it is an application using the technology. does that make does that make sense? >> it does. i will study it more and have more for all of you. a big question we have is how federal regulation is effecting what you are doing and i suspect senator alexander will cover that in his opportunity. senator bingaman. >> thank you for your testimony. but me follow up with this issue of the redesign of these courses that dr. twigg has been talking about. at the university of new mexico we have had a grant from your organization that has allowed us to put in place a redesign of the first-year psychology course, which has been

successful, students are doing better, learning more, and enjoy in it. the obvious question that comes to me it is technology has changed a lot of things in our society and an -- me as technology has changed a lot of things in our society, and we are just beginning to see it in education. if you have a group of faculty from wherever designed a course in introductory psychology or any other subject, why is the course not appropriate to be offered online everywhere in the country at that point? why should the university of tennessee do a version, the university of iowa, -- if they want to change it or add bells

and whistles, fine, but why are not all of the schools using nine basic redesigned course, dr. twigg? >> it might not surprise you to know that i asked the question often. there are 72 general psychology textbooks on the market. that is a big number for a subject -- subject most of us would think is quite similar, but there are differences in what people want to emphasize, what the levels of the students are, so there are reasons for the diversity. however, one of the big contributions of the instructional software, which is becoming more prevalent with commercial publishers and individual companies, is the create materials that are able

to be used widely. they're not as specific. a community college could use the same software that the university of mexico -- of new mexico could use. once software is playing such a big part, in many ways these courses are replicated, but you will need individual instructors to keep them on the task, mentor them, etc., but the development that wastes time in these courses can be mitigated by these packages. >> 25 courses account for 42% of the instruction that goes on at universities. it seems you could have the best designed course that we as a country could come up with for each of those 25 and have that available online to be used by any institution in the country.

>> there is a second part of it that is critical, because a lot of people talk about creating free courses, and that will solve the problem. the materials are essential, but what is important is the way the material is used. if you have one set of material, and the faculty member says go often study, and pays no attention, chances are the students will not do well. if he is interactive, there is the learning. it is more than the course material. it is the pedagogy that surrounds the material, and that is new for most college faculty. that is why the redesign has been spreading, but we have 153, not 1053. >> mr. snyder cut you indicated

you had 100 facilities? >> we have 40, and we are teaching and 60 others. >> how does the use of,, as we have been discussing, -- of online, as we have been discussing, worked in the context of your school? >> when you talk about why can there just the one course that everybody takes, that happens in indiana. we limit face-to-face courses to three books, and online courses to one book, and teachers can sign up online and unseat -- received -- receive instruction anywhere in the state. we think, is a perfect fit. there needs to be proprietary work. we have a program called smarter measure that will help you determine if you are capable of

navigating an online system, but we think it will be prevalent. we are a big partner with western governors, which is a totally online university. it is forward-thinking, and we are trying to learn much from them and offered it across state borders >> thank you, mr. chairman. >> thank you. senator alexander. >> thank you, and i want to sit thank you to senator harkin for this hearing and a constructive way it has been conducted. thank you to the witnesses. i have been asked, what is more difficult, being a governor, a member of the president's cabinet, or a university president. my answer is obviously you'll never been a university president. you have never been a university president. -- you have never been a

university president. i understand that and i appreciate you are doing. a change in state funding was said to have been the cause for the rise in education costs, and dr. leath said in iowa 70% side was paid by -- by the state. that was true in tennessee. i was governor then. we had a deal that if you increase tuition by 2%, we would increase state funding by 2%. today, it is reversed in our state and in your state based on what you said, but i did not hear any of you say what you think is the principal reason why states have failed to fund higher education as well today

as they did 30 years ago? does anybody want to say what that is? >> sure, senator alexander. i have written about this because this question comes up. we could all sit here and talk about the great benefit of higher education. i think the primary reason is politics, not economics. both legislatures and governors have discovered that public higher education institutions are one of the few sectors of state government that have the ability and willingness to raise sufficient revenue on their own. with the exception of told ruth brigitte whole roads, for example, -- with the exception of toll roads, they do not have the capability to raise their own funds. governors have found out that if they cut appropriations, universities do not shut down.

they maintain quality primarily by raising tuition and looking for additional sources of revenue. >> any other ideas? >> i have a slightly different view. indiana accepted funding generously in the university system until 2008, 2009, and tells state budgets forced them to rethink that, and now we're moving to performance funding, which will be based on outcome'' instead of just enrollment, which it was. i think we are one of a handful of states moving in that direction. it seems if you contrast what is going on in other institutions compared to community colleges, the community colleges because of their network and local support kept tuition increases low, in such that community colleges can deliver the first two years, transferable almost anywhere, for between $6,000.50

-- $10,000. so, the average book cost could be based on community college, and everything above that is based on institutional college. >> i only have one minute left. i have my own view of the real reason, and i am pretty sure of it, having watched, and it did not start with president obama or president george w. bush, and it is a single word -- medicaid. 30 years ago, state budgets were 8% medicaid. today, they are 25%. i know from my own experience, as you get down to the end of the budget process, after you find highways and courts run certain things, you get to the iwo pots of money, higher education or medicaid, the two

pots of money, higher education or -- two pots of money, higher education or medicaid, and as long as states fund medicating a parental way, higher education will be seriously damaged -- medicaid in a preferential way, higher education will be seriously damaged. maybe you can come back to this, but despite all the things you can do with two-year degrees, where one-year degrees or operating in the summer, it seems, as we on leash the states from federal medicaid requirements, than our great public universities and community colleges will continue to be under-funded and tuition and loans will go up. the increase from 8% to 25% is by far the principal reason. to recommend mr. chairman.

>> -- thank you, mr. chairman. >> i would just throw in that in numerous town meetings i have had in iowa over the last 20 years or so it has, time and time again about funding for higher education, and i have heard people say we put all of that money into iowa state, iowa, educate those kids, and they go to california, colorado, texas, or someplace like that. we do not see the benefit. this has been at town meetings for a long time. i just wonder how much that seeps through legislative thinking. >> i think one reason for the increase in scholarships and the hope scholarship or the scholarship in tennessee that will give every student $4,000 to go to tennessee is a to --

institute, i think the hope is they will stay in tennessee, but that is an interesting observation. >> thank you. senator merkley. i'm sorry. senator franken is next. >> i withdraw my thank you. [laughter] >> i did not look at my list here. >> i will take his thank you, and i will raise it wanted. dr. leath -- one. dr. leath, you have testified about information i was state include the financial award letters, including information about students current indebtedness, and the amount the loan repayment after school. can you explain why you feel it

is so important to include this type of information in award letters? >> well, there are couple of reasons. one of the things we tried to do is educate students beyond the material in the classroom, in other words make them better citizens, and it is hard to get this level of personal responsibility if they are not well-informed in these areas. we have shown by data that students do not understand personal financial commitments, so to be good citizens and manage money well, we have to do this. we think it could have a significant role in driving down indebtedness gesture the educational process. students that go through these programs tend to borrow less after the program. >> i agree with you, but unfortunately not every school is moving to include this type of important information on their financial aid award

letters. in fact, some school's letters to do not distinguish between grants and loans. i have seen letters where they have a stafford loan just by a code. they do not even say that it is a loan. it looks by all purpose, especially when it is then award letter -- the word "award" -- usually do not pay interest on the award. i introduced a bill that would include information you highlighted in your testimony. this bill will help students have accurate information on the true cost of college. do you see value in directing other schools to do what you have done with financial aid award letters, so the student

can judge apples to apples and oranges to oranges? >> absolutely. we have put a huge emphasis on that and seeing results, yet students that take financial literacy programs are still confused comparing them to other schools because not everybody uses the same language or terms. i think it would be a great service. it is unfortunate that we have to legislate it, but it would be valuable. >> i think we do have to legislate it. president snyder, aligning education with workforce needs is critical. i think students would be more willing to go to college if they had a more clear sense that a degree would lead to a job. could you talk about the work you have done to align workforce needs and college needs, and

what can be done to support alignment between schools and work force boards? >> community colleges, as a unique part of higher education, our partners across the country with -- are partners wi employers across the country. virtually every community college program has a program like industrial technology that has an industry advisory board. that is virtually the pattern, which means they are actually local leaders that are part of that. we think that is critical. we started a program. senator alexander just left, but it mimics the tennessee technology centers, which we think is one of the best examples for employees that want to think about a job where you start with the end in mind and

it might only take one-here to get to an industry-recognize certificate, which is another thing community colleges do, and then two-year degrees. partnerships, rethinking to make things more responsive, and boards focused on training and more visibility like the tennessee technology center, those are the things i think you need to demand the community colleges do it. is your best work force development tool. that is what we do. we tend to be under-funded because of the pockets that we come from and because we keep the costs low, but i think there is a huge entrepreneur spirit to keep doing this. >> there is a tendency toward

this from the country, i believe, and i am trying to get it done in minnesota, and they are doing it. i would like to tell the chairman and the ranking member that a reauthorization, i think, would be a very timely thing in terms of being able to coordinate between the industry, the work force boards and the colleges, the two-year colleges. so, thank you, mr. chairman. i have to go back to judiciary. >> thank you, senator franken. senator merkley? >> thank you, mr. chair. i see a lot of young folks attending the hearing today. i thought i would ask for you to raise your hand if you have college debt and you are worried about the way that affects your future. wow.

this is a major stress. i feel i was fortunate in college to have minimal loans coming out. my parents did not want me to work the first year to make the adjustment to college, but i worked a lot the following three years. so many students find they have to drop out of college. i was interviewing someone for my staff who was talking about a family matter -- family member, a brother i think was, who had to drop out and had to earn money to go back to a community college. in this work environment it is hard to save money to return to college, and a lot of people simply do not make it back to fulfill the opportunity, the vision and their potential dr. -- potential. dr. heller, you mentioned the pell grant program, and behind

it is that you'll be able to afford college in utilize your high school experience productively because there is a future for you. you talk about the need to find it. has it been funded at all, or is it yet to be experimented with? >> it has not yet funded. i do not believe the administration has included it in its request. >> i think it is a powerful concept. we know in some cases philanthropists have talked to kids in low-income areas, have adopted classrooms and said we would find your college, and so kids from grade one know that is your possibility. i come from a working-class family where nobody went to college, but my parents said we will figure it out. that is not always in the back of everyone in america's mines, but i think that is worth

exploring. dr. leath, you talked about financial literacy. in the state legislature by pushed to make financial literacy a required part of the education. the world is much more complicated than it was 30 years ago. when i got out of graduate school and came to washington, d.c., i was turned down for credit cards because i did not have work experience, and now my dog and children get applications. we have all sorts of loans and even school scholarships that a lot of folks do not even know they have them. you are basically on the hook. do we need to have more financial literacy as a preparation of our children in high school to go into college

and into life being able to manage finances effectively? >> it would certainly be supported. in some ways, these programs started and seemed to be remedial because you would think they would be a higher level that is why we instituted the program. if they came better prepared, we would be delighted. >> i think it is worth continuing that. i want to grow -- to continue with the example of a growing public courses. public radio had a conversation with a number of universities have worked together to create online courses, and i believe someone involved at stanford and google has left to create free online courses, but i think even though they are participating in providing these courses as an

opportunity for education, there is not a system that will accept credits from folks that take the. is that something to be explored? is that something that is a problem as far as universities been willing to accept them? dr. twigg, the want to address that? >> i think there is a problem. these courses are more like continuing education courses in that they are not awarding college credit and you can not comply -- apply at the completion of them for a degree. in many cases they are videotaped lectures of professor's class is being put on the air that. you have heard of these mass online courses. one of the stanford professors did this and had 160,000 students, primarily in other countries. it really remains to be seen whether this idea has applied

ability to american college students. >> i am 20 seconds out of time. there is so much i would like to ask. this is important to our future. one of the things that deeply disturbs me is we are becoming the first generation of parents whose children are getting less education than we got. in oregon, ages 55 to 64 are better educated. this is a knowledge economy world. this is a terrible statistic. we should be deeply concerned about it, and the costs we are discussing is a huge part of the problem. i appreciate you all participating in this as we ponder how to take on this important problem. >> thank you, senator merkley. senator hagan? >> thank you for holding this

hearing. even though dr. leath is representing iowa state, i am happy to see him prior to ohio state, he served as vice president of the medical research team at the unc system. i was happy to read that they are neck-and back in terms of fees. in north carolina we have a long history of providing academic excellence and affordable prices. despite state budget constraints, our schools continue to be a great value in terms of providing quality education for a reasonable price compared to many other colleges and universities across the country. in 2006, the former president of our system, erskine bowles, established the advisory

committee on efficiency and effectively -- effectiveness. it was passed with not only perform a comprehensive review of the unc system schools, all 60 of them, but also to establish principles promoting continuous implementation of efficiency practices moving forward. additionally, the unc at chapel hill launched a study entitled "carolina towns" and that was campus wide to make operations more efficiency -- efficient, and they have implemented permanent administrative savings. so, i think there are some positive things that can be done, but we are also very concerned about the budget issues affecting higher education today.

i'm very concerned about it. dr. leath, i know senator merkley asked the question about financial literacy. i wanted to follow-up on that. i am happy to hear about full- service financial counseling at iowa state, which i understand offers individual counseling workshops in courses on personal finance, such as budgeting and the use of credit cards. i am a strong proponent of financial literacy requirements in education, and i think we need to be doing so much more now to ensure that young people understand what it means to take out a student loan, how to use credit cards, because you cannot get by without understanding that. not all that is bad, as long as it is used for education purposes investment purposes, and education is a huge investment -- investment

purposes, and education is a huge investment. when i was in the state legislature in north carolina- mandated that a financial literacy curriculum be taught in the high schools. it is still not enough, and it is still just a very, very small part of a larger class, but what have you been doing, and what do you plan to do to attract more students? i am inclined to think that each and every student should take a course like this. would you consider making this a mandatory course for all incoming students? >> we would consider making it mandatory. where we are at right now is we are pushing a different way. we teach alcohol awareness training that covers sexual responsibility, and we are up to 83% on a voluntary level by pushing it in conjunction with the government and student body, and we find students are more respected and retain -- receptive and retain information because they think it is more

important. if we could drive up financial literacy, we think it will be more meaningful. if we cannot get those if we cannot get those numbers up soon, we would consider making it mandatory. >> our experience is you have to make it mandatory. when you make things optional for students, you do not get the kind of involvement you need to have, unfortunately. we would certainly support making it mandatory. >> we are a member of the achieving the dream initiative that your states have been involved in for low income students of color. we initiated mandatory for all incoming students. we made a mandate that if you are in a remedial course, which would be about half of our students, you must take a student success course of one to

three hours which to cover financial literacy. that is mandatory if you are in remedial education. students get lost between the first and second year. it is mandatory. >> how long as the class and what does it involve? >> it would be one hour a week for three credit hours. it is how to get yourself into all aspects of college life. these are not residential students. it is primarily going to be managing your courses, helping you choose your major, making sure you understand the advisory system, and a portion on financial literacy. our student aid in community colleges goes beyond. community college tuition is less than the pell. students have to figure out how to use the pell money so they do

not have to borrow. you should not have to borrow at a community college in florida if you have a full pell grant. students do. that is what we're trying to avoid. >> our community colleges do an excellent job. i think it should be mandatory. you cannot get by in our country today without understanding credit. i do not think many schools do a good job at this in middle and high schools. i think we need to be working on that. i am very concerned about it. the work the unc system and chapel hill are doing is one effectively to reduce costs. dr. twigg, you have shared course resigned as a way to increase quality and save money. what are other practices schools are engaging in or should consider to save funds? >> schools are trying to do a

number of different things. most of the efforts have been concentrated on the administrative level, i would say. joint procurement programs, coalitions with other institutions to buy other kinds of things. that is important. i think what is not been touched is the academic program, which is the heart and soul of most institutions. we used to say faculty costs took about 80% of the institution. that is no longer the case. there has been a lot of growth in administrative costs. the back that teaching methods remain much as they were 200 years ago makes them relatively inefficient and ineffective. the thing that needs to be done at institutions is to start on that aspect of the college or university to redesign the way

academic programs are constructed and delivered. that is where you will see much greater savings. >> give me a picture of what this would look like. >> we talk about focusing on the top 25 enrolled courses. that could affect about 52% of the overall enrollment. tallahassee community college was a participant in our earlier program. a redesigned a freshman english course -- de- redesigned the freshman english course. student outcomes were much better. this was 10 years ago. $330,000. >> what is a redesigned course? >> rather than each individual and structure -- instructor, rather than every instructor doing his or her own thing individually, instead the faculty work as a team to develop materials jointly.

all the preparation time is cut down. they develop examinations jointly. that preparation is cut down. they have online exercises so they are not doing everything, doing every single thing. they are analyzing what is going on and thinking about where technology can be applied to offload some of these human effort. there are different design decisions made according to the discipline. >> thank you. thank you, mr. chairman. >> thank you, senator hagan. a couple of final observations. this committee has conducted an extensive investigation into the poor profit -- for-profit school industry. we have had a number of hearings on it. we have had staff involved in this. we will be putting out our findings of the two-year investigation with hundreds of

thousands of documents reviewed. we will be putting this out hopefully week after next we will finally have our report. i think it will be startling. right now about 25% of all money that goes to education goes to the for-profit sector. senator hagan has a bill in to say that none of the money can be used for advertising. no entity that gets federal money should be able to use it for advertising. i happen to be a co-sponsor of the bill. i think it is a step in the right direction. the reason i bring it up is that in our investigation and the time i have spent looking at this, before profits -- the for- profits have stepped into a void not being filled. that is online courses.

i think they have skewed it greatly in many cases. they have not provided the student support services we will point out. it keeps coming up. i have heard from just about everybody in this panel about getting in line -- involved in online activities. they are learning how to read the are adapting to learning -- they are adapting to learning through online. what can we do on the federal level to help promote -- weather is iowa state or community colleges which really ought to be involved in this because you know what needs to be done. when you have 90% of your students getting jobs, that is fantastic. i can tell you is not that way in the for-profit industry. there is great expertise here.

while arm will schools not getting involved in online activities. why are more schools not getting involved in online activities? dr. twigg? but there are more schools getting involved in online activities. >> the number of students involved in online courses grows every year. there is the consortium sponsored by the sloan foundation. it counts the number of on-line students. these numbers are growing rapidly. there are not as many institutions devoted purely to online courses. there are traditional institutions that do some online. community colleges have been in the lead in many ways in online courses. the va community college system was one of the earliest leaders

in online courses. they have hundreds of thousands of students taking online courses. the average citizen thinks only a couple people are doing it. but in fact, almost every institution in the country offers some kind of online activity. >> someone mentioned the western governors association. they your doing fantastic stuff. >> -- they are doing fantastic stuff. >> they have a process model that focuses on the adult learners. that is another point we need to make. the adult learner has been benefiting from online. that was a void the for-profits filled. they are much more efficient in the way they deliver different varieties of media. a couple of concerns. i think we have to be thoughtful about new regulations because we

do not want to sweep ourselves into everybody being concerned about our reach or advertising because the states may adopt similar rules. soon you have no budget to explain to the high school students about how to go to college. also there are predators that it's concerned about the media -- there are creditors that get concerned about a variety of medias when online is all about this open network of media. i think that is critical. we are the largest on-line providers in terms of head count other than perhaps apollo. we could not have operated with the 40% increase in enrollment without online. >> i would say the proliferation of on-line has outstripped our ability to understand the effectiveness of it.

there are many organizations that have raced into the on-line world. we're now beginning to be able to sort out which are delivering quality education. as that emerges, i think people can make better decisions. we have a robust online program. i would add that we talk about it as if it is either or. we have found great effectiveness with blended learning programs. some of what we do we do online. we involved students in hands on application of course material. i think it is an incredibly important part of online. >> as you know, there was a federal requirement, 1992, that required of the for-profit schools that 50% of their students had to be campus-based.

that was removed, if i am not mistaken, in 2005. now 100% of the students. as our report will show in a couple of weeks, since that time, it has skyrocketed in terms of how many online. we know what the dropout rates are now. we know what the non completion rates are of the schools. it is abysmal. before we had a requirement, 50%. we do not have that requirement anymore. >> i would like to echo what my quality -- colleagues have said. the blended approach is the right approach. we are a science and technology university. there are many programs that are still better served in hands-on laboratories and other spaces. we want to emphasize there is also the added component that there's more to college than

just what you get in intellectual material in the fashion. team building, living in residence halls, and many other experiences that come with living on campus. we have got to get the blend right. >> if i may add in your comments about the for-profit sector, the department of education last year promulgated a set of rules around in full employment. those have been challenged in the court. on the other side of the capital, there has been some movement to prohibit the department from enforcing those rules. i would urge the senate to take a look at those and support department. that is an important quality assurance mechanisms that can be used for online, blended, and on campus programs to make sure any institution is offering a high quality program. >> i will use tallahassee community college as an example, quite frankly, in terms of employment and what can happen. it is wonderful. i had one other thing i wanted to cover. i do not mean to prolong this.

for all of you, a report from 2011 found master's degree graduates took 14% more credits than necessary for graduation. associate degree graduates took 32% work. it's unnecessary. certificates students took 1124 -- to to to get students took 112% more credits than necessary. it does drain financial aid resources. what is this all about? why are students taking additional credits? is this something we should be concerned about? it is just curious. we looked at this and saw this data. >> one thing i refer to is the academic efficiency we need in planning. our tool we use is an individualized learning plan

that begins with the conversation between the student and an advisor. they talk about if the student knows what their long-term career plan is. then they build the academic ladder to get them to their career goal. obviously, some do not know. we can start them on a generic paths. it avoids what you are talking about. we focus the students on the courses they need to take and we give them advice about our experience with regard to the sequencing of the courses that will allow them to continue and succeed. >> is it true that a lot of times kids go to college thinking they will pursue one course of study and find out they are not suited for that so they switch over and need to take extra credits. i know that happens. >> career pathing is important. we call it credit creep.

