that's my thoughts on the matter. host: thanks to all our callers and viewers for being with us. we will see you tomorrow morning. [captions copyright national cable satellite corp. 2013] [captioning performed by the national captioning institute] ♪ >> there is a look at our live events today. join us at noon eastern for a 2000 eighton the financial crisis five years later. the american action forum is the host of the program with former congressman barney frank among others. on c-span two, it's a look at tele-health and medicine issues.

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president, i intend to keep it that way. >> when the president and the earlier clip was talking about eating the dispensable nation, he does not want america to contemplate that we don't know how to win wars. by virtually any measure, we have the best military in the world and we certainly spend more on our military than the rest of the world put together. but we don't know how to win morris. -- win wars. there should be a national conversation as to why that is the case. where is the fault? is it the politicians are too stupid? of the generals inapt? is the size of the forces are too small? is it the fact that by its very nature, war is unpredictable? to go to war is to roll the dice. you might win and you might not. >> more with retired army colonel andrewbacevich sunday

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the historical narrative. also, supreme court justices. >> every single justice on the love has a passion and a for the constitution and their country that's equal to mine. that if you accept that as an operating truth which it is, you understand that we can disagree. >> and nobel prize winners. >> was interesting is the negotiation of moral decisions do no harm. love somebody and respect yourself and do work you respect. reduced,at is simplified notions. philosophers have spent their lifetime trying to imagine

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the nasties marched in on march 15, 1939. >> since 1998, book tv has over 40,000 hours of programming and it's the only national television network devoted exclusively to nonfiction books every weekend. we are marking 15 years of tv on c-span two. yesterday, a solicitor general and thomas holstein previewed cases on the supreme court's upcoming term and so far, the court will hear about campaign and affirmative action and facilities inh the president's authority to make recess appointments. this is about two hours. good afternoon, everyone. >> it is actually afternoon now. many of you spent the morning at the supreme court which was a wonderful opportunity. you got to meet megan jones who

is the program manager. over 40,000 hours of programming andand the counselof justice of the united states. this afternoon, we have a wonderful panel of experts and we will talk about the upcoming docket. i have given you a handout with time bios so we can save because i'm sure you want to get right to it. before i turned this over to them, can i please ask you to turn off your cell phones if you have them on and you might notice that some of the names that changed on the bios. schedulesneys have where they are not always in charge and some had to change but we still have an excellent panel here. as a follow-up, for many of you who are supreme court aficionados, we have justice sotomayor are coming here in january so you might want to look for that in our associates catalog. i will turn this over to tom goldstein and he will take it

over from there and enjoyed this session. thank you all for coming. thank you, ruth. we want to thank the smithsonian associates. program foron this those of you got to go to the court and meet the people there, i will do a super brief introduction and we will turn to the substance. when we do, we will split it potentially into two parts. . the first part is getting water. we will look backwards and forwards and the best part of this program might be telling you what the supreme court will be thinking about rather than what it has already done. have already read about last terms big decisions but some of those are so momentous to deal with gay rights and voting rights and affirmative action

that they do bear spending a few minutes on. we will then talk about the upcoming firm.

my name is tom goldstein. a lawyer. i run a website about the supreme court. to my right, jeff, who covers the supreme court and has done so for many years for the wall street journal, and unbelievable reporter. you should go yet his book. a fan -- get his book. a fantastic description about how detainees have been handled in the war on terror. the nests -- next suggestion, an organization you should donate to after you donate to the smithsonian associates. a huge amount of public interest work. a huge amount of work outside the supreme court, as well. next to allison is don, a general of the united states.

it is our incredible pleasure and good fortune he is able to be with us today. he is responsible for principally representing the united states in the supreme court but has other responsibilities, as well. and unbelievable public servant. the only thing worth mentioning is that, while he knows more about the supreme court and what is going on than anyone, he also has the greatest restraint than any of us. we can joke and make things up. the constitution requires that he acts responsibly. especially on c-span. his expansiveness is because of his very special role. we will start by looking and unbelievable public backward and start with same-sex marriage and we will talk about that. >> thank you for the gracious introduction. it is great to be back. i had a terrific time on this program last year. i look forward to our discussion and your questions at the end. as tom suggested, we thought, given the momentous character of the end of terms decisions last june that would -- it would be worth a backward look at those. i will talk about the gay

marriage cases. windsor, you remember the marriage cases. windsor, you remember the the supreme court held that a provision of the defense of marriage act, a statute congress enacted in 1996, was unconstitutional. that barred the federal government from recognizing for any federal law purpose the validity of marriage between persons of the same gender, even if the persons were lawfully married under state law. one significant numbers of states have started recognizing same-sex marriages, the federal law started to pose very serious consequences on lawfully married couples. edith herself, a plaintiff in the case who brought constitutional challenge in the

law was unable to be treated for federal income tax purposes. she had to pay a tax that she would not have had to pay if the federal government had recognized her marriage. a lot of other serious things follow from the law. a whole range of benefits and privileges. one unusual feature of the case was that the united states was not defending the law. we were arguing it was not constitutional. that is because in 2011, the president and the attorney general made a judgment that the law discriminates against gays and lesbians ought to be subject to heightened scrutiny and the defense of marriage act provision, section three, could not meet the standard. let me stop for a minute and talk about what it means to say something is subject to heightened scrutiny. under the 14th amendment law, it provides that no person shall be denied equal protection under the law. laws treat people unequally all the time for reasons that are legitimate. the law needs a device to decide which kinds of discriminations between people and groups are legitimate, like treating optometrists different

than ophthalmologists, and what kinds of things in the law are potentially illegitimate. what the president decided is that differences of treatment in the law that are based on sexual orientation ought to be treated as presumptively illegitimate under the status of equal protection doctrine same-sex marriage and we will because of the characteristic of being a gay or lesbian is an inherent personal characteristic and the discrimination based on that, generally, do not bear any relationship to legitimate governmental objectives. and that you could rely on the political process to ensure no discrimination occurs amongst gays and lesbians. based on that analysis, they decided section three was unconstitutional and ought not be defended by the federal government. so we did not defend it. as a result, the house of representatives stepped in and its leadership decided that they would hire a lawyer to

defend the law. you could go to the supreme court in a somewhat unusual posture. the court in a 5-4 decision concluded the treatment did violate the fundamental constitutional guarantees. justice kennedy's opinion for the majority did not express and adopt the heightened scrutiny argument that we in the united states advocated for. it did focus on the characteristic of the defense of marriage act that the court found particularly troublesome. he viewed it as an expression of animus against gays and lesbians. it was not motivated by legitimate public policy concern. a desire of discriminating for

discriminations sake. he struck the law down principally on that basis. there was a fair amount of discussion and oral argument in the case about whether really the problem with the law was not the discrimination problem so much as a federalism problem. justice kennedy asked quite a few questions saying, gee, is it not usual for the federal government to decide what is a valid marriage and what is not? that is usually the states. not the federal government. at the end of the day, the opinion for the court did not rely on the federalism ground. it was an equal protection and fundamental rights kind of analysis. he did use the federalism rationale that federalism notion as a red flag. the opinion that, precisely because the federal government is not very often in the business of deciding what is a lawful and valid marriage and

what is not, the fact that the prior -- federal government in this statute got involved in trying to answer that question and answered it not for any one particular federal program but for every single federal program across the board, from taxation to military service to social security benefits, that was a red flag that raised suspicion about whether there was any legitimate motivation for supporting the law. the other big case in this area was perry. that was a case about california's proposition eight, which was a constitutional amendment passed in california that band marriage between

persons of the same gender, subjected to a constitutional challenge under equal protection grounds and fed -- in a federal district court in california and it struck it down. something important procedurally happened during those proceedings is that the state government of california decided that he believed the law was unconstitutional, the amendment was a violation of federal constitution and they stopped defending it. because they would not defended anymore, the group that was a strong proponent of the initiative stepped in, hired a lawyer to defend the law. so the district court found it unconstitutional then the lawyers who intervened then took an appeal to the ninth circuit court of appeals where they lost, then they took the case to the supreme court and asked for review. what the supreme court ended up doing was deciding that in that situation the party that -- because the state of california had dropped out and this other group had come in, that there wasn't standing to pursue the appeal.

now, standing is a technical legal doctrine and in order to bring a case in federal court under article 3 of the constitution limits it. it has to be a genuine case or controversy in order for the constitution to allow the federal court to hear a case. and one element of that idea of a case or controversy is that you have to have real opposing parties who actually have a personal concrete stake in what is being fought over in court. and that the supreme court held that applies not only when you're at the initial trial but when you're on appeal as well. if you want to take an appeal from a lower court to a higher court and then take an appeal to the supreme court, that you have got to have that kind of personal stake. and a majority of the court ended up concluding that the proponents of proposition 8 didn't have that kind of personal stake in the law that allowed them to qualify as somebody who could have standing to take an appeal and pursue the case, that

they really weren't any different from any other citizen in the state of california, essentially, that any citizen might have an interest in seeing a law or constitutional provision of the state enforced but that kind of undifferentiated interest is one that isn't enough to get you standing to come in and pursue a case in court. one interesting thing of the consequence of the court deciding there was no standing is that it wouldn't itself reach the question of whether there is a constitutional right to gay marriage and whether prop 8 is constutional. they said we can't hear that case and the court of appeals couldn't hear that case either because the appeal was brought by the prop 8 proponents who didn't have standing. but you had a district court judgment in place that declared prop 8 unconstitutional. so what do you do in that circumstance? and the upshot is that the prop 8 proponents then went to

california state court and tried to get the district court judgment undone on the theory that this isn't right because the you have a district court judgment and it couldn't be appealed and yet it's going to have the effect if left undisturbed of wiping out prop 8 and making same sex marriage available and lawful in california. the supreme court declined to intervene. as a consequence, even though the court didn't reach the merits of the issue, it is the case now that prop 8 is inoperatives in california and the opportunity for same sex couples to marry in california is now available even though the supreme court didn't reach the merits of the case. so that's a summary of the gay rights decision, part of what made last term quite a consequential term. >> i think it may be difficult for you to opine on what comes next because the united states will have to take a

position on the next generation of same sex marriage and gay rights cases. but i am interested in you or don to the extent that you're able to think about what it is that windsor, the domea case, tells us about what the supreme court will do when it does confront the perry question. that is, the foundational question of whether there's a constitutional right to same sex marriage. so i wonder, because it seems to me that case is coming on a rocket ship. so i wonder what lessons we might derive from what the supreme court says. >> i haven't thought about -- i have thoughts about that but why don't you chime in. >> i agree that is of course the next question, because the reasoning of the windsor case leads one down as well, is it is unfair to discriminate between lawfully married couples, same sex couples and opposite sex couples, why is it lawful under the u.s. constitution for some

states to deny same sex couples the right to get married anyway? but i had before that just a precursor question. which is this, and this is a puzzling element of the way those two cases were decided. essentially, both the state and federal government did the same thing. the attorney general of california and the governor of california did the same thing that the obama administration did when it came to defending this law. they like the obama administration concluded that the state law under attack was not constitutional, they kept enforcing it but they didn't defend it in court. which is exactly what you did here in washington. maybe you could explain. how can the supreme court find that they can reach the merits when the federal government stops defending a statute it considers unconstitutional but they can't reach the merits when the state of california stops defending a statue or in their case, for the exact same reason?

>> well, the supreme court explained that in its opinion and it's a really good question. but there are a couple of differences that allowed one case to go forward with the other not going forward. in california, in the prop 8 case, the state stopped defending the statute but also stopped participating in the case. they just, the layiers weren't there. they were just gone. in this case, in windsor where the united states was a party to the case, we stopped defending the statute but we didn't stop participating in the case. we stayed in the case and one reason we did that is because part of the decision that the president and the attorney general made when they decide that had they wouldn't defend the statute any longer is they would continue to enforce it until there had been a defensive ruling from the courts that it was unconstitutional. and the reason they did that was because, as they expressed in their explanation, was because of a belief that in our system

that the judicial branch get the last word on the constitutionality of the law, that not ought to be up to the executive branch on its own and the way to maximize the prospect of the judicial branch getting the last word is to enforce the law while the law is still effect and there is the prospect of a true case or controversy that can be decided. then we were in a different position than the state of california was in prop 8 in that there actually were concrete consequences that would flow to the federal government if the statute were declared unconstitutional. and one of them most obviously with edie windsor was the federal government was fighting with her over $300,000 in tax payments. and if the statute was upheld as constitutional, that would

stay in the federal treasury and if it was struck down there would be a check to go to edie windsor. so even though the united states government believed that the statute was unconstitutional, we would suffer an adverse consequence from the statute being struck down. a majority of the court decided that was enough of a concrete dispute to justify the case continuing forward consistent with the article 3 requirements, and that -- and that concrete dispute of similar kind just wasn't there in the california case. so that's i think the best translation i can give of the supreme court's decision. >> not to throw any doubt on the infallible reasoning of the supreme court. but of course, for the state of california, they would have the exact same stake. because if there can be same sex married couples, tax laws and many other laws make similar differences. so the state of california would

also have a big financial and policy stake in whether or not same sex couples can get married. >> understanding that the half of you that are -- are now satiated, let me go to the few of you who are interested. so do you have any thoughts on what follows? >> i certainly agree with you that case is coming. i think that it will be more controversial to say that states have to recognize same sex marriage than to say that the government doesn't have to honor states' choices. i have a hard time seeing how they can write an opinion completely consistent with windsor that doesn't lead to that result that states have to. i am more often than not wrong about how the supreme court will rule. but it seems to me that that has

to be the result. and it's possible that if they can come up with some distinction for the next case it won't happen in the next case. but it will happen. >> just one word on that from the perspective of the united states. as i described earlier, we took this position as a matter of legal doctrine that heightened scrutiny ought to apply to laws that discriminate on the basis of sexual orientation. and the court in windsor, as i said, didn't adopt that rationale as the reason to strike down section 3 ofdoma. they adopted a somewhat different rationale but at the same time they didn't reject that rationale. the united states also participated in the perry case and argued that same principle of heightened scrutiny ought to apply to state laws that discriminate on the basis of sexual

orientation with respect to marriage itself because they reached that standing ruling we've been discussing they didn't grapple with that issue one way or another. so i think the most i can say is that it remains open to the supreme court to go that heightened scrutiny route and find that state laws that discriminate, that deny the ability for same sex couples to marry are a violation of the equal protection. it's open to the supreme court to craft a different rationale and decide that such laws violate equal protection. but it's also i think after windsor clearly opened to the supreme court to decide that this is principally a situation in which you would defer to the states. because, as i said, there was that strain of reasoning in the windsor opinion of justice kennedy that gave a lot of deference to states' judgments about who should be entitled to get married under state law. so i think the case is coming fast i think tom is right about that.

