years ago, the family started to engage in do more things with the north koreans. >> we leave this now and take you to a pentagon briefing of the investigation of the handling of the remains of 9/11 victim's. documents were released today. a defense the hour report released in february said there was a breakdown in procedures and command authority. >> -- commitment to treat their remains with utmost dignity and respect. for that reason in response to allegations of improper handling of remains, secretary leon panetta directed an investigation into current

operations at dover and appointed retired general to lead it. the general brief you on the report last month which affirmed that the department of defense cares for our fallen in a compassionate and professional manner. it recommended a series of steps to ensure that we always treat our fallen heroes with the highest degree of honor, and we are committed to that standard. when the report was released last month, concerns were raised that the remains of 9/11 victims were disposed in a landfill rather than retired with appropriate dignity. in response to these concerns, we conducted a detailed examination of the procedures and practices used to identify, treat, and process remains from the attack. earlier today, i had the

opportunity to brief the families of 9/11 victims on this examination which concluded their loved ones were treated with the care, dignity, and respect that we did so in accordance with appropriate processes and procedures. reflecting our desire to be as transparent as possible about operations at dover port mortuary, today we are releasing additional documents from the independent review. in my meeting with the 9/11 family members, i assure them that all those lost on that tragic day will never be forgotten. the victims deserve the utmost care, dignity, and respect with regard to their treatment. that is what they and their families received and what our fallen and their families continue to receive it into the

future. caring for the fallen and their families is a mission shared by the entire department of defense. we are committed to remedy any problems or shortfalls exposed in our handling of this mission. the independent panel's work achieved two goals. it validated the changes we have made and identified further areas for improvement. our focus is now on the present and the future. we are confident that the improvement and changes already made along with these recommendations provide the basis for us to ensure we meet the high standards we have set for ourselves in executing the solemn obligation. now would like to introduce myself as well as the members of the team. my name is jo ann rooney and i am the acting under secretary of

defense for personnel and readiness. >> i am the director of air force services. >> i and the air force medical examiner. >> i am the director of army casualty and mortuary affairs. >> at this point, we would invite your questions. >> can i ask you about the e- mail exchanges in some of the documents that showed it was hard to tell -- it seems like there was an air force colonel who suggested that the unidentified portions of the 9/11 remains be disposed of at sea. there was another official who said we do not want to do that. could you give us more clarity on who those officials are? >> i would like to give you clarity on that part that you are talking about.

as everyone is probably aware, there were six different segments or ways that the medical examiner divided the remains. the first was those who were in tact scientifically identified. the second were those who were not intact but that team was able to identify. the third is a group of remains that we know were human and identified after the initial release for non-intact bodies so we were able to identify them but later on. the fourth category are those portions that we knew were not terrorists but did not meet thresholds for positive identification. the fifth word terrorist remains. the sixth or the non-associated

fragmented material. they cannot be further identified. those were specimens that we knew were biological in nature but we could not determine first if they were human or second of all whether there were any terrorist remains mixed in. that was at the heart of the debate because we did not know whether these were human remains to begin with, but they were mixed in with pieces from the building, from the airplane. so the debate that you are talking to, without specifics, are people talking about that particular subsection and what would be appropriate. the practice in this situation like that would be to treat that

as medical waste and disposal. >> but there was a discussion about the group that you just talked about. from a colonel of some sort suggesting that they be spread at sea. then there was someone who said no because of the nature of the remains, needing to dispose of them as medical waste. can you tell me more about who that person might be? not a name but a position? >> the debate ranged throughout the department into very senior positions. there is information in the appendix that you saw indicating the final memo from the undersecretary of defense personnel at that time. that has been in the press before.

the debate was actually threw out both in dover and at any of our medical professionals. we wanted to do the best we could for dignity and care for the remains. but we wanted to determine if these were remains or biological. it was a range of people. >> next question. >> i just wanted to ask the air force general. there was an interesting detail about some of the decisions about who was going to be stationed at dover and the decisions about how long that period of time they would stay there. i wonder if you could go through the time and how those decisions were made as to who was going to be at dover, how long they were going to be there, and maybe if you could talk about plans for the future for dover airport base.

>> what i was going to say is a lot of the employees have been there for a number of years. the command position we have swapped out and will continue to do so on a rotating basis. >> many of the airmen that were there were on deployments so there was a discussion back and forth about how long they should be there and who should be there. i was just wondering if the decision -- who made the decision. >> i am now sure what you mean by the decision but there is a permanent party assigned there in charge of the unit. during times of war, we robust the deployment schedule.

it was 120 days. now the air force has gone to 180 days rotation. it is a total force deployment. they come from the reserve and active-duty. >> thank you. the supporting documentation it includes the 2011 air force inspector general's report. the report seems to justify and minimize the allegations of mishandling remains at dover for example. they go into detail about the marine whose humorous -- there was no need to notify the next of kin and this was done to accommodate the next of kin's wishes. is the air force able to police itself on this matter?

>> yes. i think the general pointed out the independent review and looking at the corrective actions that are already in place and those that have been laid out for the future. as we go through the report and look at the recommendations, we will continue to improve our .rocesses an >> why hasn't anyone been fired? >> there will be ongoing disciplinary action. >> you said you could not identify the remains. you said they were biological. if they are not human, what else could they possibly be in that situation? it may have been something from someone's lunch.

any thing of a biological nature. the captain did some of that work. >> thank you. our instructions to those in the field is to zoom in on anything we might be able to get a in identification of a victim off of and let the forensic professionals at dover evaluate them, test them, and see if we can make additional identifications. we would rather have literally thousands of portions that we can never make an id off of than miss one piece of something that we could make an id. we have hundreds of thousands that come in with all of these mass disasters that we never make an id of. we try to account for every

single victim and incident. >> any other questions? all right. >> thank you. i was wondering if you could expand on the disciplinary actions that will come out in april. are we talking about separation , prosecution? >> they are ongoing disciplinary actions. i cannot add anything. >> all right, everyone. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> just a reminder, you can read the defense department report on our website at c-span.org. this morning, the joint chiefs of staff chairman spoke to nearly 750 leaders and psychological health experts about what the pentagon is doing to help returning soldiers. he spoke at a conference. this is about a half hour. >> i am delighted to be here with you this morning. having cruised in from the amazon for this purpose. some of you look like you could live there. i am just kidding. i'm sure you know that. thanks for the opportunity to speak with you this morning briefly.

i will speak for a few minutes and share some thoughts with you. i intend to leave a few minutes for questions and answers. i hope you have some good ones. some of you know when i get a chance to speak, whether we are talking about the strategy or the budget -- in any venue, i always like to make notes of what other things that happened on this day in history. i think we have to remember we are a continuation of civilization. we are not confronting any part -- there are very few problems where i think we are confronting them for the first time. there may be a message there for resilience. we have been through this before. i will leave you to make that connection.

on march 30, 1880, just for the record up front i was not around -- [laughter] -- but a famous irish poet was born. if any of you have heard of him, i will be extraordinarily impressed. we have won air man who says he knows of him. he was kind of a rogue irish playwright of the 19th century. he was a passionate writer. apparently a strikingly handsome man. why is the chairman talking to this group? about a dashingly handsome rebel irish poet? and a deceased irish poet at that. the answer is i want to make the point that old irish guys are usually very good looking. [laughter]

i actually had to reach for that one. today was a boring day in history. [laughter] my aspiration for you all is that you keep it that way. you do your part and i will do mind. put up the slide for me and i will make a few points pertinent to this gathering. i tell people the reason i traveled by the way it is to get out of washington, d.c., and put the oxygen back in my lungs. that is not an indictment on the quality of the air. it is something that you might be able to figure out. you have to get out and feel what is going on in the world in order to really appreciate it. you can read about it and learn about it and understand the processes that drive it whether it is nato or united nations or coalitions.

until you get out there and touched it and feel it, i do not think you can appreciate it. for that reason, i carry images in my head around. not powerpoint/it. i like to have an image to capture my thinking during any particular time. not a bunch of words garbled on a page with 12 colors. this is the image that i carry around most often. i have four or five that i carry around. this one in bodies of our profession. it embodies our profession because at its most fundamental, what holds our profession apart, is that we are trust on the slide there in the relationship that exists between men and women of uniform, their families, and the site. the squad leader there -- this

image is army joint. i have other images of paratroopers and so forth hanging down. incredible stuff really. this one is an army squad leader in afghanistan. there are a handful of uniform violations. sleeves rolled up. scarf, the whole thing. you can see in his eyes the complexity of the motions that exists in our profession, uniquely in our profession. fear encourage all wrapped up in the same head at that moment of time. certainty and uncertainty right there in that picture. right in his eyes. the other thing you notice is he

is not worried about what is on his right or left. he is not worried because there is a young man or woman off to his right flank protecting him so that he can do his job. of course, it is clear that the squad leader has taken care of that by taking the actions he is supposed to take. you also see there that he has a hand microphone in his hand and he is calling for something. i do not know what it is. it could be a medevac or air support. based on the way you can see his face contorted, you know he is asking for something that he really needs and he needs a pretty quickly. the other remarkable thing about our profession and our country is whenever he asks for, he is going to get it. he is going to get it whether it is kinetic ordinance, supplies,

or whether it is what you are here to talk about the day. we are going to get these young men and women because we have to as a matter of trust. we are going to get them the life skills, the confidence, the hope which i think = the resilience that you are all here talking about after 10 years at war. you will also notice that the squad leader has his left hand in the air and a ring on his left finger indicating of course that he is married. when you think about this bond of trust, it does not stop at the battle area. it has to run all the way back to hometown, usa, where he has a family. this bond of trust which defines us as a profession and to which we have to commit ourselves every day -- 24/7,

365. you do it while they are on active duty and while they are off. here is the point. we have to commit ourselves to this bond of trust every day. you have to earn it every day in the way you develop yourself so you can live up to the trust of the men or women on your left or right. you just have to earn it every day. you wake up in the morning, you put on a uniform or a suit because you are a member of the team working on behalf of these young men or women, and you go to work and say is this an opportunity where i can earned this bond of trust that marks us as a profession? if we do that, if we do that one thing -- think about our profession as united with a common bond of trust and then commit yourself to earning it every day -- i do not care what

happens to our budget or other countries in the world, we will be fine. but if we lose that, it does not matter how much money we throw at ourselves. that is this notion of the human dimension of the profession. let me like that idea to my four focus areas. the first one of course we have to achieve the objectives in our current conflict. what you are here doing is exactly that. you are helping us achieve our objectives by seeking a deeper, richer, and understanding of what has happened to us as a force over the last 10 years of conflict. then, importantly, what are we going to do about it? what we going to do about the fact that 10 years of war has

put an enormous pressure on the force? not solving the problem but addressing the issue. secondly, develop a joint force for 2020. only a handful of us in the room were in the army -- in the in the army during the vietnam war? a handful. great. i came in right after it. only a handful have experienced what that conflicts did thto the human dimension of our force. we also added the complexity of switching to an all-volunteer force in those years and put enormous pressure on that force. we did not have anything like this, and the appreciation for how you build the lifestyle, the commitment, the hope and therefore the resilience. we assumed that it would all

work out fine. and it did because most of the force was able to absorb it but i do not think we did ourselves any favors. i do not think anyone wants to repeat those years where we took this marvelous fighting force of the united states army and marine corps and the other services as well, pulled them back from vietnam, and changed the entire equation for them. there are other pressures. joint force 2020 -- that force coming out of vietnam really did not recover. i would say they did not recover until the early or mid 1980's. i mean recover a sense of pride. its clarity of who it was and what it had to do, its commitment to education, real hard training. we did not recover until the early 1980's. it was not because we sat around

not interested in recovering, but it took that long. we do not have that kind of time today. maybe that is my point. the world is changing so fast around us. if we wait until 2020 to build in at the kind of strength you are working to build into our formation, it will be too late. i fear if we do not address this now, not only will we not be doing ourselves any favors, but we will not be doing the nation any favors. if you had to think of one word to describe our profession, unique among all others on the face of the planet, it is trust. what you hear doing is getting together and sharing best practices to wring out the problems and decide how to do what we need to do, determine how to do it efficiently in an environment of challenged

resources, and to keep that human dimension and keep reminding ourselves this is about people. this is about people. for years from now, if i am still chairman -- as you know, i am always one speech away from and in my career. today is a boring day in history. but if i am the chairman for four years, somebody said to me, "what we want people to look back and say about you 10 years from now?" i said, "that is a good question." off the cuff, i want them to say, "that is the chairman that got the people right." i have 37 years. brian reminded me of that painfully. every day when i get out of bed, i remind myself. everytime i crawl out of an

airplane, i remind myself. every day, i remember. you can to compartmentalize the things you do not want to remember. every day i remember has been an absolute blessing. and i want everybody to feel like that. everybody cannot be the chairman. everybody should not really want to be the chairman. some inside information, there. i have achieved the status as the senior military officer in the finest military the world has ever seen. that is really not it. i would have felt the same way at any rank at any time. it is one of those professions we really ought to feel good about. it has to hold together on the basis of trust. what you are here doing today is addressing that. the last -- if i have to make a case for keeping faith with ourselves, our families, our communities, and the american people, you probably do not need

to be here, and neither do i. that is almost redundant, keeping faith and trust. that is kind of my message today. what you are doing here has absolutely direct correlation to who we are today, but, more important, has anpe you feel noe told you that, i am ready to take your questions. >> we have microphones along the way. we have to make sure we get all our and co -- nco's up, the, is we are facing as we but not to the point of advocating joint medicine as a foundation. things like electronic medical records and some of the things that relate to what that young lady said a minute ago. information sharing. prescription drugs. it does not make sense that we

all do our own thing in that regard. down to this issue, i do not know the answer, actually. i know what the land component goes through. i have not ruled in on a target in an f-16 or f-18 and understood the experience. i have not lived beneath the surface of the ocean for six months at a time. there are a lot of things i have not done. a lot of things i have done, but a lot of things i have not done. what i would ask you to do is help us, the senior leaders of our military and our civilian leaders, understand what is the same and what is different, and find, to use a baseball analogy, the sweet spot. resources are a factor. let us face it. to the extent we can have a common operating pictor, we will be better off. i think what these forms were

intended to do -- forums were intended to do was march us toward that by exposing best practices and challenges. but i am not at the point where i think it needs to be all one program. i think we will get there, but we are not there yet. i hope i did not ruin your entire conference with that answer. who is in charge? me. ok. good. [laughter] >> i am a brigade level mrt. i guess the question is more army-directed. i deal with teaching my soldiers and injuring battalions are teaching their soldiers, all the way down to the team level, the mrt basics. what steps are we taking to ensure that us teachers are

having the opportunity to properly teach these soldiers? not only am i a brigade mrt, but i am an xo. i have all these other hats. i feel my time teaching these soldiers is severely limit to, as well as my battalion mrt's. >> you sound pretty stressed. somebody get this kids and help over here. [laughter] long before -- this is when the earth was still warm, when i was a lieutenant. no matter what you do as a lieutenant, if you ever feel you have enough time to do what you need to do, give me a call, because i have to change something at that point. it is the right question. at some point -- one of the things we always do as a military, because we can -- we are the most organized institution on the face of the planet. it is both what makes us great

