of treasury, the job you currently hold, of this. what was the response of the other major stakeholders in the markets, in the protection and oversight of our markets to your comments about this and your inquiry? >> i believe they shared our concerns, and the british, too, share our concerns. those in the public and there ws sufficient basis to initiate this investigation. >> i want to ask about the annual report which i am sure you are dying to get to. i identified with the financial stability of the night the state's by eliminating expectation of government bailouts, respond to the emerging threats of the u.s. financial system. how is the council doing? those are your three major goals.

>> i would say it is a little early still. i will tell you what i think the main challenge is. we have a very complicated system of financial oversight that involved a lot of different agencies. they are writing a set of rules that are very complicated by a very -- by definition. we have an interest making sure they do that stuff carefully with all necessary speed but in a way where they are not treating new opportunities and incentives for people to move risk to where regulations are softer. the council, congress did not give council the authority to override the independent jurisdiction authority of those agencies. >> can you give us examples of measures to have taken to protect and ensure there are not any type of -- there are not any --

>> i think you have to look at the scale of changes that have been put in place in our system, not just the measures we took in the financial emergency but the reforms. $400 billion more capital. we moved more aggressively than any other country that i am aware of to force these banks to hold much more capital against the risk they were taking. >> that is a direct response? foxx and to the authority we have in the law. the derivatives complicated challenges. major progress has been made in laying out a comprehensive reform that they more transparency to the markets and give them the tools to come back -- combat manipulation of these. apart from their new effort to bring supervision to non-bank

entities and consumer finance, they are protected as well. they have taken important steps to make mortgages and credit- card forms easier to understand so individuals can compete for better terms and are more aware of the risks in borrowing. those of the best examples. the fdic has put in place if i work with a huge amount of global support to implement this important objective to make sure that when firms make big mistakes, we put them out of their misery with no cost to the taxpayer and as little damage to the rest of the system. they deserve credit for a very innovative remark using the authority congress gave them. those things in derivatives oversight, consumer protectio, bankruptcy for large banks, those things are very consequential and important reforms. we have a lot of work to do still. the housing financial system. a lot of work in that context.

>> the gentleman's time has expired. the chair recognizes the gentleman from illinois. >> thank you, mr. chairman and mr. secretary for being here. which regulator dropped the ball with regard to aig? the division that engaged in the nonexistent risk management of its credit the fall swaps trading -- credit default swaps trading? >> i do not believe there was in a competent authority that was responsible and accountable for the brought entities that complicated system. you are right to say theocf did -- the ocf did have some

broader responsibility but i cannot believe their authority extended to the oversight that would the ben -- that was necessary. >> who was regulating a edgy right now? the tarp inspector general gssued a report about ai oversight and that for more than two years, they have had no consolidated banking regulator. the occ is responsible for regulating the aig savings bank that is a tiny piece of the operation. the federal reserve did not regulate aig before the bailout and did not regulate its since. but the fed could take over if

sig tarp -- if it would be the savings-and-loan holding company but they do not think that will be around too long. i take that back. the treasury, until the treasury holds less than 50% of aig, then maybe the fed could take over. meanwhile, they are engaged in securities lending and investing among other things, mortgage-backed securities. the credit swap portfolio exceeds $168 billion. the proponents of dodd frank said the loss -- the law was about and in too big to fail and regulating the industry that has become too big how is it possible there is no regulator for aig. >> dodd frank gave the united

things the authority -- the united states the authority to designate a system that could cost greater damage to the system and give the council the authority to designate those firms and give the fed the ability to provide that brought comprehensive oversight. with that authority, the council and its agencies are examining which of the firms out there that present at potential risk need to be blocked -- brought within. the council designated two weeks ago and said the financial market utilities for the same reasons. it is looking carefully. >> they have not done anything about, there is no oversight. who is in charge of regulating a ig right now -- aig right now

>> if the council does in a stock firm that authority, we are moving to put that in place. >> so is there no regulator now? >> right now, that is true. that is why in dodd frank, we want the authority to make sure we can designate. we are moving carefully because when you think about how to apply these rules to insurance companies, he wants to do it carefully. we are moving carefully. aig is a dramatically different entity. >> sig tarp said there is no plan to ween aig off of tarp. goodyear team submit the plan -- could yoru team submit the plan? >> we have remaining financial exposure to aig in the form on ly of equity. we have sold a large amount of

that. the plan to sell as much as we can as soon as we can. i would say to remind the committee that on current estimates, the taxpayer will earn a substantial positive return on the full scope of tens of billions of dollars of exposure. >> would you submit a plan? >> the time is expired. if you can get back in writing on any questions, that would be great. >> happy to respond and lay out our broad view. >> the chair recognizes the gentleman from new york for five minutes. >> thank you, mr. chairman. some stakeholders have -- the latter manipulation lee did the libor manipulation.

community banks are significant sources of small-business lending. we have dealt with this issue since 2008. the lack of access to capital to small businesses, we passed the small business lending bill. some firms have estimated u.s. community banks of paying $448 million in damages for the year alone. how does an artificially low libor rate hurt small banks that operate on profit margins and rely more on [unintelligible] >> that is an issue which is a lot of people are taking very careful look at. it is a matter of litigation and ongoing review by a bunch of

agencies that should be looking at it. i think it will take time for them to give you a good answer to that question. >> roughly $10 trillion in loans are indexed to libor, affecting the cost of many financial products, including mortgages and small business loans. what impact will the libor scandal have on access to credit for small businesses? >> i do not think it will have any material impact. >> how do we restore public confidence in the financial sector? >> we do it by making sure we put it in place tough rules. we give people the resources necessary to enforce those rules and wea -- where the agencies find bad behavior, they should be punished for it. i would say the obvious -- we have -- institutions have a long

way to go. in their ability to protect consumers and manage the risks they face. >> thank you. >> the gentleman from california. >> thank you. good to have you with us again. fsoc was asked to do a comprehensive study. we sent you a letter in june and i will like to submit the questions we put you in the letter. when you anticipate the will and we did conclude the study? i know they are making a lot of progress on it. it is an important thing to do because the cancel -- council has to figure out what to do

with their designation authority. what they're doing now is taking advantage of all the public information available about the risks in those institutions, what it means for the system. they will take it that is quickly of the new disclosure requirements. they are making progress and i welcome your attention to it. we would be happy to -- >> may be can respond to the other part of the letter. a section of dodd frank requires fsoc -- regulations crafted without coordination will likely increase cost and complexity. they may be contradictory or harmful to the purpose of systemic risk. what are you it doing to ensure it is coordinated and that it does not get worse? >> what your colleague is

referring to is the requirement we have negotiated globally to put on the largest firms higher capital requirements against the risk they hold. they are forced to hold more capital against risk than a smaller institution. that seems fair given the risks the post of assistant. we negotiated uniform rules. that is not enough to read you want to make sure they are enforced on a common basis. that is a challenging process to have a level playing field. but the fed is doing is working out with other supervisors and central banks ways to make sure that the rules are enforced in a consistent way. >> are far regulators also -- foreign regulators also -- >> they are also a part of that process. in this area and others, if you raise standards in the united states and leave them lower and

weaker, the rest will shift to those markets and that will hurt us too. >> recent will makers by the fed that apply to insurers include the capital standards implementing basel 3. the -- what actions do you think the fed needs to take to ensure they treat insurers as insurers and not banks? that is a tremendous concern and the insurance industry today, that they are getting into an area they were never authorized to get into. >> i am aware of that concern. but the fed has said is they recognize if they were in a position where they have to apply these broad standards on capitol leveraged to buy financial institution that includes insurance companies, they would have to make some changes to it to recognize the

specific differences in the insurance business from banking. they understand that and are taking a look at how they would need to be adapted. if the council decides to designate aig, that is one example. >> do you agree that capital standards need to be appropriately recognized between banks and insurance companies? i have had meetings with more bankers and insurance companies. the insurance sector is concerned this clash over -- this flash over will have an impact on their organizations. >> i agree with you that they have to be adapted and modified. i think the fed shares that view to. i am much more confident that if

they are faced with that need, they will be able to do it in a way to mitigate those concerns. >> you agree they need to be mitigated? >> absolutely. i think they can be. >> i would like to see that implemented. i yield back. thank you. >> the gentleman from north carolina is recognized for five minutes. >> thank you mr. chairman and mr. secretary. you have gotten questions about libor and i think that is important because it affects rates at which individuals are able to get loans. i cannot want to minimize the importance of it but i do not want to dwell on that. i want to deal with two other things that are significantly important in my community. one of which reference on page 4 of your testimony where you said the council recommends

reforms to address structural vulnerabilities, particularly in wholesale short-term funding markets such as money-market funds. a lot of my constituents have funds invested in money market funds. i am wondering if you would send me where i can access what these recommended reforms are so we can take a closer look at them. i will not dwell on that either. but that is important. what i do want to dwell on his automobile dealerships because the special inspector general for the troubled assets with the program came out with the report. i understand you are disputing some of the conclusions that they reached but the facts are hard to dispute. those facts suggest that by june

2009, general motors had terminated 789 dealerships -- i am sorry, chrysler terminated those dealerships and general motors wound down 1,454 dealerships. that is a significant impact in all of our congressional districts. i want to approach it from a minority perspective because the statistics indicate that the number of ethnic minority dealers was disproportionate in the numbers determined and that african-american owned automobile dealers were hit the hardest with the decline of 50%

from 523 dealerships down to 261. and number of those were in my congressional district. when i practice law, i had five african-american owned dealerships in my congressional district that i represented. they do not exist anymore. my question to you is, what leverage do we still have with these automobile companies to leverage them into being more aggressive in rebuilding those minority-owned or at least in the new dealerships, are giving some preference as they had then -- had been to minority

dealerships? >> i would be happy to think about that question more and come back to you on it. i understand your concern with it. i would say that we have been and the president has been very clear that even though as part of our effort to save this industry in the crisis, we ended up owning and still owning this -- a significant amount of common equity. we have been very careful not to get in the business of running those institutions. >> i understand that. i am not criticizing -- i think it was wonderful we bailed out the automobile industry. we would not have a domestic industry if we had not done that. the inspector general says the government had quite a role in

pushing the termination of these things. i guess i am asking you to give thought as to how we can go back and help restore. we can talk more offline. i think i have 10 seconds left. i just want your commitment to brainstorm with us about how we might be able who addressed this problem. >> you have my commitment. >> i yelled back. >> the chair recognizes the gentleman from new jersey for five minutes. >> thank you. you cannot have your cake and eat it too. you had been before this committee countless numbers of times since 2008. if this is the crime of the century as some in the people are reporting, never once did you ever, and mentioned as being a problem. never once did you say this is what you are going to do about it.