you would think to really need a certain number of courses for your two-year degree. we work with the general assembly. we made that a statute that said other than national accrediting requirements, programs should be limited to 6120. we're working through that with the two years and four years. the issue is curriculum committees will say an extra course here and there are good. pretty soon, you have 12 extra credits. did not exist five or 10 years ago. i think we will see results. some states have enacted that. it will force us to come together to compact this into a two-year or four-year windonw. credit creep is what we are working against. >> here is another touchy

subject that comes up a lot. how much of student aid is for life style rather than for meeting the money to pay tuition? for basic room and board -- how much is borrowed for having a certain higher livestock? i hear a lot about this. >> i would say the short answer is too much. none of it should be used that way. we have had issues where students have used it for car payments and spring break to keep up with their friends, weddings, other things. we have made great strides with financial literacy that there is a day of reckoning that comes when you use it for these types of things. you should be living within your means. i do not know if it is as bad as some of the spectacular stories we're hearing. it is real.

it is there. we need to drive it down. >> dr. twigg. >> we have been working with a nationwide program in developmental math. this is a big problem because of the sheer numbers of students that have to take some kind of remedial course. many institutions we are working with have analyzed students receiving f's in development amount and have found they are receiving f's in every course they have enrolled in strictly for financial aid purposes. my impression is they never go to class in any class. >> i have heard this. how prevalent is this? >> we focus on the first year of college and the delopmental area. i have heard it from numerous institutions. institutions do not think to track it. they were trying to understand why they were not having success in the redesign. i think that is something that should be looked at seriously to

find out how extension -- extensive the practice is. 85% of students in a class or in this circumstance, particularly in this economy, in rural areas of the country, where they had no intention of being students. i think it is worth looking into. >> do you have something on this, dr. snyder? is this bits and pieces or something happening more? >> we do not have good data. clearly there will be lifestyle students. community college is predominantly a location where not all students are poor. if you are poor and not a scholar, you are in community college. nine out of 10 people are trying to pay back loans. that is probably a good sign. it is not prevalent. colleges can do something.

we're trying to do that in tracking short-term attendants on people not showing up, to withdraw them from school. that is one technique for using. we worry about it. lowering the cost of attendance that we calculate puts a cap on how much they can borrow. we did that for ivy tech. we lower the cost of attendance. that reduced their borrowing capacity. if pell pays for everything, we do not want them to use that. it digs a hole they cannot get out of. the default rate of 10% across the board says a lot of people are trying to get the money back. >> senator, i think there are stories about students using for lifestyle instead of college. millions of pell grant recipients and others receiving

loans, i would be complimenting about trying to implement changes in policy based on the stores. what you find is most are highly dependent upon the assistance. they are not using it for spring break or cars unless it is one they need to get to classes. i would be cautious about not overreacting to the stories in the media. >> are there other things people want to put on the record? do you wish to add anything to the testimony? this has been a great panel. great information. we thank you very much for your leadership in this area. i guess the underlying question i always have in terms of the course redesigns and everything else is, what is the federal

government's role in promoting this? what dr. leath is doing at iowa state and having financial counseling, i think every school and college ought to have that. i do not know if we should be doing that. hopefully schools will pick it up. what dr. murdaugh is doing with community colleges, all of you. i want to find out what we should be doing for the federal government. i am not asking you to solve that right now. >> i cannot solve the entire problem, but i can make a suggestion. the federal government offers lots of competitive grant programs through the department of education, nsf, the department of labor. very few of these programs focus on the productivity problem in higher education, the very thing

we are all saying is one of the major problems we face as a country. they focus strictly on improvement of curriculum. were some of these agencies to include the cost question as well as the curriculum question , lots of creative ideas would come forward. as long as these programs are strictly for innovation and curriculum changes, they come and go. they do not tend to stabilize in any way. that is one thing i would encourage the government to do. it is a creative way of encouraging people to come up with new ideas. i think there are millions of dollars being spent in current programs that could be redirected to address the cost issue as well. >> i invite any of you, if you have thoughts on this later on,

to get it to this committee and let us know your suggestions and thoughts on how we can effect some of these changes more. unless anyone has anything else, i was going to point out someone said to think of it this way. k-12 education is mandatory. correctional facilities are mandatory. medicaid is not. it is matching money. no state has to do medicaid. they do not have to. if they want matching money, they have to do certain things. it is only in higher ed that they have paying customers. when state legislatures look at it, that is the only thing you can go to that has a big pot of money where you can get somebody else to pay for it. that is really a problem we have

got to address. i thought that was a curious way of looking at it. i thank everyone. the topic is of particular importance to this committee and the appropriations committee. i am grateful for this. i invite you to continue to give us the benefit of your insight on this. we will leave the record open for 10 days until august 2. i thank my colleagues on both side of the aisle for their hard work on this and the collaborative approach on this issue. the hearing of the health committee is now adjourned. [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> pictures of president obama returning to the white house after cutting short a campaign trip to florida. jay carney says the president will get an update on the shooting this afternoon from

vice-president joe biden, the fbi director, and white house aides. president obama told reporters there will be other days for politics. a number of sources are ordering the president has ordered flags to be flying at half staff in tribute to those who died in last night's shooting. mitt romney also suspended campaigning. he spoke in new hampshire today and said -- both candidates have suspended negative attack ads in colorado. >> it was about those men and women who are almost mortally injured in war. because of a huge advances made in medical trauma treatment over

the last 10 years, now they are being saved. an incredible number are being saved. almost everybody who falls on the battlefield is being saved. i wanted to write about what life was like for these people. i started off with a question, having seen some people who were pretty gruesomely maimed. would they be better off if they were dead? do they wish they were dead? >> david wood spoke with veterans, surgeons, therapists, and nurses on the daily struggles for those severely wounded in military operations. learn more sunday at 8:00. >> the insurance industry said wildfires in colorado have cost almost $450 million in damage.

republicans on the subcommittee blamed government regulations for the rash of wildfires in the western part of the country. the committee heard testimony on bills seeking to streamline regulations on forest management and giving communities more control over the process. this is about two hours. >> this hearing is called to order.

the national parks and forest service is meeting to hear testimony on three bills within our jurisdiction and deal with the significant issue of our national forests and prevent catastrophic wildfires from happening in the future. under the rules of this committee, the remarks are limited to the ranking member and the chairman. i ask unanimous consent to include opening statements in the record if they are submitted to the clerk by the end of today. hearing no objections. i also ask consent for any member who wishes to join us to produce great in the meeting today. without hearing any dissent, that will be the case. i realize we are in a cramped situation as far as time is concerned. some of you have flights you need to make this morning. i also recognize we have brought people in from across the country. i appreciate them coming in to witness.

my opening comments i will submit for the record. we can move forward. does the ranking member have opening comments? >> i want to say good morning and thank you for joining us. i want to welcome ourwe respectk firefighters' dedication. i will yield back my time. >> we will start with our first group, and we will talk about the first three bills. representative gosar, we will recognize him first. then mr. markey. you have five minutes. >> thank you for holding today's hearing and for cosponsoring the bill.

my thoughts and prayers continue to go out to our constituents who have suffered from wildfires. i would like to express my appreciation to everyone working to protect lives and property of our neighbors. i have a slide show to show and some of the impact of these fires. the district i represent is one of the largest congressional district in the country, encompassing a of arizona's 13 oral counties. it contains over 37 million acres. that acreage includes national forests. last year our communities were victims to some of the largest fires in history. one fire grew to more than 800 square miles. the horseshoe fire, the stanley

fire, and the monument fire blackened another 200,000 acres. this year if has not been much better. over 900 fires have charged over 6000 square miles in states, and over 50,000 of those acres are in arizona. it is clear the process of planning and consulting and litigating are failing us and our forests. the frequency of fires are increased markedly since 1990. the five largest wildfires in my state costs history -- in my state's history have all occurred in the last 10 years. prior to 1990, the largest fire was a fire in 1970 which burned 57,000 acres. our ecosystems are suffocating. where we once had 25 trees per

acre, we have over hundreds. roughly 80 million acres are over current and ripe for catastrophic wildfire. our forests have been mismanaged for a long time and it is past due to change our schedule. we continued to prioritize fighting fires, but we must shift priorities toward a proactive management. the cannot afford to be otherwise. confessed -- catastrophic wildfires are typical to control and cost millions of dollars in response and millions more in restoration. a leadership coalition estimates the costs are up to 30 times of the report of suppression costs. last year the forest area -- mored service spent

than $48 million. what is standing in the wake of the sustainable forest management? bureaucratic red tape is preventing us from participating in the stewardship of our lands, and tactics of environmental groups -- that is why i introduced the act of 2012. my bill authorizes the forest service to implement while fire prevention projects, including timber harvests in at-risk forests to focus on surface and can beat fuel production activity. it streamlines the review process and eliminate duplication and sets from time frames to bring more accountability to the process. forest building works, and in

distant arizona, the areas that of a treated as part e stuart chip project -- stewardship project were properly cleared. there are still out the trees with burned underbrush. fires left nearly scorched earth behind. we need to make ecological restoration easier. this has garnered strong bipartisan support. a utah senator has introduced legislation in the senate. they are people directly in harm's way, not safely tucked in a concrete jungle. thank you for your leadership and i look forward to the

further committee on my bill that will restore the environment and save taxpayer dollars and put people back to work. >> we will let the ranking member speak when he appears on his particular bill. if i could turn to you, mr. tipton, now. >> thank you, chairman, before concluding my legislation into de's hearing, and for your support of this bill. i would like to thank my fellow members of the colorado delegation. the bark beetle epidemic, the drought, and deteriorating conditions have increased the propensity for devastating wildfires throughout the western united states this season. while the outbreak has affected

state and private lands, the damage is often more federally -- were concentrated in federal lands. of the 6.6 million acres, over 4 million are on federal lands. efforts to manage our forests and prevent conditions for fires that have ravaged colorado have been hampered by an unwieldy regulatory framework that prevents progress toward healthy forests. the bill gives greater control to those states and communities most directly affected by these conditions, and provides a pathway for planning and a local deficits. this legislation builds on bipartisan help the forest restoration act of 2003, which empowers states to be more active in addressing these emergency circumstances.

manage our forests, reduce destruction, safeguard water supplies and species' natural habitat. utilizing tools in the act, which have proven to be effected, can help reduce the costs on taxpayers due to litigation mitigation procedures, and restore arrest appear. the bill prioritizes -- billed as a result of more of a year of committee work. everyone we talked to agreed more needs to be done to manage our federal forests, and this is the outgrowth of that stakeholder engagement. this is borne out by the

support we have received. from colorado citizens cannot national groups, and from organizations. since the bill was introduced, help the forest management act empowers governors to work with county commissioners, to identify them worst -- the most problematic areas, and the spots that pose the most imminent risk and then take action to remove hazardous feels. allows those who are impacted by what ours to take measures to address problems and mitigate the risk causes catastrophic fires. this bill is not a talker. is a doer. the act has received the support of the colorado timber association, commissioners from different municipalities. so have a private club -- club,

the national cattlemen's beef association, the national association of forest service retirees, public lands council, and the society for range management. i urge my colleagues to join us in a coalition of support for a bill that takes action to fix the problem and address critical state of the western force. thank you, and i yield back. >> thank you. we have several witnesses who have traveled great distances, and i am aware of your travel plans. i will get you done in time. i will make sure we do those who addressed the three bills at the same time. let me invite up mary wagner from the forest service, ed roberson, from the department of

the interior, who will address all three, and i invite -- commissioner gibbs from summit county, colorado, joseph romm from the center of american progress. you are all speaking on all three bills. that we invite hank kashdan from the national association of forest service retirees and tom jankovsky, commissioner from garfield county in colorado. if you guys are coming up, i would appreciate that. i was excited for a while when i saw garfield in summit county, and then i saw it was garfield in colorado, not utah.

if i could ask you -- am i missing somebody there? oh, good for you. if i could ask you if you would address the first four witnesses, all three bills, and in the last two witnesses, mr. -- the commissioner and mr. kashdan from the retirees, if you would talk about 6089. i will try to make sure everybody gets their available time. you have five minutes. we have your written testimony. it will appear as written in the record. this is an oral testimony, some make sure you hit the highlights. when the green light is in front of you, you are free to go. i will apologize to you now when it hits five minutes i will cut you off even if it is in it sends. of what to get all the testimony in.

i want to get people to meet their deadlines. i appreciate that. i take everyone is now situated. we realize you are right to be happy to be here and you will thank us. don't bother with that. >> mr. chairman, i will offer a few remarks and note that more detail is in the written testimony. drought, invasive species, lots of open space, outbreaks of insects and disease -- all these stresses and the services affect america's forests on an unprecedented scale. up to 82 million acres are in need of restoration. 65 million acres are at high risk of large wild fires. increasing the pace of restoration of a nation's forest is needed help be ecosystem, watersheds, and communities.

in fiscal year 2012, we are on track to accomplish 4 million acres. we have made strides to increase the pace of restoration, working with community organizations, groups, industry, local government and communities, tribes, and other agencies, and have demonstrated forced thinning reduces the impact of fire. we have more to do. i want to offer my appreciation to members of this subcommittee and other members for your interest and action on this issue, and i want to express my condolences to families and communities impacted by wildfires. before i address the three bills, i will tell you about the work we implement to increase restoration, and in many cases new authorities. we have invested in restoration projects which partners to the forced landscape restoration program. this has demonstrated collaboration can facilitated

large landscaped-scale restoration. the strategies developed by these efforts exceed 16 million acres and the placement of tools will help -- build a more brilliant landscape. under the 2008 farm bill, action plans were required and they delineate priority areas. we partnered with the state and coordinated across boundaries for these plans in the process of implementing them. we have implemented the bark beetle strategy. we have these tools available to the agencies such as good neighbor a party to develop more holistic treatments that accomplish multiple resource objectives cannot working across jurisdictional boundaries. with the passage of the 2012

interior appropriations bill, congress provided authorization to integrate restoration 43 pilot region's bns. this will give us a lot of flexibility to do the necessary work on the land. we have worked hard on improving efficiency for restoration. a couple of examples, we're close to issuing two new expeditions for activities and we are increasing the use of landscapes-scale -- two examples are arizona's forest initiative where the document that covers the restoration plan for that acreage is 750,000 acres. in the black hills they have issued an adapted impact statement covering over 250,000 acres of mountain pine beetle at-risk or impact of landscape. last week we are working as a

partner on the all lands cohesive strategy to the flame act. this puts together a strategy to maintain fire-adaptive landscapes including committees and optimizing response to wildfire. we're working with a host of local, municipal, state, other federal agency players to respond to that strategy. a critical part of these efforts is building public support for forced restoration and management activities. while the department supports the bills as drafted, we would like to work with the sixth subcommittee into doubling language that meet forest restoration objectives. while we support a bill, but like that further discussion on the elements. we support extending good neighbor authority. as fires have impacted lance, we

recognize the interest, and the willingness of many members of congress to provide tools for this service and other agencies to apply forest-restoration principles. thank you. >> thank you. mr. robertson? >> thank you for inviting me in to testify this morning. the department of interior is working toward maintaining brazilian landscapes, creating a fire-at that did communities. an agency at the department of interior, blm is committed to sustaining the productivity of the forests and woodlands, which together comprise 58 million

acres of the public lands which we manage. the mounting effects of insect infestation, disease, prolonged drought, climate change, invasions of harmful non native species and the accumulation tools generate increased risk of catastrophic losses, including risk to life and property that may result from wildfire. blm works with its partners to protect lives and property, a black candidate -- wildlife habitat. last year we treated 400,000 acres for hazardous field. guiding all the actions of the blm is our land use planning process. blm uses a process to include public input and analyze the effect of proposed actions. we valued this process and the information it provides for us.

two of the tools we have used effectively in our field management program our stewardship contracts and the good neighbor authority. to date. blm has used these practices in over 100,000 acres, perfecting communities from wild fire. it partnered with the state to gain some efficiencies in a cheating restoration goals in colorado. with regard to the bill, 5744, it requires blm employment authorized prevention projects which are defined to include timber harvest and livestock grazing under a reduced level of public comment and environmental analysis. this would allow timber harvesting and would impose time lieds for public review. it deems a project as complied

if time lines are not met. to get bit -- the bill requires fuel research prior to the endangered species act listings, critical habitat determinations. that department is committed to use reduction treatments to make -- to maintain resilience landscapes. we do not believe that 5744 help achieve that goal of the beginning of the risk of wildfire damage. the bill will curtail the use of some of the most viable assessment and analysis. he bill's strict time line coupled with the legislation would not enable sufficient analysis. the department opposes the study area provision and provisions that change esa. with regard to congressman markey's bill, it amends the act

to provide for enhanced restoration work and research and authorizes stuart to contract think and good neighbor authority. the bill is supported by the storage of the contract and a good neighbor authority. these authorities will enable blm to achieve forest health goals in cooperation with arab partners. the department. 5960 and appreciate the opportunity to work with the sponsor on certain technical improvements. we differ to the forest service on those portions of the bill that relate to the national force. 6089, this authorizes the state or the secretary to designate areas of public lands as high- risk, and for areas designated such, it ,blm to implement prod

-- projects in this area strip extends stuart chips -- stuart chips. the department opposes 6089, definition of high risk area outside of the normal planning process, particularly b governors without consultation with lan managers, prevents public involvement, and the time frames for designating these areas and implementing proposed project is not sufficient for analysis of those decisions -- >> thank you. commissioner gibbs, five minutes. >> thank you. my name is dan gibbs. i am a county commissioner from summit county, colorado. [unintelligible]

which were killed by the mountain pine beetle epidemic. we now have a major challenge to respond to these conditions. appreciate congress enacted a healthy forest restoration act which has helped expedite restoration. there is much more that can be done. as can be seen from the fire that destroyed 133 homes in 2002, and many like it, the cost to suppress fires exceeds the cost to treat four arrests. in summit county, over 80% which is national forest land, when hundred 46,000 acres of dead trees need to be thinned. the challenge in finding haverces for projects an-- treated 800,000 acres.

we still have tens of thousands of acres that need urgent treatment within the wild land urban interface. summit county has had to find additional resources. voters pass a measure into decimate that authorizes a property-tax levy for a while fire protection and removal of marked-beagle-killed trees. into this and 12 the county up like $300,000 from this funding for 12 projects on 140 acres of private land the colorado forced richard cripps restoration -- private land. the colorado restoration act provided money for watershed protection. these funds are available for needs statewide and grant applications exceed the need. a town was the receipt for it of

some of these grants that was used to treat forested areas along a drinking water supply. the town was concerned that a fire in this area with impact its watershed. these funds were used to treat 64 acres. the cathy's tax levy and a statewide grant program, we have been able to get projects done, but we still have thousands of acres to address. that is why we are interested in what were systems congress can provide. in the bills before this committee, they have provisions that would help. the projects i mentioned would be enhanced by these provisions. first, we need more funding, plain and simple. the task of removing trees is daunting. i understand the bills you are considering are not primarily about funding, but urge you to

make this a priority. designating the areas and our national forests in back -- impact it will allow the service to focus its attention. we welcome designated areas as areas of critical needs and appreciate being consulted in the designation process. we support the good neighbor authority which allows forster's to perform essential treatment work on federal lands and urge congress to reauthorize the program and make it permanent. we support permanently authorizing storage it kind attracting. this helps make products more economic, especially in partnership with private contractors. this would provide important assistance to reduce the threat of a large desk gayle wildfires. we need the assistance of these policies to augment state and local efforts.

we have undertaken efforts to mitigate the threat with limited resources through unique collaborations. we're not able to adjust the infestation adequately without further assistance. we urged sponsors to come up with a single bill that comes up with all of these concepts that could garner wide support and get passed. the dire condition of our forests, the threat to our committees, especially water and the drain on the treasury, demands that congress cut together for our nation's well- being. they keep. >> i appreciate that. mr. romm? >> five minutes. members of the committee, thank you for inviting me. i am a physicist, former acting assistant secretary of energy and climate expert.

fourscore and seven years, our grandfathers and grandmothers were enjoying life in the roaring 20's. imagine don't nation must leading scientists are warning that human activity have left topsoil vulnerable the forces of the wind and the next time it dropped its, much of the farmland will turn to dust. you would take action. over the past two decades, the nation bus leading scientists at issued stronger warnings that human activity, burning fossil fuels, will lead to longer and stronger droughts that dry out topsoil and timber, creating conditions ripe for multiple multi-decade dust bowls and what cars. we are already hot pink dust bowl temperatures in many places and the earth has only warm to one degree fahrenheit since the 1930's. where poised to warm 10 degrees

fahrenheit this century alone if we stay on our current path of an unrestricted carbon pollution emissions. studies project the world may warm 10 degrees this century if we did not act, and that is the average warming of the globe. much of our country would see far higher temperatures. the recent heat twave would be considered a cold spell. states would double trouble, even quadruple from current levels. imagine how big the government would have to be to deal with the rampant wildfires and with the dust bowl choking the breadbasket of the world, a lot bigger government than today. this great deliberative body is debating bills to avoid this capacity by slashing carbon pollution. accept it is not. we're discussing bills aimed at

fuels treatment, a euphemism for cutting down trees. ignoring carbon pollution and focusing solely on fuels trees -- treatment to address the epidemic of drought, while fire, is like rearranging deck chairs on the titanic. more precisely, it is like burning some of the deck chairs and removing the umbrellas. same outcome, wartime wasted. as i explainedast year, what we discussed here today is the single most important question facing the nation -- can we prevent the extreme drought and wildfires ravaging the country today from becoming the new normal? the real question, and i am addressing myself to the members of the majority, is how you want to be remembered crape you want to be remembered as a hoover or as an abraham lincoln who took every measure to save the union?

lincoln said at gettysburg, "the world will little note nor long remember what we say here, but it can never forget what they did hear." that was not true of his speech, but after testifying to congress, nearly a dozen times since 1995, when i was the principal deputy assistant secretary of energy, i convinced nobody remembers what we say here and in the case of these bills everybody will forget what you did here. are you neville chamberlain or will you be winston churchill? the consequences are here now, just as climate scientists predicted. if we fail to take action, many scientists predict ruin for large parts of this country, ruin for large parts of your

districts, ruin that lasts 50 generations. americans have fought for generations to defend government of the people, by the people, and for the people. in this hour of crisis, we need the government to do that job. now is the hour. thank you very much. , commissioner jankovsky, welcome. five minutes. >> i am tom jankovsky, garfield county commissioner, colorado. i have also been working in this key industry for 40 years as the general manager of the resort. in those 40 years, i have been on the forest in colorado. i speak in support of 6089. this bill addresses the deteriorating health of

colorado forests. it provides benefits for our local communities. the health of our forests is at risk. they are deteriorating. colorado forests are extremely dense because of what i believe is misguided management practices. currently, 30% -- force are up to 100% kennedy, which a healthy forest has 30% canopy. the beetle epidemic is impacted our force. the nation's watch, the recent tragedy in colorado. $450 million in private property lost as well as the loss of lives. current regulations fail to recognize the importance of our

forests regarding water conservation, supply, wildlife habitat, decoration, the economic benefit, and multiple uses. 6089 increase the safety and strength and stewardship. this extends the stuart chip beyond the healthy restoration act -- the stewardship beyond the help the restoration act. it also gives us the ability to manage and restore our forests. this bill empowers the governors of state and local committees to cooperate with federal land managers to develop emergency hazardous fuel production projects and gives the benefit to our federal land managers, another tool, for them to work with their local communities. the bill supports an emerging force restoration industry which is we're starting to see an industry in which, it provides

d manpower for forest restoration. this bill -- to this we have seen an increase from our natural resources for lumber mills, lock furniture making, firewood sales, biomass energy, and wood pallets. this bill does provide some economic impact as well to our communities. 6089 allows for creative funding and partnerships to reduce this fuel mitigation. federal land managers -- gives them another tool in working with local communities to address those risks. one thing that is not in the bill but i would like to talk about, it is important we

continue to educate the public on defensible space. we have a lot of communities and homeowners associations up into the forests. right now in colorado, citizens can be reimbursed up to 50% of the cost for improvement to the festival space. -- defensible space trip local doctor and -- nearly 70% of our land owned by the federal government. it helps for us to have the ability to talk to those and be empowered to work with the federal government. the vitality and strength of the western united states is closely tied to the help of our public lands, and for those reasons garfield county supports 6089. >> thank you.

