obama's economic policies. timothy geithner discusses the world economy at the council on foreign relations. j.p. morgan had trading losses. the ceo jamie dimon testified today at a hearing where he was meant fine and protesters. several ratings agencies are investigating. good this is 2 hours 15 minutes.

>> jamie dimon is a crook. this guy should be going to prisin. -- prison. they take now to trillion dollars of u.s. starts her dollars.

-- u.s. taxpayer dollars a year ago i. these guys are not new job creators. they are job destroyers. grosvenothis man is a crook. >> i would like to suspend until the chairman has arrived. >> this man is a criminal year- a. the small people cannot get loans. >> they hearing has been called into or burn a -- has been

called to order. and we are suspending until we reach orders of the reaga. we will ask people to go operates so we can conduct a serious inquiry into this matter. -- to cooperate so we can conduct a serious inquiry into this matter.

>> where is the chairman?

[unintelligible] >> he stole my house from underneath me. >> the people that were foreclosed on. stop foreclosure now. stop foreclosure now. stop foreclosure now. stop foreclosure now. stop foreclosure now. [unintelligible]

>> this hearing will come to order. i ask the capitol police to please remove anyone in the audience who is interrupting the hearing. before we proceed, i will remind our audience that any interruption of the hearing will not be permitted and you will be escorted out of the room. we will now proceed. this hearing is part of the banking committee's ongoing oversight of the massive trading losses announced by jpmorgan chase and implications for risk

management, bank supervision and the wall street reform act. since the announcement of the loss in early-may, this committee has heard from the sec, the fed, and relevant officials to learn from these events. some members of the committee have asked to hear from mr. dimon, and after due diligence conducted by my staff and ranking member shall be's staff i decided to invite mr. dimon. last week, regulators conform to the committee there was a breakdown in risk management involved with these trades despite the fact that the trades were reportedly designed to

reduce the bank's risk as they -- risk. as they continue to look into the matter officials have assured us that the stability of our financial system are not in jeopardy at this time. while this is welcome news, questions remain that must be answered. if we want our largest banks to better manage their risks to maintain financial stability, as i believe we do. today marks the two-month anniversary of mr. dimon's "tempest in a teapot" comment where he downplayed research -- concerns of the reaper trade. -- of the trade. we later learned it was no risk controls the cost the company billions of dollars. as i have said before, no financial institution is immune

from bad judgment, and in mr. dimon's own words he explained we made a terrible, egregious mistake. there is almost no excuse for it. we know we were stupid. we know there was bad judgment. in hindsight, we took far too much risk. the strategy was badly vetted, badly monitored and should never have happened there, what went wrong? for a bank renowned for risk management, where were risk controls? how can a bank taken on far too much risk when the point of trade is to reduce risk in the first place? was goal really to make money? should they be focused on

reducing risk? as the saying goes, you cannot have your cake and eat it too. as far as policy implications, my colleagues would argue that wall street reform micromanage is the operations of a large bank and regulators cannot keep up with bank and evasion. i disagree that less supervision had and less regulation will make banks less risky. we can and must demand that banks take risk management seriously and maintain strong controls. we must also demand that regulators do their job well. after all, beijing is an important, the -- banking is an and the need overset so that mismanagement does not threaten

the stability of our economy. some also suggest that capital is a silver bullet in financial regulation. while capital does and must play an important role as a backstop we must not rely only on capital. any well-capitalized banks can fail and threaten the financial stability if it is not well- managed or well-regulated. our financial system that is safer and stronger with multiple and well corroborated lines of defense, which wall street reform requires in addition to higher capital standards. congress should find -- fund them with sufficient resources so they can effectively monitor the financial system. again, it has been two months

since he first publicly acknowledged -- the trades, so i expect mr. dimon to be able to answer the questions today. a full accounting of these events will help this committee to better understand the policy implications for a safer and sounder financial system going forward. i now recognize ranking member richard shelby for his opening statement. >> thank you, mr. chair. today, the committee will hear from the chief executive officer, president and chairman of jpmorgan chase, mr. jamie dimon who is here today because jpmorgan chase lost more than two billion dollars on derivatives trades. normally is not and it should

not be the role of congress to guess -- second-guess decisions of private sector businesses, however the federal government guarantees bank deposits, and this committee has a responsibility to insure that banks do not unnecessarily put taxpayers at risk. if congress has in large part delegated the responsibility of oversight to financial regulators that are supposed to monitor the activities of banks like jpmorgan chase to ensure that they operate in a safe and sound manner. as we learned from the most recent financial crisis and this particular instance, regulators do not always meet our expectations. banks take risks because that is what they do. usually, those risks are beneficial, because they enable americans to buy homes, attend college and save for retirement. when banks fail to prudently manage those risks however, serious problems can arise.

for example, in the years we've got to the financial crisis, some banks claimed they could safely provide mortgages to borrowers with no documentation and small down payments. advancements in risk management but supposedly enable them to lend to riskier borrowers without threatening the bank's safety and soundness. we now know this was false. the banks were not applying better risk management techniques. they were simply foregoing time- tested underwriting standards and the result was the failure of some of the largest financial institutions including countrywide, fannie mae and freddie mac. certainly, many bankers did not make these mistakes, and by most accounts our witness today was one of them, yet as the financial crisis shows for risk management in even one single large bank can have profound consequences. congress and bank regulators

must, which always watch for risks that could is improperly managed threaten the system. we should examine the facts surrounding j.p. morgan's to billion dollar loss, and as we do so unthinkable questions need to be answered. -- as we do so, i think two questions need to be answered. did the losses threaten the safety and soundness of j.p. morgan had and could happen again? last week, we heard from banking regulators. they answer the first question when they told us that the $2 billion did not threaten bank insolvency because the bank has strong earnings and sufficient capital. if this conclusion shows once again why the single best way to protect taxpayers from bailouts is to ensure that banks are properly capitalized.

strong capital requirements provided valuable buffer against unexpected losses arising from the inevitable missteps from banks and regulators. although capital should be the first line of defense against taxpayer bailouts it should not be the only defense. banks also need to have good risk management. although j.p. morgan enjoy a strong reputation for effective risk management, something obviously went very wrong. regrettably, the comptroller of the currency, the federal reserve, the fdic, they were unable to tell us what happened despite having more than 100 on-site examiners at j.p. morgan. hopefully, mr. dimon today can fill in the details. in particular, i hope mr. dimon can explain why these trades were made and why they produced such large losses. i also hope to learn the extent

to which mr. dimon and other j.p. morgan senior executives were involved in the decisions that permitted these trades. mr. dimon has long been recognized for his effective management of a successful institution but it appears in this case things perhaps get away from him. why? did mr. diamond put too much faith in the risk model? or did he ignore them? officials may have dismissed warnings that the banks is that the bank was not administrating appropriate that the bank was not administering appropriate risk strategies. it has also been reported that the office responsible for these trades may have had contradictory mandates. while the stated goal of the office may have been to reduce risk, and plays of the office apparently believed they were expected to turn these into a profit.

bank employees referred to the profit as the icing on the cake. what were mr. dimon's expectations for this office? was he incentivizing them to manage risk or to maximize profit? if it was the letter, where the incentives to profit consistent with proper risk management, and moreover what did the board of directors know about how mr. dimon was managing risk? it has been reported that the risk committee may not have had the expertise necessary to oversee such a large bank. i hope to learn not only about mr. dimon's role in selecting the members of the risk committee but how they committee oversaw the firm, the risk management. finally i hope the hearing

reveals what lessons mr. dimon, j.p. morgan and others could learn. this hearing will have served a valuable purpose if it helps banks and regulators avoid repeating the mistakes of j.p. morgan. in this regard i believe it is unfortunate the committee has not held similar hearings with the heads of other financial the institutions and although the committee is hearing from mr. dimon's whose bank lost $2 billion in its own money, it has never heard from executives of fannie mae and freddie mac who have lost nearly two hundred billion dollars of taxpayer dollars. perhaps the committee could turn its attention to the gse compel massive public losses when it completes the review of the private losses thus far of jpmorgan chase. >> thank you. mr. richard shelby. >> one opening statement will be permitted to the ranking member. i will note that senator warner is absent to attend his

daughter's graduation but he will be submitting a statement and questions for the record. i want to remind my colleagues that the record will be open for the next seven days for opening statements and any other materials you would like to submit. now, i will introduce a our witness. mr. jamie dimon is the chairman of the board, president and chief executive officer at jpmorgan chase and co. mr. dimon, your full written statement will be included in the record. please begin your testimony. >> chairman johnson, ranking member shelby, and members of the committee, i am appearing today to discuss recent losses

in a portfolio held by jpmorgan chase's chief investment office cio. these losses have generated considerable attention, and while we are still reviewing the facts, i will explain everything i can to the extent possible. jpmorgan chase's six lines of business provide a broad array of financial products and services to individuals, small and large businesses, governments and non-profits. these include deposit accounts, loans, credit cards, mortgages, capital markets advice, mutual funds and other investments. what does the chief investment office do? like many banks, we have more deposits than loans -- at quarter end, we held approximately $1 billion in loans. cio, along with our treasury unit, invests excess cash in a portfolio that includes treasuries, agencies, mortgage- backed securities, high quality securities, corporate debt and other domestic and overseas assets. this portfolio serves as an important source of liquidity and maintains an average rating of aa+. it also serves as an important and liabilities of the

consolidated company. responsibility is to manage an approximately $350 billion portfolio in a conservative manner. while cio's primary purpose is to invest excess liabilities and manage long-term interest rate and currency exposure, it also maintains a smaller synthetic credit portfolio whose original intent was to protect -- or hedge-- the company against a systemic event, like the financial crisis or eurozone situation. >> so what happened? we constructed cio to reduce risk-weighted assets and associated risks. to achieve this, the cio could simply reduced existing positions. instead, starting in mid- january, it embarked on a complex strategy. this strategy and the decorating a portfolio that was larger and resulted to be more complex and

harder to manage risk. this morphed into something that rather than protect the firm created new and potentially larger risks. as a result, we let a lot of people down. let me tell you how it went wrong. these are not excuses. these are reasons. this is detailed in my written testimony but i will highlight the following. the cio strategy of reducing the synthetic portfolio was poorly conceived. they did not have an understanding of the risks they took. the risk limits should have been specific to the portfolio and much more granular, only allowing lower limits and each pacific crest to be taken. specifically, there should and more scrutiny from senior management, and i include

myself in that, and the firm- wide risk control function. did response we've taken important actions. we have appointed entirely new leadership for the cio. we have made progress in managing and reducing risk going forward. while this does not reduce risk already, it does reduce the probability and magnitude of potential future losses. we are also conducting an extensive review that our board of directors has overseen. when we make mistakes, we take them seriously. we are often our own toughest critic. we can never say we will not make mistakes. we believe that this was an isolated event.

we will not make light of these losses, but they should be put into perspective. we will lose share all the money, and for that we felt terrible. our balance sheet remains intact. as of quarter-end, we happen extremely strong capital ratios, far in excess of regulatory standards. as of march 31, 2012, our ratio was 10.4%. our estimated ratio is at 8.2%. both are among the highest levels at the banking sector. we expect both of these numbers to be hired by the end of the year. all lines of business remained profitable and continue to serve consumers and businesses. while there are still two weeks left in the second quarter we expect the quarter to be solidly profitable.

our position in capital did what was supposed to do -- cushion against an unexpected loss in one area of our business. while the incident is embarrassing his it should not and will not detract employees from our main mission to serve clients in communities around the globe. in 2011, jpmorgan chase raised capital and provided capital of over $1.8 trillion, up 18% from the private year and provided over $17 billion of credit to small businesses, up 50% from the prior year, and in the face of headwinds we made the decision to step up as we did with markets in turmoil as the only bank willing to commit to lend trillions to the state of california, illinois. just as we have remained focused on serving our clients, we have also remained focused on managing our business.

my conviction is will which we will emerge stronger, and as a better company. i would like to speak directly for a moment to our two hundred 60,000 employees, many of home are watching. i want to know how proud i am of jpmorgan chase the company and proud of what they do every day for the community. thank you and i welcome any questions you might have. >> thank you, mr. dimon, for your testimony. as we begin questions i asked the court to put five minutes on the clock for each member. mr. dimon, there was clearly a breakdown in risk management at your firm. what did you know when you made your "tempest in a teapot"

comment? why were you willing to be so disconnected when it appears you did not have the full understanding of the trading strategy? >> let me first say that when i made that statement i was dead wrong. i had been on the road. had spoken to our risk officers, our chief financial officer, there were issues with the cio. i was assured by then and i have the right to rely on them, that they thought this was an isolated, small issue and it was not a big problem. they look at things at how bad could it get, and under no event did it look like it would get as bad as it got after april 13. >> mr. dimon, there were reports that the cio had scrapped a

risk limits that would have required traders to exit positions if losses exceeded $20 million. is this true? if yes, did you approve this, and why was the limit removed? >> there was no loss limit of $20 billion compared >> $20 million. >> how much? $20 million. i am not aware of a $20 million loss limit. cio had its own limits on exposure. at one point in march some of those limits were triggered and the cio as traders to reduce taking risks and started looking heavily into the area, which is the proper thing to do. sometimes triggers get hit, and it should be focused on to decide what to do about it. >> there have been concerns raised about the change made in the cio's risk model.

when the regulators were notified, why was the risk model change, and did a change of less the true risk of the trading activity? >> what i am aware of is that sometime in 2011 the cio had asked to update their models partially to be compliant with the new basel rules. model reviews are done by an independent group that start the process six months earlier and in january did have a new model. i should note that models change over time to be better.

models were approved by the model review group, implemented in january and did effectively increased the amount of risk the unit was able to take. on april 13 we were still not aware that the model might have contributed to the problem, so when we found out later on we went back to the old model. the old model was more accurate in hindsight than the new model -- than we thought it was quite to be. >> reports suggest there were multiple warnings of leaked controls at the cio that were ignored and in your testimony you said strategy was not reviewed outside of cio. did you make the decision to exempt the cio from any review of risk controls outside of the unit, or why was no one watching? >> the first error and we made is the cio had done so well, so long that i think there was complacency.

they had their own risk committee that was supposed to review all of the risk. i think it was not independent- minded enough and should have challenged more rigorously this synthetic portfolio. the second related risk is the synthetic product portfolio should have always had more scrutiny. there were higher risks and there shouldn't it limits from the start. >> -- there should have been higher limits from the start. >> mr. dimon, was the pay structure at the cio incentivizing risky behavior that led to the trading loss instead of rewarding those who reduced the bank's risk? were there bonuses for generating profits? other than cio, will you seek clawback from executives involved in this trading

debacle? >> to start with, we have not had for five or six years several -- special severance packages, where parachutes. nobody was paid on a formula. the management of the cio portfolio was subordinate to the rest of the country -- company. they were not allowed to do what they wanted. the could not take high-risk, etc.. when we pay people, everyone, we look at the unit performance, the company performance, and that includes a recruiting, training, integrity, sharing with senior management -- all the things we need to do to make it a better company. i do not believe the compensation made this problem worse, and like i said none of these folks were paid in a formula.

your second question was clawback. review, which i think it is the appropriate time to make the decisions, you can expect we will take proper corrective action and i would say this is likely to be callbacks. >> senator richard shelby. >> thank you. >> mr. dimon, so that we would have some idea of what happened, could you explain a little further what really happened without divulging your proprietary interests? we do not want you to do this. tell us a little more. in other words, you are managing risk. what were you managing? >> the biggest risk we take is credit, loans. the excess deposits, we have it $350 billion portfolio.

that is the biggest part of the cio. the average rating is aa +. we also have the cash invested in central banks around the world. >> we understand that, but in this case that brought these losses on, explained to us without getting into your proprietary area what you were doing and what went wrong? >> the synthetic credit portfolio -- originally the design -- >> what do you mean? >> index derivatives trading in the market. >> you took a position in the? >> we took a position in them that was meant to in the nine environments make a little money but there was a crisis they would reduce risk by making money.

during 2008, 2009, it accomplished those investments. >> were you investing or hedging? >> i would call this hedging, hedging their risks of the company, protecting the company if things got really bad. >> the credit went bad? >> yes, if credit when really bad, this would do well. that was the original intent. in january, february, march, we asked them to reduce this risk. they created a portfolio that have far more risks, that were far more complex, and on april 13 we were not aware of that, but soon after we were and we made it public announcement, as we thought i owed the shareholders that, and since then we have been managing and reducing risk.