never once did he say these are the new regulations he would propose for congress. you work with the administration with the ranking member tried to pass a 300 page dodd frank before legislation. never once did you say this is a huge problem and we think should be included. you never did that during the last four years and now it comes out that this is a crime in the century and something needs to be done about it. the chairman raised the issue saying why did you go out working with the fed and set up these allow programs with the aig situation? and work with the benchmark. your answer was we are just like -- we did what investors did elsewhere. we are like investors around the world. mr. secretary, you are not like investors around the world. you are the secretary treasury

of the net is that of america. you have the authority to come to us, lay out the problem and lay out the solution. for four years, you did not do anything about it. the banks may have made problems, and i am not defending them, but we are looking to the secretary of treasury not to come in after the fact and do what every regulator has done, to point the finger at someone else. when people do wrong things, they should be punished. in the private sector, that occurred. the private bank did something wrong, they would be punished. hundreds of millions of dollars. someone lost their jobs because of this. when does something happen with the regulators who did not catch this or do anything about? will they be fined? will any regulator from the top down lose their job, mr. secretary? >> congressman, in my judgment, the regulators did the

necessary appropriate thing in this context and they started that process very early. the knicks play well we did. what we did -- let me explain what we did. what we did, and i take full responsibility, having looked into these concerns and believed they were a problem, we took the broaderive to brief thae regulatory community and we pushed the british to resolve it. we did that very early. >> the the ventilators implement any changes on the banks -- did the regulators implement any changes but -- on the banks? today and take action to make sure this information has been solved? >> the two things that happened

is the british set in motion a set of reforms. >> i am not asking about the british. >> i am coming to that. the cftc initiated a far reaching investigation that included the fcc and justice. >> the same justice department that the chairman asked you whether you notified and you indicated they were not at the table so you did not notify them. there is always so much finger- pointing by the regulators after the fact. let me turn to what you are here for today. we have the designation with regards to the banks. what have we seen as a result? those with over $50 billion of assets designated too big to fail. a doubling down in the size of consolidation of the industry. they are going to find funds are cheaper and there will be consolidation. why would we want to extend this

consolidation to the nonfinancial sector? i think it is the wrong way to go. i will bring legislation to prevent this. there is no reason to look at asset management firms, finance companies and designate them as too big to fail and spread the problem we had in the banking sector over this sector, allow them to get cheaper funding, allow them to swallow up their lesser entities. why would you want to do that? >> we have no intention of doing that. the law does not allow us to do that and we would not want to for the reasons he said. i do not think you are right to believe that designation itself will confer a financial advantage. that may explain why. -- let me explain why. the purpose of this authority is to make institutions -- make sure institutions that could threaten the broader economy are

required to hold capital against risks, more than others in the institution. i think you will find it hard to justify the view that designation is something firms would welcome. many of your colleagues are spending time trying to prevent us because they are worried it will come with constraint that will be tough on them but i understand your concern and respect your views. >> thank you. >> the chair recognizes the gentleman from california for five minutes. >> i understand what is going on here. british banks lied to the british banking association. the bank of england and other british regulators screwed up and did not catch them. even though they got extraordinary outside help.

since the british, some for his anchors like and some regulators screwed up, the solution is obvious -- we have to blame america. we have to find some american reclaim, preferably one of the opposite political party. i am not part of the blame america first crowd. what happened in london has caused a lot of private contracts etc. to be off by perhaps a half a dozen basis points. that is not a huge outcome for anyone individual consumer and in many cases, the consumer benefited. some consumers and ordinary investors were hurt. but today we have attorneys, american factories -- american

attorneys who have forms. the octet plugged in their -- they all got plugged in their libor. i think now most of them would prefer to have one that is not a result of a few private actors acting privately. they would prefer to have a government released rate or maybe one that is tied to a public market auction that is so broad it cannot be manipulated. a few of my own party have suggested i return to the practice of law. therefore when i go back to my old forms, what alternative benchmarks -- benchmarks are available? >> we are taking a look at just that question. there's lots of potential

alternatives to this. the challenge is not finding a rate that captures the government's cost of funds. the challenge is to figure out a way to capture the credit risk and exposure to a bank. the sense the right people are looking at that and it will look at the alternatives. they will brief us and you as they go through that process. >> one of the things they like the federal government to do it is based measures. it would be great if you could release this. there will be court cases will people go in and seek modification of contracts. it would be great if judges could turn to the secretary of the treasury and say when the parties agreed to libor, they did not agree to something private and subject to

manipulation. the thing that is not subject to manipulation that is closest -- in your opening statement, he said as we move forward, we must take care not to undermine the housing market which is showing signs of recovery but is still weak in many areas. if you have suggested one of the great things we can do for the federal treasury is eliminate the home mortgage deduction and eliminate the property tax deduction. that would drive housing prices down and i wonder whether a d ecline in housing prices would be bad for the economy and the deficit but particularly bad given the fact that today we are not just the government. you happen to own a couple of large companies, fannie mae and freddie mac. and obviously if home prices go

down, foreclosures go up. so home mortgage -- losing the home mortgage deduction would bring in some money but what effect would it have on the federal government with its affect on the economy? >> @ think you are right in describing the affect. -- i think you are right in describing the effect. we have a very long way to go. i think our overwhelming obligation still is to do everything we can to give people a chance who can afford to stay in their homes transition to other types of housing opportunities and repair and heal the terrible damage to allow their. there has to be overwhelming responsibility still and we will use the authority we have and the current congress in considering legislation to make it easier to refinance if you

are under water. many to be very sensitive to its still. -- we need to be very sensitive to it still. >> thank you. >> the chair recognizes the gentleman from texas for five minutes. >> thank you, mr. chairman. mr. secretary, i want to go back to april of 2008. i think that is when you are president of the federal reserve bank in new york. the first addressed the issue of libor. where you aware in the fall of 2007 that informal e-mails were coming into the new york fed saying there is something up with libor? >> i cannot believe that i was aware of those specific concerns

before that period. in response to your questions, my colleagues are going back and looking at the full range of things available. we will share that with you and make sure you have that. >> i was looking at your response to the bank of england about this disclosure. i thought we made were some structural recommendations of how libor could be more effective. here is my issue with that. -- if they were having structural problems, i thought your e-mail was appropriate. bobo was being disclosed is fraud. this rate is being manipulated. the special counsel for the federal financial crisis and permission said the bank later has an applicator -- obligation

to make a criminal referral at the expects a crime occurred. how manipulating libor did not rise to that level is puzzling to him and me. >> i think you can think about this in two different ways. a rate set in london was overseen by the british banker'' association which because of its design created the incentives to underreport but the opportunity to do that. that was a problem for a lot of different reasons. opportunity created for a lot of manipulation, not just under reporting. it was important there be an effort to fix those problems in the rate and the first instinct at that point was to go to the british and they said we agree with you. we are on it. >> we did not know whether that would be sufficient are not. so we also did the appropriate thing. we did it at an early stage even

though these concerns were in the press. we briefed the relevant authorities with enforcement authority and responsibility for fraud and manipulation. so they would have the ability to choose whether to act on those concerns. we thought the combination of the concerns in the public domain and the efforts we took directly with them provided more than enough basis for actions to not just reform the structure of the rate but to pursue the behavior that was so consequential. >> i talked to mr. ginsberg and he said where they got their information was not on the new york fed but from the wall street journal article that prompted them to open an enforcement action. but it was not just the british problem.

you had been involved in the financial markets for a very long time. you are very knowledgeable. you have to know that manipulating libor, the were people who would benefit but some people were losers because of that. a lot of financial transactions are tied to that and indexed off of that. the outcome of that transaction is based on that. in their domestic -- there are domestic u.s. banks that are a part of that. >> i agree with you. this rate had implications for not just the united states but financial markets around the world and currencies. that is why we did what we did. we did not view this as something that was a small problem. you're exactly right. what we did was try to push them to fix it, reform it. that is a bad word in this

context. and make sure the u.s. enforcement agencies and authorities were able to focus on -- >> i am going to interrupt you there. after the june memo, did you ever follow up and say what have you guys done since our last conversation? >> we did in my colleagues did. the british bankers' association that three separate points announced changes to the process. obviously we do not think it went far enough. >> the gentleman time has expired. the gentleman from new york for five minutes. >> of what to go back to something i think mr. sherman was talking about. -- i want to go back to something i think mr. sherman was talking about. i found a continuing divide between wall street and main

street. you touched on a previously that there is a lot to be done for those individuals under water. i believe we did the right thing but there are a lot of questions now with reference -- even main street said you help the others, why not me? why cannot i get a lift up? i recently saw in the new york times proposals, one of which were governments have used the legal doctrine of eminent domain. using eminent domain to purchase under water mortgages at a fair market ballet then work with private investors to reissue new mortgages with smaller balances to homeowners. homeowners would no longer be

under water and will be able to repair the credit said it would not be -- not likely to fall. new investors would be repaid and the taxpayer will not be involved. there will not be anything added to the budget. to me, that is out of the box thinking. have you thought about that kind of proposal? if not, what kind of out of box thoughts you have to help homeowners? >> we are carefully looking at exactly that proposal. it raises a lot of complicated legal and policy questions but we have to look a those carefully. it is important to recognize there is a broad range of other tools available for states, probably because we helped provide the money to the hardest hit funds.

we have been very supportive of those programs and the programs we have administered. we haven't heard the other agencies to take advantage of this things. but we will carefully look at that proposal and look at their implications. fox -- >> too many people have not been able to take advantage of that program. part of that as bank lending money. there was another article that was in the wall street journal where the writer talked about an effort to get banks to lend money again and he talked about the central banks in europe cutting their interest they pay

on excess reserves to zero. and banks have to pay the central bank to keep reserves with them. and that this was a powerful incentive to either land for put money into the markets. you work closely with the federal reserve. do you think a policy like that would be beneficial if implemented here? >> i want to be very careful not to comment on the authorities the fed has or how to use them. but i will tell you my general view on this. the economy is not growing fast enough. unemployment is very high. a huge amount of damage left in the housing market. americans are living with the scars of this crisis. the institutions with authority should be doing everything they can to try to make economic growth stronger. that is an obligation we all

share. congress has the authority for the most powerful tools we have available to help economic growth. we would like congress to use those tools now in this context. we will keep supporting anything practical that would make " strong burr, help get more people back to work, make credit more available to more people. not just to buy a home or refinance a mortgage but to major businesses can expand. we have made a lot of progress doing that. lending by small businesses has grown. it is shrinking in europe still but it is growing here because of the things we did. given the damage remaining from this crisis, the obligation we all share still will be to -- to do as much as we can to make sure growth gets stronger. >> the chair recognizes the gentleman from north carolina for five minutes. >> thank you, mr. chairman. to note for the record, the lnie

questioning about the lumber issue -- it was about three months later after the issue came to note that you agreed to the aig credit line that was tied to libor. taxpayers are on the hook for that. $85 billion. mr. secretary, the unresolved eurozone debt crisis. obviously severe consequences for the global economy. do you agree? >> obsolete. -- absolutelu. it has had a significant impact here and slowing growth of around the world. >> in the report, concerning the spanish fiscal performance -- it

hearing to target amid recession. finance ministers agreed the relaxation of spain's fiscal targets and assistants to recapitalize its troubled banking sector. the market reacted adversely to this. it seems spain as proof positive that relaxing fiscal targets and spending more money does not work. would spain be better off had the maintain and adhered to more austere fiscal targets? >> my view is the actions of the spanish government and the strategy the europeans support is moving in the right direction. let me explain why. you are right to remind us all that if you have unsustainable deficits over time, it will hurt you economically. we agree with that. but when you are in recession as europe is, you want to be very

careful that when you are putting in place reforms to address the long-term questions of system ability -- sustainability, they're making the growth challenges worse. what is a program for spain now would be different than what is a program for italy and no comparison to what is appropriate for us. do you believe the issues in the eurozone will get worse before they get better? >> it depends on the choices they make going forward. they are doing is set of imported necessary tough things on the reform side. to make their economies work better and more competitive but also to make sure the institutions in europe over time create better fiscal discipline is in better management of their financial systems which got very big and risky. in the near term, they will have to do more to make sure there is

confidence in the markets and banking systems. those countries to the -- doing the right things face lower rates. >> of note of interest -- u.s. public debt is a percentage of the gdp is greater than what it was a dentist spain -- it was in spain. there is went up to 7% when this action took to -- took place. do you think the market is discounting the adverse affects of the eurozone crisis on the world economy? foxx there is no way to tell that. -- >> there is ono way to tell that. you can tell the market every day is making a new assessment about whether european leaders will do enough to hold it together. they have committed to do that. they said that is their intention and plan. >> my question to you with the time remaining is what is the

obama administration's plan for the years on the debt crisis? i know there have been numerous summits. you are frequently there. he spent amount -- a lot of time on this significant problem. do you have any plans, large action by the world to take on this issue? you said it is a significant impact on our economy. what is the significant plan your putting forward to show some leadership on this? >> at the european leaders have said, we played a role in encouraging them to move more aggressively to contain this crisis. we have been careful to where we have the ability to help that context medicaid the pressure. we have been very supportive of the imf in some circumstances coming in on tough conditions

for reform providing some assistance. we will continue to do that. the solution to this problem will have to come from the europeans. they will have to finance it. it has to sit with their politics and economics. we cannot want is more than them. what we can do is what we are doing which is try to put pressure to move more quickly and credibly to address this because of the implications for us. >> the gentleman's time has expired. the chair recognizes the gentleman from massachusetts for five minutes. >> thank you, mr. chairman. mr. secretary, a lot of people now think he did not do enough in 2008. it strikes me that these are the same people that thought you were doing too much most of the time. they denied mike -- they do not like any regulation.