-- you cannot give us a problem that we cannot shift around the deck chairs a little bit, and get after. it is just impossible. we are that good. it is also one of our faults. we tend to throw institutional or organizational design at problems as a first instinct. what i mean that -- mean by that -- some of you know when i was a chief i wanted to get after the profession as a study. unbeknownst to me, some well- meaning subordinates had taken my guidance about really getting after the profession. they had set up a school at west point and began to train a group of individuals to be professional -- i forget. there was an acronym, naturally. but it was guys like you, and dells, who would come to us for three weeks of instruction on the profession. the would go back into

formations and would be the master gunners, the mrt's, of the profession. that is not what i really wanted. i wanted this to be a leadership issue. i wanted this to be a command issue. i wanted the professions to be embraced by our noncommissioned officers, so when they coached or trained it was there. it was always there. it was the one thing that was always present. that is where we need to get, eventually, in what your talking about. i personally -- i am not in any particular service anymore, although i wear the uniform of the army. this is the conversation i have to have with the service chiefs. the mrt program was the first step. what is the next? we knew exactly what we were doing to you when we did this. we did. you cannot give another duty to someone and say, "now i do not

worry about the multiple." i know we have done to you. i would ask you to think about it as a step toward institutionalizing this so at some point i do not get that question, and instead we are having conversations with first sergeants and company commanders, and whatever the equivalent is, about how they are getting after this as part of the development of the subordinates, not turning to you and saying, "you are in charge of resilience." does that help? [laughter] >> we have time for one last question. >> i am a medical director of the air force and as a fellow cancer survivor i commend you in that experience. mine is a more global question. in terms of preparing our soldiers, airmen, marines, and coast guard for their role in the world, i know we see a

changing environment. and an evolution of our roles. we have come from the soldier and the state to the soldiers' statement. how you see our evolution in terms of our role at the state department and how we can better prepare our soldiers statesmen of the future to deal with that? that is part of resiliency overall, to know what their role is -- at one time to be the soldier and at one time to be the statement. >> every time i have been to places i have never been before, like brazil, it does occur to me we have taken -- some of them, they have been in that environment consecutively for a decade. we trained them and made them for an area officers, in our terminology. but to answer your question, as i think about what we are trying to develop in our leaders for the future -- a joint force 2020, we kind of had a pretty

clear view of what we needed to be in terms of our attributes today. if you are in the army, you take out your dog attacks. on the back, it will have the seven army values. you look at your efficiency evaluation report. you will see some attributes. i am not sure those attributes are the same as the ones we need in 2020. each of the services is doing its own internal look, if you will, to determine whether we have the attributes right. i am going to link it to what you said in a very clever way. i appreciate you allowing me the opportunity to do that. i think one of the attributes that has become -- that i have begun to value most, at least in senior officers, but i would say that you have to begin to develop on, is adaptability.

it just seems to me to be clear that no matter how well we think we are organized in force and training equipment, it is almost, in a way that was not true 30 years ago -- the way we are going to use the force will probably not be the way that young man or woman in it thought they were going to be used. we most often failed to predict the future. we take the organizations we have and equipment we have, and we apply them to a situation. what makes it work is not the organization or the equipment. it is the leader. the leader then has to take an organization and equipment that are ill designed for the purpose we have intended, and they adapt them and accomplish the mission. if adaptability, which might be a kissing cousin of resilience, really -- if adaptability is an

important leader attribute, the question becomes how you do that. how do you build this thing called adaptability? i have started to think about that. i will use two words that you might say, "he is in the army 38 years, and has probably suffered some of the ill effects of that." i think that one of the ways that we build adaptability in our subordinates is confronting them with change, failure, and chaos. i have had this conversation with the service chiefs. they say to me, "you are telling us should introduce change, failure, and chaos in our training and education? we got plenty of that already. we do not need to be doing more of that." but think about it. when i looked back at myself and confront myself and say, "how

did i become adaptable," the answer is being placed in an friendly circumstances, being pushed to the point -- young men and women to date -- this is not an indictment. it is just what it is. it is the youth soccer model of everybody gets a trophy. i am not against that. what i am against is everybody gets a trophy all the time, and everybody grows up thinking they are the best soccer player on the field. you get to high school and failed to mature soccer team and said, "that is not possible. look at all the streaking trophies i have on my shelf over here -- these freaking trophies i have on my shelf over here." [laughter] we have to figure out the in during attributes -- integrity and honor and courage. those are in during. we are never going to -- are

enduring. we are never going to change that as part of the purpose of our program. but there are others. adaptability is one. you have to map to it your training and education. i suggest the way we meant to adaptability is throughout the three challenges i have described. we make sure in our training and education that we push people a little further than we need to go. it is about building the life skills to have been talking about as part of this conference on resilience. i think these phrases are kissing cousins of each other. ok. they have given me the hook. let me thank you for being here and for taking on this topic. i think this is the third year now. i look forward to finding out what you have learned here, and what you are recommending to us. i promise you that i will be an

advocate for it, because i am committed to maintaining the bond of trust i described to you earlier. i wish you all a very quiet and restful weekend. thanks very much. [applause] >> attention. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> also here in washington, the clinton global initiative is holding their fifth annual student conference, the former president hosting the discussion this evening on the power of public service. former secretary of state madeleine albright participants in the discussion, along with the singer usher. our coverage gets underway at 7:30 eastern. a panel we are covering tomorrow includes chelsea clinton will moderate a discussion about how

young people are creating opportunities in a tough job market. live coverage at 1:00 eastern from the clinton global initiative. republican presidential candidates mitt romney, rick santorum, and nuking rich all participating in a fake and freedom coalition in wisconsin ahead of tuesday's primary. 42 delegates up for grabs. our coverage tomorrow morning, getting underway at 11:00 eastern. next, richard cordray, the head of the consumer financial protection bureau, testifying on an agency report that said it received 13,000 complaints over the last six months related to mortgages and credit cards. he spoke yesterday in front of the house financial services committee for 2.5 hours. >> the committee will come to order.

mr. cordray, as you know, we are going to have some boat interruptions. i would like members to know, as well as anyone listening, that mr. cordray has agreed to stay until 2:00, which is a very nice accommodation. we very much appreciate that. and we thank you for your attendance today to deliver the semiannual report to the consumer financial protection bureau. the cfpb is an independent federal agency whose authority, as many of us have said, is far reaching. some have said unprecedented. title x of the dodd-frank act gives discretion to the director almost unfettered to

find services deemed to be unfair or abusive and to ban them under what has been described as a highly subjective standard that has no legally defined content. all of us agree on the need to protect consumers. all of us also agreed that every government bureaucracy needs transparency and oversight. the simple proof -- if we can have a little order. the simple truth is there is no reason we cannot have both robust consumer protection and an agency that is accountable for the action it takes and the resources it uses. the call for greater accountability was not well served by the president's decision to circumvent the advice and consent of the senate

directorall the cfpb's in a constitutionally questionable maneuver. as i told you previously, mr. cordray, i believe neither you nor the agency usurp were well served by the decision, since it cast a legal cloud over the bureau's regulatory and enforcement activity. i have also previously stated this dispute has nothing to do with you personally, but with the structure and lack of accountability surrounding the agency you have been asked to leave. the congress has passed two bills that make the cfpb more accountable without in any way hampering its ability to protect consumers. h.r. 1315 includes provisions placing cfpb under the oversight

of a five member bipartisan commission, something originally supported by house democrats. h.r. 4014, which passed with strong bipartisan support and the support of mr. cordray, texas a critical of omission in the dodd-frank -- fixes a critical omission in dodd-frank when it comes to sharing information. given that the cfpb is not subject to the annual budget process, hearings like this are essential to the oversight process. hearings like this are the only opportunity for congress to exercise any oversight of cfpb at all. again, mr. cordray, i thank you for your appearance, and now recognize the ranking member of the subcommittee, ms. maloney.

>> is mr. frank coming? pardon me? should we wait for him? first of all, i would like to -- should i wait for mr. frank? >> i will allow mr. frank to come in and make an opening statement. >> i will go ahead, in the interest of time. first of all, i want to welcome director cordray, and really thank you for your impressive accomplishments so far. i know that when we were doing the markup on dodd-frank, i offered an amendment that called for an annual report and oversight by this committee of the cfpb. that was later amended to make it a semi-annual report to

congress, but if i had known that you would be before this body or some one senior, as yourself, would be before this body 15 times this year alone, i would not have offered the amendment, because you have been very accountable to us and to this congress. i would like to say it was great to have you in my district in new york, where you discussed and launched an inquiry into overdraft practices. i know you have faced similar meetings across this country with various concerns, from student loans to mortgages to general concerns of consumers. as we reach the three month anniversary of the cfpb as a fully operational agency, i would like to note some of the

bureau's outstanding work. while some will undoubtedly continue to define the cfpb as an unchecked agency, i believe the bureau's accomplishments in oversight have been extraordinary. the bureau has initiated an examination into the growing level of student loan debt, and its ramifications on our economic recovery. it is tirelessly helping consumers understand financial products and services through the "know before you owe" program. they are curtailing abusive debt collection practices. they have modified and put forward a simplified mortgage application that people can actually understand. and the bureau is resolving consumer complaints, launching bank and non-bank supervision programs, in developing simple

disclosures for credit cards and other financial products, and targeting specific abuses aimed at older americans and service members, and have created offices just to address these concerns. i think this is a great list of accomplishments for a new agency. from what i can see in your report, it is just the beginning. the structure, the positive report, the very fact that director cordray is appearing before us today, his 15th appearance, or of other senior staff, is a testimonial to the number of checks placed on the bureau. i would say it is very accountable, given the number of times you have been here. i congratulate you on your fine

record so far. i support your testimony and hearing about the plans for the future, to work for safety and soundness and the protection of our consumers. thank you. >> on january 4 this year, the president made an alleged recess appointment of our witness, richard cordray, to head the newly-created cfpb. the problem was the senate was not in recess at the time. in fact, it was in pro-forma session. the senate has the constitutional authority to determine the role of its proceedings, not the president. under a similar set of circumstances in 2007, when it come inconveniently for democrat senate majority leader harry reid, a republican was in the white house, he was quoted as saying, "the senate will be coming in for pro-forma sessions

to prevent recess appointments." one may not like the policy, but it is a pretty convincing confirmation that a pro forma session is not a recess. it is pretty clear the senate did not believe they were in recess on january 4, and in the constitution they could not have been in recess because the house did not consent. therefore, there can be no recess appointment. but had there been a recess appointment, it does not solve the president's problem. section 1066 in title x of dodd- frank state the director must be confirmed by the senate. a recess appointment is not a senate confirmation. in 2005, then-senator barack obama said recess appointees lose credibility because they cannot make it through the confirmation process. mr. cordray, we just met for the first time about 15 minutes ago.

although we do not know each other, those who i know from ohio say you enjoyed a good professional reputation. they respect you. the respect your judgment and fairness. so this is not personal. but in my humble opinion, i believe you said before us as an unconstitutional appointee, and unlawful appointee. you suffer a loss of credibility from the outside. as long as you occupy this office -- you have been given unprecedented responsibility, unchecked powers to ban credit products, restrict fundamental economic freedoms of our citizens, and effectively control huge swathes of our economy. obviously, i look forward to hearing your views. i yield back the balance of my time. >> i think the ranking member.

-- thank the ranking member. i thank you for appearing today. i am excited about some of the things that are happening, particularly the service member's affairs program you are working on. i think this is initiative all of us would be proud of, helping our service members, which is an opportunity for me to extend a word of gratitude to all the members of the committee for helping with the homes for he rose initiative we passed -- for heroes initiative we passed. i thank my colleague for using a little bit of his time to give his expressions. i did not mention mr. gramm -- grimm when i talked about this initiative, but he was the co- sponsor, and i want to make sure i mention him. with regards to your appearance

today, you also have an office for older americans that i think is important. i understand that mr. skip humphries is the person who will lead this agency or office. i am eager to hear more about this. some of the accomplishments -- you have been their a short time, but your list of accomplishments has become very impressive over a very short time. this test pilot program, "know before you owe," i think that is something consumers with credit cards will be excited about. you have initiated an examination into student loan debt. i think it is something that college kids especially are going to be excited about. you have and ask the -- an ask the cfpb opportunity for members of the public to increase

financial literacy. you have initiated an over back exploration program to look at the harmful effects on consumers. you have created a first-of-its- kind program, a database for repeat offenders against the military realm, to combat the fraud that targets our veterans and their families. i think it is an important program as well. there are many others you have initiated, and i am looking forward to working with you. i want to call to your attention something i think is important to you. a lot of the small banks are still having a good deal of consternation. i look forward to working with you so we might do something to allay their concerns. i am confident there are ways by which we can make sure the have a greater understanding of what we are attempting to do with this agency. i thank you for being here today.

