a robust, proactive, intelligence to-driven agency that the fbi -- intelligence- driven agency that the fbi is today, focused on per -- protecting the united states from terrorists and other security interests or threats. i often say that having been in the organization for the past 20 years that i have in a sense served in two fbi's, the bureau as it existed before the 9/11 attacks, and the bureau after that seminal day. in that regard, i stand as a witness of sorts, and a participant in the transformation that the director often speaks of. that includes the establishment and the maturing of the director of intelligence within the fbi, a new creation for this organization. and a creation of the field intelligence groups that are now

placed in each field office across the country. these constitute significant steps in the development of our capability to understand action and share the intelligence that we collect. the necessary expansion of the size and capabilities of the counter-terrorism division, and the increase in the number of joint terrorism task forces are around the country that gave us the capability to investigate terrorism leads and cases in a manner that overall is more timely, more consistent, and more effective, and they are staffed, as you know with local police officers and state officials, as well as fbi agencies, as well as other officers and intelligence agency

representation. it is in part to we have joined forces and strengthened critical partnerships with hundreds of these agencies. -- functional policies that are foundational to keep america safe. we continue to revolve. for example, about one year ago, in we established a branch that has dedicated -- that is dedicated to accessing threats around the world. the threats that implicate the homeland. not only that, it assesses our

posture against each of those threats. identifying where we are well- positioned and strong and where we need to redouble our efforts. where we need to become stronger. we need to improve our posture. this branch works on those issues. identifying threats, assessing our posture, and then driving resource decisions that i make to allocate the resources unavailable against the threats that confront us. we're not just operating they get. we are operating smart to identify the landscape and of the threats that matter most and

pose the greatest risk. i recently read the biography of steve jobs and an anecdote in that book tells the story of steve jobs trying to encourage his engineering staff to speed up the time of the mac in 1980's. he said to his engineering staff, is a life was at stake, could you make it a boost of faster? they took his words and that they said yes, we could do it. if you read the book, you are familiar with the anecdote.

when i was reading that, i mentioned that we do not, in my line of work, have to imagine that if they live for at stake. a life is at stake. many lives are at stake. when we look to improve, i think of that and it does that steve jobs anecdote -- i applied it to my work force. let me be clear on this point. even in light of our recent successes, our counter-terrorism success -- counter-terrorism successes that i have mentioned earlier, we will not stop to celebrate those successes. why? america is still at risk. even as we have improved and devolved and sharpen our focus and our capabilities, our

adversaries continue to revolve their capabilities. there is a committed to attacking us. that is clear. the terrorism threat has become more decentralized, more complex. with the establishment of the al qaeda affiliates around the eastern hemisphere. 10 years ago, the threat emanated from al qaeda in asia and that is what we concentrated on. with laser focus. al qaeda continues to pose a threat and is still committed to attacking the u.s. and the west. there is still in danger. the al qaeda ciliate based in the arabian peninsula actually constitutes a more serious threat to the u.s. today.

it was aqap that planned the bombing of the northwest flight 253 in the summer of 2009. it was aqap attempted to bomb cargo flights in 2010. this and pot by other affiliates such as that time square bombing attempted by the pakistan taliban in may of 2010. in addition to spreading out around the globe, al qaeda has employed new methods and new tactics. of particular concern today is al qaeda's use of online forums, websites, and social media to reviewed and radicalized followers to commit

acts of terrorism. in this way, a terrorist organization seeking to harm us have, like i said earlier, dispensed with the limitations imposed by geography. more distance. in fact, they can reach inside our borders and attempt to influence and direct their followers or others who might be susceptible to their message promoting violence. similarly, aqap has produced an online magazine highly professional -- online magazine, highly professional. this is full of propaganda and available with the click of a mouse. terrorists are not only sharing ideas, they are soliciting information and inviting to medication. they are improving their

communication methods. they're becoming more secure. the al qaeda ciliate -- affiliate in simaly uses twitter. in english and encourages terrorist activity. the increase in online activity by extremists coupled with the rapidity that one can be radicalized presents a serious challenge for us. with these two factors in effect, that is a concern and focus of ours today. in the case of zachary tester, who was radicalized online over just a few weeks in 2008, the sentencing judge observed that his transformation from high school athlete to highly

energized trader--traitor was startling. how quickly he went from high school athlete to one dedicate to the principles advocated by al qaeda, the violent rhetoric and ideology. he was suppressed, looking back, at how quickly that transformation took place. let me just say a few words about violent extremism in a broader context. put that is a threat that we are quite concerned with today. again, the homegrown violent extremism that arises from within our borders. this provides is pure opportunities to -- us fewer opportunities to the fur and disrupt in a timely manner

before harm is in place. come extremists, or hve's, in all shapes and sizes. they come from various backgrounds. trying to assess any commonality between them upon which you can develop an effective strategy is challenging. yet, we are doing just that. we are in that process of analyzing every one of those hve's from where they came, how they became radicalized, how they mobilized, so that we can better understand, going forward, and become more effective in dealing with this threat. as i indicated, hve's are

challenging because they are ready in the country, so there is a travel involved on their part. they are familiar with their prospective targets and understand the culture. in the case of isolation, this presents few signals they are all there. few signals of what their intentions are. they can use readily available weapons or materials. when i talked about ducks attempted -- the attended a tampa of tampa, i am talking about somebody who radicalized here. -- attended an attack of tampa, i am talking about somebody who relict -- radicalized here. same here in washington with the case with the threat of the capitol. an hve.

there are many more. this is the trend. in the last -- since 2008, there has been a substantial uptick in these hve cases. the trend is -- the internet has a role to play. the trend is that the threat is inside the borders and that is a significant one and one that is occupying more and more of our attention. so, we need to do several things in this regard. the counterterrorism strategy, the national strategy is multidimensional. it involves going after your of the series, but also, entering the counter-radicalization progress. understanding why they get

radicalized and deliver messages in ways that you can do so effectively. the need for community engagement is significant and of the fbi -- in the fbi has set up efforts to engage the humidity. -- engage the community. to understand and convey to the community what our intentions are and where our interests are and where are our concerns are. it is imperative in this day and age, with the press that i have described, to sensitize the public and law enforcement officials. to hve's to signs of mobilization. to maximize the opportunity to help before harm is and what

did. each of the challenges today, in short order, that we are looking at and confronting. let me just close by saying that i have worked in counter- terrorism for the last year versus the deputy assistant director and more recently as the director. -- first as the deputy assistant director and more recently as the director. i have had the personal exposure to hundreds of counter-terrorism professionals. people who dedicate their lives to this. working counter-terrorism is not a 9 to 5 job. it is every day. i feel i would be remiss if i did not give a nod to the people that i have had the pleasure to work with in the last year. and to make you understand, to

convey with you, that this country has some fine individuals on the frontline coup are dedicating their lives, literally, to keep this country is safe. with that, thank you for your time. we will take questions. after gordon snow makes his presentation. thank you. [applause] [inaudible] >> any questions?

[inaudible] >> i can hear you. good morning. [unintelligible] >> the question was about cyber eclipsing terrorism, in a sense. as we go forward. that is our belief. as time goes on, terrorism or rather cyber issues, cyber crimes, which, by the way, cyber tends to overlap many of the

programs. you will see a greater prevalence of cyber-related offenses, including cyber terrorism, i would imagine. what we are doing to address that is, within the fbi, there is much more cross--- there is much more work. the cyber people and the terrorism people work together. we have not had a significant terrorism-related cyber-related attack in this country. that is not to say we are not preparing for that. anybody else?

questions? ok. >> good morning. >> cannot hear you. >> can you hear me now? now? i am with government security news. i was wondering if you could comment on some other reports this morning. there have been extremist websites that been taken down in

the last month or so and there is speculation that it was a cyber attack. i know you may not be able to comment specifically, but how are those websites scene? is that a domestic threat? >> what are you asking? >> can you comment on those reports? also, how does the fbi see those websites? are they more of a broader global threat? >> they are a global threat because they are viewed globally. the websites that you are talking about are extreme, if i am understanding you correctly. they carry propaganda. they publish articles on this website -- these websites. they really serve the interest

of our at the series for the most part. >> do they have an active program to reach out to those websites? >> anybody can go to these web sites. we go to the website send you the content on the web sites, just like you would. >> ok. thank you. >> thank you. >> you mentioned earlier the al qaeda group. what is the fbi doing to prevent the integration or recruitment of first generation americans, people whose families have recently moved to america or connected back home to these groups and to certain ideologies? >> i have a great closeness to that issue because i was the agent in charge of the minneapolis division before i came here.

i think the most effective answer to your question is, if we are dialoguing with the somalia-american community -- we are doing that. i met with young simaly and mails, people susceptible to -- somalian males, so that i could gauge and understanding of what went on for them. without talking about law enforcement or terrorism, just taking those topics up the table, and just building trust and understanding at the -- and at the same time conveying what the fbi's concerns were in that regard. that is the best approach. to get the message out in that way. obviously, people have been arrested, indicted, prosecuted, and convicted for attempting to join the group.

we have seen quite a slowdown in that phenomenon. somalia-americans desiring to go to the port of africa to somalia to fight. thank you. all right? >> i you would like to introduce the assistant director of the cyber division of the fbi. he started as a special agent with the fbi in 1992. in january of 2009, he was awarded the chief of the cyber cyber national security section and the director of the national cyber

investigative joint task force. in november of 2009, he was named deputy assistant director of the cyber division. in april 2010, he was named the assistant director of the cyber division. the assistant director will speak to the efforts and accomplishments of the fbi, cyber investigations and how the fbi is continuing to -- continuing to innovatively develop new techniques and resources that will help protect citizens from these crimes. [applause] >> good morning. it is my pleasure to be here today among the of steny group of professionals dedicated to protecting -- protecting our

common security. fbi director robert mahler met with a similar group of individuals at a conference in san francisco. during his speech, he said, in the not so distant future, we anticipate that the cyber threat will pose the number one threat in our country. what is the threat? it is the surprise we are living in a high-tech world. it may surprise you to know that there are more wireless devices being used in the u.s. than there are americans. by the end of 2012, the number of mobile connected devices will exceed the number of people on earth. with this constant activity comes increasing vulnerabilities. the challenges presented to law- enforcement in this area are the greatest we have encountered in a century. at no point in our history have we had to stretch our awareness, capabilities, and our understanding of a threat more than we do now. we have learned of the potential threat to individuals, businesses, national economies,

and the structures, and even two or governmental economic strengthening -- strength and stability. several think tanks have tried to quantify it. the 2011 or 10 cyber crime report put the cost of nearly 411 -- $400 a year. a study released on that the number of attacks on companies that serve a -- that were surveyed was up 45% and the cost 70% more to fix. on average, these attacks took 18 days and $460,000 to repair. that is just the beginning. psycho -- cyber criminals are using multiple attacks. the threat is real. intrusions are occurring every single day by the thousands. in this cyber criminal world, you see three actors.

foreign intelligence services. terrorist groups. organized criminal enterprises. dozens of countries have cyber capabilities in the victims ranged from government networks and private companies from which they help steal secrets or gain competitive advantage for their own nation's advantage. as an agency of the u.s. government, for more than 100 years, the fbi has become well accustomed to me new threats. as an agency with both national security and once forced responsibilities and with authorities and capabilities that allow us to investigate criminal, foreign intelligence and terrorist activities, the fbi is prepared to address the cyber threat. when we first began to look at community -- computer intrusions, it was 2002 and there were 600 million users on the internet. the methods used for straight forward and the threat was more localized. the internet has over 2 billion users and a variety of high-tech criminals.

they bring together members with specialized computer skills sets such as coding, hacking, system and ministration, social engineering, and fishing. this kind of collaboration has proven successful. for example, between 2009 and 2008, computers in georgia were hacked and 44 atm cards were reversed. in just 30 minutes, a network of cash recruited your online forums used the cards to take out $9 million. in many countries -- the fbi a brought together the u.s. secret service and international law enforcement teams resulted in multiple -- resulting in the

indictment by a federal grand jury. one of the largest arbor crime take down to day operation -- fbi agents or alerted to a series of automated clearing house payments made to 46 separate bank accounts in the u.s. fbi teams partnered with numerous partners in the u.s., the netherlands, the ukraine, and the u.k. to identify the operators responsible for stealing banking information and a $70 million. the unprecedented international teymoor that took place in that case enabled the destruction of a large, organized criminal groups and when the fees or neutralize, 39 arrests were made in the u.s. alone. clearly, high-tech criminals are evolving. alongside the developing on the environment. whether it is bring fraud, account of the trafficking, or a spinoff, most of what we see in our cyber investigation, -- is the same as offline.

it is now viewed by the global reach of the internet platform and an immediacy and anonymity that provides. as criminals continue to raise our level of technical expertise, we expect to see a new trend emerging in the next few years. some of these trends will include the advanced targeting of smartphones an electronic tablet. we also expect to see a target in the public safety infrastructure. the systems will serve at -- which serve our first responders. the threat of attacks to develop infrastructure continues to be a great concern. we have already seen criminals have become so adept at developing meler that they market entry their own products with other would-be criminals free to criminals. now, the least sophisticated actor can purchase tools or rent them. the distribution of these ready to use tacking duels quickly changes the playing field and the players in cyber crimes. the tools are easy to use and

customizable, it is not possible for nearly everyone to engage in cyber crimes. whether the motives are financial, activist, political, or otherwise, criminals are discovering ways to combine these tools to get the most from their investment. the creation of -- this group links computers as a tool for a myriad of illegal activity from harvesting credit card information to conducting other things. this computer is created through e-mail fishing and other techniques. operators often working from global locations unable to control the network for molly and they redirect funds and steal corporate secrets. the value of theft or exceeds that of the physical pain

robberies. with hundreds of millions of dollars stolen, these crimes increased the cost of doing business, but companies at a disadvantage, and create significant drain on our economy. i have told you about the threat, but what are we doing about it? to address the increasing complexity of cyber criminal technology, at an international scope of online crime, the fbi has made changes to the structure of our organization. we have placed cyber personnel in each of the field offices, housing more than 1000 fbi special agents. we have increase the capabilities of our employees by selectively seeking candidates with a technical skills. we change the way we work to employ a more multifaceted approach, leveraging law- enforcement partnerships more than we ever have before. at the heart of the cyber response effort is a national

cyber investigated during task force. just outside of d.c., the organization provides a network of the fbi-led interagency task forces which investigate all types of cyber threats. members may also become part of a more defined team. these dedicated teams focus on specific intrusion sets and problems. including -- these are composed of a liter, 8 -- agent, analyst, engineers, and other special people. the fbi as collected real-time intelligence -- intelligence that has been crucial. we have developed relationships with the private sector and for the robust information sharing that has been created, we have prevented the tax before they have occurred. with a transnational nature of cyber crime, our work is key.

