make a decision or if there's a struggle between regulators, they are put into a twilight zone of decision making and they don't make a decision. >> that you, madam chair. -- thank-you, madam chair. you have been on the job now half the year, slightly over. i know that probably there was the perception that you were going to be a wall street attacker, which obviously did not materialize. i am wondering how many, if you have a number, how many people across the country have contacted the agency so far? estimate, maybe

even an accurate number? >> how many people have contacted the agency so far? >> how many people have come to the agency and filed a complaint. >> i see. the complaints have been steadily increasing. that is a function of several things. number one, given that we did not know at the outset what the volume would be, we had different categories at a time, starting with credit cards and adding mortgages. that was only possible, notably, because other agencies cooperated with us to make that possible. the number of complaints as of september 3 was 72,297. that is increasing. we're at an annualized rate this month of what would be 10,000 in month, 120,000 a year. that has continued to increase. we have no idea when it will level off.

there are other people who have come to tell stories -- thousands. we do not have exact numbers of those. many other people who communicate with us in various ways. ranging from meetings to mail, the same sort of things they come to you by this different avenues as well. >> i do not have as much personal pain involved in this as i did a couple years ago before my youngest son graduated from school. >> from college? >> yes. i would never have given him a credit card if i owned a credit- card company. it does not have anything to do with love. it is logic. i am wondering what you found so far, whether you found anything related to student debt, and credit card use? >> one of the things the card

act addressed that has been positive among the many things it addressed was credit card marketing to minors, often to a new college students on their own for the first time. there were various concerns, i remember, state governments concerned about those abuses and different hearings in front of our legislature. the card act was passed and it addresses that to a considerable degree. that has been certainly helpful. in terms of student loan debt, we hear quite a bit. it is a big issue for people right now. we calculated, and we had better sources of data that have maybe been available before earlier this year, the total amount a student loan debt had passed the one or trillion mark. the biggest single source of debt besides mortgages. bigger than credit cards and auto loans.

many people over the years accumulated debt and did not understand the differences between private student loans and federal loans, the different protections available if you have trouble making payments, the different avenues to have. we have done a lot of work. it is part of our project around clarifying and making it much more accessible to people, the choices they have on student loans if they are thinking of going on for further school. we will be bringing out the results of all that at a college cost indicator that people can get a sense -- when they get that offer. it is like buying a house. people fall in love with a house and forget about the mortgage. you can fall in love with the school and forget about the deal. it will be much easier to compare what kinds of offers they get from different places, what the cost will be. we believe it will help people make more informed and better choices. we are working on complaints from people for whom it is too

late to inform, the already went through -- not like her son, but people of that age and older who have problems repaying their loans, what their rights are, what their responsibilities are, what their options are. we are working closely with the department of in -- education on that, with secretary duncan and his staff. >> thank you. my time is up. i would be interested if your staff could provide any information on that. i was one of the authors for that inclusion in dodd-frank. not just because of my son, but because of the sons and daughters of other people i knew. >> i would like to talk with you. sure. >> thank you, madam chairman. mr. cordray, you testified before a subcommittee on february 15. during testimony you said the

cfpb is committed to being accountable and using your resources wisely and carefully. you also repeatedly stated in correspondence that you are committed to promoting a culture of transparency and accountability. to date, the response is that we have been receiving from the cfpb have not really proved that out. one of the things that dodd- frank requires is that you provide a financial operating plan and forecast to the omb. i understand you did not do that, but given a budget justification form, which is different than a financial operating plan. additionally, we have less to to perform -- give performance measures and an overall strategic plan for the agency as of the state -- for the agency. as of the state, we have not

received that. you also mentioned the word detail processed -- in determining employment needs. when they ask you what the size was of your organization, you have still not furnished us with any kind of information on what the processes to determine what your employment needs are. i could go on. there are a number of things that we ask you that should be an integral part of any agency or business operating, especially one with half a billion dollar deficit in our budget. is it just that you do not want to furnish the information, or it is not part of the process? you do not have these documents? i am trying to get a handle on it. is it like a conspiracy -- is a lack of transparency, or do not have these documents? >> thank you for the opportunity to address this. i did read your piece in "the

wall street journal." it is important to recognize that we did not exist as an agency until last year. at the outset, we obviously were not going to have the same kind of full documentation as other agencies that existed for decades or in some cases over a century. but we are getting there. in terms of responsiveness to your request, is my understanding we have theeast five times responded to requests with more information that you have asked for, especially as it has been clarified what information you wanted. the specific issues you raised, are budgeting documents are growing larger and more full each time in the process. this is the first time for me -- i only became director in january -- i believe we are well on our way to doing the kinds of things that you will want us to be doing around the budget

process. as for performance plans, i know that we have been working, and i have seen drafts and worked on a draft that will be coming out shortly. i think you'll find that as we go, you have already seen, initially you got very little information. the first time we went through these things, 30 people at the bureau. we had not filled up the expertise. the next time it was more. this next time it will be more yet. we are happy and committed to working with you to try and make sure that you are satisfied and getting the kind of information you want. i understand that as of today you are not satisfied, but you will be over time. we are getting there. we did get a clean audit from gao, our first time through. they are back to see us again. we have our inspector general from the federal reserve who is working over matters with us. we have, congress has provided us with another outside audit,

which was also clean. we are trying to be careful. i take them seriously and personally. in terms of getting information, we are working hard and will have more as we go and would be happy to continue to be in touch with your office about making sure -- >> i have one last question. i want to follow up on my friend from texas on this term, abusive. if your agency determines that a bank or a non-banking financial entity is engaging in "and abusive product or practice," what is the recourse for that bancorp for that financial institution if they do not like your decision? >> 1 -- it has come up in different contexts. one would be an examination of the institution. if we find something we comply with the definition of congress on what abusive means, we would

have a working back and forth with the institution. there might be disagreement about that. we would discuss it and try to clarify it. it is not our intention to try to dean institutions on things is not very clear what the law is or what the law says. in grey areas. that is not really worth the time or theirs. as i say, often things that you might consider to be abusive are also unfair or deceptive, which is much clearer under the law. that may be where the discussion would center. it could also come up in the context of an enforcement act or investigation. if that is so, the company would have every opportunity to raise their concerns. we have a process that if we are considering taking action, they have an opportunity to come to us and explain what we should not or do not necessarily understand the facts correctly. then we decide that before proceeding. if we were overreaching are

getting it wrong, they might tell us that and cut us back. we have not yet had any of those occasions thus far. we hope we would not, but we will see as we go. we are trying to be reasonable and yet firm in our understanding that we are there to enforce the law. >> thank you. ms. mccarthy? >> thank you, and thank you for your testimony. it has been very interesting, especially being that it is such a young agency, and the amount of work you have done in the short period of time. one of the things that we were interested in was that your agency is so -- so far has issued two notices to propose rules in at protecting -- aiming at protecting mortgage borrowers. you have included a provision that requires services to make good-faith efforts and contact

the delinquent borrowers and inform them of their action -- options to avoid foreclosure. i was wondering, how you define good faith effort? i have to tell you that we, as i am sure members of congress are going through this, so many of our constituents are calling us because they get the foreclosure notice and do not know what to do. they then call us back to basically say, we have been trying to work with the bank. we do not understand what they are trying to tell us. or because there are different programs out there -- can you help us? we are very lucky, we have a good relationship with our community bankers. one of the things that we found, probably the best solution is for the customer to really sit down with the person so there can be a face-to-face. i wonder if you ever considered

it -- if the agency has ever considered a face-to-face once you make contact with the bar were to come in and talk about it. over the phone, sometimes it is very difficult or even, to be very honest, with some of the papers i have seen my constituents bring in and read, i am sorry, i sit on this committee, we have been working on this issue for a long time -- you need to be a lawyer. so you can understand where the confusion is coming from. most of these people, they want to keep their homes. they want to do whatever they can. obviously they are caught in the economical problems that this country has been facing. i still believe very strongly that until we settle these housing issues across this nation, that is one of the things dragging our economy down. i would like to know what your response would be to that.

>> my response, congresswoman, i agree with you. i think housing has been one of the single biggest obstacles to a faster economic recovery. i think it is well documented now. it is undeniable. everyone is working toward more improvement and no one more than the private sector, frankly. in terms of the questions you raised about mortgage servicing, i believe the community bank and credit union model is exactly as you described -- it is often a face to face process, and typically a lot of those institutions keep their loans in their own portfolios. there is not a subcontracted mortgage servicer who may not have an actual relationship with that customer. it is much easier to work to the problems in that setting. that is the traditional model. the good model. it works well. the lender and the borrower have

a stake. they talked it through and find a way to go forward. what happened in this industry is that there is a lot of high- volume providers. in many cases, servicing rights may have been bought and sold and go on to somebody who has never had a relationship with that individual customer, and it may be several years before they start having a problem making payments. that kind of a communication has not occurred well or effectively. frankly, just to be blunt about it, there has been poor customer service by a lot of mortgage servicers. there is no other way to describe it. our rules will help to improve this situation. they provide for continuity of contact, early intervention, new record-keeping and document management procedures, all of which should improve this. none of this is a surprise or a mystery to people in the industry. it is just a question of whether they are willing to put in the time and effort.

whether we should mandate face- to-face meetings in all instances, it feels a little like we would be micromanaging the process may be too much. they have to have the staff discuss with your staff along these lines, but we try to draw balance. they are out for public notice and comment now. we will be finalizing them by january. >> my time is up. sorry. >> now the gentleman from north carolina, mr. mchenry, is recognized for five minutes. >> thank you. mr. cordray, thank you for returning to the hill to testify. structural issues remain regarding the cfpb, but i certainly appreciate your willingness for congressional oversight. i want to follow up on my colleague from texas, his line of questioning, as well as the line of questioning about the

term abusive. the concern, and you answer this in the question, you outlined this term will largely be determined by enforcement action. that is the concern i hear from industry, that they will wait until you take enforcement action in order to understand what the definition of abusive is. it would be proper for you to outline what those terms would be before you take enforcement action. that concern, that sort of concern by the industry, adds to their level of uncertainty about your agency and about this bureau as it currently stands. so i asked you to consider that. the question i have at hand is about simplifying mortgage disclosures. my colleague, mr. green of texas, and i wrote legislation

about trying to create a one- page mortgage disclosure form. i appreciate the fact that you took this up first on your watch. again, the concern i have is the construct of it, as the german outlined, look -- when you say you have a three-page loan estimate and a five-page loan a disclosure form at the end, it becomes overly cumbersome and simply adds to the stack that folks have. refinancing -- we had someone testified, and even days -- even they conceded, like i did, that they did not read the whole stack. people are left with a lot of major questions, even when they make this huge closing with all these enormous mandates.