but you look at the legal options available after the windsor and perry decisions and i think they're all available to the court in the future. and i wouldn't predict what would happen. >> i think that's sort of looking for a someone on that. that may be justice kennedy. he seemed uncomfortable that he had the case before him. he wasn't quite ready i think to go as far as petitioner windsor wanted him to go. and that's why i say it might not come in the next case but it will come. it's a matter of when he is ready to get there. but the federalism angle, the deference to the states, is one way that he might decide that -- at least for now -- that the states can do what they want. >> let's turn to keep moving

forward to the vote rights act. >> one thing, in which the court held that a provision of the voting rights act was unconstitutional. i will go through a quick primer of the voting rights act to make sure we're all on the same page. it was enacted in 1965 to combat measures used to restrict minority access to the polls. it was the reaction to a range of discriminatory measures, things like literacy tests and moralities, affidavits, and to the murders of voting right activists in mississippi and state troopers, voting practices or procedures that have a discriminatory effect on voting. it's enforcible in federal court

by private litigants and the government and showing of intent to discriminate is not required. section 5 imposes a preclearance requirement on any changes that certain jurisdictions want to make to the voting practices or procedures. the jurisdictions covered are primarily in the south and with some additional counties and states elsewhere, such as alaska. so those jurisdictions can affect any change that affects voting without the clearance of the united states attorney general or the federal district court in d.c., which is three-judge court in d.c. the covered jurisdiction based on a formula that's set forth in section 4 of the act. the formula has been changed a bit since the 60s to add some requirements but that might have

been taken away. and every so often, although parts of the act continue on like section 2. every so often section 5 has to be reauthorized or reenacted by congress. and it has done so several times most recently in 2006 when congress extended it to 2031 for 25 years. and kept the existing formula for determining which jurisdictions are covered and therefore require preclearance of voting changes. at that time both the house and the senate held extensive hearings and undertook what the chair of the house judiciary committee described as one of the most extensive conversations of any piece of legislation that the united states congress has dealt with in the 27-1/2 years that he had served in the house. the goal was passed almost unanimously in both houses.

so four years ago, the -- maybe five now -- the court accepted a case that challenged section 5 preclearance requirement. the petitioner argued that it was unconstitutional. the court decide that had case on a different grounds. it didn't have to reach the constitutional question but the decision of the court noted that things had changed since the 60s and that congress needed to justify preclearance based on current needs. that brings us to shelby county, the case that was decided last june. shelby county, alabama is or was until last june, a jurisdiction covered by section 5 so that any changes to voting practices or procedures had to be precleared by the u.s. attorney or u.s. attorney general or the district court in d.c. they sued the attorney general

seeking delecktri judgment, seeking a statement of pronouncement that the formula under section 4 and the pre-clearance requirement under section 5 were unconstitutional. and they sought to permanently enjoin their enforcement. the district court and the court of appeals both rejected that challenge and held in favor of the government -- of the voting rights act. and then the case went to the supreme court where by a 5-4 decision the court held otherwise. the court did not hold the pre- clearance requirement was unconstitutional. instead, it held that the section 4 formula for determining what is pre-cleared is unconstitutional. the court held that continuing the prior formula for determining pre-clearance wasn't based on current conditions. the court said it was based on

40-year-old facts having no logical relationship to the present day. and that congress, if it is to divide the states, must identify those jurisdictions to be singled out on a basis that makes sense in light of current conditions. it was a 5-4 decision. the dissenters discussed the massive legislative record on which the renewal in 2006 was based and justice ginsburg explained that first generation barriers to access like literacy test were dealt with now but they had been replaced by second generation barriers like racial jerrymandering, large voting in places like with sizeable black minority populations and things like that. she said that the voting rights act had been effective in supporting such efforts in the past and that the majority's decision was going to or did

thwart the country's commitment to justice. in a separate opinion, justice thomas, who joined the majority called for the court to strike down section 5, the pre-clearance requirement, itself, saying the majority opinion had left that result -- had made that result inevitable, that really was all its unstated conclusion. the supreme court has repeatedly upheld the pre-clearance requirement in earlier cases. but -- so the outcome of that, although the procedure for preclearance has survived, the jurisdictions are no longer covered. it's an empty set. they're no longer covered. no coverage of jurisdiction to apply the pre-clearance requirement to. states such as texas and south carolina formerly covered by section 5 have already reacted by enacting or putting into

effect laws that they could under preclearance almost certainly not have gone forward with. and although the bill authorizing the 2006 renull of the voting rights act passed overwhelmingly, it's generally thought that the current congress will not pass new legislation or do so any time soon. you may have noticed the current congress has trouble [laughter]g. so while we weigh the federal government is using other tools, other sections of the voting rights act to try to protect minority access to the ballot. section 2, which is the after the fact, which allows an individual or government to after the fact, after a change has

been implemented to challenge the fact, that was not challenged in the case. so the government has sued texas under section 2 to challenge a voter id law that would otherwise have gone through pre-clearance. it has also filed a suit seeking an order from a federal court that would bring texas within the pre-clearance requirement based on evidence of intentional voting discrimination because although there are no covered jurisdictions under the section for formula, there is a procedure in the act where a federal court to determine that a jurisdiction should be subject to pre-clearance because of evidence of intentional discrimination. so the government is trying both those tactics in specific cases. and while the ability to challenge specific new laws remains, the decision is still extremely significant because section 5

as the court explained in one of that would bring texas within its earlier cases is in some ways more effective than case by case litigation. the court has said in 1966 that case by case litigation was inadequate to combat widespread and persistent discrimination in voting because the inordinate amount of time and energy to overcome the obstructionist tactics encountered in these lawsuits. and although the tactics have certainly changed it is certainly more time consuming and less efficient for the government to be looking at each change after the fact rather than clearing it in advance before a discrimination has occurred. so i think i've tried to describe this fairly objectively but i'll confess that i agree with the dissent, that it was a decision that is egregious in the way that it overrides

congress' decision based on a really massive legislative record and puts an egregious barrier in front of the government's ability to prevent discriminatory practices. i think that's what makes shelby county one of the most significant cases of last term. >> so maybe i can draw a couple parallels to the voting acts case and the gay marriages cases and then try to draw back to the case i'm going to talk about, the affirmative action case. two things to note. one is in the same sex marriage windsor case the supreme court strikes down section 3 of the defense of marriage act. that passed by an overwhelming majority. and in the same week it struck down section 4 of the voting rights act. and the dissenters in both cases claim bitterly that it is outrageous for the majority to

override the considered judgment of why -- wide majorities of the congress. and the two majorities are almost exactly the opposite. justice kennedy is the person shared in the majorities. and it is really interesting how, if you believe that it's a constitutional violation, then you think it's obviously important to strike down the law. if you don't think it's a violation you think it's an outrageous overreaching by the court. and there's no real way of saying who is right or wrong in that. the second parallel i would draw is that you don't really know as we were discussing how to read the windsor decision. do you read it that it is a step forward toward same sex marriage because it is essentially recognition that statutes banning it are a form of discrimination? or do you read it as a green light to states to make a judgment about how it is that they want to have marriage in their states? so too in the voting rights act case you can look at it in one of two ways. what the supreme court was

saying, congress, you go back and come up with a more updated list that's more tailored and circumstance scribed to discrimination going on today or read it as essentially a decision that you can't impose on the states. again, the kind of federalism theme. you can't impose on the states the burden of pre-clearance and they're just going to wink and nod and do an opinion because they know congress will never come up with a new list. so we have to wait for the next generation of cases to figure it out. so the parallel i would draw is between two cases related to the voting right acts. there was a case about four years ago where everybody thought the supreme court was going to strike down section 5 and they didn't. they came back to it. they sort of had a shot across the bow, congress came and did it this term. something similar may be happening with respect to affirmative action. so this term the supreme court tackled whether the university of texas program has a preference on the basis of race is constitutional.

the back off of that were a pair of opinions decided when justice o'connor was the center seat. she has been replaced by justice alito who is more conservative. justice o'connor center right conservative but you never really knew exactly where she was going to come down. she would look at each case on its fact. and the court had upheld the university of michigan law school and struck down the undergraduate program. but the bottom line was that you could have some form of racial preference. and the university of texas took from that a green light to add a preference to its own admissions program. and there were essentially two parts to how the university of texas was admitting students. part number one when it comes to diversity. part number one is this. they took the top 10% of all the graduating students in the state and admitted them to the ut system.

and that produced a fair amount of diversity because a lot of high schools in texas are in areas of the state that through segregated housing patterns inevitably have huge minority populations. so it was the case that the top 10% of the class might be overwhelmingly hispanic for example. and then they added a preference system that was challenged by an african who did not get into the university of texas and said that she believed that she at the very least was not given an equal opportunity to compete for a seat because she wasn't white. and that case went to the supreme court and everybody i think pretty much thought that u.t.'s program was in big trouble because we have one really important -- we have a recurring phenomenon in the supreme court that has happened and that is there are a variety of areas in which she was in the majority but justice kennedy was in dissent.

now that the court has taken steps materially to the right on these points of law, justice kennedy's dissenting view have tended either as a matter of actual law or as a matter of practice to become the prevailing view as he has taken on the senter seat. in the cases from the university of michigan, the predecessor one, where the law school program was upheld, justice kennedy was strongly of the view that the programs deserved much more rigorous constitutional scrutiny. and while justice kennedy, unlike his more conservative colleagues, has refused to say that the constitution is color blind and outlaws all racial preferences, he has said that they deserve significant constitutional scrutiny. so this case came up to the supreme court and people believed that this was going to be the court's opportunity to step back from that michigan law school case and put significant limits on affirmative action. but like in that first voting

rights case where we also expected section 5 of the voting rights act to be struck down, instead the court did something much more modest and it's a little bit of a puzzle exactly what they were doing, what it was mebt to do and why they did it. they issued a decision that said to the court of appeals which has upheld the program, we would like you to try again. that was a very interesting instruction. but it isn't backed up by much in the way of explanation. so what the court did actually do is it said two significant things. number one, it said we're going to continue to assume that diversity in higher education is a compelling governmental interest. remember don's explanation of how the 14th amendment works. you subject these laws to heightened scrutiny. you have to have a good reason for doing it and the law has to be tailored to achieve that reason. the most conservative justices on the supreme court don't believe that kind of diversity is sufficiently compelling interest to justify an affirmative action program. but justice kennedy got them to

join saying we'll assume it is. and the rest of the court was willing because it wasn't in a decisions that was striking down an affirmative action. the second part said, we want the court of appeals don't defer universities when they tell you they need these programs. you have to develop an actual record in court to establish that these programs are really necessary. again, it's a parallel to what happened in the voting rights act. the supreme court majority looked at the record that congress had compiled like the universities were compiling, looked at the record congress compiled and said that's not good enough. so we have in these follow-on cases courts determining whether or not a state has a history of discrimination so that a harsh remedy by pre-clearance is required. and so too in affirmative action the supreme court has said you need to scrutinize these programs. and as a result, the opinion for the courts ends up having

eight members in it. both the left and right. in what was a great surprise, because it was really expected to be a 5-4 decision coming back on affirmative action substantially. so the question i think for a lot of people is, is this term's fisher decision -- which didn't seem to do much, sending it back, is that a prelude to something much stronger just like that first voting rights act case which had a justice majority was a prelude to this term's decision striking down section 4 of the voting rights act? so the last point, perhaps the most jaundiced view of why the court did what it did. that is, really if five members of the court had signaled their grave concern with affirmative action, why didn't those five members of the court actually take the step of doing something? because they haven't hesitated to be aggressive on these important principles of constitutional law.

i think one thing that may have been happening is they were going to have to hand down the voting rights act decision at the same time they were handing down the affirmative action decision. the combination of invalidating such a critical part of the 1965 voting rights act and affirmative action or cutting it back optically would have looked very, very tough for that majority of the supreme court. and so it may have decided, in addition i'm sure they thought it was the right answer, but they may have thought that kind of the pacing of their -- i'm pretty sure. they may have thought that the pacing of the decision was better to kind of leave it for another day because they also were undertaking for next term a very significant fair housing act state that has significant racial undertones as well. before we turn to the kind of follow-on, any further thoughts? >> well, i want to say that it's certainly right to focus on justice kennedy and the fact that he really alone among the

conservatives on the court has agreed that diversity in the classroom, diversity on campus, is a compelling governmental interest. the government has a tremendous interest in promoting it. it's the other half of the 14th amendment analysis where he departs from the liberals who agree on the compelling interest. that is to add more supreme court jargon what is called, is the program narrowly tailored to achieve that end? that is where justice kennedy has departed from the liberal members of the court when it comes to these racial diversity cases. he accepts the idea that diversity is a compelling interest but he is much less willing to give governmental entities lee way to decide on their own what they can do and what level of classification is acceptable to achieve it. so what that decision in the texas case does, it requires he accepts the idea that essentially a trial to put the university of texas on trial to defend that the way that it gets

the diversity -- the supreme court says is worth while objective, does so in a way that causes the least harm to people who are not beneficiaries of the program. so that is where he sort of splits the baby on the court. >> this is also an affirmative action case but it comes at it from the other end of the spectrum because it involves an attack on a state measure that banned affirmative action. some people were present at various historical events. i was present at the origin of the modern anti-affirmative action movement. because in 1995 when i was in law school, i was the student member on the board of regents for the university of california or i would be appointed shortly thereafter and when uc under the leader shf of connelly, eliminated conversation of race and

ethnicity in their admissions procedures and the following year he followed up with a statewide initiative in california, proposition 209 which abolished racial preferences across the board for state programs, including college admissions and he then went on to replicate that measure in many other states or several other states at least. one of them was michigan. and that is where this case called, as don informed us schuty, the attorney general in michigan, comes to us from the sixth circuit court of appeals which includes michigan. michigan we heard of before in the affirmative action context because in 2003 there was a pair of cases where justice o'connor essentially said that you can't have a strict numerical advantage for minority students, you can't automatically give them 50 points on the score to get in to

school. but you can, as a part of a holistic, not very clearly defined but a sort of holistic measure of an applicant ds worth take their race into account, perhaps for the next 25 years. that was the time limit she suggested might be appropriate to keep explicitly taking race into conversation but that was not a binding part of the decision yet it was always cited as the court's benchmark. after those decision came down in 2003, michigan voters acting with the help of ward connerly who sent proposition 209 clone to the state decided they didn't want to wait 25 years and they passed something called proposal 2 which abolished the conversation of race in any state programs including higher