since 2010, we have and that full time fbi cyber experts with our partners in romania, estonia, the ukraine, and the netherlands and we continue expanding the program. paying special attention to threat areas. we also have legal attaches in 75 countries and special agents in u.s. embassies throughout the world. each year, we are training with approximately 500 law enforcement agencies and more than -- in more than 40 agencies. the close working relationships that have been created in this way act as a force multiplier for investigations by decreasing or time to react, preserving evidence, and expediting international to medications that previously had been tied up in a lengthy international legal process. the expertise that has been shared has also been an integral factor in the success of the numerous take downs, as well as in our other cyber investigations. we are working with a number of industry groups, research labs,

and academic institutions that have a vested interest in international security. we of wrote some of largest cases. intolerant -- in 2009, the fbi collaborated with a working group in spain, selenium, and the u.k. to identify 17 key players behind the mariposa -- butterfly botnet. mariposa were silent as the mastermind stoping the credentials -- stole baking credentials. they're linked to internet protocol addresses and mariposa resulted in over $35 million in losses and damage. this investigation remain significant, not just because it was successful, but because the targeted programmers.

millions of private computers were controlled worldwide and we saw in your thousand victims within the u.s.. -- 800,000 victims and the u.s. the software used keystrokes to harvest passwords, as well as the financial information of victims. it was cleverly designed to disarm anti virus programs and run repeatedly whenever an infected computer was recruited. for the first time in the u.s., the fbi and justice department were granted permission to take control of the control servers and intercept communications between infected systems and the servers controlling them. expert teams have been able to send a stock command to victim machines facing the u.s. that allow software to begin to remove the malware. there of not been our wrists, but almost -- there have not

been arrests. reaching a proud of redeposit outcome requires proactive efforts. beyond taking court actions and seizing critical hardware in the u.s., owners of the machines were identified and contacted about the intrusion. the fbi works with authorities outside the u.s. to notify non- u.s. victims. last year, with the help of its joanie and russian officials, the national aeronautics and space administration and members of the internet security committee were able to shut down a massive internet advertisement fraud scheme. that was delivered using botnet, which hijacked more than 400 computers. the malware -- manipulated information and this resulted in 40 million in gains for the seven subjects who were charged. the fbi worked with us to not -- the fbi reverse the damage to

their operating systems. as government security professionals, we are on the -- we have a unique position to address the threat. we have a special awareness of certain threats. we must couple threat information with specialized technology to increase the effectiveness of our cyber security practice. more importantly, we must recognize that we share this challenge and we must abide our resources to reduce the threat. what we do if i told you that right now, while you sit here today, a criminal gang is in your office reading your e- mails? copying your business plans and stealing your research? i imagine you call the police. and then work with the company to address the consequences of the theft. i am telling you that kind of theft is happening today. yet, we are not calling law- enforcement and addressing the threat. in february of this year, the wall street journal bricking story about a telecommunications company to networked systems.

chinese hackers allegedly down loaded technical papers and employee e-mails and other documents. stories like this one expose the uncertainty for company officials to -- we must decrease our vulnerabilities, which means we must part in the targets, including protecting the supply chain. we must be smarter about what we store in our systems. we have to make a cultural shift from protecting the systems to protecting the information. we must prepare to manage the consequences of cyber attacks. we must minimize the potential for damage, whether that means including data or ending redundant systems that can be reconstituted in the event of a new tack. -- an attack.

the cyber challenges will continue to dominate. from the law enforcement perspective, we can expect there will be investigated growing pains. the scope of our responsibility will continue to expand. to ensure the safety of our citizens and our government, we can inspect -- expect there will be cases in which minimizing the impact is the only revolution. -- resolution. despite the challenges, and ruin your mission sharing a strategic planning amongst investigative partners is already providing the expanded technical expertise and improved communication and foundation of cooperation and it is to be in place if we will keep pace with and control cyber crime. this must continue. the security guard that works is a shared challenge. i think you for the important part you each play in it. we can advance the security of our nation's networks and

infrastructures. thank you. [applause] >> we will take a few questions and answers at this time. please step up to the microphone. >> this is for guard in the snow. it -- gordon snow. when you do your investigations for the cyber division, you have the problems of independent hacker groups such as anonymous and how much does this involve

the tracing of ip addresses? how much does this involve human intelligence? how much this is -- , as does this involve -- in all the other nations? >> everything you just referenced. heavy forensic review, good victim investigative corporation, the international partners and everything else. it is a large scope for those investigations that it is something we need to keep on digging into. the one thing you did mention, now that i think is really critical, and i tried to talk about it today, is just the way we treat internet crime and traditional crime. so, and many of the cases, it has been basic tackling for investigations. who can we find? where are they humans? somewhere in this whole ecosystem, there will be somebody behind a keyboard

tapping away. we actually need to find the over cover -- undercover platforms, the human information and intelligence in order to make toor that we can dismantle any organization we are looking at. >> thank you . >> i have got a question on how much the fbi may be working with operating system vendors to tighten their default installs? most users at home have no idea about computer security, other than anti virus or spam where. -- spamwear. the default security we are applying does not work as well as if it were built into an image or installed as a security

platform. have you made any headway with the vendors? are there any plans to push that effort? >> let me break this into a couple of pieces. your comments right on -- are right on target. there are lots of things that many of us need to do it here in the u.s. and globally. the fbi does attribution and pursuit. they investigate. the home and security department does the mitigated efforts and contacts with private industry. we work in that realm. at the national cyber forensic training alliance that we partner with our private sector partners with and in great efforts like the centers of excellence across the nation f or dhs and the non-profits --

this is where they are addressing these issues. this is awareness. some of it is awareness and others -- and another piece is exactly what you were talking about. we are a market-driven society. until we get the awareness in everybody's mind and everybody understands that the cyber threat is all of our responsibility, we are not going to be crying out for these products. we are looking at it from a security aspect. it >> thank you. >> good morning. you mentioned that a new trend with the chinese hackers. when it comes to cyber security come out what is the greatest threat from china?

-- had difficult is this to accomplish? >> let us do this in a different fashion. all countries face the national security threat. to include china. when i look at a threat from any one of the nation's state actors, i try to determine what it is that is really at risk. the biggest threat is just a half. the biggest threat is the compromise. now looking at it from a technical view, but let us just say the compromise is the largest threat. that can be done by any number of means. the gentleman that was with you before talked about a lot of security applications and protocols that are not in place that could be damaging. we all know that fishing, or any of coming through your file wall, can have executable now we're -- malware.

the loss of everything that your company or corporation, agency would hold the most critical and valuable to you. if you are -- these threats and plans, your reintroduction of your products in the product life cycle, all that information is very critical. does that answer your question? >> yes. you mentioned that the fbi collaborate with other nations. are we collaborating with the chinese law enforcement agencies to address this issue? >> we are cooperating with the chinese in many different aspects. hopefully we will see that continue to improve and -- in the internet space. we have a liaison officer that works in international --

international property rights. we looked -- we work with the chinese in all realms across the bureau. i would hold -- hope that we flourish. this global environment will understand that the threat is to all and we all have to porter very closely. >> thank you. >> good morning. i am from the social security agency administration. -- administration. you talk about partnerships with state federal authorities -- state, federal, authorities and other agencies. are there any hackers that are in your employee -- ? >> we have hired people.

a member of the league of justice, they are using their powers for good, not evil as opposed to the black head actors. i would consider all of my individuals that have that skill and technical expertise b. whitehead hackers. in this environment where that skill is so widely saw to, we partner with them in the private-public partnerships in the security venues and avenues in order to make sure that the things that we are looking at or thinking about it will be the most beneficial and have the most impact. >> thank you. >> thank you for the question. >> i am part of the national initiative or cyber security education. one of the questions we get

quite often is, what kind of education are you looking for? where are the jobs? >> the education i would be looking for, and this is just me so i do not want to speak for the entire government, let us start with the nation. i want to make sure that the technical and mathematical scientific background that we had so many years ago would be replicated in become stronger here in the u.s. so that those skills sets we need would populate automatically. i would like to see education and awareness for everybody. you know, i think a large percentage of the population still believes that a laptop really does not provide any threat to them because it is inside their house. we go wherever we want or serve wherever we want. that lasts a few years and

pretty soon, we get the blue screen of death and we decide that is just three years. we go to best buy and we get a new one. i want people to understand that that threat is out there constantly on your tablets, smartphones, a computer systems, everything that you touch at work or at home that deals with the internet. from the counter to ureas some threat -- tech counter-terrorism threat to the child of your that is out there. i want to allow that information to come out and that i want to be struck treaty through 12 to make sure that we are building that strong core that we will need to repair and protect our number in the future. i would also, personally, like to see education that is developed -- i will diverge for a second. when we talk about cyber network operation, we talk about fiber

network that tax in a separate network defense -- we do not talk about cyber threat investigations. i would like to see that skill said be developed so that we can put -- i find technical experts and teach them and bring them into the cultural mind-set of doing investigations. i would like to see that, not only for ourselves, but for other agencies and companies and corporations, be instituted. the technical people in the u.s. have some of the most expansive, experienced people. since this is not done on a four-year type of degree or program, it is really is not recognized for what it should be. i would like to see that. >> thank you. >> good morning.

what are the things you think would be effective in -- community engagement? >> there radicalize -- the radicalizers can change. the audience is very broad. truly, i think we just need to assess and get out, as i said before, a counter message. we are doing that. i am talking about the entire u.s. government. i think we need to step up the game and to do that to a more affective level. and frankly, it is a vulnerability. clearly. it is a difficult challenge for us. thank you.

>> i do not know if this microphone is on. hello? yes. question over here. we have millions of people out there with computers and we heard the discussion about not having the right protection on those computers. will move toward a cloud o, everyone have terminals at home working on that the computer at home? how will that affect the security? >> it will have a huge impact. which way the impact goes will did determine -- depend on how we structure the clout. as i look at it, the cloud, while it has some great characteristics, i just want to ensure that we talked about -- i just want to ensure that we are

not driving towards the bottom line of cost reduction and not thinking about security. if you look at the contractual products -- if we look at the relationships that are built between a corporation or an hannity going into the cloud and the service provider, there are some critical things that you should know. it looks, over all, like the corporations and companies are outsourcing the information, but retaining the liability and the risk. if you do not look at the contract close enough, you will see that the cloud computing service, depending on how the contract is written, may have no responsibility for security and may have no security available at all. it would be something we would want to look at very closely to

see which way this will tip. if it ships in the direction of strong security, very good managed services, and assumes that it can protect the network, that is a good thing. if those features are not including -- included in the service, you may find out that you do not own the information. demand have access to the information and the -- if it is taken, then you may not be able to retrieve it. before any entity, corporation, went into the clouds, i would say the awareness peace is very important. a strong review is also very important. on the law enforcement side, if that information is outsourced into another country, that does

not have a long reach arm of the law, i may not be able to provide you assistance if you happen to be intruded upon. did that answer the question? yes, sir. >> thank you for being here this morning. i am an accountant. i am also a senior in my computer for and its education. -- computer forensic education. this brings for saved -- forth a circle of life behind terrorism and the advent of cyber terrorism. i have been tracking money for a very long time. how is it that our government and our partners across the pond help in this regard in tracking the money which funds a lot of this crime? >> -- is this becoming better?

>> it is. thank you for the question. a lot of great efforts by all. just like in any other crime. there is mutual legal assistance treaties that we use with other countries, depending on when there were signed. they discuss how much force and power is in -- what challenge to sovereignty is there to another country when we are talking about money? how effective the relationship is built on any one of the many nations that we would be looking for assistance from. we have to remember that, just like the cyber criminals into the computers in steel but personally and identifiable information to during your resources, they also steal that information to purchase infrastructure.

sometimes, i may follow a long path and attract the information that comes back to tell me that it is a stolen credit card or a stolen money or an identity that does not exist because it has been stolen before. it is difficult when we are tracking that money. all of the efforts are getting better. i think, from the awareness -- i keep on going back to that. it is an important piece. as our partners become more aware, i have seen the efforts from all law enforcement and intelligence community partners get even closer. a lot of times, we have policies in place from either the law enforcement side or the intelligence community side that are there for good reasons. maybe decades ago, when systems were not interconnected. i see a lot of good efforts from the global partners to pull some of those down to make sure we

can have even stronger efforts going forward. >> as the economy has slowed down and over the next couple of years, we are looking at a lot of reduction in fiscal grants for home and security, how do you see this affecting the local law enforcement participation and anti-garrison teams? >> >> i am not unconcerned about it. within the bureau, we have, obviously, counterterrorism has grown over the years. i am not anticipating that continued growth going forward. back to the comment, we need to be smarter, our analysis needs to be sharper, it needs to drive our operations so we can

maximize our protectiveness. we don't have the luxury -- talking about within the bureau -- to waste any resources on this problem, because the problem is very dynamic. looking out across the landscape, and i mentioned the 56 field the divisions -- >> we will leave this program and go live to capitol hill. the democratic steering and policy committee is holding a hearing on rising gas prices and whether wall street speculators are artificially driving up the price of gas. according to aaa, the current average is $2.92 a gallon -- $3.92 a gallon.