they argue against every regulation on everything, no matter what it is. particularly in the financial- services industry. do you think that is the best way to move forward? what would you say to the people who say we do not like what you're doing now? >> i cannot know what to say to them accept that we have had compelling evidence in the financial crisis of the damage you can do to the average american when you allow system to outgrow sensible protections for consumers. that is what happened to our country. the responsibility of this body and the executive branch is to make sure we put reforms in place that prevent that from happening. that is what we are working hard to do. we are facing enormous opposition to doing that.

and we are thought to work against that because we want to make sure these reforms are tough. you need to have agencies -- >> is the word hypocritical approach it? >> i will leave that to others to say but we need the support of this committee in congress to put these rules in place and to make sure these agencies have the resources they need to enforce them. >> do you agree with moody's comments when they downgraded 15 financial institutions? we will leave the fdic remains committed to achieving the goals set out in the title to a dodd frank, including ending bailouts of too big to fail institutions. you agree with the assessment? >> i try nevil shute -- never to comment on those reports of what they point out is remind people that under these reforms,

congress has limited the ability of the government of the united states to come in and protect an institution for their failures. for that reason, if you look at the financial markets today, there's much less confidence in markets. this is a good thing fundamentally. that congress in the future will come in and protect them from their mistakes. >> it is also another matter that some of the same people that voted to repeal the act and the ones complaining that some banks are getting bigger today, i happen to agree with them. i voted against the repeal. the libor matter cannot be ignored today and i do not intend to ignore it but i am not interested in rehashing history. but nonetheless, since we passed dodd frank and in the last year are so, we have had the mf global issue, capital one having

a significant find -- fine and now barclays with a $450 million fine. that is about 1% of their annual revenue. it is a good number but not the kind of will change anything. yet on page 9 of the executive summary report, you point out that the boehner abilities in the financial system can be broken -- grouped into three clauses -- classes. the incentive to take too much risk. i understand you are working on that and we will continue to do that but those are not in place yet otherwise these instances would not have happened. they took too much risk. maybe a different type of risk. but i would ask a simple question and i know this is by your place. -- this is not your place.

as a member of fsoc, do you think it would be appropriate for fsoc to be in touch with the justice department to inform them -- do you think the markets would be well served if individuals were held liable for criminal activity? if there is criminal activity here. barclays has indicated there might be criminal activity in this libor situation but it people are doing something wrong, some point some individual has to be held as possible. i would like to hear your opinion on the matter. >> i want to be careful not to respond directly to the question you raised about these enforcement actions but i will say the following -- it is very important to this country that we have in place a very tough enforcement regime so that people who violate the law are held accountable for their actions so that they are not as held accountable the we are deterring others from engaging in that behavior.

we have huge institutions try to restore a powerful enforcement mechanism and part of that is good will against manipulation and the pews. -- and abuse. a big part is to make sure there's adequate resources available. if we start them of resources, they cannot do an adequate job of protecting investors and consumers. we will keep working very hard to meet that test. >> thank you. >> the chair recognizes the gentleman from new mexico for five minutes. >> thank you, mr. chairman. and mr. secretary for being here. as you respond to the questions about separation of investment banks and the independent community bankers, of a like to be included in the written response.

-- i would like to be included in that written response. i have to say you have an impressive and resume. secretary of the treasury. chairman of the new york fed. one of the colleagues is try to make some choirboy with the terrible bush appointees. you have got a really strong resume and you have accomplished a lot. there are critics the city did not have the next -- have enough experience for the new york fed. i think the estimation is the work with the bush administration to minimize the policies in 2008. people question whether not the actions did that or not. we can accept the fact that there discussions. i do not know that the policy.

i did the congressman from the mexico. we do not have a big banking institutions. i will not sit here and give you some questions that will reach orient your thinking about the country but i have an obligation to those people who elected me to represent them. we have got the whole idea of the administration came in with, a definite change for the country. it was pitched that this is the hope for the peter -- for the future. we have financial difficulties that are erupting everywhere and pension system that are going to file trillions of dollars short that will make the debt in europe look small. it looks like you are not going to stay. if you do not believe in the path with you have laid out -- i am just going by what our friends on the other side of the aisle said.

i am not on the inside. so if you're going to go or even if the state, why should people of new mexico -- they're all 99%. why should they believed in -- in you or the policies he said in place? >> let me say a few things in response. i believe very strongly that this country, this economy is a much stronger place than it was when the president took office. by every measure, we are in a dramatically stronger place and much better position to deal with the challenges still ahead of us. not just on our fiscal deficits and the remaining problems people face getting a job or keeping a home. i also believe the policies we have laid out in before the congress are the best way to make the country stronger, not just go back to living with and are means of making sure we are making the economy more competitive in the future.

you are right that i am in public office terry i have a privileged and making lots of decisions. those decisions will be controversial decisions. i have taken a lot of criticism for adjustments i have had to make on both sides. all i can do is what i think is in the public interest and to help president deal with the country. those adjustments will be viewed -- those judgments will be viewed and i fully respect it. but all i can do is make sure i am doing things i think are in the public interest. >> i appreciate that. on page 4, you talk about the budgetary trends are unsustainable. in your written testimony, you talk about the fact that the

budgets are being cut in government spending is being cut causing a week is to the economy. the report talks about budget trends being unsustainable, it is talking about the debt and deficits or the cutting and spending occurring? >> it is to the government spending is falling across the american economy and that is making growth weaker. it is also true that our long- term deficits are unsustainable and would be good for the country for congress -- the deficits are too high and if left unaddressed, our debt will grow to be too large. >> let me finish up here. i does have a second. you spend a lot of time talking about the debt discussion but almost no time talking about that a i think that is a huge indication -- if you could give that in writing, that would be

great. >> the gentleman from missed -- from massachusetts. >> mr. secretary, i want to thank you for help with this committee with its work. there has been a document refer to a number of times -- referred to a number of times. this is regarding your response back in 2008. there were a series of articles that came out in the british press about a possible manipulation of libor by some of the british bank. he had an opportunity. he responded --0 your responded. -- you responded. back then, it was secretary paulson, ben bernanke at the fed, chris cox and cftc. >> there are other agencies represented but the -- it was the head of the agencies.

>> after you informed them, i have a document that has been mentioned a few time -- a memo dated june 2008. it is the cover page that says it was delivered the previous tuesday, i just to mervyn king. was to the governor of the bank of england at that time? >> yes. >> and is from you. can i have somebody -- i want to put a fine point on this. you talked about your response but it seems to be ignored. i want to make sure this goes into the record and that we have a clear understanding of what you actually did when you are at the federal reserve bank.

it has here a -- recommendations for enhancing the credibility of libor markets and research and statistics group. do you recall what the recommendations that he may wear? this is unfair, i have the document, you do not. that would help. thank you. to save time, maybe you can look at the document and say exactly what it is rather than me asking you these questions one at a time. >> there are s -- six recommendations. strength in government and establish a credible reporting procedure. increased the size and brought in the composition of the u.s. dollar panel. add a second u.s. dollar libor fixing for the u.s. market. specify its transaction size.

only report the liable maturities for which there is a net benefit. eliminate incentives to misreport. each of the subheadings, we gave a series of specific suggestions. what that goes to explain as -- is in significant detail, the range of potential boehner abilities in the way this thing is being run. >> exactly. mr. chairman, i would ask unanimous consent that this memo from the head of the federal reserve bank of new york to the governor of the bank of england be accepted into the record. >> without objection. >> thank you. secretary, there is also an article that came yesterday in the press and i cannot lay my

hands on that but it talked about the fact that a lot of the requests for manipulating libor came from traders who were asking to lower libor as opposed to coming from lenders asking to raise libor to enhance their loan portfolios. in this article, it talked to the fact that for berkeley's and other banks, two-thirds of their depository assets were invested and used in their trading portfolio of and only one-third of their depository assets were used for making loans. so there was a bigger upside if they could lower libor and enhance their trading positions as opposed to raising the

interest rate to enhance their low performance. this goes back to what the volcker rule is trying to get at. i just want to know, do you think that that fact that banks -- this goes to what was talked about this morning that maybe we have to go back and look and what banks are doing. and if we're going to have the taxpayer supporting their conduct and the performance of their basic businesses tackle the gentleman's time has expired. >> is it better to separate the risk-taking versus the traditional lending? >> good question. in response to have to think about the volcker rule in this context, i am happy to respond more to the numbers question. >> the chair recognizes the gentleman from pennsylvania for five minutes. >> thank you, mr.

secretary for your testimony and time today and for the report. i want to follow up on the question asked regarding annual budget deficits and a growing national debt. in the report, page 8 entitled potential emerging threats to the united states financial stability, you read that threats to financial stability like threats to national security are always credited. a couple of years ago, admiral michael mullen when he was chairman of the joint chiefs of staff said the greatest threat to our national security is our national debt. its stock to allow the people. do you agree that the growing national debt is a significant threat to our economic and financial security going forward? >> if left unaddressed, our long term fiscal deficits would damage the american economy.

i agree if left unaddressed, that would be true. >> honey morgan jr. secretary treasurer under franklin roosevelt. he has often been quotes recently. he said, "we are spending more money than we have ever spent before and it does not work. i want to see this country prosperous, i want to see people get a job. we have never made good on our promises. i say after eight years of this administration, we have just as much unemployment as when we started and an enormous debt." what's different between then and what is happening now in light of secretary's comment? >> good question and context. chairman greenspan and others have said this crisis was caused by a shock, a storm much

larger than what caused the great depression but because of the things we did, and we were able to get the economy growing again much more quickly. the economy is much stronger than was at that time in history that you refer to and much stronger than it was when we came into office. the fiscal challenges we face -- you were right to say they are unsustainable but these are manageable challenges for our country at this time in history. there are much more manageable than what is faced by many countries around the tree -- the world. the challenge reface -- we face is to decide how to do it. we have to balance the obvious concern. we need to have growth stronger but also we have to protect our national security interests and make sure we protect the basic

safety net for retirees and low- income americans. we will have to make tough choices about what we do for education, infrastructure, incentives for investment, so we make both stronger over the long run as we figure out how to make sure we make those commitments to retirees and low- income americans more sustainable over time. i think that is the challenge. that is what separates us. not a recognition that it's unsustainable but a debate about what's the best composition of spending, savings and tax reforms to return sustainability. >> normally is a budget resolution. would you agree to bring this back down to manageable levels -- wouldn't passing in budget resolution in both houses put this on a path towards getting the deficit under control? >> i know where you are coming from but you are right, congress has to act.