education admissions. and the number of groups including one called the coalition to defend affirmative action by any means necessary filed suit to challenge proposal 2 in michigan. the same group or a related group had also challenged proposition 209 in california arguing that essentially by preventing any state agency from adopting an affirmative action program, minorities were being disadvantaged that they alone or they among a few groups were being singled out to be disempowered, being unable to seek a kind of program that they wanted while other groups that might be given preferences and one often cited are children of alumni or athletes or other types of students who may get preferences in some instances, they aren't barred by the state constitution from getting a

preference. they can go and try to persuade the university or the university can on its own give them a preference. the ninth circuit court of appeals in california rejected that argument and upheld proposition 209. but that argument did prevail, barely, at the circumstanceth circuit court of appeals which by a single vote, i think it was a 7-6 opinion, found that this proposal 2 in michigan violated the united states constitution's equal protections clause as intprested by the court and looked to a pair of decisions principally for the authority for its ruling from one from 1969 and one from 1982 in which the supreme court had struck down local or state ordinances that made it especially hard to pass anti-discrimination laws. there had been certain measures that city council can pass any kind of law it wants. but if it wants to pass a law banning discrimination and

housing they need a super majority measures like that the supreme court felt were unconstitutional because they went out of their way to deprive minority groups that might benefit from an anti-discrimination ordinance the ability to get those sorts of ordinances enacted. the sixth circuit court used that same reasoning to say well this is the same thing. that pretty much any other type of person, an alumni child or an athlete or a tubea player or whoever, can have many ways to try to get a premps from the university of michigan or michigan state or other states colleges. they can ask the board of trustees, they can ask the admissions office, they can go to legislator, or they can see seek a constitutional amendment. but minority groups, the only way they can get a preference enacted is to amend the state's constitution. and that violates the principle by essentially depriving them

of the same way to influence legislation or influence state policy that other groups have. now, when that case -- so the case is not one that i -- i mean, it deals with affirmative action with whether a state can abolish affirmative action on a statewide basis. and it's interesting in a number of ways because it says that a measure that on its face is completely race neutral, no one shall receive any preference or detriment based on race, in effect, is unconstitutional because it prohibits some people from seeking a preference or detriment based on race. again, we can't ever be sure what the supreme court is going to do, but it seems that the proponent or the opponents of proposal 2, in other words, the coalition of affirmative

actions by any means necessary, has an uphill climb that it is a violation of equal protection to enact a state constitutional amendment that says nobody can be treated different based on race. so that will be argued on october 5 at 1:00 if you all are free. >> one very brief thing noteworthy about this is the way in which the supreme court did tackle a similar issue in earlier generations and we think of there being a lot of stability in american law in the supreme court decisions because of the value of precedent and the notion of stare decisive. but on these really fraught, hard questions, like affirmative action, race, religion, each new successive supreme court decision sees some flexibility to correct the errors of its predecessors. and so too the current court the decisions upholding the ability to have some form of

preference and so too on these questions of whether bans -- local bans on affirmative action unconstitutional. so let's continue with our forward march through the upcoming cases. the first one we talked about. in the next 45 minutes, we are going through nine cases. so we are going to stick to five minutes a case. which i think will be no problem at all. [laughter] given that we only took 20 minutes a case for the first five. so the very simple and easy to understand recess appointments? >> you bet. so this is a case called national labor relations board against canning. the case about how the constitution allocates power

between the president and the senate. article 2 of the constitution of course gives the president the power to appoint federal officers subject to the advice and consent of the senate. there's another provision called the recess appointments clause which i'm going to read and the language is going to matter in a way that we'll discuss in a minute. >> you carry that with you? >> all the time. the president shall have power to fill up all vacancies that may happen during the recess of the senate by granting the commission which shall expire at the end of the next session. so in other words if the senate is in recess, the constitution gives the president the authority to make appointments that he would otherwise need the senate's advice and consent to make. what this case is about is the meaning of that clause. now, here's what happened to give rise to the case. the national labor relations board enforces federal labor law.

it's a five-member board. and you need at least three members to have a quorum so the board can operate. there have been vacancies on the board for -- had been for some time. but they did have a quorum of three. but the term of one of the three was getting ready to expire and then they would have only had two and they wouldn't have had a quorum and couldn't operate. the president nominated two people to fill the vacancies in the board, the senate did not confirm their nominations. so the board was in this position where it was about to go out of business. in december 2011 the senate decided that it was going to take a break from mid december until january 23rd. but they didn't just declare that they were going to go out on a recess between mid december and january 23rd. instead, they provided that they would have a proforma session every three days during that

period in which one member of the senate would be there and would call the senate into session and in 30 seconds or less bring down the gavel and call the senate out of session. and the resolution that set this up provided that had members of the senate didn't need to be there for these sessions and that no business would be transacted. now why did the senate do this? they did it because by accepted practice, a break of that short of time of three days doesn't count as a recess that would trigger the president's power to make recess appointments. so this happens at the end of 2011, 2012. the president decides that actually the senate is in recess and then despite these pro forma sessions because those sessions don't make the senate available to provide its advice and

consent, which is what it has the obligation to do. and if they're not around, the president says they're in recess. since this recess is long enough, and since the nlrb is not going to have a quorum, i'm going to recess appoint two people and which he does and so the board with these two recess appointees on it renders a bunch of decisions in one decision which it is enforcing a provision of labor laws against against a company, nole canning, bring as challenge in court and says well this was an action that was without authority because the board actually lacked a quorum because the people who were sitting on the board who voted to enforce the law against me were unconstitutionally appointed. and that's how the case shaped up. and it was in the court of appeals here in the district of columbia and there was a big fight between the board and the united states government representing the board arguing that these were valid recess

appointments because the senate really was in recess. and the company which said no the pro forma sessions count and they defeat the recess appointments power. everyone anticipated that there would be a decision on the question of whether the pro formas are enough of a session to prevent the conclusion that there's a recess that allows the president to make the appointments. the decision comes out and the court goes way way beyond that question. in fact doesn't even address that question. it addresses two much more fundamental questions about the scope of this power that have been around since the beginning of the republic. and the first one is what does the recess mean? remember i said it may happen vacancies may happen during the recess. well the court said the recess that phrase in the singular, so it must apply to only one recess.

and if there's only one recess, it must be the recess between the sessions of congress, the recess between the end of the first session and the beginning of the second session. now congresses are broken into two one-year sessions. so it must be those intersession recesses and it can't be a recess within a session. like when congress takes august off. that's an intra recess. so it has to be only an intersession recess. these appointments occurred in january after the new congress convened on january 3rd, which a different provision requires them to do at noon on january 3rd. so it was within the new session and it wasn't an intersession recess and therefore it wasn't the recess and therefore it was invalid for that reason. but that's not the only problem the court said. the other problem the court said was that the constitution says the president can fill up all vacancies that may happen during

the recess. and he said well that means that the vacancy has to arise during the recess. the vacancy can't exist before the recess because if it did it didn't happen during the recess. and therefore there are two fundamental problems with these appointments. so by virtue of that decision, the d.c. circuit took what was already a quite important question of a separation of powers and the proper allocation between the authority between the senate and united states and drew it into a gigantic question of the separation of power between the senate and united states. and part of the reason is that if one goes back to american history as one will see in the brief that we file tomorrow in this case, there are hundreds and hundreds and hundreds of recess appointments that were either intra session -- in other words not during the break at the end of the session -- or to

fill vacancies that arose before the senate went into recess. and including or just to highlight one example the appointment of dwight eisenhower as commander of the u.s. forces in the summer of 1943. [laughter] it will be an interesting case. from the language i read, there is obviously an argument to be made that supports what the court of appeals did. the language is also capable of being read to support the historical practice and you have this substantial historical practice. the historical practice accelerated over time and you can see examples going back to george washington of appointments that would not qualify under the court of appeals ruling. as time has gone on, there has

been more and more. how much weight do you give history? how can you allocate authority between the president and the senate? it will be an interesting case to follow. >> let me make one tiny little point. what is old is new again. most of the work done on the question of intracession and when the recess has to occur was done by democrats, including me. i represented senator kennedy challenging recess appointments by president bush. the republican judges rejected our argument. now the shoes have been completely reversed. >> do you have an opinion or

does your brief addresses -- if the court agrees with the dc circuit, then what is the effect on going backwards? i think one of the appointments challenged i senator kennedy was a judge sitting on the 11th circuit. would the majority decisions be questioned? [laughter] >> that's actually not what the case presents, so i don't think it's an issue we will get to if the court rules that way. it will have to be confronted but i don't think it will be wrestled through directly. >> our next constitutional power is the treaty power. >> the next case asks what the limits are on the power of congress to implement treaties. some treaties are self-executing and others require the congress after the senate has approved a

treaty to pass a statute to implement its provisions. most courts have read a case from 1920 to holds if a statute is implementing a valid treaty, the statute is necessarily valid. baum vs. the u.s. concerns the statute that implements the 1993 convention on the prohibition of the development of and stockpiling of chemical weapons. it is a treaty concerned with the terrorists and rogue states. the case also concerns the meaning of this 1920 case, missouri vs holland. depending on the court's reading, that maybe another instance where this court overrules a prior decision. with these complex constitutional legal issues,

they arose from a domestic dispute. carol baum found that her friend was pregnant and her husband was the father. she flipped out. she decided to make her friend's life a living hell. and she was a microbiologist and naturally she decided to do this using some chemicals. she took some from her place of work and ordered some on amazon. she put the chemicals on the friend's car and door knobs and mailbox. she also took some mail from her friend's mailbox. at this point, she was not really a friend. [laughter] >> more of an acquaintance. >> her friend suffered a minor rash.

the chemicals were easy to see and wipe off, but her friend got a rash on her thumb. the evidence is that she intended to cause irritation and discomfort but that she did not intend serious harm. the friend enlisted local police but they did not know what to do. the mail was being taken so she asked the post office to set up surveillance and found out that carol baum was behind this. you might expect the local police to take over but instead, federal prosecutors got involved. i assume that's because the post office. ms. baum did not engage in activities in violation of the chemical weapons treaty. her actions did not involve chemical warfare or stockpiling

of chemical weapons, but the prosecutors charged her with using unconventional weapons in violation of the statute that congress passed to implement the treaty. she argued to dismiss. she said the statute exceeds congress' constitutional powers in article one, section eight, and invaded the powers reserved to the states in the 10th amendment. she called the statute a massive and unjustified expansion of federal law enforcement in a state regulated domain. the court of appeals rejected her argument and said missouri vs holland, the 1920 case, means that if congress enacted a statute to implement a valid treaty, it was acting within its authority. before the supreme court, she reiterates this argument that

the statute is unconstitutional if it is applied to such a local crime. she argues that the power to enact the statue to implement a treaty cannot bring with it the power to enact a law in disregard of other constitutional limitations. because, she says, the government has a federal law that criminalized her conduct in the absence of the treaty, they cannot criminalize her conduct under a statute implementing a treaty. she also argued the statute could be read not to cover her crime at all and if the supreme court read it that way, it would have to reach the constitutional each issue. this plainly falls under the scope of the statute and that it is constitutional because the statute that implements the treaty is constitutional even if

it covers some local subject matters that it would not otherwise address. otherwise, the government says the u.s. would be hamstrung in negotiating treaties and the confidence of other countries in the united states as a global partner would be undermined. >> a red line, if you will. [laughter] >> no comments. >> the government also makes an argument now that it did not make out the trial level. it made in the court of appeals. the argument is that the provision of the statute is valid under congress' commerce clause power which is the power to enact laws that regulate the flow of goods among the states and chemicals are sold in interstate commerce like these which are not illegal weapons.

this argument was not addressed in the opening brief because baum's position is that it was waived, so it is a bare-bones description but the government portrays the case differently. the government explains the two chemicals used have the rare ability to cause toxic harm to individuals with minimal topical contact and one half a teaspoon of one of them could be lethal. the government says that she attempted to poison the friend with these chemicals at least 24 times over the course of several months. she spread the substance on the mailbox and the door to her home and car in sufficient quantities to be lethal. to these additional details,

expect the answer to the constitutional question. the brief for baum explained she was under incredible stress. her hair was falling out. it had a devastating effect on her mental health. the conduct was completely out of character for her. do these facts affect the answer to the constitutional question? probably not, but the briefs like all good briefs, they portray the most sympathetic light of their client even if it does not have a direct answer to the legal question and the court's decision. they would probably portray the facts which are most sympathetic to the outcome it is going for. there were 18 amicus files were filed and the argument is scheduled for november 5. >> in terms of the implications of the case, i take it that a lot of treaties we enter into, there would be some other power that would allow congress to implement them.