>> good afternoon, everyone. pleased to call to order this important meeting of the steering and policy committee, with appreciation to our share, congresswoman rosa delauro of connecticut, who will preside over today's presentation. i am pleased to be joined by the chair of our caucus, congressman john larson of connecticut, and the ranking member on the natural resources committee, congressman ed markey, former chair of the energy security select committee. i am also pleased to be joined by congressman don edwards of maryland, -- donna the words of maryland, sandy levin of the ways and means committee, and from the virginia, mr. moran. what i think about -- what i

think about today's proceedings, one name and give it is "the agony and ecstasy." the agony of the consumer is with the price of the pomp and what that means to them, especially those having trouble making ends meet, and how the high cost at the pump is an obstacle for them. it is not just a luxury, i guess something they must do to make ends -- it is is something they must do to make ends meet the ecstasy is for all i elkridge they -- the ecstasy is for oil. they right in record profits last year. -- they raked in record profits last year and they are on track for another year of astronomical profits. we will hear more about that from our expert witnesses and from our colleagues.

i thank my colleagues for joining us and i appreciate the presence of a professor greenberger and mr. gill ford -- mr. guilford. >> i want to welcome everyone here today. it is a privilege to do that. i want to welcome my colleagues on the panel this afternoon. i oil prices affect every aspect of americans' lives, not just the cost of traveling, but the heating of homes, food, and other purchases. there are many reasons for the fluctuations and the price of oil. on some of these, tension in the middle east, the administration is moving forward with the international community. saudi arabia announced they would lower oil prices. that being said, the cost of gas is irrefutably affected by rabid speculation in the oil market, and that is something we can and should do more about.

last year, at the peak of the last oil price bubble, goldman sachs speculated that speculators increase crude prices by 20%, and the price of gas by 56 cents per gallon. even the head of exxonmobil conceded that the price of oil should have been in the "$60 to $70 range," went instead it hovered at $100 a barrel. speculators make up 70% to 80% of the oil market. we are holding this hearing to see how we can do a better job of curbing excessive speculation in the oil market. the dodd-frank oil legislation gave the eight cftc broad authority to investigate manipulation in the market, at last year, the commodities trade commission charged 5 oil speculators with manipulating the crude prices in 2008, netting them more than $50 million even as oil prices

climbed towards record highs. in this house, the republican majority has tried to stop the cftc at every turn to the agricultural appropriations bill last year provided only $172 million in funding, about 44% below the president's request, 159ing ithere are about last cops on the be. -- on the beat. it is still not enough for the cftc to perform as it should. their request was for three and $8 million. we are here to -- their request was for $308 million. we are here to rrepresent american consumers, not oil speculators. we should be strengthening its ability to combat rampant speculation, not working to undermine it. i introduced legislation to

provide the cftc with a reliable source of funding. wall street accountability to the sustainable funding act will bring the cftc in line with other financial regulators. the fcc, the sec, the fdic. and it would authorize the collection of user fees to offset the costs of operations. in order to decrease prices immediately, i and several of my colleagues asked the president to release some oil from the strategic petroleum reserve. right now the petroleum reserve holds 696 million barrels and is filled to more than 95% of its capacity. even releasing a small amount of oil from the reserve can have a huge impact on the price of gas and discourage speculation. today i hope we can discuss the best ways to continue moving forward on excessive speculation.

last year president obama reconstituted the oil and gas price working group to investigate manipulation in the market. what should this working group be doing to make a difference? to the current market conditions warrant the use of the cftc emergency authority to set margins and position limits? the cftc has had its authority from the beginning of its existence but has refrained from getting involved since 1980. those questions and others -- i know our panel is going to address. thank you for coming, and we look forward to our discussion today. with that, let me yield time to my colleague from massachusetts, mr. markey. >> thank you so much, chairwoman delauro. thank you for holding this. thank you, leader pelosi, for conducting this very important hearing at this time. thank you for convening this.

i think we are at a very important moment in the united states relationship with the oil marketplace. right now the national average for the price of gasoline stands at $3.93 a gallon nationwide. within the next week, the average american driver could be staring through the wind chills at $4 a gallon -- through the windshield at $4 a gallon. of course, the republicans would like you to think this is all president obama's fall and deflected blame from the real culprits. they are wrong. the current spike in gas prices is not about obama. it is about opec -- oil companies and wall street speculators. we could take four steps right now that could address this situation. one, e. coli oil from the strategic petroleum -- deploy oil from the strategic petroleum

reserve. when the french government said that talks with the united states and others deploy from the oil reserves, oil dipped just on the mere threat to use this weapon against speculators. the strategic petroleum reserve is to wall street speculator is what kryptonite is to super man. republicans oppose this. they believe the oil market is a free market. it is is not. two, we need to stop speculators from yearly gains that turn to the crude oil market into a casino. last year, republicans tried to slash the budget of the commodities futures trading commission, the agency that serves on the top of the speculation at beat. the republican majority has moved legislation intended to delay reforms by the democratic congress that would diminish the power of wall street trading firms to manipulate the market.

wall street's lobbyists have gone so far as to sue to block these reforms. we should be fully armond the wall street cops and ensure that they can crack down on the gasoline gamblers in the marketplace. the republicans are wrong. third, which it end out the need for exploitation of american energy resources. last year, america's number one export of any kind was our field. more than 1 billion barrels of gasoline, sent overseas to locations like china, morocco, and singapore. with rush holt and congressman bill owens, i introduced legislation that would stop the export of america's oil and fuel produced from public lands. when american families are facing for dollar gasoline, we should not be allowing big oil to continue to export america's

fuel that we drill for here. republicans oppose this amendment almost unanimously. four, we must end the tax breaks for oil cos. republicans want to raise taxes on the wind industry but have been protecting tax subsidies for the most profitable oil companies in the world. american taxpayers should not be asked to give oil company's 100- year-old subsidies so they can sell us oil at more than $100 a barrel and make more than $100 billion in annual profits. we should be pushing a long- term plan and moves us away from for a oil and insulate us from the price shocks of the oil market that is controlled by opec. if we take these four steps, we will stop speculators from manipulating the oil market, we will rein in and feel exporters who are sending resources to china, and we will tell the opec dictators that we don't need their oil anymore than we need there is sand.

thank you. >> i want to thank you, mr. markey. let me introduce our colleague mr. lawson to introduce one of our guests this morning. >> thank you, chairman delauro, for convening us here today. i want to commend our leader, nancy pelosi, for recognizing what americans have all across this country, the problems that they are tinkering at the pump -- are incurring at the pump, and in home heating oil and air- conditioning as we approach the summer. it is my great honor to be able to introduce gene guilford today. he is the president of the independent connecticut petroleum association and education foundation. i've had the opportunity to work with gene over the years and a number of his dealers come to understand implicitly that the laws of supply and demand have

been suspended when it comes to oil speculation. they have been at the forefront of helping us shape legislation for congresswoman delauro and myself. i am proud to be able to introduce him today. gene has an extensive background, and the members will find this most interesting, that gene was appointed by president reagan and served in the commerce department. he is very familiar with import and export commodities. and also served in the energy department as well. he has firsthand understanding of both of the regulation that is needed and also of our marketplace system. most importantly, what he understands is the need of consumers, and that a recent press conference with chris murphy and myself laid out for the public what it is the best case in terms of the need for us to have ongoing regulation

and promotion of the cftc and the dodd-frank bill. with that, i taught opportunity to introduce -- my proud opportunity to introduce gene guilford. >> it is my pleasure to introduce our other panelists, michael greenberger, who is professor at the university of maryland law school. he worked as a technical adviser to the un commission of experts on reform of the international financial system. he also previously served as director of the trading and markets division at the commodities futures trading commission, and he served on the steering committee of the president's working group on financial markets. and as a member of the international organization of securities commissions hedge fund task force. thank you, michael, for being well, mr. as

guilford. we will start with your testimony. >> [inaudible] >> microphone. >> and chairwoman rosa delauro for convening of this hearing. i worked with almost everybody in this meeting, and you have been great friends of consumers, and you have landed an ear to those of us who don't have the clout of the big wall street lobbyists. many say there is no quick fix for this. i believe there is a quick fix for this, and i agree with many of the policy proposals that enunciated, but i would prioritize three of them. first, let me say that yesterday i read the "financial times," which surveys all the world markets, and within an opinion column, the pieces was the united states is back leading

the world's economy. europe is on its back, japan has been on its back, china is decelerating. our policies, which have been guided by the obama administration and you in congress, have created the amber's that are sparking a recovery. the one that thing that will damage this recovery is the ever-accelerating gasoline prices. they are a burden in a micro sense in that people don't have the money to pay for $4 and maybe soon $5 gasoline. it is a parcher to virtually every american. but more important in a macro sense is this will break the back of the recovery. the president has said that, many of you have said that. with everything going so well we fix thiscan't problem? you toould like

believe this is a supply and demand problem. i cited in my testimony and many experts who say that supply and demand is equilibrium to the saudi kingdom said they would increase production by 25% to make up for any boycott of the iranian oil product or interference with the straits of hormuz. the president has talked about releasing oil from the strategic petroleum reserve. but as was said in the testimony, the chairman of exxonmobil has said that market fundamentals mean that oil prices should be $60 to $70. they are approaching $105. they have been up to $110. why is this happening if there is no supply and demand problem? do not believe those who tell you in the face of the experts and the face of the saudi king, in the face of the chairman of exxonmobil, that there is a supply-demand problem. what is the problem?

it is gambling by wall street on the price of oil. it is similar to the gambling wall street did on whether or not people would pay for subprime mortgages in the mortgage meltdown. they could not pay off their debts, and all of us were forced as taxpayers dictate trillions of dollars to make up for wall street's bets that the subprime market would be successful. now they are betting in the upward direction of the price of oil. again, 60 experts in my testimony have said, from your real der -- from nouriel roubini, who famously predicted a meltdown, iranian oil experts, stanford, mit -- it is excessive the speculation, which is a fancy word for saying that gamblers wearing wall street

suits have taken these markets over and are controlling the price and create investment vehicles that are designed to push the price of all i oug -- price of oil up. by gambling, but placing a bet, you do not increase oil production, you do not create market liquidity. it is like saying that las vegas creates a national economic well-being. we have a las vegas exponentially on the steroids making bets on the upward direction of oil. now, dodd-frank made it, with your leadership, a valiant attempt to deal with this, but we were to find in the way we dealt with that in dodd-frank, because we delegated all the responsibility to the administrative process, which is overwhelmed with under-the- radar-screen wall street, 24

hours a day, seven days a week, millions of dollars of lying. i recommendations for congress. under your leadership, there have been bills passed in this direction. elosi, when you the speaker, congresswoman delauro, introduced a bill to stop speculation but it passed the house order to-19 that night. -- it passed the house 401-19 that night. when oil goes over $4 nationwide, this will be a bipartisan issue. it is not a supply problem. the president said last week -- as he has said, as the saudis have said, as exxonmobil has set, a supply is plentiful. we are a net exporter of oil. it is the gambling that must be

stopped. the investment vehicles that have a fancy names of the commodity index swaps, said that exchange-traded funds -- synthetic exchange-traded funds, much like the credit default swaps that led to the meltdown at wall street propagated as investments but were released bets on whether subprime mortgages would be paid off, half a trillion dollars sending signals to the market, false signals, that there is a supply problem. anybody who knows these markets and its objective says that those false signals are damaging the supply fundamentals in this market. that gambling must be stopped. it will not have anything to do with production, none of that money goes to production, none of it goes to liquidity. it is all casino gambling and nothing productive.

second, the president now has twice wisely said incorrectly said that it is not a supply -- a man prop wise -- wisely said and correctly said that i.t. is not the supply and demand problem, but there aren't manipulations by finding -- traders -- there are manipulations by financial traders. he has asked for a prosecutorial investigation. he did that first on april 21, 2011. oil as at $110. after he made that announcement, within six months it was $75. but nothing happened and now it is back at $110 again. now the president has asked for this task force. i think all of us, and i know congressman van hollen is gathering -- all of us have to work with the department of justice to explain to them that manipulation of the oil markets

is not only crippling the american consumer, but it threatens the recovery. if we go back to recession, there will not be a safety net. there will not be at tarp next time. the american people don't have a stomach for bailing out banks. if we don't have a safety net, that means not a recession but a depression. we all ought to explain to the attorney general that this has got to be his number one investigative process. where is the fbi? where are the interviews of market participants? where are the subpoenas? president obama has focused on this. let's get these guys going. i assure you, because the president's threat in april 2011 drove the price down almost $40, if there is a real investigation, just the appearance of it will cause these cockroaches to scatter because the light will be turned on.

jail.on't want to go to they think they are not going to go to jail, they will keep damaging and the american economy. finally -- you said this may be the hardest thing to do, but the american public must understand that the commodity futures trading commission -- probably few of them know what that is -- is the, on the beat that can stop this problem. under the leadership -- is the cop on the beat that can stop this problem . under the leadership of chairman gansler they have done an amazing job, but they are underfunded. for a multibillion-dollar market, they have a 700 employees. another $100 million to stop the economy spinning into a depression. that is a very small amount of money. the cftc has to be fully funded. if they are fully funded, we

don't need an interagency task force. they would have resources to bring these manipulation cases. they marketing manipulation cases, but they don't have the fba, they don't have the necessary investigative power. we need to fund that agency. >> thank you very much, professor greenberger. mr. guilford. >> good afternoon. leader pelosi, congresswoman delauro, my friends from connecticut, thank you for inviting me before the committee. let me very briefly take you through what i believed to be an important part of the history of what we and going through, because it was in 2004 that we first came and visited congressmean larson and asked if he would be willing to join his colleagues in initiating a

government accountability study of the findings of the cftc and find out what is going on in commodity markets. it was by then that we were becoming unsettled and concern about what was going on in the markets, the volatility and price increases. it was two years later that week at the report back that said that we think there's something going on and we think this is important but we cannot tell you because the law has effectively blinded the agency that is responsible for enforcing this laws. in 2008, leader pelosi, we came very close in being able to close the loophole and move this issue down the road. you remember 2008 very well because it was an experience we won't forget. it was at that time that the secretary of the treasury and at the chairman of the federal reserve came to you and said that if you don't pass a piece of legislation in a couple of days, the american economy is going to go over the edge. it was on the basis of the

reason why that was the case, wall street's reckless and irresponsible behavior that led to that point, that we ended up moving the policy a little further down the road with dodd- frank. now, where we are today with respect to connecting the dots between wall street and the gas pump is, for us, very clear. . i would like to illustrate that you in the material i handed out to you. wall street gasoline contract is increased 86 gas a gallon in the last nine days. $25 million a week. the citizens of connecticut pay more for gasoline today than they did in the middle of december. to put that into context, for the charts we have provided for you, now we're at 92 cents by

virtue of the fact we had a six- cent increase just last night after i prepared this for delivery here today. at 11 billion gallons a month that americans consume in gasoline, americans today are paying $10 billion -- $10 billion more for gasoline than they were paying in the middle of december. when the context of the profs greenberger's statements with how much we should be finding an agency of the federal government for the purpose of overseeing these markets, it is costing the american consumer this amount of money just within the scope of 90 days -- 90 days -- it is extraordinary. now, what could possibly have happened in the last 90 days to have caused this problem? did i hurricanes go through the gulf of mexico? was there a massive shutdown of refineries around the world? did israel attack iran?

in the absence of anything that anyone can point to, a tax on the american public of $10 billion per month has been enacted as a result of what has gone on wall street since the middle of december. with due respect to anyone who chooses to blame this on india and china, we did in just discovered india and china -- justtmas -- we didn't discover india and china the week before christmas. that is what has happened since the middle of december. speculators have overtaken the commodity markets. 10 years ago, actual producers and users of energy and agricultural commodities made up 70% to 80% of the markets, with only 20% to 30% of the markets made up by speculators. now this has flipped and 70% to 80% of the commodity markets are controlled by financial industry speculators, only 20% to 30% of these markets are actual,

legitimate hedgers of purchases of energy and agricultural commodities. six years ago, wall street brought up commodity index funds, resulting in a birds of a $400 billion of strictly speculative investments in commodity markets, and that is contributing to the price of food and energy prices. if i could, i would like to read you some of the promotional material for the commodity index funds. "when trading futures, you never actually buy or sell anything tangible. you are just contract and to do so at a future date. you're taking it buying or selling position as a speculator expecting to profit from rising or falling prices. you have no intention of making or taking delivery of the commodity you are trading." let me repeat that -- this comes on the people who sell these things -- "you have no intention of making or taking delivery of

the commodity you are trading. your only goal is to buy low and sell high, or vice versa. before the contract expires, you will need to leave your contractual obligation," which is where we get into the business of ruling contracts month to month, "by offsetting your initial position." the commodity markets are overseen by the cftc, who passed regulations to restrain sicklsty financial speculation in these markets. the financial industry has filed suit against the cftc in federal court, saying that these massive price increases -- they don't believe that these rules are necessary or appropriate. to the americans who are paying $10 billion a month more for gasoline, and tell them these rules are not necessary.

the financial services industry drove american nearly into another great depression in 2008, from which we are only now beginning to emerge. congress passed the dodd-frank law to regulate the reckless and irresponsible behavior on wall street, and that law and all of the agencies responsible for implementing law need to be strongly supported. the law needs to be allowed to work for the american people. especially before it is think it with any further. in the two charts i provided, which i would like to briefly cover, because there are some excuses going on that the increase in gasoline prices is all due to crude oil. if you look at a price of crude oil between mid-december and the middle of march, it might from $94 a barrel to $106 to $12 a barrel increase. 42 gallons a barrel, up 2 cents a gallon of increase in refined products but s.