it will not happen on its own. it is not enough for us to propose things. congress has to come together and negotiate remarked that brings these reforms in place. -- negotiate framework that brings these reforms in place. >> section 112b2 of dodd frank requires a sign pavement indicating what reasonable steps such member believes the government should be taking to ensure financial stability yet neither the annual report or any individual member has recommended the senate democrats pass a budget resolution. >> that is true but it would be strange if you ask the fdc to tell congress how it would restore fiscal sustainability. there is nothing standing in the way of congress taking more action or some action to reduce

these deficits. except that you need both sides to come together on some agreement. >> yield back. >> the gentleman's time has expired. the gentleman from north carolina is recognized for five minutes. >> secretary geithner, you have said today and previously that you and others at the new york fed became aware in 2008 that there were concerns about libor and it was vulnerable to manipulation. it was essentially an honor system. there were incentives to misreport and there were rumors that that was in fact happening and the new york fed conducted investigations and decided there was a basis for those concerns. and passed along the concerns to the fsa and bank of england as well as the members of the president's working group. but among the documents released by the new york fed is a transcript from a telephone

conversation on april 2008 between an employee of the fed and an unnamed barclays trader in which the trader said they were reporting about 20 basis points lower than what it would really cost them to do it. that when it posted an honest libor rate, there was an article that they were coming in higher than the other banks. there is an implication the other banks for also misreporting. but when that happened, there was an article in the financial times the raised questions about barclays. barclays stock went down so they decided they were not going to report accurate libor any more. he said we know that we're not posting on and on his libor and the reason they did was not to have questions about barclays financial conditions. this was a month after bear stearns and jp morgan chase. did you know of this

conversation? ut barclays' financial conditions and this was a month after bear stearns and j.p. morgan chase thought bear stearns in a firestorm that the new york fed was in. did you know of this conversation? >> congressman, i did not believe i was aware of that specific -- i was made aware of that specific conversation, but i need to be aware of that. >> why not? because the concern about the structure of the rate and the concerns across the market we thought were sufficient basis on which to do the things i said i did -- >> mr. secretary, this conversation is not just about the vulnerability on libor to manipulation, but in fact, that it was, in fact, being manipulated that there were

false reports being found by someone who was involved in it and was there any -- i asked chairman bernanke last week, was there any element of criminal fraud that isn't admitted to in this transcript. >> there's a set of lawyers that will answer that question and you can be confident they're going do that, on this basic point, we had a sufficient basis on based on what the market was saying was happening and the way this thing is designed on which to take the actions we took. >> yes, i understand that. but did the employees of the new york fed involved in market surveillance tell you of this conversation or perhaps others like it that not just -- it was want just theoretically possible, but participants in libor admitted that they were, in fact, misreporting and that it was theoretical vulnerability, but in fact, that

it was happening. >> i believe that, and this is why we did what we did, and we were not concerned this was a theoretical vulnerability. we are concerned about the range of different reports that were out there, we thought were credible, that banks were actually misreporting and it was not on the basis of a theoretical concern that we did what we did, and it was the basis that those reports were plausible and credible and that's why we took the steps that we did. the chairman, justice was not part of the president's oversight or the president's working group. you did not report this conversation to the justice department. you did not, did you? >> i want to be careful about this, but my colleagues are going back over the full record in this case. i do not know what the new york fed staff did in terms of who did that. you did not. >> you did not. >> mr. secretary, you also said

earlier that litigation was certainly possible, being contemplated, and various lenders who are now have either found suit or contemplating litigation against the libor banks for having gotten paid too little interest, and no greater lender during that period of the united states government. are we considering filing litigation and pursuing claims to get back some of the money, or some of the interest that we did not get because libor was artificially loaded during that period? >> i did not know whether we were disadvantaged by this practice. obviously, we will take a careful look at that. we also don't know what the net effect was of the behavior on those prices at that point as many of your colleagues have said. there are some people who believe that people who borrowed money generally benefitted and people who lent money generally did not benefit. it is not clear that's the case, but it's going to be the process and subject to a very careful, extensive review by a lot of

people in this context, and it will take some time for them to figure that out. the gentleman's time has expired and in an effort to honor that commitment to make sure the secretary gets out on the hard stop and to make sure we're getting as many questions as possible and the chair will recognize the chairman from michigan, mr. huizenga for three minutes. >> thank you. i appreciate that, mr. chairman and mr. geithner for being here. i would like to expand and revisit, i was watching "squawk box" this morning when sandy weil made his comments and then saw the crawler about glass steagall, and i was, like, did he specifically say that? he did go back and revisit it. i don't know if you've had a chance to see it or read it. certainly would like to then get your reaction, both here, but then more in-depth as i'm sure you will be looking at that time. so if you have any reaction or comment. >> i haven't seen those reports and i don't know exactly what he said and i don't know what he meant, but on the broader

question about laying out to this committee the extent of the actions congress has authorized and taken to limit this risk, i would be happy to walk you all through that in as much detail as you like. i was getting to the too big to fail element and just whether the organizations are too big. . that is a widespread and common subject of concern and it's something that people will be looking at that time for a long period of time, but i do think it's important to recognize that we did force these to take much more than they take. we forced a dramatic restructuring in the system and congress put in place limits on how large they can get and deprive the government of the ability to in and rescue them from their mistakes in very significant ways and if you look at the net impact of those actions on how the market perceives the risk too big to

fail, that market's perception was diminished significantly. i'm not saying that is the end of this story. >> i do want to touch on the reserves here, and you had talked about $400 billion increase in reserves and the fact that the cost of credit has fallen and it does strike me, though, that whether it's denmark, switzerland, countries out of the eurozone or your own market, the united states, in a way it's among the -- it's not that we're doing so great, but maybe that they're doing so great, it's just that maybe everybody else was such a mess and the flight to credit is coming to here, but i had a very prominent comment, who actually put out an e-mail today to his clients, and i happen to be on that list regarding those reserves and he was saying that reduced access of reserves was

100 billion and that means there's 100 billion less and i am yielding back looking to hear his answer, but his argument is that it runs count tore a lot of the goals and some of them are reserve requirements that on one hand we're requiring additional reserves yet on the other hand we're lowering interest rates through quantitative easings and other things to try to stimulate more liquidity. >> is it truly a liquidity problem or do we have some other issues? >> i would be happy to look at his concerns and i would be happy to try to respond although that might be for the fed, but those are combining two different things and there are $400 billion more capital than there was before the crisis which is a necessary and very important thing that makes the system safer. is that because of the reserves? some people use those words interchangeable, but i think you're referring to a question about excess reserves in the banking system and what that

does, but i would be happy to take a look at his concerns. i appreciate that and maybe we'll put that down in writing and i would love to get that response. thank you. the numbers on each side will ask questions, thank you. the chair recognizes the gentleman from texas, mr. green. >> thank you, mr. geithner, i would be as concise as possible. you indicated that the economy is in much better shape now than when the president took office and i'm bringing this to your attention not withstanding libor and fsoc, all which are important, and i'm bringing it to your attention that if we're not careful the fact woh wows w

be perceived as fact and it's important to reiterate the condition that this economy was in when we took office, when the president took office and juxtaposed that to where we are now so that we can move forward with a much better opportunity to improve the economy. so i would like to yield time to you to please, sir, do not allow the fatuous to become fact. >> i want to emphasize that it's still a long way to go. it's a tough economy and we have to be honest and open and just for comparison, the u.s. economy was shrinking at an annual rate of 9% in the last quarter of 2008. we were on the verge of what most people thought was a plausible chance that the american economy would collapse at that time. you've seen trillions and trillions of lost wealth and six months later, because of the actions that we took, congress authorized the fed took and the things we took to fix the broken financial system the economy was growing. remarkable turnaround in a short

period of time. the economy's been growing now for three years since, not fast enough and the reason it's not been growing faster is because of this combination of concerns you're all aware of which is europe's spending not declining and not increasing by the government and people have been bringing down their debt and trying to fix some of the problems with this mess. so we have a long way to go, but absolutely we're in a much stronger position than we were at that time in history. to be more specific, we have incredible people saying some incredible things and i'm sure you're aware of these incredible statements. we are about to lose the american auto industry and do you agree that the auto industry is in a position now such that it is coming back? >> i do. >> at the time the president came into office, the financial system was almost in collapse. do you agree that it has been stabilized and that it is now in much better shape than it was

when the president took office? >> absolutely. >> at the time the president took office do you agree that economic uncertainty, while people say there's much of it now and i concur, there is some, but economic uncertainty was to the extent that banks would not lend to each other. >> that is true. >> which is why you could not structure a deal with banks to save the auto industry purpose they weren't about to salvage an auto industry when they were trying to salvage themselves. >> true? >> true. there is no private market solution to a financial crisis like we faced. >> and for those who want to lay all of this at your feet, i've heard a new term called a black swan event. is there some semblance of this? >> yes.

>> the gentleman's time has expired. i thank you for your time and some members have additional questions for you which they may wish to submit to you in writing and without objection this hearing will remain open for members to submit written questions to secretary geithner and for you to place responses into the record. this hearing now stands adjourned.

>> the house of representatives is expected to consider legislation to a dent the bush era tax that and to provide relief to farmers. i spoke with a washington reporter about the week ahead in congress. >> he is the political editor at the washington times. thank you for being with us. we expect lawmakers will be working on extensions of the tax cuts. why are republican leaders digging into this now? >> this is part of what president obama called on congress to take care of these tax cuts. the senate actually acted right before it left before last week. now the house is under pressure to follow suit and do what needs to do. the action rejected the senate version. it looks like a lot of the version that the republicans

rejected in the senate. >> there is legislation proposing to overhaul the tax code. how does this figure into the tax debate this weekend? is this a throw it out? how extensive is it? >> it lays out a framework. it is not actually do the tax shape form. it is a process that says by the end of april next year, here's how we will do a process for the youthful revamp. there are some things written in it. it is deftly a house republican version. i guess i would view it as a signal that the house is saying we need to get to a broad overhaul. all sides tend to agree. we will begin laying out a specific marker with how we did it. it would get them over.

this bill will probably not pass. if it did come it would write into law special procedures that we get them this. >> factors and not the only thing they are squeezing in. members are also pursuing a one- year extension of farm programs which would include relief. what is likely the senate would agree? >> right now the likelihood is probably pretty low. the senators are hoping they have tapped a house bill and a senate bill. the senate is something this is a marker that would get them to the senate. they will take this bill. they're hoping that the house will have this one year extension and that they can make that and try to hash out the full five-year agreement. republicans are signaling that

we want to get there another year and then we would get back to it next year. republicans hope they will be able to write a bill more to their liking. they have been unable to right now. something that both sides of congress have been pretty good on. >> both chambers also working on a continuing resolution to get the funded. what are they discussing tax whether they taking this up now? do a short-term one as you said

?hat t you do a short one to get them through november or do you give up for the year? the key question is how long the continuing resolution will go. there is a movement for republicans to push where it six months resolution. the posted they have bigger numbers for next year. the real question is what senate democrats to do. do they want to get a few done? >> the senate is focusing on cyber security legislation. tell us about this debate. what is the likely that they can finish the debate? >> there are a couple of fundamental questions they're

trying to decide. there are some senators who think that the bell should be scrapped. there seems to be a consensus that something should be done. that is what they are doing right now. the real question is what sort of the men and their love to do. anytime you have a legislative bill, it opens at the chance for other amendments. the question is what the business to and where the others are lobbying on the bill. >> steven is with the washington times. thank you for joining us. >> after meetings, benjamin netanyahu and the campaign fund- raiser mitt romney had from

israel to poland. he is meeting with the former publisher. obama his the campaign trail this week. he is an ohio wednesday. there's a the president called a campaign event in orlando in leesburg. >> former house speaker newt gingrich last week spoke at a capitol hill seminar are conservative leadership. he said the economy will improve if mr. romney is elected president. he called pakistan and saudi a radiant the most dangerous countries in the world. -- saudia arabia the most dangerous country in the world.