>> to tell what really happened, here in general terms, would you feel better in a closed hearing, or would you not to divulged things because you have a position for interests? >> we told shareholders we intend to make more disclosures about what happened and specific disclosures with this portfolio and what we've done to reduce the risk in the portfolio. >> i guess the question comes up, was this hedging or proprietary trading? according to some press reports there is disagreement about whether the chief investment officer, which executed these trades, was supposed to be hedging risks or earning a profit. it has been reported this office contributed more than $4 billion of net income in three years, about 10% of your overall profit.

what was your expectation for this unit, the cio unit? was it supposed to hedge, or some of both? >> if the whole cio unit to invest money and earns income, and that is a broader array of diversified investments, and the income is used to pay depositors, branches -- yes, it is supposed to earn revenue. in this specific synthetic revenue portfolio it was intended to earn revenue if there was a crisis. i consider that a hedge. it was protecting the downside risk of the company, and, in fact, the biggest risk of the company. the biggest risks faced are dramatically rising interest rates and a global credit crisis. those are the two biggest risks we face. we intended to improve safety and soundness, not make it worse. >> was walked went wrong the way the package was contrives, or

event beyond your control? >> i think the way it was contrived between january, february, march, it changed into something i can not publicly defend. >> lessons learned -- what have you as ceo of j.p. morgan, which is our largest bank, what have you learned from this problem, this debacle? >> i think that no matter how people are, never get complacent in rest, challenge everything. make sure people in risk committees are asking questions, share information, and that you have granular limits, no more than this risk in a marked the much including -- in a market, including things like liquidity risks. in the rest of the markets we have those things, and we did not have it here. that is what caused the problem. >> thank you, mr. chairman.

>> senator schumer. >> thank you. good morning. my first question is about risk committees. i was a proponent in dodd-frank of increasing corporate governance and fought to have included in the dodd-frank provision when 65-8 -- 165-8, a separate risk committee on the board that includes "at least one risk management expert having experience in identifying, assessing and managing risk exposures of large, complex firms." some questions have been raised about the oversight provided by your firm. you already had won, so you did not need the legislation, but what went wrong with the rest committee and what could you suggest to regulators as they formulate rules about risk committees?

why did they not do their jobs, finding out this was one area that did not have the limits in place elsewhere? >> there could be a lot of work to talk about the main risk of the company. it is not realistic to capture the risk committee to capture something like this. i would point out this risk committee took the company for the most difficult financial crisis of all time with flying colors. so, the risk committee did a great job. this is a flaw i would blame on management, not the risk committee. recently, two directors have been added that have experience in financial markets. >> ok. so, you feel the risk committee -- this was too small of an item for them? give me a little more context for this. >> the risk committee reviews broader issues, regulations, requirements -- they need a lot of management. they talk to rick committees. i think it would have been hard to capture this is management

did not capture it. we were misinformed and impaired >> the second question goes to the broader -- we were misinforming them. >> the second question goes to the broader context. a share. -- the shareholders lost, but the taxpayers did not. what is to stop this from happening again, maybe being a larger loss, but particularly in a week or less well-capitalized institution? it was an institution smaller than j.p. morgan the start of the capital the catapult, firms like lehman brothers. -- the catapult, firms like lehman brothers. were we just lucky? what is your assessment about

the danger of this type of thing happening in other institutions that are not as well-capitalized as j.p. morgan? >> we were not lucky. we have limits in place that captured it. they should have been much smaller in this particular activity. one thing regulators can and do do is this a minute and, a best practices everywhere. -- disseminate and propagate best practices everywhere. there is more transparency. boards are more engaged there are no off-balance-sheet vehicles. a lot of this has happened across countries, across america. >> what about nonbanking institutions that do not have the same requirements but are engaged in similar activities? >> i think the regulators are currently deciding which of the nonbanks will be part of systemic risk oversight and i will leave that to them at this point in time.

>> final point, the chairman asked this, but it is about callbacks, and i was glad to hear there is a clawback policy. it seems to be an appropriate thing to do. when people make tens of millions of dollars for taking risks and they do it clearly, if there is a clawback there might be a good internal incentive to be a little more careful, if you will. could you tell us a little bit about the policy that you have for slotbacks? i know you do not want to talk about -- callbacks? i know you do not want to talk about individual cases, but tell us how it works, how mandatory it is, that kind of thing. >> there are several layers. we could clawback for judgment, cash bonuses, so it is expensive. i was in favor of the system. i think one of the legitimate complaints was that after about crisis a lot of people walked away with money from companies that went bankrupt. some of that was not propriate.

in this case the board will review every single person involved. some people have been successful for a long time to >> is there a limit to how much the clawback is, or is it discretionary, and second and final question has it been used thus far in your bank over the years you have had the policy? >> it is not been used thus far. >> are there limits? >> there are limits essentially to what you have been paid. some limits are to what you have been paid over the last two years. >> senator crapo. >> thank you, mr. chairman and mr. dimon. last weekend, the testimony presented by the regulators, one of the tensions that we face here is we want to be sure we are adequately regulated and

our financial institutions and we want to be sure we do not have the regulators basically running private sector institutions. in that testimony last week, the comptroller indicated that there are approximately 65 on- site examiners from occ on site at j.p. morgan. is that correct? >> i believe so, yes. >> what should the function of the regulators be? many said the primary focus should be to make sure the banks are properly capitalized. should that be the primary focus, and what other areas of oversight would be the most effective for us in terms of regulatory structure? >> so, i've been in the regulatory business my whole life, and they look at many things we do, they audit it, criticize it, and it is important to acknowledge there have been changes because of their criticism. i think you have to keep realistic objectives.

i do not think realistically they can stop something like this from happening. it is purely management compelled mistake. if we are misinformed a little bit, not purposely, we are misinforming them. the most important thing is high capital, good liquidity standards, proper disclosure, functioning risk committees which it all of those things will not stop the attacks, -- risk committees -- not all of those things will stop these things, but they will make them smaller. >> one of the things we learned was that during the stress test applied to j.p. morgan it was assumed j.p. morgan could deal with losses of around $80 billion and still be adequately capitalized. is that correct? >> we would be adequately capitalized, but i would not be the person sitting in front of you right now. [laughter] >> we are great believers in

stress test we were put through a severe stress test. 20% unemployment, a crisis in europe, and markets as bad as what we saw during the bid and brothers crisis, and we came through with flying colors. -- with lehman brothers, and we came through with flying colors. we want to make sure we have adequate capital and liquidity so much to the extent that you would never question j.p. morgan. we believe we have that kind of capital. >> your current tier one capital is approximately one of the $28 billion? >> approximately, yes. >> i would like to conclude with a discussion of the volcker rule.

some have said it is not possible to distinguish between proprietary trading desk and hedging. clearly, that is what the volcker rule contemplates and if we implement it is what is when be imposed on banks like yours. could you discuss whether we can't distinguish between proprietary trading -- whether we can distinguish between proprietary trading and hedging? >> i think it would be hard to make a distinction. you could look at almost anything we do and call them one or the other pair every loan we make is proprietary. if we lose money, the firm loses money. if we buy treasury bonds and they lose money, we lose money. i have a hard time distinguishing it. i understand the intent of the hall volcker rule, to reduce a big financial company. i think the devil is in the details in how these rules are written that allow the good of our capital market and not the>>

tell me for a minute how you would describe that. lotwhat is it proper hedge in the context of the volcker rule distinction we are trying to film of make? >> something to protect the company in bad outcomes. you can't analyze that. it is not exactly right. -- you could analyze that. it is not exactly right. i believe you should be able to do portfolio hedging and there are ways to protect the company for that outcome. >> is that something like going short? >> going short credit if you think there might be a credit crisis would be one way of doing that, yes. >> senator.

>> thank you, mr. chairman. the issues raise go to the ability of large financial institutions to manage risk and complimenting that is the ability of regulators to oversight the management of risk by those corporations. i think it is also a strong case in my view for a very clear but very strong volcker rule, and also force stand in up -- standing up a director of national research, and i've been talking to chairman tim johnson and ranking member richard shelby about that. this question goes to your proxy materials. risk-management seems to be the responsibility of the office of risk management which is different than the cio. was this individual, and i know there were several changes, monitoring the cio on a regular basis? did he or she approve the change in modeling? >> every business we have has a risk committee.

report to the head of risk for the company. there are conversations between the risk committee and our senior operating group about the dangers. obviously, that chain of command did not wrote -- working in this of things. you could blame it on anyone in the chain. there is an independent group that looks at changes in models and we do change models all the time. models are backward-looking toward the future is not the past, and there never -- looking. the teacher is not the past, and they never captured changes in

been geopolitics or things like that. we do not run the business of models. models are one input. you should be looking at lots of other things to make sure you are managing risk properly. >> did you share with or did the occ inquire about the change in the modeling, and for the record, this change was just in the office of the investment, correct? >> there was a change in the office of investment in the january. >> why did you change the model -- did you not change the model firm-wide? >> the firm has hundreds of models? -- models. >> let me get back to theocc, were they aware? >> i do not know particularly in this one. >> if the chief investment officer response is to put risks in other structural risks, which is essentially their job is risk management, not

generating profits by investing deposits. it seems that there model was loosened up considerably, giving them the opportunity to engage in more risky activities. is that your conclusion? >> in january, the new model was put in place that allow them to take more risk and it contributed to what happened. we do not as of today believe it was done for nefarious purposes. we believe it was done properly by the independent model review group. there might be flaws in how it is implemented, but once we realized it did not accurately reflect reality we went back to the old model. >> it appears from looking at some published reports that essentially these credit default swaps were first made to

protect your loans outstanding, particularly in europe, and that was in the 2007-2008 time period. that is classic hedging. europe gave credits, they go bad, you want to ensure yourself against that. then, in 2011, 2012, at some point, the bed was switched, and in spite -- you started selling credit protection, which seems to be a bet on the direction of the market not related to your actual credit exposure in europe, which looks a lot like proprietary trading designed to generate as much profit as you can generate, which seems to be inconsistent if this is simply a risky

operation and you are hedging a portfolio. how do you be on both sides transaction and claim you are hedging? >> i think i have been clear with your original intent. i am not going to try to defend. under any name, i will not defend it. violated common-sense. i believe the people doing it thought they were maintaining a short against high-yield credit that would benefit the company in a crisis and we now know they are wrong. >> that leaves us in a situation where how -- of how do we build in rules and regulations that prevent well-intentioned, extremely bright people that do things that are very detrimental? first of all, you're lost several billions of dollars -- you've lost several billions of dollars and a significant amount of market value to your shareholders. the irony to me is is there was a good volcker rule in place they may not have been able to do this because it does not seem to be hedging customer risk for

the overall exposure of the portfolio? >> i do not know what the volcker rule is. it does not been written yet. it is very complicated. it may very well have stopped parts of what this portfolio morphed into. >> there is a possibility that it could have avoided this situation? >> it is possible. i just do not know. >> thank you very much. >> senator corporate -- senator bob corker? >> thank you, mr. chairman, and mr. dimon. i wish we had had these hearings prior to the passage of financial regulation, and one of the good things that has come out of this is a lot of folks on the committee have focused on issues that are relevant and that part of this has been positive. mr. dimon, you mentioned the

biggest risk of bank makes is making loans, is that correct? >> yes. >> what would happen in an institution like yours if you had $700 billion in loans, and you did not have the ability to hedge that risk in ways that made sense, not the way you did it? >> there are two things. he might reduce the amount of risk you are taking part >> which means less loans? >> you might make less loans. that might change the price of loans in the marketplace. i think more than that is you would not be able to protect the company from a systemic event. we want to protect j.p. morgan from systemic events. we know they happened. i want to survive good times and bad times.

the balance sheet alatas to do good things in 2008 and 2009 for clients. we could not protect ourselves clients. >> you have made it clear -- protect ourselves and clients. >> yet made it clear there was no way for regulators to catch r to catch that type of activity. >> i with but that regulation of the you want this. it is hard to see this. you try to set roles. giving them the information they are using. it is not realistic to think they will catch this. a lot of people thing that they were in yesterday talking about the fact that dodd/frank missed the mark. you have this huge amount of

regulation take place. we should have looked at regulating the markets themselves. much takes place outside of the regulated entities. is dodd/frank making our banking system safer? >> we support did some elements. it has been made it safer? >> i understand we have larger capital. i am talking about the regulatory regime they put in place. has it made our system sabre? >> i do not know we looked at

the 20 largest institutions in the world. the japanese meltdown that happened had taxpayer money injected into them. you look at what we have done. many people let coming out with all kinds of models. would you share with the committee and the purpose of a highly complex institution? what is the size of this? what would our financial system be like if we did not have these highly complex institutions? you are one of the best ceo's in the country. if you miss this that is a blip on the radar screen.

are they too complex to manage? 16 have had injections. >>we have a complex financial ecosystem. there is a place for large companies and small companies. people like us, we bank companies in 40 different countries. we do a trade finance. we do it intraday lines of billions of dollars to some of the biggest companies. can do $5 billion revolvers or raise money for america's fortune 100 companies in a day

or two if they need to do something. we extend $23 billion of credit to small banks. i look at it as you need some of these things. our diversification is a source of strength in a crisis. it allows you to invest in data centers, cybersecurity. but there are some negatives to size. lack of detail. but if you do a good job, your clients would be assured and you win their business. if we were doing some of these things for the large global american companies, and somebody else would. wey don't buy them because want them to. we provide huge credit lines to

them. >> you believe that a highly complex institution is necessary and if you're not doing what you were doing, other people in the world some other place would be. it also are not sure whether dodd-frank has made our system any safer, especially at the top level. if you were sitting on this side, what would you do to make our system safer than it is and still meet the needs of a global economy like we have? >> the biggest disciplined i've had is we have never actually sat down republicans, democrats, businesses, and had a real detail conversation about what went wrong and what needs to be fixed. we still not fix the mortgage markets, which is critical to the u.s.. we still have not fixed some of the other credit markets. the market has fixed a lot of things. we could have a great financial

system. the american business machine is the best in the world. we are all blessed to have it. if we could get it to working again instead of constantly shooting each other all the time. >> thanks for being here. >> senator menendez. >> hedge or not a hedge, that the question? you call the trade that lost that2 billionto $4 billion economic hedges a tempest in a teapot, which i understand now your regret. a hedge does not create a loss without a corresponding gain. that's why you are hedging. what seems to me that happened here is that you are pursuing a synthetic loan portfolio, selling cds's, which was a toxic instrument which caused the 2008 crisis, so when you

reduce a hedge or hedged a hedge, is that not really gambling? >> i don't believe so. >> this transaction that you said more fact, what did it change into, russian roulette? " it changed into something i cannot justify, too risky for our company. >> that is the real concern, too risky for your company,

which is one of the nation's finest, largest well-capitalized banks. if it is too risky for your company, with stops it in the future from being where you wouldn't lose maybe $50 billion, create a size that ultimately creates a risk on the banks and takes that into a run and become the collective responsibility of every? every >> that is what we are trying to prevent. i have heard you talk about the fortress balance sheet. i'm glad to hear you say to senator schumer that we should take comfort that banks are more collateralized. but one way to think about this is i wonder your regret calling the efforts to require banks to hold more money "an american" and putting the nail in our coffin? -- unamerican. you will do against us when we were trying to pursue greater capitalization of these banks.

saiddon't think what you is true. i supported parts of regulation and reform. i support higher capital and liquidity. we supported proper transparency. we supported a lot of the things you requested. we did not fight everything. when i mentioned the anti- american thing, i was talking about between dodd-frank and -- , things that were getting skewed between american banks. american banks cannot have preferred stock like foreign banks. >> you did not specifically say as part of your comment was the requirement for banks to hold more money was unamerican? >> i did not. >> you might want to review that.