$12.24. flip over to the next chart. you will see what happened between the middle of december and march 28. -- went from 2.48 to 3.40 in 90 days. what caused the other 68 cents a gallon to be added to the cost of a gallon of gasoline on the new york mercantile exchange? it has gone up every single day, steadily every day since the middle of december. not before december, but since the middle of december. personally, with regard to the 28 commodities covered by

the commodity futures trading we think thatule, the energy and agricultural commodities are so important to the people of this country that they should be 100% deliverable. that is to say we don't find any reason why this game of wall street placing bets on movements of these products -- you have no intention of making or taking delivery of a commodity york trading. if you have no intention of taking or making delivery of the commodity you are trading, you shouldn't be allowed to participate in the market. what we're talking about here is the food that americans buy and energy we rely on to run our economy. as others have said today, we strongly support at funding for the commodity futures trading commission and reject proposals to cut their funding, what g

onlyuts -- the agency -- which only guts the agency's ability to enforce this law. remember, 20, discovered by the position limits rule is energy and food. we also for the support revitalizing the department of justice task force on speculation started on july 2011, something the department of justice indicates it will begin immediately. i share professor greenberger's sentiments that if you shine light on the need for something, the beaver is likely to change. there is no reason not to begin a -- today. the behavior is likely to change. there is no reason not to begin that today. >> thank you very much for a very compelling testimony. and the real clarity of the thought and can order it with that, -- thank you very much for

the very compelling testimony and the real clarity of thought and candor. we will hold to a five minute rule here to be able to get everybody in to ask questions of panelists today. >> baggio. i think the fact that many of us are here is an indication that we may not be in session, but this congress should really be so. the republicans -- they support a free market even when it is rigged. we are here to try to probe this. you make such a compelling case as to how much the speculation is -- i think both of you have said essentially a in terms of these derivatives they may be

80% speculation and 20% response to a real need. let me just ask you, assuming that is true, and there is much evidence there is, how -- if we ran the show, and i wish we did, how would we pass legislation that would get at the speculation but permit where there was an effort to hedge against an increase and take control of the product? that is the line you draw. how would we do this realistically? evei think that if there may be some deaf ears here, we need to shout loudly and persuasively. design a proposal that would get at this. >> [inaudible]

-- new deal congress, which they passed to protect farmers from excessive speculation. essentially, the design is not to -- the critical word is "excessive" speculation, not speculation. in fact, speculation is needed for the farmer, the petroleum producer, to create liquid markets where contracts can be quickly traded. but as with a functioning market is 70% commercial, 30% of speculative. the markets are now 80% speculative, 20% commercial. inmercials don't want to be this market anymore because it is so volatile. they cannot control the price of march and because the contract should stop and their life savings may go in the margin. this is all speculation. the two vehicles that many agree -- i provided all the studies on this -- that the speculators use

that are the quickest, dirtiest way to get into this market are the commodity index swap funds and the synthetic exchange traded funds. don't worry about a fancy title. what does that mean? he walked into your bank -- you walk into your bank and say, "i don't want to buy this stuff. i don't even know what crude-oil looks like it byou advise me that the prices going up so here's my money and i want dollar for dollar everything of the upward price." those wall street operations are like bookies. they have to hedge their exposure just like a book the lays off bets when it gets a one-sided. they go into the real futures market, where the farmer and baker are trying to hedge prices, and they buy long oil

contracts so on paper they have contracts that are 33 times the size of the real supply of oil. that sends a signal out that cannot be defeated that there is a supply problem and there isn't. you can't cut this snake off at its head by saying "no more betting on these markets." these are not commercials making these debts. unfortunately, i hate to tell you this, they are pension funds, private equity companies, hedge funds, banks. all they are doing is like walking into a bookie shop saying, "i don't want to on this stuff, i just want to bet." you cannot bet that the price will go up , only that it will go down. >> the losers are the american

people. >> they are continually told it is a supply and demand problems . the ceo of exxonmobil says $60, $70 a barrel -- it is $110 now. the saudi king says you are worried about blocking the streets of hormuz? we will make up a barrel for a barrel everything that will be lost. by the way, in 1973, when opec cut off the west from all of its oil, worse than the blockage of the straits of hormuz, there was a fraction of the volatility we are seeing today, and i can give you charts that show that. in april 2011, it was the arab spring. 2% production of oil is causing this spike, and the saudis again said we will make up the 2%. the president said this is not supply and demand, this is market manipulation, and he was right.

what are you stopping here? are you stopping money from going into production? are you stopping money from people creating jobs? unless you think a casino, which comes to us with names like goldman sachs and morgan stanley are job creators -- no, you are stopping betting. if we are wrong about this, if everything we're telling you is a mistake, what will we have done if we stopped the bedding? we will close a couple of casinos. but we need, any time there has been a thread -- 2008, you guys passed a bill to hundred 88-133 to stop the backing -- 288-133 to stop the betting. is that a supply and demand responsibility? then when people said that we got the price down to $30, it shot back up to 75 by the

spring of 2009 but then you guys said that we would pass dodd- frank. when dodd-frank appears to be working because of wall street lobbying and lawsuits, the price of oil is back up again. stop gambling. i can tell you you will bring the price of oil down substantially, and all your constituents who are in heartbreaking situations, whether it is gasoline, heating oil, any derivative crude oil, will find comfort. and we will keep the recovery going and make the united states what it is for the first time in decades, a leader in world economic growth. >> thank you very much. >> thank you. let me ask my colleague from marjah island for the next question. -- from rhode island for the next question. >> this is of great importance

to my state. for island has the second highest unemployment rate in the country. -- rhode island has the second-highest and limit rate in the country. when you hear your testimony today, and we have seen so much in the research that so much is driven by what sounds dangerously reminiscent of what we heard or rwanda in the mortgage group of market and the way it brought our -- heard or were warned about in the mortgage to give the market and the way it brought our families, the way is repeating itself is really infuriating. there is a piece of legislation that has been introduced on the senate side by senator bernie sanders and senator klobuchar and senator frank anen that sees to me the required the cftc within 14 days to set about with

identifying the magnitude of the speculation at also to set about addressing it immediately. thatondering whether approach makes sense and whether the ratio you are speaking about the upside down can be corrected, and what are the obstacles to that happening is that legislation were enacted by the congress of the united states? >> let me say that that legislation is legislation that you people passed on june 26, 2008, when oil went to it will record price, which was forcing the cftc to declare an emergency in the market and hoping that they would limit speculation both by flat limits on speculation and by increasing margins speculators have to pay. i think that is a good idea. but if you guys want to kill the beast, if you want to help constituents, don't delgate this out to an opaque administrative

process where wall streeters are meeting -- by the way, the cftc will meet with anybody, but the consumers don't have the money to go down there 24 hours a day, seven days a week, and they don't have the money to fight these things in court where the wall streeters have hired the fanciest law firms, the biggest appellate firms, and i can tell you, and gene guilford can tell you, we cannot match that many dollar for dollar. the cftc is the very agency that you guys know don't have the funding for this. i would do it yourself. you can pass legislation banning commodity index swaps and exchange traded funds, and you will remove $500 trillion from the market. they will come to you, the banks will come to you and say, "oh,

you are going to limit production, you will limit liquidity." the market is overrun with liquidity. 80% of it is speculation. what you will be doing is stopping gambling, pure and simple. money only creating homes in the hamptons and yachts in the hamptons. your constituents should know that every time they break their part by buying $4 and maybe soon five other gasoline, that money isn't going into production, it is going into home building in the hamptons and yacht-building in the hamptons. it is not a constructive economic thing. frankly, i will tell you something -- that bill gets introduced. what will it say to the speculators? hey, i will have to get out of this market, i will get out before there is a panic.

i will undermine it now. that is what happened in 2008. senator reid got 51 votes in the senate where many democrats were out campaigning for president and a lot of republicans supported him. spectators said to themselves, "all, my god, these guys are serious." but then nothing happened. >> mr. guilford, let me ask you to comment, if you would. >> i think that the senator's bill is a great start. remember that the commodity futures trading commission's position limits rule was initially designed to do exactly what we're talking about today did unfortunately, at least initially, its limits were set so extraordinarily high as to be not terribly effective. it is going to take time for them to be able to collect the data necessary to make sure they are setting limits in the right place, in the right way, and to

make sure it is the most effective. that is the administrative process that professor greenberger talks about will take so long. and coupled with that, understand that the financial services industry has made it clear that it will litigate every single one of these rules that comes out of every single one of these agencies for as long as it takes, because they no they are playing for time, eager for a time in the change of the presidency or a change in the makeup of the congress. their intentions are clear -- gut the agency's budget so that the laws cannot be enforced, litigate the rulemaking process is to draw them out as far as possible. bannig -- things ban -- banning things is a great way to start. you have a great opportunity with a letter of your colleagues have signed to the agriculture committee to hold hearings immediately. there isn't a reason that should not be the centerpiece of that conversation. >> ms. edwards?

>> thank you very much, thank you to our witnesses today. i appreciate that you have put into context what consumers are feeling. most, barring a class or two in and a graduate school, have no idea about market economics, the commodities market, how that impacts things like the food we buy and the gas we put in our cars, so i appreciate that. it was helpful to hear just a reminder about supply and demand and the relationship between supply and demand and what should be the price. as you stated, prof. greenberger, supplies are plentiful, demand is down, and prices really should reflect that, and they simply don't. i fill my tank a week and half ago, and it was $4.40 a gallon. i felt that my tank after church

on sunday, this past sunday, it was $4.10 a gallon. this was just a week's time. i hear the $10 billion, and people don't understand those numbers. they are so incredible for us to privileged to for win the lottery. in the $4.10 i spent for a gallon of gas on sunday, how much should i pay? >> that's a great question. follow the logic of much of the conversation you have heard here today, and there will be widely differing opinions about the degree to its speculation in and of itself contributing to this problem, you have a range of opinions from the chief executive officer of exxonmobil, who contended that between $65.70 $5 is the fair price and everything over that is speculative -- that

between 60 $5.70 $5 is the fair price of everything over that is speculative. even if you to cut it down the middle and split the difference between the two, instead of spending $4, you should get in spending something closer to $3 for your gallon of gasoline. $10 billion is a big number. let me put it in the context that i think some may be more comfortable with. congressman larson is familiar with the people who work with me at my school. i have a lady who is a single mother raising two children by herself. she has to come back and forth to work every day. in december, she was paying about $45 a week for gas. now she is paying $70. you all worked very hard after the first of the year in what looked like an extraordinarily difficult task to give every

working american apparel tax-cut -- a payroll tax cut. the lady who works for me raising those two children, all the payroll tax cut she received goes into paying only to get her back and forth to work. whatever good intentions you may have had in helping the people like the people i work with, it has gone all entirely to the higher price of gasoline. >> i really appreciate that, because that really does say exactly what we are talking about. the single mother paying for what was $45 for a tank of gas now paying $70 as effectively lost all of the tax increase that we provided for her at the beginning of the year. $4.10 a gallon -- i've got to get that correct that i paid on sunday -- should have been $3.10

a gallon. i really thank you very much for being able to help us understand the details, but to put it into a real context in terms of what i.t. is costing the american people. thank you, and i yield. >> thank you. mr. scott. >> thank you very much, ms. delauro, thank you leader pelosi and others for convening this meeting. gas prices are complicated and it is could you see good information. both of you have spoken about the legitimate futures market and speculation. that is one of the problems we had with the credit default swaps, where you had insuring against a loss in mortgages might be legitimate, but when you allow many people to bet on the same package of mortgages, that's just raw speculation. we have centuries-old principles of insurance.

basically, what you are buying insurance, and two final principles -- if you sell insurance, you have to have assets to back up your promise. the second is you can only buy insurance where you have insurable interest. buy fire insurance on your house. what they were doing was letting dozens of people buy fire insurance on your house, so when you have a loss on your house, all of a sudden you all want all of these losses. how much of the speculation problem could be cured if we just went back to fundamental principles of insurance and required before you start selling insurance that you could only sell it to people with an insurable interest? >> the gambling aspect of the subprime built on and what we're seeing today are similar, the investment vehicles that are being used are different. what you are talking about,

congressman scott, is something that dodd-frank did a really good job on -- not a complete job, but a good job -- because you had people like john paulson who placed bets on tranches of subprime that he did not know it would fail. he bet people would be kicked out of their houses without having let any of the money to those people. by the way, the european union -- we did not in dodd-frank just say stop the gambling, we said to make it transparent so that everybody could see it, that would be there. . but the european union -- that would be therapeutic. but the european union, in the european sovereign debt crisis, angela merkel, mr. sarkozy got the european commission to say that people were betting that southern european countries would fail without having lent them any money. they had a synthetic bet they

would fail. the european commission said stop. >> but if they had lent the money, there would be legitimate -- >> they would not let the money -- >> in trouble interest would have hedged -- >> that is exactly right, and god knows how this happened. insurance commissioners were meeting in florida to say that credit default swaps are insurance and they are injuring somebody else's risk. since 18 06, when parliament said you cannot do that because people are insuring cargoes on british ships and calling the french navy to bomb the ships and collect insurance, they put a stop to that . suddenly, within dodd-frank, god knows how it happened, state insurance law was preempted. >> should we go back to that, where we insist upon insurable

interest? >> yes, we should, but what i would do is consider what the european union did on that front as well, and what i telling you is that the gambling on whether greece will fall, without lending money to greece, is not a productive investment. it is a destructive investment. european commission said no, we're not going to do that anymore. i would just say, stop this. your approach would be good. we've got a different problem in this market. this is pure and simple going into a bookie's shop and sang, i would like to bed in an upward direction. >> there's no control? >> no. >> -- there is no insurable? >> no. >> but me ask whether we should increase it more and not just on catastrophic national security

problems, but more for price stability. >> if i understand your question correctly, you are trying to get to those who have an interest in those who can take delivery of the materials being constructed in these markets. they are to be the ones per dissipating in the market. going back to wall street, what they are promoting are people who will never take delivery of anything, nor will they deliver anything in these markets. they are merely placing bets on the daily movement of these prices of commodities. for those in heating oil, it means that instead of a local -- instead of a local heating oil retailer of the type that we represent who goes into the marketplace and buys contracts so that the retailer can turnaround to consumers and our for consumers a fixed price or a