at thank you for being with us. welcome to our 2012 capitol hill seminar. my name is catherine rodriguez and i am the elected director for the clare boothe luce policy institute. as the nation's premier organization for conservative women, our mission is to promote leading conservative women and prepare women for leadership. we do this through a variety of unique programs and events like this one to expose young men and women, college students like you, to some of their conservative heroes. we also help students bring conservative ideas to their campuses through our campus lecture program. our speakers include great women speakersbay buchanan, michelle malkin and kate obenshain -- some of whom you will hear this afternoon. if you are interested in hosting a conservative speaker or would like any other

information on how the institute can help you fight the left on your campus, give us a call last 888-891-4288 or visit our web site, cbpli.org. i know you are all looking forward to the speakers today so i will not hold you up any longer. we will have the opportunity after each speaker for q&a. we have two of the student in turns holding microphones -- one on this side. raise your hand. at one on this side. if you would please line up behind them. they will hold the microphone up for you to ask your question. >> i would like to welcome our luce institute in turn laurel conrad to reduce our first speaker. >> welcome. my name is laurel conrad and i am a student at cornell university and a summer intern at clare boothe luce policy institute. i would like to introduce efforts speaker, conservative

leader and former speaker of the house, newt gingrich. he was inspired by an early age by his experiences as the son of a career soldier to dedicate his life to his country. he is the architect of the contract of america which led the republican party to victory in 1994 by capturing a majority in the u.s. house for the first time in 40 years. when of the numerous accomplishments that took place under his leadership, with congress passed the first balance -- balanced budget in a generation. "the washington times" has called newt gingrich be indispensable leader and time magazine named him man of the year for 1995. his background includes a commitment to academic achievement. he received a bachelor's degree from emory university, master's and doctorate in modern european history from tulane university. before his election to congress in 1978, he taught history and environmental studies at west georgia college for eight years. he represented georgia in congress for 20 years, including four years as speaker of the

house. he served on the defense policy board under president george w. bush. in 1999, gingrich was appointed to the united states commission on national security 21st century and the -- commission to examine national security challenges. he is also committed to developing free-market health care reforms centered on the individual. in 2003, he founded the center for health transformation. he and his wife host and produce award winning documentary films together and author the author of books. his daughter has spoken at the luce policy interests -- institute and has written policy breaks for us. he has written 23 books, including 13 "the new york times" best sellers. during his leadership he used his incredible background to be one of the strongest, most compelling and innovative

conservative leaders on the stage. join me in welcoming this extraordinary conservative leader, newt gingrich. [applause] >> thank you all. some housekeeping. i will give you a very brief talk so we can spend most fun -- most of the time questions you want and at the very end we will take two or three minutes to take pictures. i noticed several of you kept jumping up and taking pictures. and those of you trapped of the year could not do it. i am delighted to be here and i am very interested in sharing ideas. the reason i agreed to come because i think developing the next-generation of conservative activists and leaders is very important. i just got a note today from the young america foundation, i think i have spoken in 19 out of the last 20 meetings. and i do that because i do think the education matters and

i do think getting people committed matters. i want to give you three or four big jumps -- think of it as an outline. first of all, my younger daughter jackie and i wrote a book of "five principles for a successful life." it is aimed at people younger than you but the principals our universal. these are things i actually develop out of trying to think of what i had done in my life that was successful. the first is to dream big. the second is to work hard. the third is to learn everyday. the fourth is to enjoy life. and the fifth is to be true to yourself. let me tell you why i say this. you are at the right age to

dream big. and if you don't have the courage to dream big at your current age you will not acquire it at 45. it can be anything. it could be having a family. i have a 12-year-old granddaughter who wants to be a ballerina. i have a 10-year-old grandson who will be 11 on saturday who thinks he wants to either be a chess player or a sniper. he is not sure. at nine years of age he read -- "seal team 6." think about who you want to be a and b the courage to not leave with your teacher tells you are parents or friends. understand -- and this is where i disagree so deeply with president obama -- the key to success is to work hard. his comments the other day birgit on irrational. or just left-wing academic -- verged on the irrational or just left wing academic. tenured faculty -- nobody actually creates the money but they are happy the alumni showed up for you show up with the federal government pays -- shows up to pay them.

a slightly distorted view. people who are successful all work hard. this is the primary thing to get locked in your head. if you want to play a big game, you are going to get to practice, and in order to practice you have to put in the time. it gets me to my third point. enjoy life. i learned many years ago -- i did a course and as part of the course we had one of the most famous inventors of restaurants in america. norman brinker and then it tgi friday's, steak and ale, the salad bar -- the waiter walking up and in introducing yourself. we interviewed him and he said, when people come to ask him for career advice, no matter what their age, the number one question is, what do you like doing. the reason is, to do anything really well you have to do it so much that you got to like it.

nobody can will themselves to do something consistently they don't like. so, i really encourage you to think about it. life is not mean it is always fun, but that you have some deep sense of satisfaction that this is a good way to spend your day. i spend virtually all of my time either learning or teaching. i teach in speeches, in books. i just wrote an e-book called "no taxation by misrepresentation" taking on the tax bite. we did it as an experiment to see how e-books work. i just did a paper that was submitted to politico an hour ago arguing it was legitimate to ask questions about national security in terms of the muslim brotherhood. i am constantly either reading, listening, writing, speaking,

doing media. and that is probably 90% of what i do. obviously i am half irish -- i like talking, i like reading. i like learning. all of this kind of works pretty well for me. then, i think, you have to recognize -- you got to learn every day. the reason you have to learn everyday is twofold. first, the world is really big. i am 69 years old. i have worked at politics since august of 1958. and i learn stuff every day. i traveled a fair amount of the planet, and i am looking forward to my next trip. because there will be things i'd never seen before. i am currently working on a novel and potentially a movie about george washington as a young man. and i am back real engaging and rethinking about washington -- somebody probably first encountered when i was 9 for 10 years old.

i have a grandmother who taught me american history when i was very young. now at 69, i have a whole new set of questions and a whole new set of understanding and back trying to learn again. you've got to say to yourself, if i going to achieve a big dream, i have to work hard, learn every day, and i have to enjoy it. if you find attractive something where you say, i don't enjoy this, you have to have the courage to change. it is very important. which gives me -- gets me to my last point -- you have to be true to yourself. the fact is, if you are not true to yourself, you'll just crumble. you can't be true to somebody else. it can't say, they get to the fine for me whether or not i am ok. adam smith in his first great book which proceeds -- proceed to the wealth of nations talk about the idea of looking in the mirror. when you look in the mirror, and you see the person you want to be.

if not, candidly, the person who has to change is you. not other people who validate you. it is a very hard thing to do. i've done things in my career that absolutely involve people thinking that i was not. some of the time, by the way, they were right. which is one other point i would make about working hard. it doesn't always work. i just lost a presidential nomination. you probably know this. i ran for congress twice and lost, in 1974 and in 1976. i had a project starting in december -- in 1970 to create a house majority. we have been in the minority since 1954. i thought 21 years was long enough. the project i was running, we lost in 1981, 1982, 84, 88, 90, in '92. there were people -- the week before the election were election day of 1994 that we were nuts. i just saw a guy the other day who said to me that the two great surprises of his life was you actually could have a republican speaker of the house

and that the berlin wall fell. he put them in the same league. i had to be willing to endure two losses in congressional campaigns in order to finally win. i had to be willing to endure a losing year after year, getting back up and say, what didn't quite work, and going back added. i coined a phrase in that period called cheerful persistence. both words are important. anything you really want to achieve, you have to persist. if you want to be effective, you have to persist cheerfully. in a free society, you attract people by being cheerful. if you are persisting but you are grumpy, people hide from you. if you're depressed, they ignore you. if you're angry, they try not to get near you. but on the other hand, if you are cheerful, they will tolerate you. think about people you know

personally. cheerful persistence is a disciplined behavior. i want to -- a couple of books i want to recommend. i would urge all of you to buy a copy of peter drucker "the affected executive." his argument is in the information age, every worker is an executive. knowledge workers by definition are about executing. it is about 160 pages long and it is an astonishing book. i urge -- 168 pages long and it is an astonishing book and it is the best single book about being effective i have seen. he starts with a very important point, which i believe deeply having spent my whole time studying it. effectiveness is a learned have it. it is not about genetics, it is not about i.q.. it is not about personalities. learning a set of patterns that work. and then being disciplined about resupplying them and resupplying them and learning in the process

-- re-applying them and re- applying them and learning in the process. let me talk briefly about where we are as a conservative movement. i think we are in the middle of a tremendous amount of change and i don't frankly know how quite we will get the where we are from -- to where we are going. the conservative movement really began in its modern form in a reaction against the republican establishment and against the national establishment, which are parallel but not identical. if you go back and you look at the rise of goldwater, it is really taking on both the national system -- the welfare state, lyndon johnson, etc. -- and it is taking on the republican establishment -- nelson rockefeller, the northeast. it had a huge impact. there is no question that it changed the underlying pattern of the republican party decisively in ways that are still true to this day.

at the same time, it created the framework within which reagan could rise. but it is important to remember, if you go back -- this is why i am a historian and not a political scientist. any social science that has three lines is inherently unlike the real world. because the real world does not have street lines. in 1972, when richard nixon one a decisive election -- won a decisive election and carried virtually every state, there was the zeroth reason to believe ronald reagan would become president -- there was zero reason to believe ronald reagan would become president. the vice president with spiro

agnew. there was ever a reason -- every reason to believe after nixon that spiro agnew would be the republican nominee. there is a great book, i think it is called "a heartbeat away" about the discovery that iran agnew was a crook and about getting him out of the presidency, which led nixon to pick gerald ford. nixon then resigned. ford becomes president. ford then makes to the huge mistakes. he treats the reagan with contempt -- which just makes reagan irritated -- and he picks nelson rockefeller to be the vice-presidential nominee. had ford picked ronald reagan to be the vice-presidential nominee, history would have been totally different. reagan probably would not have ended up running for president. he would have been on a ticket and the ford that either would have when they were lost, and if it had one ford would have served as president. the guy who tells the story beautifully is one of the leading analyst of american

polling. he always says that he learned about campaigns being real because he was convinced to leave his job and go to work for teddy kennedy and kennedy was like 30 points ahead. and the week after he left to work for kennedy kennedy david interview with roger mudd in which roger mudd asked a to a -- ask a trick question. kennedy is running against jimmy carter. roger mudd asked this very unfair trick question -- why you want to be president? kennedy couldn't answer. he couldn't answer him so badly -- you could probably google this -- that his campaign just started to collapse. charlie cook is the guy who tells the story. charlie cook is the one who left his job to be a field organizer for kennedy because this is going to be the winning campaign. he watched it disintegrate. but there was no point in 1979 where you would have said reagan is inevitable. at this stage in 1980 reagan with nine points behind carter. i am just giving this as a way of thinking.

you don't know how the movement is going to be bold and to the next phase. you don't know what will happen decisively. but let me tell you what i think the three great needs are. first, we have to win the cultural fight to take back the campuses. we have allowed the left to develop a bizarre domination of american intellectual life, much of that reinforce the by course of behavior. -- reinforced by coercive behavior. how many of you are on a campus where it is the size of a painful to be conservative? ok. why should it be true? conservatism is the dominant dog you structure of the american people. why do we tolerate academics who are not -- nuts imposing their view and false history. teaching stuff that's not true. you want to understand why barack obama has such wacked out ideas, he is the perfect

representative of the academic class. he really believes this stuff. he thinks he can get there on your own. he thinks government is the magic thing that should work. i thing he was genuinely shocked to discover the shuttle ready jobs were not shovel ready. to live in america and not figure out bureaucracies are not exactly agile is truly being out of touch with reality. but he lives in that world of people -- they have nice cocktail parties and talk about the latest weird book they read -- [laughter] and excited because a highly esoteric poet is coming by hill was last read by 11 people but who hates america and has this wonderful new crop -- problem called "why i hate america" which is filled with a deeply powerful meaning. my describing the world some of you know? ok. one of the great challenges of the conservative movement of the next generation is a had gone all out fight for the academic world. those of you who are attracted

to that, i would urge you to get a phd and find a campus and start a war. you don't have to argue for a countervailing bias but just argue for facts. a fact-based society destroys modern liberalism because modern liberalism is based on such a large number of fantasies and highly inaccurate things. second, we desperately need a generation of innovation. one of the sad part about my not being more competent as a candidate is that we really need a whole range of new ideas. let me give you a quick examples. brain research -- alzheimer's, autism, parkinson's, mental- health, traumatic dream -- a traumatic brain injury, post- traumatic stress disorders --

the research is the biggest area of break through in the next 25 years. it will have more impact on human lives, the federal budget. we have all of this effort on aids, and i understand the importance of aids and i understand the political power, but the fact is alzheimer's is massively bigger, autism is massively bigger. why is it we don't have the same level of focus and investment and why aren't we having the kind of breakthroughs we are having in brain research, which covers all of these aspects? second, we got into a brawl about it -- i meant what i said about going into space. the weakness we got into was my opponents probably said, well, nasa is so incompetent, how could you possibly throw so much money at it? that was the right question, but then they cut off the answer. what we need is a new model for going into space that uses the private sector, it uses prizes and entrepreneurship. my guess that the people pretty knowledgeable about this, those with 30 years of experience, they believe a private sector

effort to get to the moon would cost about 5% of what the federal government plans to spend. the model i tell people are the right brothers -- wright brothers. a practice five years, spent a total of $500 in 1900's money -- they actually had 500 flights that failed. december 17, 1903, the first four flights failed. they flew on the fifth flight. so, they discovered how to fly. for $500. the smithsonian got a $50,000 grant from congress to build an elaborate fancy airplane, launched its offer of a boat of potomac and it went into the water and sank. $500 private sector, two guys who are passionate and a $50,000 bureaucratic project. and the smithsonian was so mad at the wright brothers were

succeeded that relations were so bad for 37 years the wright brothers when i give them the original plane. -- would not give them the original airplane. some of you interested in doing this, we need a generation of innovation. we need to apply a six sigma for the federal government. it would say trojans. we need to fundamentally overhaul the congressional budget office which is a disaster. it is a bastion of liberalism propping up models that don't work. we don't have the intellectual horsepower of engaged in these kinds of fights. the third thing we need is something we have a fair amount of the probably need 10 times as much -- we need a lot more noisy people. we need people who are prepared -- there are so many fronts to have fights on right now.