so can you get to a one-page mortgage disclosure, and kenny simplify the ranks -- can you simplify what you put out? >> thank you, congressman mchenry. further discussions we have had around these issues -- i recall you work on legislation on this several years before it came in. we are working to simplify the two forms. congress had asked agencies to do this before. it was not easy. there were different statutes and they overlap. we are well on our way to simplifying the forms. it is a hard piece of work, and you may be can appreciate the most of you have tried to create a short form that speaks to the things that need to be spoken to and yet it does not get overly long. our puzzle today -- proposal today is shorter than what existed before. it is not accurate to try to make something so simple when it

is not so simple. but it is an ongoing project throughout. in terms of the fact that there is still a huge stack of materials, without carefully at what there is. much of it is required by state law. unless we will pre-empts state law that says you have to have the deed and different titles -- >> we have had this discussion. it is as old as the magna cardoza. the important thing is that the people have -- magna carta. the important thing is that people have the essential information -- their payment, their industry. >> that is what we are trying to do. we have had to go out for lots of public input and are happy to get input from your office. >> what specific elements need to be reformed so that we can reduce that step and make sure that consumers have the proper information? >> although my point is that, as

the stack, a lot of it is state law, not correctable by this congress unless you will print -- pre-empts state property law. a lot of is imposed by the lenders themselves as a defensive medicine hike approach. >> my time is short, that is why i am trying to asked about the federal laws. i concede that much is state law and much is as as -- as old as the magna carta. i'm talking about things we can control. >> that is what we are doing, trying to simplify that as much as possible. that proposal is out for comment now. we will be finalizing it next year. again, we are happy to hear from everybody on that project. >> that is not much of an answer -- i am trying to ask for specifics of what can be reformed. i yield back. >> thank you. >> the gentleman from new york,

mr. meeks, is recognized for five minutes. >> thank you, mr. chairman. we thank you for the work that you do. i have just a few questions, an issue that has really come before my office from a number of constituents. i would like to get your viewpoint. the first is, of course, dealing with many of our service members. we have had a number that have come to the office and have been in very difficult financial challenges and seem to be prime victims for predatory lenders. one had told me about individuals being outside of the military base itself and giving him what he thought was an offer that was too good to be true. when it is too good to be true, it is because it is. of thethat they're part

new bureau dealing with service members affairs. i'm wondering what you can tell us in regard to how this office has been helping you, how i could direct my constituents to the services of those individuals. >> thank you, congressman, for asking about that. that has been a great success, are off as a service member affairs. a lot of this is due to the fact that the system director is in charge of it. she has tremendous credibility of the military and across the country. she goes out and brings back issues that she learns that service members and her family's, and from veterans as well. she gets a response from the department of defense, the department of veterans affairs, wanting to solve the problems. the permanent change station order that we gave -- in number of you served in the military

and can think back to when you were actively on duty and the challenges that can create economic problems for you and your families. people get a change the station order, they have to move, they do not have any choice. that is part of their duty, whichever branch of the service. they may not be able to sell their home. they may have to decide between leaving the family there because they are not able to sell it or it is under water, or taking a huge loss because they cannot afford -- hard choices that civilians and not to the if face. the guide is being provided now makes a qualifying arch of for the hamp program and other government programs that help people get mortgages modified. any number of this type of stories i can tell. people can get in touch with their service member opposite are website -- through our web site, consumerfinance.gov, or by calling our line.

we have been very actively working on behalf of service members and trying to address their special concerns. >> thank you very much. we will be in touch about that. let me ask another question -- a lot of the larger companies and the big companies in the financial crisis were the major ones, we had small institutions that are still very actively involved in their local communities. i know that when congress granted the cfpb the power to exempt various or certain financial institutions -- my question is, down the line come at you for see the cfpb treating a rule that would exempt some of the smaller financial institutions, the community banks or credit unions, things

of that nature -- what is your vision? >> that is something i have promised we will think about with every single rule. the first row we finalize on the remittance transfers, discussed earlier, we ended up putting in a threshold below which you do not have to comply with the rule which will exempted large number of community banks and credit unions. we are considering that and have that in our proposal on mortgage servicing. we are considering that in some of the other rules as well. i have said before, i will say it again -- community banks and credit unions and the model of traditional customer service that they bring to their work did not cause the financial crisis. we would have been far better off if their market share had not been robbed before the crisis by some of the irresponsible competitors. we will be better off essentially to the extent that they are restoring their place in the market. we want to encourage and promote

that. we will look to do that as we write rules. >> thank you. i yield back. >> i yield to the gentleman from illinois, for five minutes. >> thank you, mr. chairman. director -- i want to continue a little bit on what was said before. it seems that dodd-frank failed to provide the cfpb with the authority to merge the statutes. i know that we worked to try to get them together as they were working on that. they did not come up with a disparity in the statutes. but that happened. there seems to be a conflict between the statutes and their application or policy goals. can you or your staff suggest legislative language that would

resolve the differences, the conflicts between the two statutes? should they be merged? >> maybe this would help me understand what was not clear in congressman mchenry's questions before -- what congress did in the financial reform law was say that the forms that apply, the disclosures that apply to mortgage transactions at applications and at closing, those needed to be merged and consolidated and, if possible, streamlined. it was too confusing, people got two different things with some different purposes but overlapping. that is the product we're working on resolving. congress did not, though, push to get to the truth in lending act and the real estate settlement procedures act. they are different statutes with different objectives. the truth in lending act has to do with the accuracy of disclosures and the forthcoming

nature of disclosures around the different types of consumer financial lending. the real estate settlement act has to do with what were viewed as problematic issues around real estate closings. they are quite distinct. the two overlap in the area of mortgage disclosures, and that is where congress has asked us and directed us to try and clean that up. that is what we are trying to do. beyond that, i do not think i have a this point suggestions on ways in which she should change the statutes, although i would be happy to work with you and your staff about those. i do not regard the statutes themselves is a problem. >> you do not think they have to be merged? >> the two statutes? i do not think that would be productive, although i am open- minded on legislative matters in your purview. if there is something you want to look at, we're happy to look

at it as well. >> i would like to. we can do that in the future. thank you. another question, the role, i think, creates uncertainty regarding who prepares and delivers the final disclosure to the consumer. the proposed rule permitting the lender to deliver the final disclosure when they remove the independent third harkin party -- third-party closing agents from the settlement process. even in illinois, there is a state law that requires that there be a real estate attorney. what was the intent of removing this independent check at the closing table? >> one of the issues left

unresolved, to the extent of the financial reform law is -- directed us to merge the disclosures for mortgages was who would provide certain pieces of that at the closing table, whether it would be the settlement agent or the lender. the lender had more responsibility for things under the truth in lending act. we have not at this point decided that issue. we are not trying to -- we are wary about trying to impose a model on the market. we certainly feel the right answer, clearly the right answer is the two would work together. they bring different sources of information to ultimately what needs to be done to bring your mortgage. that as all-out therefore notice and comment now. we are hearing from people some of the same questions you are

raising today. we will do that before we finalize it. any thoughts you or your staff have that you want us to know, we're happy to hear them. >> when you talk -- is this from the testing you are doing and the mortgage disclosure form for consumers and how they react to changes? >> yes. but that whole thing is more about the effectiveness of disclosures, whether consumers understand them or are confused by the end. the issue you are raising is more of a practical problem of who, on the industry side, the provider side, is responsible for which pieces of the closing. that is always been an issue that lenders have tended to work out between the two of them. that is something they should continue to work at between the two of them. but we hear from people with different points of view on this. >> i would like us to discuss that further. i am concerned that the market

participants, especially small businesses, may be shut out of the process altogether. i think you for your answers and yield back the balance of my time. >> now, the gentleman from georgia, recognized for five minutes. >> thank you very much. mr. cordray, i would like to continue the line of questioning on mortgage servicing. two significant events that happened lately to help struggling homeowners. i happen to think there are too many homeowners losing their homes unnecessarily. there is help out there, they are not getting it. i want to know what connection you have and how you are working with that. one has been the problem of multi-cyclical banks, the large banks. there was a settlement -- bankamerica, wells fargo, three others.

five large banks. individuals who held their mortgages would be entitled to a very significant help. have you all looked into this -- what relationship would you have with it? how are you making sure those consumers are getting their benefit, and whether this money can be used for principle, which is very much needed? what is the assessment of the situation right now? >> our involvement in this issue is -- in particular, we now have authority over market services. we have authority to write rules on mortgage servicing that apply to banks and non-banks in the process of doing that by january. we have the ability to examine mortgage servicers, send an hour examination teams. we have been doing that with different servicers. we are in the process of doing that across the industry.