there are some like treaties about domestic violence that if congress has the power to implement, it will have to come from the treaty? >> i will talk about a case involving the clean air act briefly because it will keep us on time and it is impossibly complicated. this is a case called homer. there are two cases and they involve the transport rule. it involves downstream air pollution. we hear the idea that there may be states in the midwest or the northern part of a country where there is heavy industrialization or coal-fired power plants and emissions from those plants can travel within that state but to other states as well. the clean air act addresses many things including that. the epa went about trying to figure out how to regulate the

emissions that go from one state to another. this is why you need a federal law. a state is unlikely to regulate itself to protect another state. the epa put a series of restrictions on these up when the states on the amount of pollution that could leave that state and would end up in another state. it is a series of challenges to those regulations issued by the epa. in general, it deals with the question of whether the epa can set the rules or the states themselves are going to set the rules and some technical questions about whether these claims were brought in time in the first instance. beyond the clean air act, there is one other feature of this case. you will have heard about whether we will appoint new judges and additional judges to

the d.c. circuit and the question of whether it needs new judges or not. there is also the notion that the d.c. circuit is the second most important court in the country not because it sits in a hierarchy of the judiciary. it is that these hugely consequential cases involving the federal government are brought in that court. the recess appointment court went there, the epa case. you can see why it is there are such political struggles over the appointment to that court. let's turn to fair housing. >> very well, if you followed an earlier season of the supreme court, you know there was an exciting episode that took lace in burlington county, new jersey. tom here was involved arguing that case involving the strip search of a prisoner in burlington county. this is a different type of issue coming from the same location, the county seat of

burlington county, called mount holly and it involves an urban renewal type program. the town of mount holly wants to has begun to bulldoze a neighborhood called the mount holly gardens and build new housing there. they feel the area is blighted and there is a lot of crime there. they want it improved. mount holly gardens neighborhood is also the one part of town which is a minority neighborhood. under a federal fair housing laws, one cannot discriminate against people based on race. how do you determine when the protections of those fair housing laws go into effect? a number of residents of the

mount holly gardens neighborhood in that town sued to stop this redevelopment project from going forward. they argued that it violated fair housing laws because the people who were bearing the impact of this development were disproportionately minorities. under the way the fair housing law and other antidiscrimination laws have developed over the decades, there are different ways you can see whether their protections are triggered. in american history, it stopped being fashionable to say we just like discrimination. we are in favor of segregation and will adopt rules that discriminate against people of color. that stopped being the thing that politicians could announce. for a long time, it was the kind of thing that helped politicians win elections. since officials who make these decisions no longer are outwardly declaring that is what they want to do, how do you find out if that is what is really

going on? the doctrine that has been developed is known as disparate impact. if the policy that the agency is undertaking has a disparate impact on a protected class of people, often minority groups, then it may be illegal for them to proceed. the way this works in practice is an agency wants to do something like a redevelopment of this neighborhood, residents sue and they say it is a violation of fair housing and has a disparate impact on us and we are minorities and we are getting shafted again. if they can demonstrate there is a disparate impact, it does not mean the project cannot go forward. it means the city in this case has to show that it wants to do a legitimate goal similar to

compelling goals in the affirmative action context and it has to show that there is not way to get to the same result without having a similar kind of impact on this protected group. that is similar to the narrow tailoring of them remedies. once the city raises that defense and says this is why we have to do it this way, there is no disparate impact on the no way to get to the same legitimate all without having it, then the burden shifts back to the other side. the residents would then have to say you are wrong because there are other ways that you can get where you want to go without bulldozing our houses. that is what the third circuit court of appeals said has to happen before mount holly can go ahead and complete this redevelopment project. this disparate impact type of

hitting the ball from one side to the other depending on what each side can prove has to be examined by the trial court before the city can go ahead with this project. the city has appealed to the supreme court and they argue that no, this third circuit court of appeals and other federal appeals court have applied similar rules to this type of situation and have gotten it wrong. there does a not have to be a disparate impact type of analysis before we can go forward. we cannot have intentional discrimination and we are not intending to target people because of their race but this type of burden you are placing on us is not required by the federal housing law or by the constitution and you cannot make us jump through these hoops before we complete the redevelopment of this neighborhood. the court will look at that and it has implications not only for housing law but also for other areas of antidiscrimination law, possibly including employment discrimination.

the same type of test often arises when you have an employment discrimination lawsuit. it is hard to prove that someone is intentionally discriminating. the jargon that part uses of disparate impact smokes out impermissible discriminatory actions. it could have implications even beyond housing into an and other areas of public policy. >> one little vignette about this question is that they have been concerned about cases getting to the court that has rulings they don't favor. in this context, they have worked very hard behind the scenes to get the cases to go away. even after the supreme court agrees to hear a case, it can be settled or withdrawn up to the day they decide the case.

there was a predecessor case to this one that i represented the disparate plaintiffs in with the possible involvement of the federal government. it became controversial and that case was settled after the court agreed to hear it and they have taken this follow-up case. there is a lot of pressure on the parties to this case to settle it before the justices can decide it as well. >> the settlement in this case would probably mean a payout to the residence to move. >> the next case is called mccutchen vs federal election commission. my office filed an amicus briefing supporting the government and the case. as in citizens united, the petitioners in mccutchen are urging the court to overrule a prior court decision in the area of campaign finance. the prior case was buckley

vs vallejo, a 1976 decision in which the court upheld congress authority to up hold aggregate limits on individuals contributions to prevent circumvention of the limits on donations to individual candidates. the aggregate limit today is about $125,000 on contributions to individuals during an election cycle. an individual can contribute to parties, pac's, or individuals. there is a $74,600 two-year ceiling to contributions and a $48,600 limit to candidate

organizations. the individual position or the case is sean mccutchen. he is a wealthy man who gave a lot of money to individuals and parties during the last election cycle but he wanted to give more and had he given more, he would have exceeded the limit. he challenged the federal election campaign act arguing along with co-petitioners, the republican national committee, that the aggregate limits violate their first amendment rights and should be eliminated because the resulting contributions will not be large enough to cause any concern. that is the issue before the court -- whether the aggregate limits, not the individual limits, but the aggregate limits violate the first amendment. the concern is that the elimination of the cap would allow candidates and party officials to solicit and accept large donations to be shared among the major parties, various candidates, and committees. the supreme court has held the limits on large donations to

create a bulwark against certain corruption. in the area of campaign finance, some members of the court disagreed openly with that precedent and the court has shown itself quite willing to overturn precedent in this area. the prior cases make tell us what the outcome should be. they don't tell us what the outcome will be. part of the dispute in the case is the distinction over campaign expenditures and campaign contributions. in the 1976 case, buckley held the limits on expenditures were unconstitutional because that was a direct infringement on the first amendment right of the candidate to speak and therefore subject to the highest level of first amendment scrutiny and that the expenditure limits

could not survive that level of scrutiny. the contributions were more like an association as opposed to a speech activity. it was subject to a lower level of scrutiny and the contributions and the aggregate limits survived the first amendment challenge because they prevented corruption. mccutchen, the petitioners are asking the court to narrow if not overturn this aspect of the buckley distinction between expenditures and contributions. they say there is a distinction so that their cases just about aggregate limits and not the individual contribution limits that applies to any specific candidate. the distinction they draw is pretty fuzzy. if they succeed in that aspect of the case, that would likely pose a significant threat to the

limits on contributions of individual candidates and i expect we would promptly see some litigation in that area. the petitioners also argue that they can win even under buckley just because the aggregate limits today, and given other research in campaign-finance law, are such that these particular limits are not needed to prevent corruption. the possibilities are that buckley will be limited and at least some contribution limits will be subject to scrutiny meaning there will be no limits and buckley will not be limited but the court will hold that these particular limits do not protect against a government interest in protecting against corruption or that buckley will

be reaffirmed in the court and that the court will hold that the limits protect against corruption. in this area, i don't think justice kennedy is a swing vote. he is very well defined with long-standing views about campaign finance. if the law is to survive, we would probably looking to justice roberts. whichever side wins, he will be a fifth vote and it will turn on whether he thinks the limits are needed to protect against corruption. >> fantastic. can we turn to the other part of the first amendment? >> greece is the word.

this is a case coming from the town of upstate new york and it deals with one of the fuzzy parts of the constitution and that is the role of religion and its relationship to government. the constitution makes no reference to god at all. it has a reference to religion in the first amendment in which the congress and by extension other branches of government may make no law respecting the establishment of religion nor can they make a law preventing the exercise of religious faith as well. even though the constitution itself does not talk about god and there are apparent clauses referring to some kind of arm's- length relationship between religion and government, we know the continental and the u.s. congress and many bodies of government began their sessions with invocation of prayers and prayers and references to god were made by political officials

from the beginning of the country through the present day. it is not clear exactly where the line is and the supreme court has struggled for many years to clarify that boundary. this case is one of those efforts by the court to clarify the boundary between church and state. the town of greece had a practice of beginning the meetings of the town board with a moment of silence. perhaps some people wish it was longer -- [laughter] slightly over a decade ago, they changed their practice and decided to have a verbal invocation and invite a clergymen to come and say a prayer before the town board began its deliberations. the town change the practice of how exactly it would choose who would be selected and who would

be invited, but eventually, they came up with a system in which someone in the town clerk's office would go through the phone book and call up the different churches in town and invite them to send someone to give an invocation for the board meeting. they only called religious institutions that were located inside their town and inside the town limits, all the religious institutions were christian. there were a couple of synagogues, but they were just outside the town limits. there might have been a buddhist temple outside the town as well. anyway, as a result, virtually all the faith leaders who gave the invocation were christian. many of the prayers that they gave made very explicit references to jesus christ and our savior and were more than

the generic types of prayers that are perhaps less sectarian. two grecians, two residents of greece, who attended a board meeting regularly found this practice of prayer is objectionable and they filed suit under the establishment clause of the first amendment saying that the town of greece had gone too far in establishing a religion. the second court of appeals agreed with them by using -- by examining how the town went around selecting people to give the invocation and what exactly was being said in these prayers. it said that while there was not one clear bright line that was crossed by the town, if you look at the totality of the circumstances, and you see that almost all the prayers are given by christian clergy persons and

many of the prayers had very explicit references to jesus and to our savior and so on and you look at that, no effort was made to bring in other religions that may be located quite close physically but are just outside the town limits -- that totality of circumstances went too far under a 1983 supreme court decision called marsh vs chambers, which looked at legislative prayer and said that legislative prayer is ok if it does not involve proselytizing and disparage other religions and does not serve to advance one religion over another. the supreme court has agreed to examine whether what greece is doing is within those limits. there is an interesting anomaly in the general way the supreme court has looked at these

establishments of religion cases. the less serious the religious expression is, the more permissible it is under the constitution because it looks less like serious religion but it is more decorative. [laughter] i mean it. if government agencies that defend religious involvement in what they're doing tend to say it is not really serious, just sort of a cultural, traditional thing. we don't really mean it because if we mean it, we are taking a stand on which religion is right and that would be less likely to pass constitutional muster. the other point worth noting is where the obama administration is and they are siding on the side of the town of greece, they take the view that the court should not get into examining

the content of every prayer. they say it's too intrusive and there should be more breathing space for the town to decide what is an appropriate form of invocation. there is some commentary that has said the obama administration is hostile to religion. in this case, they have taken positions that are very much on the pro--religion side, even more dramatically a couple of years ago. the administration asked the supreme court to reverse russet reverse -- precedence make it easier for religious schools to get tax related subsidies in arizona. at least for those of us covering the supreme court, they don't -- they have not consistently always sided against religious institutions.

>> tremendous. we have three more cases to turn to before we get to your questions. i am going to talk about the trivial passing subject of abortion. [laughter] it is an area of the law that fits the bill of the theme of areas where justice kennedy was in dissent and justice o'connor was in the majority on the court. his views have the potential to emerge as controlling. the first one is about abortion protests, which is a free-speech case of the first amendment. it is about protesters at the facilities and medical health clinics that offer surgical abortions. you have to step back to the previous precedent which was called hill versus colorado with justice kennedy in dissent and the court upheld an eight foot floating offer his own.

that means literally, you cannot approach a person within a certain number of feet. in that case, with respect to any health facility, a person who is approaching and you wanted to say something to them, you had to stay eight feet away and the supreme court said that was a neutral way of preventing interference with access to health services. this case comes from massachusetts. it is a statute that is limited to abortion clinics, facilities that offer abortion, and it is a 35-foot non-floating buffer zone. within 35 feet of the entrance to the facility, a person approaching the facility, you cannot approach them to have a conversation or show them something, you have to let them proceed from that substantial difference instance into the facility.

the court of appeals upheld a 35-foot zone and the supreme court has agreed to review the case. it will present a test of the expressive rights of people who want to do abortion counseling or protesting to approach a woman who was going into one of these facilities and offer literature or show gruesome images. whether those free-speech rights are unduly infringed by making someone stand so far away that according to the protesters, they have to shout and use massive posters. the court of appeal suggested it was possible they could dress up as the grim reaper to get noticed. there are other things you could do in the context of the buffer zone. here you have a situation where justice kennedy previously felt very strongly that these restrictions unduly infringe on the right of free speech and in the previous case, chief justice rehnquist and justice o'connor

have left the court. it is now possible that justice kennedy will have a majority to narrow the decision. the second case related to abortion issues is called klein and it is a medically-induced abortion case. the supreme court was asked to review an oklahoma statute that may prohibit the use of drugs to have a medically induced abortion in the first month or so of a pregnancy. that would be a significant issue whether the roe right extends to validate a restriction. the statute may say that you have to follow fda guidelines on the use of the drugs or it may invoke the guidelines in a certain way that the drugs never actually could be used for medically-induced abortions. there is an uncertainty about what the oklahoma law does so the supreme court invoked a relatively rare procedure where

it sent to the case to the oklahoma supreme court to ask what it is this law does. if the oklahoma supreme court concludes as a matter of oklahoma law that the law prohibits the use of the drug for medically-induced abortions, then the supreme court could pick it up and it could present the first real look at roe v. wade since the partial abortion cases. that case is on hold until we hear from the state court of appeals. a follow on to the affordable care act case that -- on behalf of the administration may be coming to the supreme court. >> this is not an issue on the court's docket yet but it likely that it will be soon and will be decided this term. this is another affordable care

act issue. most people get their health insurance through their employers. one of the things the affordable care act does is regulate the terms of those plans to ensure that the plans provide coverage for certain types of medical needs. under regulations of the department of health and human services that implement that part of the affordable care act, one of the things that employer- based health plans will provide as contraceptive coverage. the hhs regulations also give religious employers and exemption for that. if you are a church employer or a church school employer, you have an exemption from it. they don't give anybody the ability to opt out. a number of employers around the country who are not religious-

based employers in the sense that they are not churches, they are regular corporations organize under state law, have argued that they ought to be themselves able to be exempt from this requirement because the religious scruples of the owners of the company are such that they believe that their religious beliefs would be violated if they were required to provide contraceptive coverage as part of their health insurance. the principal argument they make is under a statute called the religious freedom restoration act, which congress passed some years ago based on its view that the supreme court was not interpreting the free exercise clause of the first amendment and a robust enough way to you people protection when they had religious objections to being subjected to the requirements of a general law like the affordable care act law here. you have to listen carefully to the words on the statute.

it says that the government shall not substantially burden a person's exercise of religion unless the government has a compelling interest and the burden imposed is the least restrictive means of achieving that interest. the court of appeals has been wrestling with this and some have said that yes, actually, under those provisions of the program -- religious freedom restoration act, any corporation should be entitled to an exemption on the contraceptive coverage requirements. others have come to the opposite conclusion. the case presents a number of potentially interesting issues. one issue is a corporation, is it a person who can exercise religion? [laughter] another one is the contraceptive coverage requirement -- is it a substantial burden? is it a burden on the employer or is it really taking something away from the employees who might not share the religious belief of the employer?

does the government then have a compelling interest in opposing that obligation and is the least restrictive means of doing so? that is something to look out for and a case may pop up on the court dockets in the next session. >> we have finished precisely when we promised. [applause] you did not applaud any of the cases. only our timeliness. [laughter] your side of the bargain is that we get to hear your fantastic questions. >> i was going to suggest that in the interest of everyone hearing everything, we have two microphones on either side. if you would not mind lining up at the microphones, it will make it easier for everyone to hear.