and of course, some of it is cultural and some of it is dealing with the changing real world, and some of it is dealing with the obama administration. but we need more people on blogs, twitter, talk radio, tv, more people writing books. two last examples -- we are now going through a revolution in energy. there's an american energy opportunity that by itself is going to remake your life. you should be dramatically optimistic. if we can beat obama this fall, we will see a takeoff of the next decade that will once again make america the leading country in the world. we will be the dominant manufacturing country in the next decade, the dominant provider of energy. people forget, we are an enormously and doweled country. when i first thought environmental studies in the 1970's -- this would be a great

case study for someone who wants to do an interesting book when they -- we use the popular book called "the limits to growth." when it have been developed using fancy computer models at mit and was seen to be very advanced. garbage-in, garbage-out is a very important part of computer work. everything they describe as wrong. this is the problem with modern left wing environmentalism. every single prediction. you get a copy of the book -- it is just wrong. the most recent vivid example of the left being wrong is the how many of you heard of peak energy or peak oil? leftists love talking to people about. we are going to run out. -- there is a funny movie called "the last car" i think, in 1980, i think, and it is like jimmy carter's world coming true.

poponly enough gasoline leapt for one car and the whole rest of the country does not have cars -- only enough gasoline left for one car. a black utopia, if you will, where everything the left dreams of has happened and it is really miserable. in that context, innovation has changed everything. we now have a combination of what is called fracking and horizontal drilling which enables you to go down and get what is called tight oil or gas and shale. we knew there were gas and oil after index and foundations -- formation but we cannot get them. let me give you two numbers to illustrate the scale of the american energy opportunity. the amount of natural gas recoverable in the united

states went from seven years in t yearso 100 -- in 2000, to 125 years today. for most of you -- a few of you may live more than 125 years -- but for most of you we have found that natural gas to get through your lifetime. remember, this is assuming we don't find more. the numbers for oil -- 10 years ago north dakota had 150 million barrels of reserves. the current number is 24 billion. north dakota this year passed california and alaska and is now the second-largest oil- producing state in the united states. this is what is wrong with liberalism. if you went 10 years ago and said north dakota will be the number two or of the state, they would say you are crazy because they live in a polaroid snapshot world. but history is made dynamically, it is made by inventing things, creating new

potential. how many of you have a phone that has a video camera? i rest my case. just think about the dynamics of what is happening to your personal capacity to deal with the internet. so, there are things we can do when we need a generation of innovation, and we need people to be noisy about why we should get it and we need to reset the country on a belief that we could have a dramatically better future. i think that is the challenge for you generation. let me, if it is ok, toss it over to questions. [applause] and i gather you should ask the questions into the microphones of a nice spin people know what is going on. -- the nice c-span people will know what is going on. >> what do you think is the most effective way for us to encourage young people to join the conservative movement?

>> i think the starting points are two things. one is -- do they like having a job? would they rather live in a future where there are a lot more jobs, opportunity, and take-home pay and a lot more choices or one where we all come to resemble downtown detroit? second is a question of freedom. do they want to live any world where they get to define their future and make their choices or do they want to live in the world or somebody in washington, d.c., and an unknown bureaucracy issues. regulation that the deregulation is to define their life? would that work? ok. i am not a young person. i don't know what works. >> thank you, mr. speaker. from north dakota state university -- >> that is why he kept nodding, yes. >> thank you so much for pointing out the successes we have had.

-- and the state of north dakota, especially of the energy in this day. but to take my question in the different direction -- how do we when the culture war in this country and win the cultural battle for conservative soul of the nation? been a very good question. first of all, about -- >> a very good question. first of all, about -- about north dakota. vote left will start whirring about north -- north dakota, because you know when there is an oil boom there are not enough -- there are so many jobs, too many jobs. having no jobs, and no roads -- if nobody puts a truck on the road, the road last a very long time. just think about it. just watch the way the left will react to north dakota. western north dakota has to

many jobs, to many people, too many folks striding around. it is a small town that has one traffic light, it's a long time to get through because all of these people are there. so, you have this constant complaint, either why can't we all lived in detroit where they are going back to farming in downtown detroit because half the buildings are unoccupied or the complexity of succeeding. it is a very important part of life. if you succeed, there will be changes. i bet all of you have had this experience. you go back home with folksy went to high school with and you try to describe your new life and for a fair chance for some of them you live in two different worlds. my impression is most north dakota andns are happy to have so much will produce they have a $3 billion surplus -- most north dakota residents are happy to

have some much oil produced. i think the greatest the lustration of winning a cultural war in a very direct way is abraham lincoln. there are a couple of books by a theologian, one only and that the greatest speech, about his second inaugural, -- one on linkedin's greatest speech, and one as president, and one called cooper union. if you want to understand being persuasive and you want to see a cultural fight, studied abraham lincoln. abraham lincoln in 1850's, there is a very unformed argument in 1850's. should slaby allowed to expand, does it matter? -- should slavery be allowed to expand? you have in abraham lincoln's somebody who is very carefully moving public opinion extraordinary -- in an

extraordinarily well thought- out way and it all blows up in his face and you end up in a war. and he then has to mobilize and sustain the north, despite huge casualties. we lose more people between the north and south combined in the civil war and then all of the other wars combined. and from a much smaller population base. if you read abraham lincoln's gettysburg address, it is a campaign document. no president has been reelected since andrew johnson -- and dejection -- andrew jackson in 1832. the gettysburg address we looked at as a historic, cultural -- read it as a politician speech. basically saying to the north, if you vote against me, your son was killed in vain. now, are you prepared to let your son's death be meaningless or are you on the side of

freedom? it is really designed to take this cultural fight. callista and i have done a series of books on american exceptional is in and we are doing it to pick a fight with the left. either the declaration of independence matters or it does not. if it matters it is a real document and it says your rights come from god, you are endowed by your creative. this is a cultural fight we want to have a country because the hard left of not believe any of that. you get in a very serious question on the nature of america. and i think you want to get people down to first principles and you want to get the down to facts. is it a fact that we now have a lot more oil because of innovation or not? this is why i am reading this piece on the muslim brotherhood. is it a fact that there are people on the planet who said -- say they would like to kill us? let's start with that. if you are on the hard left,

they will say it is just political language. you would think after 9/11 or this week's bombing in iraq or the car >> -- car bomber in times square, maybe people who say i want to kill you actually mean they want to kill you. it is a very important core level argument and we have to be more prepared to wage a those kinds of first principles fights. >> mr. speaker, thank you very much i am from florida. i became a citizen last year and recently ran to be a delegate for the rnc convention and was told by the good old boys i could not make it. the young people could not become a delegate. i became an alternate delegate but as of the republican party need a transformation for the next generation? do we need to go back to the 1980 idea of ronald reagan expressing a genuine message to be inclusive and open? >> sure. of course, we do.

if the old timers say there is no room for them, beat them. marco rubio did not wait and line. he beat the incumbent governor the u.s. senate. i knew him before he became speaker of the house. he had a very methodical campaign to become speaker when he was clearly too young. politics in the end -- there is a very good book of "plunkett of tammany hall." plunkett later in life told this reporter about how things worked. you find an office you can win and you beat somebody. then when you won, you are somebody. you are now a real person. in the age of information -- let me give you two examples.

i did jay leno the other night. did any of you see it? what did you think? ok. i saw snooki and i had a serious and meaningful dialogue. seriously. snooki exists because she exists because she exists. this is part of the nature of the modern world. you could have a brother or a sister and do your own tv show and three years from now if it catches on, you make money. if it doesn't, don't make money. so, part of the trick is to be noisy. yourself seriously. i first appeared asking for a zoo in the city of paris for what i was 10 -- harrisburg when i was 10. i had people my whole career thinking i was too noisy.

my attitude is it is nice to have an occasional republican willing to debate and argue and be in the media. but for a large part of our party, i was seen as so guy -- why doesn't he just be quiet? there is a famous book where the title was "tell newt to shut up," and it was a quote from john boehner. go back home and be it rather than complaining about it. fill the vacuum with their own energy and courage. >> first, i'd like you better than snooki. i am michael, going to law school in boston. i have been doing research on campaign finance. as you probably know, you have a world in course in it this past year. what do you think of the state of campaign finance and how would you fight the left on things like the disclose act

and other things they have been attacking super pacs for monday utize the in the 2008 cycle? >> i think the ideal campaign finance system would allow any american to get any amount of after-tax income if they filed on the internet every night and they gave it to. i think it would clear up all the current bologna, the current red tape. the way the system currently works, if you are rich enough -- if you are mayor bloomberg, you can buy re-election. but he is writing a personal check. he spent so much the it -- getting reelected for mayor of new york that it was virtually impossible to give -- compete because if you are a middle- class candidate you could not raise the money. i think it would be healthier, instead of the money going to the supers -- super pacs that are so all outside of the system i would have the money went directly to the candidates and the candidates have to take responsibility for the advertising, and i think you would have a much cleaner

system. every night reporting on the internet, you know who gave what to whom and just relax and get away from the mess we're in now. campaign finance has consistently made the system worse and it had diverted incumbents' toward spending so much of their time raising money that they have far less time to think and far less time to work with the legislators then they did 30 years ago. -- than they did 30 years ago. >> thank you very much, mr. speaker, for this wonderful speech. i am currently with the foreign affairs committee. i want to shift the dynamic of the discussion and ask a foreign policy question, if you don't mind. recently, in the last few days, there have been a lot of reports from both sides that are sort of taking this critical view of candidate romney's

foreign policy, saying he does not have a specifically defined foreign-policy, and that is because president obama has had almost more aggressive foreign policy to some extent than president bush. i wondered if you could comment on that and what is your view in terms of this upcoming election, and in particular, how do you define it republican foreign-policy in the next foreign -- coming election? >> that is a good question. i think it is actually an advantage that romney does not have an automatic sense of what he would impose on foreign policy, because i think the world is evolving in ways we don't understand right now. i would just give you a couple of quick examples. i was at a speech in singapore

in june and i went early to listen to some of the speakers before i talked. one of them was a chinese in economist who pointed out in the next 10 years, india will add 70 billion -- 70 million workers and china because of the one child policy will lose 70 million workers. i went back to rss who works -- russ for me here, i asked sen meet the comparative numbers. 70 million workers added to india is the equivalent of the gentleman and british work force combined. nobody here -- our foreign- policy establishment in both parties doesn't think about a world in which the addition is bigger than germany and great britain, and yet that is the reality. if you look at the build up of

military force in asia and the decline of military force in europe, there are very substantial changes underway in ways we don't fully understand. in fact, there was an article this morning about the iranians by new technology to try to capacity to inflict damage to the u.s. navy -- 6 or 8 hour capacity to and flood damage to the u.s. navy. if i were to say to you what is the most dangerous country in the world today, what would you pick? china, russia -- i am going to give you two countries not on that list. the most dangerous country in the world today is pakistan. pakistan probably has well over 100 nuclear weapons.