that has been insightful for us, and it will lead to corrective action in a number of instances where they have not been up to snuff lately. we have enforcement authority, with inappropriate cases, which will be utilized -- which in appropriate cases will be utilized to make sure people are following the law. >> any problem areas there? have there been problem areas there, any complaints -- is it moving smoothly, all five major banks cooperating? >> i think our processes are rua-- moving relatively smoothl. i think it will be a smoother several years from now than they are at the outset. in the mortgage industry, things have not gone smoothly over the past six years. consumers -- i am sure your office hears from them as much as we do -- are very dissatisfied with the level of customer service accessibility. when you get then your

paperwork, whether there is continuity, that they keep and do not lose the paperwork, all the frustrations people have had. it is a troubled area. it is not a case that every mortgage servicer has deeper problems with their process. some have clean portfolios. some have been more attentive. >> let me ask you -- my time is ticking away. one other program we put together at this very committee was to get help that was really needed, for those people who have lost their homes or hardened -- or were holding on to their homes but had lost their jobs. we put forward what we call the hardest-hit program. there have been a lot of problems with that, largely because in some states they have 45% approval rates, some have a 10% approval rate. i am wondering -- this is a program, many people do not even know exists, where if an

individual loses his job, there is funding their to help him pay up to 18 months of their mortgage. they have not gotten that -- what are you doing to help some of the state's move along to more aggressively market the program, target the unemployed, make sure that they have something that can directly keep people in their homes, particularly in the view of the fact that the money will run out in four years? >> i recall, when i was attorney general of ohio and these funds were first made available, finding myself frustrated as time was passing and there were not being with -- they were not being drawn down. in the state of ohio that is going better, but it is challenging. we do not administer the funds, so i am not an expert on that, but i do know it has been an issue and a problem around the country. some states have drawn virtually none of their funds. some others have had various resistance. i do not understand it well

enough to apply it to you. >> that might be somewhere where we need extra help. you are absolutely right. many states -- let me get to one other point on the regulatory front. we hear some complaints from your agency about the regulatory, the overworked paperwork, the outdated and unnecessary and unduly burdensome regulations -- what are you doing to address this issue? >> we launched -- we have heard that too. i even invited that kind of comments. we launched a streamlining initiative earlier this year. people from everywhere, including industry and other quarters who are typically having this complaint, identified for us the types of provisions that they think could be eliminated or modified or the burden of them produced without

hurting consumers, or that they think are not delivering value. we got a number of suggestions, some of which we are definitely following up -- one of them was the credit card ability to repay for spouses who do not work us at the home. we will be taking up that imminently. there are others we will pursue. i think that was fruitful for us. we did find that a lot of the burdens people complained about had nothing to do with the consumer bureau. the financial industry -- is the money laundering requirements and the bank secrecy act, neither of which we administer. there are things that did come in our purview that we will proceed on. i think that has been helpful. we will be able to show people who complain about that that we are willing to take it up and work on some of the issues they raise, which i want to do. >> thank you very much.

>> the gentleman from missouri is recognized for five minutes. >> thank you, mr. chairman. mr. cordray, i sent you a letter, along with 30 of my colleagues, with regards to the wire remittance role that you promulgated. we received back this week for a letter and thank you for that. one of the questions i have -- in the letter says that you understand that compliance maker -- presents challenges for some institutions, and have met with some providers to hear concerns they may have. iu considering any changes as a result of meetings you have had with the providers, and so, what changes to the rule are you anticipating? >> there have been three stages of this. the first is that congress passed the law. it is the law of the land. there are now due protections

and procedures for remittance transfers. if the consumer bureau did not exist, that would still be the law. the consumer bureau was the agency designated to implement the law by adopting rules. those were out for public notice and comment. we had many discussions with many parties about an before finalizing them. we finalize those in february. at the same time, we propose a supplement to consider whether to exempt institutions below a certain threshold from having to comply with the rule because it was more burdensome than made sense for them. we adopted that threshold in august. there are many, many, thousands of institutions that are exempt from the role. it is still covered in most of the consumer market. >> through or discussions, have you found, in surveying the entities that will be affected by this, have you found a large group of them that --

[indiscernible] >> congress passed a law that is settled -- we did issue a rule that is now settled. there is an opportunity to perhaps clarify and provide guidance around some of the points being raised. unless to reopen notice and comment and redo the process, we are a little more constraint now. we're having discussions with various providers who are expressing concerns to us about what we can do to try to address those concerns. we will do as much as we can. we also recognize we need to provide clear and simple guidance to a lot of smaller institutions, and we will come at with a small-provide a guide to the rule which will be more accessible and in plain english compared to what is written in the federal register that is coming out soon.

we will work with institutions to try to ease the implementation process as much as possible. >> if you see that there is a construction of services due to the number of folks doing this, do you look at raising this number? >> we just went through a process on that. we can do and redo processes for ever, and and people complain about regulatory uncertainty. we went through process -- >> let me interrupt just a second. the law is there to solve the problem. if the problem, if there is no problem at the lower end, institutions with very few transactions, then we need to eliminate that because we are creating a problem instead of solving a problem. >> correct. that is what we did. you do not have to worry about it, you can throw in the trash.

>> but if we find that as a result of constricted services people are getting out of it, and the folks getting out of it are not the problem folks, do you not think we need to reconsider that at least? >> what the law requires is that, for the first time now, consumers are entitled to certain protections in this area. if errors are made, there is a resolution process. they are entitled to know what money will be received on the other and and not just toss the money into a black hole. >> i understand you are going. you mentioned the word error. the way the rule is written, the error can be assigned to the individual providing -- the provider who delivers the funds. >> that is an issue we are working for with different

institutions. i think it is somewhat overstated. >> how can you overstate that? >either you counted as an error or you do not. >> shall i explain? counting as an error has to do with who is responsibility -- whose responsibility is to sort out if it is an error. that is the first issue. congress provided that it is better that the institution sort out how the error occurred than the individual be given the burden of doing that. once that is done, the fact that an error was made by the consumer is something that can be worked on back and forth between the institution and the consumer. there is some concern expressed that there might be fraud here, the consumer making an error deliberately and the institution somehow on the hook for sorting through that era. nothing prevents the institution from suing consumers who attended the problem.

to get relief. -- who tend to be fraught them. to get relief. these are more complicated issues that -- then can be discussed in 30 or 60 megabytes. we're having this in discussions with some providers themselves. seeing if there is any clarification or guidance we can give. >> this is a big situation for the providers of the service. an error which is not anything they have control over -- i think we have a huge problem there that needs to be at least looked at and worked with to some degree. >> with respect, the notion that tomb -- consumers could do a four-door transfer and there is an error, that they will sue you and find an attorney to bring a case based on that, i think is vastly overstated. we do not want to foment litigation, and we're having discussions to see what we can do to address these concerns.

we're happy to have them with you and your staff. >> thank you. >> now, the gentleman from california, mr. sherman, is recognized for five minutes. >> i thank the chair. the federal government does an awful lot to try to support the home market, especially in this difficult economic time. we do so well at considerable cost and considerable controversy. we have a home mortgage deduction and property tax deduction. we have taken over fannie mae and freddie mac. considerable controversy there. at some risk to the federal government. now, the federal reserve has its qe3 program, which is designed to support home prices and allow people who might otherwise not be able to buy a home to qualify for a lower interest

rates. money the federal government is sacrificing for other goals to try to make sure we can turn around the home prices and provide for home ownership. your agency is now crafting rules defining qualified mortgages which will govern how housing finance works in the future. an issue reports indicate the rules you are considering are very conservative and could restrict the number of creditworthy borrowers able to obtain mortgage financing. how you reconcile your agency taking an action that would depress home prices, reduced the number of people could qualify for a loan and the component -- and beco homeowners what everybody else is shouldering the cost to accomplish the exact opposite gold? >> the short answer is that that is not what we are doing. >> that is a good answer. >> the longer answer is that this is not a proposal -- the

only proposal publicly on the table did not originate with us, but originated with the fed. it is a difficult area. the proposal raised a number of areas that it did not yet seek to resolve, but sought to get broad input and comments from people, which was sensible at that time. we have received that comment, received for the content -- comment, incessant comment on this. it is important to people. the question you raise is one that has been raised numerous times to us. it is fair to say we're getting the message. if we dropped the circle too narrowly, we could ourselves irresponsible for further troubles in the mortgage market. we do not intend to do that. we recently reopened the proposal for more comment because we got some new data that gives us a better handle on what is actually happening in the mortgage markets.

in this somewhat unnatural face, it is difficult to predict where it is going. i think that people will be satisfied in the end that we have taken that account into concern. it reminds me once again how important this is to people. >> i think you for your attention to that. one part of these rules goes back and forth between rebuttable presumption and safe harbor. of course, the economy works best when the rules are clear and the regulators are in touch with the markets and up to now when some new abuse occurs and they can quickly change the rules. if you cannot draw clear rules and cannot modify those rules as necessary, then we are stuck with the litigation system. the vague rules, rules you cannot rely on, then you have

litigation, liability, and a loss to consumers and the economy. is your agency leaning toward rebuttable presumption, and do you think you can write a rule that provides a safe harbor so that a business can be certain that if they comply they will avoid the liability and paying for liability insurance? >> i found myself saying in my head, amen to your comment about that. as a former attorney general now the head of a federal agency that has among other responsibilities law enforcement functions, gray areas of the law are not appreciated. they are difficult for people trying to comply and difficult for us. i think we understand it if we write rules that are murky, that will be essentially an abdication of our responsibility. we will end up getting results

in course through litigation. it will take years and be very expensive. we understand, and i think we are making real efforts here to draw very bright lines about what qualifies. the safe harbor vs rabat consumption -- presumptions comparison is a bit of a garage. even a safe harbor is not -- mirage. there was a bit of a marketing concept there -- the more important point is, are we trying bright lines that will discourage and minimize the prospect of litigation? >> let me tell you that all the sea captains i have talked to really want a safe harbor. >> look, if somebody said a safe harbor or something else, i would take the safe harbor. but i think that oversimplifies the issue. the issue is minimizing litigation costs and the risk of

that that would lead people out of this market. we will try to do that. >> thank you. >> the ground and was not at the joke. -- groaning was not at the joke. >> let me pick up -- i very much appreciate your time today. one of the frustrations that some of the members are having is that we hear there are 27 oversight meetings, but a lot of the questions and i did answer. we're talking about the questions, we are talking about everything but the answers. i was told, and please correct the record, but i was told that you yourself had mentioned that the cfpb would absolutely not be adopting a safe harbor. is that not accurate? >> first of all, that role is ending and not finalized. >> that is my point. it is a yes or no question. did you or did you not say that

cfpb would not be adopting safe harbor? yes or no? >> it is a little like being a justice of the supreme court saying, are you or are you not going to find affordable health care act unconstitutional? is in the process, not yet resolved. >> my question was, did you say that in the past? that is something that happened or did not. you see how simple the question is? did you say it in the past or not? >> i have not taken a position because the bureau has not taken a position. discussed the issues in ways i discussed with congressman sherman, explaining the difference between safe harbor and rebuttable presumption is in my view quite overstated. we will try to minimize litigation and draw bright and clear lines. that is what we will try to do. we have not done it yet, so for me to tell me what we are going to do when it is not finalized