what you criticized then and what your bank has been lobbying extensively against is the very types of protections that at the end of the day can guarantee that the american taxpayer does not become responsible. i think about the fortress balance sheet you spoke about. i remind you that fortress balance sheet has a moat that was done by taxpayers to the tune of --. the one thing that american taxpayers would seek is to insure that you are not working against the very essence of legitimate efforts to control the rest, so you can prosper and your shareholders can prosper but the same time call it does not become the collective risk of the taxpayers of this country. is that not fair for the american people to ask? >> i want financial regulation

as you do. we have supported thenm. -- them. there are some we think don't make sense. >> i think you are entitled to tell the things that don't make sense. i also think the american people, after making major investments in your bank and other institutions, are entitled to ensure they don't have to reach into their pocket again. >> senator demint. >> thank you. i really appreciate you voluntarily coming in to talk with us. it is important that we talk about things happening in the industry. it helps us as we look forward and, hopefully, it will

contribute to best practice scenarios in industry. i appreciate your emphasis on continuous quality improvement. we can hardly sit in judgment of your losing $2 billion. we lose twice that every day in washington. we plan to continue to do that every day. it is comforting to know that even with a $2 billion loss in the trade last year, your company still had a $19 billion profit during that same -- but during that same time we lost over $1 trillion. if we had a call back provision, none of us would be getting paid today. the intent of this is to not sit in judgment but to understand better what happened. some of the questions have been very helpful. as you can tell, there's a

temptation every time something goes amiss, we want to add regulation. we surrounded the banking industry with so many regulations and we still seem to have problems here and there. i think we do need to recognize that you are a very big bank, the biggest in the world. you've got a very big profits. periodically you are going to have a very big losses. we need to look at that as part of doing business and also in the context of making sure, as the senator said, that we don't create additional risk for the taxpayer, which you appear to be in much better fiscal say that we are as a country. we know that risk is required to make a profit. you are dealing with a lot of capital that you have to put to work. certainly, that will experience profits and losses and generally you have done pretty well.

i do want to follow up on senator corker asking about the dodd-frank legislation, many of us are frustrated that bank managers want to manage your business for you. we are not capable of doing that for what we have been given to manage. i would like to come away with some ideas on what you think we need to do, what we should take a part that we have already done, to allow industry to operate better, and at the same time not put the american taxpayer at risk. i am honestly looking for some ideas as we look over the next year and hopefully in a position where we can make some positive changes. >> the only real suggestion i have is i believe in strong regulation, not always more. what we set up is a system with more and more regulators. we don't even know who has jurisdiction over many of the issues we are dealing with any more. when something happens there are four different regulators. we need for a simple, clean regulatory system with

intelligent design. that's not what we did. we created a really complex and no one could adjudicate between all the different regulatory agencies and it's not clear who has the responsibility for authority. >> in a lot of industries i have worked in, they get together as peer groups to discuss best practices and sharing information with each other. is that something that you relatively do with other banks around world on how to deal with risk and how these committee should work and what the failures are? is that going on? >> we used to do a lot more. we have constant conversations with regulators and we constantly ask for feedback on goals. we send them a lot of analysis and details. there is less collaboration

among banks, among legislators, them there used to be. it has become much more adversarial. >> the laws and regulations are not necessarily improving things. some of the things you have done voluntarily like capital requirements. if we could do anything to encourage the industry to develop a lot of its own voluntary rules, that would guide us a lot better. if i could leave you with one thing, if you could come back this time next year and talk about how the industry has put together a large scale best practice committee that would help us keep banking as a private enterprise rather than a government institution. >> yes, glad to do it. >> senator brown. >> thank you for being here. you have 19,000 employees in the columbus area who are my constituents, so we have a mutual interest in your institution running safely and soundly. i don't want to see consumer lenders in columbus losing their jobs because cowboys in london make too many risky bets.

i have a series of brief questions. if you could possibly give a yes or no answer or a short answer, i would appreciate that. the chairman touched on this earlier, if you could give a yes or no, did you personally approve of the chief investment officer posing trading strategy? >> no. i was aware of it, but i did not improve -- approved it. >> did you monitor his office? >> generally, yes. >> last week i asked at a hearing about this, thisocc oversight -- about occ's oversight or lack of oversight. they say they have five examiners in london who divide part of their time examining your operations, the portfolio of assets in question being $200 million, which is bigger than the vast majority of banks in the u.s.

one of your executives in april told investors that the trades in question were fully transparent to the regulators as part of normalized reporting. the occ letter says that occ were not aware of the level of risk occurring at your chief investment officer until april. here's my series of questions. is what the occ told about the trades taking place in your cio office true prior to april 6 media reports? >> we tried to be very open with regulators. they do get some reports.

we give them what they want. in this case, since we were misinformed -- the mistake we made, we passed on to them. the second we found out, the first ones we got on the phone with was regulators and we said we have a problem. we describe them and they have been deeply engaged since then. >> that was april 6. april 13 earnings call, was occ told prior to the earnings call? >> i don't know. among the first people we called our board and then the regulators when we found out and probably not even in that order. " the issue is partly your side and partly occ. did you know if occ inquired about trades or the five regulators in new york, did they inquire about the trades prior? >> i don't know. >> at what point did occ take steps to challenge the trades? >> i think the second that they understood the significance of the trade, they started to challenge it every day.

and they continue to. >> 5 regulators in london enough? >> i don't no. in this modern day and age, they get all the reports from london and they can do it by an telepresence. 19,000 employers in columbus served 30 million americans and deserve a lot of middle-market companies, they innovate, we run a lot of call centers there, our credit cards that we ship around the country, so those people are not just doing ohio-based business. >> since 2007 your chief investment officer has grown from 76 to $307 billion. occ says your activities were not considered to be high risk but that a similar level of activity, large hedges that are complex are not present in other banks. my question is should occ have been more focused on trade with synthetic derivatives that they

admit now in hindsight or larger and more complex than any other banking system? >> we should have. >> if your bank did not have 2.3 trillion in assets, would your cio need to beat that $370 billion? >> a lot of the increase was because of wamu. what we are doing now is we have 1000 small-business bankers in the states where wamu was. investing in assets and conservatively other than this one thing is what we do. >> the senator made a statement

a moment ago, offered the question or observation that it raises the possibility that jpmorgan chase maybe too complex to manage? to too large to regulate? -- is it too large to regulate? it has quadrupled in size to $2.30 trillion today. there are six american banks that are 800 billion and above. over last five years you've grown by 400 billion. this case demonstrates that in a practical matter, neither you nor the occ could monitor what was happening at the chief investment officer that would be the eighth largest bank in the united states if it were standing alone. 559 subsidiaries in 37

countries, executives and regulators, from listening to your conversation and sing the occ, it appears regulators cannot understand why what is happening in all these offices. it demonstrates that too big to fail banks are too big to manage. and manage >> senator. >> thank you, mr. chairman. mr. diamond, let me start by saying thank you for being here today. -- mr. dimon. you have a acknowledged it was a dumb of and the loss is unfortunate. you have apologized for that. what i want to do is ask you about some things may be at a 25,000 level, if i could. starting out, how many

regulators do you have on site in your organization from some federal entity? >> hundreds, i believe. multiple regulators. >> sense something like this pops up, are the channels clear anymore as to who you deal with and who is regulating what stand who you need to be paying attention to? >> we are always going to treat the regulators the way they deserve to be treated. whenever the system is, we have to deal with it. we have people assigned specifically to deal with regulators, the fdic, bocc, the fed. -- occ, fed.

>> how much have your regulatory costs increased as a result of dodd-frank, the volcker rule, whatever it is? >> i have estimated roughly about $1 billion a year, across systems. maybe a thousand programs that we run. we have to accommodate the rules. rules come out of brussels and out of the u.k., etc. we will do all those things, meet all the requirements, but it will be costl >> one of the things i have maintained in many hearings since we have examined dodd- frank before and after its passage is that there's just a point at which it is economically better business to do business elsewhere than the

united states. do we run the risk with dodd- frank? literally, we have made life so complicated, so hard to navigate that you have enterprises who decide i will just go to singapore or wherever, to do business. >> we will be able to navigate all that. i do hear a lot of people saying it is easier to be overseas. some companies to move overseas recently. >> my concern is it does not stop there. what i saw about dodd-frank, it started with a laudable purpose, let's try to figure out

what happened in 2007-2008 and how do we fix it. then all of a sudden farmers co- ops were showing up in my office and asking what are we doing? i'm thinking, how did the farmers co-ops have anything to do with what happened in 2007- 2008? i have not verified this because somebody just told me this last night, but somebody who worked with this banking committee mentioned last night at an event i was at that there had not been a single bank charter last year in the united states and it had been 78 years since that happened. do you have any information on that? >> i was not aware. >> it further occurs to me that an enterprise as big and powerful as yours, you've got a lot of firepower, will find a way to navigate what has happened. you are not located in my state and i doubt that you are considering locating in my state, although it would be a

great place for you to do business. >> i hope to be there one day. >> what i suspect that's happening is our medium to small banks are now trying to navigate through this very complex legislation. these are banks where maybe they employ a dozen people or two dozen people and they're just. going to give just what is your impression of that? >> we bank a lot of smaller banks. i think some of these things are harder on the smaller banks ban on some of the larger banks, unfortunately. >> thank you, mr. chairman. >> senator tester. >> thanks for holding the hearing. and thanks, mr. dimon, for being here. this gives us understanding of how the company committed egregious mistakes from a poorly constructed hedging strategy. i want to focus on the company's role leading up to mf global's bankruptcy, resulting in a loss of 1 $26 billion in client funds when mf global was not obligated by law to

segregate and protect. in its final days, it shuffled hundreds of million dollars around from account to account. mf global customers, including many montana farmers and ranchers, saw their farms wiped away overnight. though its customers have received back 72 cents on the dollar, the fundamental trust and if farmers or ranchers have has been broken because of the firm's violation of a lot as well as their failure to segregate client funds, which is a bedrock of a commodities trading. we have no information on the release of mf global trusty james giden's testimony. we need to make sure ranchers and farmers see their funds returned and that those responsible for the breach of segregated customer funds are held accountable. over 100 of my constituents have their accounts raided by mf global to cover the front rows the institutional losses.

if anybody with a visit in this, i want to know about it. on may 18, he announced the return of $162 in cash proceeds of the excess collateral that your firm held at the time of mf global's liquidation more than seven months ago. funds rightfully belonging to mf global customers, including hundreds of ranchers and farmers. why did it take your from seven months to return these funds? >> the second they had problems, we immediately went to the trustees and told them exactly what we had and did not have. we had been waiting for them to finish the work. there was no hiding anything. we have cooperated every step of the way with the authorities.

" there was money released initially, i believe, when mf global started down this path. that was by your firm. but there was $168 million held seven months. why? if it was their money, it should have went to them. >> i think we were waiting for the guidance of the court and the trustee. >> i know that the investigation singled out your company, it highlighted your ongoing negotiations and potential litigation that he may bring against jpmorgan chase. in the final days before mf global went to bankruptcy, j.p. morgan had significant concerns about the health of the firm of mf global and its compliance with regulations guiding the protection of consumer -- of customer funds.

you're from was focused on whether collateral was paid with customer segregated funds. according to the investigation, your front except to protect itself and its exposure to mf global, placing mf global on alert, limiting the transactions the firm could take and increasing collateral requirements. despite repeated attempts by various senior risk management officials at your firm to determine whether collateral for the $175 million transfer request on october 28 was in compliance with the rules regarding segregated funds account, mf global did not sign a letter that your firm demanded. without this confirmation and your suspicions, jpmorgan chase all tool it transferred the funds and accepted the collateral. were you aware of the effort by senior risk-management officers at your firm to seek compliance

confirmation from mf global? >> not the time it. flexed why did jpmorgan chase relent on efforts to secure signatures of the letter and allow the transfer without written assurance? >> i think the transfer has been made -- had been made. we were asking them, to make sure they had done the right thing. it was not required. >> even though you had placed mf global on debit alert and you limit it -- you increase their collateral requirements, when they ask you to transfer the money, there was no conversation about where this money -- whether this money was segregated funds? >> they transferred it to us, yes. >> they requested a transfer? >> it was coming over draft from the prior day or something. >> the question is, you guys were concerned about mf global and you guys know the industry

better than anybody sitting up here, you guys knew what was going down with mf global because you put them on debit alert. they had requested money to be pulled out that was in your facility to be sent to another facility. there was some question by senior management officials in your firm whether this was segregated money, money that farmers were hedging with and in your words the hedging was to protect the company in bad outcomes -- from bad outcomes. can you tell me if jpmorgan chase any obligation to protect those funds? but the lawyer just did in notes and gave all confirmation and then went bankrupt. >> so you got all confirmation on this? is that general operating procedure? >> no, general operating procedure is that you don't have to ask at all. it's their responsibility. >> even? when a company's going? -- even when a company is going belly up? my concern is there were a lot of farmers that hedge to protect themselves from that now

comes. if this money was transferred and it was segregated money, there's a real problem. that's all. just looking out for my folks. >> i still believe they will get all their money back. >> i just want to make sure the individuals that are held responsible. i want to thank the chairman for his flexibility on the time and i want to thank you for the hearing. >> senator moran. >> thanks for being here. you responded to someone's question earlier, describing the things that are good about smaller institutions and the things that create problems in larger institutions. i don't have that list in my memory, but what stands out is hubris, arrogance. how do you manage a company the size of data morgan and overcome that list of adjectives that you described are a natural

occurrence with a large organization? >> they do occur in small organizations as well. theou're not talking about senate, are you? >> definitely not. not now. [laughter] i think all companies want to have great employees always open and challenging themselves and learning from their mistakes. our people are honest all the time and they share reports. hopefully we have fostered the right kind of. culture at j.p. of we believe we are in business to serve clients. that is a job number one. we do it every day around world in 2000 communities. we hope that our people believe that and it's in their hearts to do it every day the right way. we asked them to treat people the way you would treat your

friends or your parents. we ask them that you see a problem, raise your hand and call the right people. we constantly have tried to improve our products and services. we tried to and acknowledge legitimate complaints. we tried to announce them and fix them. >> how you managed a morgan is the business of your board of directors, your shareholders, but it does have consequences to those of us who believe in the free-market system, its value, its merit. i have the sense and i hope it's the case that it is a responsibility you understand. how did the morgan and every company large or small conduct themselves, would behavior they exhibit really matters in our ability to be an advocate for a free-market that creates jobs and economic opportunity and allows americans to pursue the american dream. >> i cannot agree more. what could be ask a more specific question. our ranking member, senator

shelby, often talks about sufficient capital as the greatest deterrence for too big to fail, toward systemic risk. i agree with that. one of the other components that is involved in trying to make certain that the taxpayers are not responsible for the demise of a company like yours, a financial institution like yours, is the living will. would you describe to me what process has a morgan gone through to develop that living will? how transparent is it? what role do the regulators play? what evidence would give me or others satisfaction that your company can be dissolved without a call upon taxpayer dollars?