>> and behalf of the national association of forest service retirees, we appreciate being here. our comments are specific to 6089, but we want to acknowledge that the attention given to all three bills is important in bringing attention to the continued degradation of america's forest and range lands that is caused by insect infestation, dropped. this is a serious threat to america's public lands, and our infrastructure. we feel action is needed, action that is rapid and efficient, collaborative, and and that pushes the envelope in terms of procedures and authorities. we know increasing budgets is not a fixed and we accept the potential for budget to be decreasing. in a legislative approach, there

has to be a focus on public- private partnerships, reduced process, and much greater recognition of this crisis. we think the bill supports this approach. i want to acknowledge the excellent work of the agency so far in addressing this. approach toervice's the bark beetle strategy and others should go a long way towards increasing the accomplishment. the forest service and the joint work in the use of stuart chip contacting, the release of a national cohesiveness strategy are important. these are steps in the right direction, but we think more is needed, and we think 6089 will help move the process forward. with the exception of a miner reservation, we support this legislation. for the stuart chip contract extension, let me say thank you. that tool is an essential part

future accomplishment and working with communities. the contract term extension to 20 years is helpful in incentivizing the investment of business capital and in building long-term community participation in decisions about the adjacent watershed. the good neighbor authority been made permanent is a critical need, the inclusion of categorical exclusions for projects within 500 feet of infrastructure is important, and we like the governor's authority to designate high-risk area. there is some reservation on the part, and i remember when the good neighbor authority was implemented back in the late 1990's there was concerned about what i would call shared authority, if you will. well, that concerns -- concerns about that have not come to pass, and as we look at the procedures that are called for in this bill regarding analysis

of judicial review, we think that the governor's high-risk designation, making those procedures applicable, is a good part of this legislation. we very much appreciate the application of those same procedures to non wild-urban interface lands. i mention one reservation. and say the provision calling for project implementation within 60 days of the governor's designation, even in the case where the secretary may not have designated an area as high risk, we're concerned that might raise a false expectation that national resources in terms of money and budget will be shifted to those projects. across all public lands, there is very good work being done by the agency's and done with a limited funding level.

to think there will be a shift like that is probably not realistic and where it has been a tent in the past, it has been met with little success. we think retaining the federal agency possible targets of the program is important. i would also note one technical correction dealing with the section 6 prohibition on clearcuts relative to that hazardous fuels action. lodgepole pines as a species, that requires openings in order to effectively regenerate. in the final bill. with that, let me conclude my remarks and people look forward to any questions. >> i think the witnesses for coming here and giving their testimonies. i am aware of the flight plans people have out here. we will get it done in time. i realize you have the first plane out, so i will yield my time. i'd ask palace to refrain -- to

limit their questions to 5960 and 6089. then i have two other witnesses. if you would like to take my questions? >> thank you. this is an important issue. i thank you for allowing me to ask a few questions and make an opening statement. i question would be for ms. wagner. remind me how many acres have the bark beetles impacted since the epidemic has begun. >> i know the number in your testimony was around 18 million. >> across the nation cannot impacts of the bark beetle on all jurisdiction is over 43 million acres on national forest systems. >> you discussed that 65 billion

acres are high risk for wildfire spirit that is the number that not all those acres are impacted by pine beetle epidemics, but that is a high number, even if he took the number i was running while i was sitting -- it appears that what has been treated and addressed on forest service land is less than 2% of the lands you have jurisdiction over that have actually gone and then dealt with and been treated for fiscal year 2011. is that accurate? >> for the bark beetle strategy be created and began to implement in 2011, which he did over 300,000 acres to increased resiliency cannot reduce public safety issues relative to the size of the impact of the pine beetle. that is a small amount of acreage. we are trying to upscale our treatments on the landscape cannot address priority areas, and that is for the 3.7 million acres restored in 2011.

>> for me that is a disappointing percentage. a lot of the testimony has been that we have a critical situation, and when the government has stressed its over lands, it is my anticipation that they be responsible for maintaining and taking care of those lands, especially when private lives are at risk. this is an important issue for state across the west, and you have had conversations with me regarding house out the cut is impacted. this is one of the hottest summers on record. forests across the west are turned into timber boxes. when fire in the black hills claimed the lives of four shall guardsmen from north carolina. my heart has been going out to those families as well. the outbreak of the beetle has changed our landscape.

i will pass some of those to other members said they can look at what is going on in south dakota, but when you look at this picture, and i will let everyone look at it as well, if you can see the vast difference between what has been treated by the state and what the state has stepped up and taking care of and the difference in the u.s. forest service land. i would like to thank my colleagues for introducing this legislation. i would like to thank everybody for being willing to tackle this issue. it underlies the importance that we have people on both sides of the aisle looking to find a solution, that is not a republican, a democratic issue, it impacts all americans who care about our forests. one other question, had you been out to colorado or to the black hills to visit and see this with your own eyes yet?

>> i have not. the chief has spent time in the field. regional force terse press regional foresters have. >> i invite you. there is an urgency on the ground and i would love to bring you out to south dakota and show you around and host you doing that. if they say something about we certainly have cooperation that is potential, and i would love to have you can see that together where this could work and how these bills could work on the ground for the benefit of the people living there. i yield back. >> thank you. [unintelligible] that me turn to the ranking member. >> thank you. let me start with ms. wagner. most 15 years ago the forest service began reviewing the

management of forests in rural areas. in 2001, the chief issued regulations to protect these areas and recognized one of the most for-reaching [unintelligible] after a decade of litigation, -- that bill picklers the whole national forest service in danger -- the poorest service -- the fiorest service picklers all -its new hub- >> reviewed by the courts. there are 58 million acres.

under the strategy identified across the the area, and in the state of idaho, and one is under way for the state of colorado. in the case of high priority need for fuels treatment and fire risk, the majority of those acres are outside japan roadless areas, and so we think we can abide by the provisions of the conservation rules and work on forced restoration where it is needed in priority landscapes. >> let me get back to my question. the declaration of 6089 the call last the entire system in imminent threat, thus, this declarations, section 3, -- [unintelligible]

>> i believe it would. >> thank you. mr. roberson, your testimony points out [unintelligible] makes it difficult for the public to engage with federal land managers. can you give us an idea, make it short, of how many hazardous fuels projects the bureau of land management applauds every year and how many are [unintelligible] >> we have treated in the last 10 years 23 million acres with feels -- with hazardous to your production projects, says richard -- stewardship, we have restored rangeland help enforce tell in this acreages using fuel

projects and other treatments. we have in the last year as an average treated 400,000 acres. we have less than 1%, half of 1%, are appealed. these are projects that we have worked on with the community and they have not been appealed or protest it. >> mr. kashdan, d you think all the acres of the national forest system lands are in imminent threat to health and safety so that protections should be suspended? >> that the address that this way. i am speaking on my own behalf, because we have not taken positions as a retiree group. the concern is lance are in

limbo, and we need to make some determination as to how to up properly assign those to some type of management or non management status. that would be as far as i would go on at. >> in your testimony on 6089, raised concerns about requirements for agencies to -- within 60pply days. quickly, please, is that a realistic time frame? >> if i am pulling your question correctly, i think that provision, although it has -- it tends to get a lot of attention, and is presidential,

there is 99% of the benefit derived from this bill not germane to that issue. >> i appreciate that. mr. tipton. >> thank you. i would like to give thanks to mr. jankovsky for taking his time to be here out of my home district. you may give us an idea of how much time he spent dealing with issues relating to the land management. >> land management in general, i am a new county commissioner. i have been in office for two years, and i thought i had a good idea of what i was glad to be doing. i am spending half of my time or more on federal issues concerning our cathy, and they are numerous. this is one of them. >> should the federal agencies engage county commissioners a little more? >> no doubt. the benefit to this bill is that it creates working

relationships between local communities and federal land managers, and that is very important. i have the highest regard for the federal land managers in our area, but i think there could be great improvement. >> thank you. does that help the restoration forced act require public input with respect to precious carried out in under the terms of the act? >> yes, sir. >> those are authorities that we are using here. he did not need to worry about the public input that you were worried about in your testimony. we have provided for that input. mr. kshdan, appreciate your candor with respect to a section in 6089 and recognize the

constraints faced by the agency. that's at come up with your experience in the forest service, do you believe there are efficiencies within the agency that could be pursued that would help prioritize fuel production projects? >> yes, sir, i do, and i also think the provisions in 6089 specific to the act of 2003 regarding appeals, analysis, and judicial review will enhance that. he combined those deficiencies -- you combine those efficiencies and use some of the tools with storage a contract to, we will go a long way toward improving. there are examples about how far you can go when you are encumbered by minimal analysis. we have is an example of a program that is rapidly executed, delivered with good results, and it is done with a

wide demand on the part of the public regardless of where they stand on the environmental spectrum to get work done to stabilize areas after catastrophic wildfires. isn't -- it is an example of how far dollars can go. >> i appreciate that. we will be able to achieve and a win. ms. wagner, had the opportunity to go into colorado to tour an area being treated. we were seeing a healthy forest emerge. we were talking about water table increases of 15% to be able to defend the force, healthy trees that were able to survive and grow. is it your estimation that when we see the tragedy of these

fires moving through areas like south dakota, colorado, impacting our watershed, impacting wildlife habitat, the streams and endangered species when the ash it's the reverse of that is a good approach to bring together tools and a local commitment of working with county commissioners, local governors, the tribes, the people who live there and love it most to make those sensible determinations of where the real risks are? >> yes, we are keenly interested in working in that kind of environment and doing our part to sustain our nation plus four arrests. >> they can very much for that. in your testimony you mentioned some of the great successes of the good neighbor policy authority that the forest service has accumulated in efforts: on. given this, do you believe it would be beneficial to expand

access ability to bom land? >> definitely. the good neighbor authority as well as some of the other efficiencies mobled similarly, there were some in oregon and, it works, and to apply to the other agencies is a good thing to do. >> thank you. i apologize for cutting you off twice. i am doing another audible. i want to explain what i want to get done. the ranking member is here. i have two other witnesses, but have planes to catch. can i ask -- the you have questions specific to 6089? if not -- mr. gardner, and assuming you're

here for 6089, and when i turn to you for questions, we will finish our courses, bring the other two up, and then let mr. markey give his opening remarks. we can do it that way. >> thank you. thank you in particular to congressman tipton for his work on this legislation and the work he is doing to protect colorado and the western united states. also i want to welcome the witness from colorado. thank you, commissioners. we served in the state legislature together. i am stunned by the callousness of the department of interior's objection to the healthy forest

bill, 6089. we have a situation where washington is the billing in your testimony, you state that governors can require them to meet the governor's objectives without a fair return to the american people, a fair return to the american people? i had over 200 homes burned in my district. you want to protect wild and scenic rivers? what about contaminating the river? drinking water systems that are overwhelmed. and you are going to oppose this legislation because it gives the governor the authority to save his state?

blm's ability to manage resources protected by federal law. do you believe that these beetle kill areas are high risk >> yes, congressman. -- high risk? >> yes, congressman. we believe that we and the states should work together along with the local counties together. >> do you believe you know better than the state? >> no. >> why would you oppose a bill that gives the state the ability to protect its citizens? >> we are managing national public lands, and we are trying to do that to achieve an ecological balance across the nation. and to provide for jobs and opportunities as well.

we believe in the principles that are outlined, that congressman tipton just raised and that mary wagner agreed to. our code use of fire strategy will allow us to continue to work on building resilience landscapes and working together on fire preparedness. >> is 90,000 acres of burned forest good? >> not on the landscape, sir. >> 260 times? -- homes? are your policies working to prevent this from happening? >> the bureau of land management has approximately 1.3 million acres of beetle killed trees. we are focused on that issue. we have a plan for the

infestation in, writer and other areas, and we are working through our local planning efforts with county commissioners, state foresters, and other managers to address the issue, including the state government, and our plans are reviewed by the governors of the state's. -- states. >> object to that. are the beatles killed areas going to be around for 20 years? -- are being beetle-killed areas going to be around for 20 years? i will ask again, are they going to be around for the next 20 years? >> i cannot project, sir. >> you are not able to say that a stand of dead trees will not be there in 20 years? >> 20 years as a designated high

risk area is too long, we believe. >> a catastrophic wildfire, how long does it take to recover from a catastrophic wildfires? 20 years or less? >> i will have to get back to you on that. >> let me just ask my, and then we are going to make the switch, and some of these others deal with this concept as well. i'd just have one built specific to this. usance 60 days to extinguish a high-risk area is not enough time. how much time is enough? how much time do you need to make that designation? >> we would work with them to

designate the high-risk areas. i am not sure how long it would take. i think the level of the problem that we have, the magnitude of the malt the agency landscape, i have no estimate, sir. >> ok, and i will tell me my frustration, not simply with you but with almost every agency around here. i am a schoolteacher, which means you had nine months to do it, and it was over. if my printer talking to us and said, "the final test is tuesday," and i said, "we cannot get that done, you can imagine what would happen to me. in my profession, we were taught that we had to get it done. there is no deadline that happens to be there. we had another deadline where they said it would take four years to do a study on lands.

those are frustrated for us who are not inculcated into the climate of washington, d.c., so if 60 days is not enough, that presents an allusion of the problem that is difficult for me to wrap my head around because i am used to meeting deadlines, and i had no choice and that. with that, i am sorry. you have a question? on this particular panel, 6089. >> thank you. do you think that climate change or climate variability is increasing the severity of fires in the united states. >> can i interrupt for just a second year? >> i asked a very good and legitimate question. if i can do just 6089 and then bring the other witnesses up, i

would appreciate that. >> no, i do not have a question. >> we appreciate your attendance here. we appreciate your flying all the way out here. you can go back and enjoy yourself at this particular stage of the game, and i can invite david from the national association and doyle from the national resources -- i am doing this without glasses. to join us at that panel, and while they are coming up, mr. tipton, i will give you the last comment on the bill, and then mr. -- we will then open it up for questions. mr. tipton? >> thanks. i just want to make sure that the concerned citizens in colorado and threat in the united states, they are

supporting 6089, and i submit their letters in support for the record. >> without objection. so ordered. i apologize for shifting gears, but i am trying to get everything to move in the proper order, and one of you has a flight going out, so i appreciate that. we have not had a chance for your piece of legislation. can i give you five minutes to introduce your legislation? >> i appreciate it, mr. chairman, very much. and i first want to address the congressman's earlier comment about the ability of a people who live in the concrete jungle of massachusetts to be able to understand wildfire and these issues because that is an ironic comment coming from a gentleman ms. in a landlocked desert state voting in this committee just two days ago to authorize drilling for oil and gas off of

the ocean, off of the coastline of massachusetts, so the gentleman should probably square up where he thinks, you know, yes expertise to be able to vote because of this desert state should never be able to vote on what has to do with the oceans. but our job is to represent everyone. but making those kinds of distinctions is absolutely inappropriate. it rollout most members, because their state would not be at the center of the issue. this will help all of the taxpayers. that is the essence, it people

nervous and ahmet -- e pluribus unem. it is all of us working together. i just was it -- which the gentleman appreciated that. and i want to thank you, chairman bishop, for having this hearing about combat and wildfires. -- combating wildfires. we have a very serious problem. if you think storms and catastrophic wildfires, with

random freak events, you are in deep, deep denial. when sigmund freud's study denial, he said when people are forced face unpleasant facts, they are prone to deny the reality of the fact, two, minimize the seriousness of the issue, or three, project the unpleasant situation on someone else. this is an apt analogy for howling before had to deal with it. now, the majority, we are facing a gospel-tight conditions, but they still denied the root cause. the environmental laws, -- land management, endangered species,

and even others. if we are interested in reducing catastrophic wild fire, we must admit there is a link between in this. the undersecretary has admitted this link exists. there was a massive chunks of ice, twice the size of the islands of manhattan, and scientists point to morning temperatures. they can spend the summer cooling off and escaping the heat waves, the drought, and the wildfires that have beset the united states.

this would make it possible to recognize that we have a problem. we also have the type of scientific certainty to lock in and logging and grazing. instead, my bill allows the forest service the flexibility to do thinning in areas impacted by insects and disease without waiving environmental laws and forcing them to make decisions in an unrealistic time frame. this also recognizes the constrained fiscal environment and gives the federal agencies additional authority to stretch their federal dollars for further, as we will hear from both the contract in authority, very helpful by allowing agencies. i think you, mr. chairman, for the opportunity to make the

opening statement, and i appreciate them being here to make the statement. >> i understand you have the first flight that comes out. all right, can i ask you if you can make your statement first for the record, and then mr. cook, and then we will open a questions to the bills, so if you would, please? >> patrick county, arizona. i am the coordinator for the county there, and i also do more. this is to reduce hazardous fuels and economic development cannot be stressed enough. the current system in place is heavily laden with unclear and conflicting mandates, slowing down an already cumbersome

system even more. many more roadblocks deal was stewardship along with pre and post-fire issues that need to be removed, and there is no doubt that would be elected officials around the region, that something drastic has to happen. we will lose our great -- great western timber stands. this is for the people's ability to derive benefits, recreational abilities, along with a loss of massive amounts of habitat and wildlife, and the hr bill can go a long way for doing that, because we're at a point where emergency measures are needed now. having attended the strategic planning, -- it is a threat to

our national hat -- heritage. research professors to address these issues. one thing that was notable is the conversations turn to the issue of congress -- data struggle of fires on our forest and what to do with the forests around the country and mainly especially in the west. this is due to the overwhelming evidence that the current state of affairs will lead to nothing but irreparable damage. another problem that needs to be highlighted and address that goes hand-in-hand with the catastrophic provision is the roadway networks. they cannot be neglected.

those roadway networks, proven time and time again, remember, we just went through that last summer. 838 square miles destroyed, and those roadway networks are a critical part of that prevention. those have to be integral with our future plans, including with this bill, and sweeping changes are necessary for the stewardship of our lands, and the model of county stewardship in arizona needs to be replicated throughout the united states. hr 57-44 would allow them to move forward in other areas in our jurisdiction. this is almost next to none, if you want to know the truth. post fire recovery programs or often separate short-sighted or misguided as to be useless to

the very people and resources they were meant to be helping. madam pro -- multiple programs came down, and many of us have to ask after going through the conundrum of bureaucracy and red tape and seeing no outcome. agency after agency, the dollar and waved in front of the victims of these fires with no outcome whatsoever. where did the money go, many of us have to ask. it was unusable by anybody affected. these are management factors -- factors in our country. our review with the best available science, one of the greatest losses in our country will occur, and these do not occur for action. these bills and questions can begin to attack these problems. we need to remember, too, this is the catastrophic wildfires that are just a symptom of the disease, and that is to a great

extent mismanagement by federal agencies of our lands held in trust for the public, and with that, i would dislike to remind everybody but a little historical note. we need to get those back in control. the government and fire, and george washington alluded to that when he stated the mechanization of government, how they were like fire, and it was a dangerous servant/master. >> thank you. >> members of the subcommittee, thank you for inviting me to testify. i am a rancher from arizona, where my wife and i along with our son and daughter an operation on public and private lands. i am vice-chairman for an association, and i am to they also representing the public plans council. livestock grazing represents the earliest use of western lands as

our nation expanded westward. today, they continue to be essential for my stock, wildlife habitat, open space, and the world economies. however, the hands-off management approach has led to severe damage of the resource. by shutting down logging in continuously reducing grazing on public lands, but industries are suffering. this mismanagement is causing a buildup of fuels that leads to catastrophic wildfires. when a catastrophic one of fire breaks out, there are no winners, not the web like northern communities or the taxpayers. that is why we are here to discuss the real relief on and near our public forested lands. last year in arizona, we get 1 million acres, displacing about