would be, as i understand it, improper. >> that is why, when there is a lot of talk about lack of oversight and the uncertainty out there, there have been 27 meetings, but all of them with, we are working on it, we will let you know when we are done. it is extremely frustrating peaky sometimes that is the accurate answer. if we are working --. >> it is sometimes the accurate answer. if we're working on it, sometimes that is the answer. if i can answer more definitively, i will certainly try to do so. >> do you think the litigation risk associated with the ability to repay standards will be increased if the cfpb goes that way? with that increase litigation risk? repay as opposed to a safe harbor? >> the rule is an ability to

repay. the proposal that the fed put out offers the choice between the so-called safe harbor any so-called rebuttable presumption. i think that a rule that creates uncertainty and murky criteria will foster litigation. that would, in fact, restrict access to credit. >> today, do you think there are a substantial number of borrowers who are qualifying for mortgage credit who should not be getting loans? >> today? i do not think so. i think in 2005, 2006 ,2007 , there were mortgages made for people who honestly should never have qualified. they falsified income -- legions of stories around this. today, i would say we had a financial crunch, a credit freeze, we have had a deep

recession. right now, credit is tight. that is because of what happened to the economy in a 2007-2008. >> do you think there are qualified borrowers not receiving credit under these lending standards? >> my sense is that there are -- the word in that is qualified. my sense is that credit is very tight, may be too tight. >> lastly, i will end with this -- how do you anticipate, whichever way that cfpb for the qualify mortgage role, do you think it will expand or contract that availability? >> i think we are trying to write a rule that confers the protections that are intended under the ability to repay provisions. we are trying not to have the

unfortunate side effect of drying up credit in the mortgage market. it is not an easy issue. it is a hard issue, and it is hard to gauge the future of the mortgage market right now. we ask everybody what is the future, what is going on, but financing is going on in the market. nobody has very clear answers. let me say that if we write a rule and we find that it has unduly restricted access to credit we will go back and look at redoing get. regulatory uncertainty is what people complain about now. we have these rules in place by january, then things will be certain. we will remove that cloud. people may then campaign that now it is certain that date -- but they do not like it, but that is what we are trying to work on now to take account of their concerns. >> thank you, my time has expired. >> ms. maloney had a question to

the point you made -- >> we are from the sense that -- same state and city, and are experiencing the same situation. even though the economy is improving in new york and the country overall, credit is incredibly tight, even if you have a a + + rating for your finances, you cannot get a loan. why is that, and what do we need to do about it? is it the at fannie and freddie? some of the big banks say they are pushing back properties if they find anything wrong. they pushed back into the huge loss on it. they feel they're getting so much of this that they cannot put any capital out. >> i am curious. we are all in line for

questions. i am curious where this is coming from. >> why do you think credits are tight? >> i think there are a lot of reasons. people are digging into this and trying to understand it. the most of this reason is because we went through a credit freeze and a financial crisis and that hurt a lot of institutions who, therefore, taking time for them to be able to lend more aggressively. there are a lot of problems that occurred in the financial crisis, including push back that were poorly drawn up to begin with. that has created risks for people active in the market. there are many explanations, validity.hich have the littl

i think this credit crunch is really a big problem that we have in having a robust recovery. i would just appreciate your getting back to us as soon as you can with what you think we can do to try to address that. one of the reason housing is not beginning to move forward is people cannot literally get mortgages. they come to my office and they have literally making $400,000 a year. they have an a + credit rating and cannot get a mortgage. i think it is one of the biggest problems we have. i would like to pick his brain and see how d.he sees it. i yield back to mr. green. thank you so much.

congratulations. >> thank you. i think the chair for this opportunity. thank you very much for appearing today. we do see you quite regularly. we appreciate your testimony i would like to visit with you on your program, but from a different perspective. i would like to talk about the notion, many people in the society are bilingual. in my district, we have the ballot in four languages. how does this tie into know before you owe. we are talking about understanding and making sure people understand the document

they negotiate. if we are doing this, and i know you are making an effort to get the job done, to what extent are we translating documents and providing documents in other languages such that persons can no before theknow before they k? that is the first question. i will have a quick follow-up. >> the issue of access in consumers in other languages is one where i am not satisfied with our progress to date. we need to do more. our complaint call line is accessible to people in well over 100 languages. we are good on that. in terms of our website, we do not have as much translation there yet in our view. we are working on it. takingsomething we are

into account. in the remittance rule we if you advertise in a foreign language and are trying to get customers by using that language, the disclosures need to be provided in that language. it would not be fair to speak spanish to them and then give disclosures in english you are not sure they can understand. there will be other rules as we go. we will work with that. >> i want to comment on that last didn't. that is an important aspect. we do have persons who will attract business in a certain language but when they do business, they do it in a different language. english when they do the business, but when they are attracting the business, they will use spanish or other language on various radio

stations. i appreciate your looking into it. >> thank you. i appreciate that. i agree with my colleague from new york about the credit issue. i will make a note it is not an interest rate problem as to why people are not able to get loans right now. we are having this discussion about quantitative easing three happening. i think that is important. i am happen you are here is a happy you are here. y you are here. precious little can be done unless you have that actual direct budget direction or input. by my definition, which i think is the constitutional definition, that is what real true oversight is. i know you are in a particularly tough spot to a degree. you have said a number of times

you have lost count of all these other things. not all of these things were here when that was passed. i am a freshman of 12 on this side of the island. -- aisle. i want to not talk wardwell about the specifics about your rule. i want to know this. why do you believe so many entities that will be falling under the purview of the cfpb are nervous or afraid about what your agency and rules will do to them? >> thank you. i have asked this question. i want to understand it. if we can alleviate some of that anxiety and concern, we want to do so. a lot of it stems from the fact we are just knew. people have not dealt with us before. they are not sure what we will

do. as a new agency, it takes us some time to figure out what we will do. what our priorities are. how we will approach things. we are trying to think through that carefully. it gets easier for us to signal what we intended to as we go. people will begin to see how we do our work. they do not know what to expect. >> i think that is part of it. could it be because they believe what is being imposed or discussed about is not efficient or workable, in their opinion? >> that could be the case. i am sure that is part of the reaction in some cases. >> do you believe the big banks you are dealing with now are acting in good faith? >> i have found over the years that most citizens, most businessmen in particular, they

want to follow the law. they want to get it right. i am sure they would like to have clarity and guidance. there are some who are interested in taking advantage of every gray area they can. i did not force law against a number of people. but in the banking industry, my guess is, as a legal l followonal, people wilke the rules if the rules are clear to them. community banks and credit unions, i have worked with them for years now, going back to my time in state and local government. they have a sound business model. they are under a lot of economic challenges because of the changing nature -- nature of the market. consolidation is going on for a lot of reasons.

financi i think the vast majority of people deal in good faith. they get in trouble for a variety of reasons. the ones who are looking for trouble are not caring about the consequences because they downplayed the notion they will get caught. >> do you believe it takes a massive government agency like this one to guarantee that somehow? >> i do not think that is our role. it is to focus on consumer protection and make sure there are clear rules to address some of the obvious problems we saw, particularly in the mortgage department and other places. >> you do not believe market forces can dictate that? it has to be an agency like yours? if these people are acting in good faith, and you believe that, which i have seen to of heard that is what you said from financial advisers, community

bankers, all the way up to big banks, why do we need to be going some -- through some of these things? why do we need to be causing that same anxiety? >> i would say two things. we just saw how will that work. in 2007 and 2008, the economy of the united states melted down dramatically. trillions of dollars were lost because the markets did not work properly. secondly, i served as ohio attorney general. why do we need one? i have 1500 people in my office because somebody has to enforce the law. >> i am a colonists. vanist.thinnes i understand it is not the nature of an agency to leave

things alone whether they are good or bad. that is part of my concern. that is part of the anxiety. as i have talked about -- to those people who are involved, that is the anxiety that is traded. they feel like whether they are acting in good faith or not, hanging overnd villville their head. >> when you were explaining your calvanist, i hope you are not pointing at me. >> thank you. finally. good to see you again. when you get to me, you know it is almost over. you say in your opening statement that your push for accountability extends beyond mortgage servicing or holding both banks and nonbanks accountable.

we had a hearing last week on credit bureaus in particular. i am not sure if you are aware of two pieces of legislation. one would address medical bills and the other was to add payments to the consideration of credit scores. the medical bills. what are you doing anything? then i want to ask about two bills, medical bills in particular. >> ok. in general, what we are doing with credit reporting companies? >> referring to consumer credit bureaus. >> we are. first of all, we are very appreciative congress is taking interest in this area. it is an issue that affects americans' dramatically and across the board.

most of them are unaware of it. it is something where they signed up for anything -- credit is being kept on them. that is often used to dictate whether they get along. >> that information is often incorrect. we learned one in three of the information to send the collectors for medical debt is wrong. is there anything you can do to address that question? are you aware of the bill that is before this committee? >> yes. there is a lot that will be able to do to address that question. we will be able to send in teams who are used to examine financial companies and finding out exactly how they operate. we will get a neutral view of what the error rate is. there have been different estimates that are different from one another. we will be able to really get a picture of what is actually

going on and what the problems are and what made me -- may need to be done. >> medical bills are a problem in particular. i do not know if you know a lot of the medical billing system. i will just be for my own personal experience. to figure out what gets credit and how much, it is not necessarily whether you get sick or have one of these. could happen to anybody. it is not so much a function of -- it is a function of your insurance coverage than it is ability to pay. i think it is unacceptable to use inaccurate information. is an area you need to look hard at. >> a lot of these are small amounts but they can have a huge impact on your credit score or block big transactions like mortgages. we are interested in what you

will find. we are looking at it closely and take action as needed. >> the error rate problem is the big problem there. you are getting that information into a system that has a dramatic impact on a person's ability to get credit. you and i have had this conversation before aboutnonbank lending. are you moving the ball at all on that question, particularly the payday landing? lending? >> we had our first hearing on this issue. we put out a request on the information to gather barack input on the problem. we now have begun actual examinations of payday lenders. similarly, of similar products

offered by banks. we are getting a much deeper understanding of this. we will consent -- we will consider what steps need to be taken. i waphasize we do not have under our statute authority to impose an interest rate cap, which is the approach that has been taken at the state level to address the issue at times. >> is it within your expectation you will be doing some kind of report? that would be helpful to us as legislators. >> we have not determined that. we might the proceeding in a number of ways. we are already engaged in supervision of the pay lending iindustry. we have rule writing authority. >> my time has expired. thank you for coming today. thank you for your good work. >> i appreciated.

it. >> thank you. i would like to welcome one of my constituents. i have known him for a long time. i appreciate your commitment to consumer protection. i have a couple questions about the structure and the budget of the committee. then some issue questions. the first is regarding the structure of the cfpb. i am bothered there is no reference in the creation about safety and sound of a financial institutions. if you're only charges protecting consumers but you have no responsibility to the safety and soundness of the risk -- of the institutions, it hurts the safety and soundness of our financial system. what are your thoughts on that issue? ihave you had a chance to reconcile that?