i am eager to hear more from you. and i yield back the balance of my time. >> i want to welcome mr. cordray from a neighboring state of ohio. this is the first statutory mandated hearing to discuss the cfpb and the report. a little over a year ago, professor warren visited my office. she said at the time that the cfpb provided an opportunity to knock down the silos that existed between financial regulatory agencies and to provide clear information and consumer supervision. unfortunately, from all of the interviews and testimony that we have received, this is not what is occurring. i fear the cfpb has just created

a new silo. some of the financial regulators have not eliminated positions, and they were not transferred. rather than using this opportunity to insure no duplication among the agencies, we have just added another bureaucracy to the agency. i hope you will address the staffing needs going forward and work with the provincial regulators to eliminate these conflicting divisions and positions. it adds an unnecessary and added burden to particularly community banks as they are moving forward, trying to unlock and create jobs and get lending in small businesses selling again. i do have questions, like my colleague from texas, on the nature of the appointment of mr. cordray as the director. i believe it could lead to some legal challenges of the cfpb actions, and create more

ambiguity. i hope this becomes more clarified. i thank you for appearing before the committee and look forward to your testimony. >> ranking member waters is recognized for one and a half to two minutes. a minute and a half? >> mr. chairman, i think you for holding this hearing this morning. mr. cordray, i am pleased to have opportunity to testify before our committee. as i understand it, you have been before congress five times since you were appointed cfpb back in january. that is once every few weeks. that is not to mention all the other employees of cfpb that have come up to testify since the bureau opened its doors. your agency has been before congress 16 times over its short life. it is clear that this agency is setting the gold standard in

terms of transparency and accountability. the cfpb has gone out of its way to solicit public and industry feedback on mortgage disclosure forms as well as student loan disclosures sheets. moreover, cfpb is governed by budget caps, vetoes by the financial stability oversight council, and an annual gao audit, to name just a few provisions to which the bureau is uniquely subject. i am pleased to hear from you what is included in your semiannual report to congress and your plans for what you will undertake in the coming months. thank you, and i yield the balance of my time to the gentleman from chicago to add to his minute and a half, hopefully two minutes. >> you were reserved 10 seconds. >> thank you, mr. chairman. we have expressed our concern from time to time about this

arrangement. this legislation that set up the cfpb is going to add to the regulatory costs that are growing at a rapid clip that has few checks and balances but broad authority. here is the main point. it separates safety and soundness regulation from consumer protection legislation. prior to her departure, sheila bear had this to say about this problem. -- shiela bair said agencies are formed by a broader understanding of other risks in financial institutions. place in consumer protection policy in a separate organization, apart from existing expertise and examination infrastructure, could ultimately result in less effective protections for the consumer. if we are not able to mandate coordination between the cfpb

and financial regulators through changes in law, my hope is this some u.n. -- this semiannual hearing can at least serve as a platform for discussion of the key concern so many provincial regulators have on this issue, and which we from past experience have learned the hard way is a big problem with bifurcated regulation. >> i also want to thank mr. cordray for being here today. one of the biggest accomplishment contained in the dodd-frank act was the creation of the consumer financial protection bureau. finally we have a call on the beat whose sole purpose is to ensure american consumers are getting a fair shake in the marketplace. in the past four years, in has been dominated by efforts to clean up the mess created by the previous structure, which left

enforcement and regulation based solely on the financial industry's bottom line. if we believe the financial sector depends on the american consumer, i think it is imperative that we do all we can to protect the well-being of the american consumer. in just a few short months since mr. cordray took his post, the cfpb has taken a number of issues, including "know before you owe," ensuring consumers know what they are getting into with mortgages, student loans, and credit cards. i hope this good work will continue. i hope we can discuss the next steps to work to ensure accountability and transparency. at the same time, as ed royce indicated, we need mandates. but remember we need mandates with funding. you cannot have a mandate

without the additional funding to make sure we have accountability and transparency. that has to come hand in hand together. i look forward to your testimony. thank you very much. >> welcome, director cordray. i would like to echo a number of concerns expressed by my colleagues on this side of the aisle. i am particularly concerned by reports that the cfpb is engaging in regulatory activity that could jeopardize the safety and soundness of financial institutions. i am also concerned about attempts to regulate insurance. finally, i am told the simplify mortgage disclosures the cfpb is developing may be more complicated than previous disclosures. i welcome your comments on these matters. thank you for being here. i yield back. >> mr. gutierrez, 2 minutes 15

seconds. >> i appreciate that. first of all, welcome. secondly, i would love to see how we went from seven pages to three pages and make it more complicated, because that is what we have done in terms of disclosure of transactions, something easier to understand. i know you are currently testing the document, and i congratulate you. i think that is what we should be doing. but you never know. democrats with a democratic president -- maybe we did find a way to reduce seven pages to three and make it more complicated. but i want to tell you that credit card companies, you have to stay on top of them. they are getting trickier every day in terms of trying to figure out how they can hoodwink the american public. student that, i think, should be a non-partisan issue.

$1 trillion, more than all the credit card debt in america. that is the youth. they are not going to be able to buy a home. we have to figure out to -- a way to make sure they are not getting ripped off also, and that the terms in the agreements are such that will let the next generation of americans, our children, to be happy. you have done so many things. i would like to say i think it has been five times -- you have had the job a short time. five times -- that would make 16 times since last year. you know what the best thing about you is that? people just want to see you on capitol hill. i have to tell you every time one of those bankers knocks on my door, i think next year at halloween the will have a cordray costume for all those bankers. you are a scary man to them.

do you know what? i do not think that is so bad. i think they need to have a little fear of the lord as they move forward. lastly, we have to stay on top of this. last week, i opened up my account. i keep $250 there. that is the minimum for the savings accounts so they do not charge you every month. they raised it to $500 and charged me $4 in order to keep my money. they continue to do these little tricky things. the continue to put their hands in the consumer's pocket. keep up the good work. >> we would get a copyright on the richard cordray halloween costume. mr. miller for one minute. >> mortgage regulation is a critical part of our finance structure. reforms must be enacted with caution. cfpb has been active in working

on regulation mortgage loans and integrated requirements for truthful lending and mortgage originated -- origination. these will harm consumers by driving up costs and limiting access to mortgage credit. we have already seen a rule implemented in the name of consumer protection that limited access to lower-cost loans. some rules have prevented borrowers [unintelligible] consumers often pay more for closing costs. we must protect the consumer. we must make sure that costs of increasing consumer protections are not implemented. we must not inappropriately restrict liquidity in the name of consumer protection. in your testimony, i hope you will make sure that access to credit will not decrease and

these new rules are done properly. i yield back. >> i want to thank you for having this hearing today, and think director cordray for coming in again. it is good to see you. my colleagues are concerned how you were reported. -- appointed. i am just glad we have a good man doing a difficult job at a challenging time. i look forward to following up on the conversation we started in my office when you were the enforcement director. it was about non-bank lending, paid a loan making, short-term lending, and in particular lending practices online. i appreciate the fact that you have had field hearings on this issue in alabama, and look forward to continuing our conversation on that. thanks again for the great work you are doing. i look forward to our conversation today.

>> one minute. >> i am one of those on the other side that am concerned about how the appointment was made. i think that goes down to the basic structure of the law. we know there is an ongoing discussion about organizational structure. that is a big concern. should the cfpb be the same structure that the house, under democratic control, passed in the 111th congress, which is also the structure we have been advocating in this committee during this congress? or should the structure remain as it is today, with few checks and balances for the american public? while the structure discussion continues, i think we all should be able to agree on some fundamental principles. first, strong consumer protection is important, necessary, and good for consumers and private sector businesses. second, cfpb rulemaking should

be constructed and transparent, objectively considering all viewpoints from interested parties. third, regulations that stifle the availability of products, competition, and growth, would be inefficient and ineffective while harming consumers, employment, and our economy. as we move toward -- move forward, i hope to use common ground to analyze future and existing proposals. i appreciate your time and being here today. >> thank you. mr. frank for two minutes. >> welcome to one of the longest-running in hearings in washington, the hearings in oversight of your agency in which my colleagues complain that there is no oversight. i look forward to the reruns, going forward. the reason to complain about their not being oversight at an oversight hearing and the structure is to have nothing firm to complain about. the agency has been in existence for a considerable

time and there are no horrors or abuses we were threatened would happen. in the absence of that, let me talk about an important issue, which was our addition of the word "abusive" to the practices you were to protect people against. people have said what do you mean by abusive. we defined it in the statute to say it materially interferes with the ability of the consumer to understand a term or condition, which takes unreasonable advantage of a lack of understanding on the part of the consumer, the inability of the consumer to protect their interests. in other words, it may depend on the consumer. if people think that is a far- fetched notion, remember a problem we had with the some prime loans -- when you go to an a.d.-year-old and urge her to refinance when she has nearly paid off her mortgage -- when refinancing is sold to an 80- year-old, it is not a good idea.

why are we getting involved? i quoted before, and i misplaced the book of a very distinguished economist, who said, "of course there needs to be a capacity in the government to protect people not just against deception, but against people who would take advantage of their ignorance." that is what abusive does. in giving you the authority to protect people against abuse, so-defined, we are following the instruction of that particular economist, friedrich hayek. look specifically at what he said. there was great support for dealing with efforts to support individuals. >> we have possibly two votes on the house floor. members may want to do that. we will come back and hear your testimony. miss can say go for one minute.

-- canseco for one minute. >> this week, just across the street from the capital, we have been reminded about the constitutional limits of our federal government, as the president's health care law appears to be in serious jeopardy. unfortunately, i believe it will not be very long before matters involving the cfpb end up in the very same place. we must be ever so mindful today that president obama gave a recess appointment to mr. cordray despite the fact that the senate was in session at the time, a black and white matter despite the administration's been there is some gray there-- administration spin there is some gray there. this has set up an unnecessary constitutional crisis at the time we can least afford it.

with that, i yield back. >> we will close out the opening statements and go vote and come back as soon as we can. i would encourage the members to make your way to the floor. >> with your indulgence, i have another committee i have to testify at. i will not be back right away. it is not a sign of my lack of interest in the oversight of this agency. >> thank you. >> the fact that you are here today is troubling and another display that this administration picked arrogance -- of this administration's arrogance. the director requires senate confirmation and this president ignored it. the only way this president gets around the constitutional process is to fill vacancies during recess. but this authority depends on the senate being in recess. i suppose the president is an impatient man. instead of waiting for a

significant recess of at least three days, the president declared the senate in recess. this was a unilateral infringement on the constitutional powers of congress. the recess appointment clause was adopted to ensure unfettered continuation of government, not to provide an escape hatch to avoid the confirmation process. history tells us this. the founding fathers said so. nothing more than a supplement to establish an auxiliary method of reappointment in case the general method was inadequate. this position was illegitimately occupied and has been granted broad powers that will affect almost every aspect of american business. it has been insulated from congressional oversight. i say all of that with nothing ill against you personally. as a member of this congress, who has sworn an oath to defend the constitution, i find the method in which you were appointed offensive and in violation of the highest law of this land, the constitution of

the united states. with that, i yield back. >> thank you. at this time, we will stand in a brief recess.

>> mr. cordray, the committee will come to order. we are ready to proceed. you are recognized for a five minute opening statement. if you wish to go over, that will not be a problem. we will not be interrupting you. >> thank you, mr. chairman, ranking member frank, members of the committee. i want to thank you for this opportunity to testify on the first semi-annual report of the consumer financial protection bureau, the telling the bureau's accomplishments in its first six months. in january, a presented this information to your colleagues in the senate. i look forward to presenting it to you today. before i became director, i promised members in both chambers that i would be accountable to you for how the consumer bureau carries out the laws you enact. i said i would always welcome your thoughts about our work and

i stand by that commitment. i am pleased to be here to tell you about our work and answer questions. the people who work at the consumer bureau are always happy to discuss our work with congress. this is the 15th time, maybe the 16th, we have testified before either the house or senate. my colleagues and i look forward to working closely with you, with the businesses that serve customers in consumer finance, and with millions of american consumers. i am honored to serve as the first director of this new consumer bureau. i am energized and inspired by the many talented people who worked at the cfpb, and and driven by our responsibility to protect american consumers. our mission is of critical importance to making life better for americans. consumer finance is a big part of all of our lives. mortgages allow people to buy a home and spread the payments for many years.

student loans give young people with talent and ambition access to education. credit cards give us immediate and convenient access to money when we need it. these products enable people to achieve their dreams. but as we have all seen in recent years, they can also create dangers and pitfalls if they are misused or not properly understood. during my years in state and local government, and became deeply engaged in consumer finance issues. i saw good people struggling with that they could not afford. sometimes those people had made bad decisions they came to regret. sometimes an unexpected event like a love the one getting sick or a family member losing a job overwhelmed their most careful planning. other times, i saw unscrupulous businesses who obscured the terms of loans or engage in outright fraud, causing substantial harm to unsuspecting consumers, ruining their lives and devastating their

communities. i am certain that each of you hears every day from your friends, your neighbors, constituents in your district who have these kinds of stories to tell. these people do not want or expect any special favors. they just ask for a fair shake and a chance to get back on track toward the american dream. one of our primary objectives at the bureau is to ensure the costs and risks of these financial products are made clear. people can make their own decisions. nobody can or should try to do that for them. but it is the american way for getting them all the information they need to make informed decisions. it is good for the overall economy. another objective is making sure that banks receipt the evenhanded oversight necessary to promote a fair and open

marketplace. our supervisors are going on site to examine they -- examine their books, and ask tough questions, and thinks the problems we uncover. we have the ability to make sure this is true across all the essential products and services. the consumer bureau will make clear that by late in the law has consequences. there are field examiners and highly skilled researchers. we have multiple channels to know the facts about what is happening in the marketplace. we plan to use all the tools available to us to make sure everyone respects and follows the rules of the road. where we can cooperate with financial institutions to do that, we will. we will not hesitate to use enforcement actions to right a wrong. we need to hear directly from the consumers we protect and the businesses that serve them.

we do this on our web site, where consumers are able to tell us their personal stories. we also make it a point to get out of washington and hear from people first hand. we have held town hall meetings in cleveland and new york city and we have held a field hearing in birmingham, alabama. we are hearing from thousands of americans about what works and what does not. we hope many of you will join us at these events when we come to your communities. accomplishing our mission will take time. we are already taking important steps to improve the lives of consumers. thank you. i looked over to your questions. >> thank you, director. you probably heard ranking member frank talk about abusive as being a new term. he said it was defined in the act.

there has been a lot of focus on both sides on what is abusive and how that would be determined by your agency and by the lender, how they would know whether it was abusive or not. i am looking at the definition of abusive. one of the things says, "takes on reasonable advantage of a lack of understanding on the part of the consumer." whether they understood something or not, would that not depend on their ability to think and understand and reason? to a certain extent, would that be based on their common sense or iq? >> that prong of the abusive

definition is situational and objective. some of the prongs of the definition that congress enacted are more firm and some are a bit less firm. we have been trying to puzzle through exactly how that straight forward and definition of the tar and that is in the law -- it is law that -- definitions of the law -- it is a law that must be enforced. we are trying to assess it as we go. >> you would almost have to go situation by situation, wouldn't you? >> with some prongs, that might be true. >> that might be a problem for an institution or a lender. some agreements, depending on

the ability of the consumer to understand, a focus on the agreement could determine whether it is abusive or not. for instance, under the definition and under the law, 8 financial institutions could be liable any time a consumer -- a financial institution could be liable in time a consumer does not understand the terms. >> not necessarily. it is taking advantage of the institution -- of the consumer. >> of their lack of understanding. >> institutions should be thinking if they are taking advantage of the consumer. if so, you should hesitate and think again and be careful that you are treating your customers

clearly. it is something good businesses think about every day. there was an article in american banker that talked about an interview with you in which you indicated you did not anticipate the agency writing a rule around -- you were asking a follow-up question about whether your statement meant that people would have to look at your actions as a model for how the new term of abuse is defined. you were reported to have responded, i think that is probably right. is that a correct reporting of your response? >> it was. >> does that mean you are going to use your enforcement authority rather than rulemaking authority to set the standard on what is abusive?

>> it meant several things. for us to define what abusive means feels a little presumptive given that congress defines what abuse it means. congress gives us the law that binds us. we do not make up that law ourselves. we have to supervise institutions. there is some guidance that we have provided around that set of terms, unfair or abusive acts or practices. our report is available on our web site. institutions have every opportunity to look at that and ask questions about anything that is on clear to them. i think how the law that congress has defined apply in particular situations. we will have to measure it on a tax and circumstances basis as we go. congress defies it and it is our job to try to apply it.