it had a growing islamist factions. it is a very precarious, very complex country. it has substantial terrorist organizations operating all over the place. the pakistani intelligence service funds some of those operations. i mean, it is truly complicated. we all worry about iran might get a nuclear weapon. pakistan has 100 nuclear weapons. iran -- ahmadinejad talked about eliminating is a row, so from that point, but there are a lot of people in pakistan who would like to eliminate somebody. whether it is india, what have you. the second most dangerous country from our standpoint is saudi arabia. it is the largest funder of wahabism in the world, a radical islamist position totally incompatible with your lives. this is one of the conversation

nobody in our elites want to have. this room. he would not be allowed to be here. you have to look carefully at what does this all mean. i don't think today that we have designed systems that fit the realities of the world that is emerging, and i think one of the things i would recommend to a president-elect is he really methodically rethink -- and not just assume that he wants the right wing version of the establishment but that he actually wants to rethink what are our principles, goals, and what kind of systems we need to get there. i think the changes in the world around us are that big. i think are some of -- i am about to get the hook. >> one last question. i want to ask you about electromagnet pulse. bit on it. it is such a frightening prospect and we had a taste of it if you weeks ago when the

power went out of the storm. the you know people in the private sector working -- do you know people in the private sector working on it? >> that everything that are the most immediate threats to your lives on a grand scale -- assuming there is not a nuclear war -- is cyber warfare, which we don't understand very well, and an electromagnetic pulse and of the two, electromagnetic pulse is much worse. we clearly know the technology because we first discovered it in the late 1950's when we set off a hydrogen warhead in the south pacific and 28 miles of -- 20,000 miles away in hawaii it telephones. if you launch the weapon at the right out the to be potentially can knock out in large part of the country. the reason it is so formidable is if you burnout elektra

generating systems can't replace them. -- electric generating systems, you can't replace them. deduction, michael author wrote a great book called "one second after" actor -- where he shows you the town of north carolina after an electromagnetic pulse event. it is one areas, if i was looking at restructuring our national security system, we program of hardening our systems. and you can hardin all of these electromagnetic pulse would not destroy them. and also think through how you harden and of stuff that if there was an attack you could rebuild the system pretty fast. today it would truly be a nightmare. let me just say, i hope all of

you will get active and stay active and be engaged and i hope you will be engaged in an aggressive and direct way, and don't be too patient. we need people who are pushy and willing to work hard. to take pictures? who is my leader? you are my leader? pictures outside? do you want them to take pictures outside? >> also addressing the gathering, star parker. she was introduced by michelle easton. one thing we want to do is recognize effected leaders who

speak up boldly. on behalf of the traditional values, before star parker speaks, i want to introduce you and give -- into this her and give her an award. it is a distinction for women who have showed exceptional leadership in providing conservative dowdies. i am proud to present this war -- this award because she has established herself as a thoughtful lear. before her involvement in the conservative movement, she had seven years of firsthand experience in the grip of welfare dependency. she found a cure, the center for urban and renewal education, to bring new energy on how true -- to transition america's pour from dependency. now one of the things she does

is she consults with legislators are market-based strategies to eliminate poverty. this fall she is gone to speak at and university of arkansas. she writes insightful columns on tsus and her columns are nationally syndicated by scripts news service which reaches 7 million readers weekly and often you'll find that star's articles are posted on the front page of our website, cblti.org. they're excellent. she's also written tremendously powerful books including in 2010 she wrote "uncle sam's plantation, how big government enslaves america's poor and what we can do about it. "white get i don't, how the middle class reflects inner city" and in 1998, my favorite title, her book was called

"pimps, whores and welfare brats, from welfare cheat to conservative activist", star is a mom and grandmother. one look at you i'm a grandmother. she does spend time with her grandchildren in southern california and she also loves riding her bike around d.c. and in our 2012 great american conservative woman calendar here's a picture of star on her bike in front of the lincoln memorial. you know, despite their leadership and their rich lives of achievement, you won't find conservative women like star praised in the mainstream media or by feminist womens' groups. in fact, many of the lib raps in the media and on college campuses wish they could silence conservative messages like star. but at the clare booth luce policy institute, we are eager to honor leaders like star

parker. we want to recognize star appearing and say thank you for your courage and determination in promoting our shared conservative values, and for speaking out against the left's big government socialist people hurting polices. and another thing you might not realize, star, is that you inspire all conservatives to be more courageous and fivey feisty in defending and promoting our beliefs because you are courageous and feisty. if you'd come on up here now, i have an award. [applause] >> this is our 2012 clare booth luce policy institute conservative leadership award. >> there you go. >> thank you. [applause] >> thank you. i found out when kate was speaking that i was to speak. i didn't come prepared to speak. so what i'm going to do is just share a few thoughts with you and then you will have to have me come to your campus and then i will make a presentation.

i came in today, i flew all the way back from dallas, just to receive this award. gratefulust very, very for it. i understood through my assistant, no, you have to be back, because i was on my way to see my grandchildren. i left washington yesterday, i was half way to california, and came back here to be with you, just to say thank you. one thing that i was reminded of, not just with the q & a, when you asked about chick phil eh, which i chickfila, which i wrote on this week, we need to be there for them, i was reminded about the cultural war we're in as a nation, when you think about being a christian in our society today. it's becoming much more difficult. for people that don't know my story, i believe the i believed the lie of the left. one of the challenges with what's happening to our country has already happened to every inner city in our country. in fact when you look at the minority communities, we can

see a picture of where we're going as nation if we continue on this journey toward secular socialism. when you think about a religious conversion, i experienced that, after buying into their ideas, and as was mentioned in my introduction, living seven years in and out of welfare i didn't start living in welfare. i started by believing the poor were poor because the wealthy were wealthy, i started believing that my problems were not my fault, somebody else could fix them, and i started by believing that america was inherently racist so i doesn't have to mainstream my left, i bought every idea they said and found myself totally bankrupt. after the christian conversion i changed my life, went back to school, got a degree, went into business and during the 1992 los angeles riots when that business was destroyed, i had already started thinking about social activism, i had already started thinking about the damage that was done by the welfare state, particularly in the black community and i wanted to do something about it. as mentioned to you through mary catherine, she said focus yourself, think about why you're here, what opportunities that you have because you've

been selected to be here. not every youth is here. in fact when you think about the department of education, the damage that they do to youth today, six 80s million of our young people who have this perverted notion of how life works simply because they hear one side of the story. so when i see buckling conservatives that are here in washington, interning, because they've got a break, i want to challenge that group to say you're not here just for yourself. you're not here to advance yourself. in fact, you are selected, similar to the way that moses was selected. he didn't know what his journey was going to be, he didn't know the outcome because he was a baby, he was put into a river and he had to go into a place and grow nup a place that he didn't know, that he would be called one day to go out and serve, to serve in a very, very special way, so that others could live free. so when i look at interns coming to washington, d.c., i look at you in that similar light and in fact my organization, cure, we just launched an internship program, because i've been on campuses all over the country, as mentioned in the

introduction, almost 18 80s campuses that people tell me that i look young. i'm 55 years old. i look young because i'm changing the image of the republican party. i figure i can just do it singlehandedly if i have to and now it's changing the moilage of grandmas because i'm two times a grandma. i have a 6 1/2 year old and four month old that i'm looking very, very forward to getting on that plane and getting back to california so that i can give her grand mama kisses. this special place that you're in, washington, d.c., where the laws of this land are shaped, is under attack. it's under attack by the very people who have been elected to do the bidding for the american people. we have an opportunity to make some changes. we've always changed as a society, when we are encouraged to do so. mostly because it's a time of decision.

and we're at a time of decision right now. i knew that then, that there was a special call on my life, when i could look into the inner city and not just see the damage that was done to my own personal life, but to the life of everybody that i knew. i knew then when i looked at the data of how broken the black community was that i needed to do something about it. i ended up in washington, d.c., because i realized myself that we needed people here in washington who understand traditional values, because choice loses its meaning if it doesn't matter what you choose. we keep hearing the ideas of choice. there's no definition for choice. if you can do any and everything you want to. i knew that we needed people in washington that believed in limited government. the role of government is not to pursue our interests. it's to protect them. it's not to plunder our bank account. it's to protect our interests. it's to protect us, as chuck holzen said, from our neighbor's sin. i knew we needed people in washington, d.c. that will fight for free markets. we have to have profit. market is good. capitalism is good. and the idea of socialism have been sold into the inner cities and that's why you see no fruit. we see bankrupt, broken life. it's underappreciated that in this country, in the '60s, 70

percent of black children were raised in marital households, today, 70 percent are raised in single households. when we look at the cultural pathologies that come from that, that's where we're going as a country because out of wednesday lock birth rate is 40 percent, four in ten children. you cannot have a civil society if it's a broken society. so i've dedicated my life to get here to do so really hard and serious work, to declare to the country that the answer to poverty is freedom and personal responsibility. not a welfare statement that's what ronald reagan says. i'm just stealing it from him. but it's absolutely true. and i wanted to declare that through an organization, so i started one. i started an organization, cube the urban center so we can find market based solution toss fight poverty, we have given $400 billion on poverty in the last 40 years and look at the end result. time doesn't allow me to tell you the he said result of the $400 billion. most of it isn't a named program. if they do name it, it isn't working. one of the programs is the food

stamp program. now it's grown into the second largest welfare program in the cup. you look at what happened in economic collapse, those were welfare programs, fannie mae and freddie mac was a welfare program. that's whato by government intervention in places that it didn't belong, free markets, individuals, enghaidged lives and product, are how we're going to solve economic problems, but through the hand of government. i know people in washington that believe in a strong national allegiance. we have divided ourselves as a country. we can't go on like this anymore. but it's so terribly divided. i've been saying all over the country t. reminds me in the '50s, when the 1850s with abraham lincoln when he had to look into the striptures at that hard place in our society and say a house divided against itself can't stand. he quoted lord jesus christ and said we can't go on like this, we're going to be all one or all the other. he didn't expect the union to

dissolve but he knew we can no longer be half, we couldn't be half free and half slave and that's where we are as a nation. we have some that believe in biblical principles and personal responsibility, and we have others that have bought this lie of secularism and socialism, and now we're about half way. we have 48 percent on one side and 48 percent on the other side and there's not anything getting done to solve our problems. that's what the chick fil a debate is about. nature abhors a vacuum. you can't take morality and principles out of a society and say let's just have neutral territory now. no, the enemy comes and. so does terrorism. that is exactly what we are seeing. it is un-american to be christian. if you dare to speak your biblical police in the society today, you are getting things taken from you. it might be a violation of civil-rights law. it has got to be a violation to some policies. it is one thing for me to

boycott and say i am not coming into your store. it is another thing to say you cannot come into my store. i think the homosexual community crossed the line. everybody will be eating at chick-fil-a next wednesday. i hope you'll join me. i have not been into a chick- fil-a. but i will buy one. is there a chick-fil-a around here? we will try to find somewhere we can get our chick-fil-a to make a statement. the statement has to go beyond just that one day. saying that we will not dissipate in the boycott, saying we will go in and purchase. we have to think of their own personal lives. i dedicate my life to this work. i got tired of people coming to washington to have fun, play games, become part of the problem, and if that is one of the reasons you think, i love it out there and i will come there