>> we have to get rid of anything that looks like to big to fail. we have to allow our big institutions to fail. it is part of the help of the system. we should not prop them up. we have to allow them to fail. you want to be sure they can fail and not damage the american economy and the american public. a big bank, we want to be in a position where big banks could be allowed to fail. it's called bankruptcy. i would call it bankruptcy for big dumb banks. i would fire the board and what about the equity and the unsecured should only recover what they would recover in a normal bankruptcy. the resolution authority start to put the authority in place and a living will means giving information to regulators that. know how to that. it is complex. fdic has taken down a lot of large banks without damaging the american public, including wamu, and american savings bank some

years ago. it's more complex now, it's updated. the need to know what happens if a certain thing happens. how to go about dismantling jpmorgan chase that did not cost taxpayers. if the ftse ever puts -- and i think the bank should be dismantled after that and the name should be buried in disgrace, but even if it ever cost the fdic money, that should be charged back to the other big banks. during this crisis we have paid $5 billion, so we are paying the fdic. the other big banks should collaborate and make sure rules are in place so we don't jeopardize each other. >> if taping morgan became a big, dumb bank and was in serious financial difficulty, is your sense that it would be -- a circumstance would be included with j.p. morgan posted demise and no cost to the taxpayer? >> yes. >> mr. dimon, i understand that j.p. morgan is lending more money to businesses, and i appreciate that it. however, it appears lending is not keeping pace with the deposits you are taking in. it last year reported in had 1.1 trillion dollars in

deposits. this is more deposits than any other bank in the united states. the other big banks reported ratios that are 10% to 20% higher than your bank. it seems like lending to american businesses would be less risky than what was being done in the london office. is your loan deposit ratio lower than your peer banks because you are perhaps prioritizing the risky trading activities over landing?

can we hope that you are going to focus more on lending in the american market? >> we are making all the good loans. we can we are a global money center bank. that means we have deposits from governors around the world from sovereign entities, from large corporations that can be taken out tomorrow. we do have to keep liquidity. we have several hundred billion dollars right now invested in central banks around the world in case the biggest companies call up and say send me the $5 billion. we are a bank for people that

can face huge liquidity fund's. >> the records indicate your reported loan deposit ratios, the other big banks are 10% to 20% higher than yours. that would seem not to square with your statements that you want to lend but you don't have the customers plan to. >> market loans uptalk% on average for the last eight quarters. our small business loans up 52%. corporations have a lot of choices out there, mortgages last quarter for us was $40 billion, which is a huge number of new mortgages. we're not like all other banks. we do need to keep a lot of cash around to deal with immediate demands of the people dealing with us. we're talking about some of the biggest companies in the world. >> one final comment, the

biggest banks with whom you are competing are described in the same way you just described yours. their loan deposit ratios are higher than yours. >> they are all different. >> we often hear constituents trying to get a modification or stave off foreclosure is. they typically come to us because they're having trouble getting through to their lender. sadly, it is common for our constituents to say that the bank lost their paperwork. four years since the crisis began, we are still hearing about these mixups.

as a constituent who had along with jpmorgan chase said recently, "i don't want to lose my house because they cannot keep their paperwork straight." why have banks not been able to sort out these paperwork problems? >> i agree they should not lose their home because we failed with their paperwork. i would love you to send that to me. we have hired 20,000 people to deal with the faults, modifications. we have offered modification of 1.2 million loans. and given alternatives to foreclosure to 700,000 loans. we or not very good added to problems first started. we were overwhelmed. >> the cio office carries out a very complicated transactions and you employ some of the smartest people in the industry to work for you. your bank undertakes such complicated business on one hand, but on the other hand oftentimes you and other banks of your size cannot seem to do

something as simple as straighten out your own paperwork. the plight of the american homeowner, does it have the same attention or should it have the same attention that the bank gives to its cio office? >> yes, it should. we should do it properly. for anyone that has issues, please send it to me and we will take care of it right away. >> thank you. >> senator. >> thank you, mr. chairman. it's been very instructive to the public and members of the committee. i think you told senator shelby that the purpose of hedging is to earn a lot of revenue in the event of a crisis. i think you said that hedging works to an extent in 2008 for your company. can you quantify the extent to which hedging worked in 2008? >> i never said the 2008 year, but the synthetic credit portfolio and several billion dollars of income. we could give you more specific details.

but that is probably what we need to do with a follow-up. you said you did not know what the volcker rule was. if you don't, we don't either. beingk you know how it's drafted. as it is currently drafted, how would that have affected the cio's ability to do the hedging in 2008 and prevent losses? >> i think you are allowed to hedge under the current regulation, but i don't know what the current rule would do. the ability to actively make markets, to raise capital for companies and clients and investors is the main thing. we have the best and the deepest and most transparent capital markets in the world.

the capital markets of america are part of the great american business enterprise. we have the best in the world. we have had some problems. we don't want to throw the baby out with the bathwater. how does it benefit? the cost of buying or selling a share stock is a 10th of what it was years ago. the cost of doing swaps is a sense of what it was eight years ago. if they're doing it at a cheaper price, the people they invest for are doing things cheaper. that's a good thing for them. it also allows corporations to issue debt cheaper and quicker. a large corporation wants to issue $5 billion, it can be done in a day around the world. they can get a cheaper price. the liquidity in markets keeps

the spread low and benefits investors and issuers. the secondary markets and primary markets are directly related. if the cost is no here, then the issuers can do it. the investor is not fidelity. it is the person who fidelity is investing for peridots are retirees, veterans, etc.. it's a good thing. the volcker rule had so many pieces to it when it came out, we are urging people not to think of it as binary but to think of it as traffic laws it. some cars should go 65 and some should not. some lights should. be should -- some lights should be bright. all these securities are different. we need to own that for a while. we cannot turn them over very quickly. we need to buy securities that we make sell tomorrow, but you want to sell them right now.

you are our client and we make a little bit of money every time it happens. we don't take a lot of speculation. go through the details and make sure we get it right and we end up with the deepest and best capital markets in the world. i don't want to be sitting here in 20 years wondering why it is elsewhere. >> thank you. i hope you can appreciate why i only had five minutes. i think you told senator corker the financial system is safer today and you cannot say dodd- frank has helped at all. but i think then you went on to

say the regulation regime is not necessarily stronger today but it is more complex and you don't really know what the jurisdiction is. have i paraphrase your testimony correctly? >> some of the things in dodd- frank and other things made it safer, but the most important thing is higher capital, higher -- high liquidity, and better risk management. >> you said something else that caught me by surprise. that was the testimony that nobody got all the parties in a room with people in your industry, democrats, republicans, and folks affected, and talk about what was needed and what needed to be fixed. correct? >> yes. >> did you volunteer to be part of that conversation? >> we said that we would do whatever you want and go through it in detail. we spoke with lots of people. our folks did a lot of analysis and research. it lack the real collaboration that should taken place. i think it would have been better had there been more

collaboration and at the end of the day shake hands with a new system in place and move forward. >> let me ask about the living will. are you telling this committee that jpmorgan chase has a living will that has been approved by? >> no, it has been drafted and circulated to legislators. they have to coordinate it with foreign entities, so it will take a little sign. >> thank you. >> senator. >> thank you for coming before the committee. in 2008 through 2009, your company benefited from a half trillion dollars in low-cost federal loans, $25 billion in -- in tarp funds.

with all that in mind, would j.p. morgan not have gone down without the massive federal intervention directly and indirectly in 2008 or 2009? >> i think your misinformed. that is leading to a lot of the problems we have today. j.p. morgan took part with the ftse in the room, tim geithner, ben bernanke in the room, we did not need tarp. we were asked to take it to stop the system from going down. we did not borrow from the federal reserve. they asked us to, they said please use these facilities. we were not billed out by aig. we would've been okay if it had

gone down. >> aig did benefit you enormously. i'm asking you to respond to questions and i also have five minutes. let's agree to disagree. but i think that many alice everette the conclusion if you had -- many analysts have come to the conclusion that you would've been out of a job. how many countries in the history of the plant have been offered a half trillion dollars in low-interest loans?

not many. but the basic concept behind the volcker far wall is banks are in the lending business and not in the hedge fund business. do you share that basic philosophical orientation? >> we're not in the hedge fund business. >> i want to turn to the report of a few days ago. it reports that jamie dimon created thecio, had her to report directly to him, encouraged her department to seek profits by speculating in higher yield asset such as credit derivatives, according to a half-dozen former executives of the company. that sounds like offering a hedge fund and doing so at your direction, the government insured deposits. >> $350 billion of assets incio. the average rating is aa+, the average maturity with a duration of three years and not 20 or 30 years. the average yield is 2.7%. those characteristics are of a young, conservative portfolio. in addition we have $150 billion sitting in central banks

around walt. that is considered conservative. and not conservative there are legitimate complaints in other areas, yes. but the former head of credit- rating said we want to ramp up the ability to generate profits for the firm, this is jamie dimon's new vision for the company. you would disagree that was your instruction? >> i don't know what he means. >> here's the general picture. it is one in which the assets from cio or spend dramatically fivefold over four years, with numerous executives of your firm to testify that at your personal direction they were to invest in higher yielding assets rather than traditional government-

backed securities. and yet when those bets go bad, instead of taking responsibility, you blame it on the unit that you set up. should you not take personal responsibility since they were following the game plan that you had personally laid out? >> the $350,000 portfolio is conservative and it has an unrealized gain of $7 billion. it is synthetic credit and that's why we are here. we have made a mistake and i'm absolutely irresponsible. the book stops with me. >> the heart of the vocal rule addresses liquidity management and says the funds that are in between loans should be invested in either treasuries or government backed instruments. taking those same deposits and putting them into high-risk investments and credit derivatives is a fundamentally

different strategy. i am puzzled by your comment early on that you are not sure whether or not the vision laid out by the volcker far wall between hedge funds and banking's would have prevented the type of operation that you set up in london. -- volcker firewall. >> i have already confessed to the sins on the synthetic credit side. we will not do something like that again. it will not stop us from making money. we are doing what the bank is supposed to do. we do it every day. >> from what you say, your plan going forward is when you have surplus deposits and you are managing them, and return to the strategy of relatively safe, liquid investments rather than operating in the derivatives? >> the current strategy is to stay relatively liquid.

>> thank you very much. >> i understand we have two votes beginning at noon. >> please take them. >> senator. >> thanks, mr. chairman. and thanks for being hereand thd for your testimony. you made the statement that the answer is not more regulation, it is smarter, stronger regulation. i absolutely strongly agree with that. unfortunately, i think a lot of dodd-frank, most of dodd-frank has been more regulation, which in many cases has been more confusing and not helpful regulation. another way i might put it is i think we need more systemic changes and less micromanagement. the big systemic changes that are under discussion that impact what we are talking about

are capital requirements and the volcker rule. so i want to explore that. capital requirements, i understood when you criticize previously that part of the criticism was higher capital requirements for bigger banks. correct? >> it was more about the details behind it. when we went through the crisis, we had 7% . the capital ratios never went down. today we have 10%. all the new rules, it would be 14%. muchere's an issue of how capital is enough. we never argued about having more capital and we have no problem with 10, 11, 12. but the calculations should be done fairly and properly. some of them make it harder to have proper capital.

i have complaints about how the chief of the charge has been done. >> in general, do you think very big banks should have clearly higher capital requirements? >> i would be fine with that in general. >> compared to the 7% floor for a bank as big as yours, where should that be? >> i thought they should have said you will have 8%. 8 is plenty and it does not create confusion. people don't know what the real requirements are, because the rules are not in place. it takes years. i would say just 8 and let the regulators have time if they think that's a wrong number a couple years from now, change it again. it should not be a once-in-a- lifetime change. i was worried there would be capital confusion. people don't know what the capital is, what it is supposed to be, or how it will be

evaluated. that is not conducive to lending. that is conducive to people retaining their capital and reducing their balance sheets. >> there are other folks like switzerland requiring 19% of their two large banks. is that over till? -- overkill? >> yes, 19 is not comparable to my ten. >> what would be an apples to apples comparison? >> it's much higher, but they have a bigger problem for the size of their country's. >> the volcker rule, is there a true version of the rule that should be implemented and makes sense? >> but i think that it is a struggle to get it right because it was written vaguely and it's hard for regulators to come up with rules that make it easy for market makers and regulators. unmasking about if we start with a blank sheet of paper, would you support a properly designed but true version of the

volcker rule? but i feel it was unnecessary. >> i think it is unnecessary. if you said the intent is that we do not want to take so much risk on the trading books, i think there are ways to do that. i would try to rewrite the rules. >> what are sort of the systematic, simple regulation ways to do that? >> this is trading books. proper capital, proper liquidity. make sure it is appropriate for the product and customers. proper risk measures and proper risk controls. >> ok. again, i strongly endorse overall the concept of not more regulation but stronger, smarter regulation. what is i am concerned about some sort of like the dodd- frank reaction to the crisis, i

do not think the solution is we're going to have really smart regulators this time, instead of just simply smart regulators before. we are going to have more regulators. quite frankly, my concern about some of your testimony about the chase reaction is that i sort of hear that tone in your reaction. well, we're going to be smarter about the of this time. we're going to get it right this time. we're going to pare down. i am wondered if there should not be a more systemic change within the company to avoid this. >> i understand your point, yes. >> are there any more truly systemic changes in light of this incident? >> in our company? >> yes. >> know, we're going to make sure that there are no other issues like this around the company -- no. but i can never tell you we will not make a mistake. >> i am not asking that. but will there be more broad

scale changes within the company in reaction to this incident? >> a thorough review of every single thing that happened, and we do think it is isolated. >> ok, thank you. >> we will hold up the vote for a few minutes. senator hagen. >> thank you for holding this hearing. mr. dimon, thank you for your testimony. i know your company encourages people to raise their hands lacy things going wrong, and they appreciate you doing that today. i want to talk about the actual trade. i would like to get some perspective about the size of the trade, the size. we saw press reports about the london way, how big was the position, and the real question is, how could it be so large

without coming to the attention of management, of regulators, and ultimately, shareholders? >> i have to declined to comment on some of that. my job is to first protect my company and to manage it. i can disclose certain things. some of the information was accurate, some was not. it was a complex series of trades, not just one single thing. i can manage that risk down. i can go through the reasons that it should have never gotten to this size. >> would not ask anything to put the process at jeopardy. in may, jpmorgan changed how it calculated the amount of money that the firm's chief investment officer could use in a single day, and you have

talked about this somewhat. can you discuss those changes and when the decisions were made? >> the old model took effect about 10 or 15 of this year. the new model put in place. on april 13, there's no reason to believe that the new model was not better, nor do we realize the severity of the problem. shortly after that, we filed on may 10. between the last weeks in april and the first parts of may, we realized the problem we had. we filed. we put the old model back because we thought it was more accurate than the new model. we made that disclosure to our shoulders.

-- shareholders. >> can you explain the magnitude of losses? >> these are statistical test things over -- over last two or three years, i mentioned the models, the future is not the past. things change. concentration, liquidity, people confused about europe, credit spreads. the old model better predicts the sort of things that happened in april and may than the new model. >> some banking regulators through their consideration of on thebasel committee are considering a move to an expected shortfall. what a move to this expected shortfall provide regulators and investors more information about the possible losses than a bank could experience?

>> i do not know, because i do not know how good is all calculated. that is one measure. we also would get stress tests. i do think it is important that people stress test properly. but management cannot rely on models to run businesses. they are one input. judgment,so knowledge, and experience and the general fear you have learned over 56 years on how things can go wrong. >> thank you. also in your testimony, you indicated that one of the reasons that the chief investment officer started adding positions in the synthetic credit portfolio was to reduce the risk in anticipation of basel requirements. can you explain what these conditions would be problematic under basel? >> i think in 2011, the fourth quarter, it was about $20 billion. basel three was estimated to be

something like $60 billion. we thought it was an ineffective use of risk weighted assets. the intent was to bring that down over time. >> why did you say the bank would experience similar reductions? >> there were other parts of the company that we looked at the new basel iii. we still have customers and sometimes it is driven by them and not our own decisions. >> thank you. >> thank you, mr. chairman. good to see you. thanks for being here today. i am last. being lost is no fun because of your body else has asked the questions. but let me try. first of all, i appreciate your response to senator cole's observations about the

difficulty borrowers are having with responsiveness from banks. i will say to anybody listening to this hearing, who may be listening to it, if it would make the same generous offer, i think all of us would appreciate, on behalf of the people we represent. in your written testimony, and you said it again today, you said that while the cio c- span.org cio will-'s purpose is to manage, it maintains the credit portfolio. the intent was to protect the larger institution. at of curiosity, wondered what those two functions were in the same place -- is that something that you're thinking about at all? i know that you hedge all across your lines of business, but i wondered why this was not buying the same place? >> it did not have to be. but the unit worried about

exposure, consolidated foreign- currency exposure, consolidated, and some of the credit exposure consolidated. it was a rational place to put it. there are other things to hedge credit exposure. >> as somebody who supports a hedging exemption in the context of the volcker rule, which i also support, it raised in my mind the question of whether having them in separate places might -- because the purposes are different, having them in separate places may have a useful value. the second question i had was about the trade, and then i will move something -- a move on. you're also made the observation in your written testimony that this transaction could have been handled by unwinding, lessening the degree of exposure. why wouldn't that have been the thing to do? i do think the folks that made this decision made this

decision? >> i am told that they fought with the were doing was a more cost-efficient way to reduce the exposure and maintain some of the head against back tell you cents. that is what i am told they were thinking. >> that fees or less? >> that over time, he would not spend as much money on one way versus the other. >> ok. since you are hearing, and mr. chairman, this is unrelated to the topic at hand, but i think you're well aware of my concern about the fiscal condition of this country. i wonder if you could take the last couple minutes of this time to talk about how you see our relative position with europe and other places, the political risk of our not accomplishing what we need to do in the fiscal side? and the upside if we could actually come together in a

comprehensive way to address the long-term fiscal condition of the united states? >> if you're asking one citizens of and in, i will be happy to share. -- one citizen's opinion, i will be happy to share. >> yes. >> europe has serious issues. there is a good reason for the european union, for political and monetary union. it is complex, 17 nations and more. the united states has a serious issue. we have to acknowledge that we have a serious problem. we have several. the fiscal cliff, i will not go through. the one thing to keep in mind is that it may not wait until december 31. markets and businesses may start taking actions before that that could slow down the economy, which would be a bad thing. i would not be of the mine that is ok to wait until after the election, until midnight december 31. i think it would be better to do something now so we do not create additional uncertainty

among businesses and consumers. we have to get our fiscal act in order. i mean, it will either be done for us or we do it ourselves. there is a road map, which i like -- not every part, but it is called simpson-bowles. if we had done something remotely like simpson-bowles, in my opinion, you would reduce uncertainty about taxes. you would increase confidence in america. you'd have a real fix of the long-term fiscal problems. i think you would have a more efficient and effective tax system that is conducive to economic growth. i would urge everyone to support getting something like that done. the specifics, unfortunately, no people argue, but they are not as important as getting something like that done. and we missed an opportunity to do it. i think it helped cause a little downturn last year. >> thank you. >> senator shelby has a brief observation to make. >> do you know of any bank that has been well-capitalized, well-regulated, and well-managed that has failed?