18,000 head of cattle. as of this week, over 1.5 million acres have burned. the overall cost of wildfires range from three to five times the fire suppression costs, not counting property loss, injury, and death. for the ranchers, the cost includes displaced cattle, loss of infrastructure, and death of livestock. what is the cause of this destruction? we should start by looking. agencies face a tremendous workload and the plant, study, get sued, plan and studied for months, creating backlogs and pilots. there are procedural points, like to miss deadlines. they add to agency workloads and

further worsen the backlog. the result is tremendous economic uncertainty. the fourth service estimates the backlog of 2700 grazing. i am personally been involved in the process to renew a 55-head permit. how is this acceptable? we should also take a look at another environmental law. wildfire poses a huge threat to many species, and yet e.s.a. often limits things like grazing and timber harvesting. the spotted owl has all but wiped out the industry in the left would greatly reduced grazing. by the way, over half of the sites were destroyed in one fire alone. how long do we have to watch everything from one of my habitat, subdivisions, to

national resources go up in smoke in the nightly news before our country wakes up to the mismanagement of these public lands? this goes to the heart of the problem. regulations that have led to overgrowth of fuels. it will expedite grazing in thinning projects and encourage free enterprise solutions on federal lands that will reduce the threat of catastrophic wildfire. this puts special focus on two areas, including the endangered species habitat. if the agency has missed a deadline, it automatically deemed these compliant. while fired does not wait. neither should we. finally, this requires the use

of additional emergency provisions which allow for provisions. this bill is just common sense. it will put people to work while improving the health and safety of our forests. again, thinking for the opportunity to testify today, and i look forward to any of your questions. >> that is very kind. you are watching it very well. we are now opening up questions for mr. markey's bill and another bill. you are probably going on the same airline that the other is going on. allow me to yield my time to you. >> i appreciate it. just for a contract, for the initiatives, we knew it was

coming. i am very aware that the chief had to fly into albuquerque to even oversee these types of contracts. this is not rocket science, but we have to get it right. it is inappropriate what we are doing. >> what i would like to say is i appreciate the leadership of local elected officials. in many cases, they are the heart of some of the most successful work we are doing. states are playing a very similar role. we agree there is more work to be done. we would like to work with you to find all of the tools to be most expeditious. >> give me a timetable. give me what you look at as a timetable. we sent 60 days. give us a timetable. >> days to identify a high-risk

area. >> tell me what is wrong with this. >> there is nothing wrong with this, but it would be wise to look at the plan. >> in good stewardship, you should do that? >> absolutely. >> thank you. sir, you said that you were not in favor of this timetable. i want to hear your specifics. very quickly. >> i am in agreement with chief wagner. i believe we need to look at our local plans. our cohesive strategy builds on those plans, and i believe together we identify those high risk areas. >> what is wrong with 60 days? i do not see a problem with 60 days. i see that. that has got to stop. i do not seen the government keeping their promises one iota.

when we are starting to look at these, it is going to have to reinvigorate the private sector so that your returning money on investment. mr. cook, give me your experience. we just saw this wall of fire. it was a disaster. the massive disaster because this forest is not going to be returning anytime soon. >> not on the is it not going to be returning anytime soon, i would give the total to the loss in revenue and economic growth in rural communities. >> you have a kinship and the stewardship with the forest and the environment, do you not, because you have to watch this. >> we want the land to be in the best shape we possibly can. i am reading a biological assessment on a grazing

allotment where the number one threat to the spotted owl is catastrophic fire, according to the republic -- recovery plan, and they want to address a grazing -- address grazing. >> creating money and royalties. our education system, is it not? >> i agree. i saw this information, and i know this has been funded for one more year, but in the west, in rural areas, we want to be put to work. we want industries and jobs for our communities. we do not want a handout. we want to put loggers and cattle back. >> sir, i know you just got back from a conference, and we got some amazing information that you want to share with us? >> yes. one of the key things to note is that there is a growing movement

in academia, former employees of the agencies, and i am in full agreement of it. one of the only long-term fixes is to have the forests back to the states as a part of the plan, because there is no feasible way to manage the forest as the system is now, and we are going to keep destroying massive amounts of habitat, as we saw, and our county sturgell program is a bold and working. we are the ones protecting the spotted owl. i do not see any of the litigants beside us. >> you are pretty much blazing a trail that is pretty much common sense, is it not? >> yes, and we have done so already. >> thank you. >> thank you, mr. chairman. i flew to the island of hispaniola down near florida,

and you see that half of the island is green, and the other half is daron. the dominican republic and haiti. there must be something wrong. i am not a point to argue with you because you know your business better than i do. and the spot and all -- spotted owl and others are the reason we are here. there are placesthere are placen see the lack of control over natural resources. i do not understand [unintelligible] but on issues of climate change, anyone who wants to see evidence of climate change, i invite you to the islands, and you will see coconut trees side the water, you will see houses

inside the water because of the rising sea. >> thank you. in 2012 we are beginning to emerge from the great recession, but a new drought for a new era is threatening a majority of our country. the dust bowl was surely the to and out -- actual parched state, but it was also a man may come as years of farming on marginal land had sapped the strength from our solara, leaving it to turn to dust as the rain dried and the winds whipped. this last drop of two doesn't help is also a man made, but not because we failed to learn the lessons of the land. it is man made because we have failed to heed the warnings from nature. the drought of 2012 is

another datapoint in a line of climate catastrophe. mr. romm, the intensity of these fires, the frequency of the fires, how much of it do you think we should attribute now to this rapidly changing climate in the united states and on the planet? >> i think that is the question of the day, and i had an article which i would like to get into the record. i think drought is the most pressing problem caused by climate change. that the frame it this way. we know global warming makes extreme weather more likely and many kinds of extreme weather more destructive, and the analogy people have used is a baseball player on steroids. you do not know that any individual home run was caused by this their right, but the t.c. 70 home runs in one season, then you'd know this is what is

going on, where the atmosphere is juiced. scientists knew there were three reasons that global warming was on to make wildfires worse. obviously whenever it is hotter, it is dry air. soil moisture is driven by how much about rates, how much comes down, and how much evaporate. when it is hotter, you get more of the operation. you will get earlier snow melt, and there's no doubt about it. as spring -- we had no winter. winter was like spring this year. spring was like summer, and and when you're spring become some

of her, colorado had staggering loss of bytes, and i lived in both your district at one point and i lived in your district, mr. tipton. i worked at the rocky mountain institute. i know the place looked like 20 years ago and know what it looks like now. when you get the earlier knelt, many of these western regions, it does not get a lot of precipitation in the summertime. it requires the stream flow from the reservoir of snow. snow and ice is the reservoir. is thecond impact caused hi loss of snow melt. global warming change is the climate. it shifts the subtropical drive belts and unfortunately, when

you expand the subtropical dried up, that hits the southwest. we will see less precipitation, and that is the double whammy that states like colorado will be hit by. more soil evaporation, and then finally the bark beetle. the bark beetle -- >> the german yields, and i am very appreciative, but my time has expired. >> thank you. to get this focus back on the topic of the hearing, the question, is the bark beetle and imminent threat? yes or no covers it. ms. wagner, can we start with you. >> there is current for the impact that the bark beetle has

had -- -- t? is it a threat > >> yes. >>yes. >>ye yes. >> the bark beetle -- is not a yes or no question. it is a long term threat. it is and in basic species. it will keep innovating. is an imminent threat, it will be a threat 20 years from now. .> thank you, sir great > >> yes. >> absolutely. >> yes. a senator requisitioned a study and said that the primary reasons that we are seeing the bark beetle infestation is because of the forest service

action regarding the approving of timber harvesting, lack of active management, drought, that it access to areas the to the inability to provide access routes, a federal land designation as the primary contributing factors to the rampant bark beetle outbreak. i would like to ask the question, since this was a report that came out with the forest service, which helped identify the problem, do you believe an expedited approval of a party could do that, given the information we received that by getting in and defending these devastated areas we increase the water table and we increase the health of trees? but we would like to do more work in bark beetle restoration. >> thank you. i would like to yield the balance of my time. >> >> what we have is a can

damage. it is not just about bark beetles, because what we do is if somebody here who has measles and we are stuck around here so we are much more contagious, we have different species that at different requirements, like the ponderous and time. we want to see up to 25 trees per acres instead of the 600 trees. we have a problem and we have to address it, and by allowing them to stand, we are creating the pandemic, are we not? but yes, we have serious concerns about insects, disease, and privilege, because it is hot. >> with the little chart that the gentleman showed us, it is a focal point for the disease. what you are doing is if there are areas that continue to create the infestation, true? yes, conditions are ripe.

>> longer its stance, the bearer of the problem? >> >i ranch in the area up to 7,000 feet, and what i do not understand if you have people talking about a drought, you have all these trees competing for th aat same -- for the same drop of water. >> would you agree with that? >> yes, i would because i can think anybody here who wants to see our once great forest and show you the entire hillsides and the forest service personnel are the ones who indicated that due to it being too thick of a tree stand and a lack of activities in there, they became weakened because they were competing for water. that is when the people moved in. , i want to take this back in, and we some mitigation but the tribes, which was interesting

because they have the same kinds of trouble? >> no. they're treating plants, and they are thinking about conservation. >> they are thinking about conservation and they are thinning the forest. this is an oxymoron. >> our fire came to a halt when it came to the apache reservation. >> a dynamic force is all old- growth trees? >> it is a full mixture. >> i appreciate it. >> before i turn to mr. markey, mr. shamley, i know you have a flight. the not think it would be offensive if you leave to go to the airport when you need to go. we are happy to have you as long

as you can stay, but when the hour hits, feel free. mr. markey, did you have in questions? >> i do, thank you. to come back to you, i think you are trying to be reflective of what is happening in explaining the bark beetle and why it is now reproducing not once a year, but twice a year. why the change in temperatures are causing back to happen. why is expanding its footprint, getting into larger and larger areas, and you are trying to explain that as a reality that has led to a metastasis a ship of the problem. in the same way that in new england, our winters are four degrees warmer than they were in 1970. the maple trees are going further and further north, and that is just the change in

climate. we barely had a winter last year. all you are doing is pointing out the facts, that the maple trees are going further north and the bark beetles are reproducing twice a year, able to cause more damage, and the climate is at the heart of it. it is a big change that is occurring. i do not know why we just cannot agree on that because it is not just the west, it is new england, it is a commonroblem that we all have to deal with, and the consequences, first of all, you can put a band-aid on it and try to put together policies that deal with that, but you have to look at the larger climate cancer that is out there and say, what can be due to reduce the locker-term impacts that will be profound? that is what you are bringing to this discussion, and we thank you for that. can you tell us how

effective air tankers are? >> think utilization of tankers is important. it is most effective when you put resources on the ground for the sensible around communities, but if there is a large scale utilizing single- engined air tankers, is positive. the big halfies can carry more, but the single engine air tankers definitely have more versatility. they are easier to get around. quite often the big at these -- heavies cannot fly when it is windy, and the single best engine air tankers are more versatile, you can get more up in the air as well. >> thank you.

whether it is a flash flood or a flash route or a flash of lightning 819 wire of fires, climate change increases the risk to all parts of the country. what happens in the midwest affects massachusetts, arizona. because there is an extreme weather food tax, higher prices for food coming to every american because of this drought. at $7 a bushel for corn, we are looking at real consequences. could he talk about the economic impact? >> certainly every american is concerned about the explosion of the wildfires, but i think and i have said and i have read much literature and written a great many articles on -- i believe it is through food prices that most people are going to experience climate change. people can adapt.

when you go into an air- conditioned room when it is hot, but a farm is out there and exposed to the weather. there is no question, food prices have been stuck at levels that we have not seen in 20 years. it is projected that food prices will double or triple. >> are you concerned about the impact of the drought in terms of the impact it will have on your business? >> the cost association of corn prices affects our beef cattle prices and they moved together, and that opens up another discussion. in the agricultural producer wilkens always be concerned with drought. >> de do you think climate change is planning a role? >> my thoughts are different than yours. our time line, what you are

speaking of today is about a pebble on the size of the sand on a beach somewhere. >> mr. romm, is it a pebble on the sand on the beach? >> not at all. there is no question that climate change is making the drought's worst. it is important, and i do not know if this will be another round of questions, there is a difference between warming the average temperature and changing the climate. there have been studies in the last months that say when you lose the arctic ice, you weaken the jet stream, and when you begin the jet stream, weather patterns get stock. -- get stuck. if you're asking why our heat waves lasting longer, why are highs sticking around longer, climate change driven by carbon pollution. >> i am sorry to interrupt you. it is unfair.

one second left. that me ask one quick question quickms. wagner. the reference was made at home runs were a cause of steroids. home runs are also the cause of corked bats. let me talk to you about an alternative method. one of the witnesses said there is little empirical research to document the fact that lower fuel loads and reduction in fuel produces costs of suppression. could you describe the researcher or agency has done with respect to the effects of fuel production on wall fire behavior? >> two publications i can cite from a fire in california and a fire in the southwest. research scientists looked at

impact and field treatments. we saw a fire as recently as this summer, and through visual pictures others, you can see the difference, a stand that is dinner that has had fuels' remove and hal fire behaves when that encounters that and barnett. >> let me ask one specific question. from your testimony about 5960, it add pine beetle infestation under the act, and the section authorizes the secretary to apply -- on federal lands that the secretary determines is at risk for infestation. can you define for us damaging

insects? >> i believe the term to find itself, sir. the pine beetle would qualify. >> you are correct. it defines itself in the stat sheet. -- in the stat sheet. the question i would ask is how is this new authority given to you, if it is in the statute? >> some of the authorities were for the forest service and this may have been one of the. i can get back to you on that. >> this needs to be clarified. a let's see if there is second round of questions. any other questions? >> ms. wagner and we have these heavy canopied forest fires,

airy intense? >> yes. >> date sterilize the soil? >> we are able to determine the intensity of the fire, and in some cases we are seeing impacts on slow. >> is it easier to mitigate tougher? >> tougher. >> and topsoil is thinner than in the east? >> there are types that are of concern when they are impacted by fire. of that we ask you a question we at these inabilities for roadless rules impact our harvesting process, a core part of how we go into the forest. tell me part what part of the road mitigation is tougher to do than sterilized soil? >> i am sorry, i am not following your question. >> when we enter a road to go into log, how is that mitigation

worse than sterilized soil? >> week at the ability to design it roads and place roads so they are low impact. >> i would agree definitively. mr. shamley, only these other things that you have been doing at that drew so much attention out in your local -- their most recent speech. >> one of the big things was the multiple counties and the scientists there were -- hear ewardship.county stil we had to bring the fight all the way to washington which we did in january, to move on to the forests that looked to get something done or we will fix it. after that meeting was ditched,

our locals, and those are the only ones i can get the credit to, local fire and fuel teams and our local supervisor are the ones who worked with us and said you are right, that area it needs to be treated, and you're right, the west side which we are targeting was completely left off any target plans at the u.s. forest service for treatment. this town already tried to burn down in the wallow fire. the other half we are treating to protect residents and the water shipped and the only actions that are protecting the spotted owl -- were no plans by the agency. they completely lifted off any plans or maps. >> is an aspect about this that shows and the gate and take care of the forest and you can also

have increased grazing and have a number of different proprieties that are increasing endangered species. there was a ranch in utah, may be in mr. -- wrenched it shows everything being -- there's a proper balance that shows this working? >> absolutely, and speaking for myself, we monitor the spotted owls on our own branch. we pay-for our south because the agency fails to do so. they say they will monitor the species, but we find out that that does not happen. we hired biologists because the monitoring for the agency themselves. the owls do not breed and reproduce on the years that cattle are not present in that forest. we have a lot data, science, that shows the crazy impacts,

when done in the proper methods cannot deny -- proper methods, did not do anything but help the species. >> we have an unhealthy situation that aendangers everything. you do not have a diversification of species. it hurts the spotted owl, a whole different plethora of species within that environment. >> it does, and that is the discussion we have been adding, grazing creates transition zones, and the around the while light drinkers benefits the species, the cattle being there. >> thank you. [unintelligible]

thank you. any other questions? >> yes, i do. this discussion about steroids, i just love it, and i have a chart that is now 4 years old, but it still works for the purpose of this discussion. what i had was my staff went back about four years ago and track the number of players in the major leagues who had more than a number of home runs per year creeks from the time when babe ruth, the average was 3.3 players per year average more than 40 home runs. mickey mantle, willie mays -- ted williams, and then all the sudden in about 1995, it started to spike, up to 8, 9, 10, 11,

12, 13 players getting more than 40 home runs. it stayed very high until major league baseball, after congressional hearings, decided they were going to test for steroids, an artificial substance, put into the bodies of people. no longer a better diet and court bats or smaller ballparks, bigger players, but let's just check for this terror raids, and was right back down to 3.3 players per year who were averaging more than 40 home runs per year. this chart looks exactly like a spike the amount of c02 in the atmosphere and the rising temperatures on the planet since the dawn of the industrial age, when human beings started to inject additional carbon dioxide

into the atmosphere. it will take a number of congressional hearings ultimately before we will finally come to realize it is not sons by it, not these other ingredients that the climate and myers want to attribute this dramatic rise to in the same weight major league baseball did, all the way from the commissioner down to the lowliest ball player who all had a stake in this phone system that was put together. rather, just a reflection of the reality that once we get the artificial additional chemicals out of our system, then the climate will start to calm down, the wild fires will start to calm down, the drought will start to calm down, but until we get this they're right out of the climate, until we admit that we are playing a role in this, that all of the other issues are just band-aids tried to deal with the harlem that is being

done -- the harm being done but to the players and the game, the whole planet, on an ongoing basis. what do you think about this? >> it has moved beyond correlation to causation, and you can do this when you have an underlying theory. we know carbon dioxide traps heat. we know -- they call them greenhouse gases for a reason. they did not make up greenhouse gases because the gas is did not -- the gases do not behave like a greenhouse. they do. i am not an expert on short-term forest management. i am an expert on the medium and long term. there is no question that trees compete for water, and no question that drought is a big

problem for trees and it exacerbates the bark beetle problem because trees killed bark beetles. the solution to the drought problem is we thin forests so that trees did not compete so much. the problem we are on a track where your districts are going to see levels of soil worcester in the coming decade that are worse than the dust bowl, which was a - 3 on an index, which means there's got to be more drought and wildfire and another congressman will come in 20 years and say we will lead to thin more. the thinning to deal with drought is not a sustainable solution. it is the end of all trees in all other districts. as someone who has lived in your district, i must say i love your district. >> i thank you, and in the same

way we knew that utility infielders and outfielders who went from 13 hour runs the 50 home runs, we knew they were not nimickey weight lifting was not making them like them. >> i think most people know something is wrong. and we are contributing to it. as soon as be admitted -- as we admit it, i think it will get to the heart of the solutions we need to put in place. >> thank you. that may ask one last question. i hope this can be the end of it. we have planes to catch. bob richardson was probably the best second baseman in the history of the world. he does not smoke, he does not drink or stay at night and he still cannot get 250. although he wasn't roommates with mickey mantle. it was the perfect thing that

not smoking, not drinking can help you live longer but it does not help you hit a curveball. so i appreciate that. unless there are other questions, i want to thank our witnesses for being here. there may be additional questions from members that will be sent to you. i asked you to respond in a timely manner with that. i hope you make your flights and i appreciate your chance to visit with us. i do appreciate all the testimony given here today. thank you very much. this committee will stand adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> this weekend, the harlem book fair starting saturday at 12:30 eastern with a panel discussion on the future of african american publishing followed by a look at pork -- public

education. dan cornell west examines the next presidential election. then a panel celebrating the 150th anniversary of the emancipation proclamation. sunday at 2:00 p.m. eastern, the leadership summit with all including phyliis laughly. part of a book to be this weekend on c-span to. -- part of book tv this weekend on c =span2. >> witnesses raised concerns about issues including cash flow challenges and high compliance costs. especially for small banks and credit unions. this hearing is two hours and 20 minutes.