cap price plan for the winter, he or she is buying the contract on the market and taking advantage of the options available in order to stabilize his or her price. as these are being inflated constantly and turned constantly, it is costing more money for these small retailers to engage in these transactions, which means it is costing consumers more money. what professor greenberger is talking about is to be able to puncture this bubble and bring these prices down. with respect to the strategic petroleum reserve, i guess i can be counted among those, because it was a year ago but i was in the rep's office and we were working on the statement in anticipation of action in libya, about the president's announcement for the potential

release of the strategic petroleum reserve at that time. and indeed, it is strategic for that purpose. you announce your intention. much vice -- much like professor greenberger was talking about when he said they could have a huge effect on the marketplace if the justice department announced it was going to undertake a massive and serious investigation of what is going on in these markets. the threat of that alone is huge. add to that the threat, and that is what we were talking about a year ago, a year ago was the threat that the united states was willing to do whatever necessary in conjunction with our eyes to make sure that an adequate and -- with our allies to make sure that an adequate amount of oil was available in the market. including strategic movement. and understanding that we do not have a problem with a shortage

of crude oil today. cushing, okla. is awash in crude oil. there is no problem with the physical supply of the product, none whatsoever. >> i thank the leadership for having this hearing. i wonder how long this can last and how high prices can go. normally, in the commodities markets you have a boom and bust cycle. it has occurred with gold, with basically -- i mean, orange juice, everything. it seems that there must be some people, the john paul since of the world -- john paulsons of the world, if you would, ready

to buy swaps, ready to gain the volatility of the market. or is there a uniqueness to this market? i would like to hear from both of you. >> this is a bubble and the bubble will burst. the last big bubble one from 147 to 30 in six months, but nobody saw that coming. goldman was predicting it at 200 when it was at 30. we do not know when the bubble will burst. in the meantime, as we said, people are spending money they probably do not even half, or not buying medicine they need, or not paying rent, to pay for gas. that can trigger a recession. if we do not have tarp and the fed window, which i do not think politically we can have the next time, we are told by economists that could be a depression. when the bubble bursts, we may

already be flat on our back. the fact that gasoline is down to $1.50, let's say, may mean nothing if we have unemployment up to 15% or 17%. >> i agree clearly that congress needs to take action. although, just between us and the cameras, that is not going to happen as long as the majority in the house of representatives are owned by the extractive industries. i want to ask you a question. we have a figure here that says that for every penny more we pay at the pump, the profits for the five largest oil companies go up by $200 million. is there any kind of collusion going on? we got a figure from the head of exxonmobil, but they are profiting, are they not, from this speculation?

it is all good for them. and when the price per barrel drops, the prices at the pumps are not going to drop proportionately. they will keep a larger and larger share. that is what has happened every time. their profits go up as prices go down. is that not true? >> two things, first, to professor greenberger's point that he was getting into it, to go, because i think 2008 was very instructive. in march of 2008 it was $70. by july it was $147. by november, $30. by next march it was at $70. that is an extraordinary role pressure to put an economy through. no one with a straight face could look at you and tell you that as india, that as china, we have some extraordinary weather event. no, we did not. there was some interference in the marketplace that was posing

such an extraordinary circumstance that it needed to go to $147. no, i did not happen either. it could only be -- >> it could only be market manipulation. >> what other consequence? the supply and demand fundamentals did not exist. it is almost as though someone were to say to you, everyone in china and india decided to drive their car in july and that drove it up. and they parked their cars by the fall, and that is why it went down. it is truly absurd. with respect your question about profits, first, every day that you hear a report on the news about what happens on the commodity markets, every single day, by that evening for publication the next morning, the commodity market movements get translated into what happens on the physical market, a wholesale prices that are people pay -- the wholesale prices that

our people pay. they follow almost in lockstep. there's no question that what goes on on wall street has a direct causal effect on ultimately, what is made, by virtue of what is charged to the general products -- general public and the price of a product that they pay. there is a direct causal relationship between the commodity markets and the prices charged in the physical market. we watch them every day. and the absurdity of some of this should not be lost on anyone. i will pick on heating oil again we just came through a heating oil season where we have virtually no winter. it was extraordinary. the measurement of cold that -- of coal that we used was down by 25%. the volumes sold by hitting retailers were down by one-

third. extraordinary weather event. then why, under those circumstances, would the commodity cost of heating oil to $83.22? you cannot give away heating oil -- would be $3.22? you cannot give awaking oil. we're talking about the price of crude and the price of a barrel of heating oil. the price of a barrel of crude is $104. at the price of a barrel of heating oil is $135. why would there be such a huge premium for a product no one is using because it is 70 degrees? it defies logic for anyone to say is that -- it is supply and demand. and a representative markey, to your opening statements for the first time since truman was president, the united states has become a supplier of petroleum products.

most people think we are a net importer of everything. our crude imports are under 50% and we make so much of the refined products that we use that we have enough to export to foreign markets. and heating oil commodity cost is $3.22 in a season with no winter. and the price of a gallon of gasoline on the nymex has gone up 92 cents between the middle of december and the end of march at a time when americans last year reduce their consumption of gasoline 2.5% and have reduced it by an amount more than any time since world war ii over the last three years in the economic contraction. if there is anything that underscores what professor greenberger has said today about the actions you should take in these markets, is the fundamentals of supply and demand do not seem to count. americans have sacrificed. they have sacrificed. and they are not getting the

benefit of it. >> compelling in sight. thank you. >> extraordinary. i now recognize the vice chair of our democratic caucus. >> thank you, madam leader. thank you to my colleagues for being here. by the way, in california, we are paying well more than $4 per gallon of gas. we are paying up to $4.50 and more for regular gasoline in los angeles. denman, we have seen this movie before. and it was not very good the first time. we sought with the so-called enron energy crisis -- we saw it with the so-called enron energy crisis with the early to mid 2020. we sought with the housing bubble in the late 2000's. i think we hear you loud and clear. but there are still folks out

there saying it is not speculation. it is not what you are saying. let me give you one other chance. is there another explanation for the steep increase in petroleum prices today? is there anyone out there in the world who has some credibility in saying that -- saying it is something other than speculators? >> it is in many people's financial interest to propagate, which is a logical thing, but people who do not know the markets, you would think with the prices going up like this, it must be supply and demand. that is what we all thought and economics 101. we did not know that these markets would become gambling casinos. that is what has happened now. there may be some worry about the straits of hormuz. there may be some transportation problems that are causing this. but i will tell you, it did not go from $147 to $30 accidentally.

the house ever presented as passed a bill to stop gambling. senator reid -- by the way, also you keep saying we should have hearings. in june of 2008 the leadership brought a bill to the floor that was introduced that day that passed that night. senator reid did not wait in 2008 to go through hearings. he introduced in his own name a bill that got 51 votes to stop gambling. he could not vote cloture. but if he kept fighting -- if the if prices had stayed up, he might have voted cloture. people were saying the republicans -- we will never get their support. i will tell you, when gasoline goes up, we have gotten their support before. >> and let us work on that because i think is absolutely true that it is almost impossible these days in the house of representatives to get a hearing to have you officially testified, katulis -- to essentially convey what you have

announced today, that it is due to speculation. but let me make sure. i do not want to walk away from this hearing and have someone say to me that there are credible folks out there saying it is in the supply and demand. is there anyone out there that you know that is saying we have a supply problem, that we do not have enough production? and i do not want to go into the dynamics of this and marketing 101. i just want a name. is there anyone i can turn to to find out where this person is coming from to say there is a supply problem? >> in all honesty, we have to say there is a guy who is a professor at one texas university. i note a professor from the london school of economics. but if you wait, it is like the 60 to two or three. >> is there anyone saying that it is a demand problem, that we have increased our consumption? and you were saying we have seen the demand drop. >> absolutely, and to that

point, there was a great story in the news that when i get home i will forward to you and other members of the committee. i forget what news service it was, but the department of energy produces these statistics. and the headline was, "americans reduce gasoline consumption. wall street does not believe it." [laughter] at some point you could have a debate with some about whether the statistics are right or wrong, but the fact of the matter is -- and i think this is borne out by whether it is a mastercard figures on credit- card purchases or whether it is even the american petroleum statistics on gasoline. very clearly over the last few years, americans have decreased their consumption of gasoline. is not a demand problem. there may be some areas of a country where there was this location of a product from time to time, and a question. -- and dislocation of the product from time to time, no question. >> i was interested to see your

background. if you are not coming from a left-wing think tank. if i understand it, you served under reagan for a time, did you not? >> yes, sir. and i appreciate you letting me in the room today. [laughter] >> we thank you for your testimony. who is pocketing this $10 billion a month that americans are having to pay for overpriced gasoline? where is it going? >> in the quarterly report you are going to learn that information. there is no question that the profitability of those who refined gasoline and to market it throughout the country are going to be benefiting from this. there is no question about that. everyone knows that. also, those who are making these investments in these gasoline contracts are profiting handsomely. if you pay very close attention to what goes on between wall street and the physical markets, and i think this is an incredibly important thing for the commodity futures trading commission to be paying

attention to, because it is not just about the commodities market, but also the relationship between commodities and the physical market and how one drives the other. you'll find people are paying a hefty bill for what is going on. >> thank you. >> i have to add that it is also wall street. this is how they make their money. there are two things getting at them indirectly. one is the so-called local role. which means they cannot -- volcker role. which means they cannot trade these contracts they have to have an intermediary. and the fed is telling these banks, get out of commodities. you are not buying oil. you are not selling oil finally, with regard to the physical markets -- you are not selling oil. finally, with regard to the physical markets, the 2000 biggest one was morgan stanley. if you can drive prices up in the physical market, he will not

want to sell those physical because it is an appreciating asset. why let the american consumer have a? but keep it until the bubble peaks. >> the largest supplier of heating oil is morgan stanley. it is not an oil company. even though you talk about big oil, it is actually big wall street that is controlling most of our heating oil. >> revelation after revelation. with that, let me ask for questioning from my colleague from massachusetts, mr. markey. >> thank you. climate change. new england's temperatures in the winter or four degrees warmer than they were in 1970. we now have philadelphia's whether from 1970. people for opening day for the red sox are now planning which short sleeve shirt they're going to wear rather than which combination of sweaters and final shirts they are going to wear. that is a big change from years

past. it reflects the downward pressure on home heating oil. but let's be honest, the price of home heating oil somehow or other was unaffected by the market. and people in new england and all across the country just got tipped upside down by morgan stanley. let's go to what happened in this market since 2002. if we had dennis kellaher from better markets testified two weeks ago. he told us that in 2002, 11% of this oil market was controlled by speculators, and 89% controlled by airlines. trucking firms. shippers. who had to basically placed bets to protect themselves. , 63% are -- 2012 ..

speculators and only 37% our truckers and shippers and airlines. putting them at the mercy of morgan stanley in terms of ensuring that this oil product is sold and that the law of supply and demand is, in fact, abided by. is this part of the issue here? but the people owning these oil products have no stake in ensuring -- that the people owning these oil products have no stake in ensuring that the prices go up? they just hold it. all it is for them is cash. is that what hold new england hostage to this winter, and people across the country? >> gazprom i agree with that. -- yes, i agree with that. just parenthetically, since i'm a red sox fan, where word about who is going to be pitching, not the clothes we are wearing. [laughter] but back to morgan stanley.

>> [unintelligible] >> i did not mean to start a major league baseball war. i'm sorry. to the point of anyone's rational concept of supply and demand, when you have a one- third decrease in the demand for your product and supply is adequate for the market, based on the imputed demand, it defies imagination than anyone who ever took an economics 101 class would look at that circumstance and say the press should do anything other than go down. you do not have to be dick tracy to figure out why wall street is taking the cftc and all of the dodd-franc rose to court. >> right. >> they want to stop putting a card on the beat. they want to make sure these regulations are not there so

they can, the market and create artificial volatility in the market. that is the easy connection. morgan stanley control the market and they then go to court to make sure that the wall street regulations that dodd- frank put on the books are not implemented. and then they say to congress, do not put the $100 million worth of extra cops on the beat to scare the living daylights out of the scam artists. it is pretty simple. you can summarize this nefarious activity in this simple form. let me go to a couple pieces of information that came out today. one, according to the energy information agency, the united states crude oil inventories increased 16 million barrels over the last two weeks. the inventory of oil in the u.s. one of 16 million barrels in the last two weeks. but the price of a gallon of gasoline went up 7 cents a gallon. >> that is right. >> there seems to be a disconnect in the market.

and this morning, the department of energy announced that u.s. crude oil production last week rose to 228,000 barrels per day to 6 million barrels per day altogether. it is high as oil production since 1998. -- of the high as oil production since 1998. yeah higher production, more oil reserves, and the price went up 7 cents per gallon in the last two weeks. why would that happen unless morgan stanley and the other ticket scam artists are not out there trying to manipulate the market to keep prices high to reap short-term profits at the expense of our economy and at the expense of ordinary consumers? do you agree with that summary? >> yes, i do. >> professor? >> absolutely, yes. >> professor, let me go through this litany that you want us to go through. one, you want the $100 million for the cftc.

and you want to make sure that the republicans cannot cut $30 million from the cftc budget so that the cops are on the beat. is that right? >> that is right. i would add a footnote, because you are also proposing a transaction tax. the fed does not come to you every year and ask for money. they get money from the banks. the cftc should have, frankly cannot -- frankly, $100 million is the limit. there is a $100 million defense between what they're getting and what president obama wants to give them. >> they are getting $205 million and they want $308 million. >> in my opinion, they should get $408 million. they need more cops on the beat. >> mr. guilford is talking about $10 billion because there are no cops on the beat. >> do you want the justice department to begin the

investigation and announced that you think it will have -- and announced that you think will have an immediate impact on the market. on the question of banning some -- certain vehicles, name them. >> commodity index swaps, and synthetic exchange traded funds. >> how much money you think that will take out of the market? >> probably at least half a trillion dollars. >> that is the gambling money in the system. >> yes. >> you take that out and you will see a drop in home heating oil prices. >> any of those three things, you will see a drop. the three of them together, you will cut the head of the snake off for ever. >> and you agree with that? >> yes. >> it will have that impact almost immediately? >> yes. >> thank you. >> i want to thank our witnesses. this has been extraordinarily informative. it is always good to hear you again, a professor. >> thank you. >> i have the benefit of the wisdom and knowledge of gene

guilford, but i especially want to thank you. there is a tendency in hearings like this not to bring it down to how it really impacts a mother of two. and especially mr. guilford, thank you for that scenario. it is those compelling stories that bring home the issue to every day americans in terms of both where the problem is, and the impact that this has, and then how we go about doing it in the case of home heating oil. the prices at a record. this is what is all -- it is all about at the end of the day. we cannot thank you enough for your testimony, and also for backing up what we think is an important agenda to accomplish in the u.s. congress. >> thank you. [no audio]

with quick answers, if i can, because we're coming to the 3:30 p.m. mar. professor greenberger, you started to allude to this, every president since ronald reagan has proposed offsetting the safety of -- cftc operation for the collection of the fees. we have legislation out there at the moment to authorize that. i do. other colleagues have. the question for you, and a quick answer from both of you. what a small user fee impose any real burden on the market -- what a small user fee impose any record on the market participants? >> the cftc's market has increased from 40 trillion dollars notion value market to 300 trillion dollars notion of your market. if you took a little bit of that, it would not be noticed. but wall street will not give an inch on that. even if it is cynical, they do not want to give the american consumer a nickel.