>> i do not, sir. >> i know you are aware that we have closed about 500 banks in the last three or four years, and just about everyone of those banks failed because they were inadequately capitalized. bad loans. so, would you agree that there is no substitute for capital? when you run a financial institution, you have got to have capital, and you have got to be liquid. >> there is no substitute for capital. that is correct, sir. >> thank you. >> thank you for your testimony and for being here with us today. it is a reminder that we cannot let down our guard and we must remain vigilant so that we continue to have a strong and stable financial system. before we adjourn, i also want to provide committee members a brief update on [unintelligible]

ranking member shall be and i -- shelby and i are continuing to discuss a way forward on finance legislation. we have worked together in the past markups to keep amendments to those related to the bill, and i hope that my colleagues will agree to continue this approach. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> j.p. morgan chase president jamie dimon will return on tuesday to testify. we will have coverage beginning

at 10:00 a.m. eastern on c-span 3, c-span radio and c-span.org. coming up, mitt romney talks about president obama's economic policies. treasury secretary to jim geiger discusses the global economy. later, another chance to see ceo jamie dimon on capitol hill asked -- answering questions about his company's trading loss. tomorrow, the senate finance committee looks at how medicare reimburses health-care providers and the effect on the deficit. we will hear from health insurance executives. you could watch the proceedings beginning at 10:00 a.m. eastern on c-span. >> kenya, indonesia, a kansas,

chicago, and washington. followed david maraniss walking in a president's footsteps sunday at 6:00 p.m. eastern. the video rerd of his travels and then david takes your calls and questions. also this weekend, a conservative commentator blames liberals for an ongoing war of ideas. >> american politics have been distorted by this idea the further you move away from the left, the closer you get too bad things. in some ways the best working definition of a fascist is a conservative who was winning an argument. >> that is sunday at 9:00 p.m. >> and mitt romney talked about the economy and the obama administration's policies before

a gathering today in washington. he calls the policies anti- business and anti-jobs. president obama will give his own speech in cleveland tomorrow. but this is a half-hour. >> ok. my remarks are going to be short because i am the last guy you want to listen to. it is my privilege to introduce governor mitt romney who will this summer formally become the republican nominee for president of the united states. most members of the business roundtable are familiar with his background and accomplishments in government and business. of course, co-founder at bain, turning around and salt lake city, which may have been the toughest thing you did. your audience today includes the leaders of 100 american companies representing about

60% of the gnp of this country. we are ceos committed to the decisions are political leaders need to make in coming months, decisions that will affect the course of our country for many years. this morning we have already heard from the director of fragile housing. we dealt into competitiveness. we heard from tom donelan who gave a compelling speech honda on national security and its intersection with the global economy. we look forward to hearing your views on other topics. ladies and gentlemen, governor mitt romney. [applause] >> thank you. thank you. appreciate your introduction this morning and a chance to meet with this group. i look forward to your questions

more than my comments. we will decide that once this is over. i appreciate the chance to spend some time with a good friend of mine, the former governor of michigan, who has been an adviser to me. when i got elected he spent a day with me and told me where the biggest opportunities would be in our budget. i have worked with a number of individuals in this room. we worked together sometime ago in bain consulting and others that have shared paths in the past. this is a critical time for the country and a choice is before us as to what kind of america we are going to live been over the coming century. this water -- this is a watershed election that will determine the relationship between psittacine an enterprising government. we have a president who has addressed to the american people and spoke to us after being

elected. i happen to think the american people are tired of politicians to make excuses. i think this is an occasion of that nature. the president appeared on the today show and said if he could not get the economy turned around in three years he would be looking at a one-term proposition. he has been going across the country attempting to convince the american people he has turned it around. he said a few days ago that the private sector is doing fine. the in credulity they came screaming back from the american people has caused him to rethink that. i think you will see him change course when he speaks tomorrow and where he will acknowledge it is not going well and he will be asking for four more years. instead of three years, he wants four more. he will speak eloquently, but the words are cheap.

of the record of an individual is the basis on which to determine whether they should hold onto their jobs. the record we have 23 million americans out of work or have stopped looking. that is a compelling and stet -- sat statistic. these are real people. i have learned about their circumstances. it is more than the 23 million the field the concern associated with the obama economy. the concern associated with the obama economy. a lot of parents wonder if the past is fraught -- brighter than the future. half of college graduates do not have a job. or not a jot consistent with their skills. the president indicated if we pass the stimulus they would hold unemployment below 8%.

we have gone 40 months with unemployment above 8%. home values have declined and continue to bump along the bottom. we will hear what he has to say tomorrow as he describes the reason for four more years but i happen to believe if you look at his record over the last three and a half years you will conclude is the most anti investment, anti-business, anti- jobs series of policies in modern history. the reason it has taken so long for this recovery to gain traction and to put people back to work is in large measure because of the policy choices the president made. he is not responsible for what ever improvement we might see. he is responsible for the fact it has taken so long to see this recovery and it is so tepid. why do i say that? i will go down my list. the stimulus he put in place

upon coming into office was not directed at reigniting the private sector but associated with trying to protect the government sector. then there were his regulatory plans. the rate of increase has a jumped threefold from that of his press -- predecessor. there is an agency that calculates the cost of regulation on the overall economy. the estimate is 1.4 trillion dollars per year of regulatory burden on our economy. that is more than corporate taxes that are paid in this country. their regulatory burden that is imposed upon small businesses is even more onerous than the tax burden. then there was obamacare. the decision to pursue that piece of legislation was understood to have the potential to slow down the economy. slow it down it did. the president demonstrated not

only a lack of understanding of what the american people are experiencing but about what small-business is are experiencing. he was asked, you understand that a small businesses having a harder time? he said he did not know. he had not heard small businesses were affected negatively. the chamber of commerce did a survey, 75% of small businesses that it was less likely they would hire people because of obamacare. the additional taxes, the recognition there will be new coverage mandates on top of insurance policies suggest to them they are frightened about hiring more people. that also delayed the recovery. dodd-frank, 848 pages to be followed by hundreds and thousands of pages of regulation, much of which is not

written, has degraded -- created uncertainty. it sought -- struck me that the legislators and staff used to the crisis to do all of the things they had always wanted to do and to be able to overreach and tried to put the reins on all kinds of enterprises. the impact is seen by community banks, for instance, that find it harder to keep up with the regulations and less likely for them to make loans to small businesses. in a recession it is small businesses that are the first to recover but -- and put americans back to work. we needed banks to make loans, this piece of legislation caused them to pull back. there are other measures like margin requirements for non- financial enterprises which will add to the cost of inputs going

into manufactured products. again, what does margin requirements have to do with the economic crisis? this was an overreach, taking the advantage of a crisis to do things that a lot of staff members and legislators wanted to carry out. lnb, stacking the board with those that were in the aura of the union world led to decisions like the boeing decision in south carolina. also when efforts to pursue -- in force unions of businesses that did not like that. that meant to small enterprises, this is not a time to be hiring people. the very time we wanted people to be hiring people and taking risks, they were confronted with the uncertainty from washington and pulled back.

it has been harder for the economy to rebound. trade. in a productive nation like ours, with the most output per person, trade is good. it helps our economy. we want to open up new markets for our goods. china and european union nations have negotiated about 44 trade agreements. this administration has negotiated none. three were negotiated by the senate, but the senate dragged his heels three years before putting them through. trade is good for labor as well as for the overall economy, and putting americans back to work. the president took a very different view of that. i am going to come back to energy, but it is a godsend. and the availability of low- cost national gas should reignite our economy. instead, the president has done,

through his regulators, whether the epa or others, has taken action to make it harder to depend on national -- natural gas. has made it almost impossible to find coal and use coal. we have the largest coal reserves of any nation on earth. if we do not take it vantage, it is going to go overseas, and be used in china. and the emissions will be dirtier than if it is used here. of course, there is oil. the president put a moratorium on drilling in the gulf, the intercontinental shelf. we have these energy resources. i think the president or his people want to see the cost of the sources we have in abundance come to a higher level, so other technologies become more competitive. finally, i will mention the deficit. if i were thinking of investing a major portion of my future in this country, i would want to

know the future value of the dollar. if i saw deficits as far as the eye can see, i would be concerned. if i saw a president which had not put forward proposals to get the budget balanced, that would make me more concerned. and if i saw entitlements like social security, medicare, and medicaid, without any effort by the president to address them, and to find a way to make sure they are saved, but also solvent, that would give me concern. for all those reasons, my view that this has been a tepid and unfortunate recovery for the american people. it means for people are out of work. more people are looking for good jobs. and that breaks my heart. i think this flows from the fact that the president and his people do not understand how the private sector works. i think it would be helpful for the president to have spent some time in the private sector, to have a job at a real enterprise,

to have a sense of what makes an enterprise decide to grow or shrink, to send jobs overseas or bring them back, to train people or not provide -- or not train people, to raise wages or not. assuming a business has to be in america -- business is increasingly able to go other places. there was a time when the people in this room would all the folks that have very heavy equipment, blast furnaces and the like. you could not go anywhere else, because you were in the ground. now, a lot of businesses can go a lot of different places. you have a fiduciary duty to shareholders, and you recognize that. therefore, you look at other places for various enterprises to carry out. you also recognize you have a responsibility to your community, your nation. but all these combined. the belief on the part of some in washington that you have no choice, that you have to be

here, though we can put the burden on you we want, that government can be your opponent -- that that attitude is going to lead to more jobs leaving. my priority is to create jobs back to america, a growing american jobs, having competition among you to hire good people. wages will go up again. i want to see that happen. my view is the job of the government, among its responsibilities for caring for our security and the like -- the job as it relates to the economy is to make america the most attractive place in the world for entrepreneurs, innovators, investors, job critters. i want america to be home to the best job-creating machine the world knows. we have been, over the decades. how do we make america the best place for enterprise fax i did write a note on this. -- for enterprise? i did write a note on this.

i want to underscore it. the government has to be the ally of the enterprise, not the enemy. too often, you find yourself facing a government that looks at you like the bad guy. if you are hiring people and employing people and paying taxes, you are the good guy. i want you to do well. there are always bad apples in an enterprise. government has responsibility to find them, because the hurt everybody. but overall, every agency of government should be looking to say, "how can we make enterprise more successful, so they hire more people and give them better benefits?" i want to change the attitude, to encourage the growth of enterprise in this country, and the building of more jobs. what will i do on day one? first of all, i recognize something i heard from governor engler some time ago, and from

one of your vice-chairman. i believe andrew said to me a study by the national association of manufacturers indicated the cost of doing business in this country is about 15% higher than other industrialized nations. that was not due to a difference in cost of labor. that was all governmental policy -- tax policy, regulatory policy, and energy policy. my job, if i become president, is to try to eliminate that 15%, so that you decide to build more enterprises here, and hire more people in america. how do you do that? first of all, you make energy and the abundant resources we have in this country for energy and an enormous advantage for enterprise. i could build the keystone pipeline immediately. i could open up more federal lands for licenses, which has been cut by almost 2/3, the permiting on federal lands.

i want to get cold. i want to review the regulations that relate to these different sources of energy. i want more energy here, and believe that if we have low-cost energy, you will see manufacturing, particularly energy-intensive processes, come back to this country. second, i am going to get rid of obamacare. i do not know what the supreme court is a joy to do. i hope it does the right thing, and says it is going to -- and says it is unconstitutional. i think we need real health care reform. i do not want to go back to the way things work. i want real reform. at the same time, i want health care to act more like a consumer market. i happen to be a believer in competition and consumer markets. as i look at the elements of the economy that do not work well, where the prices go up and equality does i get better -- those typically are associated

with heavy government involvement. health care, education, the postal service, and so forth. competition drives prices down and keeps quality of. i would like to bring us principles to health care. we will talk more about that, as you like. i will carry out a review of the obama-iraq regulations, and get rid of those that are not meaningful or that cost jobs. we have too much regulation. if we were to take the annual regulatory burden and cut it by $400 billion, think what that would do to the gdp, to add that to the growth of our gdp. i am going to hold those regulations. i will also put in place a policy that no agency of government can and regulations without removing equal and opposite regulations. i mean opposite in terms of cost, so we do not add more every year.

finally, large regulatory changes would have to be approved by congress. i want to open trade, particularly with a massive economic entity next door, latin america. the opportunity for us to have more free trade with latin american nations is huge. i also want to see more trade with other nations. trade is good for us. it is good for them. it raises the standard of living of the american people. i want to make sure people abide by their trade agreements. i look at the reagan economic zone. i want a group of nations to join in a trade agreement where we have completely free trade, but agreed not to manipulate our currencies, steal intellectual property, and so forth. i would like to level the playing field with management and labor, so the national labor relations board will have to be restructured or re-peopled. it has become a political entity. i want to repeal dodd-frank,

were major portions of it. you need regulation in financial services and other parts of industry. we did a disservice by ms. communicating what we meant by regulatory reform. we talked about the regulating. you have to have laws and regulation to make laws work. in the case of dodd-frank, it is overwhelming. it is beyond the areas where we had concerns. we need to review dodd-frank, and put into place the regulations that are necessary. financial institutions ought to have capital requirements understood for various categories of assets. if they have lots of debt on their books, they will need more capital than if they have treasuries. that type of regulation needs to be there. it has to be more transparent, the training of derivatives, so people understand what other people are paying.

we also understand the degree of structural risk. tax reform. i want to see lower tax rates. it makes no sense to me that we have the highest corporate tax rate in the world. i know what that will do. i have been in business. over time, at the margin, enterprises will move to places that have lower taxes, or you will recognize your income in places that have lower taxes. the irs will try to make you recognize it back here, but just like water flows to the lowest point, profits will flow to the place where the taxes are lowest. i want to get the tax rate down to at least 25%, and do that in the anticipation of not losing revenues. i am not expecting you will pay overall less tax. i just want to make this a more attractive place. less complexity. get our tax rates competitive with other nations. on an individual level, i do not want to raise the marginal tax

rate from 35% to 40%. something that is a great way to go after rich people. -- some think that is a great way to go after rich people. shame on anybody who thinks we will divide the country on the basis of success. 50% of american workers work for companies that are taxed at the individual tax rate. 54% of american workers. raise that rate, and you kill jobs. i want to bring the marginal tax rates down in america. i would cut them across the board, by the way. but i will also limit deductions and exemptions, so the revenue coming in remains the same. with the rates down, we would encourage business and jobs, which is my priority. i am going to go after government. we have to put government on a

pathway to have a balanced budget. i want people who are thinking of investing, whether foreign or domestic, who know that the dollar is going to be worth something down the road, and america is not going to hit a wall like greece. i will take action in my first hundred days to eliminate government programs, to some government programs back to states, where and limit the rate of growth in inflation, and to cut back the number of federal employees through attrition, and to link the pay of government workers with the pay that exists in the private sector. that saves about $500 billion a year. that would get as to a balanced budget within eight to 10 years. i think those things have to be done to convince the world is worth making major permanent investments in the united states of america. i have to believe you are going to see, as a result of those policies, a resurgence in this

country of our economic vitality. you are going to see businesses bringing money back to put it in america. this is the right place for our enterprise to grow and thrive. i think we will surprise the world with the kind of policies i described. i think you will see small businesses to very large businesses think of america as the best place in the world to do business. i neglected to mention one thing, which is an unusual thing. we have the repatriation tax. if you make money in a foreign country and leave it there, we do not tax you. but if you want to bring it home, we do tax to up to 35%. that does not make sense to me. if you want to bring your money home, please bring it here. invest in new equipment and hire people. some people say that companies might put it out as dividends. that is ok. i would rather have you invest it, but get it out to the

people. make what has happened to the interest rate on their cd's -- get people buying things. put people to work. this is not about punishing america. this is not about assuming an enemy. all our streets are connected. this is one nation under god. this is about having government become part of the solution, not part of the problem. i happen to know that if president obama speaks, as he normally well, tomorrow, his rhetoric will be soaring and eloquent. but i suggest you look at the record more than the words, and i think you know what his record shows. i think you will also see that the policies he would take are very different than the ones i have described. without question, he will stifle our energy resources in coal, natural gas, and oil. he will, of course, implement

obamacare. you are going to see more and more coverage mandates, meaning more items have to be included in policies. that will make them much more expensive. i would be surprised if anyone believes the cost of health care is going to go down. he will have to do the work for the unions that will put hundreds of millions of dollars into their coffers. he will try to impose unions were employees do not want them. the regulatory burden will increase. taxes will be raised. the idea of raising the dividend tax from 15% to 44% -- think of what that means to the decision to invest in enterprises in this country. the capital gains tax will go from 15% to 44%. impact on investment is dramatically different. something i call crony capitalism -- i know not

everyone is happy with my discourse on this, but i do not think the government should be investing in individual companies. i think the government has a role investing in basic science and technology, and sharing that with enterprise. but i do not believe in the government picking winners, or in the case of our government, picking losers. i think the free market does a better job in picking specific enterprises. technology and science, absolutely. but enterprises, absolutely not. i appreciate the chance to be with you. i love this country. i believe in the principles upon which was founded -- political freedom, personal freedom, and economic freedom. those have driven us to be the most powerful economy in the world, and the greatest nation in the history of the earth. i happen to believe that what you are seeing in washington today is a growing philosophy somehow that government

directing people and enterprise can do a better job than free people pursuing their dream. i disagree with that. i want to go back to the principles that made as the powerhouse we are. the policies should be based on principles that are enduring, and match the needs of america today. i am not going back to acquire time. this is a new time. this continues to be the formula that made america what it is, and what i believe will make america continue to be the greatest nation on earth. i look forward to working with you. i need the help of all the american people. i need your support, and look forward to your questions. thank you so much. [applause] >> is this working? >> this one is.