>> yes, sir. >> [inaudible] does the fact of working and playing well together with other justices result in decisions for the particular case is falling short of logic and consistency to reach the magic number of five? >> one justice historically was famous for talking about the rule of five, and that was the justice brennan. perhaps don could answer that. >> not a chance. [laughter] thanks for suggesting it. >> when the chief justice

roberts famously talked about the need for the court to provide clarity and come together, you can look at that in one of two ways. there is the need to have broad majorities, so we talked about decisions that were surprisingly 8-1, and the other is the bare fact of getting five people to agree to something so people know what the law is. if the supreme court is divided, we used to have a committee that would say the chief justice delivered the opinion for the plurality of the court. justice o'connor joined one part of the law and it would be very difficult for people trying to apply the courts decision to know what the rules are. i think in any collective body, including the supreme court, there are compromises that are made in order to have some kind of rule that people can follow. >> you don't have to think about that as being politicizing.

they do have different judicial philosophies, but there is a real imperative to come together with one rule if they can do it. that seems to me a perfectly legitimate impulse to accomplish that is much better for the country if there is a clear rule that comes out of a case. >> if i could add what could have been on big cases -- justice ginsburg more recently indicated she was not going to be drawn into that again. she was the one dissent in the affirmative action case in june. sometimes there is a compromise to get more people to sign on but there are sentences in there that up the analysis for a future case in ways that make some people unhappy. in the voting rights case, the one a few years ago, it was 8-1 but it set up the overturning of

an incredibly important part of the voting rights act and she indicated she was not going to concur or join the opinion of the affirmative action case this year because she did not to go in that direction. >> the panel has identified some interesting days coming in this term. can you tell us about some uninteresting days -- if any of us would care to watch the supreme court in action but would not care to encounter a line over the horizon. when are we most likely to be successful with that shorter line? [laughter] >> don has the responsibility to argue the most important cases in america. you are talking about my cases. [laughter] >> you and i argue against each other sometimes. >> if you are not going to get

in line for the fate of obamacare or abortion, on the first day of the term, i will argue about whether the securities litigation uniform standards act prevents people from filing suit under state law in texas and louisiana to try and bring claims arising from the stanford ponzi scheme, he sold about seven billion dollars of certificates but was buying polo ponies in antigua. it is whether you can bring a lawsuit about that. that is a technical question of law but that is an illustration of the fact that nine cases of the supreme court out of 10 present relatively ordinary questions of federal law. we have these disagreements over the contraception mandate, and that is the supreme court's job principally. there will be these conflicts in the court of appeals and the supreme court says we have to have one rule for the whole country and they will take the case. that can be a fantastically boring question. it may not be a hugely important

question but i would say that nine times out of 10, you can go and see a relatively technical case that will not have lines going out the door. in favor of the argument for cameras in the courtroom, there are not many seats. there can be as few as 100 public seats on a given day. if people are coming from out of town, they should write to the court to get a reserved seat. it is tough and the view of most people that if you ceased your supreme court in action, you will be proud of them. they are working hard on these tough questions. >> you can look on tom's website with a list of cases they are deciding and what the questions are. you will be bored by in good number of those questions and you might have a chance of getting into them. [laughter] >> thank you. >> there seems to be an

increasing politicization of the court, and part of that may be media driven not because of a position, but because of reading whatever you put out instantaneously and get it on the airwaves. i appreciate that you may not be able to answer this but i am looking for more of an historical perspective of the court today versus its apparent politicization versus what we have seen historically. >> what i would say about that is what is portrayed sometimes as politics or being politicized, what you are really seeing is the operation of different judicial philosophies at work. there are different members of the court that have different judicial philosophies.

they are legitimate philosophies and they hold them quite deeply. they tend to drive them in a principled way to different answers to the same question. it is easy enough to perceive that as politics but, a lot of times, it's not the right way to think about it. that's not politics. this is a well-thought-out philosophy about the law and the constitution and how to apply it. they just don't have the same philosophy, and so that generates differing results. you could say the same thing about the great battle in the supreme court during the 1930's over the new deal. each member of the court had different philosophies how to interpret the constitution and how much deference you give to legislative bodies. that does not mean its politics. >> in earlier periods, the court was not just political in this art of sense of how do their

opinions line with political ideologies but they were actual politicians. in the 19th century, justice hughes ran for president. another former president, chief justice taft who was appointed to the court. sometimes justices, the first chief justice resigned to run for governor of new york, john jay. during the new deal era, one justice became a consultant. there were periods when the court was even more involved in the actual nuts and bolts of politics. they published articles under pseudonyms to influence policy. it may be one of those things where we always pine for the good old days no matter where we were. i'm not certain that however political it is now, it is more

political than it has been in other periods. >> i would not use the word political but i am thinking that this court seems not hesitant to disregard prior supreme court decisions. not hesitant to disregard prior supreme court decisions, not because -- and i would not call that elliptical --

>> we will leave this now and head to a live discussion of the repercussions of the 2008 11: crisis. >> i want to thank everyone who put this panel together. our moderator did yeoman's work the crisis. the crisis was not a single event precipitated by the bankruptcy of lehman brothers. it was an ongoing process that took months. depending on who you talk to, began years earlier. but we use use lehman brothers as a reference point for the unfolding crisis. i am sure the panel would agree it was a confluence of many factors. steve is going to act as our

moderator. we will have time for questions from the audience as we have them. these join me in welcoming our panel. -- please join me in welcoming our panel. [applause] i need to start off by saying how disappointed i am, not i the panel, but i thought i had my one chance to sit on the chairs behind me and that did not happen. >> you did not negotiate. >> we could get a photo of you afterward. >> ok. >> well, let's go to a committee now, not a subcommittee. >> the two gentlemen to my right and left have had ample opportunity to sit in the stuffed chairs behind me. cocreated the

legislation known as dodd frank. to my right is the honorable bill thomas, who served in congress until 2007. he was the chair of the house ways and means committee. and for purposes here today, he was the vice-chairman of of the financial crisis inquiry commission. to my left is a member of the fcic who i have known for many years, headed the cbo for quarter years, was john mccain's economic adviser, and was on the council of economic advisers. a guy who, for whatever reason,

when he calls me up to do this always say yes. >> there may be people who do not know what cbo means. it is the congressional budget office. barney and i have one thing in common, if nothing else, we were frustrated over and over again by the congressional budget office on our plans based on what we thought they cost and what they told us, given their statutory power, it costs. >> always cost too much and never raised enough revenue. >> no, we knew that. they just didn't say yes. [laughter] i, for the record, loved working as the director of the cbo, but i was also 6'4" then and had a full head of hair. let's begin.

we are five years after the collapse of lehman brothers. as a person who cover the financial crisis from day one, or even before that, there were a lot of important numbers. $16 trillion in lost wealth, the number of americans who lost their homes, the number of americans unemployed, but the ist important number to me 30. 30 is the number of years after the great depression it took friedman and schwartz to figure out what happened. we are still in early days, figuring out what led to what has become known as the great recession. start with doug before i get to the two former congressman. what is your understanding? have we arrived -- there are ,olar opposite ideas, which is

the government caused it all through their housing policy. wall street caused it all through greed. middle ground. i think you were distinct in your dissent on the fcic by saying, you know what, it is all of these. >> i think the two popular versions you have heard are wrong. they are too simplistic. now appreciate some of the things that were central. first, it was not just a housing story. .t was a broad credit problem number two, it was characterized by instances of poor regulation. some cases,tion in but also overregulation. i think it is not a simple story there. needs the most work is global character. too much discussion is about what happened in the u.s., but

we had housing bubbles, real estate bubbles in general, across the globe. large institutions failed. a french firm got in trouble with liquidity. those failures occurred in a variety of ways and regimes. i think it would be very useful to go back and look at global curator much more carefully if we are going to understand this thoroughly. -- global character much more thoroughly if we're are going to understand this fully. >> i think the two polar opposites are wrong. reread the dissent by bill, thomas, doug and keith. i am very much in agreement with it. they talk about a number of individual things rather than talking about deregulation. four or five of those were --

deregulation was part of the reason they were there. to talk about deregulation in general doesn't get you anywhere, but there were some specific instances. is economic history here. the private sector innovates. because the nature of the private sector is that you don't participate unless you want to, it is voluntary, the innovations, if they do not have economic value to the public, they don't go anywhere. innovationnt, outstrips the public rules. 1880, there were no large enterprises in america. by 1890 there were. what happened then was antitrust, the federal trade commission.

deal is rulesw for large institutions. the rules that came out of the securities and exchange ask, worked pretty well until the 1980s. two things happen, it seems to me. a lot of liquidity was built outside the banks. secondly, information technology. it becomes possible to do things, particularly in regard to securitization. ways inave come up with the industry to pass the buck on the risk. there are systems whereby people think they can make some money and minimize the responsibility for the risk. what i think the job of the tellc sector is, not to people you can't do this and you to try tohat, it is reconnect risk-taking with responsibility for taking it.

>> let me give bill a chance to respond to that question. when you think about the reasons for the crisis, where do you end up? asked to serve on this commission and i told them, this purelyarly -- a political device and a placeholder, don't expect much out of it. and i think we lived up to that. i agree with barney. when you just say think of the of0s in the u.s. in terms the criminal element versus the government infrastructure, you -- bonniee and clyde and clyde crossing jurisdictions , state lines, submachine guns, they were so much ahead of the transportation and legal system at the time, we had to rethink the way the federal system

operated and the jurisdiction. between world war i and world war ii, we had to make sure we could stop these new mechanisms coming in. government can never be a head of or outthink. what happened was, we got caught with a lot of very love for verye, as bernie said -- clever people, as bernie said, and theg new technology human desire to get something for nothing, and the technology got ahead of us. ultimately, it is transparency ability to understand so that when you legislate, you do not actually complicate the problem, you provide society with tools to be able to watch what is happening and monitor. that is one of the problems i have with the legislation that came out of the crisis.

i think over time people are going to figure out how to make whatever is currently measured -- stress tests worthless, and they are doing other things. so you have to decide how to upate the new fbi to keep with the technology and the changes. but the most important thing i am concerned about is the failure of the international government system to understand it was international. we were ahead of others in addressing directly, and five years later, a lot of the international relationships and compacts and agreements, i think, are woefully behind us to a certain extent. and therefore, there are places that this could potentially a kind of different

structure and not be monitored. i just don't think we did the job. >> i think we want to come back to the international aspect. barney, the criticism build dave is one you hear -- bill gave is one you hear very often. it is too long. it is too complicated. it is too difficult to implement. we still have not implemented the volcker rule. fast forward from five years ago to what is happening now. does the dodd frank legislation guarantee or otherwise make it less possible to have another crisis? >> make it less possible. nobody guarantees anything. i disagreeme say, with those who say deregulation caused the crisis. i think it was non-regulation. it was not putting in new regulations to catch up with what was going on. with regard to what bill said,

he said they are going to figure out how to get around it. i agree. that is why it is not very specific. it is long. at the new deal, they dealt with bank insurance, mutual funds and the sec. put it all in one bill. if you look at the totality of the legislation of the new deal, it is similar. you gave the number 30. i will give the number 60. understandn congress what that means. that is what it takes to break a filibuster. we had nine separate markups in our committee, voted on them separately, and they had some relationship, but they stood alone. the senate said look, it is going to be hard enough to get 60 ones. there is no way we are going to get it nine times.

as bill said, you delegated too much. first of all, compare it to the sherman act. we are a marvel of precision be on that. -- beyond that. it is their job to figure out ways to innovate. the more specific you are, the is to implement. we empowered the regulators to be innovative. that is basically why we did not write the specifics. i don't think they put enough risk retention in there, but at least it is regulatory and it can be done. but i agree with bill's point. we need to retain the ability to move in the future, and we didn't. there is no aspect of the financial system which some

regulator does not now have the ability to deal with. >> and that is new. >> yes. >> there were whole pieces of the financial system -- >> we regulated known things. we knew there were going to be some unknown things. if you look at the 1930's and what money was, and ways in today --was used, and do youy respond -- how respond to criticism that you did not reform the regulatory ?tructure ofwe created the office consumer protection because nobody else was doing that job. fisk supervision was where everybody went. i had to proposals.

one was to rename it the office of fig leaf dispensation. >> let me explain what we are talking about just real quick. there are three or four agencies that regulate banks. now there are three. >> and there was talk during the dodd frank regulation about about ify would -- they should be consolidated to one. >> and which would the one b? >> the fed. -- do you know one know why we didn't? because nobody wanted to deal with the fed. proposal was basically to give all powers to one or the other, and the state-chartered banks, by and large the smaller banks said do not throw us in with the bigger banks.

they insisted. so the fed deals with smaller banks. proposal to take powers bank supervisory away and put that in the oecd. the fed chairman have always said we need some looksee to be able to do monetary policy. but the key was that the state- chartered banks said don't you dare throw us in their -- in there with the megabanks. the problem is, if we had done that, we would have seen an outbreak of shays rebellion. the farmers would have been there. this is american cultural history. >> which rebellion? the cftc was created for the farmers when commodities is what you dealt with. then commodities get financial eyes. if you try to merge the two --

get financialized. if you try to merge the two, the community rebels. the reason we did not merge them was political. is friday, and the major bank is having liquidity -- it isand it is not thought that it will not survive the weekend. what happens now as opposed to what happened then, which was regulators gathering over the weekend, on the phone to , beggings in london other banks to take them out, the other banks refusing and saying what happens when they come for me?

>> last time, two things happen that were very important. responsesthe initial were very much institutional. lehman brothers has a problem. there stearns has a problem. aig. was toly, the response pump liquidity into the system. was to the whole goal get liquidity to anybody who needs it with reasonable collateral. in 2013. it is friday. , not asis seeing that an institutional problem, but as problem,ased financial the fed needs to be there

quickly as opposed to dipping in slowly as they did in 2008. an article disabused people of the notion that the fed would somehow bailout its friends. they created a system that is broadly available to everybody and could be used by everybody. i think it is misleading -- vice chairman. i will never get another word. >> you just got it. >> there are automatic procedures now to get liquidity to that institution. it turns out, if it is not just liquidity, it is a solvency problem, it will go away. >> i thought the question was bogus. [laughter] the moderator is not the best policy. i just want to point that out. i mean you're not a politician -- many votes do you have?

