"1960, k vs nixon." to join us live on sunday july 1 on c-span to. >> the key 27 wrapped up today. president obama met with more leaders at the gathering. at a news conference he took questions on european debt, violence in syria and the u.s. economy.

this is my last -- i want to say how much i've value of the progress we made today over the past several years i am confident that these times between our country will grow stronger. of the past three years the summits have allowed our nation's to pull from the global economy back to put it back on a path of recovery. our businesses have created jobs for 20 million people in a row.

today we recognize that there are a wide range of areas of global growth. the one that has received the most focus and that is having is a the vacant impact is the situation in europe. slower growth in europe means slower growth in american jobs. i am working closely with my european counterparts. a deep belief most leaders of the arizona and a part of the g- 20. they challenges will not be by this.es

this has been an opportunity for us to hear from european leaders and the steps in the wake of the election increase. they will go into the summit later this month. it is a chance for the international community to live out this for responding to financial crises. necessary to hold the eurozone together. european leaders here ihave made it clear they understand the stakes and they understand the actions to restore confidence

and stability. let me be a little more specific. our friends in europe grab the seriousness of the situation and are moving forward with a heightened sense of urgency. i welcome the steps they have already taken that promote growth and fiscal responsibility. i am very pleased that the leaders here said that they will take all necessary measures for the stability of the year is done to improve the functioning of the financial markets. this will contribute toward breaking the feedback toward banks and make this sustainable. i also welcome the adoption of the fiscal context. together with a growth strategy which includes structural reforms. g-20 leaders supported europe working in partnership with the

next government to make sure they remain on a path of reform. another positive step forward was the financial architecture including banking supervision and recapitalization as well as deposit insurance. also in the coming days spain will lay out the details of its financial support request for the bank's restructuring agency and provide clarity to reassure markets on the form in the amount and structure of support to be approved at the earliest time. it is possible that they will pursue structural reforms to strengthen competitiveness and desperate countries and promote demand. finally, i welcome the fact that europe is determined to move for quickly on measures to support growth and investments including the european market and making

better this. europe is not the only source of concern. the g-20 agrees that reversing the economic slow growth down has a focus. the best thing the united states to do is create this as part of this effort we made it of again progress in advancing our trade agenda. this is essential. mexico and canada have been joined to join this pressure ambitious trade agreement that will include 11 countries.

and this agreement includes enormous opportunities to boost trade in one of the world's fastest growing regions. even as we build this new framework for trade in the asia pacific, we're also working to expand our trade with europe. so today the united states and the european union agreed to take the next step in our work towards the possible launching of negotiations on an agreement to strengthen our already very deep trade and investment partnership. in addition, and in keeping with our commitments at the last g-20 in cannes, we agreed that countries should not intervene to hold their currencies at undervalued levels and that countries with large surpluses and export oriented economies needed to continue to boost demand. so, in closing, i'd note that, with mexico's leadership, we continue to make progress across a range of challenges that are vital to our shared prosperity, from food security to green economic growth that combats climate change, from financial education and protection for consumers to combating corruption that stifles economic growth and in

strengthening financial regulation to creating a more level playing field. all of this happened, in large part, because of the leadership of president calderon. i want to thank him and i want to thank my fellow leaders for their partnership as we work very hard to create jobs and opportunity that all of our citizens deserve. so, with that, i'm going to start with ben feller of ap. >> thank you very much, mr. president. we're all hearing a lot of encouraging promises about what europe plans to do. but can you assure us that those actions, if they're able to come together on them, will actually do anything to create jobs in america this year? and if europe is not able to rally in a big way pretty quickly, do you think that will cost you the election?

>> well, first of all, i think that what i've heard from european leaders during the course of these discussions is they understand the stakes, they understand why it's important for them to take bold and decisive action, and i'm confident they can meet those tests. now, i always show great sympathy for my european friends, because they don't have to deal with one congress, they have to deal with 17 parliaments, if you're talking about the eurozone. if you're talking about the european union, you're talking about 27. and that means that sometimes, even after they've conceived of approaches to deal with the

crisis, they have to work through all the politics to get it done. and markets are a lot more impatient. and so what i've encouraged them to do is to lay out a framework for where they want to go in increasing european integration, in resolving the financial pressures that are on sovereign countries. even if they can't achieve all of it in one fell swoop, i think if people have a sense of where they're going, that can provide confidence and break the fever because, you know, if you think about europe, look, this remains one of the wealthiest most productive regions of the world. europe continues to have enormous strengths a very well educated productive workforce. they have, you know, some of the biggest, best-run companies in the world. they have trading relationships around the world. and all these problems that they're facing right now are entirely solvable, but the markets, when they start seating

potential uncertainty, show a lot more risk aversion, and you can start getting into a negative cycle. and what we have to do is to create a positive cycle where people become more confident, the markets settle down and they have the time and the space to execute the kinds of structural reforms that not only europe but all of us are having to go through in balancing the need for growth, but also dealing with issues like debt and deficits. and i'm confident that over the next several weeks europe will paint a picture of where we need to go, take some immediate steps that are required to give them that time and space and, based on the conversations that i've had here today and the

conversations i've had over the last several months, i'm confident that they are very much committed to the european project. now, all this affects the united states. europe, as a whole, is our largest trading partner. and if fewer folks are buying stuff in paris or berlin, that means that we're selling less stuff made in pittsburgh or cleveland. but i think there are a couple of things that we've already done that help the financial regulatory reforms that we've passed, means that our banks are better capitalized. that means that our supervision and our mechanisms for looking at trouble spots in our financial system are superior to what they were back in 2008. that's an important difference. but there's still some more things we can do.

and the most important thing we can do is something that i've already talked about. if congress would act on a jobs plan that independent economists say would put us on the path of creating an extra million jobs on top of the ones that have already been created, putting teachers back in the classroom, putting construction workers back on the job, rebuilding infrastructure that badly needs to be rebuilt. all those things can make a significant difference. and given that we don't have full control over what happens in europe or the pace at which things happen in europe, let's make sure that we're doing those

things that we do have control over and that are good policy anyway. >> [inaudible] >> you know, the -- i think it's fair to say that any all of these issues, economic issues, will potentially have some impact on the election. but that's not my biggest concern right now. my biggest concern is the same concern i've had over the last three-and-a-half years, which is, folks who are out of work or underemployed or unable to pay the bills, what steps are we taking to potentially put them in a stronger position? and i've consistently believed that if we take the right policy steps, if we're doing the right thing, then the politics will follow. and my mind hasn't changed on that. >> right here. thank you, sir. my question is about syria. did president putin of russia indicate any desire on russia's part for assad to step down or to leave power? and did you make any tangible progress in your meetings with him or with chinese president hu in finding a way to stop the bloodshed there? thank you. >> right. well, these were major topics of conversations in both meetings. and anybody who has seen scenes of what's happening in syria i think recognizes that the violence is completely out of hand, that civilians are being

targeted, and that assad has lost legitimacy. and, you know, when you massacre your own citizens in the ways that we've seen, it is impossible to conceive of an orderly political transition that leaves assad in power. now, that doesn't mean that that process of political transition is easy. and there's no doubt that russia, which historically has had a relationship with syria, as well as china, which is generally wary of commenting on what it considers to be the internal affairs of other countries, are and have been more resistant to applying the kind of pressure that is necessary to achieve that political transition. we had a very candid conversation. i wouldn't suggest that at this point the united states and the rest of the international

community are aligned with russia and china in their positions. but i do think they recognize the grave dangers of all-out civil war. i do not think they condone the massacres that we've witnessed. and i think they believe that everybody would be better served if syria had a mechanism for ceasing the violence and creating a legitimate government. you know, what i've said to them is that it's important for the world community to work with the united nations and kofi annan on what a political transition would look like. and my hope is, is that we can have those conversations in the coming week or two.

and that we can present to the world but, most importantly, to the syrian people, a pathway, whereby this conflict can be resolved. but i don't think it would be fair to say that the russians and the chinese are signed on at this point. i think what is fair to say is that they recognize that the current situation is grave. it does not serve their interests. it certainly does not serve the interests of the syrian people. and where we agree is that if we can help the syrian people find

a path to a resolution, all of us would be better off. but it's my personal belief, and i shared this with them, that i don't see a scenario in which assad stays and violence is reduced. he had an opportunity with the annan plan. they did not fulfill their side of the deal. instead, we saw escalation, and murder of innocent women and children. and at this point we have the international monitors that were sent in having to leave because of this violence that's being perpetrated. and although you'll hear sometimes from some commentators that the opposition has engaged in violence as well, and obviously there's evidence of that, i think it's also fair to say that those haunting images that we saw in places like homs were the direct results of decisions made by the syrian government. and ultimately mr. assad is responsible.

>> we had an intensive conversation about it. if you're asking me whether they signed on to that proposition, i don't think it would be fair to say that they are there yet. but my i'm going to keep on making the argument. and my expectation is is that at some point there's a recognition that it's hard to envision a better future for syria while assad is still there. >> thank you, mr. president. one of mitt romney's economic advisers recently wrote in a german publication that your recommendations to europe and to germany in particular reveal ignorance of the causes of the crisis, and he said that they have the same flaws as your own economic policies. i wanted to get your response to that. and also, to follow up on ben's question, europe has been kicking the can down the road for years.

so why are you any more convinced that we won't see another three-month fix emerge out of brussels at the end of the month? >> well, first of all, with respect to mr. romney's advisers, i suggest you go talk to mr. romney about his advisers. i would point out that we have one president at a time and one administration at a time. and i think traditionally the notion has been that america's political differences end at the water's edge. i'd also suggest that he may not be familiar with what our suggestions to the germans have been. and i think sometimes back home there is a desire to superimpose whatever ideological arguments are taking place back home onto a very complicated

situation in europe. the situation in europe is a combination of things. you've got situations where some countries did have undisciplined fiscal practices, public debt. you have some countries like spain whose problems actually arose out of housing speculation and problems in the private sector that didn't have to do with public debt. i think that there's no doubt that all the countries in europe at this point recognize the need for growth strategies inside of europe that are consistent with fiscal consolidation plans. and by the way, that's exactly what i think the united states should be thinking about.