>> thank you, governor. thanks again for your remarks. terrific. while our press exit, we will move to a more informal session, shall we say, in about one minute. the governor is going to remain here while we say goodbye to our friends in the press. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> on tomorrows "washington

journal," you will get some different perspectives on jobs, the economy, and the november elections. we will talk to former michigan governor john engler, and a former secretary in the clinton administration. later, she lived there on financial market regulation. -- shiela bear on financial market regulation. >> a "from a house staffer that i thought was exceptionally inspiring is, once you realize the magnitude of difference you can make in public life, everything will fail income -- will pale in comparison. >> there was a "that those who are crazy enough to try to change the world are the ones that do. >> choose carefully, and execute

relentlessly. to many times, we find ourselves taking on too many things, not focusing on the one thing that should be the top priority. >> a week of government and leadership expect -- the education. >> i started with the mindset of what is it like to be them. now that i am in this role, what could i share with them that either i wish i had known all along the way or that they will remember when they leave washington backs which as you mentioned is a very intense, rapid-fire experience. if you leave a few encouraging messages at a time where you know it is easy to be cynical about politics, it is a good thing to encourage young people to pursue public service. >> more sunday at 8:00 eastern and pacific, on c-span.

>> the story behind the star spangled banner. the invasion and burning of washington, d.c. this weekend, mark the bicentennial of the start of the war of 1812. historians, authors, and your calls, live saturday at 11:00 a.m. eastern. also, key political figures who ran for president and lost, but changed political history. this week, william jennings bryan. american history tv, this weekend on c-span 3. >> treasury secretary timothy geithner was at the council on foreign relations to talk about the world economy ahead of next week's g 20 summit. topics include the european debt crisis, and capitol hill testimony by jpmorgan chase ceo

jamie dimon. this is 40 minutes. >> thank you all very much. i am from nbc news and msnbc. you on the secretary of the treasury timothy geithner. -- you all know secretary of the treasury tim geithner. please turn off all your devices. not just on vibrate. we have secretary geithner here. it could not be a more timely moment. the headlines today across europe and the wall street journal -- the handling of the

european debt crisis, and the timing of the banking committee as well. i want to give you the opportunity to talk about the crisis in the eurozone, the fact that we see rates rising dramatically in italy, which certainly signals there is some fear in the markets about contagion spreading from greece to spain to italy. italy is going to be the big concern. sunday, you are going to the g- 20 meeting. a lot of major players will be there. your perspective on the european crisis, the possibility of contagion, and how well- capitalized our system is. today, we learned there is a lot even the best bankers do not know about business in their bank. for all of the assurances that the u.s. now is immune, are we really? >> good question.

obviously, it is still a challenging moment for our economy and the world. you are seen growth slow a bit. that is in most of the other major economies around the world. we have our familiar challenges here. europe is in the next stage of another major escalation in their strategy to make the monetary union work, and build a stronger europe. what they are talking about, at least in the near term, are three really important sets of policy changes. the first is what they call a banking union, which is a commitment to a more integrated framework for supervision, for a backstop to the financial system in europe. this is really important, because of course no economies can function or grow without a functional financial system. and it is important because of the pressures you are seeing

from greece and elsewhere. what spain did over the weekend, to commit to a much more dramatic recapitalization of its banking system, is a good concrete symbol, and an illustration of the commitment to move toward a stronger banking union. the second thing that are talking about is a set of measures to make sure the have a framework in place to support the countries undertaking these reforms. what these fire walls were designed to do was to make sure that interest rates in spain, italy, and the rest of those countries are at moderate levels, so they can grow. it is very important that the second piece of this -- that there is a credible financial backstop in place, supporting the countries that are reforming. reforms are going to take time, and they will not work without the ability to borrow at affordable rates.

the third thing in the near term is a little bit of a shift toward growth on the basic framework of economic strategy. they have a very large infrastructure bank in europe. they are talking about mobilizing a larger scale of resources, and allocating those to the countries in europe. and they are talking about the calibrating their path to fiscal consolidation, to give reforming countries more time to get there, a little more consistent with the weaker growth outlook in europe. that sets a financial union for the financial system, a stronger backstop so reforming countries can borrow at affordable interest rates. these moderates steps toward growth are important, and would be a good next step. but this is a very challenging crisis for them still. they recognize that are going to have to do a bunch more, just to

restore a bit of calm and convince people date are able to make this work. i think there will be a chance this monday and tuesday in mexico, at the g-20 meetings, to hear where they will go next. >> you believe the eurozone will stay together, or that countries will drop out? >> listening to them over the last two and a half years of crisis, my view is they have considered this carefully and decided it is in their interest to hold it together. but they say to us privately is they will do whatever is necessary to hold it together. there are three -- there are many. among the many concerns people have, looking at europe -- a worry. does europe have the ability economically and financially to make it work? i think they do.

do they have the will, the political will to make it work? two months ago, it was written, "never underestimate the political commitment of european leaders to meet european integration work." it was a project decades in the making. a huge strategic and political imperative for the members of the union. they say to us, we will do what is a necessary to hold this together. there is another misperception. people worry about, are they actually deferring their problems? are they doing things the will make the underlying economics viable? some people fear the range of actions by the central bank are buying time to enable the countries to not do anything. that is unfair to them. they are doing very difficult things, economically, to improve the prospects for long-term

growth, and make it easier to start a company. they are working to make themselves more competitive, to reduce long-term fiscal deficits, and to restructure the financial system. they will have to do that, no matter what. this is something they have to manage. they made the choice they will do what it takes to make europe work. they are doing very tough reforms across europe's that are absolutely essential for this thing to to be more viable. >> we are feeling the psychological impact. days before november 6, what is your outlook for any real improvement barring some shots that would otherwise changes thathat? >> most forecasters look at the

american economy and they still say that they think the economy is going to grow at roughly 2% rate over the next 18 months. some say it should be 2-3. that is recognizing the pressures we see ahead and elsewhere. >> that is not strong enough to make a lot more progress, getting more americans back to work. that is why it is so important that we do what we really can do in the united states. that is to put in place more things that could make it stronger. we have the unique capacity. we are judged for the savings of the world. position tha unique

for more teachers, tax incentives, things like that, combined with long term fiscal reform. if we could do this now, we would be in a stronger place to understand the uncertainty you're going to face. >> of 42 senators said they are prepared to revisit bowls bowles-simpson. president toor the present be addressed that and give some stronger signal that he would be willing to embrace the tough choices to get the market a better sense of confidence? >> but me say what would be most helpful. did the most helpful things you could see would be a willingness to legislate.

the middle-class tax cuts affect 98th term of american taxpayers. no reason the should be put in jeopardy as the face those at the end of the year. take the risk of default off the table. those are damaging to confidence. both sides should negotiate a balanced framework of broader spending savings that will help bring our deficit down over time. the pace is consistent with the recovery. >> said that will not happen, why not take bowles-simpson and have the president sends it? >> this debate began there and

that is where it will end. the framework the president laid out a bill is different in a small respect is very close to that basic design. that is the neighborhood we plan to govern. that is the only path to resolution. what that requires is tax reforms that raise a modest amount of revenue tied was spending savings across the government. i think it would be helpful to confidence to have both sides say that we are willing to negotiate a free market that moves in that direction. >> this is where this has to go. there is no plausible way to get their economically or politically without that kind

of framework. it mary's tax reform with broader spending reforms -- it marries tax reform with broader spending reforms. >> should there be a temporary extension of the bush tax cut thas? >> our view right now is that we need to take advantage of the incentives created by the sequester. it will force this town to confront and take on the things that divide us now. we can go ahead and govern and start to address the other many problems the country faces. for people to we are going to put that off i think would be damaging to confidence. this is a place where people spend a lot of time worrying.

there is a cloud over the economy about whether washington can work again. i do not see how they can have the confidence. >> the date the fed reported indicated that the recession -- >> we would not support that. is that claire? >> got it. -- is that clear? >> got it. the recession is so much deeper than anyone reported. the middle income americans lost 39%-40% of their wealth. this is a devastating loss of a generation for middle income americans. how do you as a policymaker take that in and translate the effect on average american family is? >> it tells us what we already know. the crisis was much deeper. the damage to confidence and

wealth and people security is much greater even people could see in the number is at the time. the economy was shrinking at an annual rate of 9%. house prices have fallen pretty dramatically at that time they started to move up quite early in the first half pit pension savings started to go up again beginning in the second quarter of 2009. income growth started to recover again. it was a deep, a traumatic scar across the economy. we still have a long way to dig out of that and repair that damage. absolutely. most of the damage was done. you can see what happened in

equity prices. that damage, those things started to improve and stabilize. when the president's policy started to get more traction. they got traction pretty quickly. it was remarkablremarkable. we have positive growth in the summer of 2009. in six months, you went from an economy that was falling off the cliff to an economy growing. growth has not been as strong that any of us would like in part because of europe and the heaheadwinds at the state and local level. in some ways that is a story of how effective and how quickly you saw the economy start to stabilize and recover because we did move very hard and very

fast. we did the difficult things very quickly. that made a huge difference. it did not bother a lot of problems. it was very important. if you look at europe, and everything is a justification for the basic lesson in crisis management. >> if that is given that the average american does not understand private equity, wall street, the banking system, except to worry about it, what is your response by jamie dimon that the best banker and the banker with the best record did not know the size of these debts and it did not know of the risk entailed and that the federal reserve imbedded in the new york and london at jpmorgan chase were unaware? what does it tell us about the

regulatory system and the apparent rests? >> it is an import reminder of three things. this is inherently uncertain. nobody knows the future. what makes this a challenge is you cannot predict how any position is going to be paid on the basis of the last three weeks or years or months. that is what caused the financial crises. that is what makes everything about managing risk complicated. you need to have a lot of humility about the basic uncertainty we live with. the second thing is that the best defense against that particular inherent an avoidable problem is to make sure these firms run with less leverage, more capital, more conservative funding. there is no rule or reform our supervisor that can define their

objective as preventing these firms from taking risks or making mistakes. is whether you make the system strong enough. those mistakes do not matter. the best way to do that is to make sure firms hold much more capital against risk of the losses they make are low and the rest of the system has a similar cmoa structured shock reforms. -- similarly structured shock reforms. this was manageable. this is why it is being designed and implemented. if we allow them to be

weekend we will be much more vulnerable. i completely agree that it is a good reminder of the uncertainty we live with. it is related to the reality that we cannot confidently predict the future. the best way to deal with that is to recognize it and force four these firms to hold their position. >> the argument being made on the hill was that there has to be inherent risk in banking. do you think looking at it from the outside that they did anything wrong? >> i would say that one strength of what they have said is that they were direct and clear and crisp in a mixing the scale of the error and in trying to get quickly to what produce that and to get very quick.

that is a good thing. the job of reform and supervision is to force them to hold more capital against risk to make sure they understand them and they let them to a tolerable amount. he began with a related question. it is how comfortable should we be with the strength of the u.s. financial system? this is a good test. we have several test like this for the last several years. the core of the financial system we forced to raise $300 billion in common equity since the peak of our crisis. they are funded much more conservatively. they have reduced their exposures to the most obvious risks to radically. i believe we are in a much on

their position that any time you were in the last six or eight months. to withstand the strains of what is happening. the challenges are hurting growth here and elsewhere around the world. spend a lot of time trying to do this. >> why do you think wall street is putting its money and it romney's kant? the 21 big contributors have now switched sides. >> i cannot speculate on their motives. i suspect it is because they believe they are more likely to get a more favorable hearing if the republicans have a stronger

hand in washington. >> i do not think they will be successful. the core reforms we will fight to preserve. we will fight to keep them. there is an overwhelming case to do so. we are still living with the spirit.caused by the spirit > >> what romney said when asked what he would do if there were another financial crisis, he said -- >> why would they leave the country vulnerable? just to finish up what he said,

i can tell you this. i'm not like to have to call up timothy geithner and say how does the economy work because i spent my whole life in the economy. >> who said that? >> met romney. [laughter] >> you want me to respond to that? [laughter] >> in terms of the president's comments, we know what he meant. when he said the private economy is doing just fine, how do you explain to the american people what he meant? are in the middle of a close campaign. >> it is a tough the

economy still. we tried to put out as clearly as we can, as powerful and creative a set of proposals for helping resolve that as possible and to legislate as many as we can. we have tried to choose one that have had a tradition of a broad bipartisan support in the hopes it would ease the prospect of legislation. that is what we are going to keep doing. we cannot just focus on growth now. we have to worry about the longer-term. we believe those things would be best combined with a long-term plan to restore fiscal sustainability. that is why you have to thing about these things. we're having a debate of the right way to help growth and now. we're trying to meet the test

you need if you are governing, laying out what we are for. >> the justice prove your own point. you are right on the message. given what you have said about wanting to just search for the first term, have you read thought it the president is reelected whether you would stay there it? >> no. i have not rethought that. by thank you for asking. [laughter] you've had so much fun in the first three years. now come to the time when the audience joined in. please state your name and affiliation. keep questions can size. with the microphones to reach you. right here in the fro -- wait for the microphones to reach you.

right here in the front row. >> thank you are coming back. you said that we needed a balance plan for fiscal sustainability as well as room to invest. i want to ask you as the treasury secretary, how would you tell the difference between government spending that is investment and spending that is not investment? >> this is really the only place we were proposing meaningful changes in what we spend. we what it limited to areas we think there's a pretty high economic concern. you will not see it happen without the government playing some big role. the examples are public infrastructure. the overwhelming compelling case for doing that. private markets are not investing in that context.

education. very high returns to education. we have seen a significant erosion relative to the rest of the world. there is a pretty good case for investment in basic scientific research, as we have done for decades. maybe going be on there to support areas like clean energy. you're likely to see the market under invest. this is a relatively limited list of things. a huge part of what you do is incentives for private investment. we propose a broad framework that we think would improve the incentives for private investment here, not just things like permanent advantages for this but to clean up all the mauck. these are some things we think.

if you look outside the medicare and medicare and social happened toat's has the role of government is you're going to see a significant restraint across the government to preserve room for those third four areas that we think our investments with economic returns. >> right here in the front row. >> i am with the postgraduate school. five days before he took over the job, everything collapsed. he had a combined respectability but oversight. he said that when he got there he cannot begin to understand

how the system worked. he pulled together a team. it took them six months to identify how our system in the u.s. worked and you were all the players and who talked to one another and to do not. he said if you do not understand that, how do you know what to fix the? if we understand it, why isn't it made public? >> are you talking about the complexity of the oversight structure? >> he was looking in the whole financial system. the process really matters. you ought to be educating us on these unbelievable processes so we can see that will make a decision it makes sense. >> there is so little education about how our financial system works. when something like a $2 billion

happened everyone goes the sky is falling. maybe it is. the average person does not know how to deal with it. >> it is true with a lot of things. i agree about this. we do have a more complex financial oversight shropshire. what makes our system unique and different is that it provides tap the credit the economy needs. most of your banks are 3/4 of it in that context. it has a bunch of its advantages.

some parts of the systems are weak. we also have left in place a very complicated oversight structure. we have banks regulated. >> it needs to be there. >> i would love to spend more time talking about it. you are right. it is a complicated system. these you do not have a lot of confidence that it works. the is lifted thelived through worst financial system. they are simple in terms of capital. in their design, they are complicated. in make it harder to make you believe that they're better.

we can do a better job of it. >> going back. >> what is the u.s. interest with regard to the euro? doesn't matter to the u.s. whether or not europe proceed with monetary jurisdiction? >> it does matter. we have a long interest in supporting this project. we cannot choose how to do it. we do have an interest in doing what they need to do. >> what role do we played?

there is a phrase that we can not want this more than them. we cannot make these choices for them. it is 17 countries. it is incredibly different politics. they're fun to have to figure out what works for them. what we're doing is what i think we can do. we're trying to be as helpful as possible. they come to us all the time to ask as for ideas on what might work. but that the lessons. they're willing to give that advice. where we have the capacity we are doing that. the federal reserve is doing what we do uniquely pierre this

is what we have done on a very substantial scale. we are supporting with the imf is doing. people say we should be louder. that would be more helpful. i do not think so. there are people that say we should go right them a check so they do not have to write a check. czectax i do not know how that is valid. if we try to limit the burden than their commitment to the endeavor would look weaker. that will not help. >> what matters that's correct in matters because we need a strong europe. we do not benefit from long european weakness.