>> it is a new approach that has an agency that focuses and decouples that from the chartering. we do not have the authority to make companies offer products at a loss. we have no authority to require them to do that. the notion that we wouldn't pay attention to the safety and soundness would be quite misguided. if institutions are not going to be safe and sound, they will not be good for consumers. >> i believe you would do that. do you believe we need to make it clear in the law that the cfpb should look at safety and soundness as one piece you should look at? >> i think the law does that unpleasantly by making our subject to beingex overruled. >> with only a supermajority

vote. not a simple majority. >> that is right. if it were not a close call, i have no doubt that could be the outcome. i do not think there is a change in the law needed. i think if we show we are not willing to cooperate with other regulators and work closely with them, maybe that should be reconsidered down the road. that is not the case now. >> i do not have concern with you at the helm now. you are one of the few agencies in washington that does financial regulations that is not aboard. the federal reserve is a board. you are one person and you run the agency the way you see fit. i have total confidence in you know you. who knows who is after you? i think that is why it is important to look the agency. i appreciate that. the other question is about your budget. it comes -- you could have up to

12% of the federal reserve's budget up to $598 million without a request. an extra $200 million as i understand it discretionary increase from congress. i think the requested 440 some million this year. my question is do you believe the cfpb have less accountability then the fbi? >> my understanding is i was not here when the -- was enacted. we should operate on equivalent terms as them. it is true to some extent of the structure.

i think it makes sense for us to be on par with others. that would be my sense of it. >> that is a choice we have to make. i have concerns. i want to quickly talk. we have a big somali community in columbia, ohio. these remittances are truly lifelines for those folks. and other folks that are immigrants and trying to help family back home. i am curious, when i read your rules and every the comments from those, it sounds like a closed networks like western union and money gramm will be able to comply with your february deadline. a lot of the wireless services might have real trouble with that. have you been told that and doesn't give you cause for concern? what it tells me is there will be less competition and more expensive costs to these

remittances and less access. is it something you are aware of and are you willing to do something to give folks time to make sure they can comply with your regulations? >> we are aware of it. i was some phone just the other day. we offered to make us available. this has been long telegraph. the law was passed more than two years ago. i also think this is an area -- you can appreciate this -- the technology and innovation are changing very fast in this area. a pal is in the space. prepaid cards are being used to get money overseas. transfers may now be starting to increase. i have no desire to have a lot

drive out institutions from the space. they are treated a little more generously under the law. work through will try to other issues with them. >> i appreciate your indulgence. when you get to me, you are really done. one other question i have is when financial institutions do with many regulators, they get some confidentiality of the privilege on the information they provide, but they do not receive that same benefit to the information they provide to the cfpb. would you be amenable to congress amending the federal deposit insurance act for which is preserved? pervert

>> we think the law is clear. we issued a bulletin to that effect. we went through the rulemaking process to inductive role that has a force of law. we have said there is legislativon pending. we think it is clear now. that is our position. >> can i do one more? >> is a really good one? >> i do not know. >> go ahead. >> thank you, mr. chairman. i appreciate, again, your indulgence. i want to ask you quickly about the ability to pay the qualified mortgage. i understand you have worked on your rulemaking and your rulemaking on underwriting

ability to pay mortgage requirements. and high cost loan requirements. it affects some of the smaller institutions like community banks. a lot of community banks in my district. i am curious if you have a game plan about how you will deal with these regulatory changes and make the manageable for small institutions like community banks because they serve a lot of customers, especially in the rule part of my district and in a lot of the southern ohio counties that i am familiar with, as well. >> is it a really good one? should i answer? [laughter] we are mindful of that, congressman. one of the things we have begun to realize we will need to put out when all of these rules are finalized is what i am calling a

slim mortgage booklet. it will boil down the changes in the rules in plain english so it can be followed. i think that is important for us to do. it is important for us to make it easy for people to understand what will be required of them. there will be an implication. on those rules. on those rules. >> i appreciate your time. >> you think that when did ok? we agreed you were worth the extra time. this is the moment where you know you were near the end. one of my great concerns is the differences different states operate under. i come from a trust state. the member next to me comes from a mortgage state.

they use a judicial foreclosure system. in the rule writing, the one- size-fits-all colloquialism. i have a great concern. as you do that, are you finding mechanics looking at those differences in different state laws? i come from a 91 state for closure system. there are no lawyers at the closing because many years ago they did a constitutional amendment in arizona to try to do the things to make buying a piece of property as inexpensive as possible. any rules that come from the federal government that change the costs of doing that transaction, that is my concern. >> it is a great question. i am very mindful and sensitive to differences in state law, which usually reflect different circumstances. things are different in arizona

than they would be in new york. our approach is we will be leery about pre-empting state law. most of what we do will ride on top of state law and coexist with state law. that was most of the premise of the dodd-frank act. in terms of, it is the nature of things we will be adopting rules that apply throughout the country. the difficulty of how that fits with local conditions is something we will try to understand. >> you have to do with both the types of instruments we use, the coding procedures -- the closing procedures, even down to the weight title insurance is issued. you do have some dramatic regional differences. >> yes. that is right.

we have an office of intergovernmental affairs that will help us try to be sensitive to those things. people can comment on our rules as we go and we will take account of those things. if we are getting this balance wrong somehow, i hope people will bring that to our attention. we are trying to be mindful. >> one example. let's say one lived in iraq -- arizona and had a handful of properties she owned and wanted to sell. she chose to carry the loans on them. she was going to act on the bank -- as the bank on it. she does half a dozen of these in one year. do you think someone will fall into your purview? >> no. well, i do not think we have --

i am not clear we have anything to do with person to person lending if it is not -- i do not think it falls under the broader provision. i have to go back and look at that. i would say it would not be any kind of priority for us as we are trying to allocate resources. the things that are broader patterns of potential consumer harm are the things we should prioritize. i would have to go back and look that. >> if you could and let me know, i have seen in arizona where certain subdivisions have been subdivided where the old farmer or rancher of that owned the land cases it up and sells it and carries back the loans for 10 years. those sort of things. will they be pulled into another regulatory scheme? in a previous life, i was the treasury of the county.

one of our side projects was to reach out to the unbankable population. the population that would show to our countertop twice a year to pay tax. they had a checking account. i do have this great fear as we reach out to protect everyone, do we change the cost structure that more of our population does move into the unbankable population because they will not fit in the box? in many ways, this might be a statement. i hope you are keeping in mind these -- i do not want to call the more marginal populations. they have a relationship with banking financial institutions through distrust or some other reason. being very careful we do not build additional barriers for

them to come join us. >> i would say, ironically, you and i may be the only two people in the same room who can speak the same language. i used to be responsible for collecting the real estate taxes. i had a lot of the same experience. it was good for me. what i would say is we are very concerned about the under bank. -- under-banked. they are very interesting in particular. they have a bank account. they have a lot of alternative financial policies and services. whatever reason, the banking system is not meeting their needs. we need to understand that

better. >> we found it was more complicated. we had folks who had the income and resources. they came from an ethnic background where they did not trust the institution, and the fact of the matter is, they should have every right to not trust institutions and have another alternative channel if that their particular background. this is a tricky line. >> it is. >> my fear is we raise the cost structure. so institutions and of having to limit services, we start to drop parts of bank. >> it is a tricky line. one of the things we will now do, the banking agency says we have the ability to protect consumers even if they are getting their services from unbanked firms. we will try to be thoughtful about how we use that authority, but we care deeply about these

people. just because they are not in the banking system we care very much about how they are getting their ways and means of their lives managed and thinking about whether they are getting the same kind of protection they should be entitled to. it is interesting and difficult but very important. >> it is one of those things my office has an interest in. if you have an occasion, think of it, and send those things. i think that is the end of this hearing. >> i would like to add my appreciation. you have been incredibly generous with your time. i am proud of you and work your department is doing. i think you are doing a sensational job. i often -- i also have a goal. that is the federal reserve interpretation of the ability to pay standard. i am looking forward to that report sooner rather than later. .et's get something done i want to show the world we can solve this problem.

anyway, thank you for all the problems you have solved in you are working on to solve. >> and the ones we are hoping to not create. >> the chair notes some have additional questions to the director. they may wish to express -- to submit that in writing. without objection, members will be able to submit the questions in 30 days and the old place responses in the record. thank you for it time, thank you for your generosity, and this is closed. >> tomorrow, paul ryan addresses

the aarp conference in new orleans. live coverage begins at 12:35 p.m. eastern time on c-span 3. defense department officials spoke to the house services committee today about their plans for sequestration. published cuts -- budget cuts will be implemented if they fail to have 1.2 trillion dollars in deficit reduction.