the essence of the plan that i presented back in september was how do we increase growth and jobs now, while providing clarity in terms of how we reduce our deficit and our debt medium and long term. and i think that's right recipe generally, not just for us but across the board. you had a second question. what was it? >> [away from microphone] >> why am i confident? well, look. i don't want to sound pollyannish here. resolving the issues in europe is difficult. as i said, there are a lot of players involved. there are a lot of complexities to the problems because we're

talking about the problems of a bunch of different countries at this point. changing market psychology is very difficult, but the tools are available. the sense of urgency among the leaders is clear. and so what we have to do is combine that sense of urgency with the tools that are available and bridge them in a timely fashion that can provide markets confidence. and, you know, i think that can be done. you know, hopefully -- just to give an example, when spain clarifies exactly how it intends to draw down and utilize dollars or not dollars, but euros to recapitalize its banking system, given that it has already got support from other european countries, given that the resources are available, what's missing right now is just a sense of specifics and the path whereby that takes place. when markets see that, that can help build confidence and reverse psychology.

so there are going to be a range of steps that they can take. none of them are going to be a silver bullet that solves this thing entirely over the next week or two weeks or two months. but each step points to the fact that europe is moving toward further interrogation rather than break-up, and that these problems can be resolved, and points to the underlying strength in europe's economies. these are not countries that somehow at their core are unproductive or dysfunctional. these are advanced economies with extraordinarily productive people. they've got a particular challenge that has to do with a

currency union that didn't have all the best bells and whistles of a fiscal or a monetary union. and they're catching up now to some of those needs. and they just need the time and the space to do it. in the meantime, they've got to send a strong signal to the market. and i'm confident they can do that. all right? thank you very much, everybody. >> still ahead, a preview from the national journal of the upcoming presidential and upcoming elections. after that, yesterday's house hearing on j.p. morgan posted a trading loss. we will hear from a panel of

financial regulators and j.p. morgan ceo jamie dimon. >> the state department released its annual trafficking report and added syria to the list of offending countries. tomorrow we will talk to luis cdebaca who leads the council on human trafficking. did the senate this week is working on a $969 billion farm belt. the financial firm collapsed with more than $1.6 billion in customer money missing. live every day at 7:00 a.m. eastern. >> the next month david is our

guest. they have resulted in a dozen books including 1920, the year of the 60th president. dolan as live with your calls, e-mails and tweets. >> how do you approach both interviews differently? >> i think of it as gathering history. i think of the interviewing as gathering contemporary information. >> how difficult is it to remain reporting? >> i will try to give people as

full understanding of what is happening. it is not that of a call to put your biases to the side. >> how is it to change your line of work? >> torture is a primary new source for anybody who covers politics and anybody who pays attention to politics. twitter did that exist for years ago. >> sunday at 8:00 on c-span. >> not a look at the race of control of the presidency. charlie cook spoke with two former congressman. they spoke about mitt romney and

president obama's chances for reelection. friendly some in washington, this is 1.5 hours. -- from the museum in washington, this is 1.5 hours. >> the morning. thank you for joining us. it is my pleasure to welcome me. thank you those of you who are joining the via our live video screen. we're very grateful to charlie cook for a briefing us on the elections and trends. they're willing to take questions. please think about what you would like to ask them. if you raise your hand, the

staff will come over with a microphone. succinctly.stions to see m finally, if you would not mind silencing herself once this morning so we can have uninterrupted discussions. we are able to gather here thanks to the thoughtful leadership and support of united technologies corp.. utc is comprised of several well-known brands like hamilton, otis, utc power. utc has been a great power and underwriting the connection polls. he may have seen it. the poll takes the pulse of opinion from americans and brings the message back to washington. the leaders of recognizes the importance of highlighting these

issues and before the national influential. for partnering us. meetin he led the office and currently its of the federal government and state of affairs for utc. his portfolio is even broader. please welcome greg ward. >> thank you. the morning everybody. it is good to be back. we are glad to see mr. cook this morning. it is our pleasure to be here. we are a pretty substantial company.

,nd number of the company's we're are bought ready to add one more. we hope to have this within the next six weeks or so. it is our pleasure to be here this morning. it is always fun to work in partnership with the national journal and the national journal family. he seems to recruit the best people to run his division. it is fun to be here with charlie. they are political observers. this is going to be a great panel.

heat at one time had this. his four year-old was coming down for christmas and looking at all the christmas presents under the truth. he said unbelievable. i think that is the image an attitude that he must have. all the guests he is being presented. thank you for being here. thank you for participating. i will handle back to victoria. it is good to see you. -- hand it back to victoria. it is good to see you. >> i think you all know charlie cook. i think that is why you are here. i think you would agree that charlie and his team put together some of the biggest

political reports. they also write regularly. he remains a political analyst for nbc news. at a time when news is so polarized, he remains one of the most respected political analyst in the country providing a very humorous take on the ultimate sports and politics. >> thank you. i'm going to talk grow briefly. i want to get more and up here. i am afraid that what i might say, i do not this prejudice. i'm curious about what they are going to say. and do not want to lead them into it.

you know that the nature of presidential campaigns that some campaigns have ups and downs. sometimes they can just power through their problems. sometimes things are kind of chill or a can really take off vertically. hamilton east may propellers. they still do. sometimes they get really tired. that was tortured. thank you offer coming out. i cherished this relationship

with the national journal. we're working on a new contract. to tip these guys off, and the first question i'm going to ask, are we adding different places than 60 or 90 -- are we at a different place than we were 60 or 90 days ago? conventional wisdom catching up with reality? go ahead dax 20 see why don't i go i go ahead? out of the thousands of former members of congress, there is a

very small number that you can count on a hand that are known as being really sharp, able to dissect political situations, are not rubber-stamp thing party positions and really have an expertise and an analytical ability that really helps people. the thing is if you were going to put together five of them, if they would be on the side. they are the gold standard. they really are. martin was in congress for 12 years.

they know where all the bodies are buried. they are tempted to tell us where they are. i have an enormous admiration for them. for one of these things we ought to have invited three members up and then have one as a control group say this is somebody else. this appeals to my perverse nature. ?hy don't you come up we'll just have a conversation.

>> he is in charge of leadership. it is early in the morning. he meant to say terms. he said years. >> what i want to do is cover presidential and a little but the congressional of what is going to happen. is the race fundamentally any

different than where it was the day romney nailed down the nomination? >> we have been doing this kind of programs for the last year. this is going to be a very close race. at some point there is saying obama was going to win. as a democrat, i think obama has a reasonable chance of winning. i never thought this would be other than close. i thought it would be comparable to what happened in 2004 when you had an incumbent who barely won reelection. i looked at all the materials you have done. charlie generate more stuff than anybody else. >> i people who generate more step. >> charlie did a summary of the

states. he showed the electoral votes almost exactly even. they had this. it is interesting. it looks like if everything breaks the way in looks, wisconsin and michigan and pennsylvania state democratic is still up there. the election is going to come down to three states. for romney to win he will have to carry ohio, virginia, and florida. i do not know that he can carry out three of those states. if the does, he could be the

next president. i think that is where you will see a lot of action. i think what obama did on the team act was very important. hispanics are important in florida of those three states. this'll be a very close race. >> how has it changed? we had a negative for several months running for unemployment kept dropping. last month job creation was well under. i do not know where the next month there going. i can tell you those metrics will determine who the next president is.

what martin just described is the old bush and carrkerry coalition. there were some close states. obama broke new ground last time in indiana and north carolina. this is a throwback. if you look at where the administration is going, it is going after independence. >> it is going to be a turn out model. there will have a difficult time. instead of running against bush, he was not on the ballot that he was pulling. it was an economic fallout. this time around he has had to govern for four years.

government is a tough business. this is not a hard and fact role. the metrics of this race make it much more to the call for the principle. >> there is an interesting piece today talking about how the electorate has changed and the last 20 years. it is the percentage of the white vote continues to decline. the percentage of the minority continues to increase. the republicans are in trouble. they might scrape by this time if the hispanic vote lots and to the democratic column and republicans have done nothing to attract hispanic. the underlying dynamics of the election are not on the republican side. they may win because of the economy. we have to watch very closely

about what happens. the turnout model from 2008 cannot be replicated. romney is not going to win by that kind of margin. there are states he carried last time that will be off the table. they do not have to replicate the exact model. what they have to do is when i just enough. i write for politico from time to time. i am just saying. i wrote an article about a month ago where i pointed out a row

problem for the obama campaign, and seniors. but together the white seniors. the democratic share among white seniors has been declining. interest rates have stayed low. that is good for a lot of people. they would say is and it's wonderful that interest rates are down? you can buy this. there is a huge and not understand. they have their money and cds and savings account. obama has to figure out how to speak to seniors. they are turning in the wrong direction. up, there's nolow question that some elements has done everything humanly possible

to get the latino vote. while there is an anger toward s. there's acanlatino disappointment that you're on our side but did you fight for us? did you break a sweat? did you shed any blood? they are angry at one side and disappointed in another. that is one reason why. how likely are you to vote? latino voters -- he is matching for the poll. >> that is a good observation.

i think there are recognize its. they have a difficult time replicating what they did before. it is easy to put a coalition together when you are running again something. yet a different set of issues. i think is going to go close to what he did before. winning the playoffs a second time is not quite the impetus. you will be able to drive that turn out. let's get the students and the young people. these are huge gains for obama last time. in virginia, if they had not voted for a president since the 1948. a straight ticket vote coming out of his college towns. where are the young people?

they are looking for jobs. they're back in school. republicans are are registering democrats under 21. that is under the table. this is a strategy geared toward hispanics here and young people here. porter ricans do not have the same interest. they are citizens. cubans the differently the mexican-americans. there is enthusiasm. it is a tructough group to get . i do not think you'll be able to replicate that.

long-term this is tough. and this election with the economy at the front, there are coalitions we have come together on. >> it is interesting. if you look at what is going on in the hispanic community, the republicans have had opportunities. many have the presidential debate. what they did, look at the presidential debates. it was for a reasonable position.

the progressive views heard him inside the republican party. now some republicans are threatening to sue the president about his decision on the dream act. he is driving the point home that republicans are on the wrong side of an issue that is wildly popular with the hispanic community. did the president push hard enough early on? you can debate that. all the body language that they sent to the hispanic community has been wrong. they have blown opportunities. hispanic voters are conservative. republicans have not done anything. this is going to be a real problem going into the campaign. i want to go back to this.

>> explicitly you said references to the bush of 2004. there's never a perfect analogy. you had two precedents that are facing this. there is a choice of how much effort the make chasing after swing voters who probably are not going to go your way purses in the case of bush organically growing his base or in the case of president obama. how do you get as close as you

can do that extraordinary turnout? let me just tossed out something. nbc and the wall street journal combine five months. it was polls in each way. then they pulled out for comparison and looked at just the undecideds, it the seventh term of the 3800 combat were undecided -- 38% of the undecided.