>> none. [laughter] basically, after dodd frank, take us back to a scenario that is now going to occur. in fact, if you do get a belly up, what has happened to transparency? what has happened to all the other things that are supposed to be in place. in obamacare, everybody is now looking at the old single-payer model. picking the fed as the single governor made no sense either. but it is always going to be difficult. you have to appreciate that the -- and iat we did think, notwithstanding the fact that it took two tries to get it passed in congress, the bailout money, that it could've been a much more significant disaster

at the time. don'tdd frank said you need that power anymore because, -- and barney used the politics, and i think he and i probably agree on the definition of politics which is who gets what, when and how. we could not have the kinds of interventions today unless you not only decided you could put money up at you had to go back and either waive the law, create --indow in a law >> let me do a point of information. there have been three substantive changes of emperor mei sheng -- changes of information. in order to create the broad- based programs that doug talked

about that were so helpful, it needs the approval of the treasury secretary. that is one. i am going to have a terry moment here if i get all three. let's see if i can. you cannot do individual bailouts at all. the 13-3 powers no longer exist. the third as i understand it is that it can no longer use the tonomic stabilization fund bail out the money market. why is that significant? because it was really hard for the treasury to find a pot of money to bail out the money market. there are not pots of money lying around which a president in the middle of a financial crisis can rely on to bail out and in touche and. therefore, the upside is, in bail out anl out -- institution. therefore, the upside is, in order to bail out an institution today, you must go to congress.

>> no. >> no? >> doug got it essentially right . the fed had a power signed into that saidbert hoover they could basically give money deemedentity they expedient. billion tore the $85 aig came, to a lot of people's surprise. that has been abolished. ability the fed has the -- it might be a big institution, but it is money apply for, but they can only extend that money to an institution they find to be solvent. abolished. but here is the other factor.

if an institution cannot pay its , there is an alternative pot of money. that pot of money is the power of the secretary of the treasury. the secretary of the treasury is empowered to pay off debts and put money in if he thinks it is necessary to prevent a meltdown, but he is mandated, not permitted, but mandated under the bill to recover every dollar of financialsment institutions with $50 billion in with a form that essentially says, if you are to play with derivatives, this is not mutual funds -- >> you make a good point. and i want to -- >> let me make one more point. think it is inconceivable that

a secretary of the treasury would say to the fed, you can't do that. we keep getting secretaries of the treasury from the fed and vice versa, they do. most --urse, i am the it is a horserace for the most on the panel, but in my experience, policymakers .re so risk averse -- adverse you can tell them, there is a .0001% chance this is going to happen, and they will not do it. if you look at the dodd frank , aislation and where we are lot of this relies upon being able to tell liquidity from

solvency, and a lot of people can't. if you are a financial institution and you are holding a bunch of bonds. faceu'd take them at value, your solvent. your net worth is positive. but you cannot sell them off. there are not any buyers. there is no cash out there. you are ill liquid. the trouble is, in the moment of , you startrisis wondering if the bonds are worth face value or $.10 on the dollar. if you take $.10 on the dollar, you are also broke. >> the problem is that the government has been willing to finance a liquidity run but not solvency. and can't tell the difference. basically, the answer is, if the fed makes a mistake and they

extend liquidity to someone who turns out to be insolvent, they still have dinner the next day. there is no penalty on the fed. this is one of the key things we were asked to do and one of the debates. in some cases, the pot of money would be the secretary of the treasury advancing it and getting it back from the financial institution. we're talking about institutions institutions that are insolvent, not just a liquid. yes, some of their debts will be paid, but only after they have been put out of business. we had that panels in 2010, but they were for big tanks and not old ladies. -- secretary of the treasury nobody is going to advance that until the institution is put out of business. there are no longer institutions that are too big to fail, but

there are institutions that are so big that you cannot let them fail without attention to their debts. us for lehmanzed and aig. first said those were the only two choices i had. i either paid all of the debts or some of the debts. so we created a system where he can pay some of the debts but the institution dies. >> but this gets back to what i said probably -- earlier. differenceency and a between solvency and liquidity is think of two pieces of metal that rubbed together to make things work. they are both installment, but if you don't have the liquid between the two, the ability to make them slide, then you have got problems, but if you go back to the two pieces of metal, there is more air than substance , and it turns out they discover that maybe some of the stuff they were counting over on the solvency side had more air than

stuff, and no one was willing to buy it because they did not know what it was worth. they could not price it. so this is where it really starts to devolve into a very complicated structure where you could not tell what something was worth and you are not willing to risk what people would call something to play, if you cannot dump in and job between of two pieces of metal -- >> there are two pieces of rentable here -- principle. there is no reason not to decide them in general. cases, you will know the difference within solvency and liquidity, and you recognize that at some point, and from the standpoint of safety, either sidelation -- err on the of the fed misjudging. if the fed makes those payments to somebody and it turns out

they cannot pay it back, then they get put out. >> what i want to do is just tell a little bit about what is in this legislation, one piece which i was talking to. he said that -- what barney is talking about is probably the single best part of the dodd frank. he also pointed out it was the one completely bipartisan part. there were other parts that may have been -- >> i do not know there were any. >> idle to legislation -- title to legislation -- >> beefing up the rating was another bipartisan -- >> here is what happened, management gets thrown out, the state -- the stockholders are wiped out, the unsecured creditors are come to for losses, and i believe also the -- >> the extremism -- >> they can begun to through payouts. if all of that is insufficient,

there is a clawback provision, you called it, or whatever it is where you go to the industry and you can recover losses from the bank, $50 billion. it is not technically a bankruptcy because it is not part of the bankruptcy law, but people call it chapter two bankruptcy. it is probably that's known as a bankruptcy for banks. they simply did not exist when they went to go shut down. this is what is new. here is the question on the too big does this end to fail? to answer that question, you have got to put yourself in the minds of the people who were the secured and unsecured creditors i just spoke about. are they now lending to the banks with a mind that if this bank gets in trouble, the government will bail me out? and that it be? now. doug, why don't you take a crack at that? >> i don't believe in too big to fail. there are things that are too big to fail quickly. everything can fail.

that was true before, it remains true now. point number one. we have waystwo, and weple to fail, really attempted to create any dodd frank essentially a special bingo supervision for large institutions. make that clear, you do talk about not paying the secured creditor -- the reason it has something to do with bankruptcy is the constitutional power for this comes from the bankruptcy lane which in a constitution, so it is because the constitution said that it is legitimate to go to some people. i know you thought you were going to get paid, but you ain't. >> at the last one i'm going to make -- in terms of big to fail economic and legal phenomenon, the answer is that is gone. we know that. the question is whether market

participants believe that, and good is an extraordinarily academic skirmish about whether they believe that or not, and a variety of test looking at yields -- >> i get in on this because doug is an economist, and on the fdic, the democrats, and they are usually very intelligent, six of the 10 members who understand politics, and my side , policy walks. so what i was constantly trying fcic perspective was to explain politics. it is easy. i gave your definition, you go out and look for it. but you hear it in various ways. congress never ask, they only react. well, bureaucracy never ask,

they only react. stope are not going to doing what you have told them not to do unless it is at least equally painful or more painful to stop what you are doing. the idea that somehow obama care is going to solve the health care problem by imposing some nickel or dime fine if you don't get insurance is to weigh the costs of the fine first is the cost of insurance. this is going to be ongoing. you can never stop failure. up with theto stay measurements stress test, which is a great term, as to where failure might occur. had we had stress tests on most of the bridges in the u.s. over the last 50 years, we would not be crossing them. so you have got to realize that politics is the beginning of the

end permeated that decision to deal with the problem. , the alphabet they ran off, the federal deposit insurance corporation of fdic, ok, i will put my money there, they were all created for a reason. they are still around, notwithstanding the reason for their correct -- creation is not necessary in some instances, and they have a life that they want to continue to live. >> i want to come to the defense of the fdic in particular. a function --e first of all, dodd and shelby worked closely. approachfor this whole came in part from hank paulson, and in the execution, a republican george bush appointee, great regulator, had a major role in it. opinion, whatour

about too big to fail -- here is the deal, first of all, the people who say we did not result to be to fail are the best friends of the doctrine because this is a matter of perception, and when people read that too big to fail is still there, some of them are going to invest their money that way. legally in fact, it is very clear, no secretary of the treasury, no federal official campaigning the death of one of these intrusions without -- institutions without first abolishing it. the secretary of the treasury would commit a felony. no, he won't. especially since we have provided a way to do it that is systemic impact by advancing the money, wiping everybody out as we have noted, and then testing the large financial institutions. moody's is now apparently going onto this, and it is talking ofut reducing the ratings the very large financial institution.

quoting them makes me very unhappy because they think they know -- they were the biggest screwup. >> we're never going to get through it -- up. think they will catch here is what we are told. the argument we get is oh, yeah, but here is the deal. if a major bank or investment yes, was about to fail, your horse says they fail and then you deal with the death, but there would be overwhelming political restaurant administration to bail them out anyway. in what universe? release he will not hear the last five years? juster member the tarp. bill said it took us two strikes. you had george bush, barack obama, the craddick leadership of the house and senate, the leadership of the committee working as hard as we could and

barely got the thing through. the notion that some point in the future, despite the law, they were be an overwhelming public demand to bail out one of these institutions and keep it alive is nonsense. >> everyone was for it, no one had an alternative, and you still had to pull heat to get the vote. >> a lot of people voting, no one saying yes. >> oh, barney, barney -- >> and so they could vote no -- >> don't talk about our secrets in this forum. >> doug is recalling the suspense of the campaign amid that vote. >> i did peek when he suspended, to be honest. >> there'll be an extra session afterwards. [applause] [laughter] >> i will not be attending. >> foreign policy in syria -- >> health care -- >> barney, did you feel that tarp was going to go down any system with it? i disability system -- if we

had to do target would go down -- i the way, bill had mentioned people said these could be as bad as the great depression. it could've been worse for this reason. seven years ago, you had geographic particularly cared things can happen in one part of the world that would not necessarily destroy the other. by 2008, we were on one grade. so people afraid that they would not get paid -- i mean, that had a global shock. that is why we knew we had to do it, though we had some differences about relief and compensation. when we lost on the floor of the house, i was sure it would be turned around. two factors. first of all, bill knows this, when a measure is coming up, the people who are for it tend to take for granted that it will happen, and the people who are against it scream and yell. you hear disproportionally from the antis. we heard from all the people who thought it was terrible.

after the vote, people started hearing from other people who thought that not doing it was terrible. and of course -- and i would say this is not purely hindsight here. hank paulson will verify this. we talked that night, and hang, who had done a great job, was in despair. the day the vote was going on, there was a gathering in the well of the house of the bipartisan leadership ready to go into the usual drill of trying to change members vote. i will take credit for going to study or a -- steny hoyer and others if they do not do this, this is to serious, don't win this by these kind of tactics. we will pay a big price. i called hank that night and he don't me and i said -- worry about it. sometimes the kid gets really mad, you have to let him run away, go a few blocks away, get hungry and cold and scared and then he will come home again. >> what is the alternative? >> when the market drops 700

points -- but i was at the airport the day after the vote, and a couple of people from north carolina came up and said that was terrible. i said, how did your representative to vote? he voted no. they got right on the phone. he voted yes this time. the people who are opposed, you hear from them or. so i knew we had to do it, and i was confident it was going to pass. >> you gave an interesting economic history lesson earlier, and i wanted to see if you would be amenable to my m&a that, which is we talked about innovation, a kind of lurch forward, and in a need for regulation to catch up. there is often a piece of that, which is innovation, like of crisis -- lack of crisis, and the regulations get lax.

you look at it for a long time, and suddenly disappears, it is not there, you cannot see it. there is something that economist colet a ulysses act, which is the idea that ulysses strapped herself to the mast so he will not heed the call of the sirens and orders the shipment not to listen to anything he says. there is a big of that any legislation, there is a bit of that in any legislation. and bill was getting at this earlier. this notion that ultimately politics determines the quality of regulation. stops us next time when the markets are booming, everybody is feeling at this good times are here again, and as happened somewhat during the pre-crisis forward,egulators come try to slap on the banks, they get slapped down again by congress, and are told back off, these guys.

what keeps that from happening again? >> nothing. memory will retard the process, but memories fade. part of it is this. i think -- there were ups and downs, but there was also a trend. clearly, intellectually the 1980 the 19 90's, regulation became credible. academic theory was to be critical. it has made something of a comeback, but nobody can predict that going forward. i do think now there is more of a sense of regulation and how to do it well, but that is the you willf democracy, always have the people most rectally involved more engaged than the did -- than the general public.

>> i do not think it is a democracy necessarily. >> america is not a democracy? i'm talking about in america. >> that is not the problem. to me, the problem is -- i think a lot of people, you talked about the desire to deregulate. it was an understanding of relationships over things. deregulate the railroads. in this situation, we all spent a lot of time looking at booms and busts in history, and we lived through a dot com, and i heard people talking about, can you imagine the stupid dutch? they started biting to look bulbs,- buying tulip and it is that crazy, they were paying enormous amounts for a tulip bulb. i said maybe they're not crazy because of their athletic turns worthless, at least they can eat it. and that is not the case with --

>> i agree with some of what you said. there was a good case we may for deregulation where the government had committed -- had created monopolies. , where thes government had interfered with the market. what happened was deregulation became non-regulation, as i said, because we did not deregulate derivatives. we had not regulated them in the first place heard what happened was the whole philosophy of the regulation or not the regulation got so strong that a kind of jumped the phenomenon where it it was not as reasonable. many people make bad mortgage loans and sell them off and having no responsibly for it is not the famous as opening up airlines to competition. but there was a philosophical kind of semantic carryover. >> i agree completely on that, and especially when you have people who are paid to estimate the value of it, and they give you a value that is not accurate, and then they flip it.

there was so much blue sky involved in everything that everyone was doing am i and all the fun, they will go to the blue skies. semantic one quick difference -- >> hold on, barney, it you pick the panel, -- >> once it is to bill -- one sentence to bill. i think you are right about the word, and it begins with a b and an s, but it is not blue sky. [laughter] >> a couple of points. number one, the history lesson i think is important. a lot of the stuff is just the same as before in new clothing. here is the thing we learned on the commission that is the most striking. bubble destroyed welcome and we remember that in the late 1990's, and there was a little recession afterwards. the housing collapse destroyed wealth. the decline any housing rate and

comdecline in the dot were the same. one produced the great recession because it was deafening, the other one with equity finance. the lesson is control levers, and you should never forget that. that is important. that will inflate in the future. >> identity great depression have something to do with lever? -- didn't the great depression have something to do with leverage? >> i will stop there. you can integrate a little bit with smart design, and mistakes still being made in the u.s. and elsewhere are too much arrogance about our ability to identify specific risks and somehow hedge against them. that is going to be impossible. i prefer stress tests, which are on the bus tests, and too much institution specific stuff because financial institutions work all the time, and the

labels on them are not important. i do not think we are out of the woods yet -- specific institution way, what would be your example? >> we still have labels for things that are banks -- >> i said this what you want to have risks. >> battle three goes a long way. 3 goes a long way. >> if you look at what we do quick like a lot of legacy -- >> i understand, but in the bill , we regulate this and that any other, no matter who does it, what like ok, i will raise your grade. >> government institutions were created for a specific -- >> i really can't think of any. which ones? sec and the fdic