>> you are a acknowledging some difficulty in being able to write a rule and tell institutions when they may or may not be violating the law. >> i do not think that is the preferred approach when congress has defied a term already. are we going to define it differently from how congress defined it? i do not think so. i think we should take some time which it rather than pontificate about it at the beginning. that is what we are going to try to do. we are trying to be careful, measured, and possible. that means you do not have all the answers in the first instance. that is where we are. >> thank you. ms. waters? >> thank you.

there are new mortgaging standards that addressed this issue. third-party provider oversight. loss mitigation requirement. however, the settlement only covers five of our major mortgage servicers. the servicing standard will only be in place for the length of the settlement, which is three years. you have a lot on your plate. do you have any plans to develop permanent servicing standards that cover the entire servicing industry? if so, will cfpb use the standards in the state federal settlement as a template? >> thank you for the question. it is a timely question. we do have the intention to develop servicing standards that would apply across the entire industry.

as you noted, the servicing settlement was a partial step, a partial -- an important step. it only applies to certain institutions and certain loans and their portfolio. we are working with other federal agencies to develop standards that were true before the service in settlement was reached. it remains true after the settlement was reached. it is no question that the provisions in the settlement, that were worked over carefully, that institutions are going to try to provide broader guidance to the market. there are many servicers that have not been touched by the settlement, that have not been affected in any way. some of them have not been overseen by anyone. we need to bring them under the umbrella so that everyone is playing by the same rules as quickly as possible. we have certain mortgage servicing rules that we are required to adopt by january.

we are working closely with our fellow agencies. we see that as a high priority. i saw mortgage servicing problems in ohio going back to when i was a local treasurer, state treasurer, and state attorney general. i find them to be national in scope. >> thank you. i really appreciate that. i have been following the mortgage servicing consent in a process initiated by the federal reserve board, our largest mortgage servicer. this process allows it servicers to hire their own auditors to investigate their practices in 2009 and 2010. i cannot understand why it would not include the cfpb in the process. we did not get a really good answer. given the new jurisdiction over servicers, what do you think?

you have any desire to be involved in this process? >> we are taking complaint now on our website and in calls from people about mortgage issues. a few of those complaints deal with foreclosure situations and other surfacing issues. i think the congress is well served on any kind of significant initiative like this to exert oversight just as you exert oversight over our efforts and processes. the occ was the first of the federal agencies to step up and document the extensive abuses in the mortgage servicing sector. they issued a report on that that demonstrated the seriousness and realized it affected the safety and soundness of the institutions. that allow anybody to move forward toward the servicing settlement. we need to make sure all of

these other processes are working as well as possible. the consumer bureau had significant authority here to examine institutions, banks and non-bank, to enforce the law going forward and to write rules. we will do that carefully and we are glad to consult with you as we go. >> thank you. i yield back the balance of my time. >> i would like to follow up on the line of questioning that our chairman had. with respect to the term abusive, you said the law was clear in this area. i also heard you say it was situational and subjected. the co-author of dodd-frank, said on thed senate floor that i have never claimed that consumer protection is perfect. the word abusive needs to be

defined. we are trying to make it better. the language never changed after that. for the record, i would like to say that the call author of the act did not define it too clear. is it clear or is it subjected? is it clearly objective? are those competing our problem in terms? i do not understand your point of view. >> what i am say is that this is not an undefined term in the law. some have said it is an abusive or baby -- or vague. congress has laid out specific prongs. there are criteria people are supposed to use. >> did you say it was subjected in your testimony a few minutes

ago? >> if you look at those prongs, some of them are situation up to the individual consumer. i think that is true. >> can a consumer product be both fair and abusive? >> i think congress has made a judgment. it is not for me to make up terms and go forward. i am is supposed to enforce the law that you have enacted and we intend to do that. >> there is case law surrounding greater statutory specificity with respect to unfair. is the term abusive redundant with unfair? can you have a fair product that is an abusive product? >> yes. the answer to your question is

that congress has put together three different terms in that passage. they talk about unfair, a deceptive, or abusive actual practices. congress seems to indicate there is a distinction among each of those categories. that is not to say there cannot be some overlap. congress has clearly spoken and said, there could be a practice that would not be unfair, but would be abusive. there are lawyers that are arguing back and forth trying to understand the parameters of that. >> in interpreting the term abusive, you said it could be situational. it is situational consumer- specific, it goes down to the specific consumer? >> i was asked about a particular prong, which was the consumer's understanding. that is situational.

>> so a product could be abusive to one individual consumer, but not abusive to another consumer. is this correct? >> the law seems to clearly contemplate that, yes. in other ways, that is not necessarily true. >> if i want to roll out a product, in order to avoid litigation or enforcement action, am i going to see the day where i have to enforce a financial literacy tests on my customers? >> there are good practices that business is engaged in all of the time. if you are offering refinancing to an elderly customer and you know they may be having difficulty understanding -- >> you said consumer dependent,

down to the individual consumer. >> they would not approach certain customers with certain products. >> mr. cordray, just one other quick question. you have said fraud is fraud. you also said there is fraud committed in the marketplace that is not on its face, illegal. ors fraught illegal fraud the mere fact that you are an-- agency is -- is fraud fraud, or has your agency determined that it does not like the company? >> thank you for asking the question. that is either a misquote or taken out of context. you can have fraudulent acts and

practices that may or may not rise to an actual illegality, depending on whether there is reliance or damage. that is a standard matter for securities laws. our job will be to protect consumers against unfair, deceptive acts and practices. the other definitions remain a matter under debate. >> thank you. that is my time. >> yesterday, i ran in one of the papers that you have a new feature on the cfpb called, " ask us anything." i believe financial literacy is something i care deeply about.

i believe if people have the best information, they can make the best decisions for their financial lives. can you report on the use of this function and how these questions and form your work going forward. . thank you, congresswoman. it is something we think we will build on going forward. as we prepared the bureau to recede and to handle consumer complaints in the credit card area and the mortgage area and other areas as well, we developed training materials for our folks that would be receiving those complaints to be able to address different questions and to be knowledgeable about the products they would be talking about. it occurred to us that rather than limit that information to our employees, if we could put it out on our web site and make

it more available to the public at large, they can answer a lot of questions for themselves. they can get that information when it is most pertinent and convenience for them. we will continue to build on this. people can ask questions that they would like to have us answer. they can offer their thoughts about the answers we are providing to the questions that are raised. we expect we will build this out across the whole range of products and services. we hope to become a trusted resources for people out in the marketplace who need to know more and are not sure where to get it. sometimes they go to websites of people who are trying to sell them a product and the information may be distorted. we do not have any of that. we hope to promote this. we would be glad if he would promote it among your constituents. it is intended to help consumers so they can protect themselves. >> director cordray, most of us

receive quite a few complaints from our constituents about student loans. it has recently been reported that student loan debt reached $1 trillion. that is-and credit card debt. i know you have release -- that credit cardhan debt. what steps are you taking to further educate students and parents about the merits and drawbacks of the various options they have in student loans? are you including the deferred interest and all of these other aspects? >> those are good questions. this is a subject of growing importance to a number of americans and it should be to the country as a whole. the population we are talking about here are young people who

have the ability to make something of themselves. they are the kinds of young people we would like to see rise toward success in our society. they are held back only by lacking the means. they need to be able to finance an education. this becomes an enormous decision or a student and their family. if they are not on the right financial track, they will not be able to achieve what they want to achieve. we will be deprived of their talent in our society. it is one of the few big decisions people make in the course of their lives that have vast repercussions. we have the financial a shopping sheet because we want to make the prices, risks, and comparisons clear to young people and their families. they have not done it before. they may have done it once but did not get it done right been

either. we have a calculator so that people can understand what their rights are. once they are in situations in having significant stood alone debt, they can plan their path forward to getting out from under that debt and three leading that cloud over their future. we are working closely with -- and we leave him -- we leaving -- relieving that cloud under their future. there are incentives for loans to students that they know they will default. that gives them access to the 90% of the federal funds. it is something congress is looking at. we urge you to look carefully at this and at what the unintended consequence have been. we have many young people, some of you -- some of whom have

served their country and they are stumbling because of bad decisions. >> thank you. >> mr. miller for five minutes. >> congress passed an act, which was a significant achievement at its time. it is being jeopardized. we are hearing reports of lenders training their own origination staffs. that was not our intent. there should be independent training. mortgage origination training should be independent. we need to insure that all loans are license and qualified. do you share my concern about lender training their own personnel. do you plan to include language to address this issue in the cfpb mortgage origination ruled?

>> thank you for that question. it is a thought the question. i agree with you that training your own staff -- although i suppose it can be cost- effective -- you can imagine that when you train your own staff, the training may be distorted a bit because of the financial self interest of the organization, which is inconsistent with the congressional intent. i will have my staff get back to you on how we see it and what we plan to do about it. it is a statute that came over to us to enforce. there are a number of questions about it. the chairman raise a question about transitional licensing, which is another issue for us. we would be glad to look at that. >> you plan on addressing it in

quick fashion? >> i will have my staff come back to you on that. >> is saying -- you saasay the - there was a rule and to protect consumers from unscrupulous lending practice. we think the provisions went too far. while intended to prevent -- mortgage originators are only offering loans with the closing costs rolled into the loan. consumers have the ability to pay their closing costs a matter how the mortgage company pays their employees. toortgage originator tries

-- my bill would allow the mortgage originators to reduce their compensation. this provision is tailored to protect borrowers from bad actors. my concern is that if there is a discrepancy in closing, the originator can not modify their compensation to the benefit of the buyer. can you please tell us how you plan on addressing that? >> i want to be careful in my response to that. that is an open and pending rule-making for us. we were given the mortgage loan originator compensation rule that the federal reserve enacted and finalized last year. we were given authority under the law and were required to do some work in that area by january of this coming year.

this is an issue we are looking at. there are other issues we are looking at, perhaps the unintended effects, the pension arrangements and compensation, especially as some of the smaller institutions. we have comments that we are digesting. we would be glad to speak further with you. i am not sure how much i should say publicly. >> in a situation where you are getting ready to close and you have restating your costs, you will does not allow any leeway at all in that. you have had a situation where everybody sits around a table and says, this type of reduction. many times, the originator will make allowances rather than lose the closing. now they cannot do that. there are some bad actors out there that would raise costs at closing. my bill does not allow for that.

to modify the closing and let the person role those costs into their lawn rather than paying up front, it is not impacting the m&a negative way, it is something you really need to look at -- impacting them in a negative way, it is something you need to look at. >> i hear you and we will take that back. i appreciate that. >> director, in the small business community, we have a great deal of concern among merchants and retail businesses who fear that their financial transactions with other businesses could be subject to cfpb oversight. what can you say to rest their

worries that new regulations will affect purely commercial transactions? >> the authority given to us under the law has to do with consumer and natural products and services. it is defined in the law to only affect matters involving household credit used for personal purposes. it is a broader array of products, mortgages, credit cards, some loans, payday loans. it goes on into credit reporting and debt settlement. contrary to views about the breast of our authority, we do not have the authority-- the breadth of our authority, we do not have authority over commercial transactions. i would reiterate that that is what our low the one that our law is. that is not with an hour per view. -- purview.

>> some fear that the law would be extended to businesses that were not previously subject to a federal regulator. should small businesses that previously did not offer consumer financial products be concerned about a new layer of regulation? >> if a business does not offer consumer financial products or services, they would not be service -- subject to our oversight. if they do, they would. money service companies previously were not subject to federal oversight. arguably, there were some laws that may have applied to them. they are now subject to oversight by us. this is a big shift that the law represents. you have banks and credit

unions competing against non -chartered. we want to make sure they are held to the same standards and principles. that is the big part of our job. it is a big challenge for us to do it. we are working hard to do it as we go over the first few years of our existence. >> the federal regulators have retained enforcement powers for the overwhelming majority of banks. if there is a -- there is a risk that this will weaken protections for consumers or lead to confusion for financial institutions. >> i do not know that there should be confusion. for the majority of banks, they

remain subject to the same regulators they have always had. for the 110th largest institutions, with assets over $10 billion. , they will be overseen by us for safety and soundness purposes. there is some overlap there. it behooves us to collaborate with our federal agencies to make sure we are on the right page, make sure we are consulting carefully and getting their perspective as we act and give them whatever perspective we may be developing. that is something we are working toward with my fellow heads of the agencies and among the staff. >> i am the ranking member of the small business committee. it is frustrating for me that time and time again when we have community banks coming before the committee to discuss why it

is difficult for them to continue to lend to small businesses, they are saying it is because of the dodd-frank regulations. if they knelt beside will not have any direct impact of those community -- if they understood there will not be any direct impact on those community institutions -- >> our regulations will affect them. i have said time and again in front of this and other panels that we need to think carefully about what the effect our regulations will be on small institutions. that is why we are utilizing the panels to make sure small providers have the authority to inform us about their concerns and their operations and how they work. that is something we are taking

seriously. we have a couple more of those panels at work. we are listening carefully to them. i am created an advisory council so that their perspective does not get lost in the shuffle. it is important for us. we need them to be able to lend to small businesses because they create the vast majority of jobs in this country. encouraging recent economic news seems connected to the fact that small businesses are being created at a smaller -- a faster pace. that is a good thing for us. >> i will recognize myself for five minutes for questioning. in your report you talk about streamlining regulations and the law is to address outdated and unnecessary and burdensome regulations. the president talked about this in his state of the union and

now he wants to eliminate older and antiquated regulations. my question is, what steps are you taking to eliminate these overburdened some or and that it -- repetitive regulations? can you give me some specific examples. i do not want to hear about the one page mortgage. the last time i answered -- asked a question, i got a three minute answer on the one-page mortgage. not from you. the treasury secretary pointed to the cfpb as one way to eliminate these regulations. >> i have been known to give long answers. one of the things we were praised for is that we have

launched an initiative on streamlining the regulations we have inherited from other agencies. we did not write those rules. they were adopted by different agencies at different times for different purposes. there is often not a lot of careful thought about the aggregate impact of those. we have had a request for information outstanding for a couple months now asking anyone to bring us their ideas about how we can streamline regulations and show we are a different sort of agency. in the consumer wrong, there is room to do this because there has been aimed -- in the consumer realm, there is a mania to do this. consumers were getting very little value from them. we think we can cut that back substantially. this is something we can take

seriously. we will be digesting the comments and we hope to walk the talk. >> i would like to follow up with you on that as time moves on. you have had to divert your resources from a compliance officer or an attorney to keep up with the majority of radiations, the new and the old as well. -- majority of regulations, the new and the old as well. the federal reserve initially proposed be qualified mortgage rule before it was transferred to the cfpb. it offered alternative proposals. we have had a lot of discussion about this. one would give safe harbor and one would have a rebuttable presumption. which one would you recommend?