48 were approved and 48 disapproved. of the undecided, 24 approved, 59 disapproved. on the obamacare operating, 44 approved, 52 disapproved. on the generic ballot test, democrats were ahead by two points. looking at this group, a thick are older. they are little bit more republican than they are a democrat. they are older. looking at that group and say you're not getting half of this comment in are not getting a third.

if this is the case, it doesn't that foresee back -- doesn't that force you back a? ? >> bush won the race by an enormous turnout. you have to ask where these voters are geographically. of course these undecided voters are going to break strongly against democrats. what you have to look at is what is going on in ohio? what is going on in wisconsin? what is going on in michigan. you have the automobile bailout. obama acted forcefully to keep general motors in business. all these small businesses rely

on people that have jobs. bikaner a lot about that and those key states. i think that will have an impact. romney was opposed to the auto bailout. have to go into this state by state and see what makes a difference to undecided voters. this is not an argument that will necessarily help in virginia. the turnout model of maximizing support from last time, make a difference in virginia. florida i think it's very hard for me to call and protect. i'm not sure any of those factors will be in play on obama as sides. in virginia, he has one thing going for him. in ohio, he has another thing. this will come down to just a handful. >> undecided voters will decide this.

they have had three years plus to look at president obama. today are not there. >> they knew me. i've been to their parents separate. but they did not let me, romney has to make a sale. this is a dangerous place for the president to be. the more alienated these groups are becoming. it is hard to have the election go after independence. every state has different kind of components to put together to muster a majority. the obama team is looking at

this very carefully. this is not a cake walk. a take a look at registrations. but parties have lost market share. people are going to the other parts. there is a huge dissatisfaction with the political class. people are looking are around. a long way to go. this forces the income to get the base together. i do not think they can mobilize the base like they did last time. >> that is pretty good for the democrats. >> let me play devil's advocate. in 95% chance that whoever wins

the popular vote wins the electro. if it is not, if the popular vote goes one way ahead in the other goes the other, my assumption has always been a democrat might be more likely to win the popular vote and lose the electoral college than the other way around. the democrats way so many votes. >> where i pushed back on the state by state, there's a 95% it's a good the same direction. i am going to use the technical

term. crap. we will not name not name the sc pollsters. this is like at best a dime store stuff if not total garbage. we are talking about 80% of the polling in this country. i have decided, i am watching the time. the obama campaign is spending money in survey research. if this were one of the top spending, they are both in there, it is probably pretty close. if only one side is in and the other is not, maybe it is less so. i am not getting torqued up over whatever is the latest ppp poll.

the day of the largest newspaper in the state and of the leading tv station getting together and commissioning a fabulous statewide survey, that is pretty rare. >> i would wait a week. at that point, the undecided voters start focusing. the candidates start focusing. this is within four or five. . it is anybody's race. i do think the metrics on the economy are going to set the voter mood. they are probably the most important indicator.

>> going to your point, we live in the washington d.c. area, we see local television here. i have noticed the obama campaign has a very clean and effective advertisement on right now. they are focusing on virginia. they show obama at the beginning where he says i have of the rest of this advertisement. that is a counter message. -- i have authorized this advertisement. that is a counter message. he focuses on the romney's record in massachusetts as governor. that is a very clean, affective advertisement. it is running because virginia is up for grabs. >> let's segue over and talk about congress for a couple of minutes.

i am not going to say anything. [laughter] >> i have some things to say. >> democrats need 25 seats to get a majority in the house. i am kind of skeptical. martin, if you want to make the case or if someone was going to make the case, what would they say? >> i am trying to give an independent view. [laughter] it is early in the morning. i think it is not impossible for democrats to take back the house. it is a heavy lift. it is not just 25 seats. there are other seats were democrats are retiring. it is not impossible.

if there is an anti-incumbency mood out there, i have felt there is more of that mood and we have seen in previous elections, there are more republicans an office in the house and democrats, i think the democrats can make significant gains. the important thing is that there are a lot of new republicans who have not established themselves. they have not been in long enough. they have not done what tom did. to go to of little league games and all the pta meetings. -- to all of the little league games and all of the pta meetings. it takes a while to become a figure. there are a lot of new republicans who are vulnerable. some of who were swept in by the tide who are going to lose. when you have a landslide election, just like you did in 1994, we knew who the accident took congressmen were. we knew someone not going to

make it more than one term. the redistricting has been a wash. republicans thought they were going to benefit. it has been a wash. democrats will pick up some seats in california and illinois. republicans will pick up some in north carolina. it is not impossible for democrats because of the unrest in the country to take the house back. the most likely outcome is republicans will lose some seats and it will be much closer. it is not inconceivable democrats could take the house back. >> i will bet you $10,000. [laughter] >> i am standing up for martin. >> i would not take his money. >> we both went. >> the republican problem is

they over performed. they had the highest turnover since 1938. they have used the redistricting where they controlled more seats than at any time since 1920 to strengthen a lot of the seat. there are a half-dozen seats that are gone because of retirement. historically, when you look at presidential reelect, republicans lost seats, nixon swept 49 seats. reagan in 1984. [talking over eachother] 1992 is not a reelect. >> we gained a seat. >> not enough to take back the house. [laughter] that was because of republican

over performance. reelects, people and not that upset. they tend to re-elect congressman. take a look at history. it would be difficult for people to oust obama and have a divided congress. it takes the whole argument away. it is a much more difficult -- not impossible, but a much more difficult-. republicans are likely to lose a handful of seats. i think 25 seats is a way that i think is unlikely to occur. >> to talk about the senate for a minute. -- can we talk about the senate for a minute? a statistic that makes the point is that the postwar era, the party in the white house only gaining more than 15 seats more than once. that was in 1964 with thelbj

landslide. lbj landslide.e in a presidential reelection, 25, that is a heavy lift. >> i do not disagree. i am saying, this is such an extraordinary year, strange things could happen. >> i have some thoughts about the sun. -- senate. some of the people have not figured out what is going on. while democrats have a three vote majority, the hill for the republicans is more than that. they need to pick up more than three seat. they are going to lose, there will be an independent in man. that is four. if obama is reelected, the vice

president presides over the senate. that is five. if we win either nevada or massachusetts, two states held by republicans, we could win one of those, that is six. the republicans probably have to pick up at least six seats. i do not think they can do that. i think there are a lot of closely contested senate races. some of those will break democratic. some of those will break republican. there are a couple of wild cards. democrats have a shot of maintaining control of the senate by one vote. >> let me make this observation. elections have become very parliamentary. although the last time the republicans over performed and they won a handful of senators, illinois, pennsylvania, wisconsin, that is the exception to the rule.

u.s. in very few blue senators in red states and red senators in ballistics. we have 23 democrats -- in blue states. we have 23 democrats up for reelection. 11 open senate seat. it could go either way. i think sometimes there is an exuberance to think we are going to take it. nothing is automatic. we have some democrats that one in 2006. it was a huge democratic year. they have to protect themselves. they are tough holds for the democrats. you have a number of these other seats that could go either way. i feel good about republican prospects and wisconsin, montana, north dakota, nebraska, missouri. >> that does not get the 6. >> that gets you five. virginia is a possibility.

you get into second-tier, ohio, indiana. indiana is not clear. >> that is a republican seat. >> the polling is close. by the time it straightens out, it is likely to stay republican. it is not there yet. the feelings within the coalition perr. i think the senate is very much up for grabs. my gut is that if romney wins, it will portend a republican senate. if he does not win, it becomes much more difficult. >> it is interesting, i am from texas. i went to school in missouri. i was a journalism major. the missouri senate race is one

of the most interesting in the country. clear mccaskill is running for reelection. they have a late primary. they have three candidates. it is possible the republicans will nominate the weakest candidate. it is possible mccaskill could be reelected in a state that normally would go republican. there are a lot of things going on. the race in montana is a very interesting race. it is a republican state. he fits the personality of the state. do not forget, the old and a wild card, no one thinks has a chance -- the ultimate wild card, no one thinks has a chance, bob kerrey. >> right. [laughter] >> he is a very interesting candidate.

he is an unusual candidate. it is not going to be easy for him to win. not impossible. >> he has lived in new york the last 10 years. he is a badly flawed republican. the three republicans running, one of them is critical disfigured politically speaking. -- quarter thickly disfigured politically speaking -- horrifically disfigured politically speaking. [laughter] the other is more of a placebo. who is able to win the generic republican vote, i think that is okay. i think it was the worst outcome for carry. -- kerry. the only thing that jumped out is that i am not rush into a

judgment on what is going to happen. i think this is a guy who wants to stay independent. it depends on what happens in the other -- i say, we do not have 33 senate races, we have 32 senate races and one silent auction. [laughter] the thing is that historic plea they do not -- historical way they do not let it sit in the center aisle. you have to get yourself committee assignment -- your committee assignment. depending on what happens to the other 32 states, i think this guy with love -- 1 part of his tenure as governor, the state senate was evenly divided.

there was a power-sharing agreement. i do not know whether these circumstances would allow this or whether this would make things happen, lord knows it would be over harry reid's and mitch mcconnell's dead bodies. in his heart of hearts, he is closer to being a democrat than a republican. i think he really is an independent. if he can figure out a way to do that. he has said, i will do it as long as i can still be effective for maine. if it means siding with the minority party in the matter much -- no matter what, he is not going to do that. on a bad night, republicans picked up two seats. it would take them from 47 to 49.

a good night would get them to 52. odds of them doing better than that ended when olympia snowe retired. i did not want to get too specific. there are a number of places where republicans have not been able to get the optimal people to run. >> that is an understatement. [laughter] >> the best candidate is not likely to win. >> is prevented from running. >> virginia. or, let's say, florida. this is not likely to be an optimal situation for republicans. missouri, martin is dead on.