-- >> one that comes to mind is the credit agency. >> e-government editions. employee to suffer greater oversight in the money market. >> that is not what i asked build. happened, oneat of the problems we had, a ghost of his west of how do you deal with the regulators. i wish there was some way to tell the senate that appointment of the commissioners on the sec and the others was not part of their charter. we had a system that were the president gets to appoint the chair of the commission, but then the senators of the committee of jurisdiction get to appoint the democratic and republican other members. there is a quote that said you

do not have any chairs the asap, and tooity many of those commissioners are now there as special interest representatives to the senators -- >> yep, barney and i will agree on anything to say about the sense -- >> it is a time-honored tradition in the rayburn house building. >> we have about 40 minutes less, 38 minutes or so. i have questions that have come to me over twitter. if you want to send questions, it is #5afterthefall. i am monitoring it here. let me start with the audience and ask questions here. christie.vid my question has to do with the called bail the so- and policy. i understand as you guys have admitted, the ballot is lyrically hard -- bail out is

politically hard. before, the bailout was enforced by a threat of martial law from the ocean administration. so i see the political difficulties in it. i guess my question is as terms of the veil and as we have seen bail in, as we have seen in now, and cyprus and detroit, the financial institutions where the deposit bail in theded to derivatives. given i had just came from the program last he go, five years glassbe last eagle -- pro stegall, though you dig it would be better that we enact it, bank of the wall street instead of fleece the american citizens by stealing their savings under the liquidation authority of just

being able to bail in the derivatives of the -- >> the question makes no sense. >> normally, i would think that is a radical question, but i do not think he is too far from the public and how they think about what is happened. >> i understand that. >> and there are factual issues -- >> let me start with this nonsense about martial law. i do not care what the chairman thought he needed to do to get reelected, but this notion about martial law, that is a very serious thing. there is no threat to democracy. that is a silly rhetoric that drives people -- secondly, as far as the glass-steagall is concerned, we are not the anti- glass-steagall panel, most of us thought it was not relevant. aig would have done it everything it had done whether there had been glass-steagall or not. glass was a lot smarter than steagall, but that is getting

into the senate there, bill, but they had never heard of derivatives. derivatives did not exist in 1931. they never heard of the subprime loan. so it was a relevant here the notion that an acting glass- steagall would somehow encrypt wall street is nonsense. it is not make any sense. you may feel that things are too big from the political sticker -- say why, and there's an argument to be made, but it is not relevant to what happened. i voted against the repeal of glass-steagall for a number of reasons. country right was a -- countrywide was a bank. they could've gone all of their loans if the glass-steagall was in effect or not. as far as getting rid of the pensions of people, no, that is now we do. all the liquidation says if the bank -- if the financial institution cannot pay its debts, we will put it out of business. the first people to get hit are the shareholders, the executors,

the people below the money. and that, i think, if the alternative than to have it come from the taxpayers, and we don't want to do that. >> a quick response, and i do want to get these out because one of the fun things of focusing on this five years after the crash is that there have been some publications talking about -- here is one, what has changed since the lehman failure five years ago, the crisis, the response, and the responses cents? carolyn bowman, this is a really a fun one, five years after the crash, what americans think about wall street, banks, business, and free enterprise. the appendix is a whole series examination of past polls from the 1970's, 1980's, 1990 go the. and the fact is that virtually no opinions have been changed about the role of business, labor action went down a little bit, and government and the rest.

-- ieard about barney's just want to say, for the record, i have two children, and the treatment of the child in my opinion is not to let them run off unsupervised and it will come back. i guess your position is that if a runoff, you should lock the door. and that would guarantee they don't come back. when you talk about all these people who are victims on the sideline, i may be point briefly, i want to go back to it. pogo, we met the enemy, and he it is us. it is not wall street -- it is mainstream. it is not the bank, it is the people writing the value of the home. it is not those people, it is the people who believed that in buying shelter it is their greatest investment and it will always -- a multitude of reasons why it happened. gatherlways fun to around those people who over the years have been the ones you

pick on. business,t, banks, free enterprise, as though the enemy is a nascar cartoon of with hisweight banker top hat on with the dollar bill signed and a big cigar and if we could just stop that, then we could deal with it. it is far more fundamental than that. for more difficult. i will turn my time back. >> in the free market, you want the government to back up the wall street derivatives behavior. is exactly the opposite. it requires them to put a margins. we try to put them on exchange a spirit we do introduce competent and in the derivatives in the industry. >> and i believe in free an oppressed, and i believe in what ronald reagan said when he said trust but verify. it is the verification of the relationships that really makes

free enterprise work. it is not darwinian. >> point that are grounded in the facts. quite here we go. -- >> here we go. >> i think good policy has to become good politics. number one, size of and institutions are not simply a political choice -- they are driven by economic forces. we have large banks, small banks, a whole range of scopes of activities. those are economic forces at work, and to pretend otherwise is a mistake. glass- i 100% agree that steagall had nothing to do with this. there is no evidence that proprietary trading with the problem. indeed, if you want to look at risks and what is risky out there, it is making loans. everyone has this beautiful vision we are going to go back -- these banks just make loans to their customers. that is where the risk was. that is where we lost money. mortgages went south. >> i think everybody forgot the savings and loan crisis -- >> sure.

>> everybody says we needed to hold again -- >> we did that. >> during that time. >> i understand the concern and the wind down of these large institutions but a fair reading of the crisis is that it was more a liquidity fireman on -- a liquidity phenomenon than anything else. when the fed stepped up to liquidity, the financial system turn -- return to solvency pretty quickly. i think the bigger threats are liquidity. >> it was the role the fed played with the money coming in that created a comfort level. banker western where the will only loan money to people who don't need the loan -- if we had continued to practice that, we would not have the problems we encountered but we also would not have the economy and the lifestyle and quality of life. >> one of the arguments against

error view that we have done wey with too big to fail -- have done away with the legal ability of officials to keep alive an institution that is in fact insolvent. these arguments are that won't work if one institution has that problem but the pattern is for them all to have it and that is not the pattern. that was not the pattern in 2008. most of them were not in that situation. the payment system, the system by which money travels within the country and around the world is in private hands. even though it is effectively a public utility in the sense that the public requires this to go to the atm to get their money back. as long as that is the case, there is going to be a nexus for government involvement. the body politic will not stand

for the payment system to shut down. that is where the quandary is. it is a bit like how private tenure water company be? how private tenure gas company be? demands theitic service. at a cost that is reasonable. and they recover it from the large financial institutions. >> this first question on twitter -- very simple -- why is no one in jail? >> because being stupid is not a legal. -- is not a legal. >> even worse, being an moral is not illegal. we had to pass a lot of laws because some of the things that people did were not illegal. i heard from the administration is you don't want to prosecute an institution but

i accept that, go after the individuals. some of my friends need to remember that one element of due process is that you cannot be criminally prosecuted if you did not have good reason to know that the activity was illegal. ambiguity is the enemy of due process. you also have to be able to prove beyond a reasonable doubt. a guards of the law is no excuse. if the law was there and you did not know about it, that does not help you. if the best informed person in knownrld could not have that was a legal, it is hard do a criminal prosecution. that's why insider trading is what you see in criminal prosecutions because it is illegal. there was great ambiguity and going forward now, we have made some things illegal that i hope

will lead to greater prosecution if those things are done. >> an example of something that was done during the crisis that if it was done now would be criminal? >> some of these sub rime loans that people made. >> giving the loan to somebody who you know does not qualify. >> the falsification of some of the documents. you would think it is illegal but in our system -- in our system of law, things are not illegal just because we think they suck. somebody has to write down it is illegal. a lot of these mortgage practices were not terminally prosecutable but will be in the future. >> a lot of people run for office on the part that sucks, that will be their platform. >> my platform t when we voted througharp because i knew people were unhappy but you don't get credit for disaster averted. i wanted to make a big bumper sticker that said " things would

have sucked worse without me." >> which is true. counter a little of what has been said about the orderly liquidation authority. insure for thes stealing of depositors accounts and is completely unconstitutional and has been cited by the bank of england and the bis as the model for the global approach to the systemic crisis. the point that senator warren has made about glass-steagall is that for over 60 years, there was no major financial crisis and since 2007, the large banks have increased their indebtedness and only glass- steagall would create the firewall where derivatives would have no federal insurance allowing for an actual reorganization of the system and allow for human progress. what's being done now is an attack on human creativity saying there is no way to the

future and no other solution and these are lies. just as obama is lying and should be impeached. >> no, this is totally wrong. deposits are not only protected but the legislation increased the amount of deposit insurance from $100,000-200 $50,000 for the smaller banks. there is nothing in our legislation that in any way weakens deposit insurance. if you deposit in any fdic insured institution up to 250 thousand dollars for any individual, you are completely and legally protected. that's what the public might think. you mentioned glass-steagall and the savings and loan crisis which was a terrible problem. it cost the federal government much more than this in terms of payout. that happened while we had

glass-steagall. there is just no rationale to the argument -- shareholders lose. >> the shareholders are not depositors. >> the shareholders lose, the the alternative is maybe they want the taxpayers bail them out. the notion that depositors are at risk is completely and totally not true. depositors came out of this legislation that are protected because the amount went from 250,000 permanently. in terms of the actions in. frack and how it changed the legal landscape, the most important thing it did was it nationalized a lot of the rules. people forget that much of the mortgage origination was state regulated. the states were very different

in their oversight and different and their standards and we had very different housing problems as a result. >> i'm glad you made that point. yes, the states were the ones that had dealt with this and in 2004, the comptroller of the currency, gated a regulation preempting the regulation of national banks not by saying this is a bad regulation but they tempted it with field preemption. toe of the states started regulate mortgages and in 2004, the rule came in that said mortgage practices of nationally chartered banks are none of the states this was and that was part of the problem. >> to other areas we need to cover -- fannie mae and freddie mac- and the international aspect. barney, i think people would say it is a huge failure five years

after the collapse. i guess it's five years in one week that fannie mae and freddie mac were taken over by the treasury department and there is still no plan and they remain wards of the state. obviouslyoing better, they are not bleeding money and returning some money to treasury. fundamentally, we have not come up with a plan for how to resolve fannie mae and freddie mac and get it out of government ownership. the subsidyting right for housing in the united states. first of all, why hasn't this happened? are there any prospects for to happen soon and how would you do it? nothing had happened with fannie mae and freddie mac for a long time. 2005.use passed a bill in the senate under republican control rejected that bill. bush gave himorge

the one finger salute. in 2006 become secretary of treasury and says we have to fix it. he says if you become the chairman, will you do that? i said yes. we needed to do something by 2004. in 2007, we gave the bush administration most of what it wanted with regard to fannie mae and freddie mac. paulsen use that power in 2008 to put them into receivership. planning to do something about it and then the financial crisis hit and we made the judgment in the congress that trying to restructure housing, finance going forward at the same time as you are doing all the other financial reforms which were more backward looking, it was too heavy a lift. if we had maintained the

majority, i promised we would look at fannie mae and freddie mac going forward. the republicans took over and this is the dilemma -- there is a genuine split ideologically as to what we would do. there are a large number of people who believe, including people in the housing business, that you cannot have 30 year fixed rate mortgages unless the lender who was ultimately responsible for that can get some guarantee against interest rate fluctuation. they say people will not lock in. unless the initial interest rate you can makeat money. consensus, i is a hope so, that fannie may and freddie mac, that was not a good model. air were to alternative approaches. one that chairmanhenserling

has and the conservatives have is it is time for them to phase out and let the market do it. on the other side, there is a minority of republicans and the home builders and realtors and others saying that you need to do something. proposal that says to sell should be able a lender who is a 30 year fixed rate mortgage a guarantee against interest rate fluctuation, a hedge, which should not be a bad word in general priced to breakeven. view is the flipside of banning the bad mortgages which we did is to put more money into rental housing. we should get poor people into rental housing and not homeownership. there are two conflicting views. and geto build a house

the government out of the business. is getting some kind of guarantee again to -- against interest rate fluctuation. >> the problem is, and it's one of the reasons it went worldwide, other places that used to rent got into buying and picked up some of these securities. when you take a social desire like everybody should go to college and you create a system in which everyone should go to college and therefore everyone gets to go to college, and you then say what good is it to go to college? if you start out believing everyone should own their own home and it turns out to be the primary asset which generates money, and then congress passes saysax code change that certain interest cannot be deducted and so you play gimmicks and that is your mortgage was being paid down.

the lending institutions provided you with a sample check of what you could cash out from your home ownership to use to pay off the suv and the other things. you never built up that equity. in the old days, you built up the equity to wait for the burning of the mortgage. now you whittled it down every bond to pay for those things that the government used to excuse on the interest adoptions and it does not. the problem for me with fannie mae and freddie mac was they tried to play both sides of the street. if it's focused narrowly on a -- the whole savings and loan came from people who did not have money to get into a home. at some point, we have to reassess homeownership, its value, and its cost. frankly, i don't know why a rental cannot get a deduction if somebody who can afford a

mortgage gets the payment of the interest deducted. if somebody wants to live on a boat, why can't they get a deduction? a mobile home or manufactured housing depreciate and homes don't? it just needs to be a fun to- month-old -- a fundamental reassessment. fannie got and carried away playing the market to make money and still wound up holding the bag on those 30 year mortgages. they made money on their multifamily housing. the other disadvantage is you can build up a good credit score by making your mortgage payment but you can pay your rent faithfully every year for 40 years and you get zip in terms of credit. first i get to say we told

you so. in 2003, there is a study that said the structure of these gse's will cost the taxpayer a lot of money. we testified and it happened faster than anyone dreamed. it was a known problem. fannie mae and freddie mac did a couple of things. they provided a guarantee. you could provide that guarantee but it should be explicitly charged. that will raise the cost of mortgages. or you cannot have the guarantee and that will raise the cost of mortgages. one of the thing stopping this is going back to the good old days when mortgages were that cheap. the whole housing industry will have to come to grips with the fact that mortgages will be more expensive. the second thing they did is they had a large taxpayer backed hedge funds and we all lost our shirts bird they should not be

allowed to do that again. it was a disaster. the third thing they did which is a source of disagreement is affordable housing goals. essentially, off budget activities to promote shelter whether it's multi family or single-family. i think i have been the biggest for rental housing. no more goals are telling the private sector what they need to do. >> i'm with you. >> what we had in the bill and worked on it in 2005 and 2007, we created an affordable housing trust fund on budget. when you are building housing, you don't do on annual appropriation. it was to be funded out of the profits of fannie mae and freddie mac. fat chance. we talked about pricing that guarantee per home mortgages 50 basis points would give you enough money to build the affordable housing.