>> the committee will come to

order. the hearing is entitled who is in -- dodd-frank's impact on families, communities and small businesses. i want to thank our witnesses. there is a lot of different ways the government can get in your pocket. i think most people think about taxes as the primary way to do that because basically the government as to determine how much of your hard earned money you get to keep. but what i do think about the people underestimate is what the cost of other ways government does that through regulations that basically there are costs to those. when we look at -- one of the thing this congress has been trying to focus on for a number of months now is jobs. we still have a number of

americans that are out of work and we are looking for ways to make sure that we help find ways to get those people back to work. in texas, about 98% of the employers are small businesses. in the 19th congressional district, there is probably a higher number because we have a bunch of hard-working small- business people that have worked hard to build those businesses up. we do not have the big trio the plant in the 19th congressional district but the small businesses are a major job creator for us. small businesses rely on access to capital. our community banks have been the primary provider of that capital. when you look at small business

loans in this country, most of those loans are under $100,000. while that is not a small amount of money, for many banks that would be a relatively small loan. but to those businesses, it is a very important loan. we want to make sure that as we move forward, we are not part of the problem of inhibiting the financial community's, particularly our community banks, from providing important lending opportunities. but also serving the customers. i was talking to someone the other day and many other smaller communities across my district with the consolidation that's happened in the agricultural business, there are a smaller number of farmers farming in a lot more acres. a lot of communities that are

used e.g. they used to be more larger or smaller now and in many cases, the community bank was one of the last larger corporate citizens in those community. to provide capital and other financial-services for those individuals. what i am looking to accomplish with this hearing -- i think there has been a lot of focus on wall street but what we really know is that main street is where all of the cost and burden of regulations tends to fall. we do not think about the fact that we raise the cost of the asphalt in the parking lot of the supermarket if we tinker with some of these markets or that the cost of financing a car, the commodities and availability of certain banking services are now at a cost.

so what i hope to accomplish with this hearing is to begin to identify some of those because i think on both sides of the aisle, we want to make sure that if we are going to have regulation, we understand the consequences. also we have had discussions about the cost and benefit. you can make a car really safe but if it cost $100,000 to make a car really safe, how many people can afford the car? so i look forward to our discussion and our panel. we have a great panel today. thank you again for being here. with that, i will yield to the ranking member. >> thank you, mr. chairman. i want to thank the witnesses as well.

i look forward to this hearing and the other hearings scheduled this week. dodd-frank, i do not think anyone would suggest it was a perfect bill. certainly not by my measure. that is never the measure of anything. if was, we would not be reelected. therefore we have to look for the cost-benefit analysis. but costs are easy to measure. how much does it cost to hire a new person to do regulation? that is a fair thing to look at. benefits are more difficult to measure. the benefits to the economy as a whole and the individual in this -- institution are almost impossible to measure. i fear some people are suffering with amnesia. secretary gardner drilled an article in -- secretary geithner wrote an article a couple months ago talking about how we got to where we are. dodd-frank came out the response

to an economic crisis caused by a massive on regulated banking industry. i do not mean the regular banks in a people who were totally unregulated and that the competition with regulated banks. they took excessive risk. they had no document loans. just giving out loans to people with no documentation whatsoever. credit defaults what squared and tripled and all kinds of things. i have not met a human being who really understands what that is about. off-balance sheet investments. cozy relationships with regulators and credit agencies. all of that led us to the second worst recession in american history. let's not forget -- we lost $19 trillion of household wealth. it was not a small bump. 9 million jobs lost.

10 million homes in foreclosure. it required some sort of reaction and dodd-frank was an attempt to do that. i do not a one -- i do not think anyone would suggest we have a perfect or that anyone could get a perfect on the lot -- on the first draft. most of dodd-frank is not implemented because of the times to cut back as we are expanding the responsibility is -- responsibilities. massively increasing the responsibilities, suggesting to cut their budget by over 40%. that is ridiculous. of course to cannot get things done when you face those situations. 75 years ago, this country faced the worst economic problem we have ever had. immediately thereafter, and lot of people cried these regulations are going to kill everything. before most of them were implemented, by the way to rid

of it were implemented -- by the way. when they were implemented, we have the most stable environment in the history of mankind. we have the greatest expansion of wealth in the league got into this thing where all regulation is evil. let me be clear -- no one in their right mind wants or supports excessive burdensome regulation. no one that i know of what advocates for that, including me. however, no one should forget what we just went through and therefore argue that nothing should have happened. no one in their right mind should say we should have to little regulation. it is always an attempt to find the balance. that's what i hope we come up with. to try to figure out what we have a right and wrong and try to keep the good without throwing out the back. with that, i yield back. >> i thank the chairman and now

the vice-chairman of the committee is recognized for two minutes. >> thank you, mr. chairman. we are here to examine how dodd- frank affects our constituents. our constituents are everyday people who do not work on wall street, do not deal in complicated financial products or sit at trading desks of investment banks. the law may have been designed to rein in wall street and regulate financiers but the fact is that this bill reaches into the pockets of just about every american. a lot of people may be surprised to learn that dodd-frank rules governing commodities that could cause prices to rise in everything from airline tickets to a six-pack of beer. there are also the effects of increased regulations on small financial institutions. access to credit and the ability to maintain a simple checking

account could be jeopardized. higher fees, increased costs and reduce services are naturally occurring byproducts of increased regulation. these costs are not going to be borne by the customers and financial institutions but they will be felt across the economy because it crosses into so many areas of american life. we should all expect a well regulated financial system that is free of fraud and bruce -- and abuse. expose flaws in our markets and should have absolutely lead to policy changes. however, as happens so often in washington, this opportunity to work together resulted in a bill rife with unintended consequences. i look forward to hearing from our panelists and working to do that doesrepaiur

more harm than good. >> mr. frank is recognized for three minutes. >> thank you, mr. chairman. i'm struck by the irony in the title. borrowing, given the loosness of constraint here, from the capitol one slogan what's in your wallet, and what was in the wallet of many consumers were the hands of capital one. so references are very relevant to today's hearings. capital one was just find -- fined. so there are all kinds of people in the wallet. i see the testimony here from the chamber of commerce -- deja

vu. in 2006, i was the chairman in waiting of this committee. i was asked to come to a session in 2006. we are over regulating the financial industry and we were told we have to cut back. that if we did not caught back -- cut back, the likelihood of ipos being diminished -- being issued would be substantially diminished. it could not have been more wrong. we were told at the time that we should emulate in the light touch regulation of the british financial-services authority. the people of don a fairly job, by their own admission, of not regulating when they should have. i see complaints that we are over regulating mortgages. there are complaints from some in the credit unions and

elsewhere that we're being too tough in requiring paid -- requiring payment standards for people taking out mortgages. i am surprised to hear the complaint. given the unfortunate role was played by market standards in helping to bring this crisis about, i am surprised. i have also urged -- heard some complaints that the bill's requirement that those of securitized mortgages retain some of the rest. that that is retarding mortgages. they clearly cannot be blamed for doing anything but this resistance to tightening mortgage standards is odd to me, given what has happened. we also have complained about the over regulation of derivatives, as if there never was an aig. or the problems -- or the problems that recently served

as -- surfaced with j.p. morgan never existed. i would have to say to my friends in the chamber, they remind me of when the restoration came in the 19th century in france and said they have forgotten nothing because they earned nothing. the notion that people would be repeating the argument of 2006 is surprising to me. >> thank you, gentlemen. now the gentleman from texas is recognized for two minutes. >> thank you, mr. chairman. before i came to congress, i spent most of my life in the private sector in banking and real estate and law. one thing that continues to amaze me is the complete disconnect between what goes on in washington and the realities on the ground in our economy.

two years ago, and we were given a lot of promises over dodd- frank. the one that sticks out the most is that the bill would "bring greater economic security to families and businesses across the country." all it takes is a five minute conversation with the community banker, is small businessmen or credit worthy family that can get a loan to comprehend just how badly this promise has been broken. dodd-frank told us they had crafted reforms that were absolutely necessary. when you pile hundreds of new rules on top of existing rules, and give greater authority to the same regulators that missed the last crisis, calling at reform, it is a little ambitious. the more we hear about dodd- frank, the less there is to like.

i look forward to our committees continued examination of this bill and i yield back. >> now the gentleman from california is recognized for two minutes. >> thank you, mr. chairman and ranking member for calling this hearing and i also want to thank the witnesses. it has been almost two years since the passage of the dodd- frank legislation. yet we have not had an opportunity to implement all aspects of the frank about legislation. -- as the dodd frank legislation. we have to keep in mind that the regulations are good because we have to protect the consumer and stockholders. if we do not have this regulations, but will happen? it is important we continue to protect them to assure that the consumer is protected and the stockholders are protected.

having the regulations are very important. while our economy has not yet fully recovered from a crisis that got us into this mess, i am proud that we have the tools to prevent another crisis. that means having the tools to have the oversight and making sure we have the enforcement. we have not done a lot of the enforcement that needs to be done. it is easy to say let's not have these regulations theory look what happened with the supreme court making the decision on the independent expenditures that can be given out. you have all kinds of independent expenditures that are going. everybody says i wish we could regulate them. regulations are important to a lot of us. with the situation was made about buying a car or not having access to credit, we want to make sure that theme individuals getting credit are able to pay for what they are borrowing as well. that is taxpayers' money that is being used.

instead, congress needs to work together to try to get our fiscal house in order to make spending cuts, find resources of revenue. i hope we can strike a tune instead of focusing on partisan talking points. that seems like what you have heard on both sides. over reform, we need to stop the abuse and work together and try to find solutions to make sure we protect the american consumer so they have more confidence in the us. i yield back the balance of my time. >> not a gentleman from the mexico is recognized for two minutes. >> thank you, mr. chairman, i am listening with interest to our friends on the other side of the aisle. my objection to what is occurring in dodd-frank is that regulators were sitting in the room with mf global as they were

making decisions and no one said the award. j.p. morgan, 57 regulators were in that building. if we were to tighten up the regulations in place and a free and need more, that is fine but what i am hearing is that the safety and soundness interviews are no longer preeminent. they have been replaced by the compliance reviews and they say if they make a clerical error, they could face a $50,000 fine. nobody in new mexico calls a problem on wall street and yet they -- caused a problem on wall street in yet they getting faced with this regulation. this guy whose family started this little cabinet shop could not get a $50,000 loan. he has plenty of equity, never been late on payments but he could not get a $50,000 loan to get him through these rough

times. so they are hiring fewer people, lay people off. i will guarantee that none of the problems in wall street originated in new mexico but women regulated, regulated the main street small banks and are left with fannie and freddie going on regulated. i agree with friends on the other side of the aisle. let's hold the regulators accountable in the room allowing things to go on before we start laying on the regulations to people that were not involved. i yield back my time. >> i have a letter from the credit union national association. i will like that to be a part of the record today. we now return to our panel.

-- president chief executive officer the federal credit union, jessie sharp, capital markets and competitiveness, u.s. chamber of commerce. mr. gary johnson, president of american flooring installers. mr. david minn, university of california irvine school of law. board share, a federal credit union. without objection, your written statements will be made a part of the record and you will be each recognized for five minutes to summarize your testimony.

you are recognized, mr. force, for five minutes. >> thank you. good morning, members of the committee. my firm -- >> mr. forest, if you pull the microphone close to you, that would be appreciated. >> my firm provides consulting and research services to commercial banks, credit unions and alternative financial services providers. i have 30 years of experience in banking and have published several articles on the financial-services industry, including issues with overdraft, general purpose prepaid cards. the cause of this hearing is about the consequences of dodd- frank on small businesses and individuals. i am here to describe my analysis. while there is a need to address the causes of the financial meltdown in 2008, there are

assets of dodd-frank that have a disproportionate and negative impact on financial services providers that play no role in the financial crisis. small businesses are particularly impacted. contrary to making financial- services more available and consumer friendly, they increased restrictions of compliance cost reducing services has a negative impact on the economic well-being of the communities they serve. many of the 6700 community banks and 7000 credit unions are burdened with operating costs and data technologies that inhibit their ability to serve their customers. es suffer asbusiness i a result. transaction accounts and credit options are impacted. our studies indicate that it is

not profitable for most banks and credit unions to underwrite loans under $5,000. the traditional options of overdraft are less viable today because of regulations. with the reduction of overdraft fees, many banks have eliminated free checking accounts. the fees have resulted in a wealth transfer from consumers to merchants. i contacted several clients to solicit their feedback on these issues. i have listed their quotes in my testimony bubbles summarize my thoughts -- their thoughts here. substantial increase in compliance costs, increased fees to small businesses, increased banked individuals and a decrease in the number of branches in low-income markets is an attempt to reduce

expenses. other comments include -- the 400 will making required by the law, only a quarter have been finalized and 36% have not been proposed. a significant decline in a traditional closer b.j. traditional wholesale bankers reduces access to mortgage credit, particularly to those without an established relationship with a bank. a requirement to get new appraisals and updated credit reports on existing loans creates extra costs to the consumer. this requirement is regardless of the market or strength of the customer. people talk about section 1071 of dodd-frank having a chilling affect on small business lending. others deal with unaffiliated network requirements on government benefits on prepaid cards. as well as the requirement to

get state money transmitter licenses for a prepaid card program managers. and limited functionality of prepaid cards. the board's decision to condition reliable prepaid cards being the only means of access to the underlying funds associated with the card might inadvertently result of that the consumer's not having access to helpful features and services. dodd-frank has had this inevitably more regulations to a point of making traditional credit unions almost unworkable. it is crating roadblocks to innovators working diligently to address the under-banked

segment of our society. these problems do not exist with the majority of financial institutions in this country. i look forward to answering your questions. >> thank you, chairman and ranking member and other members of this committee. i am in the ceo of state national bank in texas. for you to understand some about me, i was raised on a ranch in eastern new mexico, about 20 miles from the town of san hone, right between -- rest stop and resume spped. eed. my first grade teacher had something to teach us and one of the first ones was what do you do when you come to a railroad

crossing? stop, look and listen. i would humbly urge you to do the same in regards to this bank regulation and to the dodd-frank act. this act currently has implications on community banks across america, much more than what was stated when it was passed and more than i could have dreamed it would affect us. in quoting senator dodd, community banks will pay lower premiums and continue to work with their existing regulators. in a nation with more than 6000 banks, the bulk of the bill's new regulations apply only to the few dozen of the largest ones. the senior deputy comptroller for midsize and community banks stated regardless of how well community banks adapt to dodd- frank, these new requirements

will raise costs. orderesident's executive urged independent agencies to propose a regulation only upon a reasonable determination that its benefits justify the cost. when the stated goals by proponents and opponents of dodd-frank disclosed that community banks were not the problem and should not be affected, we should have a clear starting point to undo the harm and consequences of this legislation. state national bank is over 100 years old. our motto after the 1930's bank holiday was, time tried adn nd penick tested. we have had examples of the recently and have had customers who went out of business in the 1950's and came back in the

1970's and pay their applications -- paid their obligations. we have customers continuing to make home -- payments with no collateral, never missing a payment for 24 years. we have relied on our handshakes for over 100 years. that is a commitment of trust and loyalty and commitment, both to our customers and from our customers. we have-wired money to europe in the past or to a retiree whose purse was stolen. we did not know the exchange rate in spain or france or the fee being charged upon receipt but we did know our customer needed help and we provided that. this month, we had a customer that have a family problem and they need in mexico. we could not wire had the money because we did not know the change waite or the fees we would be giving if we abided by

the proposal rule. our break through the years has made consumer real-estate loans to purchase and occupy the home in which they would live. we never sold the loan. the service the loans. we did not charge application fees, origination fees or any other type of fee. there were typically five-year balloon the notes which under the proposal would not be allowed. we would have the customer put up 20%. we would put up 80%. the customer paid his own taxes and insurance. if he paid -- we would renew the loan, keeping the payment schedule the same. that is not how it will be under the proposals. our customers have a dilemma. where do we turn -- loyalty, service? the will and that getting toll- free numbers, application fees and will get to speak to more people with one problem that we have employees in our bank.

then moving our business to that make a bank. our base compliance costs continue to increase. we are starting with 40 years' worth the regulation and adding to that. who pays the price when you disregard the needs of the community and the customer to make everyone the same receptors. the customer pays the price and the product will be sacrificed. i'd like to ask you to do the same thing that my first grade teacher dissent -- stop, look, and listen. if we continue to disregard reality as that regulation upon regulation, we will not be able to cross the track to serve our customers. i thank you for the time. i hope this makes a difference. >> miss smith, you're recognized for five minutes. >> good morning.

my name is lynn that smith -- is linette smith and i serve as the president and ceo of washington gas light federal credit union in spring bill, virginia. we have 8000 members and the are 87 million in assets. thank you for the opportunity to testify here today about the impact dodd-frank act has had on credit unions. credit unions were not the cause of the financial crisis. still, there are significantly impacted by dodd-frank. such as being subject to the rulemaking authority of the new cfpb. we are very concerned that efforts in dodd-frank to rein it

in bad actors and greed on wall street will inevitably have a negative impact on credit unions, especially when it comes to regulatory in compliance burdens. one of the biggest impacts dodd- frank has had on credit unions comes from the data interchange price cap. market forces have already seen some credit unions began to have higher debit card costs and declining interchange revenue. many of the regulations flowing out of dodd-frank are well intended. however, for credit unions, they are often a solution in search of a problem. i cannot overemphasize how burdensome and expensive dodd- frank related compliance costs will be for credit unions.

we can only hope congress will urge regulators to do more robust, cost-benefit analysis of potential regulation and look for areas to streamline. more importantly, we hope that they will follow up once the regulations are in place and make changes if these costs are too high. washington gas light has a staff of 17. my employees and i already spent countless hours trying to comply it with a never ending -- with the never ending changes to laws and regulation. my credit union is healthy, growing and we have a very good loan demand. still rather than looking to hire a new loan officer, the growing compliance burden means that i must first look to hire a compliance officer. while we still try to make the

loans to our members and needs, the staff time dedicated to compliance means that my members have to wait -- longer for their loans. the financial stability oversight council -- council has a duty to facilitate regulatory coordination. we hope you'll take this to be seriously. it is not in a single regulation but an accumulation regulation but an accumulation of regulations from numerous regulators operating independently of each other that magnifies the regulatory burkett -- bird and credit unions face today. attached to my testimony is a letter sent to secretary guide their last month on this issue. the rule is nearly 800 pages.

and only exempts those making fewer than 25 transfers per year. a survey found that nearly 84% of those credit unions that provide remittances make more than 25 transfers a year. the majority of those barely break even or will have to operate at a loss. the new compliance cost for this role may force many of the credit unions and financial institutions to eliminate this service. the cfpb recently released its regulatory agenda which outlines 27 different areas where potential rulemaking may occur in the future. it will be very challenging for limited because we're

in resources. i am not sure how to keep up. what credit unions were not the problem, the dodd-frank act impacts credit unions in many ways and it is increasing their regulatory burden. congress must continue vigorous oversight and look for ways to act on regulatory relief. regulators, on the other hand, must accept responsibility for this -- for disregard and the newly created stock should make regulatory coordination part of its focus. thank you for your time and opportunity to testify here. i will welcome any questions you may have. >> thank you. mr. sharp, you are recognized for five minutes. >> chairman and members, it is a pleasure to do with it.

i am the managing director of u.s. chamber's capital markets center and i am here representing more than 300 companies and dozens of trade associations. the coalition represents companies across the economy and that the manufacturing, agriculture, energy and other sectors of united in one respect. the use derivatives to manage risk, not create it. the coalition has advocated for strong regulation that brings transparency to the derivatives market while avoiding needless costs on ussers -- on users. many of the many factors used derivatives to manage commodities and interest-rate risks resulting from the design and manufacture sales and financing of vehicles. the price and commodities fluctuate with the market.

on the revenue side, many factors that export their product need the currency exposure that arises from production costs and revenue in euros or pesos and they can use derivatives like foreign exchange swaps to do that. in construction or agriculture, they financed the sale of their products. derivatives enable these companies to match the interest rate characteristics of the funding available from the capital markets to put together their loan portfolios with the financial needs of their customers. the energy company members of the coalition also rely heavily on derivatives. in the case of electricity which cannot be stored, this physical energy markets are volatile and unpredictable but hedging with derivatives allows energy

companies to lock in prices and provide electricity and natural gas at a low, fixed price. i want to talk about the impact of dodd-frank and where we are today. the coalition has been supportive of increase transparency in the market and will fully support the overall move towards clearing an exchange rate. however, we remain concerned that a few regulations never intended by congress to affect major companies will make a derivatives more extensive or altogether on available for users. we have seen strong bipartisan support. this committee has been a good ally for users. i will like to thank you for your hard work in passing to bills through the house that have addressed some of these unintended consequences. the first, hr 2682, creates an

exemption for march requirements from nonfinancial businesses. imposing unnecessary margin requirements on these non- financial users would put capital away from productive business use. despite evidence that congress did not intend for regulators to impose this on users, the regulators have proposed to do so and this could be huge capital drain on the economy and a jobs issue. chairman bernanke this be addressed this issue in testimony and said he would be supportive of the legislation passed -- that has passed the house. supposing they% requirement could cause the loss of 120,000 jobs and reduce capital spending by up to $6.7 billion. the passage of this bill will help mainstream businesses be

fuelled from these huge cash calls. the second bill, 2779, prevent internal trades from being subject to reckon seri -- to regulatory burdens. these risk mitigation centers generate economic -- by allowing companies to risk more efficiently. this compact on to consumers are used to further businesses and create jobs. the overwhelming bipartisan process the lead to the passage of these two bills demonstrates that they provide not controversial approaches to help in growth businesses and improve the economy. we are hoping the senate will pass these bills quickly. in legislation is not enacted,

users could lose these management tools and that is bad for businesses and their customers and the economy. thank you. >> mr. johnson, you're recognized for five minutes. >> good morning, mr. chairman, ranking member capuano, and other members. i am the owner and president and ceo of a small but fast-growing construction business in toledo, ohio, called american flooring installers. i'm testifying on behalf of the ohio hispanic chamber of commerce where i am the chairman. the objective of our chamber is to promote the development and continued growth of hispanic businesses in the ohio community. it is a pleasure to appear before you today. i want to tell you a little bit about my company. and also provide you with a personal account of some of the ways in which i am using financial products and services to run and grow my business.

i am here to talk about the effects of regulation but i hope to tell you about how my business works and how i use financial products in it to help you consider proposals for new regulations. my company currently has 23 full-time employees and we had a gross revenues in 2011 of approximately $1.8 million. i am looking forward to hiring additional workers and we are on track to double our revenues this year. one part of meeting that goal is the financial product services that we and our customers use. and help the financial sector is important for business of all sizes, -- a healthy financial sector is important for businesses of all sizes. many of us are concerned about the new law enacted by congress which is indirectly hurting small businesses through tighter lending practices and new fees in routine financial-services for businesses and consumer

banking customers. among the subject that always seems to come up is the challenge of cash flow. many of us believe that the challenge is exacerbated by the law enacted by congress in response to the financial crisis. while less regulation in some areas has contributed to the necessity for government to act, over regulation has made it hard to obtain the necessary funding needed to grow many small businesses. we are concerned that overregulation is making it harder for banks to make credit- card loans to us and harder for customers to use payment terms. these cards are essential for cash flow on both the expense and revenue side of small business. other options such as lines of credit either take too long to obtain or simply are not available. when i accept credit cards from my customers, i get paid faster and the time value -- more relatively speaking.