>> if she wins the republican nomination -- >> let me make a comment about and this king -- about angus king. >> they have an ankle on everything perry >> i have a daughter in tmaine. his aunt was mayor of ... andrea. xandria.ezan there is an angle. i did not dismiss his automatically democrat. i think he wants to be independent. he is going to represent people who are frustrated. >> main elected an independent governor who is very unpopular.

i am not sure an independent aligning himself with the republican party makes a lot of sense. >> i learned something interesting. angus king's first political involvement was as a driver. >> the current governor of maryland, you know how he got his start? he was a driver for gary hart. >> being a driver is an interesting thing. [laughter] >> it was one of my first two jobs. that and elevator operator. i do not think otis was a run. >> to you have any idea? there were not that many elevator companies. anyway, that is a job that has

its ups and duncowns. [laughter] >> the messages of race is one of the most intriguing races. when we talk about people vote in parliamentary, scott brown is gearing his campaign for it independents. there are only 13 percent and republicans. elizabeth warren is not given her campaign towards -- during her campaign towards independents. he could pull this thing off. the other interesting race from a republican perspective is why. the democrats have a very contentious primary. she was elected governor twice. carried every legislative district in the state. obama, that is one of his home

state. he is going to do very well. you get a bitter democratic primary, things can happen. usually when you see a trend, there are always one or two that pop up. >> the massachusetts race is interesting. obama is going to carry massachusetts by a large margin. the question is does a elizabeth warren gets swept in. this happened once before. people do not talk about it much. this happened in new york. bobby kennedy got swept in. these things can happen. i think that elizabeth warren has a problem. he will see how that plays out. it is such a democratic state. she could win it. >> the problem sometimes is too

many chiefs and not enough indians. [laughter] >> oh. where is the seven second replay. >> mass., a landslide for republicans would be 52%. he has no margin for error. i would rather be him at this point. let's switch. we want to get to questions. i want to go to the fiscal cliff and the end of this year. this is a sophisticated audience. you know all of the background. my best friend has written some good stuff on what may happen at the end of the year. let's see. who wants to go first? between now and the election, lame-duck or sudden death,

meaning after the first of january. >> i vote for sudden death. nothing is going to happen between now and the election. lame ducks are very unproductive. there are going to be a lot of lame ducks. it is going to be hard to do much. whatever happens happens in january or february. >> will whatever that happens, will it be preceded by a significant stock market sell- off? >> what they need is a market tremor to get them to act. the coalition -- the race is the primary election. it is the way lines are drawn. the senate, too. you have blue and red states.

they are worried about the primary. it does not allow them to act. compromise is not rewarded. the other thing i would note, if you get to the lame duck session, it is done in the concept of leadership election. i have one two caucus votes. the a secret ballot. when i call of members and say, will you support me? they say yes. you say, can i make the public? they say, no. the only member you can believe it is the one who says he is voting against the. this is done in the context of caucus votes. sequestering, you have a report showing this could put us over the financial cliff. two years ago, they did reach

some accord. all they did was they added $800 billion to the debt. this time, they have to go the other direction. it is much harder. it is going to take a market tremor. you'll have the appropriation bills. i think it will be a big mistake to let those hang out there. if you are still doing appropriations, you'll not get anything else done. >> is the dynamic of you have to let -- there is an argument that you have to let the bush tax cuts expire so that republicans can vote for something that is not a tax increase. in other words, the brits have to jack up to the pre-bush tax cut level for them to come up with anything less than that.

>> that is interesting. >> i have heard the argument. >> it is a good argument. i think what they like to do is lower rates but take care of a lot of special provisions in between. >> at least on the personal side, on the corporate side, that is its own set of issues, on the personal side, is that not so much easier said than done? we are talking about paying taxes on your health insurance premiums. that goes over big. you a talking about going straight to the marrow. it sums great until you read the fine print. >> this is tough stuff. if this were easy, they would have resolved this a long time ago. none of this is popular.

someone has to be willing to lose an election. >> you are asking two different questions. do you have tax reform that everybody says they are for? do you have tax reform that is revenue positive, that actually raises more money than the current system no matter how you change the deductions, actually generate some revenue that can be used to pay down the deficit? the parties are not even there. you may have revenue neutral tax reform at the end of the day, which will be a long time coming. that is very difficult to figure out. there is a shorter-term question, are you going to do something anytime soon about the size of the deficit? separate from the issue of overall tax reform. i do not think the parties are incapable of doing that between now and the first of the year. there may be an external shock

that will force them to do something. i do not know, this business of playing games, saying, but the bush tax cuts expire. -- let the bush tax cuts expire. it is not a tax increase because they are going to bring the 39.6% rate them. i do not think it plays very well. one of the bigger issues is the sequestration. that is a 50% cut on defense, on domestic spending that is going to happen automatically on january 1. i do not think congress is capable of acting between l and the first of the year to avoid sequestration. the question is, how quickly can they act after the first saw the

mitigate some of the problems? that is going to cause real problems in the defense industry. it is going to cause real problems on some domestic programs. i think congress will do something about that in the january, february, and march time frame. apart from whether there is some external economic problem, they have to deal with these automatic cuts. no one thought they were going to happen. everybody thought it would hang there. congress deadlocked and said, -- >> i think it is going to depend on the makeup of the new congress. if republicans take the presidency, the house, and the senate, they will wait to do something. they will do it their way. if you have continued divided government, they may get together and try to get some of the stuff off the table.

they will have to live with each other and of the two years. we will see. >> i am very skeptical. >> we need to open it up to the audience. let me clarify, do we have two or three votes for the single most likely outcome sudden-death million post december 31? >> i am a sudden-death guide. >> we have three votes for going into sudden death, with the emphasis on death. [laughter] let's open it up. but the road in microphones? -- are there roving microphones? yes. wave your hand and someone will come. >> the question i have is on the sequestration. the issue came out that if they do go ahead with sequestration,

the requirement is a notify the employees 60 days prior to the impetus. that puts it at early november. how much of an impact will that have? >> it could have some. it requires a 60 day notice when you are going to close a facility or decrease employment. that could have a chilling effect. i do not think congress or the president or anybody is capable of avoiding that. we will see what kind of effect it has perry >> they will be home campaigning. each side will get the talking point. i will tell you this, members who voted for the compromise are on the hook for. those who did not fort dodge vote for or off of hope. >> that is called -- those who did not vote for it are off the hook. >> that is called a turning up

the heat. >> i do not know how they are capable of solving the problem. this is what they came up with. it is going to be a good. -- to be ugly. i did not see it anything where they could find the offset. you have to find a cut somewhere. we know where a lot of money is, in entitlements. nobody is going to touch that. i have maps i is that show the counties and countries that get the highest percent getting medicare. they are republican counties. these are rural areas. you start messing with the benefits you watch voting patterns change quickly. >> i think the only way this happens before the election, i have talked about the stock market, it has to be the equivalent of attaching

electrodes to sensitive body parts and crank it up the electricity. [laughter] i think that is the only way you are going to change behavior. if that sounds chris lee, -- grizzly, yeah. >> let me make one more point. i am somewhat optimistic that if the president is reelected, it is still an of. if the president is reelected, he will show real leadership in the second term in terms of resolving these problems. without presidential leadership, these things do not get solved. >> when has a president had a successful second term? >> bill clinton had a reasonably successful second term. we have had some president to did ok.

-- presidents who did ok. i think bill clinton did pretty darn well. >> 5.5 on a 10 scale. >> impeachment. >> who else have we got? >> since both of you are creatures of the house, let's assume the election gets closer without picking a number, what is your prediction on leadership of the house? >> let me jump in and modified this question. on the republican side, how many seats could republicans lose before john boehner gets in some difficulty?

if you would like to take the fifth amendment. >> i was there. that is how i got elected to leadership we took a five or six seat loss. that was enough to get the balance shift. i'd be linda who was campaign chairman. -- i'd beat linda who was campaign chairman. it is managing expectations. it is probably nonsense. it is probably not within the realm of high probability. i think it would take a 15, something in the range of 15 to 20 seat loss. they come to town right after the election. they do this on purpose so no one can organize against them. they elect the leaders. then they elect the committee

chairman's in january. that is what it would take. if the democrats were to lose seats, that would be a different issue. >> i want to go back to something that tom talked about. the secret ballot. when i was elected caucus chair, i won by seven votes. when tom-a was elected democratic leader, he won by one vote. it is unpredictable. you never know. what happened in 1998 is gingrich -- it is interesting, linder was on the right side. he did not want to make impeachment an issue. i was chair of the democratic side. linda and i were on tv.

he said, we are not going to make a big issue about impeachment. he was overruled by gingrich. the republicans lost five seats. that was the first time the president's party had gained seats in the sixth year of an eight year term. gingrich was in disgrace. he had a lot of other problems. i cannot predict how the republicans will be john boehner. if the democrats picked up a lot of seats, he could be in trouble. >> i think he is going to be fun. >> -- fine. >> are you convinced policy is going to seek reelection? >> i did not know. i do not know.

if the democrats close this gap substantially, my guess is she does try to stay around. if democrats did not pick up many seats, there probably would be a lot of interest in such a democrat -- inside the democratic caucus. she has turned out to be the right leader. the republicans made her an issue in the 2010 election. she has been exactly the right person in 2012. she is a great fundraiser, she is enthusiastic. it was the right decision for her to say, the caucus will have to make the decision after the 2012 election. how this thing turns up. -- out. >> i am with at&t.

we know each other. i have a question which is the vice presidential sweepstakes. do vp picks matter? the think it will matter in this election? >> let tom start on that. >> i think it matters. the old rule is first do no harm. it can matter in picking up a stake. for romney, it will be the first window into how he makes decisions. putting his imprint on things. i think most people vote for president. you do not want to do any harm. if you can add a state or two, so be it. >> let's ask each person to do something. pick three people that you think would be considered and what

percentage chance of each one of getting picked. >> as the outsider, let me start on this. this is a republican issue. i think that romney, a cautious politician, will make a conscious choice. i do not plentolenty, know who is third. i think he picks portland. it makes the most sense. romney is a cautious politician. i cannot see him making an out of the box choice. who knows? we will see what happens. tom is in that party. he may have a different view. >> i do not know what he will do. i hesitate to take a choice. i have so many friends. [laughter] everybody has some strong

attributes. they all have some negative factors. >> for the record, i was thinking portman at 35%, plen awlenty at 20 or 25%. i would put mitch daniels really high. i do not get a sense that he is aggressively getting a look at. i would put him there. after that, -- >> you have to put the governor. >> of the wife is on his cabinet. [laughter] i think he would be a great pick. i also think rubio would be a good pick. he is hispanic, he helps you in florida. generationaly.

he solidifies your tea party base. i think he would be a very attractive choice. >> i was at a small breakfast last week, 20 reporters with rubio. a smart guy, smith. i think he has a terrific future. i would not pick him this time for a couple of reasons. one, the subtext of your candidacy is that we should not have elected a guy last time who had never run anything before. you put on your ticket someone who has never run anything. you undercut yourself. 41. to me, republicans, the argument is, that was a mistake.