-- even if it is a nickel, they do not want to give the american consumer and nickel. >> it is almost infinitesimal, it is so small. >> but that would alleviate the problem in terms of the funding. that would be beyond the operation that we deal with and so forth. it would alleviate the funding problem for the cftc to do their job. professor greenberger, again quickly, to current market conditions warrant the use of cftc's current emergency authority to set margin and position limits to curb excess of speculation in the oil market? >> yes, but remember, the cftc, which is not heroic in its efforts, is being starved to death. that is why the -- which is heroic in its efforts, is being starved to death. that is why the president is so smart. get the fbi married with the

brains of a starved agency. that would be my answer. >> and that is the authority that they have had for 30 years. >> but they are understaffed, as you know. i would like to get more direct and hit it harder. >> relief to consumers, once the definition of a swap is finalized, what concerns do you both have with regard to the lawsuits filed to prevent their role? >> i'm very word the lawsuit is going to kill whatever dodd- frank did. dodd-frank set the shipwright. the hearing, those who attended it -- i did not, but i hear from people who i respect that did -- did not go well. and it will go in front of a judge that probably will be objective. the d.c. circuit has already banned the first dodd-frank objective put in front of it -- has already been to the first dodd-frank objective put in front of it i want to thank my

colleagues efforts and -- has already bent the first dodd- frank objective put in front of it. >> i want to thank my colleagues for revealing information on technical issues. i wish we could take your all on the road and let the american people hear from you about what is going on. i think it would be critical to do that. i thank you for the clarity, the candor, and for your commitment to the american public and to the american consumer at an unbelievably disastrous time economically in their lives. there are relieving -- they are really on my support. many, many thanks for your contribution today. >> thank you, madam chair. i want to thank you for bringing us together and bring forth

these excellent witnesses to shed light on an issue of great significance to all of the american people. all of our members, as i said earlier, when we are out of session and so many members are present for a hearing, it speaks to the urgency of the matter and the expectation of excellence that we have from all of you, which was certainly realized. when i began my remarks, i talked about the agony and ecstasy, the agony been the consumer at the pump, and the ecstasy being the the oil companies. it is clearly recognizing they have made $137 billion in profits last year, $261,000 a minute. it is clear that some of that ecstasy is shared by speculators, excessive speculators on wall street. this is a very big deal.

i really -- it may be about the nicole, but i -- the nickel, but i think is more about the supervision that this will bring that they do not want. i will bring the issue before the full house of representatives in a bipartisan way. the answers to your supplying to us, the documentation of the challenge that we have will be before the full house. having said that, this is a matter of public record. thank you for bringing this issue to the congress. and the range of opinions between dr. greenberger and his academic world and dr. guilford serving the administration in more than one capacity. the validity that you bring to

this is wide ranging. we are most grateful. i thank my colleagues and the distinguished ranking member on the natural resources committee. he has spoken so highly of what your testimony would be. again, thank you. and thank you, congressman doyle for your leadership. thank you, and the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> the tonight, remarks from a republican presidential candidates mitt romney. he spoke at the american society of news editors. he discussed his win in the primaries as today and his strategy for dealing with the nation's economic challenges. we'll have that tonight at 8:00 p.m. eastern on c-span. and tonight on c-span2, is "book tv" in prime time. after that, a discussion on money well spent, the truth behind the trillion dollars stimulus with the author,

michael grindle. that is tonight on "book tv"on c-span2. this year's studentcam contest asked students across the country what part of the constitution was important to them and why. today's winner selected the first amendment. >> and god said, let there be light, and there was light. >> but it is no rebuttal to my position that atheism poisons everything that religion poisons. there are plenty of poisons in the world. >> anyone who says they have god on their side, also helps themselves and has the right to commit any crime reported -- any crime. >> a little harsh, right? the debate over religion has been going on since civilization began the jews were oppressed by the pagans. they, muslims and oppressed by the catholic. in america, we are guaranteed

our free right to practice whatever religion we associate with. the congress will make no law is out with -- affecting the establishment of religion or the practice there appeared -- there of. this is my house in grand junction, colorado. i have lived here most of my life and have hardly ever been to church. it is not because my family is traditionally nonreligious, because they are both catholic. i consider myself agnostic. religious leaders can truly separate a society. i decided to immerse myself in the middle to better understand religion and its role in government. this is a free lunch put on everwood by baptist church at my high school. people of all faiths are welcome. all they ask in return is to listen to a sermon.

>> allowing things in my life to interfere with the greatest decision, the greatest reality that mankind can never know, and that is, daily walking with christ. >> at the other end of the spectrum, the western colorado atheist and freethinkers meet once a month at the local mall to talk about service projects and infringement on their first amendment rights. >> [unintelligible] >> i spoke to the pastor at the church lunch and the leader of the '80s and freethinkers about many topics, including the existence of god. >> one way i know there is a god as i cannot look at this beautiful world around us and say that this happened by accident. i believe that is an insult to my intelligence. >> but to say that there is some guy in the heavens looking down on me and, oh, i lost my

cellphone and god found it for me because i've prayed, it is a very odd thing. if god can find somebody's cellphone, how come he cannot make peace in the middle east? >> because there is no certainty. we all need to take a bit of faith in our beliefs. faith, to me, and jesus christ, for instance, when i set this chair down in front of you, i did not test it out to see if it would hold me. i did not look at the manufacturer. i believe with all of my heart that it would hold me up, and so i sat in it. >> as a scientist, i cannot say that there is no god, because you cannot prove that. there is no scientific way to test that. however, for myself, i can say to me, there is no god. i have not seen any evidence, or any kind of analysis that would convince me. >> those -- both have been using

the government as a moral system. i spoke with my teachers about the history of religion in america. >> reading the declaration of independence, you can see we are given these inalienable rights by our creator. just having god mentioned in the declaration of independence and those individual rights given by him were a huge driving force in the american revolution. >> the father is definitely saw the need for religious, but not the establishment of religious institutions that would be imposed on people. they wanted people to believe in whatever form of religion they so choose. >> i think the thing that offends me the most, especially when politicians nowadays say, we were founded on christian principles, christians do not have a monopoly on morality.

morada comes from your upbringing, your environment that eat -- morality comes from europe and into my europe in -- morality comes from your upbringing and the and are meant that you live in. >> we have got a little too far in trying to keep got out of government. >> i do not think it was intended to be protected from exposure to religion. whether it be a christmas tree or some kind of display of -- of belief in god. once we get to the point where we are that sensitive, then we are missing the point of what our freedoms are. >> the constitution protect our rights, whether christian, jewish, muslim, it is, whenever we choose. i do not see any reason why we should eradicate god from a government that was founded by christians. congress shall make no law with respect to the establishment of religion or the provision of the exercise thereof. we need a mutual understanding that we are a country founded

by christians. nobody is wrong and nobody is right under the law. we can practice what we wish. even though there is a nativity scene at the congress building, that does not permit you from going to a synagogue or exempting your freedom of speech or write to vote. i respect others rights if they respect my. we need to have the right to express our own beliefs. >> we, like other countries, need to be vigilant in protecting the rights of minorities and building a society in which people of all faiths, and people of no faith can live together openly and peacefully. >> go to studentcam.org to watch all of the winning videos, and continue the conversation on our facebook and for pages >> -- and twitter pages. today, we heard

remarks from george mitchell about peace in the arab world. this is about 30 minutes. >> can create uncertainty for the u.s. economy and security. these paramount threats, along with domestic and international terrorism, combine to emerge and remain constant in challenging our security policies and taxing the resiliency of our nation. it is my honor and privilege to introduce our keynote speaker today, senator george j. mitchell. senator mitchell served as a u.s. special envoy for middle east peace under the obama administration, and before this distinguished position, began his career in the military serving as an officer in the u.s. army counterintelligence corps. senator mitchell practiced law in the -- in washington d.c. and maine before he was appointed

the u.s. district judge for maine. shortly thereafter, he was appointed to the u.s. senate and served in the senate for 15 years. in 2008, time -- "time" magazine named him one of the 100 most influential persons in the world. in his keynote this morning, senator mitchell will discuss the current dangers and the middle east, and the effect on our nation's security, and share his insight on how america can effectively counter terrorism from hostile governments and radical terrorist groups. please give a warm welcome to senator george mitchell. [applause] >> thank you. thank you very much. thank you, ladies and gentleman,

for your warm reception. it is a pleasure for me to participate in this conference. i did not hear the remark about the moon. someone said to be back there, he wants you to move on them. [laughter] -- to moon thyem. [laughter] icet jamaat i signed up for a lot of things, but not for that. -- i said, i signed up for a lot of things, but not for that. i was a sitting federal judge in my home state of maine when a vacancy occurred in the senate, when one of the main centers was appointed secretary of state. senators was appointed secretary of state. i thought about that when i was invited to address this conference. i asked her to describe the audience and the subject matter

of, and when she told me there would be a lot of experts in the audience, hesitated because i've always been reluctant to speak to audiences in which the members of the audience know more about a subject that i do. but then i reflected on my first day in the senate. after the vacancy in the senate occurred in maine, the governor announced he was going to make a quick decision, because it was in the middle of a legislative session and he did not want maine to be underrepresented in the senate. in the middle of the week when all of this broke in the news, he said, i will hold a press conference next monday noon at the state capitol to announce my choice. for a few days, there was intense speculation in the media about who would be appointed. we had a former governor, a former senator, a couple of

former congressman, all of whom were well qualified. i had been appointed a federal judge to the previous year, so my name was not mentioned. and it did not occur to me that i might be under consideration. and on that sunday night, the day before the governor's announcement, like everyone else in maine, i went to bed early wondering what the governor was going to do the next day. about 11:00 p.m. that night, the phone rang. it was the governor calling and he said, i would like you to come down to the state capitol tomorrow so that i could announce that i'm going to appoint you to complete the unexpired term of senator muskie, who had been appointed secretary of state. i said, this is a big surprise. this is an important decision. i need time to think about this. i've got to call my family, my friends.

i just last year became a federal judge, and as you know, that is a lifetime appointment. he said, i will give you one hour. [laughter] when i protested it was an adequate, he said, look, if you call me back at midnight and tell you cannot do it, i've only got 12 hours to find someone else. b. thank -- be thankful for the hour. and he hung up. i called my brothers. how many people here have a brother? raise your hands. that is good, because you know what is coming. i grow up in a small town in maine and my three older brothers were very famous athlete, well-known not just in our community, but statewide, even in new england that i came along and i was not as good an athlete -- even in new england. then i came along and i was not as good an athlete. in fact, i was not even as good

as anyone else's brother. [laughter] at a very early age i became known around town as johnny mitchell's brother, the one who is not any good. as you might expect, i developed a massive inferiority complex and a highly competitive attitude toward our brothers, which continues to this day. on that night after getting the governor's call, i called my three brothers. ostensibly, to seek their advice. but i confess that there was a note of triumphalism in my voice when i informed them that the governor wanted to appoint me to the senate. and then i asked, what do you guys think of that? [laughter] the responses were predictably negative. my brother johnny said, look, everybody knows your a born loser. he said, you could not possibly win a statewide election. no one can understand how you got to be a federal judge, let

alone a senator. he said, you better call the governor and decline. my oldest brother, somewhat more moderate, he thought that he would elevate the level of the discussion. he likes to practice what he believed to be the socratic method. he said, look, let's take a look at this from the standpoint of the people of maine. aren't they entitled to have a qualified person represent them in in the united states senate? [laughter] and then he said, isn't it obvious that you are not one of them? after about 10 minutes of this, i hung up and i called the governor and i said, governor, i do not need an hour. i have already received all the reassurance are required. [laughter] -- are required of my ability. i accept and i will be there tomorrow at noon during i went down to -- at noon. i went down to the state capital and accepted.

by then flew from maine to washington. the swearing-in with schedules for the following day, tuesday morning. when i landed at national airport, it was late afternoon. on a whim, i decided i would go up to the senate, meet the senate majority leader, and kind of get the feel of the senate chamber before the swearing in the next day. i took a taxi to the capital. i made my way in. and i was introduced to then senate majority leader robert byrd. the senate was in session and debating a bill. an aide to me down to the floor of the senate. senator byrd was very busy. at first, he really did not know why was. and then, being distracted said, well, ok, are you here for the swearing in? we will swear u.n. right now. i protested because the ceremony was -- we will swear to you in

right now. i protested because the ceremony was the next morning. i thought all the new stations would be carrying it live and i did not want to disrupt their schedules. he said, look, we are very busy. we will swear u.n. right now. he interrupted the debate that was going on -- we will swear you in right now. he dreaded the debate that was going on and swore me in -- he interrupted the debate that was going on as for me in. no one knew what was going on. the senate resumed debate and two minutes later, a vote occurred. for those of you interested in political trivia, i hold the all-time record in american history for having cast a vote the shortest time after becoming a senator, a two minutes. and that was the first of many informed judgments i made on your behalf -- [laughter] -- and on behalf of other citizens. i stood there and i was a

senator. i did not know where to go or what to do and thankfully, a young man came rushing up to me a few minutes later with papers in his hand. he introduced himself to me as my administrative assistant. i had never met him before. i never heard of him before. it turned out he had been senator muskie's administrative assistant, and now that i replaced him, he was mine. he began by berating me before committing myself to be sworn in and ruining the party that was set for the next day. then he read off the list of instructions and concluded by saying, we've got a very nice introduction. you will give a speech here in washington tonight. i said, what is it? he said, there are 3000 served by public accounts at a convention in washington and they just saw you being sworn in on tv and they called and asked if he would come down and

deliver the keynote address at their convention this evening. i said to him, and i thought, this is really something. i always knew cpa's were smart, but until yesterday, i did not know myself i would be here to think that these guys held this important speech open for me. i said, i'm really impressed. he said, no, it is nothing like that. he said, they have had four last minute cancellations. [laughter] your the only member of congress they could think of that might not have anything to do tonight. [laughter] and they wanted to give the keynote address. i said, what do they want me to talk about? he said, the tax code. i said, wait a minute, you've got 3000 cpa's, everyone of whom knows more about the tax code that i do. i cannot talk to an audience about a subject about which everybody knows more than i do.