one tool i am increasingly using to enhance might cash flow and volsci acceptance of payment cards using a device attached to a mobile phone. this allows me to accept the credit-card and debit payment while i am face to face with the customer. if i am out on the job site using this device, i know whether or not i am going to get my money within the next three days. if the payment is declined, i know about it right then and there and i can address it with my customer. if authorization goes through, i know i can put that money back to work within three days. i accept anywhere between $2,500.10000 dollars per month on cards and it would be great if more of my customers pay me this way instead of sending a check. accepting payment cards enables me to get paid typically within a few days. this is light years faster than the invoice system otherwise use to typically -- that typically results in receiving a payment by check which takes as long as

60 to 90 days. small businesses do not need to worry about bounced checks with him in cars. even though i accept a fee, i prefer them as a commitment that because i get access to funds almost immediately. that allows me to put the money back to work it into my business in near real-time. when i receive payments for my customers more quickly, i can put money to work quickly in my growing business. if you consider what i paid to accept payment cards as opposed to the cost of floating a loan to a customer for 60 to 90 days when i can be putting the cash back to work, this is a no- brainer. i have learned not from a book but from my business about the time gawdy of money. i want to keep going back to that because knowing the time value of money is one of the key to successfully growing your business. the situation i just described hits me in two ways.

even if i was not growing business during the 60 to 90 dayperiod, i have to wait. i cannot even earn interest on it as i said. i am basically extending a loan. when i am growing my business, the impact is even worse. if laws and regulations make it harder for banks to make payment cards available to my customers or make it harder for companies to develop innovative products like the mobile phone device, that hurts my business. like all small businesses, i want to pay less for almost everything that i use, however, at ohio limited but it could charge to install a wood floor in a government building -- i do a lot of work for the state.

i guarantee you i would recover my cost across the rest of my line of business. the limit was too much, i would stop doing that line of business. no matter what, i would try to grow other areas of my business as opposed to devoting -- to devoting resources to that area. i do support having some rules, as long as i know they are -- they make it easier for my customers and i to do business. it would not be fair if the rules were drawn up in favor and i did not want someone dictating basic choices or business decisions. in many cases, leasing back and -- we swing back and forth in h directions. there is the not knowing that is

coming. i just want to say if dodd- frank any other legislation like it does not have anything i've just talked about, of a likely oppose it or whatever parts of it that affect or hurt my business. i also want to talk about how my business eases credit cards for purchasing. >> mr. johnson, if you can wrap up. >> sure. in my experience, any regulation that increases cost to business with regardless of the industry will be borne by the business customers. it is difficult for me to characterize how the financial sector is enacted in congress because i am not a banker. other witnesses are better suited to speak to these issues but in the wake of the financial crisis, it is crucial but congress and regulators not react so strongly to good parts of banking that we rely on, the

parts that are not involved in the financial crisis. when small businesses help the cause the economy is healthy. >> thank you, mr. johnson. >> year-ago period jamming, ranking member and members of the subcommittee -- there we go. ranking member, members of the subcommittee, i take it for the opportunity to testify here today on the impact of dodd- frank and the consumer protection act of 2010. this issue has been fraught with confusion. i would like to make three main point in my testimony. the negative impacts of dodd- frank have been greatly exaggerated. dodd-frank has not had much of an impact to date because most of it has not yet been

implemented, tanks -- thanks in large part toi to lobbyists who have delayed the implementation of this law. less than 30% of rules mandated have been issued. with most issues only in the last few months. it is difficult to understand the claim that dodd-frank has resulted in large regulatory costs. most of the negative effects being blamed on dodd-frank are highly spec with it and often misplaced. cause ofof good -- beaus this, we do not have a basis to know what it will look like. but almost all the claims have been based on unfounded and often wildly incorrect speculation. for example, critics have claimed that its proposed regulation of derivatives would

increase the compliance costs for users who currently uses for hedging like farmers, airlines, and thus increasing the cost of our food, energy and travel. this argument has been proved wrong. the regulatory agency responsible for the regulations has not released the first set of rules until last week. these rules crafted a broad exemption for this type of user. while there has been much grumbling about the performance cost it will create for small banks, it is not clear that dodd-frank will aim -- increased compliance costs. the link has been cited as 2300 pages where it is only 800 some odd pages.

the fact is if you are not a make a bank or running a hedge fund, the majority of dodd-frank does not apply to you. dodd-frank may actually reduce compliance costs for some small banks. -- the federal deposit insurance copper -- corp. and others into one central body. there's also been a great deal of confusion about the negative impact caused by dodd-frank and completion of the negative impact by the financial crisis. most of the burdens include many of the ones you have heard here today and are the result of the financial instability that led to the enactment of dodd-frank. many have blamed dodd-frank for tighter underwriting standards

and lack of credibility in the marketplace. the lack of liquidity was caused by the financial crisis. in considering the impact of dodd-frank on small business, it would be irresponsible to focus on the negative impacts. we must consider the positive impacts it may have. it was passed to enhance consumer protection, and bees have had enormous benefits. many of us have forgotten recent history. this recent crisis in to designate -- in to designate caused 19 trillion dollars in lost household wealth. while many critics have focused

on -- it should be noted that if this law prevents a similar cross -- if a similar -- the impacts have been far too minimal so far. thanks to successful lobbying campaigns to delay the implementation. the impact of dodd-frank will be significant insofar as it will reduce the likelihood of a major financial crisis. by prohibiting prohibitory lending practices. i urge this committee to urge the prompt implementation of this law. thank you. >> thank you. >> good morning. thank you for the opportunity to

testify. i of the board chair of the lower east side federal credit union. we are a small community development institution that has $33 million in assets. have a focus on two neighborhoods, including central harlem and parts of the lower east side. while we are close to wall street, where far philosophically from wall street. i am pleased to comment on the docdd-frank and the perspective of our institution. i have four main points. i'd want to say from our point of view the dodd-frank act and the budget -- other reforms have not harmed our credit union in any way in terms of our ability

to provide loans and services. if anything, our credit union has improved in performance in recent years. our lending has increased. we have flexible underwriting standards that we do not think will be curtailed by the regulations. we have 90 bright 95% of members' deposits reinvested back into the neighborhood in firms -- in terms of affordable housing, and we provide free checking accounts to all of our members to maintain at least $25 an hour credit union. we see more members leaving the banks which are becoming increasingly unfriendly, particularly to lower-income customers. we have not experienced a noticeable increase in revenue as a result of reforms, but it is because we did not engage in the types of deceptive practices

curbed.k kere we never offered those types of products and chose instead offer traditional overdraft lines of credit and other responsible services. i will note that dodd-frank makes it important accommodations for small institutions like ours. with less than $10 million in assets, we will be supervised for compliance with consumer financial protection lost by our existing regulator and they are required to assess the impact of its rulemaking on small businesses like ours. my second point is to the extent our union is facing challenges, they result from the financial crisis and the ongoing economic downturn and not from

excessive regulation. i cannot stress this enough. our credit union had no part in causing the crisis, but we are feeling the effects and the costs. to continue the unemployment, the depressed in bremen, and the ongoing foreclosure crisis. these are our threats to our institutions and to our members. the lack of financial regulation d.c. as causing distress at our institution has to work around. my third point is that in response to the crisis strong regulation and protection are needed to prevent future cris es and to ensure fairness for low income people and communities. the repercussions of the crisis will be felt in communities like ours for many years to come. one grim statistics, the median

net worth of american families fell by almost 40% between 2007 and 2009. this will take years for families for generations to recover. we are concerned that a growing number of our members are contending with damaged credit history as a result of the abusive lending practices, and job losses, and the overall downturn. this is a distressing thing for us because damaged credit history not only impedes people's access, but increasingly they are being used outside the credit is sphere and can block people's opportunity for affordable housing and jobs. many other economic opportunities that people will be denied access to because of the damaged credit through no fault of their own.

congress enacted the dodd-frank act in the wake of undeniable regulatory failure. in includes such provisions as a requirement that lenders consider the ability to repay loans. this is a fundamental tenet of responsible lending that was lost, and we support these regulations which we think all responsible lender should embrace. we believe the consumer financial protection bureau has a vital role to play in regulating the playing field for but the deposit and non-banking financial institutions. we welcomed its institution as the first agencies tasked with in theting consumers se marketplace. we could have used this in the years leading up to the crash when neighborhoods were flooded with destabilizing forms of credit that caused havoc for the economy as well as for

neighborhoods. this failure, the fact that the seven agencies did not catch or prevent the crisis, is distressing because many of the problems could have been avoided had regulators spent many full attention, and this over emphasis on what ostensibly was safety and soundness, which is important, but by focusing on bat to the exports of consumer protection, regulators failed to detect the broad systemic risk being caused by predatory lending practices, which were lucre turf in the short term. this agency has an important role to play. >> we need you to wrap up. >> i want to say we at the lower east side and allies of ours have met with field hearings and

weighed in on things like here. we have been impressed by the approach and the thoughtfulness of the cfpb. they have been exceptional in the way they have elicited feedback from small businesses and financial institutions, as well as americans being affected by the practice. we appreciate that and we think their efforts to promote transparency are going to bring benefits to institutions like ours that will far outweigh any marginal or short-term costs of regulatory compliance. >> you are recognized for five minutes. >> thank you. good morning. i am the chief operating officer of the colorado public employees retirement

association. i am pleased to appear before you today. but over $39 billion in assets, copera is possible for the security of over 480,000 employees of state and local governments in colorado. our members include teachers, snowplow driver some prison guards, regular people, hard- working people, people who support small businesses across cholera and who would use local banks dropped the state. colorado provides over $3.3 billion in annual benefit payments over 95,000 beneficiaries of the public employees retirement association. 90% of these army to beneficiaries living in colorado. using commonly recognized impact measures such as output, now you add it, these payments represent $4.3 billion in output, 1.8 $7 billion in value

add, and $1.1 billion in labor income, and over 23,000 jobs in the state of colorado. the annual benefit payments made to our beneficiaries represent 3.3% of the total wage income in colorado. in the rural counties, this percentage is far greater. in some of our counties, benefit payments represent over 25% of total payroll in that county. this infusion of income into the economies creates a critical and stable source of income that fuel made street and businesses throughout the state of colorado. as an owner of many of the nation's small and large corporations, our fund is aligned with corporate america. we have every interest in its long-term success and in its profitability. we believe in good corporate governance and good corporate practice is are essential to

protect long-term shareowner value and interests. it is established that a key cost of the crisis was a failure in corporate governance. only did our clients suffered billions in losses, many lost the confidence in the integrity and our markets and board oversight pick in the lead up to the financial crisis, boards of directors failed to understand to monitor and oversee enterprise risk and corporate strategy. far too many boards approved executive compensation programs that motivated excessive risk- taking. as the costly fallout of such poor board oversight became clear, investors were left with few effective tools to hold directors accountable. congress responded in the dodd- frank act by providing investors with some of the tools needed to

it approved market-based oversight of corporate boards. those reforms have already begun to improve investor% of boards. this key provisions of dodd- frank, the benefits of which are described in more detail in my testimony, include the following -- share owner advisory vote on compensation, independent compensation committees, enhanced disclosure of incentive-based compensation arrangements, and share owner proxy access. today, only the first of these five important reforms has been fully implemented as intended. that reform has proven highly successful in opening up dialogue between boards and share owners on executive pay, concerns, and has also had an impact on eliminating or pay

practices in many companies. these were practices that were unrelated or inconsistent with the company's long-term performance. the other performers described in my testimony were rulemaking by the securities and exchange commission and in some cases the stock exchanges. these are integral in improving oversight and meaningful accountability of corporate directors. cpera requests the subcommittee support the implementation of these provisions and support providing the sec resources they need to write and enforce the related rules while at the same time continuing to perform their corporate portability's as the only agency in the federal government mission includes protecting investors and policing the capital markets. that, for inviting me to participate, and i look forward to your questions. >> i think the gentleman, and i

think the panel for those statements. now we will go to question. each member will be recognized for five minutes, and the chair recognizes himself. one of the things that i hear and you admitted to in your testimony, from small community bankers that have been used to making what i was in the banking business would call portfolio mortgage loans, these are loans that are $25,000, $30,000, $40,000 for houses in the community or outside of town. and number of those banks have quit making those loans because of some of the requirements of new regulations. i want you to elaborate on that, but who is going to make those loans? those loans normally are not

secure ties, and the only source of funding for those loans in the past have been our committee banks. our are the citizens, the families in the small communities, going to buy a house? >> mr. chairman, i appreciate the opportunity to speak here, and that is a dilemma in our area. we are a rural area. we have made loans since the inception of the bank of hundred years ago to route the committee, and we feel the need that was not being met in that no one was interested in making a loan 10 miles from town for 400 people, it was only on a small acreagem we have done five-year balloon notes under the new proposalm they would be high price.

we do not charge fees. i have had 15 community banks in our area, within 200 miles, not a lot of people there, that are getting out of the mortgage lending because of the cost. i am not certain where those will go, where they will have to go to family, but the real problem is if you cannot provide that, each one of those customers have family, friends, and so the bank will not take care of me. i put my money down, i have always paid my obligations as agreed. where do i go? it is a dilemma. if you want to go to the farm credit system, which the federal land bank or something like them, they require 80 acres of land to be there. he cannot sell a $25,000 mortgage loan in the secondary market whatever price you pay. >> i think you heard it said that all of the claims by small

financial institutions that dodd-frank is going to have an impact on them are true. are these committee bankers dreaming this stuff up? >> they are not treating it up and they are worried. i and stand there was a calamity here. unfortunately for our part of the world in the 1970's, we had calamity there. i did not get these bald spots from good times. i got them from bad times. we learned some lessons, and, one, if i concurred that the customer needs to be able to afford it, but if the payments are structured to what they would be paying in rent, they have a chance to build equity in their home, they have a chance to have home ownership. at times, week out smart ourselves and we try to make people fit in a certain category, and that is one of the unique things about our

community, is that in our particular bank, the customer goes to whichever officer they want. i have more $500 loans than $3 million loans with our customers, and we try to meet their needs. where they go, when they have something to lose. if you have skin in the game, your commitment to pain is much better. the banker and the customer realizes it. we are unique in the scope of things. i do not understand all there is about wall street, but we are not driving for wall street in big spring, texas. but one of the things i hear from a lot of the smaller community banks, and maybe even some of the regional banks, the scale and the cost of compliance of all these new regulations obviously impact their ability

to deliver some of those services. we hear people talking about they are going to see more consolidation in the banking industry. one of the things that i have heard is that we need -- there was a call to break up the big banks. they were to be. it almost looks like we are forcing a consolidation in the banking industry that basically just kind of going the other direction. would you agree with that? >> it is amazing -- >> yes, i would agree with that. i have a colleague that teaches commercial lending, and that is one of the key concerns that they are raising, is with community bankers and not

particularly those in markets that are low growth or no growth, they have had business model issues before this crisis. this has exacerbated that. within margins they were operating under four, with the additional cost and a loss of income, they are looking to sell. you are right, who is going to buy them? it is obviously the bigger banks. the default position is that the too big to fail banks will get bigger. >> i thank the gentleman, and my time is up. >> thank you. i suppose i cannot help myself, you realize your company is named after a place where one of the most broad based regulations in history came out of. brenton woods is a wonderful place.

i hope you will take some comfort in a fact of my life. i have all of my family's personal business and campaign funds in small banks. i cannot at any, not one penny at that i control, is in a large bank. i just prefer small banks. i like knowing my bankers and all the other stuff. i just tell you that hopefully you will take comfort before i go in a different direction. stop, look, and listen. i totally agree. i have not disagree with anything that i have heard this morning. this is 100% right. but dodd-frank is now two years old, and we're stopping, looking, and trying to listen. this does not mean do not cross the street. it means the costs, be careful, keep an eye on what is going on, and then cross the street.

i would like to think that that is what we are trying to do. on the remittance side, today is the first day i heard about that issue and the 25 per year. an interesting issue and i wish it had been brought to my attention. i am under the impression that that aspect has not been finalized. i intend to look into it. i do not know if i agree with you or not. that is what this stop, look, and listen is all about. two years later we have not implemented that. it is an interesting point, a good point, one that is worthy of pursuit. i am sure that is not finalized yet. >> i appreciate you looking into that. that is catastrophic. we do on average three international wires and month. if you multiplied at times 12,

that is 36. i might get to a point where i cannot -- >> i am saying is a good point, worthy of consideration and i will look into it, and i wish i had been informed of it. my bottom line, a lot of concerns i've heard about dodd- frank, our fears of what might happen. some of them are legitimate and some of them i share. the way to deal with the fear is not to not do it. it is to try to get it right before the mistake is made, or even after the facts. everybody on this panel has made a mistake, and when you do, you correct it. that is hopefully but we are trying to do. regulations are not meant for the good players. they are only meant to say here is the line, best way cannot cost you. do not kill anybody. that is a regulation, guys. it does not mean that somebody

will not go out and kill somebody. there will be a consequence. all regulations draw a line, seeing here we are. mr. johnson, i appreciate your being here. i will not ask technical banking questions. >> i appreciate that. >> i am only half a step ahead of you. if you had a company, and you are a businessman, i presume you have never misled or to cede any of your customers. >> i tried very hard not to do that. >> you have never to cede them into thinking that something you were providing was free? >> no. >> eligible what they are not eligible for? >> no. >> any business that does that is doing something wrong, and bad for america. which you're great? >> i would agree.

then you must support what the cfpb did yesterday which was enforced capital one. they were clearly engaged in misleading customers, 2 million customers, and they were slapped for it. it means they were slapped. they had to refund $140 million hopefully to somebody who needs new flooring in your area. >> what i can tell you from my vantage point as a business person, i have seen the effect because lines of credit has been snatched away from me and i have had to resort to credit cards to keep my business afloat as a result of the regulations. >> but you are not sure that is because of the regulation, but about most loss of credit was not the result of regulation, the result of an economic downturn, that the banks, even when in fused by capital, they

have tons of money, they still refuse to load it. there is no way for the government to force them to unload it. are you aware of anything we can do to force you to make a loan? >> no, but i wish you could have convinced our customers of the uncertainty so they could continue borrowing. >> what happened from a collateral standpoint, when the banks would give me financing based on certain pieces of collateral, the regulations took that away -- >> which regulations did that? >> i do not know. you tell me. >> here is the problem stated by -- knows where this -- by the independent committee bankers of america. more feared than fact. i need to know specific regulations that are either proposed or finalize that did not work.

when that happens, i have done it repeatedly to educate them to stop them or change them. both sides of the aisle will. to say all regulation has caused the problem, it is not helpful, especially if you cannot point to a specific regulation. >> i hope i did not say that, because i cannot believe that. you need to look at that and say how can we get cash flow back into the hands of the small business people? , no disagreement. that is what they are trying to do. i am trying to point out that we are trying to get it right and that not all regulation is inherently bad. some regulations are necessary and it is important for us to work together to try to get it right. >> i thank the gentleman. >> thank you, and i think the members of the panel for the testimony. this is performing a great

service for our country, and no matter where each of a stand or fall on the issue of the legislation, we can agree but we are doing today, which is oversight, it is important. for the industry, for our customers, constituents. it is a program, and especially for bills that are new that exceed thousands of pages in length, and also in connection with regulations that are yet to be written. i agree, stop, look, and listen. we can do that now. we're interested in hearing from you how these regulations you know about, as well as those that are threatened or yet to be written, how that impacts were small banks, institutions, and our constituents. according to your testimony, he said dodd-frank has increased fees to small businesses and consumers. what effect these increased

fees and reduced services have on consumers? can you develop that? >> not a direct relation. a lot of the provisions have not been implemented, but people are preparing it, so they are hiring people to comply. the durbin amendment, with the reduction of interchange fees, that requires a lot of banks that have eliminated free checking. with the new products out there, costs to have a checking product has gone up, and this impacts note to moderate income consumers. if they do not maintain a $1,500 daily balance, they will get a service charge. the indirect impacts about the loss of fee income, an increase

of operating expenses that banks are looking for new avenues of revenue production, be it fees or they at little control on interest margins, said the only thing they can look at our fees. they are being passed on to small businesses and consumers. >> you are describing your bank and the type of mortgages you grant, and it sounds like the small bank at home in pennsylvania that my wife and i use. you talked about most of all loans you acquire 20% down, the bank provides a%. you service them. is that a fair assessment? >> that is correct. we have never sold a mortgage, and in the times of distress over the last seven years there was the beginning of -- the end of good times and it has been

tough times since then. we have not foreclosed on in the home were rich, but we do work with the customer. >> you know what a qualified or were -- borrower looks like. >> the problem on the balloon payment, you have to be able to show that that customer can continue to make the payments, which is if you went out to in years or 15 years, we have no deposits committed in our institution for that, and that is what the savings and loans got in trouble in the 1980's, extending loans further than what their deposits were. that is the reason for the five- year balloon payment. >> i was intrigued about your testimony, the cost of compliance of big banks versus community banks that most of us think of when we think about the banking industry. he said big banks, the banks that are the center of the

problems that spurred the enactment of dodd-frank are greateste new llaw's beneficiaries because they can shoulder the compliance burdens. can you describe how big banks have benefited from all law and how law has actually negatively impacted your ability to continue to service your customers? >> there are members on both sides of the aisle i'd want what is good for our borrowers, but when you enact legislation and you have a large make the bank that has a consumer department that is probably 100 times or greater than our total employees are, when you talk with your regulators and you talk about their compliance, how they go, they have two paths, a path to the complex officer that

handles the compliance side, and in the have a pat on the lending side. if it is so complicated that someone who examines compliance issues everyday, they have to split it up two different directions, we are a small bank, and all this time of what everyone has said they wanted, the things that we wanted to avoid, we did not want to big to fail, we want people to have risk and responsibilities for their actions. large mega banks have increased in size. >> i wanted to pursue something that you said, one of the problems was that banks deal with are now rejecting

collateral you had given them previously. would you describe that to me. >> there were times when banks would look at your credit rating, your character, things like that, and they would take your receivables and go ahead and loan you money. now what is happening they are saying we cannot do that. >> there is nothing in the statute that compels them. i assume you are not talking about a residential mortgage. >> no. >> we have a problem that some examiners have been overreacting. it is the problem in that culture. no examiner was ever represented for a loan that should have been made and was not made. they were reprimanded for lens that then made that they should not have. there's nothing in the statute that requires banks to change its pattern with regard to what you just said.