we should not do something remarkably similar. then there is the latino argument. if republicans need help with cubans, we should shut the alexian down. the idea of going after mexican americans with a cuban, that is like saying, i need to set up to the irish, i will pick and englishmen. [laughter] >> you are all the talk and the move in a couple of points. i think he would help. -- you are only talking about moving a couple of points. i think he would help. >> if he suddenly has a gray streak in his hair, he is a serious candidates. [laughter] >> do we have time to squeeze out a couple more? we will go with whoever has the microphone. >> you all have talked about how

the republican brand suffers among hispanic. one thing no one has mentioned is women, particularly, women who are not into republicans. has the damage to the republican brand healed since primary season? if it has not, does it matter in the congressional or presidential election? >> i am going to start on this. i am mystified by this issue. my initial reaction, when you had all of this come up about the health care bill and contraception, that this was a real blow for republicans among women, the polling has not shown that. i do not understand. republicans should be having problems among female voters.

they made before the election is over. the current polling does not show that. >> if you looked at tracking polls at the time, you cannot find where that happened. you can make a great reason why it should have. it did not. what i have started doing is when i talk about the obama campaign, independents, 18-29 year olds, latinos, african americans, people started saying, what about the women go? -- vote? when you are talking about 52% of the electorate, you were talking about a big group. they are not all alike. this is the first four months of

the president's approval rating. the first four months combined. president obama approval rating among single women was 63% and. 63%. among divorced women, 52%. among married women, 44%. what about women? which ones? [laughter] >> and hell about white women and black women? >> white married women with kids, romney went by 18. non married women without kids, obama w -- white, obama wins by one. you get it. >> we have not talked about this. the interesting thing is the catholic vote.

i think obama has taken a hit among catholic voters. i am for obama. i still think he wins the election. i am not catholic. [laughter] i do not think this issue was played very well. i do not know that he could have headed off all of the opposition from the catholic church. i think this is a potentially harmful to them -- him. >> one last question. i would like to remind online view is they can participate via twitter. we have an on-line question for you. there are two big phenomenon in this election, media and the rise of the super pac. which has more of an impact?

>> super pacs. >> super pac. tom davis and i both spoke out against mccain fine go-fiengold. what we said is this was going to force money. it is taking money away from political parties. it is going to force money into the fringes. everyone ignored us. everybody. that is exactly what has happened. it is unfortunate. you are going to have to amend the u.s. constitution. it is very hard. the people who drafted our constitution knew what they were doing. they made it hard to ever change the constitution. >> this is a huge variation from four years ago. you did not have super pacs. he did not take the federal match. 3-to-1.

this time it is going to be maybe advantage republicans. do not underestimate the effect that can have perry >> back to you original question. we need to recognize the obvious. we have guys who we are not collectively 175 years old, but getting to that general area. [laughter] we are not the right people to be asking about social media. >> you are exactly right. asked my granddaughter. >> unless it is for. detainment purposes -- pure entertainment purposes. in 2004, the bush campaign used state of the m articro-

targeting. it was before social media. the obama campaign is doing that. but they are going to use it very effectively. my guess is the romney campaign will probably do a competent job. the obama campaign will be better at it. will it make a difference? i am on the edge. i am not wild about the idea of super pacs. if you are going to say spending is a form of free speech, that is the slippery slope that led us to this. when you have democrats getting torqued up about this, i did not notice a lot of them getting upset when two people were writing big checks not that many

years ago. you have to be consistent. my theory has been that there is a law of diminishing returns in politics. for obama, he raised and spent $700 million total. half of it went to win the nomination. he outspent mccann better than two-to-one. he was going to spend $750 million to $1 billion. what of the number he is going to spend, it is going to be into the law of diminishing returns. i think romney will spend a similar amount. beyond that point, i am not sure each additional dollar is going to have that much of an impact. my hunch for the super pacs is

the congressional level. i do not know that he will be at a point where, the presidential, both sides, it will have more money than they know what to do with. extra money on one side, what is that going to do? that is not always going to be the case at the congressional level. >> certainly in senate races. some of the democratic senate candidates are going to be outspent. the house chris gets harder. candidates are better known. where the money could have an effect are in some of these battleground senate races. >> next question. >> i am susan.

i have a question about the supreme court decision on health care, how does that affect the election? >> supreme court, health care. >> window that normally the supreme court handles the hottest days. i assume that is what they are going to do. it cannot predict that. if the supreme court strikes thedown the individual mandate,t becomes a non-issue for the rest of this campaign. congress will have to figure out what to do. how to put honda dumped it back together again, assuming the law will continue. if the supreme court were to totally invalidate the law, it

becomes a real issue. a lot of parts of the lot are very popular. it gives democrats an interesting issue to run on. i do not know what the republicans do if the supreme court upholds the law. >> i think we continue the narrative. it is not a popular bill. that is not me speaking. if they uphold the law, it is the issue we are going to come in and repealed. if they knock it down, i do not see any legislation coming forward. whatever you put out there, somebody is going to attack. >> my hunch is that in october, november, we are not going to be talking about the supreme court decision. what say the decision comes down next week and for three weeks you are going to have over

cabinet people -- over- caffeinated people on cable television say this is the biggest thing in the election. these are the same people who said that contraception was going to be the biggest issue. then they said sam sex marriage. it is this same group of people. we will move on to something else. i do not think it is going to have a huge impact. is there any other issue that has been so thoroughly litigated in the court of public opinion and health care reform? i think no matter what side you are on, you are not likely to switch. it is factored into the stock price for and against president obama. it had a huge impact on his numbers. it is one reason he is in the gym he is in.

i do not think it is going to change because of what the supreme court does. i am not a lawyer. i had an interesting theory that a friend of mine and listened to the recordings of the first two days of oral argument. he thought, they will probably throw out the individual mandate. he listened to the third day. if you throw out individual mandate, can you take that part out? he cannot at the very end of thinking, you know what, i am not sure they are going to do this after all. one of the things he said was, roberts desperately does not want a 5-4, bush-gore political decision. that is what his tenure will be remembered by.

just as the previous chief justice, it was bush-gore. he thinks that justice robert is going to want a 6-3 decision. when you had asked malia -- justice scalia asking, are we supposed to go through all 2700 pages? can you really do this? this guy is guess was that -- justice roberts turned to anthony kennedy and suggest for him to write a majority opinion of 6-3, what would turn up to 6-3 in terms of upholding

the law. i thought that was a very interesting theory. >> i had the wonderful experience of clerking for a federal judge. it was a district court judge. based on that experience, i would never try to predict what a federal judge is going to do. i think just leave this alone. we will see what the decision is. >> the most important metric is where is unemployment going to be? >> i would say personal disposable income. >> the numbers are not good. again, i want to go back. this is going to be fought state-by-state. what is important in some of the midwestern states, that may turn

this election. >> on behalf of national journal and united technologies and greg ward, thank you all for coming. thank you guys. you are awesome. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> alcee spans road to the white house coverage is available on

our web site, c- span.org/campaign2012. you can see speeches from president obama and mitt romney on major issues, like the economy, the deficit, national security, and health care. we have an electoral college math, campaign commercials, information on key races, and more. all at c-span.org/campaign2012. friday, ruth bader ginsburg talks about the court's current term, including the health care case. >> no contest since new briefs has attracted more attention. the ticket line outside the supreme court. a line that formed three days before oral argument commenced. some have discussed it --

described as unprecedented. they may be right if they mean that the number of press conferences, prayer circles, protests, but going on.

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ask people who are not needed to move. if people get outside of the door, they're blocking the door. we have to get mr. dimon. would people at the door, treasury department officials please move outside. >> ryan, let mr. andrews maybe find a place to sit.

. >> thank you. the chair wishes to remind all our guests that manifestation of approval or disapproval including the use of signs and placards is a violation of rules which govern this committee. the chair wish to thank our guests in advance for their cooperation in maintaining order and decorum. our second panel is made up of one witness. the ceo of jpmorgan chase, mr. dimon. and, mr. dimon, you are recognized for five minutes but maybe if the cameras will take a picture and then sort of exit.

mr. dimon, you are recognized five minutes. we welcome you to the committee. >> thank you, mr. chairman. chairman baucus, ranking member frank and members of the committee, i'm appearing today to discuss recent losses in a portfolio held by jpmorgan ch e chase -- >> could we get him to pull the mike closer. >> reporter: chief investment office. we are still reviewing the facts and i will explain everything i can to the extent possible. the six lines of business provide array of services. these include deposit accounts, loans, credit cards, mortgages, capital market advice, mutual funds and other investments. let me start by explaining what

the chief investment office does. like many banks, we have more deposits than loans. at quarter end, we held approximately 1.1 trillion in deposits and 700 billion in loans. cio along with the treasury unit invest excess cash in a portfolio that includes treasuries, agencies, mortgage backed securities, high quality securities, corporate debt and other domestic and overseas assets. it also serves as an important vehicle for managing assets and liabilities of the consolidated company. in short, the bulk of ceo's responsibility is to manage $350 billion portfolio in a conservative manner. while the primary purpose is to investigate excess liabilities and manage long-term risk, it maintain as smaller synthetic credit portfolio whose intent is to hedge the company against systemic event like the

financial crisis or current eurozone situation. so what happened? in december 2011, as part of a firm-wide effort and in anticipation of new capital requirements, we instructed cio to reduce risk rate assets and associated risk. to achieve this in synthetic credit portfolio, the cio could have reduced position but in january it embarked on a strategy that believed off set exiting ones that created a portfolio that was larger and hard to manage risks. this portfolio morphed into something rather than protect the firm created new and larger risks. as a result, we let a lot of people down and we are sorry for it. now let me turn to what went wrong. we believe the series of events led to difficulties in the

synthetic portfolio. they highlight the following. cio strategy to reducing the portfolio was poorly conceived and vetted. in hindsight, they didn't know the risk they took. it should have been specific to the portfolio and more granular only allowing lower limits on each specific risk being taken. cio particularly the synthetic credit portfolio should have gotten more scrutiny. in response to this instance, we've taken a number of important actions to regard against an occurrence. new leadership for cio and importantly our team has made progress in aggressively analyzing, managing and significantly reducing risk going forward. this does not reduce the losses already incurred, it does not preclude future losses but

reduces probability and magnitude of future losses. we are reviewing this incident which the board of directors is independently overseeing. we make mistakes and take them seriously and often our own toughest critic. we apply lessons learned to the entire firm. we know we will make mistakes. with he do believe this to be an isolated event. we will not make light of these losses but they should be put into perspective. we will lose shareholders money and for that we feel terrible but no client, customer, or taxpayer money was affected by the incident. our balance sheet remains intact. as of quarter end we held 900 billion in equity and 30 billion in loan loss reserves. we have strong capital ratios were in excess of regulate-year capital standards. as of march 31st our tier one ratio was 10.1% and 8.2%.