>> i want to give -- be careful at how i answer this question. it is a pending rule-making. we have been getting comments from consumer groups and our fellow agencies. it was it said that propose the rule and it came over to us to finalize. providing guard rails are around lenders, paying attention to the bar were -- borrower's ability to pay. but we have done as we have been working on this is that you can have a definition of safe harbor or a rebuttable presumption. if you leave the standards mushy, you can still litigate over the qualifications to get into the safe harbor. we tried to create a bright line so there would not be a lot of

litigation. we do not want this to go into the courts and for people not to be sure for years to come. we want to get this right. this intersects with the qualified mortgage rule that other agencies are going to be adopting. we are taking a lot of input from all lots of groups who have competing, but converging perspectives on some of these issues. >> i would urge caution in this area. to get the economy moving again, we have to get this right. we have to get first-time home buyers into the market. we have to get people able to move in order to get our economy moving again. i would like to follow up with the one that. i wanted to ask you about the complaint line. i will say that for another day. our next person is mr. miller.

>> thank you, madam chair. i have been puzzled by the complaints about the use of subjected to arms and statutes and where that will lead. my knowledge is that subjective terms are used throughout the law to reach -- so that the law applies differently in different circumstances. that is seen as a strength of our legal system. there was a 17th century english judge who wrote -- this is probably not exactly close -- there shall be no sixth definition of fraud so that men will not contrive ways to ebay it. clarity can lead to inflexibility.

there needs to be some subjective standards to reach new circumstances. a reasonable man -- the idea that reasonableness is a new theme snatched out of the air to apply to the law. that is curious. it is not the clearest standard. it depends on the circumstance. mr. cordray, do you think you will have any difficulty applying standards of unfair, unreasonable or abusive -- >> there is a gray area and there is a core. the people who are perpetrating acts within the cre -no- the

core now they are perpetrating acts that are wrong. -- kthe core know they are perpetrating acts that are wrong. they do it anyway. the main outlines of how people mystery their customers are pretty well defined. when they see that that is happening or they see that is likely happening, they should be hesitating. they should be rethinking. that is entirely appropriate. >> you have enforcement powers and you have regulatory powers. in the gray areas, would use proceeds to enforcement, or

would you turn to rule-making so that everyone would know what the rules were? >> there could be situations where we might do either. but i also think there is enough misconduct that occurs in the core areas that we would be well served to focus on that in the first period of our bureau. then we can work on trying to define around the edges more clearly. >> there have been concerns today and in the past about whether your rules -- the prohibitions on unfair and deceptive and abusive practice -- would affect financial institutions. there was a proposal that included a requirement that a

plain vanilla product be offered side-by-side with any other product offered by a financial institutions. that was shot down. there was a sentence or two place in the law that there is no requirement to offer at any given financial product. it has only been your authority to prohibit unfair products. you are not requiring a financial institution to offer a product. >> one of the mandates in the lot is that we are supposed to promote innovations, which means whether 1000 flowers bloom, if they are not beyond the pale of exploiting our treating their customers unfair labor being deceptive, we want

there to be innovations and there is competition in the financial sector. there will be times when a choice is better for consumers. there will be times in the mortgage market where there are a lot of exotic products being offered to customers where they were a poor thick and the default rate showed that quickly. it is something that we are going to have to think carefully about as we go. in general, we want to encourage innovation. we want to encourage competition. we want it to be competition that respects the consumer. >> the gentleman's time has expired. >> thank you madam chair. good to see you again, mr. cordray. you told the chairman earlier today that you promise to be

accountable and answerable to congress. you are here to work with congress. some of the people in your agency have not gotten the memo yet. i have heard cases -- this is from another office, not mine. they have no neary -- no need to fear retribution. cfpb states it does not have to respond to them because it reports directly to the fed. that was the second day of this month. i pursued that further when i saw it. i found a litany of unreturned phone calls and messages. maybe there are some people who need to be briefed on your philosophy in the agency.

>> i am not following your question. are you talking about a financial institutions that deals they could not get answers from our end -- our agency? >> congressional offices. members of congress. >> that is different from what i have heard. my staff would be happy to take up any situations that need to be attended to better. i have heard comments from both sides of the aisle on how we are handling consumer complaints. we are beginning to see all lots of post-mortem is from consumers that are pleased. >> i don't want to run out of time. >> i am sure it is a mixed bag. >> i am sure it is. there is something called to the dictum's relief fund. our agency hangs onto the -- the

victim's relief fund. there is no requirement that i can see that the penalty must be paid to the victims of a specific wrongdoing from which the penalty was collected. what happens to the money if the victim cannot be located or if there is more money collected then there is due compensation? are you able to keep the money and call me late with other agency funds? >> this is something -- -and co mingle it with other agency funds? >> this is something we have been looking at. if there is a penalty assessed, that does not apply to compensation. if we can compensate dictums, that is our first priority. -- compensate =--

victims. beyond that, we are trying to be mindful of carrying out the law as congress enacted it and that is what it seems to say to us. >> would you anticipate being involved in stipulate its settlements? >> you mean settlements -- which you be involved in stipulated settlements? >> that is something that would come to private litigators. >> you do not anticipate that money would be transparent and it would go to pick them -- victims or education.

>> when we all right -- arrive at a settlement, we would create a consent decree. the nature of that document is that the court will specify in a court order how many funds are to be allocated and how they are to be used. that create a binding law we have to follow. that is what i would expect would typically be the case in our matters that do not go to final judgment in a court. >> that is what i wanted to hear. i yield back. >> mr. scott for five minutes. >> thanks, madam chairman. mr. cordray, how long have you been on the job? >> i have been on the job for

three months - five days. -- minus five days. >> what areas have raised the greatest number of complaints or concerns if you had to prioritize on where there is the greatest area of problems and abusive practices in carrying out your mission. what would that be. would it be more disservice is or student loans or credit cards? >> it is hard to determine trends because it has been a short time. we have been -- been reseeding complaint in stages. the pace of complaints have been fast is in the mortgage area, especially around foreclosures and the frustration people feel. the pattern of complaints we are

receiving mirrors the complaints each of your offices receipt from your constituents. we also receive a lot of complaint around credit cards, typically for small dollar issues. it is still frustrating for people. we have begun receiving complaints about student loans. we expect we will have a significant volume of those and others. >> i am glad you volunteer -- .olunteered that answer priority on complaints have been in the mortgage area. it put emphasis on dealing with the more its service area. i commend you on that. let me ask you how your bureau response to developments that

happened that may be outside and impact the mortgage area. for example, during this time, a few months ago, there was a settlement made. billions and billions of dollars. apportions to the states and designed to go back and help struggling homeowners with their mortgages. one of the major areas of concern is difficulty with mortgage holders and having the ability to write down the principle. we have been after that for a long time. the secretary of treasury was asked about that. could that money be used to assist homeowners in their great this area of need in terms of lowering the cost of their monthly payment and writing down the principle. he said yes. you are aware of this? >> yes.

>> how are you getting this information out to mortgage holders who are confused and do not understand? are you working to understand to get out to each of the states, the communities, how the mortgage holders who are struggling can take advantage of this? my state of georgia's share in this is $850 million. one of the concerns we have had is that the governor of georgia has decided that $110 million of this would not be used. the funds would be diverted, would not go to the struggling home owners. it seems like something like this, where you are talking about consumer protection, there are areas where you guys should

weigh in. what has been your response? where is there a clear understanding of how this money can get into the hands of the consumer to help them for what it was designed to do, get down that principle and help these people say their homes? these states cannot use this money for a rainy day fund, or wherever. that is a problem. how are you helping us with that? >> in the mortgage servicing the settlement was organized around a settlement that there was significant money allocated on a state-by-state basis and the attorneys general would have significant say on whether that was used for homeowner counseling or raising - razing abandoned -- razing houses in

the city. there is also money that will go to homeowner really. principal writedowns are one tool in the toolbox of addressing an upside-down mortgage situation. >> my time is short. tell us right quick what your bureau is doing to get this idle information out to the consumer? >> do this quickly because i would like to get one more question in. >> we helped publicize what is available to homeowners. is falling onre the backs of the state attorneys general and justice and treasury departments. >> my intention is to put us on

recess. we have two votes. >> mr. cordray, in reading your report, i noticed that the positions you are killing had a breakdown of the groups you were hiring -- filling had a breakdown of groups you were hiring and it had a breakdown of their experience. are you hiring people who know the unintended consequences of a rule or law proposed by you and how it all fits together? >> it is a good question. it would be a poor performance by me if the answer to the question was, no, we are not. we have people coming to the bureau will have not come from other federal agencies or state government or not from the

public sector, but from private sector entities, often from banks or other financial institutions. >> you have a number off of the top of your head percentage wise. >> it is many. >> could i get that number? >> the deputy of the bureau has intimate knowledge and he has that kind of background. >> with regard to that, i know there is a movement. >> day know him by any chance? >> i have not met him. i have heard a lot about him. >> i believe they are trying to recommend him for your agency. are you considering that all? >> that is news to me.

>> he is outspoken with regards to his opinion to oversight and the service industry. in 2010, at duke university, he made a statement that says that we have hired 50 lawyers to basically terrorize the financial service industry. that gives me great pause when someone like that is being recommended for your agency. if they have added to growing in -- attitude going in -- what is your reaction to this quote? >> i do not have a reaction to that quote. we want to look at the full picture. we are looking for a responsible balance perspective on the problems that we are facing. frankly whether we hire someone

or not, in this particular situation you're raised, that is news to me. we are getting input from people who have a lot of different perspectives. some like the banks and some do not. we want to get all of those perspectives as three deal with these hard issues. >> use a they believe that everyone should have even oversight. if you are to to your words, i think that he would have a difficult time getting employed with the agency. >> i think the premise of the question is mistaken. >> another question, you have rule-making authority. >> we make strenuous effort as our statute tells us to assess the benefits of each and every rule the we consider adopting.

>> is the and permission public? is that something that we can get our hands on? >> it is part of every role making. it is typically published as part of the rule making. i think there is nothing hidden about it. it is something that the court will review carefully when they look at the finished product by us. it is something that we have every reason to do and it also makes common sense. >> ok. is this a rule of thumb? when you propose a rule and you get a cost-benefit analysis, is that something that alarms do? -- you? >> that would be of concern for me. >> quick overview. you said you have been hearing

from hundreds of americans about what works and what does not work. what are some things that you have heard? >> there are a lot of americans who feel that they have trouble making their voices heard when they are on the other side of the table of some of these transactions, or if the transaction does not work out and now they are dealing with a debt collector or something down the road. i am sure it is not something different from when you hear every day. they just want to know that someone is on their side helping them. we try to do that. we are happy to work with you to do that. >> thank you. we appreciate that. madam chair. >> we will have a recess. we will have two votes. -- we will have two votes. thank you for your cooperation.

cracks in the interest of everyone who is here, we will go ahead and start -- >> in the interest of everyone who is here, we will go ahead and start. >> i'd like to talk about several issues. of the like to start with small banks and credit unions. i have been meeting with them.

they have expressed concerns. have a leg to give you an opportunity to share some of the outreach efforts we have in place to allay some of their concerns. >> thank you, congressman. it is something i have indicated as a point of this is for the bureau. this goes back to my personal background. i served as a elected state treasurer in ohio and also as attorney general. i worked a great deal smaller banks in the state. we had a small business lending program that we made available to them. a number of them participated in it. out of that work, we created a community bankers council that advise me on all aspects of the work we're doing at the treasury and really improved our work. when i became attorney general, i continued that.

i said that i will do the same as director of this bureau. we'll have the community bank ers council. we met earlier this week to work out how we are going to select members for that ended frequency of meetings and the like. they will have very direct input to me. the other thing is -- excuse me -- we are required by the law in a number of our rule makings to have very special panels that gives small providers and small banks the opportunity to give us very direct input about rule proposals and how that would affect operations, and whether there should be adjustments made. that is something we will consider with each of our proposals. we have issued one final rule --

international transfer of moneys. we have issued a supplemental proposal to consider whether there should be a threshold of institutions that do not do these transactions as a regular matter and who should be exempt. >> with reference to our service members, i see that you have that office. i am eager to hear what you have about this. i am amazed how important this has become for our country to veterans as well as those on active duty. can you share a few thoughts? >> you are exactly right. it is of increasing importance to our country. we have a new crop of veterans who are or will be returning from active duty.

many of them activated from national guard status. making sure that they are protected both during their active duty, which they have very special provisions in the law, and when they come back, there are opportunities available. certainly we want to protect them. many of them have benefits in the gi bill. we have money coming in, there are people who have different ideas for you. many of them are not in your self-interest. i am very impressed both as a colleague of mine and since becoming a director, she has been a strong voice for our military. she visits military bases. she brings back the insights that she gleans from those trips about the needs and struggles of service members and their families.

we make sure that we give voice to their concerns whether they are in the narrow jurisdiction of the bureau or working with the department of defense or department of education or others. there is much that she is getting done. we want to protect service members every way we can because it feels like the appropriate way to repay are down to people who have sacrificed so much for the liberties of the rest of us. >> thank you. finally, my district is quite diverse. we have four languages. i would like to know what you are doing in terms of language translation to mention that you are communicating with all persons in the country. >> first of all, that is fascinating. second come at the bureau, the most direct way we hear from people is on our consumer

complaint line. we created this capacity to hear inquiries from people from 180 languages. that pretty much covers the waterfront in this country as best as we can tell. we do not want anyone to be blocked from being treated fairly as a consumer by the fact there is some sort of language barrier that they cannot make their voice heard. we also know that many communities where there is a language barrier, they can be the target of predatory schemes and plans because there is an assumption often savage correct that it will not pursue law enforcement remedies or complain to the government. we do not want that to be the case. we want those communities to be just as protected as the majority of communities. if that means breaking down language barriers to do it,

that is a profit for us. >> thank you, madam chair. i owe you one minute and 15 seconds. >> thank you. you have five minutes. >> welcome. saturday night, i am sure we will agree on which team should be winning. >> we sure will. >> someone pointed out that none of the federal banking agencies have ever had attorneys present. i am afraid the cfpb practice is intimidating. indeed this practice is an institutional fear that their main purpose is to obtain the documents for information that

later can be used to launch some sort of action. are you concerned about this as far as the institutions perception of the cfpb? >> it is something i have had discussions with banks about. i am calling through the different institutions the we are working with to make to that they know that there is an open line of communication. some have raised the issue. i have taken pains to explain that we are trying to integrate our enforcement teams. one of the supervision teams to know we're in for some works, why, and how. not often may be a preferable way to address and resolve -- that may be a preferable way to address and resolve the issue. we did not have any kind of

examination capacity. i indicated it is not an attempt to create some sort of macho message the we are sending. we do not have regional councils. this is one way to make sure that our supervision teams have proper support. >> on enforcement, according to some reports, you may be able to confirm that the cfpb staff has more than 100 attorneys. this disparity is striking. cfpb does not have a 100-year traction to justify it's needs. >> first of all, i think that number is ahead of where we are in the bureau. i do not think it is accurate.