. thank you all for being here. this will be the last week the house is in session until november. today's hearing will provide opportunity to inform themselves and their constituents about how sequestration will be implemented and how those decisions will affect our men and women in uniform and our national security. we hope the president would provide this information in the report required by the sequestration transparency act, but unfortunately, he failed to comply with the letter and spirit of the law. not only what is the report late but it was nearly paying lip service -- what service to the national security, implications of these cuts. the president has had over a year to consider this crisis. moreover, the white house has gone so far as to instruct the department of defense not to make preparations for

sequestration. nevertheless, as previous testimony, this committee has provided, many of our military leaders believe initial preparation for sequestration must occur well in advance of date.nuariey 2 it was stated, we are not doing any hard planning. that will probably happen later this summer. later -- today, we are following up. how would they implemented necessary to develop a comprehensive and complete strategy if sequestration were to occur. this morning, we will hear from the honorable secretary defense comptroller of the department. the vice chief of staff of the army the vice chief of naval

operations, the vice chief of staff of the air force, and the assistant commandant of the marine corps. as the recent violence throughout the middle east has reminded us, we are living in the most dynamic and complex security environment in recent memory. the decisions we make with regards to sequestration will have a tangible and lasting affect on that environment. last month, the white house stated, the impact of sequestration cannot have advance planning and executive action. he misses the point. planning cannot resolve sequestration. the lack of planning and a failure to exercise leadership now can have a dire -- can make

a dire situation worse. we understand there are no easy choices. now is not the time for ambiguity. i urge each of you to be clear with us as you possibly can about what the road ahead has for the implementation of sequestration. this could be the last opportunity for our military to get these facts on the record before the deadline for legislative remedy has passed. with that, i look forward to your testimony. thank you for your service and thank you for being here today. mr. smith. >> thank you. i appreciate we are having this hearing. it is unquestionably the most important issue facing our governments, figuring out how we deal with it, and it is important we learn more about it. it is clear. i believe numerous executive branch officials have made it clear they see sequestration as

having a devastating impact on the fence. -- on defense. don't think you can somehow make this work on a way that will have a huge negative impact on our national security. that is the main point that has been made by countless witnesses in a very bipartisan way. i do not think there is disagreement. ben if you think sable savingsn found, i do, this is not the way to do it. the last minute in the middle of fiscal year 13 after all kinds of planning was done, it is all set up across the board. every program has to be cut by the same amount, for the most part. very limited terms in terms of any flexibility of handling this. we have established beyond a shadow of a doubt this is not good policy and no one has claimed that it is. as for the issue that somehow the pentagon and the white house has done nothing to plan for it,

i do not think that is at all accurate. he went 5 for 10 minutes right down the line of the programs that would be cut and how. the executive branch has said which programs will be exempt. personnel programs will be exempt. they said specifically this would-be. be. i do not think it is accurate we have not planned for. there is some ambiguity in the law. we have heard a variety of interpretations. the president has said, here is what it is. we know what is. the challenge is trying to stop it from happening. the only way to do that is to pass a comprehensive plan to

reduce the deficit. that is what the budget control act requires. find savings so we do not have a deficit that is uncontrollable, so we get it under control. there have been various plans out there to get us up as high as $4 trillion every 10 years. we have to choose to do that. i think revenue has to be part of that equation. if you are absolutely committed to the need to provide for the national security of this country, if you are deeply concerned, and i share the chairman's views about the complexity of the credit environment and the need to be prepared for it, you ought to be prepared to raise the revenue necessary to pay for that national security was so desperately. we have been unwilling to do that. that is why we are in the box we are in. i do not think it is a huge mystery that somehow penetrated to be paired we know how much will be cut. we know where it will be cut

from. a number of different studies both inside and outside of the government continue to assess the damage that will be caused. a variety of different opinions, but it is not something that has gone unexamined. let's put it that way. what i would like to do is spend the time to make sure we stop this thing that just about everybody agrees is bad policy from happening and the way to do that is to be realistic about our budget deficit. stop pretending we can bang the table about how awful the deficit isn't shy away from any of the steps necessary to deal with it. that is the denial we have to deal with to prevent this problem from becoming very great come january. i look for from the testimony -- to the testimony.ward >> thank you. thank you for the opportunity to discuss the drastic effects

sequestration would have on the department of defense. as well as the recently released report required by the sequestration transparency act. i submitted a joint statement. i will summarize that briefly. then some oral statements will be presented. as secretary panetta has said, sequestration will have devastating effects on the department of defense. the office of management and budget transmitted a report that spells out the dollar consequences of sequester. our testimony today provides to some high level assessment of the impacts. these consequences cannot be avoided or substantially mitigated by planning alone. the reason is simple. sequestration was designed to be inflexible. it was enacted as a prod for both houses of congress to devise a comprehensive plan to

reduce deficit. the only way to avoid these bad consequences is for congress to enact a deficit-reduction plan the president can sign. if that action is not taken, we are faced with the dollar consequences the sequestration transparency act report spells out. it will total $54.70 billion. of this amount, $52.30 billion will come out of the dod budget. each of these non exempt budget accounts will be hit with 9.4%. the only major exempt accounts involve those that fund military personnel. what affects willie's cuts have on duty? funding for our overseas contingency will be subject to

sequestration. we will protect them to the extent we can. the support of our war fighters is our highest priority. that will mean higher cuts on the base budget. that will result in reductions in training. reduce training would affect our -- affect our ability to respond. sequestration will almost certainly force us to reduce spending for -- which would be to hire an forces -- this would leave us without enough personnel to fix our weapons. to maintain a strong program of contrasting and to sustain financial management, as well as many other support functions. sequestration would also have substantial effects on investment programs. there would be no intact -- impact on prior year funds, and that is an important point.

there would the substantial adverse effects. the 9.4% cut would affect each of the budget accounts for research development and technology evaluation and military construction. in those cases, we would have to buy fewer weapons, which would drive up unit costs. in the case of ships, or you cannot reduce the number of weapons, sequester would result in delays. it would adversely affect our military retirees and their families. we would have to cut family housing maintenance. we would have to cut operating report -- support. we would have to make some of these cuts. we would not have enough funds to cut the defense health program. it would leave us without enough money to pay bills. unless we find a way to offset that, it would be difficult. these are the consequences that would come to play in fiscal 2013. a law that or go into affect on

january to what actually not discretionary cash out. in the longer term, the cuts will affect double the reduction is already imposed by . if we do not do that, we would end up with more units than we can have funds to train and equip. over time, sequestration would lead to reduced forces, aircraft carriers, fighters. we would have fewer options to respond quickly to emergency crises. this will require changes to the national security strategy that was put into affect last january and which we think remains the right one for the times. for all these reasons, we believe a sequestration is a very bad policy. we hope congress will pass a plan the president can sign and withhold sequestration. this concludes my opening statement. we welcome your questions after

the others are completed. >> thank you. >> good morning. distinguished members of the committee. i want to thank you for the steadfast and strong support you have shown to our men and women and their families. i appreciate the opportunity to appear before you on their behalf to discuss a potential impact of sequestration on the united states army. i look forward to answering your questions after my colleagues have concluded their opening comments. as we are all well aware, these are challenging times for our nation and our military. tough choices must be made. the army stands ready to do its part. we are already operating out of the budget control act, which will cut the fed spending by about $490 billion over 10 years. sequestration would mean another $550 billion cut. what's more, it represents a ridges solution that would

supply these cuts in an arbitrary fashion across the board. as such, these cuts will adversely affect just about every aspect of us. particular concern, cuts will apply to were funding, which supports training and forces deployed to afghanistan. we will do everything we can to ensure that our deployed and next to deployed soldiers have everything they need to be successful. we will also do all we can to maintain its sport -- maintain support. even deeper cuts will be made to other accounts. they will adversely affect arenas and our ability to respond to contingencies. such mechanical guts will increase risk in what is a

complex global operating environment. it will potentially require us to look our national military strategy. ideally, congress and the administration will work together to hold sequestration as soon as possible. if not, if sequestration goes into affect, we must be afforded the necessary flexibility to adjust resources in order to avoid wasteful penalty -- wistful penalties -- wasteful penalties and focus on our highest priorities. we must continue to work together to ensure our army remains our nation's force of decisive action, ready today and prepared for tomorrow. i think you again for your continued support and demonstrated commitment to the outstanding men and women of the united states army and their families and i look forward to answering your questions. >> thank you. >> good morning.

it is an honor to discuss sequestration with you today. based on our preliminary review, sequestration will reduce funding for the navy in fiscal year 2013 by nearly $12 billion. should sequestration occur, it would force the navy to make difficult choices in the second half of the fiscal year across three broad categories. fleet operations and maintenance, procurement, and force struccore structure. there will be a reduction of over $4 billion. this account funds our fleet operation, maintenance, spare parts, civilian part -- civilian personnel and training. these reductions will translate to reduced flying hours for our air cruisers.

less means for the fleet. this will impact our industrial base. we will prioritize expenditures to ensure our four deployed forges -- forces continue to be trained and equipped. not deployed forces will see a disproportionate share of reduction under sequestration. we will make every effort but to preserve quality of life and family support programs for our personnel. we may be forced to make selective reductions and infrastructural sustainment. these reductions will have effects to our readiness in the fiscal year 2014 and beyond. sequestration will also reduce the fiscal year 2013 shift -- shipbuilding by over $4 billion. it will require reductions to modernization programs and will

reduce funding for research and technology centers. is difficult to assess the impact on individual program or family programs, since each contract contains unique and complex provisions. also, a change in one program may have a cascading effect on the investments and other programs in the future. we will carefully examine each of our programs to understand the full impact. in some cases, our assessment will be we are unable to procure an action. in others, higher unit costs. we will work to sustain our shipbuilding programs. the mechanical nature of sequestration of for its limited flexibility to mitigate the impact of these budget reductions. our fiscal year 2013 budget commission already reflects difficult choices to meet the

budget control act. our request balances, future capability operations, maintenance, and training, to sustain a ready force. the potential reductions of the budget control act beyond those reflected in our fiscal year 13, will translate over time to a smaller force with long response times, and reduce ability to provide support for our major operational plans. under these reductions, we will be unable to execute the requirements of the current defense strategy. last month, i visited both carriers. our minesweeper force, our patrol tret -- patrol craft, and i talked to other 10,000 -- over 10,000 sailors. at every form, sailors expressed concern regarding what sequestration will mean to our

navy. the uncertainty of our fiscal future is increasingly on the minds in number for us. we appreciate the continued support. on behalf of the men and women serving around the world, i appreciate the opportunity to discuss this issue and look forward to your questions. thank you. >> thank you. general? >> good morning. thank you for the opportunity to share the air force's perspective on sequestration. we carefully balance risk across all missionaries while protecting readiness and proposed a minimum structure required for the strategic guidance within the research guided in the budget control act. was difficult but doable. further reductions through

sequestration would affect this balance and our ability t. more than two decades of sustained combat from the world has stressed our forest, and limit our ability to replace our old aircraft's and invest in advanced capabilities. it will not only affect our ability for operational requirements and the fence of homeland, but it would significantly impact our ability to prepare for future operations. the same is true for investments in modernization sequestration would also force us to reevaluate our contracts. we do not know to what extent because we do not know -- we have not had the discussions. these would impact the future of aerospace technology, one of our

key competitive advantages. our nation is fortunate to have world-class people who work hard to produce world-class air power every day. sequestration would leave the air force with people who are not adequately trained, who lack the equipment they need, and who must make do with weapons systems that are not fully equipped, representing a hollow force on able to support the current defense guidance.