both among the highest in the banking sector. we expect both numbers to be higher by the end of the year. all of our lines of business remain profitable and continue to serve consumers and businesses and while there are still two weeks left in second quarter, we expect our quarter to be solidly profitable. in short our strong capital position did what it was supposed to do. cushion us against unexpected loss in one area of our business. while this incident is embarrassing and should not and will not detract employees from our main mission to serve clients, consumers and companies and communities around the globe. during 2011, jpmorgan raised capital and provided credit of over $1.8 trillion for consumer and commercial clients up 18% from the prior year. we provided more than 17 billion of credit to u.s. small businesses up 52% over the prior year. and over the past three years in the face of significant economic

headwinds we made the decision to step up as we did with markets and turmoil with the only bank willing to comment to lending billions to states of california, new jersey, and illinois. all of these activities come with risk and just to remain focused on serving clients, we also remain focused on managing risk of businesses particularly given today's considerable global economic and financial volatility. last, i would like to say in the face of recent losses with he have come together as a firm, acknowledge our mistakes and committed ourselves to fixing them. we'll learn from this incident and my conviction is we'll emerge from this moment stronger, smarter, better company. i would also like to speak directly for a moment to our 260,000 employees, many of whom are watching this hearing today. i want you to know how proud i am of jpmorgan chase, the company, and how proud i am of what you do every day for your clients and communities around the world. thank you. i would welcome any questions you have. >> thank you, mr. dimon.

let me say that the first panel unanimously said that there was -- that jpmorgan had sufficient capital and that there were no liquidity problems and that depositors money and clients money were not at risk. >> mr. chairman, a point of order. are we going to ask the witness to take an oath and testify under oath or has that process been waived here? >> we have never done that and in my mind i see no reason why at this hearing to do what we have not done in several years. >> i object to that, sir. thank you. >> all right. i see no reason to place this witness under -- this is not a criminal proceeding or even a civil proceeding. he's voluntarily come before us. and at this time mr. manzaula

for five minutes. >> thank you, mr. chairman, for calling this hearing. mr. dimon, on third to last paragraph of your written temperature, all activity come with a risk as we have remained focus on serving our clients, we are focused on manuel hassassagk of our business given today's financial volatility. i just returned from a conference in copenhagen discussing the tremendous crisis going on with the eurozone countries. the imf has estimated that the average debt of the 17 eurozone countries is 80% of gdp.

in the united states, the debtg but in the united states the debt of this country which includes state, local and federal is 107% of gdp, and my question to you is what do you think is going to be the bigger story two years from now in terms of the health and strength of the financial industry? >> the trading losses at gpm or the eurozone? >> i mean, i'm sorry i take up so many people's time in this loss because it is so big in the global scheme of things when we have to worry about europe. europe is a significant event. i am far more worried about europe than i am about this trading position, and i hope the legislators over there overcome their complications and keep the eurozone alive. >> do you -- can you give us a reading in your opinion as to the impact, for example, on the

u.s. economy, should the greeks decide to get out of the eurozone, go back to the drama or should the entire eurozone itself collapse. >> unfortunately, as a bank we have to prepare for all eventuality, we don't want to guess for what happened and i want to make sure we come to the shareholders and communities and say whatever happens, we can survive and thrive going forward. europe, grease defauece defaultt might result in a bank run. to put fire walls in place is not far from happening. if i had to guess at the outcome i think that might work. i think it's important to do that and hold back a crisis and then they have to go have a fiscal treaty among the 17 nations of the euro.

they have to fix the underlying problems. >> italy has an economy that's two and a half times that of ireland, portugal and greece combined. to tell you banks don't have a liquidity problem they have a big problem with debt. can you address the impact of debt on nations as it relate to the ability of -- as it relates to liquidity, but more importantly the overall economy. >> the banking, italy, surprisingly is a very wealthy nation and they have the wherewithal to meet their debt, but they're having a crisis of confidence which is damaging that, they own a lot of the sovereign debt and banking systems don't function very well. if the sovereign system is not funking they have to go hand in hand. you have to meet both to make

the whole financial system strong there. >> the reason i ask that is as you know, the eu is our largest trading partner and your bank is obviously involved in international finance. it's always important for members to be able to glean from people who are on the inside of seeing that happen -- can you give -- and i'm not looking for a forecast, but how do you see the eurozone issue as being resolved? >> in europe, what we see is that the politicians have the will and they want to fix it and there's only one plan which is to keep the euro alive. i think the way is very hard because you have 17 nations and 17 parliaments, so what we, what our economists think and the smart people listen to is there will abe fire wall because you will have growth for the southern nations and that the 17

nations will come to the pickal treaty which has more carrots and sticks in it and that will bring down the debt of europe. >> thank you. >> thank you. >> you said that you want it to be a smart regulation as opposed to -- the economy future's training committee budget was 200 million for the year and proposed to raise it at 2008. do you think at the level of 180 million to get smart regulation. i have never looked at the budgets and i don't know what they need and it's almost impossible for me to comment on it. >> i'm disappointed and the appropriations committee is 27 to 19. i am surprised because it did

seem to me you were well informed about what the federal government does and doesn't do and to talk about smart regulation, but in effect, give them a pass on the substantial reduction and see if they made a mistake, the next question is the legislation that would remove any -- over and above the volker rule they would put out derivative trading which you spoke about favorably, but there is legislation that would have exempted the transactions in question and any other transactions conducted overseas and not in this country from the rules about clearing transparency. do you believe that we should enact that and exempt the kinds of activities here even when conducted by an american institution from these regulations? >> these trades are not exempt from regulations. >> no, i'm talking about the

regulation, mr. dimon, you know what i mean. i'm talking about the specific rules enacted in the specific reform bills that are about to be adopted and transparency, et cetera, there is a bill, as you know that would exempt derivative rules, whether in a bank or know, but there are two sets of rules here. do you support that bill that would exempt these trades from the rules on derivatives that we hope to have in place? >> yes. >> why do you think that they are adequately regulated elsewhere? why would you not want the american regulators to have an ability to, for instance, transparency and clearing where possible? i thought you were approving of those. why would we want to except those activities and these rules? >> these trades are visible by occ and the fed. 16% of the traced were, in fact, cleared and all of them were fully collateralized.

>> mr. then they would have met the rule, but it does seem to me there were problems with this in terms of knowing about when it happened and in terms of being underinformed and you are in favor of -- >> not any. >> the transparency is part of the thing that would be exempted from. and we have a time issue. you said -- because you have a fortress balance sheet, these are not a threat. what about institutions whose balance sheets are less impression national, a chain link or two. if we don't just legislate for j.p. morgan chase, is there a danger that the financial

institution with less of a strong balance sheet might cause some problems? >> i don't know, but i think you should all take comfort in the fact that all banks are better capitalized. the system is far stronger today. that was know the question i asked and we can't assume that will be the case forever and there are some resisting the capitalization. would that have had problems in it that we didn't have because of the balance sheet? >> that assumes that there's something special about the way you are, but we can't assume that will be the case for every financial institution. >> we also said there was going to be profitable -- >> please don't filibuster. let me ask you, finally, that there would be some callbacks for compensation. we both have taken some responsibility here. will the callbacks for

compensation, is your compensation on the table for consideration of clubex? >> this whole with act should be reviewed by the board -- >> answer my question. >> my compensation is 100% up to my board. >> mr. dimon, you said there would be callbacks for people -- >> they will do as they see appropriate. i can't tell my board what to do. >> thank you, mr. chairman. mr. dimon -- >> over here. >> let me explain to the witness just -- because a little unusual procedure, the republican side elected to go in order and not to come back up to the top to allow all of the members to ask question and the democratic members are starting over. >> with modifications for people who are here or not here. >> that's right.

thank you. >> miss biggert for give minutes. >> thank you. >> the model which was used to estimate losses that occurred a particular trade or portfolio. the press has reported that j.p. morgan changed its model which allowed its london traders to take on more risk and then j.p. morgan changed its model again and then to top it off this change occurred in january which seemed to be material in nature, but was not included at value at risk model. the sec has said that when a public company changes its model those changes must be disclosed. so why, exactly, have the risk models changed? >> we have hundreds and thousands of models and they're periodically changed and updated and it usually makes them better

and constantly trying to be improved and back in june of the prior year and an independent model risk group, they're trying to improve a model. it was approved and implemented in january and as of april 13th, we had no reason to say -- clearly, when things started to go south several weeks later, we felt that the new model was not better and went back to the old model which we thought was better and we disclosed that in the 10q and we filed the 10q on may 10th. okay. so it was changed may 10th and there was an approval? >> there's an independent model approve board that approved it. and this is one of the things we'll go through in a lot of detail and make sure we know all of the facts exactly as they happened. we don't run trading on one

model for a lot of other things that should determine your decisions. >> do you think that that was adequate disclosure? >> we disclosed what we knew when we knew it. >> okay. so who was responsible for making the change? >> it was the -- it was approved by an independent model review board. i don't know, it was still part of the review. >> you don't know who made the change in the company or decided that there needed to be a change. there are constant changes, based on new facts and new history. do you think that regulators should have noticed whether there was adequacy in the reporting? regulators review periodically models and model changes and in this case i wouldn't blame that, if we failed to pick up inadequacy i don't think we should expect regulators to pick it up.

so you don't think these changes had anything to do with what happened? >> i think it may have aggravated what happened. i wouldn't say it was the cause of what happened. >> all right. i yield back. miss waters for five minutes. >> thank you very much. mr. dimon, i am trying to understand your position relative to dodd frank and a number of other issues. i'm want going to use this and i don't want you to use this as a way of a time that you can basically just give us a lot of information that we don't need. you said you support 75% of dodd frank, but after your testimony last weekend, after following your statements and the lobbying of some of the industry of the last two years i really don't know what you really support, when it comes to the most

important element of dodd frank een when these reforms would benefit your firm, your shareholders and america's taxpayers by preventing another financial crisis. of the volker rule you called it unnecessary and you asserted that some banks like j.p. morgan should be treated differently under the rule and a higher speed limit, but at the same time you also conceded that the voker rule may have prevented the recent trading losses in the cio of capital standards. you told the senate that you support higher standard, but the chief officer has testified against a capital surcharge in the largest u.s. banks and on title 7 derivatives and requirements in dodd frank, you say that you want to work with us to implement those reforms, but you work for loopholes through bills here in congress,

so i want to ask a new question and this is just a yes or no answer. when we think of the losses coming out of the cio in london. did those losses stay in london or did the 30 billion or more impact your shareholders here in the u.s.? ? >> yes, it did affect our share ho holders, yes. >> you have lobbied very strongly and you just answered mr. frank that you do believe that that the foreign markets should be except for the territorial regulations we're proposing here and if this impacted your shareholders here why do you continue to take that position? >> i think i said, the occ, these things went to clearing house and they collateralized.