we do not have 100 active attorneys at the moment. what people need to keep in mind is that we are supporters to enforce the law not only against the banks, but also a very significant densely populated non-blank rome as well. we will need enforcement attorneys to address a lot of problems in that area. we're talking about mortgage issues, both servicer and brokers. a lot of areas that people have a lot of dissatisfaction with. we need to make sure that the laws are being respected and followed and enforced. i do think that our emphasis that enforcement is one of a number of tools, all of which are essential to doing our job well. particularly given that we are dealing with banks and non- banks and no federal oversight that was previously existed,

this is a puppet. we will continue to calibrate that as we go. we are learning as we go. >> based on a consumer testimony of cfpb, there exists a need for options. i believe that is critical that we identify the lenders who have operated illegally, whether they are depositories are non-banks. my concern is that over- regulation by the cfpb and non- limitlenders will our consumers need to short-term credit. can you provide assurances that that will not be the case? >> that is a great question. that is an issue we have been talking about. we had our first hearing on the issue of short-term low dollar loans.

that is an area where consumers have demand. they need that product. we are concerned that those products should help the consumer rather than harm them. we like there to see robust competition for services. not everyone has a rich family member to help out when a family needs it. we want to foster competition in that area. it is something the we are thinking carefully about. there are some credit for products as well. we want to encourage the good products. we want to discourage the bad products, frankly. >> thank you. >> thank you. you have five minutes. >> hello, mr. cordray.

there is one little glimmer of light. if a series of pro-form cause of each reel sessions of the senate, then cartoons are real people. i welcome you to this committee. i have one long question dealing with mortgage finance, and then a whole bunch of questions that are numerous. the bureau is currently working on the ability to qualify mortgage regulation. this will shape the future of the mortgage market and people's ability to buy homes. congress created this ability to make sure that bankers were vouching the people who were

buying homes. did you want to make sure that they could pay for it. -- they wanted to make sure that they could pay for it. they could have access to mortgage credit, which is already a tight lending environment. i would like your comment on this qualified mortgage rules, specifically whether you intended to be a broad measure or a narrower measure that might deny credit-worthy by year's access to credit. you indicated the desire to finish the rule by the middle of this year. when finalized, will it require lenders to determine that the borrower has the ability to pay under dodd-frank? that the buyer qualifies?

how will that definition of qualifying mortgage relate to the rules that you are putting together? i told it was a long question. >> ok. long question, but i have long answers. maybe they will match up. i want to be careful. it is a pending rule. it is a proposed rule the federal reserve put out. it is now put on us to finalize that role. we are collaborating with other agencies. we have gotten extensive input from consumer groups and people across the spectrum, all of them interested in the mortgage markets. we all feel the same way. we want to see it come back to life and vibrancy. it will be important to the economic recovery. this is an important statute.

we want to get the role in the right place. we are trying to be careful as we think about it. we are looking closely at the alternatives that the federal reserve board proposed. we are considering how best to give the language to the statute. we have to ensure access to credit in the market broadly. that is important to us. one of the difficulties here is that it is not easy to predict the past-ford of the markets. we had a very overheated market leading up to the financial crisis. there were a lot of lenders that were making loans without considering the ability of the buyer to pay back. >> i will have to interrupt you

at this point. i have a number of questions for the record. one of them relate to atm disclosures. there needs to be a disclosure that pops up as you are operating the atm. there is also the physical disclosure. there are some people who will rip off the disclosure. then there will be some people who will sue because it was not on the machine. now we have the technological world because everyone has the screen notice. it is far more noticeable and important. would you write regulations so you would not have the physical ones? or would you have the physical one when you install the machine, but you're not responsible for the fact that someone comes by and rinse it off, -- rips it off, and then someone comes by and sues

you? we have credit unions and community banks involved under consumer advisory board -- will you have credit unions and community banks involved under your consumer advisory board? would you be able to put out something a little bit more streamlined? when we expect a larger market participants will to be finalized? we would all of those submitted as questions for the record. thank you. >> thank you. i am trying to squeeze all of this anin. like director cordray to return to that quote that i mentioned in this hearing.

thinkiare they closely linked by in aactivities separate organization apart from the expertise and infrastructure? i will like to ask if you agree in concept with for concern there. >> i have not heard that before. i find it curious. the fdic has organized their own staff to separate consumer protection staff from other staffs so they can assure that they have a more direct focus on the same issues. they sort of mirror dodd-frank. >> the " here is a separate

organization. that is her point. >> i think the two issues go hand in hand. i do not think it and have a safe and sound constitution that is not treating the customers in a sustainable basis for the long term. if they are eating their customer base by exploiting them in the short run, they will not be a safe and sound institution in the long run. i think there is much more harmony between these concepts than people have recognized. i also think and agree with you that it behooves us to collaborate closely with our fellow regulators to make sure that we are not inadvertently undermining anything about the safety and soundness of the financial system. -- however,ourse- we lost the argument for inclusion in one organization, o

rin -- or in one entity for these functions -- ship are not that you could share that information and have the understanding of risk in terms of your decision making. would you agree that the authors of this bill went to great lengths during deliberation to ensure that you were not required to consider safety and soundness? >> i am not sure i would agree with that. under the new law, i sit as part of the financial stability oversight council, along with my fellow regulators. we have the ability to override rules. thanks a we have to and should take that into account. nd --ould also seek out and

>> with a supermajority vote, i would point out that perhaps the reason i am focused on that issue of not considering safety and soundness is because i tried during the markups to have that included. i filled in that endeavor. let me go to another concern that i have. it has to do with the cfpb will now have the authority to rule whether a state law is inconsistent with federal consumer protection laws. what standards will the cfpb use when exercising the authority? if little is done in terms of keeping the states on the same page, the meat could end up with patchwork of varying -- then we

could end up with a patchwork of varying consumer laws in this country. >> i think we have had a patchwork of varying consumer laws in this country. >> the articles of confederation would be the actual term. there are exceptions, such as that in the insurance industry. we have 50 different sets of markets. the real reason we give up on the articles of confederation and try to go to one national market was to affoavoid such j. a thing. the idea was that we were going to have one national markets. that is not where we ended up. that is where i hope that president compound is a problem. you might work in the other

direction. >> your time is expired. >> can i respond to the congressman? >> quickly. >> we ensure quick collaboration in regards to the law. we want to make sure the we are not going in 50 different directions with the state law. if you want to bring them to our attention, we will be interested in hearing that. >> thank you. >> 5 minutes. >> thank you, madam chair. mr. cordray, what would be your personal definition of "fair"?

>> and do not know that my personal definition is relevant here. "unfair" is a defining terms in the law. my job is to enforce the law that congress has enacted. congress specified what "unfair" means. but i think you and i and most people have a common sense in view on what is fair and not fair. that is not to say that we agree on every circumstance. there are areas where they are great. as a bureau, we tread cautiously. >> what is the definition of "fair" that you are going by?

>> it is the definition in the dodd-frank act. that builds on in years of case law and interpretation of the federal trade commission. >> what is the definition that to go by that dodd-frank lays out? >> i do not have it in front of me. it is a defined term. it is based on decades of case law that have been very carefully worked out. this is not an area of controversy. they understand that law. they're concerned that they expressed that we are not deviating from that and going in some unexpected direction. >> do you have a definition of personal responsibility? >> that is not a defining terms under the law. i could give you my own view of it.

and i will. i think that consumers have a responsibility to make their own decisions and to be responsible and accountable for their own decisions. they are the ones who have to deal with those decisions. i think that there is much we can do as a deer and as a country to mature that consumers are better informed on the positions that they are making. we want to make sure that it did not confused by fine print that does not specify terms very clearly and that sometimes fosters and takes advantage of customer confusion. >> so, you are admitting that there is some personal responsibility involved when people make financial decisions. there are consequences to those decisions. correct? >> i would acknowledge that. absolutely. >> do you recommend products or

push a certain product for somebody such as a 30-year loan versus an arm. do you promote that kind of thing or is it a personal decision? >> that is not what we are doing. it is our role to enforce and implement the law. congress has made some judgments about some of the exotic mortgage products that led to the mortgage crisis, the credit crunch that destroyed many businesses in this country and costing many people their jobs and homes. we have judges to make. we try to make them very carefully.

>> but you're not trying to go to a plain vanilla, everyone gets the same type of loans thing? >> there are choices that are clearly explained. ultimately, they have to make the decision. >> do you think that enters into the fact -- i think report was disappointing, to say the least -- do you think that has anything to do with their not being -- that he did not have any accountability to congress as far as funding is concerned? >> i think we have more accountability to congress than any of the other banking agencies. all of them are independent. i do not hear any strong moved to put them under the carpet process. the federal reserve has been around -- under the appropriate

process. the federal reserve has been around 100 years. we are subject to multiple ofaudits. i welcome your oversight. i am always pleased to come and talk to and hear about your concerns. if there was anything that you were disappointed about, i am happy to have my staff work with yours to find how we can do better. we want to improve as we go. >> your time is expired. mr. duffy. >> thank you, madam chair. mr. cordray, it is fair to say that the rules that come out of the cfpb that apply to big banks will also apply to smaller banks as well, but implemented by different regulators. is that fair to say? >> they will apply to all banks.

that is one of the reasons why i said we should carefully consider if they should apply differently to smaller banks to do not have an army of compliance officers and maybe have simpler process tes. >> that is one of my concerns. we have a lot of smaller banks in my district. the way it seems today is that the same rules still apply to them. they do not have the resources to hire new compliance officers and attorneys. even if you will not be endorsing them, someone will be endorsing those rules on them. is it also fair to say that we can have a consumer who is seeking out a certain product and you deemed a product fair, but it could also be deemed abusive as well. is that correct?

can be fair and abusive? >> we have this discussion earlier. congress define the terms to some degree that each of them is distinct, although there should be some considerable overlap among them. >> in regard to the term abusive, do you believe the definition but congress is sufficient and there is no further definition the needs to be made by the cfpb? >> it was my testimony that sometimes people have referred to the term abusive as a non- defining term. it was to find its possibly by congress. our goal is to enforce the law that congress has enacted. if congress at some point will

rewrite the law, we will implement whatever law that is. >> said to look at the fterm "abusive" there are some guidelines for what it is. it means taking unreasonable advantage. did you have an idea of what an "unreasonable advantage" is? how would the cfpb deal with unreasonable advantage? >> i think the term " unreasonable" is used in the law. it becomes more carefully defined over time. if banks are in a position where they fear that they may be

deemed taking unreasonable advantage of their customers, we have the example of peddling an exotic mortgage product to an elderly widow, that is something that banks should take a slightly different approach than if they are peddling it to a more sophisticated consumer. >> you agree then it is a subjective standard. there is a defining line for how this can be implanted for it to be abusive. >> i would not agree with that characterization. i think it is a tax and circumstances test. i think people know when they are walking the line and when they are far from the line. they can also communicate with us to get more guidance. >> humans operate differently. what you may find a visa, someone may not find abuses.

what is abusive in alabama, may not be abusive in wisconsin. is that fair to say? >> said it is the case -- i think it is the case that -- >> it talks about a lack of understanding of the consumer regarding the conditions of the product or service. your referenced the case law. what would a reasonable person know or should know when engaged in that agreement? the standard is not a reasonable person. this is the individual standard. you have one person come in and use the standard with them may not be abusive. but the the next person that may come in, because of their experience or background, it could be abusive for the

customer. how do you comply with this law? >> i think good businesses deal with this all the time. they think carefully about which customer they are dealing with. most of the bankers i talk to know their customers. they tailor their dealings with the customer to the situation of the customer. it is not a one size fits all. that is part of their strength. there are other prongs of that definition that are much more subjective. some customers are not able to choose their service provider. that is true of debt collectors. there is nothing subjective about that. congress had laid down a definition. we are required to the doorstep. if at some point you wanted to be right back, we will implement

whatever law you right. >> thank you. >> you have five minutes. >> thank you, madam chairwoman. some of my friends and colleagues have left. i find him to be a great public servant. he tries to do the right thing. he also listens. i appreciate him coming to testify before us today. some of us on this side of our are unhappy about the process under which you were appointed, but i want to assure my colleague on the record that the president picks someone who i think can carry out this job very well and do it in the right way to protect consumers was still looking out for the safety and soundness and competitiveness of our financial service industry. i urge you to continue to look

out for both competitiveness and city and san is what you are protecting consumers. they are interrelated. i appreciate you being here. i did have a thought for the gentleman from california who has left. i am curious if the gentleman please the the payroll tax cut that was passed is a cartoon tax cut. i am not sure if he does. he left. i will not get my question into today. i will turn to more serious business and talk to you about f dodd-frank.g o it requires you to put safeguards in place to make sure that new regulations did not lead to further reduction in the affordability of credit for small businesses and consumers. i am curious, what kind of

cigarettes are you putting in place to make sure that that happens? we all believe in consumer protection. the gentleman from california believes that should be integrated. i hope that it could be integrated. i hope that he will work with regulators to integrate that. i want to make sure that we keep affordable credit available for small businesses and consumers. >> thank you, congressman. i would like to go back to a point you made. i agree with you. it does not help consumers if we under mind the safety and soundness of the financial sector. consumers rely on financial credit to be able to buy homes and access education and managing their spending. if the system does not provide those opportunities to people, and the lives are stalled as a

result. lots of availability of choice. one of the things that we will try to be mindful of is our governing of the law. it is only thing that gives us the authority. we will try to be mindful of that as we go about our different tasks. one of the task at talked about was the ability to -- mortgage rules. we want a mortgage market where credit is available to people where they can in a reasonable way -- in the lead to the financial crisis, credit was available on some of the most bizarre terms. their loans but did not pay

attention to people close to incomes or the ability to pay for their assets. it was a very broken markets. one of the things we need to keep in mind is the credit cards. -- credit crunch. >> we have one minute left. talk to me about availability in writing. one other thing, you are working on a two-page prototype of the credit card agreement. that is my understanding. it comes at over 4000 words of the does not include the defining terms the are house on other pages. somewhere between 2-7 pages of definition and other and told him permission.

i am told that the goal is to make sure that people understand and read these contracts. we are building on the one page agreement. >> good question. it is one we are trying to carefully consider. we're not trying to operate in this our area by trying to put in a dictator or single will everyone needs to follow. several institutions have been compiling agreements. what we are moving towards is a shorter summer agreement that people can read and understand the pulls out the key -- shorter agreement that people can read and understand, and pulls out the key points.

they can reference to it. it does not have to pollute the short-term agreement. i think that is what we are working towards. a lot of visitations are working towards that. i think we will end up with some pretty good consensus around this. >> i yield back my non-existent time. >> your time expired. it is just you and i. it is you and i for another hour. that is a joke. the chair notes that there were some who have additional questions. members can cement written questions. thank you for your patience. i know it has been quite a day. i appreciate your honesty and responding to all the questions.