and stay there, i think people like monica lewinsky had those ideas. if you do not know who you are and why you believe what you believe, you will get very lost. this is a very dark place. we are in a cultural war. we have a number people on each side and there are strong believers within both of them. those that buy into the idea of american sectionalism, those are the ones you will find on the right. the basically christian people in our society today. we get pushed against wall, with this idea of social justice. we are the ones that, after going to church, and after the government takes $400 billion to go into the poverty war that we have no result except broken this and chaos, liberalism is cruel. it is recklessly kroll. you are leaving a whole lot of casualties. we are the ones that, after they take that money, forcing it out

of our pockets, it is inconsistent with scripture, we give away another $300 billion in this country. another $300 billion abroad. we open homes. we opened our homes. we work in the crises pregnancy centers, a homeless shelters. this benevolent, christian work. it will be a dark place in this world if we lose the cultural war. if christians do not engage. if we do not think about our lives and say, why am i here and what is a i am supposed to do. connected to that personal level first and then determine if washington d.c. is where you are supposed to be. i believe we should go to college campuses and share our ideas and fight with them and allow people to participate in the struggle as you are thinking through ideas in discussion. it is tragedy sky, that we have to fight our way into college campuses today because you would think that would be a place where ideas of all kinds would

be welcome because that is where young people are shaped. that is not true. i have an agenda. i do not want this country to crash before the very few who have not had an opportunity to find out what freedom looks like or is all about are going to find themselves in a country that is not like that of our findings -- of our founding fathers. the very few that are trying to figure out their lives because they made a few mistakes, because they bought the same lies i did. where liberals keep promising we will make everything battle for you, do not worry about it, we will keep stealing from your neighbor, those very few have to keep depending on us to keep our country free they do not know this. they are the one that thinks that america is stacked against them because they have been told it is inherently racist, as

well. in the history of america, from slavery to the welfare state, which is another type of slavery, they are the ones that say the government can take care of the children and the environment and their health. i had an opportunity to go on "theview" because michael more was being interviewed. i wanted to ask him a question. he'd come out with a movie and i had to sit there for 45 minutes in order to get to that question. when i get into heaven, i will ask god for a special crown for sitting between the people i sat between. i just want to ask michael more one question, why did he go to canada and cuba? he could have gone anywhere in

the city to see what happens when the government takes health care -. you can go into south central, los angeles. you can go into every urban community within our country and see exactly what happens when government controls health care. where it takes you an hour and a half to get an ob/gyn. it can take you 1.5 hours to get to a hospital because there is not one in your local community. the government drives up opportunity. it is high style to the free market. i am rambling on about why i am here. , was telling you about my internship program, too. we launch an tip program -- an internship program to change people to start to believe in that america is not set against them. we want to get campuses into our think tank so they can read

books and move on to other great works that were mentioned to you earlier today. your role is to make sure that, when you finish your college studies, if you decide to come to washington d.c., is to come here and take this seriously. the cultural war. we are up against -- i talked about this because i know these are the principles these people believe and cheered when you get here, that is what will first be challenged. what i want you to know most importantly is that those ideas are what really work effectively, not just for the poor in this country, but for the poor in the world. we need to keep our resolve. just recently, one of the beautiful things about america is that we get the opportunity to change. we have a lot of challenges. you heard from many great

speakers today. we are at the crossroads in our country where we are going to have to make clear decisions about who we are going to be. one of the things that is beautiful is that we will change when we need to. i do believe we will change. we still higher our leadership. that is a wonderful opportunity other countries do not have. we battle in the voting booth and that is an opportunity we have that around the world they do not have. blood runs in the street when they have to battle. because we hire our leadership, we hire representative that represent we, the people paroquet close values are consistent with the values of this country. i am so honored. i lectured on a couple of campuses. to get this award is extremely special. i have been in this battle for

quite some time and have somebody full-time on staff that has to go through my mail because i will not read that stuff and some of the names they will call you and the viciousness of these battles. i do know the rewards are not just about coming and saying, i live in washington d.c. and in california, i wonder where this will live. the rewards are when you get letters that say, you change me, you touched me. mother teresa is one of my heroes. she said, you change one, you change the world. you touch one, you touched all. our ideas are what rescue's others, and we can live healthy, proud, and conservative, and christian. thank you so much. [applause] yes, i will answer a few questions. as i watched that clock, i

really do have a flight. i was not expecting to make a presentation. thank you. >> during the conversion process, what was the most difficult liberal like to shed and how can we show truth to people who are struggling with that. >> i think the biggest liberal lie is that -- that your fate is your destiny. your faith is not your density. if you are born poor, you are going to die poor. if you are born black, then everybody is going to judge you by being black. i think the biggest liberal why is that if you are female, then all that goes with that is going to the hostility, so we have to nanny you. the concept that you do not have the ability to engage your own

life, to sort through and make choices, some good and some not- so-good, and when you fall, you cannot get back up. when people do not have dignity, their fate is their destiny. the circumstances that one is born into does not have to be the circumstances they die in. it is really hard to deal with this all the time. i work with welfare moms all over the country, to really make them think they have the ability to raise their children healthy. that they even have the ability to move out of the poverty situation. when you tell people that it is too hard for you, so do not try, you destroy their reason for being -- for being here, their reason for existence. that is one of the most damaging lies you can put out. to steal away from them the ability or the opportunity or the desire to try.

>> club. i was wondering if you would speak to christians and social justice and getting christians engaged and involved. i think this system in america is moral. >> that is a difficult one. many christians in america take their christianity for granted. they get up and go to church and live quiet lives, in quiet communities, and do not realize that we are under attack until it hits their lives personally. i believe in churches all over the country, people are engaged to the level that they can -- we are missing it. those who have bought this notion that we are a christian country so nothing's wrong with redistributing wealth, when barack obama talked about we distributing wealth, half the nation agreed with them -- him.

gott told us to reject god told us to pull our portions. not to go into your neighbor's pocket. many of my friends that are trying to get the message out to christians in their churches and in those environments so they will connect the economic side of their lives with the social side of their lives. when you think about property, it is as sacred as life and marriage. you have to get people to understand that. there is and in -- and inconsistently with greece distribution. social -- socialism is rooted in this. we ask politicians to go take it from them.

what we have done is built up this model system that is harsh. the rules of welfare do not work. we will keep you enslaved to the poverty plantation. a lot of christians do not understand what has happened. to our society and the role they should play. the only reason i was in dallas and get on at 5:00 in the morning plane is that it was a tea party event. i think a man -- a lot of people are waking up. a lot of people are saying, what has happened to our country? we can be hopeful that the tide is turning. it is in part and we continue that journey and young people like yourself find a place to say, i am going to be involved as well. that involvement is personal. one of the questions you asked earlier was, can women have it all.

we can. i remember one of our pastors, when we were frustrated in the cultural war, trying to save babies, he said, i know how to win this. we will marry kids young and have a lot of children and outnumber the enemy. if you are looking for the cinderella dream, there is nothing wrong with that. we need to outnumber the enemy. some unease to have children. [laughter] it is true. the new data is out. the demographic shift in this country, it is unappreciated that we sell this idea more. the country is drowning. when you think about the demographic shift and not having children, in order to place yourself, latinos are having 2.4 children, black people are 2.1, and whites are 2.7. when you think about who is not producing, that might be a noble cause for a good, christian

family. when asked, what can they do? marry young. have a whole bunch of children. we can have it all but we also have to look for those times that we might hear it in our ear that it is time for us to get up, go to war. we are under horrible attack and there is not a clearer picture today. it is what is happening to chick-fil-a. this is a wonderful christian family that believes the bible. when a baptist paper asked them about marriage, of course they will believe in the sanctity of marriage as defined in the scripture. now their business is under attack and the aggressiveness of the left could run them out of business if we do not help continuously. once there is a target in their mind, they are relentless and they will continue to push against that.

christians need to understand we are in a war and we better win. >> i was wondering, do you believe there is any room for entitlement programs into a's government or should they be abolished altogether? >> i think we should understand that the entitlement programs are government taking from one and giving to another, so i think they should all be abolished. i do not think they should be abolished overnight. they cannot be. look at one in particular. one i am very passionate about. social security. it is a government promise that it cannot fulfill. when it was developed, it was developed on a concept that a business and society would be illegal, you cannot build out pyramid schemes. one was arrested for doing this kind of business. back when the system was designed in this country, roosevelt decided to find out

what is the age of death. when two people die? most people die at 63, so he made the age 65. you cannot have current workers pay for retirees and think you will fulfill everybody's retirement. one of the challenges of the system, the biggest challenge, is that the people who get the -- hit the hardest on the people who need it, the most. most of people will not retire off of social security. poor people, the only little but they may have to save and invest. the social security system makes them violates scripture, because the bible says a good man leaves an inheritance for their grandchildren. if you force poor people to give it to uncle sam and i cannot transfer it to their grandchildren, where do they get

resources to pass to their grandchildren to fulfill that scripture? the only little bit that they have, they do not own. the cannot pass it on. any time we try to have this discussion about changing these programs so they are fruitful to people, so they help those who need help most, we get the push back from the left that they want us to save the entitlement program. the medicare program, it has its challenges, but the one that has the biggest tragedy is the medicaid program. the medicaid is a cottage -- a poverty program. it takes out of taxpayer's to pay for all of the health care of those that qualify for what we might consider poverty. from any and everything. scrapes, bruises, you name it, you can pay for it through medicaid. pays for 40 pot -- 40% and 60%

of all long-term care in our nursing homes. we cannot go on like this. young people cannot afford it. the main reason we should abolish the entitlement is because they are inconsistent with scripture. they are inconsistent with scripture. we need to make sure we take care of the poor. one of the things i appreciate about the honesty of the gospels is when john wrote about an encounter, john the baptist. when he was in jail and be heard about jesus and the amazing things going on, he said, go ask if he the one or should i look for another. jesus told him a few things. he said to tell john that the deaf are hearing, the blind are seeing, the lame are walking, and the gospel is being preached to the poor. it seems like that will be out of place with all the amazing

miracles unless the gospels were being preached and that is a miracle. the government has interjected itself into a miracle that could occur in people's lives if they had control over their lives and we have injected government to say, we will take care of you. and people are in that little space they have on the side of eternity. entitlement programs are inconsistent with structure and rigid scripture. yes, we need to get rid of all of them. >> i was wondering who is your favorite woman in the bible? >> my favorite? star?ere one named s [applause] that is difficult. they are convinced that an order for them to take work, they have to get a minimum wage.

the left has convinced people we need to pay a minimum wage. when you look at what happened in this economy, it is because of the minimum wage as well. we are looking at other factors as i mentioned earlier. the mortgage collapse. it gets little attention. one of the first things they did is increase the minimum wage. it just pulled the rug out from under young people to get any type of employment. it is one of the reasons the unemployment rate is so high. what is that to do with my favorite person in the bible. imagine, think about ruth's life. everything the left says, she is a picture of the opposite. she was a product of arape and incest. raped him.ter

he went to serve his mother-in- law. she went into a land that was not her own. had there been a minimum wage, she would not have been able to key a great-grandmother of king david. she is one i really like because i think one of our welfare moms should model there life after her. the key to work, you just get in and take any job and then work harder than the person above you. i think the absolute favorite is lydia. i like her because i think my life as a lot like hers. got it has been so gracious to me -- two has been so gracious to me. i got into serious trouble. i left a lot of that -- a lot of

things out of my autobiography. i did not want to get arrested later in life. [laughter] i was rescued and my life was saved. i could take on more of a lydia type of persona. i own a home now in a beach town in southern california that i rarely get to because i worked in washington. now i am able to transition into a bed and breakfast. i have a lot of people there who are growing weary, tired. ministers and others are able to come and get a refreshing. if you look at lydia's life, that is what she was able to do. when she heard the gospel, she changed. she invited the disciples into her home and was able, had the resources, to serve them, so they could go back to the battle. i am 55 years old. i hope you young people will be inspired enough and challenged enough by some of the women you have heard today, and th