>> last october at as you a question. do europeans have the financial powers to sell this issue that are you satisfied with the position on this crisis? have the germans made up their mind? >> and now there's a lot of focus on germany. it is unfair to look to germany as the sole source of the problem. what germany is saying is to make monetary union work. we're prepared to put a substantial resource behind this. for that to work in these to be in support of reforms. this is a very reasonable position. there are lots of elements of

this strategy. and the basic premise, he wrote this and a good sense. that is perfectly reasonable. you need vote for this to work. we need reforms that will indoor. and does not just about germany. back there.tter fromicrophone >> thank you. to review youring process project progress next week. i assume they're not want to do much more than that.

do we have time for 11th hour action by europe once again later in the month? spain yields are be unsustainable. do you have that time? >> i think you're right. if you wait to move in these things, and let the market ahead of you, the increase the costs of it harder to get their head there is no argument. they're having a summit. they are negotiating a new set of reforms civic and lay them out to the world. you're asking the question of the world will wait for that. they have a pretty strong incentive.

they're adding as much clarity to those plans as early as they can. they can make the major players state what their intentions are even if the take a little time. this can be reassuring. is theu're going to see world looks still to germany and other major players to lay out more clarity what these broad objectives mean on banking unions and a fire wall for the reforming countries. at the mark parity with the better sooner. >> you listed three things, a

banking union, and i remember, firewalls, support mechanisms. you said ask that the summit. are you confident you will get all 3 dec? are you confident th? what is the risk that they are falling short? i think this goes for the consequences for the broader financial system including our own. >> i think the states are pretty

high. their interest is more powerful than anyone's in trying to avoid that risk. how confident and i? -- am i? they have laid out where they want to go in these dimensions. they put some pretty capable people in charge of trying to design the details of that framework. based on what they say to us directly they're serious about it. they intend to move. this is not like it has been the fourth major escalation. this is different from the way it felt before. they're not minimizing the risks. they are not telling us that they feel they have a whole bunch of time to wait. hopefully, that is encouraging.

>> i am told that we have no more time. we want to thank the secretary geithner and your team for making this possible. [applause] i should point out with all these cameras it is very obvious to make sure everyone knows this was entirely on the record. cried thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

? the senate finance committee but said how medicare reimburses health care providers and the effect on the federal deficit. we will hear from health- insurance executives. you can watch the proceedings live at 10:00 a.m. eastern on c- span. >> kenya, indonesia, hawaii, kansas and washington, at this weekend's on a tv, sunday

starting at 6:00 p.m. eastern. a record of his travels. he takes your calls and questions. also this weekend, joan of goldberg blames liberals for an ongoing war on ideas using tierney of cliche is. >> american politics has been distorted. there is this idea that the further you move away from the left the for the you get from bad things. in some ways, the best working definition of a fascist is a conservative who is winning an argument. >> this weekend on c-span2. >> it has been 40 years since the watergate scandal began. this weekend, c-span radio will air recorded conversations between richard nixon.

>> we have a cancer within the presidency. it compounds itself. this will be clear. i will explain some of the details of why it is. people are want to start perjuring themselves pretty quickly. >> hear more of the nixon tapes this saturday at 6:00 p.m.. >> they discuss what it is like a developing country.

the moderate a panel that also includes the former head of ireland. beta said this event at georgetown university. >> good morning, everyone. i'm judy woodruff. i am extraordinarily i honored -- honored to be your this morning and the participating in this important conference on the future of development as it intersects with democracy and security in the 21st century. at a time when the world is growing not only more complex but more and more interconnected, we know that it is more critical than ever to pay attention to the needs of every country. as one nation are in distress, and there are repercussions for

the entire region surrounding and ultimately for the entire world. we're so fortunate to have with us three currents and three former heads of states, all women who play or have played instrumental roles and leaving their own country their historic transitions and over key hurdles and development. of the 197 countries, only eight of them are led by women. to have three of them together at one time is unusual. it is a great opportunity for all of us here this morning. each one of them has an important and distinct vantage point based on her own experiences. it is nice to say that. we expect to learn from each of them. i will briefly introduce them beginning on my immediate -- i

will start on the center. on my right with the president'president, and joyce. to my immediate right you recognizer, alan johnson, the president of live area. -- of liberia. to my immediate left, the president of kosovo. on my far right is the former president of ireland, mary robinson. she is the president of the mary robinson foundation for climate justice.

on my far left and on my far left, and the administrator of the united nations development program, alan clark, the former prime minister of new zealand. it is an extraordinary group. i want to the gamut an unconventional question before we get into the important topic that we're discussing this morning. i want to ask each one of these leaders to just give us a fact or two about your country. maybe something many of us do not know. i am going to start with you. >> there are decades of

conflict. it resulted in dysfunctional institution. young people bypassed by education and training. a lot of despair. six years of trying to fix it. we brought back hoe. we have young people back in school. repairing the infrastructure. one today they see the future and in which each one has a stake. one that has the ambition to be

a post-complex success story. [applause] >> what about coast of kodak's what do you love about your country? kosovo? about coast of what do you love about your country? >> as we were looking here we are just celebrating in my country. there is the entry of this. it has been supporting peace and stability with international community'ies. these past 13 years have not been easy, particularly in the beginning on trying to get over

with the consequences that were left out of the war. thousands of people have been killed. for the first year, it was a difficult time of trying to cope with all of this. they're trying to build the country anin order to overcome these consequences much quicker. i am so proud i come into the country. it has one of the young the speculations. it has about 60% of this.

it raises from 26 up to 35. it is well educated and well trained. but we are looking to provide a better future for them. what to find a piece for myself. the population will have a better future. >> thank you. >> the presidents of malawi. >> thank you. from malawi.om a loudl 60% live under the poverty line. one thing about the people is that they are resilient and very

clear about what they want. they lived in a country for three years that have lost direction. leadership was corrupt. leadership was human rights. what i love must is that they knew what they wanted for themselves. they stood firm. we have a peaceful transition. in some parts of the world, there.

>> the head of the united nations development program. >> i come from a small country that is done for being peaceful. we have a history going back to the 19th century when after a treaty signed between the indigenous people of new zealand and the british, when the treaty was not respected. a civil war broke out. the indigenous people were the losers. the zealand has been quite preoccupied with truth and reconciliation, restoration of dignity in every respect. i think we offer some experiences about to overcome a difficult past the very clear

policies. >> thank you. >> finally, the former president of ireland's. she is addressing climate. >> when i was crying up in the west of ireland, we always thought of the next parish being there. he mentioned passion. i putting it in terms. i think women tend to be more intergenerational. we tend to think of children and grandchildren. i children better in their twenties and forties. i have a sense that they will look back on this time and say how could they have been so neglectful? how could they have been so

shortsighted? why did they do not understand the urgency of dealing with issues of development and huge population increases? the security issues. there is an urgent need for a leadership. i think a lot of it has to be in leadership. this is what is needed. the issues we are discussing we are discussing in an innovative way. they are issues that are not being given leadership on is our challenge. >> thank you. >> we have heard from each of the three heads of state about some of the stresses in tinges in their own region. i want to start with you. tell us a little bit about how

you see the main hurdles that a country faces a moving from conflict to post-conflict and to continue on a path to democracy. our focus is development in the context of democracy and security. >> in managing the process, but post-conflict country, everything is a priority. the greatest hurdle perhaps is managing the expectations of a young population that has been bypassed by education and skill, giving them hope, enabling them to know they have a stake, making them productive citizens again, of bringing back their

confidence and their dignity. if one can manage those when i think you have a chance of being able to address all the many other shortcomings. >> more than budgets and money, you are saying high expectations is the job of a leader to think about that and suggest that. >> that is very difficult in the post-conflict environment when patients runs out and have taken time to the fundamentals in place. we need to go beyond that to be able to transform people and insure all the things begin to affect people's lives. >> what would you add to this question about the main challenges facing this tax >> i

have to agree president. the community has to be a part of every process from day one. they have to feel that level of the confidence we have seen in the leadership. they also have this that has the accountability and responsibility. the ownership that has to be developed is only link with the leaders. it is within the community. none of the reforms are process, it is not possible if it is not accepted and received. we have a lot of the progress.

it has been viewed as a success story between the local institutions. we could be much further today have included the community and made the population a part of all of the process. in our country, all of the people from the education and others have not been a part of the process of the development of the country. they have to be employed by international companies. that is a short-term solution. i think the best solution is the combination between the community and the local leadership and the international

ones. if we really want to get the best of the process. there are being received and transmitted. >> what about you? how do you see the most challenging piece of this transition from complex? >> i think the problem is that the whole economy was near collapse. the people are living in very difficult conditions. they help that there is expectation that things would change. sometimes they expected to come immediately. it is what you do. what i had done is to be all inclusive to ensure -- to be

able to talk to the people. i believe if the people are told the truth they will stand with you. and my particular case, i have for to the people for 30 years. i believe that leadership is a love affair. he must bottom of the people. they must fall in love with you. >> we will remember that line. leadership is a love affair with the people. >> if they trust and love you, they will stand with you. especially during difficult times. in malawi this is the time. we're trying to recover. i have said to the people that we must very quickly move.

we will depend on aid to the tune of 40%. we must change the way we do business and change. these are the steps i think we should take. we must take them together. to give people a boat is what is critical. >> at a time like this, we're trying to get back on track.

he must be the first to demonstrate. you can make sacrifices. for me to get to zambia to see my brother it takes me one hour. if i do not have a plane, it would take me two days. when you tell them we're going to sell the plane, and they know what you are talking about. you want to get down with them and pay the price together and supper together. >> you're dealing with many leaders. what would you add to this conversation about moving from conflict to post-conflict and for the focus should be? >> the first one is to build

public confidence. everything needs to be done at once they get traction. people need to be taken into the leaders' confidence and understand the path that is being followed. the more inclusion the better. the better engage with the people. there's democracy to be deepened. there's livelihoods'. democracy does not that food on the table. that would take a while to be more confident. be the key to everybody doing better in the longer term. sometimes symbolic decisions, or

night tweeted, i got an incredibly positive reaction about being a woman in charge. it really is highly commendable. >> you clearly have experience in this area of conflict. what one thing would you add to this? >> we need this confidence and closeness to the community. we also know and need innovative partnerships for a change. it is happening. this conference has engaged partners to usaid. you are working begin are increasingly linking this to the business community. she is setting up women in different parts of the world of both leadership and regional to try to create these partnerships.

this is an important part of how we can this. this is very disappointing to see the preparation and the real urgency of the problems. we have never had this before in the same way. then we have kindness, which preoccupies me more and more. this is a country with different views on the issue, but we have to understand in the countries in africa in particular that the climate is affecting people. it is affecting development. everybody knows it. >> that is a reminder that there so many issues, so many balls in the year that you have to keep moving as the leader of any one of these countries. what about -- getting back to

what president johnson said a moment ago about everything is important -- how do you prioritize when you want to maintain a strong democracy? you want to maintain security, however you define it. you're thinking about development, but you don't want to be dependent on the rest of the world forever. how do you decide what is most important? how do you make those decisions? >> there is no easy answer to this question. everything coming in the beginning -- after the end of the world and up to the conflict, everything has to take time at the same time. i am a firm believer that making the short term challenges will lead you to the most sustainable country of development. i will go with a few examples

that my country has taken the lead in. i will go back to the community. that community needs to see that the country is their own country. the best combination is their joint responsibility for the proper success or to make it a joining success. after the conflict, together with international community, the local institution has taken up the leadership in accordance to the effort that has been made 15 years ago to try to set the preconditions of the proper life of the people. which is getting back into the proper function, the 100,000 houses that were destroyed. also, having set the proper conditions for the refugees, which was about 60% of the

crickets -- 60% of the population, said that the elementary conditions for the people to return and to have the food and supply necessary for a day to day living. immediately and parallel to that and what also made our country become one of the post- conflict success stories is that it is also trying to solve the security dilemma along with rebuilding infrastructure and security of the elements from the security force and the police organization where both of those have been used as a tool of the repression, where the community has not so much trust. vetter said, they had a fear toward the uniform, whether the military or the police.

by granting their political and troll and establishing the state monopoly of the force in the public security. at the same time, poland started the process of reconstructing the policy consistent that we would be establishing together with the other local actors. which would be meeting the need of the country, addressing the circumstances of the country, at the same time, establishing a legitimate government based on the power-sharing model. these are all the preconditions that will be due from the short term of the solution or the challenges immediately to have democracy developed, to have secured the envelop, and have the process of state building. >> turning back to your comment

in ago -- a minute to go for you say everything is important in used to have to prioritize, you have to focus -- security, democracy broadly speaking, thinking about development and moving away from the need for development. how do you make those decisions? how do you organize? how do you approach it? >> it is always a challenge trying to find the right balance between the promotion of sustainable development based upon growth and the conventional methods of achieving that growth. and the promotion of democracy based upon an open society in which accountability, transparency, participation are the key elements. everyone wants to -- one has to

find a way to reinforce both of those concepts. that is always difficult. putting one to work, changing the work ethics in an environment in which having a society long suffered to be a refugee one of entitlement and dependency be part of the normal behavior. the two much reinforce each other. there's always a debate as to whether democracy capitalizes development or development capitalizes democracy. in our own experience, we have both, but there are bound to become good christians -- to be contradictions. you have to get to the infrastructure-trip, getting the institutions, introducing a

society that has long bid neglected. there needs should be met and their freedom to choose. we choose the path of trying to, first of all, stabilize the situation, get the fundamentals in place well, at the same time, in still freedom in the society with an amount of participation and accountability. that creates tension. in the youth, they have a sense of entitlement and come in some cases, a sense of disappointment. >> i think that is the second time you have mentioned the youth and the concern you must fill you have about how they see the future.