>> this is why it is best the president is not going to the london olympics. you did not win that. united states open, it is either about the golf competition or president's immigration policy. this is back when there were calling each other names. i think they should get back to the fictitious platitudes voters care about. in the poll vault -- it says the jobs on there.

this is one george bush came out in favor of a mitt romney and endorsed mitt romney. now if things do not go well in november, i cannot blame bush. mars mission, why are we spending $2.5 billion on mars when we could be spending it to dig up dirt on mitt romney. with the race tightening, some say you should look for another running mate. i could never do that to barack. and this is in the men's room at a restaurant. and obama says, how about seconds? it is working now by the way. >> hello.

this is one of the things, i will have to walk over here. it is the statue of liberty. now this one is how you get your wife not to talk to you for two days. he is in front of the gates, in front of the pearly gates. all of these babies saying, what trimester were you in? my wife and i have been married for 31 years. and to tell you our relationship, in 1998 we were expecting our second child, and she was then labor, ready to burst labor, this was election day 1998, we stopped by the voting place so she could cancel out my vote.

[laughter] we disagree on the stuff. i am to the right. i worked on reagan's campaigns. but we still share the same values. we want our kids to go to school that teach them. how we get there, a little different routes. the iraq war, and there is france on the tread. that is cartoon excellence. i do believe in the culture of life. i am against the death penalty, abortion, euthanasia. this was, they executed another one, sir. and god says, i say it over and over again. what part of thou shalt not kill do they not get?

it is days like this when i really regret the note floods -- no new floods pledge. and privacy is a big issue for me. with the patriot act i opposed it. here is our current secretary of homeland security setting, do not mind me, as the announce you can also watch your e-mails and computer use. this is george w. bush saying, can i hear you now? this was of course after katrina. we have a -- had a five refuges and our house. -- we are from fema, we got here as fast as we could.

we understand a cow started a fire? and sometimes the curtains are serious. humor is a great vehicle to express your opinion. but there are days when you take your foot off of your throat. when we are debating security versus civil liberty, and it is an uncle sam -- so, where do i draw the line? i really like the drawing. sometimes you actually talk like you did not draw it yourself. because it turned out well. the president, of course, the current president likes to smoke. claims he spent. it is like unfiltered spending. he says i can't seem to quit. and republicans have their problems. people say it is my turn. from bulk, to mccain, to mitt romney. i was lucky enough to cover

both conventions. the average age of the delegate was almost dead. [laughter] and that is not a good sign for a party moving forward. fidel castro says we are throwing out our old economic model. and the president says, can we have it? and our debt past 100.3% of gdp. and you have a obama setting -- opa! i like the strong because it turned out perfectly. this is the tea party. this little girl looks a lot like sarah palin. and she is saying, drink it! [laughter] this was drawn -- michele bachmann had just won the straw vote. and he is looking down and he

has a tramp stamp. dear lord, what did i do last weekend? and this does let the honeymoon of tenants. i just love the look on the president's face. this is one of the things that drives me nuts. the new york city council just voted that he was right and they outlawed big drinks, the big gulp. and i have a very poplins dropping it down and saying, drop it chubs. this was one of donald trump endorsed mitt romney. he is saying -- you had me at i do not care about poor people.

and $70 billion brain defense budget. and president obama is saying, it was working so well. and the submarine saying -- strike the solar panels. this primary season was one of the most exciting, most interesting because they did not want mitt romney. they wanted santorum? really? a lesser question of -- and this is the front-runner. there is mitt.

steve kelly gave a great endorsement yesterday. he is in michigan. and he would start his speeches, it is good to be back in michigan. where everything is the right height. what? maybe he can explain that. >> it is a different kind of homey, though. [laughter] going back to obama's small businesses being crushed -- he is saying, you did not build that. and obama is saying, my case for reelection is clear. this is again on mitt romney.

soloed twister? and he is losing it. i love the first amendment. i love free expression and democracy. but each candidate could spend over $1 billion each, a $2 billion campaign. i wish someone would come up with a model -- people united, citizens united, we have to find a middle ground here. this is an example of a bad cartoon. it is the truth. it is the fast and furious case. we gave dunnes to bad guys. and there were killed to kill an american officer. -- week gave guns to bad guys.

this says we are spending more than we are taking in. and? our friends russian and china. and the president says president putin -- and he says not a good time. and here is the president and a baby bull. forward to november so i can tax you into stake. -- into steak. giddyup! finally the elephant open ups u the door and says, you win.

and when he said about legitimate rape, this is when hurricane isaac was going to go into tampa, so he had the elephant looking off shore, and he is saying, i am told it is not a legitimate storm. let the humanizing comments. -- let the humanizing commence. uncle sam, it did seem to me like a new beginning for mitt romney to introduce himself. and assam is saying, convince me. and at the democratic convention -- are you better off now than you or four years ago. you bet. and the national debt --

$16,000. and the president -- for word. are you better off today than you or two weeks ago? one more. a woman reading -- the newspaper says they may stop delivering letters on saturday. and the boys says what is a letter? and the girl says what is a newspaper? >> if you have a question, please raise your hand. i will get the ball rolling on questions. who do you want to win in november? mitt romney may or obama? strictly cartoonist speaking?

>> mitt romney 8 is much funnier. he is great. >> i would set my job aside and prefer to of the country recover. i am hoping for a regime change. cartoonists are and the position where what is best for them is not necessarily best for the country. but i think it is too important this time. >> that is why i want romney. >> i agree. but from a philosophical point of view, i would like mitt romney. but from a cartoonist point of view is always easier to go after the guy you disagree with. >> any time someone has a

reputation for salacious behavior, it makes them a rich target for us. and certainly the clinton years, i got out of the office very early every day. that was back when i had a six handicap. >> george w. bush was fun for me. he is great to drop. the term progressed, i disagree with him on some of the -- if you are conservative and you have a conservative a dental office -- when they screw up and disappoint you -- we kind of expect them to be dufy and goofy and silly, but when our guys do it, we tend to be harsher. so my cartoons of romney are

pretty harsh. >> i get sick of drawing bush. every day was a tragedy coming from his mouth. when i started, i just met in college cartoonist back at our convention, and brought him back to starting as a editorial cartoonist. i had my piece on ronald reagan, and that was like having george w. bush in office. reagan would say crazy stuff, off the cuff stuff. he was great to draw. i kind of miss reagan for different reasons than you. >> we have a question a dented the front. >> i am curious. you said your sometimes considered too political. what does that mean?

>> i was talking to in terms of a daily comic strip. we have that issue where, if you have a political comic strip, people will segregate it in another section on the opinion page. or in the l.a. times right under a comic. just being a latino and a minority cartoonist, there are not that many of us. almost like anything i say can be considered too political because people want me to shut up. >> i do a political comic strip as well called prickley city. i would challenge you to find another one. >> it is interesting a french

someone. challenged someon [laughter] >> i did not say i would surrender. >> talk to us about prickley city. >> it came as a reaction to lacoocaracha. i thought i could do better. and so i was living in the southwest united states. in an environment that will prick you , eat you. and i thought that is politics. i created two cartoons. kevin, the lost rabbani of the apocalypse. he is now running for president. -- the lost bunny of the

apocalypse. he is now running for president. >> i got a partner. i got the best artist in the business. it is about a young man who graduate from college and then moves back in with his parents, kind of a crowded scenario. he works temporary jobs until he screws up and gets fired or the jokes run out. it has been a terrific success. newspapers are not really buying comic strip snout. if you are in a 60 papers by the end of the year, consider that a home run. we are and a 320 today. we are in 320 today. the husband is a conservative.

and his wife is a radio talk show host is more of a free spirit, liberal minded. you have to build a conflict into a comic strip or sitcom to throw off the humor. you have to bang two rocks together. >> i started doing a panel in de l.a. weekly. this is the week after the riot. the paper invited me to come in and pitch them a weekly panel. and it was the characters that i had been working on. as the years progressed and realized i was going to die broke in the gutter if i just depended on editorial cartoons, i pitched the comic strip and got it to universal -- 8 cindy

syndicate. the characters are 20 somethings. they talk a lot of politics at each other. i do a lot of straight political commentary in the strip. but also, when i do latino cultural stuff, it gets the same reaction -- this has no place in the family newspaper. because it is shocking to be pro-latino in some places. >> we have a question of debt of the front. -- we have a question in the front. >> do you ever hear from the principal and gratitude or not so much? >> if any elected officials are

watching, the best thing you can do is saying, we love the cartoon, can we buy its? what we want to do is tick them off. over time, i got meaner and meaner, until i did a cartoon of beating an old woman with a walker. and he wanted it. >> the attempt is really too savage somebody. and -- it is like a trophy. i always likened it to taking someone in the groin, and they want the shoe.