the reason we were careful about overseas competition, if j.p. morgan operates under a different rule than foreign competitors, we can no longer provide the best products and services to the u.s. clients and the foreign kleins and that's why we're concerned about the extra territoriality. when we compete we give our clients which include major u.s. companies better deals. they will go elsewhere if we can't give them the best possible deal no matter how much they like us. >> so you take that position despite the fact that the losses do not stay in london? >> yes. >> and you continue to lobby against or fore exemptions for the lobby. >> i'm not questioning your right to lobby. i'm questioning what's in the best interest of the american

public. while the public doesn't know the full details of this trade, it is clear that these trades were not subject to the full panoply of rules we crafted under title 7, and i think we all need to be just very, very clear about that. and what he said about the risk that you take and having that kind of exemption and whether or not you agree with mr. gensler and what he testified here today in any way, shape, form or fashion. >> i don't agree with him. i heard part of it and i think the starting point should be that the united states is the best, widest, deepest, most transparent capital market in the world that had flaws. we should fix the flaws. we are concerned about some of these things making us not the best capital markets in the world and the best capital markets in the world would make this the best business machine

ever, the united states of america. so we just want to get it right. it's not binary, it's not one thing. these are complex rules and we want to get it right so it works for america. >> thank you. mr. duffy, five minutes. >> thank you, mr. chairman. mr. dimon, good morning. it is clear that we're here because many of the american taxpayers are concerned when big banks go bad, they're left holding the loss. it's one of these philosophies where we have capitalism on the way up where you and your firm make a lot of money when you do well and when you fail we have socialism on the way down and the taxpayers bear the brunt of that loss and that's why we sit here today to make sure that taxpayers in wisconsin don't bear the loss of big banks on wall street. and so when we look at what's going on. would you say that the regulators are capable of

sufficiently regulating the bank the size of j.p. morgan. >> i agree that taxpayers should never pay for big bank failing -- >> we agree we're nervous about it when we had t.a.r.p. and the taxpayers did it just a couple of years ago. we're a little gun shy with big bank losses and the regulators staged a bank like j.p. morgan. >> it's challenging them to get them done in time. >> can they regulate a bank the size of j.p. morgan? >> believe so, yes. >> for your testimony, i believe one of the best and brightest ceos in history held out in high esteem. you didn't know about these trades. you didn't know about these losses. how do you come forward today and say the regulators should have known that one of the best ceos in the industry didn't know and could have known? >> i didn't say that.

remember we had higher quality standards and higher rules, most banks are stronger and boards are more engaged and there's no off-balance sheet vehicles and no more subprime mortgagees. the system is far healthier and you have to look at regulation in it's whole and not the one thing they might have missed. >> if one of the ceos in the industry does not know about the trades how can we expect the regulators to know about the trades and protect the taxpayer? >> i believe they'll kacapture everything. however, they can make it a better system by disseminating the kind of information by getting to the companies and they're critizing some of the things they're doing. i just think we need realistic expectations for regular laters. >> i would agree. but is it fair to say that a $2.3 trillion bank is too big to

manage? too big to regulate and too big to control and too big to fail? >> no. we believe a bank should be bankruptable and that when the bank fails that the clawbacks should be invoked on management. the board should be fired. the company should be slowly dismantled. >> and who pays the losses. >> in a way that it doesn't cost the -- >> that's what i believe. >> if j.p. morgan fails who picks up the tab? >> if j.p. morgan fails i don't think anyone will pick up the tab because we have $290 billion of unsecured debt and i don't think there's any chance that we'll fail, but if we did, any losses the government should bear should go back and be charged to the bank just like fdic is charged backed to banks and j.p. morgan is going to spend $5 billion of fees to pay for the failure of other banks.

i don't like the 5 billion, but it's appropriate that the american taxpayer should have to pay for that. >> i thought you were done, sorry. they should step in and bear the brunt of j.p. morgan's loss should you fail, right? >> the loss would mostly be borne by equity and unsecured debt. they might provide temporary funs to keep them in the short run. >> is it fair to say that j.p. morgan could be a loss of half a trillion or a trillion? & not unless the earth is hit by a moon. >> i want to go to the trades that brought you the 2 trillion. the $2 bill scombron 5 $5 billion loss? ? those were backed up by the fdic, is that right? >> i'm sorry, say it again? >> the $2 billion to $5 billion loss you incurred, the dollars that were used to make those trades.

those were dollars that were backed up by the fdic? >> yes. >> okay. >> and why then weren't you taking this excess deposit and invest in those dollars here with american businesses, american consumers? instead, taking those excess dollars back up by the american taxpayers or the fdic and sending them over to london to make it complex. >> it's not either/or. we have $700 billion of loans. we've got $200 billion of short-term investments in the central banks around the world to handle bank folds. >> any loan that comes in the door that we can make. small business, middle market, we try to make those loans. >> thank you. . let me say somewhere in dodd frank there is a prohibition against them striking the earth. mr. maloney?

>> thank you. i would like to welcome mr. dimon who resides in the district i am privileged to represent, and i would like to note that he has been a major employer in a number of different financial institutions before joining j.p. morgan chase. i would like to ask you, mr. dimon, i thought youo new york, so why are all these jobs and all this activity taking place in london? and i specifically would like to know where were the losses incurred in the london unit? they didn't take place in the northern unit and could they have incurred in new york just as easily? we learned in the prior regulatory panel that a substantial portion of the bank's chief investment offices,

activities including its credit derivatives are conducted and that other financial institutions and i certainly understand that we're in a global market and we have to be in global markets and around the world, but what is it about the regulatory regime and the united kingdom that encourages such a large portion of these activities to take place in london as opposed to the united states? and i would also say that a large portion of the credit disasters have taken place in london, aig, we bailed out at $184 billion. lehman, ubs, there's a whole seary, and i want to understand why all of this is taking place. why london? >> the predominant part of cio is done in new york. we operate in 100 countries and we're on the ground in 60

countries and we take deposits in a lot of these countries and they have the laws, rules and requirements and that operation could have been london or somewhere else and sometimes the operation where we have the people, so -- >> is the regulatory regime lightner london? why is all of the activity overwhelmingly and all of the problems appear to be in london? >> i don't think this activity was in london because regulatory activity was less in london and most of what we do in london was european companies. >> well, what are the lessons you have learned from large financial institutions going forward? is there any way to ensure against this type of loss where a trader is forced to hedge the hedge and cover losses that led to more losses? is it possible to ensure that legitimate hedges never morph into something else? >>. >> it's not possible to ensure

we won't make a mistake. hopefully they're small and few and far between and hopefully not life-threatening. we in this one area we failed to have the gran all limits and the review that we should have. we believe it's not true, and we fixed the problem. >> and where the risk limit rules raised while the loss-making position was in the books? no, sometimes, they're triggered and they ask for further focus and we heard about when the limits were hit. so do they raise them? they do get raised, yes. >> and why were they raised again? >> i think sometimes they do get raised so you don't know why they were raised? >> i don't recall. >> was the loss-making position

increased in size after they began generating losses? >> what i recall is that -- is that they weren't increased in size after early april and at that point they stopped making decisions. >> what was the start of the losses and senior management action? >> so prior to april 13th, there had been some losses and people looked to stress testing. a lot of folks thought it was an aberrational thing that would come back that happens sometimes. the real losses started later in april like late april, like the last week of april. at that point they brought in some top experts again and they dug deep and we realized they had a much more severe problem and it was late april that we

started to -- and what was the delay between the start of the losses and disclosure of the losses to the office of the controller of the currency on si site@ at j.p. morgan chase. >> we run the company, the what we know and when we know it. i don't know exactly what older reports oui they're looking at. we don't hide reports from them. they do see p & l, so they know the losses. at one point they explained when it happened right prior to april 13th. we did not understand the seriousness of it until later in april. on april 3rd -- >> my time has expired. >> five minutes. >> thank you, mr. chairman. and forgive me, as i've been bouncing around. just so i can get put it on the

ridiculous, we are the estimate of losses? we have not disclosed that. we disclosed the quarter on july 13th, and the full and flair explanation of what went on. i personally, you feel this will never be life-threatening to the party, and probably the second -- and i'll reserve your time if you read the articles on this, the more disclosure they just made the more those betting against position of j.p. morgan can use that to the disadvantage of j.p. morgan. i think it's pretty well established and that this open disclosure and discussion has precipitated some of those losses. so, it's not necessary for him

to disclose proprietary information, but i think if you read any of these articles you see that they're managing these. they said the loss could be 6 billion, but it's just an estimate. it could be 2 billion and some have estimated that, and you'll be doing your quarterlies shortly. the second questiones of going to ask is profit for the quarter and we'll just wait on that one, too. >> but there will be profits in the quarter and that was the point i was trying to head toward is that at least as an institution this is not happy. it's shareholders' money, but not devastating. >> not fun, either. >> and this is actually more of an offshoot having read some of the senate testimony. i want to get my head around something that's looking down

the financial and the fixed income and the banking community. we're all operating in an environment that's operating in zero interest rates. you plug in interest rates today and plug in what with real inflation. so slight movements, whether because by cascading europe or argentina or fed policy or fiscal policy here. my understanding is just little bit of movement would be devastating to your book of business, if you have not hedged that. what scale are you hedged for the fear of movements in interest rates a couple of ticks up? >> our biggest exposures are credits and interest rate asks we try to manage the portfolio in all interest rates such that rising rates don't hurt us because our biggest risk with rapidly rising rates, in fact, we're positioned today that if rates went up we mack moke morey

and it does cost us to do that. >> you're heading to the ultimate question here. i'm trying to get a sense of the cost to prevent to do that type of risk management and that's one of the frustrations. i hear lots of discussion talking about are you doing risk management here and here, but folks don't understand it's expensive. >> i'm guessing it causes probably over $1 billion a year to be positioned where we are to benefit from rising rates as opposed to neutral to rising rates and it protects our company and again, we may be wrong. >> do you have to do excessive amounts of hedging in that fashion or buying and we'll call it interest rate insurance and it might be an easier way to understand it because of your imbalance in both deposits to loan portfolio? >> the investment portfolio is invested to help matters of exposure to make sure it's what i call shorter than most.