>is there one right formula as you think about balancing all of these priorities? >> what i have done -- it is only six weeks. [laughter] [applause] >> it does take some call on my part to ask for these questions when she has only been there less than two months. >> the whole world has asked how you will have money to have so much in six weeks. but they think it was necessary. it is about the people who have prepared for change. so it has been a little bit easier for me to make a bold decisions i have made. what i have found that is

helping is the quick wins within the short term. that gives people hope. in my case, ford is after a was an office, i established -- four days after a was in office, i established the initiative. and there was the initiative on poverty and then the education. i wanted people to continue to hold onto hope because i knew these are the two areas that they were concerned about. as you know, 690 women died at a 100,000 giving birth. increasing every day, i say to the people, it is unacceptable. we must not accept a woman to die giving birth to another

life. and i have also said that, in the initiative over poverty, is encourage women of youth. get involved in a production of cash crops. that is for exportation. this is short term. in order for people to see that there's something to look forward to. in six weeks, i have launched the construction of two shelters so that women can get to clinics a week or two before so they don't die walking the long distance to the clinic. in the long term, you must begin to show the people that we must change and begin to strengthen our government institutions. at spoken again and again about

tackling corruption and putting in place institutions that will tackle corruption but also to follow up cases that have been lying there because people cannot want to tackle them. in the long term, we concentrate on the economic recovery to strengthen the government institutions but also to begin to win back the confidence of our donors and partners because that really devastated allowance -- devastated mala wians. you need to do what is required to make people move along with you. >> we talk about these broad concepts -- development, democracy, security.

but when i hear each of you speak, you talk about specific steps to have to take that makes those things a reality. is that a big part of what it means to choose? >> absolutely. i have the advantage of nine years at the top of my government. you pick your fights. you prioritize very clearly as to what you can do in what timeframe. you cannot do everything at once, but you can put up the building blocks that you build on further as you have the time and opportunity. looking at the issues which confront out of crisis, the constitution is written, the elections have been held, those things have been done. but then the priorities move to have do you actually build the capacity for your government to deliver it and delivery becomes a big part of building

confidence as well. you have to build a parliament which is such important for public to scrutinize government. and address correction, etc. -- and address corruption, etc. the security sector, police and so on, a big job there. the judiciary has to be built. then there is the work on the reconstruction and it can take a long time to get to the significant infrastructure. but at least the basics of shelter and so on have to be began. and i stress again, the all- important livelihood. people need to eat, a way of earning a living. with the development partners, they can be helpful in support for the cash to work in the kinds of schemes that get income back into people's pockets and

allow the microeconomy to start again. inclusion, we mentioned, is a great deal. it is a priority for the public money that is available. education schools, we're all talking about the huge youth generation which wants to fulfill its potential and is frustrated. if we do not deal with the hopes and dreams of young people, then all of our societies are in trouble. it is the biggest complicated agenda, but pick your way through it very deliberately. >> president robinson, what advice do you have? if you would presume to give advice, as you hear the difficult choices that these leaders are having to make every single day? >> when i was listening, i was struck with the commitment and also the willingness to be innovative. i remember in 2009, being in

liberia for an international symposium and with support from another woman president at the time of finland -- there was criticism of ellen for daring to have an international symposium when her country was still try to have the basic infrastructure. even hotels that people could stay in. but come in fact, it was great not just for the women of the country, but the pride of the country. it changed some of the dynamics. she is a new president in a country that she has already made some impact in. from time to time, do something bigger and order to -- and do it with partners, with outside partners of that kind. then you continue in a symbolic way to drive the agenda. it is not business as usual

anymore. we have the extraordinary capacity people themselves to link and people in the informal sector. what amazes me yet the moment -- what amazes me at the moment , these are very poor people, but they are linking through the numbers that they are and we have to address the young people and it has to be done in innovative ways. the capacity to create these new kinds of partnerships -- and i think women are good partnering and good at listening to and forming better partnerships -- it has to take on much more of a role in development. the last thing i would say, because i have to, listening to the commitment of these distinguished women presidents dealing with their country's,

the they have to prioritize. each of them has prioritized democracy and the structures of democracy. are they getting good examples? and money is corrupting democracy in this country and it is being followed in the rest of the world. the pacs and super pacs are undermining democracy and it is something we have to be very vigilant about. [applause] >> that is a perfect segue. what does democracy look like to you right now in the world that is democracy still appealing as a form of government? there are criticisms of democracy and the way democracy workss.

they are not all the same. is it appealing as it once was? how do you know that it is the right path for your country? >> i have always said, yes, democracy for the whole world. but i think it's part of the world will have one day to develop their own and collett democracy. for example, in other parts of the world -- and called it democracy. for example, in other parts of the world, they didn't have democracy. they had what looked like autocratic governments. then they fought to get what they thought was democracy. and what we see now is total chaos. is that what we want? i don't know. but for us, in africa, i think we are coming up with a mix of democracy and a mix of us

respecting our traditional and historic models where our chiefs and are local leadership is there and we respect them. and i am taking total advantage of that in my program. because the chiefs -- i engaged the cheese with the chiefs. every woman can go -- when we build the clinics, i shall say that everyone will go. but that can be autocratic. >> yes, democracy is flourishing in mulallmalawi. i think each part of the world will have to have their own, what they consider democracy. >> president johnson, what about in liberia? you have a different history

from every other country. of course, every country's history is unique. but what does democracy look like you right now? is it easy to embrace the concept of democracy today as it has been? >> today, i think democracy is exemplified in the liberian experience are the basic things we know. the promotion of basic freedom, freedom of expression, association, religion, the rights of the people to participate in the decisions that affect their lives, the rights of them to question and insist on accountability, transparency by their government. but i think we need to be very mindful but when she talked about democracy being corrupted by money. when nine campaigned in liberia in the 1980's, we went to the

villages and we were hosted by villages. they provided for you. when i campaigned in 2011, i carried t-shirts and caps and -- [laughter] all the goodies of which they feel entitled. and it keeps going up. every election year, you have to take more things. the money goes to china and they bring them in containers. [laughter] democracy remains the same, but we put a chapter on what is happening. >>, to give away. >> yes. [laughter] >> what does of democracy look like you? what does it mean to you? is it the same as what it felt like 5 or 10 years ago? >> definitely, it is not the same. as a democracy at this level today handed democracy four

years ago or 30 years ago, democracy is a very achievable thing. but, at the same time, it is also a quite challenging process. the democracy by many people can be understood especially in the beginning. like the freedom of expression and freedom of speech. but sometimes i found that quite often, with recent examples, that the democracy people expect a very quick results. when there is not a quick result, they become quite disappointed. democracy is not that you'd solve it today and you see it tomorrow. people must have the access on the information. that brings into the light the

level of the interaction between the government and between the people. the governments are there to serve the people and not the people to serve the government. that has to be inserted. the process of the democratization in my country has lasted longer than we expected. i have a message here that there is no -- system. canada -- you cannot take it from kosovo and inserted in liberia or someplace else. the international community should come and, hand to hand with the local government, start the process of democracy and not

try to impose or force the system because it will not work out. i'll reviews one example. -- i always -- i already used one example. by receiving those kinds of changes, it will reflect very differently. in my country, the process of building the democratization, it has been done hand to hand with the local institutions and international partners. every process has been planned in advance how that would be reflecting could -- reflecting. maybe it would work out in finland door of the netherlands. but it will not necessarily work out in kosovo.

they need to work with the expertise of their own needs. >> who should hear that message? whom do you want to hear that message that you just so passionately shared with us pierre >> the message has to be from the local leaders and the community and also from the international community. there has to be flexibility with the emission mandate. there is not a fixed mission mandate. there -- it has to be preplanned and join the plan with the local actors are within the country. because you cannot function by just coming and inserting it within the country because it will definitely not have an

effect. >> administrator clark, is that realistic in the way things work today in the world? >> i was going to tackle the question is democracy appealing? it is the best of all available options. what is the other buttresses? not give the people an option in who rules? there comes a tipping point and it might be economic hardship. it may be the growing despair of youth never getting a job. it may be the further impoverishment of the poor which came with the global recession. tipton points for the growing middle class, the organization of workers, the organization of students. and another tipping point is the role of information and communications technology which

has had an extraordinary democratizing effect in a number of countries. i think democracy has some safety valves in it. but i think they are right to stress the point about being vigilant with democracy because too much money sloshing around is corrosive of democracy. too much concentration of media ownership is corrosive to democracy. and i think democracy is challenged by these issues of the moment, how do you provide with freedom -- provide for freedom of expression and voice and not let that become over- weaning because of a concentration in power. >> do you think the country is prepared to hear that message, that democracy needs to work at the ground level? that it needs to listen to what the community wants and cannot be imposed from the outside?

>> i think that each country have to craft its own design. but we come back to the fundamental principle. if we believe the people have the right to choose their government, we can build our own unique ways of doing it from there. the constitution of picasso -- the constitution of kosovo will not work for the constitution of new zealand because we don't have one. but if it is the power people to choose, i think then it will be capable. >> president robinson, how much can a country taylor and democracy to the needs of their own people? how much leeway is there? >> and think we have heard from all of us but that has to be the starting point and build with your community and that is the essential voice and that the international community should support as much as possible.

i am involved in an interesting way of assessing how countries are doing in government in the continent of africa. the index covers 54 countries on the continent of africa. we will have to wait now because of sudan and south sudan to become clear. but all of the other countries are working on their human development, economic development, human rights, participation, attacking poverty, health concerns. you can see the index where the countries are making progress. for example, liberia is coming up the index. zimbabwe has come down for reasons that are understandable. this is an index that has the marriage to -- has the merits of being treated by an african.

-- has the merits of being an african appeared. we don't measure the performance of democratic governments very carefully. it is left to them making speeches rather than what they are actually doing. can you measure improvements? this is what this foundation is doing. i think it is a very innovative example. >> we cannot have this extraordinary group of leaders without asking a question about how much difference it makes. it does it make a difference. is there a material difference of what you're able to do and

how you are perceived by the people who chose you that ?ow do you see that that's >> it does make a difference. [laughter] life has been world for men. it is the first time and make progress in 60 years. really, i do believe that women leadership brings a certain dimension to the management, in need of humankind but i think i think comes from a woman and mother.

it does not and should not take .way a woman's competitiveness once those are in place, then i think a woman leaves. i think a woman is more honest. [applause] what about the fact you are a woman in your position? think about this. >> let me start by saying what happened three days ago and washington.

people came to have a meeting with me. the spokesperson said we are much different. what are each of you going to be do differently? i said they were not women. what i was trying to say was that i was trying to communicate that this was my personal conviction. we look at leadership different. it is the principle of stewardship.

we stop having any motive. particularly these women. i was coming from an abusive marriage. i decided no one was going to go that pact if there's anything i could do to change this. i went flat out for 30 years. by the time i went into this position, everyone knew what i have been able to do before. how i have fought for women's right. i believe being a woman is the best. the woman later is the best. now and africa, men and women have agreed that they should

allow women to participate in leadership. at this time, allow me to give the president an incentive. she said in my country they went out again and again telling the people it is possible to have a woman leader. it is the support and my country that we must get to one another. in order to support more women to enter the leadership care we come here to do something big for women. he began to get the confidence

in the people. when she came, we had a maternity clinic. everyone knows i am not joking when i talk about fighting. we will go with the president. we will be abused. at the end of the conference, they made a statement. all women in africa willing to support them to get into leadership. because of back, women issued statements condemning them for treating me the way they were. we know that women make better leaders. as i can say, i am looking at

five years with four or five women presidential one. >> next time i'm glad to ask you this something you felt passionately. >> what about you? how is being a woman affecting changing your ability to lead in kosovo? >> it really does make a chance. it makes a change to have women in the leadership role.

women are better in the decision process making because they're more inclusive. they have more ability to listen. in the process of the decision making, you need the head of the state. the need to be able to have full participation. you can be able to have them to listen. and have an affinity for building at the bridges. building of the soul of the consensus between the leadership. this is not the case.

only one year ago there is almost a consensus and every matter which is state related or it is for the major interest of the country. they are committed on what they are doing. they do it with a fall passion. they have a zero tolerance toward the negative matters. i have started to councils with in my presidency. it is setting up the council. mike hunter has a lot of perception about the corruption.

this is a continuous burning witches an obstacle. -- which is an obstacle. they're having a fat woman fighting the crime. it has been very well, except by the community. community has more trust. the only answer is saying they are best corrupts. they did it. they do it with the commitment. those are the values that can be found within the one man. they are more mobilized with their environment. it is something that has to be more bloated. in the globalized challenges,

the gender issue is not only a problem of one country or one state. in order to transact, we need a global response. how we do it is the network in the leadership role, how to best share of the expertise and how to address the issues. >> it is remarkable to be able to get directly the perspective of these leaders there is a good day. >> yet at the chance to think about this a lot. with the benefit of hindsight, how do you see a thing a woman changes? >> i talked about it a great deal. it is not that women are better

than men. women lead in a different way. when i was elected president, and i talked the women of ireland to have been rocking the cradle. it is very important to me to be a woman president. i joined this in establishing a council of women leaders. we mentioned there are women presidents.

directly there.direct ple the only one i know who declined was margaret thatcher. we have a critical mass of women think it has to begin to make more of a difference. a number of us are called in ways of linking when men in a way that women naturally network. climates are undermining poverty. there is huge gender dimensions. women's leadership tends to be more

intergenerational. this is an innovation platform. when the noble priest women, when they got together, it is now an institution. men have been nobel peace prize winners for a long time. it was not part of their thinking that they would get together and network for good as a woman's initiative. i think this is where women can be more creative. >> yet had the benefit to think about this. what would you add? we have all been the first to be elected by the people?

the public has to visit a woman in the role. this is the glass ceiling that has to be broken. one could talk at great length about that. we have to be frank that not every woman leader there has ever been has been a saint. not everyone has been caring and sharing. mary has reminded us. i suggest the ones here. >> there is a material difference. we are reminded of not everyone being caring and sharing. as a matter of principle, this should be equally there.

the civil society should hold us to ensure that we deliver for women when we are there and not pulled the lever up. in the end, women have a fundamental connection with society which is not shared to the shared extent. that is what these societies that women and of taking more responsibilities for the care of children and being very connected with the needs of people. how does the health system work? have my kids got a job? in the end, we see women much more attentive to these kinds of issues and services. >> for the last question, i want to bring it back to the subject of this coconference.

there are those that think about development. what do you most needed? what do you most want in terms of development that's what do they need to know about your country and your people? it to make it just a much more efficient, effective process. i will start with you. >> and recognize that our people, particularly those in this area are intelligent or not educated. they know it best.

they know what will help them to change their lives. though should listen to them. they should construct our programs for this. it brings the best results. >> has that not always been the case that's correc? >> it is changing. the ownership factor is being recognized by all. the evolution is established by governments. they are in consultation with their own people. we have reached a level where we see full compliance with this principle. it is moving in that direction.

we encourage everyone to move at an even faster pace. >> i am going to come back to prime minister clark. what is it that the west, is that a message that the development communities hear? >> it is important to invest for the long term. they want results. these are the work that leaders want. they're looking for this. it is in a generation's time. i think that for development assistance which is a relatively small time, there are resources.

it needs to focus on capacities and on building resilience. be prepared to explain that to the stakeholders. they will take time to achieve. the quick results may not be sustainable at all. have faith in these leaders. invest in them and their capacity to change their country. >> from your perspective, being an office at the show over a year, what is it that the development community needs to know about your country and what the need? >> i think that now we're coming to the stage where we need investment frontiers for the future.

we are the frontiers. we need to identify now the frontiers for the future. we need to invest in the future. we continue building up the relation between the other countries, particularly into the western of achieving the long term goals. that can be done. they have the right to moving forward on the direction. it is the time today that we

need to identify this. >> present roberson, as someone who has spent a lot of time thinking about these areas, are these messages the international aid community is hearing that >> these are the messages. i know that. i think it those messages are heard comment irresponsive them has to be beyond frontiers, innovative. european countries are cutting their aid budgets unfortunately. it did not think the united states budget is going to increase dramatically. let me give you an example. i happen to be designated an

elder. we wanted to tackle issues and discrimination against women. it is a huge area. can elders do something. we realize the extent of it. 10 million girls a year are married well before they should be or are ready physically or emotionally. what we did was we looked to see that in every region where people were working illegally that they were never able to come together. we were able to create an umbrella organization. there is a global partnership.

we need more of these global partnerships. governments are extremely important. i remember the president here in washington meeting with donors for the first year. he told them i welcome in my country. i want to know what you are doing. then he met the non-government organizations. that has been the problem and development. sometimes presidents do not know what they're doing in their country. they come with good will. it does not have to the government controlled. there has to be a leadership for the community that is represented by a good democrat government. we can be more innovative. the money is not a come in the same amounts. >> she is our newest leader. i'm going to give you the last word.

what is it that you want the west to know? what do they need to know about the need of your country as you see them? the capitalize on the continent of africa, in particular malawi. that has come out and demonstrated that they are prepared to follow them. they are going to recover the economy. we have taken states. i'm selling my plane. i have said this. just last week, i went from one

corner to the other. everywhere i went, people came out to greet. i said close your eyes. imagine the stones being thrown at you 12 months down the line. this is up a hill. as we make those old issues, the international community has to recognize them. malawi people are not just sitting by waiting for hand thaout. i do not think i can leave this podium with out the u.s. aid

parent a want to do something. i came from an abusive marriage. i know some women do not have the courage to walk out. and a the only thing i can do for them is this. the partnership was forged a bad day. it has lasted this long. i finish by saying it is imperative for not only malawi but all of africa to support women leadership. they are passing the domestic violence. we worked throughout the night.

we have to bring women into parliament to make sure i'd there and watching. it is very important to have women sitting. thank you. [applause] >> from my perspective, it has been a remarkable discussion and conversation with these whicwith these five extraordinary leaders. i would ask as you are going to

a break that you join me in thanking each one of them. the presidents of malawi, vo, the former gkoso president of ireland. let's thank them all. >> that was very good. >> he testified on capitol hill >> he testified on capitol hill about his