let me ask mr. sharp, you mentioned two pieces of legislation that this committee has approved. are there other changes you want to see with regard to derivatives? you want to make sure those become law? but those are the highest priorities. >> with regard to the nine financial -- the non financial aspects of what the non end user, jpmorgan chase, do you have changes you want to see in this area where we are talking about the financial institutions? >> no, our coalition does not have national members. >> there are things where nobody can anticipate every issue. i am hoping those are unnecessary, but i have a principle of legislation, redundancy is a lot better than

uncertainty, particularly for lawyers, because we are the belt and suspenders group. on the question you mentioned your lawsuit and you say you brought a lawsuit against youcfpb the grounds it is an independent agency, not susceptible to checks and balances, it does not go to the regular appropriations process, it is appointed by the president, but otherwise controlled. why did you not sue to get the control of the currency thrown out? everything in your lawsuit of which complained about consumer bureau applies even more strongly to the control of the currency. the consumer bill can restrict -- troll of the currency as a totally independent source. what about different frome

the sense of the comptroller of the currency? >> i appreciate you being aware of losses that we filed. i will leave that up to the attorneys. >> you mentioned in your testimony. >> it says i will ask questions or answer questions about the other part of its. >> if you do not want to answer, ok. i have only find minutes. if you did not want to answer it, don't answer it. the argument aimed at the cfpb, legally they are on all fours with respect to cfpb. with regard to mortgages, some of the criticisms, do you think we should have pass any law to change the rules regarding the granting of mortgages? when we look at what happened

through 2008, and if so, should proposals have been submitted to us? , we do support the support we do support the reforms. >> should we have changed along with the ability to do mortgages with two years and 28 years interest, with no prepayment allowed, or that there has to be so much skin in the game that you should not get mortgages to people who cannot afford it -- would you have recommended in 2009 any changes in mortgage wall? >> i believe there are substantive changes that need to be made, and i can give that to you. >> did they ever tell you what they work? >> no --

>> i am skeptical of this. we're not saying there should not be in the regulations cannot accept many of you did say there should not be any regulations by not saying anything. people who did not tell us -- you are right, there were mortgage abuses, this is how you can correct them, we were content to let this aggression go for it. i'm skeptical when you say there was a need to do things, but you should have done it different. thank you. >> the gentleman from ohio. >> thank you. i want to thank the witnesses for being here. in your testimony you say and this is in regard to the negative aspects of conclusions on dodd-frank, because of that the delays in implementing dodd-

frank, it is impossible know what the actual impact of dodd- frank will be. would you also agree that from a positive standpoint it would be impossible to determine what the impacts of dodd-frank would be? >> agreed, and that is why i do not attempt to quantify what the numbers would be. we have recent evidence of what the status quo looks like, but whether dodd-frank is a perfect answer for that -- >> had you ever operated a small business or a bank? >> no, sir. >> i will go -- but you are a professor. if i came to your office before your semester started and i threw 2300 pages in front of you and said he now had to teach based on this 2300 pages, that would bring some uncertainty to you, would it not? , it depends. is 848 pages, and if i had to teach it tomorrow, but if he

told me i needed to teach in the spring, that would be doable. >> you would have to understand what was in it, spend time and energy -- >> i would look at the table of contents and seed which provisions i've wanted to teach. >> i am talking about how you teach and how you interact and move forward, really how you would move forward. there would be some uncertainty. >> of course. >> you talked about regulations , and give me some idea of what yet to be implemented regulations you anticipate will have the most profound effect on you, your customer base, and the community you surf? >> i am concerned about the interchange price gap. also, just the overwhelming compliance burden in the

new rules -- is hard for me to keep up with all the compliance, if that answers your questions. that is what i have sleepless nights about. >> you are concerned with the 2300 pages, and you have had to spend some money to prepare for the compliance. >> absolutely. i will have to officer a -- i will have to hire a full-time compliance officer at this point. >> do you feel some of these costs, you will have to increase fees for services? >> yes, they could down the road. credit unions have always been a lender of last resort. if i could share with you for a minute, when i have never come into office and i know they have no other place to go, i can provide them a loan within an hour. i want to continue to do that. they walk away and the next day

they are bringing the cucumbers from their garden. that is the grassroots that credit unions do. that is why i am in business. >> i want to welcome a fellow ohioan here to washington. he talked about credit cards and debit cards and the dow you to your business. how you were able to get your cash in three days versus 90 days. you also talked about the cost of it. he compared it to the cost of if you were put in a wood floor. what are you trying to get at there? >> if i were able to get the money in three days, i could turn it around and do five jobs as opposed to having to wait for 60 to 90 days to get that money. by being able to accept credit cards for payment, i am assured i am getting the money, i did not have to worry about getting a check, and if the check

bounces, i have to take out another loan to pay the bounce feet from the bank rate it is good for me to get that money and turn it around. if there is a cost of it, i can make a lot more money by getting it and turning it back into the business. >> you are not concerned about cost. you are more concerned about getting the cash in. , absolutely. >> i understand wholeheartedly. before my time runs out, you heard some of the concerns. you have some complaints that you have to prepare for, and you will have to pass those costs on to someone? >> we complied with a wide array of consumer protections and regulations. to us, dodd-frank is not want to be something that is going to be a week the new regulation for us.

we will incorporate it into our practices. we did not have to anticipate to raise fees for our services. we do everything we can -- we -- >> you do not see any more costs and the concern about passing back on it? >> the majority of those pages -- you are a responsible le nder, those pages will not change your practices. that is different than having to read that your entire business model. >> i wanted to say the $39 credit union may not have the services that and $80 million credit in has. we're trying to compete with the big banks. our infrastructure, our a array of services, are going to be more than a smaller load-income credit union. >> can i address that?

>> i am running out of time. >> i think the gentleman. mr. miller is recognized. >> when i hear the complaints about compliance costs with consumer protections in financial transactions, and what is happening is consumer is walking in the loan officer or whoever pulls out a legal pad or computer screen and says, you want to be the first party, the party of the second part. then draft's something from scratch and has to have 2200 pages of a statute or regulation in their head or by their desk that they can consult. that is seriously different from my own experience in practicing law for 20 years. there is something called forms, which made life a lot easier. they were published, vetted that they were legal, developed by

trade associations come almost every real estate form, for real estate transactions were forms that were developed by the bar association and by the realtors, and it was a lot less work for me. i did not think i was cheating. every lawyer use them. they saved a lot of money for the client and ended up better forms with better legal documents that complied with all wall. -- with the law. do you generate all the forms from scratch in your credit union, or use forms that complied with the law that you can use? >> we have third-party vendors that process credit cards and a bit of regulation and compliance work for us. there times that we need to update them with a disclosure

form. we welcome these regulations and want to be a transparent institution. for us that is not a cost. we are a full-service institutions, so we have checking, savings, business lending, online banking, everything that a bank and other credit union do. we have grown throughout this trip we prioritize where and how we offset our costs, where we raise money to expand our services. because we never became dependent on these high fees that other institutions did, we are not scrambling to figure out where to make it out. in the credit union world, there were regulators, examiners encouraging us to find more ways to chart members fees, and we have chosen not to do that, and that is why we generate most of our income off of loan interest. we want to make our income in a way that is responsible that is generating activity in our

community. we do a lot of small business lending, including for businesses that are sent to us by our local banks. >> one complaint i heard from lenders that wanted to do the right thing, why is that one reason the disclosures were so bees -- big was their lawyers advised them that the safest thing to do was to set out disclosures verbatim from the statute. it was safer than trying to summarize them. they specifically cited the example of -- being similar, but not quite the same, and what they would the is set out both statutes verbatim in the disclosures. when cfpb approved a plain english form that included but, it seemed to be a great service to everybody. has that been the case? >> as far as i know, the new form -- >> you said you are ok with

that? >> yes, i do favorite that. i was at cfpb last year before that form -- >> i am running out of time. that there are forms you can use -- >> we do, and every time the law changes we get to increase our fees. >> you are a national press your national trade associations did not provide you with forms that complied with all? >> there are major vendors that do provide that. they charge maintenance fees and they charge when you have to have major modifications in it. >> i know you are now a professor, so you have nothing -- no idea of what goes on in the real world.

do you have an understanding of how this works? are there standard forms? >> i would be surprised if the law was as onerous in practice as it is claimed. but there are 14 titles the dodd-frank. how many of those titles apply to your business? >>wel, to my business, none, but several,s' businesses, depending on if they are financial services or community banks, or sizes. >> you had your fair credit reporting act which is one example, but you also have your different type of lending. you have multiple titles within the dodd-frank. you have the cfpb etch is

wrapping its arms around things that covered us before, but changing definitions, but i could not tell you exactly which ones do or which ones do not. >> thank you. there are several, and i can give you that in writing at a later date. >> i think the gentleman. now the gentleman from new mexico is recognized. >> thank you. it is nice to hear each one of you testify, and i especially appreciate -- your ling go sounds like where i grew up. mr. johnson, i appreciate your testimony. we need to be hearing from people building businesses. i was a small business owner and i appreciate that. i will bypass the chance to ask a question -- i built a small

business, so we struggled all the way along and i can hear the struggles that you have. mr. smith, what assumption of rate of return do you have to make the distributions out of your pension fund? >> our current assumption is 8%. at 25-year return is 8.9%. >> what have you made in the last quarter? >> the last quarter, about 4%. the last three years -- >> how much shortage -- your assumptions are at 8%. >> 1.9% compared to 8%, if that is what you are getting too. yesterday it was announced that they had a 1% rate of return.

it is looking like may be they are $800 billion short, so the calculation for one. rate of return is in the trillions, just for california. these pension funds that make the assumptions and then pay out very large retirement business or retirements are putting the long-term future of the pension fund in jeopardy. i was interested in your comment on executive compensation. do you allow your shareholders -- do you allow them to vote on their compensation? >> our board of directors is directly elected by our membership -- >> do you allow them to vote on your compositions the way that you are requesting in your testimony? >> i would challenge whether

that is a comparison, but -- >> what is your salary? >> $300,000 a year. >> they did not get to vote on that? >> >no. >> do you keep track of people who are not able to service the loans? moore customers who cannot service their loans? >> sure. >> if someone defaults on your loan and they come back for a loan, yet their record? >> we try to restructure people so we do not have to get to the point -- >> you're not just knowledgeable if they have defaulted on loan. >> no. >> i find your testimony -- you are very critical of those who

allow credit histories to go about come and get you all track credit history. >> i was not clear. in terms of the credit, we'd look at credit history of people, but we also look at many other things. >> thank you. >> critique in my testimony was about employers and others outside the credit system using that to judge character and whether someone would make a good complete -- a good employee. >> do you know how many employers ask for credit history before they hire? people are dying for employees in new mexico. all they have to do is pass the drug screen, and i never heard one employer asked for a credit history. it is a curiosity. mr. min, you never download

content of the web? of course, so you have an opinion on that neutrality come to those who are downloading. >> i do not have an opinion. i did not have enough knowledge of that issue. >> their people who would like to limit their ability to download information. i suspect they do not have one shred of empirical evidence. they understand they are opposed to the government coming in and regulating, so when i see that you talk about regulation being highly speculative, it would be highly speculative if the people want to say you cannot stop me from downloading content. it is a free society. it is free. they will not have one shred of evidence -- to clear that to be highly speculative, and i find that to be a deeper flaw in your

testimony. i yield back. >> thank you. >> thank you. thank you for holding this hearing and thank you to all the folks who have come to share your experience and expertise with us. i am usually the lowest man on the totem pole, so i get to ask my questions last, and i hear a lot of back-and-forth in this testimony, and it is in teresting. their comparison of standing on the report tracks, stop, look and, and listened, and we do a lot of stopping, looking, and listening, and we do not cross in the streets. with respect to the dodd-frank regulatory reform legislation that congress responded to a devastating crisis and crossed

the street, and we are here today to explore how that crossing the street has affected small businesses and families. would suggest to me that somehow the regulations are having an impact on individuals, while forget, i think, the impact on our wallets, bank accounts, home home equities, retirement funds that the crisis had on all of us. i think the professor said $19 trillion of loss well around the country. we had chairman bernd thank you in yesterday testifying and telling us that the -- chairman ben bernanke in yesterday testifying and telling us. i did not hear any of the same regulatory reform was not

necessary. but that it is having some unintended negative consequences on each of you. the purpose of our hearing today is to identify some of those unintended consequences or intended consequences that are having a negative affect. it is in all of our interest. we have a strong economy and that we have confidence in it being strong. i hear all the time that it is the accumulation of regulations and the duplication. could you address that and tell us how you think we can change something to address that problem. >> i do not doubt the intent of the act. i do not disagree that there should not be regulation.

stop, look, and listen is less think about some of the things that are enacted. i am speaking of regulations in general as he spoke. it does not make a lot of sense to me. we just replaced our atm about a month ago. our drive up one did not have braille on it. i not know what is worse, someone driving up needing braille or not having the braille. i am not being critical i'm to sing the part of making regulations affected. >> is the point that maybe we go too far with small things and the -- and it is the accumulation of those small things? >> i think it. everyone has good intentions coble me at up to it and we start with 40 years' worth of regulations -- but when we start

with 40 years' worth of regulations, it makes it difficult. >> it is rationalizing regulations. a lot of my clients say we are being painted with the broader brush when they were not responsible for the financial meltdown. when you look at re-engineering a process, it is the 80-20 rule. a lot of people who wrote mortgages with no income verification would not have done that if they held the portfolio. they are only doing that because they were unable by -- >> so the legislation address that to a certain extent by requiring banks to have some scan in the game, as someone said earlier. correct? >> if you are servicing loans because you know who the customer is and deal with that, retaining five% -- 5% is not a

a problem. >> my time is running out. let me say to all of you, if you have specifics, send them to us so we could try to address that directly. i just want to reiterate or revisit the question that mr. frank asked with respect to the derivatives. we have these two pieces of legislation addressing some of the concerns and your clients have but you said there is nothing else? are there any next steps? >> it is just that these two bills are absolutely the highest priority for this group. they would help the largest number of members of this coalition. >> thank you very much. >> now the gentleman from texas is recognized for five minutes. >> thank you, mr. chairman and panel members.

i am sometimes concerned about what happens when we talk about dodd-frank and when we talk about the 2008 economic crash that happened and the solutions and the language and the economy, it seems to me that what we are doing is stepping on the brink of an automobile at the same time that we are pressing on the accelerator. not realizing that what we're doing is very counterproductive. professor, i am sure you are familiar with sarbanes oxley. section 404b has resulted in costing 20 times more in reality than it of original estimates. you seemed to argue in your testimony that we should not worry because we have not seen the full facts of dodd-frank.

but doesn't the experience that we have had with sarbanes oxley suggest this is exactly the time to be concerned? >> you are asking, looking back 404, i am not sure about the 20x figure you cited, whether we should use that as a basis to assume the regulation might cost more than the evidence gives us the lead to do? is that the question you're asking? >> i am asking if you are not as protecting wrong and not realizing that sometimes these over regulations seem to paint everyone with one broad brush, a very counterproductive. let me go on because i am limited time. mr. purcell, we hear a lot about how many government bureaucrats

to protect american citizens from their own detriment. this was a large part of the argument behind the creation of the cfpb. i was in community banking in taxes for a number of years and i understand that if you are not taking care of your customers, you will be put out the business pretty quickly. can you explain to us why consumer protection, safety and soundness and doing the right thing, all go hand in hand and by the creation of the cfpb could disrupt and hurt consumers? >> i am not certain i can answer that in the two minutes allotted with your time but i will tell you that many times, we get carried away. the pendulum swings and times get good and times get bad and

we overreact again to both scenarios. but we cannot remove the culpability of the person that causes the problem. for instance, overdraft, overdraft protection. there has been all kinds of news about that. the question i would have this, who has the checkbook, who has the deposit slip and who issues the checks? i find it ironic that the federal reserve will charge you $300 for being overdrawn 20 minutes during the daytime but $25 for someone that is overdrawn two weeks is unfair. we compare different things but the person that wrote the check should be responsible for making that deposit. the person that borrow money at a greater amount may be 102% of the value of his home, there is a price to pay. for the person that loaned the%

of that had agreed in their heart. they should be the ones that stand the loss. all but the losses follow around the necks of the ones that created and we try to lift -- let that take place rather than coming up with regulations to prove that we're going to prevent any future efforts or problem. maybe this skepticism, maybe it is cynicism but i am pretty sure that dodd-frank will not prevent another catastrophe as long as civilization moves. >> let me move on because i have a few seconds left. in a speech recently, the president remarked that if you bought a business, you did not bill that. somebody else make that happen. i am sure you do with plenty of small businesses. in your experience, who build

those businesses? what is the individuals did and if you doubt it, you should come to texas. you know the independent nature that are business people have. >> thank you very much. i yield back the balance of my time. >> now another gentleman from texas. >> thank you, mr. chairman. we have about four texans in the house currently. i have met with the small bankers in texas, a good many of them. at small bankers from other places as well. and they all echo the same concerns and it has been said enough for me to walk to find some means by which we can ease some of the consternation. i am not sure what the solution

is but i would like to ask, do you make a distinction between the $10 billion demarcation that we have in the community bank? many of the bankers i meet with are not at the $10 billion mark. they are considerably smaller. do you make a distinction in your mind? >> i do. i do not know if it is a magic $10 billion or if it is $2 billion. i do not know if it is $50 billion but there is definitely a difference for someone -- if they make a good loan, they have to die by the business and be proud of it. the bad side of it is if he made the bad loan, you still have to drive by the property every day and decide that it was not a good deal and remember that. so i do not understand all the fault swaps and the things that happen on wall street. i am confused by the definition

of what a bank is of how the common to the fdic without pain passed premiums and now they are automatically at bank. by my definition, it does not include a lot of those on wall street. >> are you considerably smaller than $10 billion? >> we are less than $300 million. i know the zeros in washington kind of get confused but a lot less. >> it is just my hearing. some of the things did not function as well as they used to. but $300 million. our most of the community banks that you refer to less than say $500 million or less than $1 billion? >> by my definition, a true community bank would probably be less than $1 billion. there are some successful banks

in our area that are $2 billion that really do serve their communities. >> when you are smaller than $1 billion, tell me how your department's organized. do you have many departments or do you have people multitask? i have heard the answer but i want it for the record now. >> it does not know very often but we multitask -- we have about 40 employees. we have been lending department and then we have customer service and operations department. there are some cross issues there because you have to wear many hats. at the same time. if a customer comes in to the bank and they want to borrow money, they choose to they want to go to. we do not assign them. we do not say if you're doing consumer credit, you need to go to the gentlemen are this lady or fill out an application and

we will run your credit check and get back with you in a week. we do not do it that way. we try to answer immediately. >> would you say that most community banks with assets under $1 billion, that they do a lot of multitasking that they do not have parnis set aside -- have departments set aside for compliance adherence? >> that is correct. >> as i talk to bankers in texas, it seems they have a distinction between a $10 billion small bank and what they call a community bank. that is where i'm trying to find some means by which we can address some of these concerns. i do not know that we can go to a third tier. right now we have a two-tier system. but small community banks seem to have a different role. i am picking up that they seem

to serve a clientele that is much more intimately known to them. the way that they do business has a lot to do with tradition and i am trying to find a way to resolve some of these issues for the small community banks. >> i do not know if i can help you with that but i do know that if our customer does not do well and survive, our bank is not too well and survive. >> what percentage of your loans do you maintain in house? 100% of the loans, unless it is too large a credit and we would participate that out with other community banks in the area that understand the risk involved and know that type of credit. but our customer is serviced their. he does not go anywhere else. if he has a problem, he comes to us. if we have a problem, we go to

him. >> thank you, mr. chairman. >> now the gentleman is recognized for five minutes. >> thank you, mr. chairman and witnesses for taking time to be with us today. mr. purcell, i am from west tennessee. a lot of farms. severe drought right now that we're facing. we have been farmers for seven generations. upton doubts many many times. i want to use a hypothetical -- ups and downs many, many times. i want to use a hypothetical three years ago, we had some bad times and i can remember my father going to the bank, our local community bank, and saying we have had a bad season. so i want to pay the interest on my notes. we had been doing business at the bank for ever.

my father and the banker were able to work out a solution to go forward and and the pain the bank of in full. today, with what is happening with the drought situation in the country and all the farmers that will be short this year, do you still have the same authority and flexibility to sit down with the customer and work out a solution? or are we standing in the way? >> we have the ability to do it but i do not know that we could sustain it for very long with the regulatory climate that it is. everything needs to be lost -- loss free. interest is the price for taking the risk but we would attempt to do that. we would talk about the capacity -- i fyou make a crop next year, we would try to set up your carry over over a 3-4

year period. but you could not stop your toe three years in a row and come out ok. one of the problems that might be ongoing is the basel 3 which we have not even discussed in this. your market accounting on small loans -- what is a drought ridden ag loan worth and who would buy it? we can stop credit fast if we have to go to market. a guy comes in and he wants to borrow money and he was to use the land for collateral and we telemarketer market. he is 150% collateralized and next year, real estate values go down. when market to market, we say we cannot loan you money because their value has gone down. he says but i have not had a loss.