>> i appreciate that and all the keep.g syos you have to >> without, the hearing is adjourned. -- with that, the hearing is adjourned. [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> here in washington this weekend, the clinton bill will university is holding a student conference. the former president will present the university and have a discussion with leaders who embodied the mission, including former secretary of state ms.

albright. >> mitt romney, rick santorum, and newt gingrinch are participating in a fake and freedom coalition. we have live coverage on c-span. they will have a primary on tuesday. >> follow our local content vehicles throughout the weekend. we explore the history and literary culture of little rock, arkansas. on sunday, the little known riots and killings of share croppers. >> they were saying that blacks were -- the next morning, begins 600 men

poured in and shooting down blacks. >> sunday at 5:00 p.m., integration and a little rock high school. >> they know what will happen, but we do not know what will happen. the crowds are with us now. they are pushing us up the stairs. >> these stories and others from c-span's local content of vehicles in little rock. this weekend on c-span 2 and 3. c-span will every air the health care cases. at 5:00, medicaid.

on sunday, the institution naughty of the individual mandate. at 4:00 to 5:00 p.m., and the rest of the laws stay in tact? you can hear all the arguments this weekend on c-span, or listen to them any time on c- span.org. >> president obama attended the university of vermont in burlington. he talked about his administration's accomplishments over the last three years and the work is still wants to get done before his term ends. this is 35 minutes. [cheers and applause]

>> hello, vermont. [cheers and applause] hello. thank you. thank you. thank you. this is a ggood cry here in vermont. -- crowd here in vermont. [cheers and applause] it is good to be here. it is good to be here in vermont. [cheers and applause] now out of all 50 states,

vermont has gone along ththe lo. the last time a president stopped by was president clinton in 1995. we decided that today we will reset the clock. [cheers and applause] a couple of acknowledgements i want to make. give a round of applause for that introduction. [applause] you have one of the best governors in the country. [applause] when disaster struck, and he was here every single day, working on your behalf. we could not be prouder of him. [applause] have two outstanding

senators. [cheers and applause] outstanding mayor. [cheers and applause] it up for them. [applause] i also want to thank the entire community for organizing this event. one last thing, i want to express my condolences to everyone who knew melissa jenkins. i know some officials who are going to her funeral.

i know that there are those who are heartbroken. let's pay tribute to her by looking after her students and her son. let's express our thoughts and prayers. and that is a tough situation. [applause] i am here -- [cheers and applause] you know -- [laughter] maybe i should just quit while i am ahead. [cheers and applause]

i am here not just because i need your help, but i am here because the country needs your help. there are a lot of reasons that many of you work your heart out for a campaign in 2008. it was not because it was going to be easy. it was not because it was a sure thing. when you decide on a candidate whose name is brock obama, that is not a guarantee. -- barack obama, that is not a guarantee. the point is, you did not join the campaign because of me. he joined it because we had a shared vision for america. it was not a vision everyone was left to fend for themselves. it was not a vision where the

rules are made just for the powerful. it was a vision of an america where everybody who works hard has a chance to get away. everybody in. -- everybody. [cheers and applause] that is the vision that we share. that is the change that we believe in. we knew it would not come easily or quickly. but we had confidence. we had faith in each other. we believe that when americans make commitments to each other about a bold and generous vision for the country that we can achieve it. there is the challenge we cannot overcome here is what i want to report. in three years, because of what

many of you did in 2008, we have begun to see what change looks like we have begun to see what change looks like. change is a first bill i signed into law. it is a law that says that we deserve equal pay for equal work. [cheers and applause] change is a decision we made for the auto industry that was on the verge of collapse, even when someone said to lead detroit go bankrupt. 1 million jobs were at stake. we would not let that happen. today gm is back on top. reported the highest profits in 100 years. the american auto industry is back and it is making cars that

are more fuel-efficient. that is helping the environment as we are putting people to work. [cheers and applause] change is the decision we made to stop waiting for congress to do something. but as why we we raise our fuel efficiency standard and by the middle of next year come out -- the next decade, we will be driving american cars with 55 miles a gallon. [applause] this will save the family more than a thousand dollars at the -- 8 thou -- $8 thousand at the pump. that is what change is. change is a fight we want to stop handing $60 billion in taxpayer giveaways to the banks who are processing student loans. we decided to give the student loans to students. [applause] this means we can make college more affordable for young people who need it. [applause] that is what change is.

that happened because of you. [applause] yes, change is the health care reform that we passed after over a century of trying. [applause] reform that will finally insure that in the united states of america, no one will go broke because they get sick. already, already, 2.5 million young people now have health insurance who did not have it before because this law let them stay on their parents' plan. [applause] already, millions of seniors are paying less for their prescription drugs because of this law. already, americans cannot be denied or dropped by their insurance companies when they need care the most. [applause] already, they're getting preventive care they did not

have before. that is happening right now. [applause] change is the fact that for the first time in history, you do not have to hide who you love in order to serve the country you love because we ended do not ask, do not tell. [cheers and applause] change is the fact that for the first time in nine years, there are no americans fighting in iraq. [cheers and applause] we refocus our efforts on terrorists to actually attack us on 9/11 and thanks to the great men and women in uniform, al qaeda is weaker and osama bin laden is no more.

we have a transition in afghanistan to put them in the week and start bringing our troops home from afghanistan. that is what changes. [cheers and applause] -- that is what change is. [cheers and applause] none of this has been easy. we have had a little bit of resistance from the other side. [laughter] we have got more work to do. there are still to many americans who are looking for work. there are still too many families who can barely afford to pay the bills or make the mortgage. we are still recovering from the worst economic storm in generations. i love you, back. [laughter] [cheers and applause]

but, over the past two years, over the past two years, businesses have added 4 million new jobs. [cheers and applause]. our manufacturers claim -- our manufacturers are creating jobs for the first time since the nineties. our economy is getting stronger. the recovery is accelerating. all of this means the last thing we can afford to do is to go back to the same policies that got us into this miss in the first place. [cheers and applause] that is what the other side wants to do. they make no secret about it. they want to go back to the days where wall street plays by its own rules. they want to go back to the day when insurance companies can do whatever they want. they want to go back to the day when -- continue to spend trillions of dollars on tax breaks for the wealthiest

individuals in america, even if it means adding to the deficit or cutting education or gutting investment between energy -- for clean energy. their philosophy is simple. you are on your own. you are on your own. if you are out of work, tough luck. you are on your own. if you do not have health care, that is your problem. you are on your own. if you are born into poverty, lift yourself up with your own bootstraps, even if you do not have boots. you are on your own. they believe that that is how america -- they believe that is how america has advanced. that is the conception they have of liberty. they are wrong. [cheers and applause] they're wrong. in the united states of america, we are greater together than we are on our own. [cheers and applause]

this country advances when we keep that basic american promise. if you work hard, you can do well enough to raise a family. on a home. send your kids to college. put away for retirement. it does not matter who you are, where you come from, what you look like. that is what has created this extraordinary country of ours. [cheers and applause] that is what we are fighting for. that is the choice in this election. this is not just your usual run- of-the-mill political debate. this is the defining issue of our time. a make or break a moment for the middle class. that is what we have to fight for. [cheers and applause]

we can go back to an economy that was built on outsourcing and bad debt and phony financial problems -- profits, or we can build an economy that is built to last. an economy that is built on american manufacturing. american innovation. american energy. american workers who are skilled. at the values that make this country great -- hard work and shared responsibility. that is the vision i believe in. [cheers and applause] that is what i am fighting for. we have got to make sure that the next generation of manufacturers take root in factories in detroit and pittsburgh and cleveland. i do not want this nation to be known for buying and consuming things. i want is to build and sell

things all around the world. [cheers and applause] i want us to stop rewarding businesses that ship jobs overseas, record companies that are investing right here in the u.s. [cheers and applause] i want to make our schools the envy of the world. [cheers and applause] that starts with the man or woman at the front of the classroom. [cheers and applause]. a good teacher can increase the lifetime earning of a classroom by over $250,000. and a great teacher can help a child trapped in poverty dream and then live beyond their circumstances. i do not want people in washington to be bashing teachers. i do not want them to defend the status quo.

i want us to give schools the resources they need to hire good teachers. [cheers and applause] reward great teachers. i want us to grant schools flexibility to teach with creativity and passion and stop teaching for the test. i want to replace teachers who are not helping kids learn. that is what i want to see happen. [cheers and applause] when kids do graduate, the most daunting challenge can be the cost of college. when americans owe more tuition debt than they do credit card debt, you know we have a problem. the first thing we have to do is congress has to stop interest rates that are currently scheduled -- this is a huge problem for a lot of people. i a party as congress to do it.

they have not done its. they have not done it so far. colleges and universities have to do their part to keep tuition from going up. [cheers and applause] higher education cannot be a luxury. it is an imperative that every family in america should be able to afford. [cheers and applause] an economy built to last is one that supports scientists and researchers and science. and whether we're talking about stem cell or climate change, we do not need science deniers. we need people to understand that america is always succeeding because of our belief in science. [cheers and applause] our investment in research.

we have to make sure the next great breakthrough in clean energy happens here in the united states of america. [cheers and applause] we have been subsidizing oil companies for 100 years now. through taxpayer giveaways. i think -- i just talked about this yesterday. it is time to stop taxpayer giveaways to an oil industry that has been rarely more profitable. let us double down on clean energy that has never been more promising. [cheers and applause] energy efficiency. electric batteries. investing in. -- that is what we need to be investing in. we have got to rebuild america.

our businesses and our people -- want them to have access to the best things. the best roads and airports. faster high-speed rail. the faster high speed internet access. it is time for us to take the money we were spending at war, use half of it to pay down the debt and use the rest of it to start doing some nation-building right here at home. [cheers and applause] and we have to make sure that we have a tax system that is actually fair. [cheers and applause] part of that is something i call

the buffett rule. very similar. re-. -- very simple. if you're making more than a million dollars a year, you should not pay a lower rate than your secretary. [cheers and applause] that is a simple proposition. now, if you make less than $250,000 a year, like 98 percent of all families, your taxes should not go up because right now, folks are struggling to dig themselves out of this incredible recession. if you are making more than $1 million per year, you can do it. this is not class warfare. this is basic math. [cheers and applause] that is what this is. look, if somebody like me gets a tax break that they do not need, and that the country cannot afford, then one of two things will happen.

one, it adds to the deficit. or, we are taking something away from somebody else. the student has to pay a higher interest rate on their student loans because we have to make up the money somewhere. or that senior has to start paying more for medicare. the money has to be made up somewhere. or that veteran does not get the ptsd they need after serving the country. or a family that is struggling to get by is getting less home assistance. there is no way of getting around that. i there folks like me are doing more -- either folks like me are doing more or somebody who cannot afford it is getting less. that is not right. that is not who we are. [cheers and applause] that is not what america is about.

[cheers and applause] i hear politicians talking about values in an election year. i hear a lot about that. let me tell you about values. hard work. personal responsibility. those are values. looking out for one another, that is of value. [cheers and applause] the idea we are all in this together. i my brother's keeper. i and my sister's keeper. that is a value. -- i am my sister's keeper. that is a value. the idea that we think about the next generation and we are taking care of our planet. that is a value. [cheers and applause] each of us is only here because somebody somewhere felt a responsibility to their families and to their fellow

citizens. to our countries future. -- our country's future. the american story is not just about what we do our own. we are individualist and we expect personal responsibility and everyone has to work hard. but, we also have always understood that we would not win the race for new jobs and businesses and middle-class security if we were just applying some you are on your own economics. it has been tried it has not worked. it did not work when we tried it in a decade before the great depression. it did not work when we tried it in the last decade. we just tried this. what they are peddling has been tried. it did not work. [cheers and applause]

we know this from our own lives. if we attract some outstanding in person to become a teacher -- young person to be a teacher by giving them what they deserve and that teacher educates the next steve jobs, we all benefit. we all do better. america rises. if we are providing faster internet to rural america so that some small business owner, someone can sell his or her goods around the world. that is good for all of us. if we build a new bridge that saves the shipping company time and money, everybody benefits. we do better. that is america became an economic superpower. this is not traditionally -- this has not been a democratic

or republican idea. it was a republican, teddy roosevelt, who called for progressive income tax. it was light as an hour who -- dwight eisenhower who build the interstate highway system. -- like eisenhower who builds the interstate system. it was president lincoln, who could not win the nomination for the primary right now -- [laughter] [cheers and applause] you know, in the middle of the civil war, he helped make the transcontinental railroad possible and the national academy of sciences. he understood that we are in this together. we have to make and has been in our futures. it was with the help that fdr gave heroes, including my grandfather, the chance to go to

college through the gi bill. [cheers and applause] that same spirit of common purpose still exists today. beat it does not exist in washington. but out here in vermont, and all across america, it is there. [cheers and applause] is there when you talk to folks on main street and when you talk to members of our armed forces. is there when you talk to people in their places of worship. our politics may be divided, but most americans will understand that no matter where you come from and who you are, we rise and fall together as one nation. [cheers and applause]

as one people. that is what is at stake right now. [cheers and applause] that is what this election is about. so, i know we have gone through some tough years. i know that for all the things we have done, we have still got some much undone. sometimes the change we thought for does not come as fast as we want it. when you see what has been going on in washington, i know it is tempting to get discouraged. to kind of think maybe change is not possible. maybe it was an illusion. i want you people to recall, i did say that in 2008, real change is hard. it takes time. it takes more than one single term. more than a single president. what it takes is ordinary citizens who are committed to

keep fighting in to keep pushing and inching us closer and closer to our country's highest ideals. [cheers and applause] you know something else i used to sit back and 2008? i said i am not a perfect man. michaud will tell you that. -- michele will tell you that. [laughter] i will never be perfect president. i made a promise to you then. i will always tell you what i believe and i will always tell you where i stand and i will always wake up every single day, fighting as hard as i know how for you. i have kept that promise. [cheers and applause] i have kept that promise. i have kept that promise. if you're willing to keep going with me throughout the obstacles, through all the naysayers, if you're willing to keep reaching for that addition

of america, -- that vision of america, the commitment you made -- we made to each other, i guarantee you, change will come. [cheers and applause] if you're willing to work harder in this election than the last one, i promise you, change will come. [cheers and applause] onyou're willing to knock some doors and make some phone calls, i promise you, change will come. it we will finish what we started in 2008. fight with me. press on with me and we will remind the world once again just what america is all about. god bless you. [cheers and applause] god bless the united states of america. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> c-span is going to be live tonight at george washington university for the annual meeting of the clinton goes double initiative university. we'll hear from founder and former president bill clinton as he leads the discussion, as well as his former secretary of state, madeleine albright. we will bring you back to gw in a moment. first, a discussion with the reporter earlier about the clinton initiative. >> the fifth annual clinton global initiative this weekend and george washington university -- you wrote about in this week. what is behind the initiative? how did it start and what is its purpose? >> bill clinton came up with the

idea five years ago. it is connected to his global initiative, which brings world leaders together to talk about the big problems of the day. this is taking the same concept and applying it to colleges and college students. the first group gathered in new orleans after hurricane katrina. they look at a whole bunch of different service projects that students had come up with from all over the world. former president clinton wanted to take these projects and help the students figure out how to make them scalable and make some of them into reality. it is more ambitious than the idea of community service, which has caught on a college campuses across the country in the last 10 or 20 years. >> a side of being the former president, what is his role with the initiative? is it fundraising? is reaching out to students who attend this event? >> he sees his role as bringing

these people together and creating the venue for it. the idea is more than these people meet each other. you have a woman from new york university who is stitching dolls for kids to have night terrors. you have a team from one washington university that has made bamboo bicycles. you have another team that is working toward health care needs in sub-saharan africa. the idea is to get all these people together and to get them to learn from each other and learn from some exports -- experts. bill clinton brings his name and credentials to the event. >> it is a fairly a best -- a- list lineup. >> john stewart is going to be there.