the duration is three years and if you invest that longer, it's the ability to reinvest $40 billion a year and whatever the current rates are. that portfolio is what we use to manage interest rate exposure. your universal lam is you're saying -- >> the $350 billion portfolio. >> and that costs you almost $1 billion to insure? >> just to keep it positioned to benefit from rising rates. >> in this type of environment and your understanding, and i know we're all still working on what the ultimate neck anecs, the volker rule. what would have happened in these tradessome if the volker rule was fully implemented as you understand it? >> the volker rule specifically allows portfolio hedging and the original intent it would have been allowed because it was a hedge that would benefit the company in a terrible stress like eurozone.

i think it would have morphed into i cannot defend and it violated the volker rule and if it did it wouldn't bother me and the far more important thing about the volker rule is the ability to make active markets here keep down spreads for everybody and for all investors and that makes it easier for companies to raise money and cheaper for investors to raise money and those investors are veterans, retirees, mothers and they're not just people like me. so that's why we think the volkers have been written carefully to maintain the best capital markets in the world and not stifle them. >> in six seconds, how do you as an international organization hedge against political sxrifk what's happening in

>> i happen to agree with that. " is an unrealistic goal. i think if we focus, and want to rest your question. capital requirements, leverage ratios. i think that is something that regulators can actually get their hands around and do a good job at. would you agree with that? >> yes. >> if i could just understand a

little bit without divulging your proprietary risk information, what was your risk model? how would to calculate it? >> i believe it was daily. >> as a 95% confidence? >> i forget what the public disclosures are. >> my question is going to be it to go to 3, 4 sigma, would that have helped your scenario? i'm just curious. would that have actually helped? >> it is as if -- it is just a statistical thing. there's nothing mystical about it. the other thing that helps is having a limited granule lovell and doing real stress testing. what happens if rates blowout. what happens with a credit

crisis in the united states. it is one measure and, in my opinion, not the best, either. >> i know there were technically insured. at any point, even now, where the taxpayers at risk? >> no. and i believe when the fed governors was saying that a bank can bear a $80 billion at risk before the taxpayers are risk. >> i am trying to get my hands around this to look in some areas. doing is trying to turn banks and utilities. when the financial meltdown in it to designate, where much of the come -- much of the country was in loans -- we know it was

subprime. other markets were able to clearly notice your london debts. do you think that we evaluating these, especially in light of things that a liquid, is something that makes sense for a banking institution? >> that is one of the flaws here. there should have been more granule limits. i did not mention that specifically. it might be specific limits on credit. we had some but not all. they all should of been in place. >> thank you. i yield back. >> thank you. >> if i might, i would like to get back to some very basic concepts. in your opinion, is gambling investing?

>> no. no, it is not. >> what is the difference between -- briefly, if you can. >> when you gamble, you lose. the house wins. >> that has been my experience with investing. [laughter] >> our behalf to give you a better investment adviser and see if we can improve upon your experience. >> you have an excellent track record. i would tend to agree with you. but we seem to be treating them quite the same. i used to think that all of wall street was on the level. that it facilitated investing. that it allowed people and institutions to put their money into something that they believed in and believed would be helpful and beneficial and grow, like money.

and especially help the economy. on the side, create a lot of jobs. now, a lot of what we are doing with this hedging, and you could call it protecting our investment are whenever, but it is basically gambling. george is betting that you might have been wrong. it does not help anything succeed any more. it creates the possibility of that they say, to discuss renewal of their doing? and then if you go and hedge against your head, which means you're betting against your bet against your further bet, it seems to me you're throwing darts at a dart board and putting a lot of money at risk just in case you're wrong the first time. i do not see how that creates one job in america. i don't see how it helps the american economy. i don't see how it helps the housing market or the building

market. super 1% of one zillionth of a percent. it does not help the country, the industry, are the economy at all. if you are wrong, it puts systemically everything at risk. and when i say everything, i mean the confidence of the american people, the public, and everybody else has in the system. that is a loss you cannot hedge against because the more you hedge, the more questions you raise in the confidence of what you're doing with your initial investments. the fact that you have chosen to do this overseas race is a lot of fuzziness. do itit's not a legal to

over there so it is good to do it over here. when you come back for an overseas trip in customs there's always a question on the form -- did you have any exposure to farm animals? and i'm sure the last people in europe or africa or asia have safety codes, but they still ask the question because they're worried about the infiltration and the problem of putting us at risk. they ask that question. how is this hedging and wedging any different than protecting yourself by taking the odds to las vegas? >> we did not gamble. we do make mistakes. the main mission of this company is to serve clients around the world. we're one of the biggest small- business lenders and united states. we raised $500 billion for the american corporations.

we bing countries around the world. our main mission is serving clients, investors, capitalists, and investors -- and clients. >> i want all good things to happen. but would you be serving those clients better, and you have done a pretty adequate job, would you be serving them better if he spent more time or energy in that $1 billion to figure out these mathematical formulas, when you do a better job if you evaluated the investment a lot clearer? >> in this case, yes. >> why should we apply that to the whole program? i am raising a question on what is the purpose of hedging. if you're right you win. if you're wrong, the system loses. we all lose.

>> thank you. mr. fitzpatrick. >> thank you, mr. chairman. much of the discussion regarding jpmorgan's trading losses is focused on whether the activity in question would have been prohibited if the so-called a ball girl would of been in effect. what is your -- paul volcker rule had been in effect. what is your opinion? >> i do not know. if it did not prohibit it, it would not bother me. >> putting aside the question, since the regulators who wrote it cannot seem to answer that question, what is your view on whether it should be prohibiting? >> it for textile companies. in times of dramatic credit crisis.

i do believe we should be allowed. >> some have suggested the your position as a board member on the new york federal court is a significant conflict of interest and has suggested the you and other bankers who sit on the board should resign your positions. how do respond to that? >> the federal reserve's rules are written. i should tell you that i did not vote the president. i do not get involved in the supervisory. i cannot serve the audit committee. the board basically sit around and talks at the economy, what is going on. that information is put together and sent to washington. is more informational advisory group and never the lawmakers think is right is fine with me. if i was the head of board, i would want to hear from a lot of different people. it would be fine talking to --

talking about global markets and not have someone involved in the global markets at the table. >> nothing further. >> thank you. mr. sherman for five minutes. >> thank you. mr. lynch wanted to swear you win. you party says of in that is false that we all know is false. >> excuse me. i want to clarify something about swearing people in. we had a hearing in september of 2009 where mr. frank was chairman. and mr. frank minute decision not to swear an any of the ceo's of the banks about what had gone on in september of 2009. i am following the protocol of the committee. if you want to concede to say he ought to be sworn in, that is fine. >> i am not saying that.

i was not criticizing you. i am saying the ranking member has said i'm doing something unusual. what i'm doing is following the standard policy. >> i did not say that. >> i took it that way. >> i made no comment. >> i guess that is right. i guess it was mr. lynch. >> this is normal, standard procedure. >> i take exception. i have made no comment. i am gratified to your following my precedent. i will have by tomorrow another list of precedents you can also fall and we will all benefit. [laughter] >> do not given any rush to get it to me. [laughter] >> you would face no legal obligation -- obligations for the comment you made.

you put forward the idea that there are three and a $50 billion a year given to your chief investment officer because there were not small and medium- size businesses in united states our creditworthy that wanted the money. i assure you there is not a member of this panel that could not bring you 100 small and medium-size businesses credit worthy, in need of loans from new and instead, he took the three of $50 million to london. that is why we are here. it could make the small and medium-sized business loans, you would not be here. and some of that money in london went to the gambling tables in london. and whether it was $2 billion loss or some multiple of that, that is why we're here. i would hope the your leave here, dedicated to taking the

money away from our london operations and lending it to small and medium-size businesses. if you cannot find the 100 in each of our districts, we will do for you. now, i would like to call without objection, put into the record an editorial from bloomberg. i assume there is no objection. >> without objection. >> they point to a study published by the imf that says that your bank enjoys a $14 billion subsidy. that its cost of funds is some 0.8% lower because of the employes since it will guarantee. what we saw in 2008 is a belief around the world that if a bank your size was going to go under, there would be a bailouts not just of your depositors, but of all creditors.

that belief reduces your costs by 0.8% of your total funds. you are in a position where you are simply too big to fail. this raises -- and i think the gentleman from wisconsin made this point. you lost $2 billion or some multiple of that. you happen to be very well financed. but you get over $300 billion. , unfortunate, and why is he did not lose more. -- and wise you do not lose more. " you think all the banks could have survived a loss of this size? -- do you think all the banks

could have survived a loss of this size? my question is, why do you think we should let you do something that you go under, we have to bail out york creditors? >> banks to take risks relatives to the size of their liability. a lot of things report in the storm. i know it is convenient to blame the mall for everything, but jpmorgan's size, capability, and diversification into doesn't account 2009, and 2010 allows us to continue to do the things you want us to do. we never stopped making loans. it allowed us to do it. we tried to be a conservative company that does the right thing. every now and then we make mistakes. >> how can medium-sized banks compete against you in your cost of capital is reduced by 80 basis points -- 0.8% because

they believe that if they go under, we will let them go under. but if you go under, we will build of your creditors. >> i do not believe that is true. i'll give you two facts if you do not mind. people in thetest world. koses 200 basis points over treasuries. -- it costs us 200 basis points over treasuries. >> i would expect creditors would be reluctant to lend money at less than that rate. >> most of it is here. the fdic report looks at average funding costs. almost all of the report was related to mix. we are a money-center bank and we have a tremendous amount of money which costas very little right now because of the way the yield curve is. we are the checking account for large corporations including

some nations and we invest the money sure and make almost no money on it. it shows up as a loaf on because the actual cost for deposits and negotiate deposits is probably like everybody else. >> there's not a small size bank that agrees with you. >> five months? -- five minutes? >> i have spent a number of years in the banking sector. i am approaching this hearing keeping in mind a primary truth about banking industry and that is that the business of banking is inherently risky. lending money is a risky proposition. this was evident back in february when your firm disclosed in an investor presentation that it had set presentation that it had set aside $27 billion, more than 10