so, it is complicated. >> to the, a few minutes ago about the -- some of you not giving suggestions on the rules of what you wanted to see change, the unfortunate part of what i hear when i am out in the district is that most of you were doing it right. you were not doing things wrong. so you were cooperating and working in the system as it was very -- as it was. us getting in the way he most of the time, the and the count -- the unintended consequences really mess things up. you talked about how successful you had been five years ago -- had been. five years ago, it you charged the same rates as today? nothing has changed? >> in terms of the cost of our

services? yes, more less we are the same. >> so the charges would be the same? >> in terms of what we charge our members? interest rates obviously have changed so those would have been adjusted according with prime rates and so forth and terms of fees, we have not raised fees. >> did your credit union take part of money -- take tarp m oney? >> in my testimony, i talk about one of the regulatory tools that our credit union, low income credit unions that are certified by the treasury department. in 2010 -- >> why did you apply an need money if you were doing things so well? >> what it was is this was actual money that was returned by the banks made available to

these community development financial institutions serving distressed neighborhoods. it was a loan to strengthen our bottom line, our net worth so we could expand lending. we specifically took that money to increase small business and other lending in our neighborhood. >> and he paid the loan back? >> it is over the length of eight years so we are in the process. >> to wrap up, in your testimony, i heard you say uncertain as we go forward. dodd-frank was an active july 21, 2010. what happens - i am a freshman member of congress but i am afraid that maybe sitting here three years from now saying what if, it is unclear, it is uncertain. because it is so big.

a lot of times regulators denied get blamed if someone does not make a loan but it the making bad loans, they do. so they are overprotective of what is happening in the private sector. we're not recovering. the jobless claims numbers this morning we did this is not getting any better. this is just a monster. to this magnitude -- it has got to stop somewhere. with that, i yield back my time. >> i thank you gentleman and the panel. we have had a great discussion today and we have been talking about the people we need to be talking about and that is the consumer of financial products. those are the people that are most affected by this. i think we had some good dialogue and i think one of the things i feel encouraged about is there seems to be a bipartisan feeling that there are some areas that we need to take a look at and a look

forward to working with my colleagues to do that. the chair also notes that some members may have additional questions for the panel which they may wish to submit to you in writing. without objection -- i am sorry, i yield to the gentleman. >> there are two news articles on record without objection. one from "the wall street journal" and another one from forbes magazine. i would just offer to put these on the record. >> without objection. without objection, the hearing record will remain open for 30 days for members to submit written questions to these witnesses. with that, this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> next, a look at campaign finance issues. brad smith, former chairman of the federal election commission, was a guest on this morning's " washington journal." this is 35 minutes. >> mr. smith served five years in the federal alexian commission. he is our guest this morning to talk about campaign spending in 2012 and the senate's effort this week to pass legislation called the disclose act. let's start with this story in usa today. campaign fundraising right now at $1 billion and counting. it suggests that it could hit $3 billion.

what do those numbers say to you? guest: it is not a lot of money. we need to be informed about candidates. higher spending dozen factories -- increase voter knowledge of who the candidates are and where they stand. as much as people take those 32nd at, the data shows that higher spending does increase voter knowledge and awareness. senate's's move to the effort this week to pass legislation called the disclose act. you have been a critic of that. why? >> there are a number problems with the act. it is not really necessary. people here this reports of secret money and the reality is every super pak has to disclose

all of its donors. campaigns disclose their donors. we have more disclosure them we have ever had in american politics. that comes with the cost. there's a cost especially on smaller campaigns and grass- roots groups. the disclose act would require reports to be filed within 24 hours of making expenditures. for a typical small business or individual who might be a fairly wealthy but contributes $10,000, they're not retired -- they're not prepared to file reports from 24 hours. that is a burdensome fact on them. there's also the problem that disclosure can be used to harass and vilify people. the disclose act itself was introduced in 2010 and remains a partisan bit of legislation and

tended to favor certain constituencies. host: we have bullet points of the act. we will show you those then senator sheldon was a major sponsor of the legislation. he was on the senate floor after two attempts to pass it this week failed. let's listen to what he had to say. >> we have tried to accommodate. many of my colleagues -- colleagues like my colleague here remain great supporters of that provision. i hope we will be able to introduce it at another time but we did not. that complaint should be closed off. some complained this was just an opportunity to influence this election. it's effective date is january 1. 2013. so it will not, to the regret of many, influenced this election. according to trevor potter, the

disclosure act of 2012 is a properly targeted and clearly constitutional and desperately needed. i stand ready to work with any of my colleagues who want to make this bill better. we can i use conflates -- we can i use the complaint as an excuse to do nothing. host: here is brad smith's view of it. the disclose act is a sham. guest: when it was first introduced, the lead sponsor was senator schumer of new york. he made the statement that one of the purpose of disclosure was to deter people from speaking. he was a very open about that. it is clear that they want to deter from speaking. they believe will be republican

constituencies. it is not entirely clear. it remains a partisan piece of legislation. one of the things you can do when you understand campaign finance is it is easy to write legislation that is neutral but that target once political opponents. if you know how family's list exercises political influence or businesses, you can write legislation that is neutral on its face but targets that particular type of group or that particular type of agency. you could write rules that would change the dimensions of the field. it might be neutral -- for all teams but you can adjust the

rules to make fairly predictable outcomes as to who you will help and hurt. host: of phone call from stanford, connecticut. caller: good morning. i heard something a while back that are both will be tallied by company in spain. is this true? why is this happening? is george soros a part owner in this corporation? thank you. guest: i do not know anything about that particular story and therefore i have no idea whether george soros is an owner or involved. i generally will say i have a lot of faith in counting votes in the united states. we developed a bad habit over the last decade of everybody hurling charges, suggesting

officials will be dishonest. i think that is a bad tendency. i think our accounting is predicted. the democrats said that. it is an interesting kind of thing. in 2010, scott brown defeated him in a special election for massachusetts. a couple of days after the supreme court announced the decision. these events are unrelated but when i talk to liberals and democrats, the events are welded in their mind. they realize they were in a lecture tour trouble in 2010. there is a belief that a large corporations are pro republican. i think that is a shaky belize. but this was an effort to say we have to silence these types of speakers that are likely to help

republicans. that is the bottom line of it. i hate to make that comment, something like that. i had a pretty good record for being non-partisan but that is the reality of the disclose act. >> you wrote about the supreme court's latest decision regarding citizens united. that the montana challenge was not successful and their recent ruling. what is the legislative future of citizens united? guest: let's start with what citizens united was. it allowed corporations and unions to spend on elections. not to give money directly to candidates but just to spend. this was not a radical break of american history. prior to citizens united, 26 states allowed unlimited

corporate spending in their elections. those included many of the state's that have been recognized as the best governor states in the country. it is not something on heard of it in american politics. i think it will be efforts to suggest a constitutional amendment. i do not think most americans are eager when they're faced with it to amend the first amendment. if you ask people in polls do you favor citizens united, a huge majority say they oppose. but if the gas people, you think that group should have been able to show its documentary movie about hillary clinton, which is what the case was about, you get

a huge majority saying of course they should be able to show their documentary movie about hillary clinton. that is not so clear the public will support any kind of constitutional amendment. congress can play with a disclosure laws, but you have to do it in a truly non-partisan manner. when i hear people on the hill, sponsor saying we going to reach out and worked with folks. i know of nobody who has been opposed to the disclose act. talking but groups like mine and a center for competitive politics or other groups sometimes being involved arguing for less regulation of this area and none of us have been approached by any of the supporting groups as to what we can do to fashion a good compromise and disclosure rules. host: next caller is from st. paul. caller: good morning, america. a couple of questions and one common. -- one comment. i totally disagree with you, sir, when you come and say more spending and elections is actually a good thing because you learn more about the candidates. i think it is factually wrong. you actually are learning more about the bad things of the other candidates when the other people are spending the money.

just to tell you, that is actually not correct. i questions are, one, what is the relationship between this commission and the commission on the presidential debates? what was the background that you had best that you to be on this? -- had that got you to be on this? third, what party affiliation are you? and that is my question. thank you very much. guest: sure. first, i do have to disagree with you -- the political science data is very clear. if you say people are just learning the bad things of the other candidates, that is something people are learning about the candidates. those are actually very important things to know. you can fight the data but the data is what it is and more spending tends to lead to a better informed electorate. on your particular questions. there is no relationship between the commission on presidential debates and the fec. one thing often misunderstood the commission on presidential debates is not a government agency at all. despite the exalted title. it is a private enterprise and simply an effort to put together debates.

it is very separate. what the fec covers is essentially a federal campaign finance laws. basically it deals with federal campaign finance laws. the commission on federal debates is just a private group that organizes debates between the major candidates for the president. i am a law professor in columbus, ohio, and i got to be known here in washington essentially just on the basis of my writing and being invited to testify on the hill, and that way i can of got noticed by people. i was never a staffer on the hill. was not a lawyer for the parties. i am not a defeated former congressman or anything like that. i just became known for my riding and my speaking on the issue and got to know folks around the hill and when the vacancy came up i was recommended and nominated essentially. i am republican appointee, appointed by president clinton but a republican appointee. a lot of these independent

commissions, most of the independent commission is likely fec and sec have a certain number of seats that are designated for each party. some republicans often have to appoint democrats and vice versa. host: here is "the national telegraph" which we focus on in the new hampshire primary and it is editorializing on the disclose act. it says --

guest: that is the typical sort of -- what is interesting is the same right in there they say, yes, it is about getting conservatives. they say right in their own post. here is what you have, isn't there are dangers of retaliation. we know for example in 2008 after the same-sex marriage proposition in california, that people used the campaign donor records to harass. some people lost their jobs because their employers, who had done nothing, were boycotted until employees given to one side were fired were terminated from their positions. we have to think about it. do you want the government maintaining a database of everybody's political activity? there are pluses and minuses. historical rhetoric about secret money and the darkness of politics, but pretty much the money spent in american politics is disclosed. what is not disclosed is one subset of money, and that is,

who are members of our organizations organize our501c4 of the tax code -- like national rifle association, a naacp, sierra club -- those groups when they spend money they have to file reports of this than money, what race citizen, how much. if anybody gave the money to run those ads, they have to include the names of the people gave the money for that purpose. what they don't have to do is disclose the original members. the supreme court long recognize the constitutional interest of the privacy of the organizations not to disclose their members. this is nothing new. these groups long before citizens united rand little lad's. the naacp did it in 2000, planned parenthood did it in 200, and certainly the national rifle association has been involved. there is nothing really new

there's so the question comes up is what is the sudden push for all of this new disclosure that has never previously been required? host: c-spanjunkie agrees -- what about the hard to escape phenomenon that the people voting and a laws of those will ultimately benefit. guest: it is interesting that we are supposed to believe that these folks are terrible corrupt, but there is one shining moment when they will not be corrupt, when they will not be pursuing self-interest, and that is when they pass campaign finance legislation. i think it is not true. i think there is a lot of truth in what the twitterer says. laws that benefit incumbents will tend to stay on the books because incumbents will not say problem with them. those that do not tend to be amended because incumbents will see them as being very bad laws, and they will change.

that is natural human personality. there is the reason why generally we are better off keeping the government out of the rape. -- out of this area. the whole point of the first amendment is we do not want the government deciding who has spoken to much, who gets to speak more and whose speech is dangerous. host: james tweets -- next is new jersey. rich, a democrat. caller: you said it was partisan, the bill favored the republicans -- or went against the republicans. what happens to all of this id stuff that the states are passing that people have to have id. isn't that also partisan? guest: sure, one concern to me that. again, my view is the government to be hesitant and regulating the election process beyond anything necessary.

i have sort of been the dissenting voice in republican circles in i don't believe there is a great deal of fraud that can be prevented by voter i.d. laws. i will say as well -- there is not much evidence people are deprived by voting id laws. to the extent you see it as a problem i think it is important to recognize the same problem and existence something like this goes act. host: a comment from twitter -- the next comment is from new york. julia, a republican. caller: yes. i would like to say -- i feel like my vote is not important anymore because i feel that there is fraud. there were people where they found how many votes from people who were dead. i mean, why is it such a

terrible thing to ask for id? it is ridiculous. absolutely ridiculous. you need id for everything. that is the first part of the question. the second part i would like to address to the blacks and hispanics in this country. i like them to ask themselves really, if obama was not black, would they be voting for him? because their unemployment is so high and they have not prospered over the last four years. and if they do choose another, they only have one choice, which is democratic, if they choose the republican side, they are ostracized in their own community. they are. they are called the white man's lackey and then are considered an uncle tom, and this is a terrible thing, i think. i think they should really understand that in the two- party system, we have a choice, i have a choice, and they should have a choice.

guest: let me relate that back briefly to the immediate topic we have been talking about, which is political disclosure. you say that you think some people are essentially intimidated into voting for one side of the other and ostracized. of course, we have secret voting. in a sense, it raises exactly the problem with excess of disclosure laws, requiring groups like the and -- naacp, rifle association, planned parenthood, to disclose all of their financial supporters are members. the book could be ostracized and intimidating. -- people could be ostracized and intimidated. disclosure has costs. we need to strike an adequate balance. people will see an ad on television, it will say what organization paid for it and and is very to find -- easy to find out about the organization. i think therefore we need to be careful. we cannot allow people to do anything labeled disclosure as good, but we have to look at it.

it has costs and benefits. host: a new phenomenon out -- after citizens united, the social welfare organizations. they are speaking out -- the issues that support the candidates but they did not face the same disclosure. guest: this is the issue i mentioned earlier, this is the naacp, sierra club, rifle association, organize under section 501c4 in the tax code. it is true they did not have to disclose it gives them money but they have to disclose their donors to give them money for the purpose of running ads. they just don't have to disclose general members. the question we need to ask ourselves is how much more do we gain by knowing the particular individuals? we know about the groups, we know what they are up to above the point of view is. the supreme court has long held in a series of cases back to the 1950's that these types of organizations have an interest in keeping their members' private, the members have an

answer is not having all their political activity and memberships disclosed and it could open be blood to intimidation, authorization -- authorization -- being ostracized. host: ms. viewer who tweets -- guest: that is a good question whether it is true or not. there is a tremendous amount of constitutional rights recognizing anonymous speech is. the supreme court long said there is a right for groups not to disclose who the members are. note, by the way, it is not totally anonymous. you know who paid for the ad and they have to file reports with the fec and this is very transparent. but we don't know who the members are. in the supreme court held there is a constitutional right to keep their membership private.

the supreme court also held, for example, if you want to organize a boycott of a political speaker, you have a right to remain constitutionally anonymous. so, people who might organize a boycott -- boycott and not have to disclose whether financing comes from. the supreme court has held union organizers and speak anonymously. people want to go door-to-door do not have to announce themselves or registered with the government about what they are but -- doing. in fact, the supreme court held in numerous cases there is an fact a right to anonymous political speech. at some point we hit that and the political realm as well. what we have now is a new effort to regulate in ways that we have never regulated before. the supreme court clearly allows some required disclosure of political speech. it has never blessed the kind of regime that has been proposed in the disclose act. it raises legitimate constitutional questions. host:aaron2000 -- guest: i am not quite sure what the irony means.

the argument is voters can better judge a message if they know more about the speaker. but what is going on in the current debate is not people saying, boy, i don't know if i can trust this message, who is the speaker, but we have normal people saying i had that message and i don't know the speaker is but i hate him, to o, and i want to get him. we are in an environment in which we do have the case with the president himself has publicly targeted certain individuals and say they are disreputable, right after they give money to various conservative groups. is it to bush and a couple of years ago, a group called accountable america, run by a former democratic party stafford sent a letter to conservative donors of a bit -- keep giving to conservative groups they will dig into their history and find out about the personal life. a few weeks ago, at boston college business school, one of the speakers was a lawyer from san francisco who stated very

clearly that we do not want corp. speaking and if you speak we will try to find grounds, i have clients who will try to sue you. there is a reason why people may not want to engage in a speech at -- speech and it is not entirely clear what more we gained. if we know the chamber of commerce is funding a message, do we learn a whole lot more knowing exactly what companies are members of the chamber of commerce? host: next on the phone is linda from boston. you are on the air. a democrat. caller: am i on the line? host: we can hear you. caller: i have never in my life -- and i am a baby boomer and i follow politics -- seem more mud slugging from corporations giving misinformation. this is why you get people asking for birth certificates still. and it is important to know who is funding these millions and billions of dollars and what is their agenda.

because it goes to the fabric of the ideology of that candidate. and it is taken out of the hands of the people because they are not informed. guest: luna, i hear your concern. but first, there is very little corporate money being spent. the vast majority of money comes from individuals. and it's a killer, large corporations are spending very little money in this particular -- in particular, large corporations are spending very little money in this race. you say it is important to know the agenda. my question is, what agenda don't we know? if we hear an ad from a chamber of commerce, what the agenda are

we missing? an ad from the naacp, planned parenthood, rifle association -- what agenda are we missing puree people talk about crossroads gps -- i do not see how money -- how many reports where, crossroads gps, a shadow group run by former bush director karl rove and former republican chairman ed gillespie to promote conservative pro- business agenda. and i am like, if this is a secretive group they are bad at it. so, we talk about this, this need to say we need to know the agenda my question honestly is, what agendas don't we know? what adds can't you tell the agenda either by the face of the ad or even more from the disclosure of information and clear it would be at an already filed with the federal election commission? host: more -- guest: those are two separate questions. candidates do take responsibility for their ads.

they have to disclose all of their donors all the time. and then we must know who is funding the sham c-4 groups. most of them are not sham. some of them like the naacp are real groups. there is the question -- what more is it that we need to know? what will we gain if we know the members of these groups? is it worth the cost of having these members essentially -- as other callers have raised some of the questions of the possibility of being ostracized, harassment, retaliation by government officials. again, remember, there have been threats of retaliation from government officials. it is reported in an editorial in today's "wall street journal" about van sloot who gave money to a pro-romney super pac, which was disclosed, and suddenly finds his taxes being audited, one of his business is being audited by the department of labour.

these are real concerns as well. host: next is a call from kevin, delray beach, florida. caller: i just have a question. first of all, i believe there has to be full transparency and in the system because i personally believe that money is destroying our political system. it is taking it completely out of the hands of the people and putting it in corporations. i keep hearing you make the point that we will learn more about the candidates with more money that they have. but the koch brothers, willing to raise $300 million just in this presidential campaign, and citizens -- not citizens united but they karl rove group you just mentioned wanted to raise $250 million as well. do we really need that much money to inform ourselves? social media is free on the internet.

i think that money is causing more corruption then there is good. and you just give me three other reasons why you believe that money in our local system is actually a good thing? guest: sure very i am happy to -- sure. let's take one. historically, challengers rely more on large contributions and they need large contributions. new idea and outside challengers from outside the system rely more on big money. if you take the last campaign before the federal election campaign act of these limits on what a candidate could raise, 1968 campaign, and in that campaign mccarthy got his campaign up and running in a matter of weeks. he didn't declare until december, a little before the new hampshire cam -- primary.

a handful of people were willing to commit in today's dollars would be 10, $12 million a piece to get the campaign up and running. it raised the anti-war issue, actually drove lyndon johnson out of the race. that kind of thing could not have happened under today's rules, now that the speechnow.org -- citizens denied it would allow super pacs to take on the from some very-- ross perot spent a lot of his own money because the only day he could do was to be the candidate himself. he may have had flaws as a candidate, but who can deny he actually gave voice to millions of americans by committing his own resources to the campaign? we tend to think that these big folks a drowning others out. in fact what we see it more often as putting voices and to play, allowing people to be heard what the rise would not be heard.

just a couple of ways in which money in the system generally creates an open system. the third thing i say is the alternative you are offering -- i will offer this as sort of a bad -- which is to say government is going to try to start regulating who can speak and how much they can speak, and that of a recipe for favoritism, creating distrust, and for the government to try to rig the electoral system to try to rig the electoral system. i think what we will find overtime, by the way -- because right now i think super pacs have benefited republicans but i think it is just a coincidence in time but i take over time it -- i think it will benefit the party out of power. host: we have about five minutes left. this is huffington post, the author of this. he writes -- a remarkable turnaround for republicans to long supported disclosure as an alternative to a campaign donation limits. guest: i am glad you raised it. i hearing all the time but it is

not true. there is no republican over hill on the -- over here on the hill talking about repealing any disclosure rules. we have more now than we have ever had. nobody is talking of a rolling it back. the question is whether more disclosure than we ever had. and the past republicans said they supported disclosure, they never suggested this supported the unnecessary and duplicative and biased disclosure of the disclose act. secondly, of course. that's changed, circumstances change. i see things dragged up from 10 years ago and i was like, 10 years ago you did not have all of these folks out there openly -- openly saying the reason why they wanted the information was to "hold accountable" by which they mean harass, bullet, and intimidate speakers. it is actually salutatory that people say, wait a minute, that as not the purpose. and the final point which is simply this, a lot of republicans a dozen years ago were saying we could consider more disclosure as an alternative. that was an alternative to the descriptions of the mccain- feingold act which despite the

republican namesake mccain was a democratic bill. the democrats turned that down. and then the supreme court held some of the restrictions on speech were unconstitutional. now democrats come back and say, what about the more disclosure stuff. it is not the way politics works. the deal was there and it was passed up and that is where we are now. host: tenements next. scott, a democrat from silver city, north carolina -- two minutes next. caller: i am calling in reference to citizens united. i think citizens united is a one-sided deal. just like you said when you came on. the citizens united favors a republican candidate. like earlier -- we have some much money in the system.

we know the money is going to control the system. one other thing i would also like to say. the lady said to the blacks and latinos -- unemployment was 14.4% but if she had went back and done some research on a lot of their president, black unemployment that was also just about the same rate. the guest: again, your view is held by lots of people. the comments which relates to how much does money control elections. again, i understand there is a general belief people have that is the case. is the case.