and he straightened itself up with a voice dripping with sarcasm and condescension and he said, listen, you are now a united states senator. you will regularly be called upon to speak in public on subjects you know nothing about. [laughter] you better get started. and if you want to get -- be a good senator, you go down there and tell the cpa's what is in the tax code. i went out and told them what is in the tax code. and here i am to tell a group of experts about threats to our security. i can speak in general terms, which i will do, on the subject overall of security, our national interests, and some of the areas in which we face serious challenges today. in the 20th century, democracy faced three major challenges, depression, fascism, and

communism. and the ultimate and most meaningful event of that century was the triumph of democracy. in the aftermath of the second world war in an effort to secure peace and promote stability, the united states led the way in building new international institutions and alliances. the united nations was created. nato was established. the european union was founded. germany and japan were rebuilt and became resurgent. what started as the north atlantic alliance became one of the most successful collaborations in history. the intention was and is to embed the nations of europe into

political, economic, and military alliances that will make it less likely that their long history of warfare would be repeated. recall, if you will, that in the three-quarters of a century between 1870 and 1945, europe was devastated by three major land wars. in the second world war, in countries whose populations were smaller than they are today, between 55 million and 60 million people died. in large areas of europe, including many major cities, there were laid to waste. but in the three-quarters of a century since then, europe has been largely at peace. their seats -- there continue to be some regional and local conflicts, but measured against the history of europe, the

absence of a major war, even its possibility is new and it is heartening. and it represents the success of an american vision and american leadership. that is why it is so important to us that the european union's current financial crisis be resolved in a manner that does not undermine those impressive political achievement. the north atlantic alliance, and what flowed from it, is an example of extraordinary leadership and collaboration at a turning point in history. we now face new challenges, but we still need extraordinary leadership. one enormous threat that is new to human history is the potential proliferation of

nuclear weapons. the united states led the world into the nuclear age, and has led the effort to contain these highly destructive weapons with some success. many countries with a capacity to develop nuclear weapons, dozens of them all around the but north korea has raised the number of countries with nuclear weapons to nine, and iran is moving to make it 10. iran's program in particular could trigger a collapse of nonproliferation and result in a large increase in the number of nuclear powers in a relatively short time. that would dramatically increase the risk of a terrorist or nongovernment group gaining access to nuclear materials and

and nuclear weapon, which would, of course, increased instability and threats to our national interest. so it is of the highest importance that we sustain and intensify the effort to limit the spread of nuclear weapons. human history is in very large part a tale of conflict. how we began, and how it ended. what is different now is that every previous conflict came to an end, and live continues. and all our nuclear wars -- it could not only the the into civilization as we know it. there is greater urgency now for that, and a number of reasons, among them, the people reduce

the number of people on earth is increasing rapidly. -- the number of people on earth is increasing rapidly. i will address that in a moment. the number of nation states continues to grow. the number of non state organizations which rely on acts of terror to initiate or extend conflict is also on the increase. rapid technological developments make it easier to start and conduct conflicts that is to prevent them. as the circumstances of inequality, injustice, the absence of freedom are still rollout -- still reality of life for a vast number of people around the world. poverty, famine and disease continued at appallingly high levels. it took 18 centuries, following the birth of christ for the

world's population to reach 1 billion. the most recent billion was added in 50 years. think about that. 1800 years for the first billion, 50 years for the seventh billion. although the rate of increase has recently slowed, a credible estimate is by the end of this century, there will be between 9.5 10 billion people -- 9.5 and 10 billion people on earth. that means more competition for land, water, natural resources for economic growth, political power, and therefore, inevitably, more conflict. all of this at a time when technology has enhanced the human ability to kill ever larger numbers of other men and

women, and at a time when the number of terrorist groups is increasing. some national intelligence agencies have expressed concern that there are now many more such groups, they are less centrally controlled, making detection, infiltration, and prevention more difficult. added to that is the concern about the return of islamic fundamentalists. it has recurred regularly in the 13 centuries of islam was the existence, as has internal division and conflict -- in the 13th centuries of islam's existence. stagnant economies, the absence of opportunity, and deep and widespread feelings of humiliation and alienation, all

of which contributed to the revolutions now known collectively as the air of spring. what the islamic countries need -- as the arab spring. what the islamic countries need is what people need everywhere, the modernization of their countries, the widespread acquisition of knowledge and technical skills, economic growth, job creation, and to help achieve all that, the strengthening of moderates in their societies. there is, of course, no single act, no one policy which will enable us to deal with all of these challenges, but some needs are clear. one is for a more effective counter terror program. if we have learned anything in the past several years, it should be that military force, although a necessary component,

is by itself insufficient, as has been made clear in recent years throughout the middle east, and was made clear in northern ireland. overwhelming, conventional military superiority does not guarantee victory, because these conflicts are not simply conventional wars. so i were effort must include a more effective and cooperative -- our efforts must include a more effective and walked to police work, diplomacy, much more that is not primarily military in nature, and especially, better intelligence gathering and analysis. recent technological events is have dramatically increased our ability to gather huge amounts of information, but we need a major effort to enable us to improve our capacity to

interpret, analyze, and use relevant information in a timely manner. that is easy to say in a single sentence, but very difficult to do in the complex circumstances in which we find ourselves. and we also need to restore a better balance between technology and human intelligence efforts. it helps a great deal to have technological vances like satellite photography and telephone interception -- technological advances. they should supplement, not supplant eyes and ears on the ground in close and daily proximity to our targets. we have been engaged now for decades in what we have constantly called a war on terror. but terror is a tactic, not an enemy. while the use of terror is

widespread, there are many differences among those who use that tactic. some have specific political objective. some did not. some are coherent political groups with whom dialogue is possible. some, like al qaeda, are not. for such groups, the response must be total opposition and their total destruction. but it is simply inaccurate, and helpful, and self diluting to them all together. we must have the confidence needed to discern the differences among the many uses of terror and to adopt responses that are suitable to the particular challenge. i would like to mention briefly my experience in northern ireland. i spent five years there,

chairing three separate related discussions. the main negotiations lasted nearly two years. in the end, we are able to get a peace agreement, thanks in large part to the courage of the political leaders of northern ireland. they are ordinary men and women. they spent years in congress. many of them had been personally injured in the assassination bombing attempts. some of them had been in prison for long periods of time for their violent activities, and yet at a critical moment in their nation's history, they rose to the occasion and came together for peace. under intense criticism from hard-liners on both sides, who regarded any concession as a sign of weakness, those leaders

may principled compromise is that put at risk their careers and their lives. for some of them, their lives were brought to an end and their careers destroyed, but in the process, that brought peace to their war-torn land. that was political leadership at its most courageous. that is needed everywhere now, including the middle east, where the situation is especially volatile. the arabic spring represents a turning point in the history of the middle east -- the arab spring. while the countries involved are predominantly muslim, and most of them are era, each has a unique history -- most of them are arab. there will be instability. some steps forward, backward. there will be different outcomes for different countries. there will be some good results

and some bad results. history tells us, among other things, that revolutions are unpredictable, and often require years and sometimes decades to play out. in our own country, in a much less complicated time and circumstance, seven years elapsed between the time the fighting ended and the establishment of the united states. and unfortunately, it has often been the case that very bad governments that were removed by revolutions were followed by governments that were even worse. the most obvious example, of course, is russia, where life under the czars was hard and oppressive for most of the people. few would argue that conditions under communism, and particularly under stalin's brutal and murderous regime, or

better. so we must be patient and we must be realistic in our expectations, even as we do all we can to support the transition to democracy where possible in the middle east. we must also bear in mind that these changes came from within. these were indigenous, revolutionary movements, and they will succeed or fail from within. now we must also continue our effort to help end the conflict between israelis and palestinians. even though pessimism is very widespread right now, and there are many, many reasons for that pessimism, many reasons to be skeptical about the prospects for success. the most recent of which is the arab spring itself.

the upheavals across the arab world, especially in egypt and syria, have created anxiety and uncertainty among both israelis and palestinians, making progress and resolving -- making progress in resolving the conflict more difficult than ever. even before the arab spring, the conflict had gone on for so long, it has had such destructive effects, the level of mistrust and hostility between the parties is so high that many regard it as unsolvable. but the pursuit of peace is so important it demands our maximum effort, no matter the difficulties or no matter how often we are sent back. the key is easy to say, but difficult to achieve. it is the mutual commitment of israel and the palestinians, and the active participation of the united states, with the support

and assistance of the many other governments and institutions who can and want to help. the task is to reconcile the palestinian goal of a viable, contiguous, sovereign, and independent state, based on the 1967 lines with agreed swaps, and the israeli goal of a jewish state with secure, recognized, and defensible borders. just before he left office in january 2009, president george w. bush, in jerusalem, said, " the point of departure for permanent status negotiations is clear. there should be an end to the occupation that began in 1967. the agreement must establish palestine as a homeland for the palestinian people, just as

israel is the homeland for the jewish people. these negotiations must ensure that israel has secure, recognized, and defensible borders, and they must ensure that the state of palestine is a bible, contiguous, sovereign, -- is a viable, contiguous, sovereign, an independent. it is vital that each side understands that satisfying the others fundamental objective is key to a successful agreement. security for israel and viability for the palestinian state or in the mutual interests of both parties." taking office just a few days after that speech, president obama publicly reaffirmed that policy. but it seemed then that the culture of peace, so carefully

nurtured during the process, had largely dissipated, replaced by a sense of futility, of despair, of the inevitability of conflict. the conflict in gaza had just ended four days before president obama took office. the palestinians were deeply divided, and israel was in the middle of the general election. few then believed that there was any chance for restarting peace negotiations, let alone achieving an agreement to end its conflict. unfortunately, three years later, that remains largely the case, despite an intense effort. the solution cannot be imposed externally. the parties themselves must negotiate directly with the active and sustained support of the united states. this will require of them

compromise and flexibility. most of all, it will require leadership. by all concerned, leaders, especially, who are willing to take risks for peace. i still believe that this conflict can be ended. in part, because i think the very real pain that they will endure from negotiating an end to the conflict will in fact be much less than the pain that will endure if they do not. lull now that has created a false sense of comfort, but if history is any guide, that will not last. if the conflict continues, both israelis and palestinians face a dangerous and uncertain future. that includes, of course, the possibility of renewed violence, which we hope and pray will not

occur, but if it does, could spread in unpredictable ways. there are other dangers for both. let me mention just a few. for the israelis, first, demography. there are now just about or a little over 5.75 million jews living in the area between the jordan river and the mediterranean sea. in the same space, there are just over 5.25 million arabs, including israeli arabs, palestinians on the west bank, and in gaza. the arab birthrate overall is much higher. within just a few years, they will be in the majority. israel will then have to choose between being a jewish state or a democratic state. once the two state solution is

lost, it cannot be both. this has been widely discussed in israel, most recently and most forcefully by ehud barak, the former prime minister, now the defense minister, who has said that this is a painful choice that israel should not have to make. the second challenge arises from technology. to keep out suicide bombers, israel built an enormous wall. but the real threat now comes not from suicide bombers, but from rockets. hamas has thousands of them along israel's southern border. they are crude, lacking in guidance or destructive power, but they do create fear and anxiety, and no one can doubt that over time, they will have more and better rockets. on israel's northern border,

hezbollah already has tens of thousands of them. the public estimates range from 30,000 to 50,000. they are somewhat more effective, and though limited in range, hezbollah is engaged in efforts to upgrade their rocket systems. finally, and most ominously, iran now has rockets that can reach israel from iran itself. they don't yet have the precision weapons that are needed to strike very specific military targets, but they could cause enormous death and destruction in cities. the united states is fully committed to israel's security. that commitment is firm and unshakeable, and will not change. to honor it, we have provided enormous financial and military support to israel, most recently in the development of an effective antimissile system.

but it is won known whether that or any system could intercept a large number of missiles that could be launched in the event of an all out war. israel's very existence would then be threatened. the palestinians also face serious problems, especially the indefinite continuation of the occupation under which they do not have the dignity that comes from self governance. 1947, the united nations proposed a plan to petition -- partition the area and create two states. israel accepted it, the arabs rejected it, and the first of several wars began, all of them one by an increasingly strong israel. every sensible arab leader today would gladly accept that un partition plan which they

rejected in 1948, if it were still available, but it is not, and it will not ever again be available, because circumstances have changed so dramatically. since then, the plans over to the palestinians have been less attractive, and they have rejected them all. but as i told chairman arafat many times, and the current palestinian leader many times directly, there's no evidence to suggest that the offers are going to get any better in the future. so they have got to sit down, participate in, and stay in direct negotiations to get the best deal they can, even though this cannot 100% of what they want. that is the way they can bring

the occupation to an end. and they really have to do it if they want to be successful in gaining their own state. once they get their state, they can build on its. under the outstanding leadership of the palestinian prime minister kan that have demonstrated that they can do it, by laying the foundation and building the institutions needed for a viable and independent state. unfortunately, that state building effort cannot be sustained in the absence of progress on the political side. they are inextricably linked. there must be progress on both, or both will fail. it is a daunting challenge to rebuild trust, not only between the political leaders but also between two peoples, two societies with a long and bitter history of conflict, but they

must find a way to renew hope and seek that peace can prevail, because it is very much in both of their self interest. we must do all we can to help them. well, before i take your questions, i want to close with the personal story. as i mentioned earlier, and does ralph mentioned in the introduction, before i entered the senate, i had the privilege of serving as a federal judge. i enjoyed it very much, especially when i presided over what are called naturalization ceremonies. they are citizenship ceremonies. a group of people who come from all over the world, who have gone through the required procedures, gather before me in a federal courtroom in my home state of maine. there i administered to them the

oath of allegiance to the united states, and by the power vested in me under our constitution and law, i made them americans. it was always very emotional for me, because my mother was an immigrant, my father of the orphan son of immigrants. they had no education. my mother could not read or write, never went to school. for her entire adult life, she worked the night shift in a textile mill. my father was a janitor. but because of their efforts, and more importantly, because of the openness of american society, i, their son, got the education they never had, and became the majority leader of the united states senate. after every ceremony, i made it a point to speak personally with each of the new americans,

individually or in family groups. i asked them how they came, why they came, i asked them to tell me about their hopes and their fears. their answers were all inspiring. most of us are americans by an accident of birth. all of them are americans by an act of free will, taken at great risk and cost to themselves in many cases. although the answers were as different as their countries of origin, there were some common themes, and they were best summarized by a young asian man. when i asked him why he came, he replied in very slow and halting english, "i came, judge, he said, because in america, everybody has a chance. think about the fact that a young man who had been in

america for less than 10 minutes, who could barely speak english, was able to sum up the meaning of our country in a single sentence. america is freedom and opportunity, although we now face serious challenges here at home and abroad. i am confident that we will meet and overcome those challenges, and as we have in the past, emerge a better and stronger country. thank you for having me. i look forward now to taking your questions and comments. [applause] >> thank you for that, and i am going to ask the first question, because a lot of these people are having to deal with the craziness that goes on on both sides of pennsylvania this after -- these days, including not

getting a budget on time and sometimes months end. how many potential shut -- how many potential shutdowns did we have last year, five? how do they do their jobs in that kind of environment? >> that is a question i am asking literally everywhere in the world. americans don't understand what is going on, and people outside the united states really don't understand what is going on. let me try first to establish some context. most human beings look at past through rose colored glasses, and imagine it to be better than it was, and most look to the future with blinders, and imagine a worse than it will be. there was never a time in american history that was free of political conflict,

partisanship, criticism, infective -- never. go back to the time of thomas jefferson and read about the things said about him and the things that he said and did about john adams and his other political opponents. the back to the time of abraham lincoln and read what was said about him. franklin roosevelt. the first thing to do is to put it in context. it is bad now. it has never been a rose garden. that does not excuse what is going on now. it puts it in some context. secondly, i don't want to sound too much like i am defending politicians, which is an unpopular position in america today. this is a divided country.