>> i found that politicians and celebrities assistance are -- or their employees are the one that contact me and they want it for free. but not because the celebrity or politician is in love with the cartoon, but because they want to get this free saying from me. and i am like, i am not stupid. this happened with bill richardson. he came up to me at a party. he says, yo, homie. he did not say that, but the kind of a said that. he said people pay for your stuff, so, send me the bill. i never did. >> i think it is interesting.

politicians have to be very serious and they become a funny. and you guys set out to be funny and it becomes serious. maybe editorial cartoonists should run for office. it is more of a thing -- you have to talk about comics and in a way -- when you go out, are you expected to be funny in your parties? or do you really feel more comfortable with a pen behind it and it is a different sense of humor. how does that work? how you handle that? >> i always wanted to go the other way. i always wanted to do stand up comedy. i think most political cartoonists are frustrated theyd-up comedians, foor

cannot take the fear of rejection. if no one laughs when you are telling a joke, it is hard to deal with. i actually tried stand up comedy after being a political cartoonist for a long time. and it is very frightening. there are only two times in your life where you stand in front of a group of people and there is a brick wall behind you. and one of them is a firing squad. the other is stand up comedy. think about it. [laughter] >> this is for all of you. but steve, it is. dick truly your cartoon that made me want to ask. -- -- >> did you think that the chik

fila cartoon seemed to be casting a diversion? -- adversion? >> the carlton asked both questions. do you align yourself more with the ceo, or do you support the people who are protesting? it was not choosing, it was kind of and equivalents. people were saying, this is beside the point. they said they missed the separation of church and fast food. they are saying, do we need to take our political battles to a restaurant. it seems -- i think most people felt that way. that was just such a weird, so real news cycle for a few days.

every time you turn on the news or picked up a paper, it was chik fil-a. i was trying to give voice to the american public. it was massively beside the point. >> we have time for two more questions. we are going to go up there. >> for all three of you, here for the convention. i was wondering how, you work for very large national news organizations. how has the expansion of new media changed the business of political cartoonists in your own -- >> i have never been more well known, and been and fewer

outlets. some of my papers have gone to the tucson citizen. it is a transition for me. my work gets out everywhere. i am licensing myself a lot. i get book deals here and there. so, it has helped get my name out. i will write it for now. i have not figured out -- we were talking about this at the convention. what app is going to have your cartoon plus 10 ad attached to it, plus a button where you can send money to the campaign. >> years ago, and you have done this as well, my first convention was 1988.

back then, you did your editorial cartoon. and you faxed it back to your newspaper and you were done during this cycle i was working 16-18 hours a day, posting videos. and doing my cartoon for the chicago tribune. and in my spare 2.5 hours of sleep, write the comic strip. we do not know where it is going. a lot of us are going in a different -- a zillion different directions. >> sudley you do not see anyone reading a newspaper anymore. i am sure a lot of people still read newspapers. a lot of people still love

newspapers. my newspaper has decided to go to a 3 day a week newspaper. they laid off many good journalists. and i am among them. was one of the people they laid off, not a good journalist. they laid off many good journalists and me. on the 30th of this month, i may already be looking for work elsewhere. it is sad. and although the great new frontier is the internet, we really have not figured out collectively how to monetize that yet. industries have not figured that out yet. everybody expects everything for free. society cannot expect that a very good journalism is produced without paying. we send reporters to cover city hall and dispense two or three days writing a story. he has to be paid something for

that. cannot expect them to do good work for free. it is such a critical part of our democracy that a free press exists and keeps an eye on these s.o.b.'s. without it, we are looking at a big problems. imagine as bad as city hall is, imagine it without the tribune. and you can just see the look of fear in their eyes. i do not know what the solution is. but i am really sorry to hear -- to see it headed in that direction. [applause] >> if that is all of our questions, i think we are done for the day. [applause] >> i tribute to my wanting to

get more involved with politics is watching information on c- span. i love the information. i love the current events. i love the hot topics, things that come up. i love watching it. i love pulling it up on my mobile device. c-span, created by america's cable companies in 1979. brought to you by a public service by your television provider. >> ann romney campaigning for her husband mitt romney and milwaukee on a thursday. this is about 30 minutes. ♪ free like a river raging strong

♪ ♪ >> good afternoon. isn't it great to be on this campus? [applause] >> i am a proud mother of a freshman student on campus. when i get a chance to see my son, i am most appreciated. so, thank you, matt. thank you for coming out. scott and i are asked, why do we do what we do? what we spend so much time and energy trying to make wisconsin a better place, he is the reason why we do what we do. we want wisconsin and america to be a better place for our son and our grandchildren. we had the honor to sit with the ann romney family at the convention. it was great to see ann romney

with your children and grandchildren. there are such a wonderful family. we can see they wanted exactly what we want to become a better america for our children. [applause] ann and mitt raised five sons and have 18 grandchildren. they understand responsibility, hard work and unconditional love. ann romney takes this primary importance on her role as a wife, mother and grandmother. as the first lady of massachusetts, ann romney works to focus attention on the challenges facing at risk youth and continues to be interested in that today. while serving on the board of united way, she founded a program that joins inner-city boston churches with at risk youth in the community.

ann romney is a strong believer that face to face and community organizations can lead some of our committee better than the government. [applause] in 1988, ann romney was diagnosed wasms. for those -- was diagnosed with ms. as gov. romney often states, ann is a rock. the ms is so severe that some days she is not able to get out of bed. when she ran -- her five sons and her husband united behind her. it is that fire that burns with

the strength and passion to overcome any obstacle and that is an inspiration to all of us. as the first lady of united states, she will continue to raise awareness for multiple sclerosis and will continue to inspire all of us. please join me in welcoming the next first lady of the united states, and romney. -- ann romney. [applause] >> thank you. do you know what i think? i think we can carry with confidence.

before i start, this is another sober moment in our history 911 is another difficult country for our country. and today, navy seals whose family has the unspeakable challenge of bearing -- burying this young man today. if you would all join me and pause for just a moment for all of the brave americans who approved every day that freedom is not free. -- prove evryday that freedom is not free. thank you. [applause]

just like we can together 11 years ago in the base of great challenges, our country is coming together during this, the most critical election of our lifetime. you know, today i have the honor of actually having a few women behind me that i know from massachusetts. and i want you to be aware of some things. as governor, half of mitt's cabinet are women, and some of them are here right now. in fact, when he was governor, he was ranked as number one every year for having more women in his senior positions. the women in this administration were at the heart of the economic turnaround in massachusetts. his chief of staff was 8 will \

\ a woman. these are women that helped mitt put economy and job creation on a growth path. [applause] so, i am going to introduce a few of those women that are here on the stage with us today. his secretary of business and technology, renae. she works with mitt to create jobs. his secretary of consumer affairs and business regulations, beth. [applause] this is a great job. her job as to go through all of the regulations slowing down business start-ups, and cut red

tape. i think we need a little bit of this in washington. his secretary of environmental affairs, ellen. she knew her mission was to figure out how to protect the environment, but restructure deregulation slowing down and new business start-ups. she did this by shifting to zero day approval for new start-ups. another woman i want to introduce, i knew very well because she worked at the olympics with mitt. cindy gillespie. after the olympics, she joined with the team and made sure that

all of the promises that mitt made during his campaign -- we followed through with. and she oversaw all of that. the bottom line is, having these women here, having me here, having all of these women in the audience, mitt put women in key leadership positions to cut regulations, red tape, make energy affordable and turn around the economy. [applause] you happen to know that he also did this for business. and one of the wonderful business leaders, you are now famous throughout the country, meg whitman. she worked with mitt. [applause] i also cannot say enough about being rolled to have a paul

ryan and his wife as part of our team. [applause] -- i cannot see say enough about being thrilled to have paul ryan and his wife as part our team. he is so great. [applause] and he is ringing a warning bell. we appreciate the belt he is bringing. he is making all of us aware that we are approaching a fiscal cliff, that we of economic problems in this nation that have got to be addressed and have got to be solved.

we are grateful for a man who has that much courage, integrity. we would love paul ryan. -- we love paul ryan. [applause] i am going to now have fun and tell you a story about mid. and my fund job as a wife is to tell people about things that you might not know about. i think everyone knows he was a governor, successful businessman, that he has a big family. in the balloon drop, my grandchildren got lost. the balloons were dropping. and there were diving into the balloons. but they knew there was going to be another balloon drop and there were truly going to be buried. but they did not mind.

that was their favorite part of the convention. there was a story told at the convention that i would like to retell. and have the ability to let you know what kind of a person mitt is. he is a person who cares. and having these women with us today, we know that he cares about women and making the economy good for women. and he cares that these past four years have been the most difficult on women. do you know that more women have become unemployed than men in the last four years? do you know that more women have fallen into poverty in the last four years? i know we need to have women under there understand -- out of there understand that mitt is someone who cares, someone who will work harder than anyone, who will be there, and he will

not fail. [applause] to show you the kind of character that i have seen a dead of this man that i have been married to for 43 years, i will tell a story that has been told at the convention. was a surprise to me. friends from our past, ted was a fireman in massachusetts. and i remember how old one of my sons was, you was just learning how to talk. it sticks in my memory because of that. my son, ban, was two. then is now a doctor. ben is now a doctor.

the story is that there were just friends of ours, members of our congregation. and one of their sons became ill with leukemia. mitt continues to be friends with the family, he would visit them. but he he was in and out of the hospital for seven months before his death. during those months, mitt would often visit with the david. it is interesting to think that mitt was very busy at that point in his life. he was also raising five little boys of his own. and it would have actually been only four if ben was two. but he was there for this family. and one of those conversations,

he discovered david like firewood. some mitt made sure to tell david that he had bought him a very large box of firewood and fireworks for david when he got out of the hospital to set off. and his family remembered that so fondly. because it was relief from the that theyness felt. can you imagine if 14-year-old boy does not probably have many possessions. but he was -- mitt brought a yellow legal pad with him and they sat down together and they wrote out his will. in another visit, david was

planning his funeral. he. to mitt, i know who i want to speak at my eulogy. i want you to speak at my funeral. and mitt said, how amazing is that? this to me is how we measure a person. how we care for one another. [applause] i was grateful for pat and ted to come to our convention and tell that story. there were getting tired of hearing a story about a man that is heartless and only cares about profit. we know what he cares about, he

cares about people. [applause] so, here we are facing a very significant moment in our history. we have a very important election coming up. i was with barbara bush a couple months ago, and she was very outspoken and frank but she has a tendency to be. and she said something interesting. she said when she was introducing me that this is the most important election of her lifetime. and i said, is that amazing. she is 86 from 87 years old. she has been married to a president. and her son was a president. and i thought, this is the most important election of her lifetime. and it is. you did it. you did the hard work here in

wisconsin. you got scott walker. [applause] and i know we can do it again. we have got to make sure that paul ryan and mitt romney win november.in mitt is optimistic. he loves this country. he loves everything about the opportunity and promise that it has given us all. we are grateful for all of those to of sacrificed for us, who have come here for hope and opportunity, as my ancestors did. my grandfather would be stunned to know that his granddaughter would be standing here. and he came in a very bad time. 1929. with not a nickel in his pocket.

but my father as a 15-year-old boy went to work during a high- school, got a good degree, worked harder. and he built his own business. [applause] mitt is running to make sure that all of those dramas, all of those people who are working so hard will know that the next generation promises america will always be there for them. we love this country, we love what it has given for all of us. we love what it would give up for our children if we continue to fight and keep america what it has always been, the hope of the earth. god bless america. and thank you very much.

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