i know chelsea clinton will be there. as will usher. and various people who founded non-profit thing fed started out essentially as college endeavors. >> did they have funding from the group? >> there has to be a specific commitment that addresses a known problem in some sort of novel way. i do not know that anybody is guaranteed any sort of funding for future for their project. i think the idea is to get these people together and kept them to learn how to make the thing actionable. these are mostly students. they have great ideas. but a lot of them do not know how to be nonprofit directors or how to launch a company. the idea is that they come here and do these things. >> you can read that reporting at "washington post."

thank you for the update. >> live coverage of the annual meeting of the clinton global initiative. this meeting being held at george washington university here in the nation's capital. the mission is to engage students in addressing global challenges. this meeting focusing on poverty, the environment, peace, and public health. tonight's session, we will hear from the former president. he will moderate a discussion that focuses on the public service of a few individuals engaged in those efforts and how to foster a broader culture of civic engagement. i will also hear from madeleine albright, the former secretary of state. as bloomberg news reports, every spring in the initiative brings together some of the most promising student entrepreneurs.

you conceive and gathering here on the floor of the auditorium. this year, one of the sessions will focus on the global economic crisis and the impact it has had on recent college graduates. many have started their own companies. according to the website, 20% of males -- of millenials have started their own businesses, and 40% intend to do so. this is the fifth annual meeting of the initiative, bringing together more than a thousand students from many countries and every state. the proposed ideas such as low- cost bamboo bicycles for africa and michael financing for cash strapped entrepreneurs. -- microfinancing for cash- strapped entrepreneurs.

as things get ready for this opening session, this weekend we will hear from chelsea clinton. she will speak tomorrow at 1:00 eastern. tomorrow afternoon, 4:00 p.m., bill clinton will be interviewed by john stuart. -- jon stewart. >> after spending summer's fighting aids in south africa, tyler spencer came back to washington, d.c. to find that aids rates were climbing in his backyard. one in 20 adults in washington, d.c. or infected with hiv, a

rate on par with sub-saharan africa. communities of color are reluctant to talk about a chevy and aids. spencer wanted to break through the wall and decided to use group sports to start a conversation with urban youth. in 2011, he made a commitment to train college athletes in d.c. in an urban sports-based hiv and aids education program for at risk youth. spencer has raised more than $100,000 to support his mission. since his commitment, the program has trained 58 college athletes. in a semester long program, they have worked with over 370 youth. >> ladies and gentlemen, please welcome the 42nd president of the united states, william

jefferson clinton. [applause] >> thank you. thank you. thank you. thank you very much. [applause] thank you. thank you. thank you very much, and welcome to the fifth clinton global initiative university meeting. i think you for being here tonight, and i especially thank the staff at george washington university, who have been so great to put this together. they have done a wonderful job. [applause] g w is the perfect host for this

conference. more than 200 years ago, president george washington called for the establishment of a great university to forge citizen leaders. today, the george washington university is the and bottom of that vision. through its leadership, the university has established the center for civic engagement and public service. last year, the steven and diane robinson fellowship for entrepreneurial service learning was established, and fellowships inspired by the deep commitment to service and community engagement that gw students exhibit every week. i would also like to thank the sponsors to allow us to have this meeting free of charge for all attendees. that includes microsoft, john

and irwin jacobs, the prospect fund, and others. thank you very much. [applause] tonight, there are more than 1000 of you here from more than 300 universities, more than a youth organizations, 82 nations, and all 50 states of the united states. you have already made 915 commitments to change your schools and communities, and the lives of people across the world. you represent your generation, young people who have a greater ability to enact change than any before you. in the past year, more than 30,000 students, faculty, and administrators have become engaged in commitments to action. as a result of the commitments in 2011 alone, more than 146,000

people have improved access to health care and social services. nearly 31,000 students have improved access to education. more than a million dollars has been raised for scholarships, humanitarian relief, hospitals, and other worthy endeavors. i am fortunate to see a lot of amazing examples of people taking this kind of action. this september, we will have the eighth annual meeting of the clinton global initiative, convening with nonprofit directors and philanthropists from across the world. they have, in seven years, made 2000 commitments which are ready have improved the lives of 300 million people in 180 countries. both cgi and cgiu are global networks of people seeking to use the resources at your

disposal to make a difference. but you have something they do not. more time, for one thing. [laughter] all the years i was in politics, i loved it, but we spent most of our time arguing over 2 view of things. what are you going to do and how much money are you going to spend? are you going to cut taxes or put more money into education? what are you going to do, and how much money are you going to spend on it? we did not spend much time on the third question, which i think is the most important of the 21st century. whenever you are proposing to do, how the proposed to do it? how you turned your good intentions into real changes in other people's lives? one of the reasons we see so much innovation coming from college students is that you do not have all that money, so you

have no choice but to think about the how question. but if you think about it and implement it, you might draw tens of money to it. really, over the last 10 years or so, one of the most hopeful things about our future is that it is now possible to raise a very large amounts of money in very small units. when the tsunami hit south asia, americans gave a billion dollars. half of it over the internet. first time. and the median contribution was about $56. when the earthquake hit haiti, the americans gave a billion dollars. the median contribution was even smaller, because it could not only give a over the internet, you could simply text the number of your favorite charity, the red cross or the

clinton haiti fund or whatever it was, and immediately transfer $10. when we recognize the commitments that are made here today, they are worthy in their own right, but some of them are capable of dramatic expansion or adoption or modification. creativity is really important. i will just give a couple of examples of the commitments that have been made this year by you. christine schindler of duke will work to connect female engineering students with girls ages 14 through 17 for men turn ship reform and worship, and partner to work on medical devices for the developing world. she plans to implement this worldwide. why is this important?

because only 14% of americans engineers are women, and only 15% of engineering students in our universities are women. it is well known that the united states has a shortage in the so- called stem fields. what is not so well known is if we can abolish the difference between women and men in those fields, and the difference between asian americans, european americans, americans of middle eastern descent, african- americans, and hispanic americans -- with in a few years, our shortage would disappear. meanwhile, we would give out more visas, i think. [applause] shirley kotteo of virginia state is committed to replicating the

hands for haiti model in order to increase employment and food security. she and her colleagues started a very successful facility in haiti and want to take it to scale across the country. the country has a serious protein deficiency that can be remedied partly with chickens and eggs, whichever comes first, and partly by growing their own fish in an environmentally healthy and responsible manner. you were going to hear later about the students from vanderbilt university who started, a couple of years ago, a program to train offenders who had been sent to prison and who were in halfway houses, having been released from prison but not into society that, so there were employable, and then helping to find them jobs.

this is a huge deal. people who go to prison and get out, which is more than 90% of the people who go to prison, are much less likely to become repeat offenders if they have jobs. and yet even though we say we are a people of second chances and once you pay your debt to society are supposed to get one, the truth is that are one of the first casualties of the budget crisis of the last few years, the job-training and placement program. this is something that nearly every college or university in america could adopt. again i say do not be discouraged before you are doing starts off helping a relatively small number of people. if replicated are taken to scale, it could change the future for a huge number of people. we're going to try to address these challenges step-by-step,

knowing that, as my good friend mario cuomo used to say, in politics you campaign in poetry, but you govern in prose. the same thing is true of citizen service. you work in prose. you take one step and another step and another step. pretty soon, you look around and you have walked several miles, and a lot of lives are better as a result. i thank you for your commitment to take those steps. i want to introduce our hosts, who have worked tirelessly to make education possible for thousands of students, the president of george washington. i want to tell you a little bit about him. he has a long history of supporting students. he was a professor of english and literature at the university of california at berkeley. dean of the college of arts and scientists and provost at john

hopkins university up the road in baltimore. as president of george washington, he has made it a priority to increase student opportunities for public service. in order to be accessible and better serve the students here, he chose to take up residence on the campus, the first president of this university ever to do that. maybe he was just trying to avoid the well-known washington, d.c. traffic, but it looked to me like he was trying to remain open to the students. he has made a lot of green renovations to the residence, demonstrating his strong commitment to sustainability, and tried to make the university and model for sustainability. this kind of complete view of public service, how it permeates every decision he makes, makes him not just a good president for the students of gw, but an inspiration to people everywhere.

please welcome the president of george washington university, steven knapp. [applause] >> thank you for that kind introduction, and for the inspiring leadership that has launched this extraordinary initiative. let us all recognize that leadership, if we could. [applause] ladies and gentlemen, it is truly an honor to host this event. i am pleased to honor our distinguished panelists. we have a number of trustees of our university who are present, as well as our presidents emeritus.

above all, i am delighted to welcome the thousand students who successfully competed to participate in this year's cgiu. you come from 82 countries, all 50 states of the united states. you represent 300 colleges and universities. president clinton was very kind to mention the fact that the founding vision of our university goes all the way back to our namesake, who dreamed of a university in our nation's capital that would educate the citizen leaders of the very new nation he helped to found. and we have preserved the admission, except that now instead of training citizen leaders just for our nation, we educate citizen leaders for the world. at the core of that mission is a commitment to service. it is reflected in the way, two years ago, first lady michelle

obama challenged us to perform 100,000 hours of service during the course of an academic year. we greatly exceeded that, she spoke of our commencement. for the third year in a row, we sent more students to the peace corps than any other school our size. we passed the 1000 peace corps volunteer market this spring. for the past four years, the number one employer of washington -- of george washington graduates has been teach for america. in fact, this generation of students is marked by a deep commitment to service not just at gw, but worldwide. to give you a statistic published in the washington post, in 2010, more than 3 million students in the united states alone volunteered more than 300 million hours to service. two nights ago, we held a reception for students volunteering to support cgiu.

i was inspired by the variety and creativity of our students' commitments to action. the range from a plan to make bicycles out of bamboo, panda bikes, and extremely expert -- extremely inexpensive, sturdy, and renewable material. they are so inexpensive this program will be able to donate a bicycle for everyone it sells. they include a program of art therapy to prevent suicides by lakotaolescence i people. they donate to homeless shelters. we could multiplied as examples 100 fold. you have heard many examples from the president a few moments ago. you realize how much

imagination and dedication and creativity has gone into these commitments to action. i would like to think the clinton global initiative and the university department of external relations for setting up such a terrific weekend. i urge you all to take advantage of the activities in store, including the plenary and briquettes sessions tomorrow and a service project on sunday. i close by saying congratulations to all who chose to participate in the events. you are making a transformative difference in our world, and i hope you will enjoy your time here at the george washington university. thank you, good luck to you, godspeed. [applause] >> i am going to begin as we always do, with the announcement of new commitments.

i will ask the people who made them to come forward. first, a commitment named pay it forward. they are from illinois state. an undergraduate at michigan state. an undergraduate at the university of minnesota, twin cities campus. the students are all involved in a group called "students today, leaders forever." that are committed to creating new programs which will provide community service opportunities for young americans across the country. between september of 2010 and september of 2011, 25% of americans between the ages of 16 and 24 volunteered even once. ade and caroline will develop community service road trips to areas on the east and west coast, and topic specific

service tours. shelby will use for resources to bring service opportunities to public high school students in lansing, michigan. cristina will implement an after-school literacy program for multi-cultural students in inner-city schools, to give them access to multi-cultural mentors. these projects together will help the organization scale up by 37,000 hours of service over the next year, and involve a lot more young people in doing this. let us give them a hand. that is a good idea. [applause] [applause]

now i would like to invite to the stage sam king, an undergraduate at stanford university. [applause] he is wearing his commitment's name, code the change. here is the issue. more and more and more, the individuals and foundations that donate money to nonprofit organizations want to, understandably, keep down the percentage of the donations that goes too centralized costs, things that do not directly

touched the intended beneficiaries. that is a laudable goal. but there are certain unavoidable costs for computer systems and technologies, for example. to better connect the world of non-profit and computer science, sam will increase the national presence of his organization, code the change. it holds events in which computer science students volunteer up to 24 hours of their skills to nonprofit projects. they hold 6 at stanford every year. he will expand the program to 10 additional universities, specifically targeting schools with strong computer science programs. each event connects 30 computer science students with eight non profits for a day-long coating -- coding session. it will address 480 additional

technology needs for nonprofits. it is a good deal. let us give him a big hand. [applause] [applause] now i would like to introduce our panelists. as all of you know, i am going to ask them a question or two, and they are basically going to tell their stories in a way that makes it relevant to your lives and why you came here. after which we are going to take your questions. so supply us some. [laughter] first, president knapp, who has

already been introduced. i would like for him to come out and take a chair. [applause] second, the first woman ever to be secretary of state of the united states, appointed by some long-ago president, madeleine albright. [applause] who -- [applause] madeleine -- [applause] here is -- [applause] you know what that reminded me of, for some bizarre reason? the time we went to buenos aires and went to the tango place. [laughter] anyway, here is what i want you

to know about madeline. she is a professor at georgetown school of foreign service, my alma mater. but in her current life, she is a citizen servant, chairman of the national democratic institute, president of the truman scholarship foundation, on the board of the council of foreign relations and the center for american promise. -- american progress. third, i would like to call out the founder of [unintelligible]. [applause] he wrote an amazing book some of you are familiar with -- it happened on the way to the war."

he served in the united states marine corps. he is a graduate of the university of north carolina at chapel hill, the kennedy school in the business school at harvard where he was