split about 50-50, down the middle. you just look at the last several elections and see how they have gone back and forth. as the results -- as a result, the elected representatives of people reflected divisions among the people. let me give you one example of the proposition that people, like political leaders, can and to hold an advocate contradictory views at the same time. in 1990, i was the majority leader of the united states senate, a democrat. bush, at george h.w. republican, was president. we had a very tough time on the budget.

not nearly as tough as now, but it seem so at the time. it lasted for months, a lot of back and forth and a lot of public criticism. just like now, you can go back and look at the papers, and much of the current criticism was made then. i used to go back to maine every weekend to hold open town meetings, and after about three months of this budget battle back and forth, i went back to a town meeting on a saturday morning, a big crowd. they were disproportionately elderly, the sixth project because they have more time to attend these things. -- disproportionately elderly, because they have more time to attend these things. the first guy got up and strongly denounced me, hardly criticize me for what he termed my excessive partisanship, the

problems we are having in the budget, he said president bush has a home just a few miles from here. why don't you go down there like a gentleman and settle it with him? when he finished his scathing denunciation of me, the crowd rose and a standing ovation to endorse his view. then he said, now have a question. back and forth all across, we don't even know what you guys are fighting about. can you explain the issues? well, life goes around. the big issue was medicare funding. the president had proposed a series of cuts that we felt would change the nature of the program. we have proposed some cuts that he did not like, and we were fighting over that period the guy got up and said senator, you represent us, and we are telling you, you go back and don't give an inch on medicare. and the crowd stood up and gave me a double standing ovation. so that is the second point. there are divided points of view.

everybody says i hate negative political ads. why do you think negative political ads run all the time? because they work. everybody says settle at, but -- settle it, but settled it on our terms. all of that explanation being said, it is really bad today, and it is i necessarily bad today, for a variety of reasons. does not have to be this way. -- it does not have to be this way. i was the democratic majority leader for six years. bob dole was the republican leader. not once, never to this moment, has a harsh word ever passed between us in public or in private. we disagreed every day before the senate in full public view, but we never once tried to embarrass or demonize or personally criticized the other. we had dinner a couple of times

. week we understood that carl -- while we have loyalty to our part is, we had a higher loyalty to our country into the institution of the senate. i am sorry to say, that is what i think is happening for a whole variety of reasons. that is another long speech did it -- to tell you what to do about it. i think ultimately, it will be solved, if at all, by the american people. if the people decide they are sick of this, they will change it. there is no other way to change it, because the members of congress are elected by the people and they represent the people, and the way it is going to changes for the american people to say, we have had enough of that. we want something different. that means a willingness to compromise. i actually read about one member of congress who got up and said i am opposed to compromise in any form.

compromise got us here. this is a country of 310 million people. this is the most diverse country and all of human history. -- in all of human history. we have people virtually from every religion, every language spoken in this country. the notion that this country can be governed with no compromise of any kind, that any one person or any one group is going to get 100% of what they want is simply divorced from reality. the challenge of leadership is to do what senator dole and i did, too vigorously advocate our positions, but be prepared to make principal compromise when necessary for the common good. which means you don't get 100% of what you want, 100% of the time. you have to recognize that the other guy is just as sincere in his or her view, that

disagreeing with you is not un- american are criminal, it just reflects a different point of view, and they have to be reconciled with the good of the people. but in the end, it will be the public that changes it, not the politicians. [applause] >> we all love change as long as we don't have to do anything differently, right? >> israel has been identified as the probable source for a very effective computer virus that was sent out there to effect iran's nuclear processing. can you describe at all the u.s. response to that and how we feel about that? >> in cybersecurity overall, we are always talking about cyber war. first i have to make clear, i do not represent the united states

government. i am a private citizen. i did serve in that position, but i no longer serve now, so i do not purport to speak for the united states government, and my statements should not be regarded in any way is attempting to do so. secondly, even if i knew exactly what was going on, i would not answer your question. [laughter] know,e truth is, i don't because i have been out for several months now, and i think there are some things that the edley are not and should not be discussed publicly. that having been said, it is a matter of public knowledge that both the united states and israel, and indeed many other countries, conduct covert operations to achieve their

objectives, in a manner short of overt public conflict. and there has been a great deal written about -- much of that speculation, some of it grounded in fact, about the types of covert operations that have been conducted with respect to iran's nuclear program. so i believe i should leave it at that for now. >> but the term cyber war, there is a little debate going on about whether this is helpful to the overall debate, or whether this is up just blowing cyber out of proportion, and it does not really make much difference in the end. how important is this terminology? >> i believe that the

technological and the communications revolution through which we are now passing will ultimately, in historic terms, be seen as a turning point in human history of significance equal to or perhaps greater than the industrial revolution, which of course began in england and which has transformed human history in a way that anyone who lived prior to then could not possibly have imagined. and so i think the subject -- i am not going to talk about the term, because it is beyond my scope and i should not be commenting on things like that -- but the subject matter, methods of communication, methods of compiling and transmitting data, have become so significant, not just in

individual human relations, but perhaps in a way that most people do not think about or comprehend, in terms of government policy and actions. so what you are talking about is of truly enormous significance for the future. >> thank you for making me get my exercise. i am exhausted. >> good morning. you mentioned in your discussion about a better balance between technology and human activities. the whole idea of the information age you mentioned has the connotation of being short. everything done more efficiently, everything done more quickly. but a lot of the issues that you discussed about the arab spring and the problems we face in the developing world, you have to approach it with a long-term

state of mind. sometimes when ever we invest, will try to do work in the developing world, it is kind of hard to go into it with a short- term view in mind. a lot of the time you have to bring resources to bear. you have to bring capital and do most of the investing, most of everything. but whenever you go into it, you have to go with a long-term view in mind. do you think that going forward, even though we have to do things more quickly than we are able to because of the asian times in which we live, we have to have that long-term view in mind whenever we do anything that involves our country as well as doing work internationally. >> yes, we do have to, but it is extraordinarily difficult to do so when you are reset -- when

you are to be set by so many current, contemporary problems arising -- when you are beset by so many contemporary problems arising. our capacity to absorb and act upon the massive increase in the volume of information that we received thus not keep pace with the technology, and let me tell just a couple of short stories to illustrate that 0.3 before i went to northern ireland and the middle east, i spent a lot of time in the balkans during the conflict there. i visited a small town in northern bosnia which had been croat befored half wrot

the war. they seized the town and burned down every building in the town owned by a croat. when i got there, almost every building in town had been destroyed. i said to the mayor, when do you think serbs and croats will be able to live side-by-side in this town? he said we will repair are building long before we repair oversouls. -- we will repair our buildings long before we repair our soles. -- our souls. we have not been able to keep pace with the rapid change it is developing now, and we are beset by a constant an unending flow of information that is

difficult for us to process. i have two young kids in school. my daughter does her homework while she is listening to music on her ipod and watching television at the same time. i said, how can you do three things? she said eddie, it is different now. we can do that, you cannot -- she said, daddy, it is different now. i do not think that is true, but a person thinks she can do three things and do them all well. we do need more long-range thinking. we do need more thinking beyond tomorrow. i was told about -- i raised this issue with people in the middle east, and i was told that one of the problems is that some of the leaders there, short-term

is the morning paper, long-term is the evening news. we have to get past thinking you can make decisions based solely on what appears in the morning paper in the evening news. it is one of those things, as i remarked in my comments, that it is easy to say, and easy to get agreement on, but then once you are in a position when you are beset with all kinds of different issues at once, it is hard to do. but it does require the kind of concentration focus because it is very much in our interest that we act in a long-term thought. >> people have been told they are overpaid and underworked and underqualified and every bad over and under thing you can possibly imagine. we are making new king for the day. -- making new king for the day. but one thing we do like to see happen that would enable them to do their job better, that would

make for better government? >> first off, i spent a good part of my life in government service and a good part out. i don't know about the rest of you, but i have done much better out than in in terms of pay. >> don't tell them that. >> i did not enter government because there was an increase in pay. every time i entered government, there was a big decrease in pay. i did because i believe very strongly in government service. i feel i have been very lucky. i support the american dream because i think i have lived it. i cannot imagine not doing public service when the opportunity arose. so i think if you enter public service, i think it has to be with the proper frame of mind that you are serving. that is what the word means.

service is serving others. you don't do it exclusively for financial or security reasons, although obviously everyone is interested in proper compensation and gaining security to the extent possible. secondly, i think a lot of the criticism is simply unfounded. for example, one of the common charges you here today is that the government does not do anything right. well, it is so easily disproved. was the gi bill are wrong thing to do? when franklin roosevelt signed the gi bill, 4% of americans had four-year college degrees. today, 25% have college degrees. to a significant degree, because of the consequences that flowed from that enactment. was that a failure? the answer is, of course not. that was a very good thing to

do, and everyone tends to agree with that. i think some of the criticism of government and government employees is vastly overstated and erroneous and undermining. although it does not apply specifically to government service, i think one of the big problems in our society today is the undervaluation of teachers. people talk about all that is needed in the system of education, and i am not an expert in do not pretend to be, but i know my life was changed by few inspirational teachers. i will bet that is true of a lot of people in this room. i believe one of the great failings of our society has been the extent to which we did mean, undervalue, and insult our teachers, and we are now seeing that going on right at this very moment in the debate in public

education in our society. and if we really want to have the kind of knowledge and skill and wisdom for future generations, we have to do better at recognizing the immense importance and value of good teachers in our society. i think that applies as well in government service. >> former senator george mitchell, thank you, sir. >> thank you all. [applause] >> this weekend marks the anniversary of the bloodiest belt to be fought in the civil war. up to that point, the bottle of -- the battle of shiloh, with almost 24,000 casualties. saturday at 6:00 p.m. eastern. sunday night at 7:00, the angel of the battlefield and founder of the red cross, clara barton.

join us as we rediscover the third floor office as it is prepared for renovation. this weekend on american history tv on c-span32 >> at the annual meeting of the global initiative, chelsea clinton moderated a panel of zero entrepreneurs to talk about their common service work in developing nations. this hourlong discussion happen on saturday at george washington university. >> chelsea clinton. and our panelists. vice-president, policy and programs, president, inter- american development bank, chief executive officer, sent the accounted -- cynthia koenig.

>> thank you. mr. peterson just exhorted all of us, though i may not actually be a member, given that i am 32, probably much older than many in the audience. for young people to turn out in the tens of thousands, hundreds of thousands, even, to hold our government accountable for the decisions they are making now about our future, we certainly saw in the thousands and hundreds of thousands of young people turn out in the last 15 months from the arab spring to protest against higher university fees in chile, to protest for affordable housing in tel aviv, to certainly occupy wall street where i live in new york city. and yet, as much as young people may be in the vanguard of so

many of these social protests and social movements, we are notably behind in employment, painfully behind in employment. in the united states, youth unemployment has been above 16% now for 36 months. last month, it was 16.5%. in much of the developed world, it is actually higher. in the eurozone, it is 21%. in greece, which many of you have been watching over the last few months, it is just below 50%. in the developing world, it is often somewhere between 26, 27% in the middle east and north africa, and new york teens began in the high teens in much of southeast asia. clearly we have been facing many challenges, those we have just heard about, to think about how

we build an economy for our future, but another commensurate challenges, how we build the next generation of entrepreneurs? business and social i to partners and even political and government of entrepreneurs. i hope that is what we will talk a little bit about today. cynthia actually had an idea when she was in school that became not only her job, but became a mechanism through which she very much is adding to her own and our collective bottom line. will you talk about how it has evolved? >> it was about a year ago i was graduating from university of michigan and looking for a job myself. a real turning point for me was being interviewed and being asked the question, why are you looking for a job when you have one already?

i was looking for a job to support my hobby, essentially. from there, it has really snowballed. >> would you talk a little bit of bell whatwello is? >> it manufactures -- will you talk a little bit about what well is? >> it moves four-five times the amount of water that is traditionally carry, which is 5 pounds on the head. >> you are now employing other people. >> we will probably double again in the next two months. >> terrific. at the inter-american development bank, and that you can explain a little bit about what that is, how do you find people like cynthia in latin america and the caribbean, given

that 60% of the latin-american and caribbean populations are under 30? have you connect with people who have these great ideas for their own advancement but also for society as a whole? -- how do you connect with people? >> first of all, it is great to be here, having all these people think about these great ideas. there is a focus on development. they have created all these institutions over 50 years ago with the sole purpose of helping governments find ways to have development, to do schools, roads, hydroelectric projects. it took a long time to incorporate the best practices. we are more than just a financial institution. they are focused on looking at

best practices. having said that, what cynthia was just describing is the larger story of the emerging world. if you look at the old factories , when we had all of financial crisis, at the time, the real issue was unemployment. today, the issue is not employment anymore, it is more security. it is connected to many areas that are facing crime. we use a fund for provide grants s, tolp small entrepreneur i provide some of the technical assistance needed. in most countries the world of the world, and happens in small

and medium enterprises. with real skills, you can help develop that small business over time. we work with students. we had some students go to peru, and they are working in peru, helping women on japan norris, helping them set up their own businesses -- helping women on entrepreneurs. they need support from institution to provide some of the funding. >> in many ways, you embody the paradigm of doing well and doing good together. what you have been able to do in india is really remarkable with now 500,000 farmers affecting

millions of other lives. can you talk a little bit about that work, and what lessons you think are applicable to students in the audience who are thinking about what they want to do when they graduate? >> whatever you have studied or are studying will not necessarily fall you all your life if you will not necessarily follow you all your life. >> this is partly why i ask the question. >> in 1984, we had the worst industrial disaster. terrorism took 30,000 jobs since 9/11. it was killing people and also species. for ecological reasons, it became increasingly economic, because high cost agriculture is

pushing farmers into debt. a quarter million farmers have committed suicide in the last decade of globalization. what they are growing is eventually having less and less value because of these subsidies, etc. so we build a network of farmers thatmost importantly, they are rebuilding nature's economy. what is wrong with the present model of the economy is because it came from fossil fuels. we cannot afford to keep thinking that fossil fuels are at the center of work which displaces people which is why unemployment is linked to ecological destruction. [applause] we now need to link stabilizing, maintaining,