it was a mishmash and it should not be off budget. it is an on budget appropriation. >> not everyone is with you. >> one of the goals of fannie mae and freddie mac was the concept of promoting homeownership and that was something that contributed to the crisis. >> very much so. times" had an appalling article a couple of weeks ago on the front page of the business section. it said that rental housing is ruining neighborhoods. it was this vicious attack on saying look what is going on in the financial crisis and investors are buying these properties and letting them be rented and isn't that terribly unfair to the owners? that was beyond what i would've expected. homeownership is a good thing. when we were younger, you

expected to pay 25% of your income for shelter and then it became make 25% on the appreciation of your home. it should not be the way that poor people built up equity. income people, rental housing is a better fit than all thetus questions of homeownership. >> we come full circle to politics because that defines any number of areas where desired social policy gets under government control and you lose complete site of what you are doing. look how long we paid farmers subsidies to grow crops based on parity. some magic amount they made back in 1914. >> that would be still. >> we knocked a lot of that out. i come from non-subsidy state.

mess ofurrently in this subsidizing the making of ethanol principally from corn. ratinghas a lower btu than gasoline. cows eat corn. the price of corn has gone up because government is subsidizing the making of ethanol. more thanut, e-85 10% corrodes many working parts of cards. s. you get into these policies that are written into government determining what the outcome should be rather than the market and housing probably is the single best example of how much we got carried away believing that home ownership is so important. >> i partially agree with you.

we have all agreed about glass- steagall. all of us agree that one of the things that did not contribute to that was the community reinvestment act. with that. >> i want to make that explicit because some say that's what you got out of the cra. >> it goes back to the business that if you want something, incentivize it. >> i just wanted to make it clear that we all agree that the community reinvestment act was good. >> let's see if the panel can go further. if these government incentive distortions --d fannie mae and freddie mac admittedly came to the game later but they propelled it further -- would wall street have done quite as badly as it did in the absence of the

political incentives that were out there? >> qualitatively, yes, quantitatively, no. fannie mae and freddie mac help them do it more but they did not do it because they were told homeownership was a good thing. they did it because it was a good way to make money. >> they existed because we thought homeownership was a good thing and a people could not finance it -- >> how much of this blame from the beginning of the conversation goes to the government center -- a sector and how much goes to the private sector? it seems the government sector propelled the private sector to some of its excesses. >> fannie mae and freddie mac were propelling that. >> let's go another step. the mechanics of that -- one of the great ironies is that weree mae and freddie mac created to securitize so we could get away from the regional

mortgage markets that were supposed to be good. the government political process propels the private sector to access as it would not have otherwise gone to, isdodd- frank too tough on the private sector and somewhat unnecessary if we don't have these government policies that propel the private sector to its excesses? >> you don't get to go first because you are biased. respond first. >> the root of all evil is money. bright people get attracted to money. ofl street is a manufacturer a way to make more money. some people resent that. if we come back another five years years for the 10 year reunion and then the 15 or the 20, dodd-frank was not a shot in the dark at a shot in the misty

evening. like all the other stuff government does to stop behavior, if it is not on oversight and review and adjustment as what we per pose to regulate continues to change, i imagine some french thought them maginot line was a good buy. it constantly has to be reviewed. vigilance and the willingness to be transparent and educate people making choices is our only alternative and from an historical point of view, we will make the mistakes over and over. >> i'm glad you asked that question. fannie mae and freddie mac mac got off. my first thing we got under being chairman was to put fannie mae and freddie mac out of business and put them into receivership.

we shut down the problem and stopped the bleeding. what you do going forward is still there. you are too pessimistic about fannie mae and freddie mac. once we stopped it, there is the value of the housing inventory. -- i didhat will not not think it would cost as much as you predicted in 2003. >> putting him out of business was a good idea. >> it now will be a breakeven. >> so far. >> it looks that way. had we done it we would have been better off. in the that we did financial reform bill whether you approve of it or not was punishing them for fannie mae and freddie mac. someone would have to tell me specifically what we did. we made it illegal to give bad mortgages. that's the only prohibition in

the bill. there were other things that we said to increase your margins and capital. i think it was market oriented. >> you also saw wasn't institutions but the leadership and the direction it takes under the rules they play had changed. you had some go-go guys running the place making money. you were too tough on wall street is one question and none of them went to jail. can i debate the winner of that argument? we will have semi finals. >> nothing we did i think penalize them for fannie mae and freddie mac mistakes. the harshness of it essentially for the subprime

mortgages, we did not stop them from taking any risk they wanted. we try to increase two things. the people who took the risk should bear the responsibility and they should have the money to back it up in terms of capital. >> that's after the fact because that's all you can do. >> we have just a few minutes. doug? lee's go out with this question -- what remains significantly undone and do you emerge optimistic about five years on now or are you as scared as you ever were? think we are in far better shape than we were in 2006. part of that is simply cultural and memories will fade. one of my striking observations from the commission is markets failed the price risk. spreads were notoriously narrow.

internally, attention to risk management fell apart. the number of times we had hearings with executives and about internal risk management, it was a disaster. some of it was dealt with legislatively but most of it was cultural. i am very worried about the future of housing finance. and onmains untouched result is a terrible thing in my view. it is the single biggest domestic peace (the international coordination remains problematic. it is way too expensive and complicated for what we are getting so we are exposed there. when i worry, i worry about the europeans banking system and the ills it can visit upon the u.s. >> do you want to take this? circle, manyull

times we look at the symptoms and don't deal with the causes on a fundamental basis. dollars times politics, who gets what when and how and one of the fundamental rule structures is the tax structure. just as we outdated the earlier laws and you could repeal them but they almost don't apply anymore is the change. i think we need a wholesale reevaluation of what we have in no way in which we separate people from their means in the tax structure and begin an equitable rewarding of thattment in various ways people can utilize their dollars and to let somebody put it into a mortgage expecting it to be building equity is crazy. to tax things that should not be taxed -- i think it is a good step but i

think a lot of the problem is that this society is not in termsg fundamentals of a safety net or the tax or how people and the government coordinate pay for their senior years. you've got social security as a medicare structure and as a senior healthcare structure. nobody looks at the fact that the healthcare structure is primarily acute-care and is not long-term and we should combine combine social security and medicare to create a long-term assistance to health care. medicare as a senior healthcare structure. we need to look at fundamentals because the world has changed. >> i have another question. 70 years from now after the next financial crisis and whoever has managed to water down frank -- down. frank, will they say we

should go back to dodd frank? is a piece of legislation that you're proud of? clock cyclic semantic point. semantic point. the way from which we separate people from their meanings, that is why we are called the ways and means committee. the international one -- whatever we think about what we have done, we have done a better job than most of the rest of the world on the international side. one of the dangers is the business community -- and going back to our family analogy -- the business and financial community has come to some extent, adopted the mode -- adopted the mood of the teenage parent -- the teenage child against most parents an. "england let me do it."

we have to talk to each other about this. -- if you have been to a national airport legally there is a racist quote from carter glass and he was in the constitutional assembly, explaining why it is terribly important not to use the -- not -- it those "black people" don't think that's the word he used -- don't let them vote. going to use these regulators to do with the problems we don't know about yet. this, riskargin for retention there. i believe we have given the regulators the broad powers that are going to make it work. on the other hand.

-- on the other hand, i don't think it is going to be all that relevant. >> i would like to exercise my prerogative and thank my fellow panelists. >> this could have been something completely different but it was fascinating. generally in the television business the viewer quick -- viewer clicks the channel between financial and reform. what is interesting about this from my perspective is this is not something ordinary people had to listen or think about five or six years ago. now what happens to the banks and bank regulation is a matter of public policy debates. some of our former colleagues will probably want

some record of you telling me when we could talk. >> what you don't know, can't hurt you. >> exactly. >> thank you very much, folks. [applause]

>> if you missed any of this discussion, as with all of our programming, you concede in the c-span video library anytime. go to c-span.org. an update on the situation in syria. secretary of state john kerry

met with his russian counterpart yesterday in geneva to discuss syria's offer to place chemical paid pile under control the syrians are including -- are asking -- under control. following the meeting, secretary kerry released a statement that -- i in part, "i was today will say in behalf of the united states that president obama is deeply committed -- and now "the new york times" is reporting secretary of state , in setting upy a peace conference with syria to mobile continue in new york. the prospects of a peace talk will depend heavily on efforts to put syria's chemical weapons under international control. in other news, coming out of

washington, white house economic adviser gene stirling announced his resignation today. here is how "the associated press" is reporting the story -- we -- he will be replaced by jeffrey zioents. sperling heldr. for three years. >> let me focus on something called advanced persistent threat, which is both the mastic and international. there are footprints that are left regarding behaviors that go on out there that are indications that something is going to occur. changeshe reasons it ash that changes need to be made is this cyber security options this country has made, and continues to look at and the executive order and everything to move toat we need

continuous monitoring and after that we need to move to continually be able to look at the precursor or the context that is being set for an attack. a lot of that has to do with analyzing social media. >> you are never going to defeat a senator -- to feed an enemy. -- defeat an enemy. by having the private sector checking the compliance box -- we did what congress wants us to do. that is inadequate. it is grossly ineffective. it has to be timely and continual information sharing. particularly in the dhs and vertically down to the state locals and particularly the private sector. after all, the federal government relies on the private sector in order to function. >> this weekend, the senate homeland security committee looks at where the next common threats come from. secret life hidden

from family and friends, the story of america's first female rocket scientist, mary sherman morgan. span3'se sunday on c- american history tv, commemorating the 50th anniversary of the 16th street baptist church bombings with eric holder. starting at 11 a.m. and throughout the day, from birmingham, alabama. >> yes, the world is changing. no, we cannot control every event. america remains the one indispensable nation in world affairs and as long as i am president i intend to keep it that way. he is talking about the indispensable nation, what he doesn't want us to talk about is that we don't know how to win wars. have, by virtually any measures, the best military in the world. we certainly spend more on our military than the rest of the

world put together. we don't know how to win wars. it seems to me there ought to be a very serious national conversation to ask why that is the case. where does the fault lie echo is the faultiticians -- lie? is it our politicians are too stupid? is at the size of the forces are too small? by itst the fact that very nature war is very unpredictable. to go to war is to roll the dice. you might win and you might not. >> more with retired army c-onel andrew bacevich on span's " duende." -- c-span's "q and a." "stands a look now at your ground" laws. examining these laws in the wake

of the trayvon martin case. prosecutors, judges, defense lawyers, and this europe's -- advocacy groups testified at the annual meeting in san francisco last month. as his two hours 25 minutes. -- this is two hours 25 minutes. >> we are the coalition of rasul -- of racial and ethnic justice. i am from chicago. aba andition works with groups on social justice issues involving equality, inclusion, and tolerance. our major after -- our major effort was facilitation of the task force on "stand your ground" laws. the task force came about because we felt it necessary to look deeply at the effects of

stand your ground laws across the nations following the underal conversation merits and under consequences. to thank the dedicated cochairs, leeann buchanan and jack middleton, for their leadership. leeann is often sending e-mails at 330 -- at 3:30 or 4:30 in the morning. rachel patrick, our executive director, icutive want to thank you on your conscious and your work behalf of the coalition. this is the fourth public hearing. we have had successful hearings in dallas, philadelphia, and chicago. solicitedgs have voices from all sides to ensure the critical examination of

perspectives without regard to political ideology. ultimately it will be the citizens of the state that have various versions of stand your ground laws, to decide the fate of their own stand your ground law. it is my hope that the task catalystorts will be a for a reasonable discussion of the issues and be able t6o make reasoned decision making. before we begin we have the honor of having the president of the american bar association, a belos,of mine, laura with us. i would ask you to step forward and welcome everyone. [applause]

>> now that the important things are over, this is quite a serious event, as you all know. the aba and our country have a responsibility to scrutinize any law with life or death consequences. this is such a law. thank you judge michael hyman, not just the cousin i can root becauseago -- not just i can root for chicago and say we are there, and again rachel patrick for leading this from the inside to make certain that we are including the right to that means everyone --

into this discussion. forjack buchanan and leeann being cochairs for the stand your ground task force. youudge hyman has just told , the aba has no policy on standard ground laws. that is exactly the point of these hearings, to hear from the community. we want to examine the impact of stand your ground laws on public safety. we need to talk about the impact of stand your ground laws on criminal justice systems. these are not easy questions but we have brought the experts to the table from all over the country over the last year. inwill be issuing a report 2014. meanwhile, the task force is expected to look at the terrible violence that we have seen in

newtown connecticut, aurora colorado. this standard ground examination also gives us a chance to have a national conversation about gun violence. we know that three people are killed every hour by a gun. several people are injured every hour by a gun in this country. it is time for us to look at sandra ground laws, it is time for us to have a national conversation. of this isn't an issue to be talked about only by lawyers. this is not an issue to be talked about only by our legislators and congressional representatives. national,community, opinion leader conversation and a conversation that has to take place within our community. that is why this is so exciting. we have jumpedte into this conversation with all the aba could muster him all the experts we could bring to the table. we hope to have a resolution to

a problem that is touching every person in this country as of this minute. thank you, again, to the task force and a particular thank you to jack middleton and leeann buchanan for leading this task force. i look for to hearing the results of this hearing and reading your report in the near future. thank you all. [applause] >> this is leeann p cannon. -- leeann buchanan. she is not afraid to take on the stuff issue. to many people are willing jump in an issue that we know is controversial. those are the issues that the aba is more powerful to bring a voice and on.

leeann is upfront. i congratulate you. go for it. >> thank you. to the, everybody, western regional hearing of the aba national task force on standard ground laws. as you heard, my name is leeann buchanan and i am cochair of the task force. tost of all, i would like thank all of you present here today. your presence demonstrates that you are committed to addressing and participating in the dialogue of a very important issue. it was just last month the president barack obama and attorney general eric holder more attention and scrutiny and analysis and assessment to be paid to the standard ground laws in many states across the united states. until recently, little to no attention has been paid to stand your ground laws. are self-defense laws, which expand the parameters of self-defense and protections that can be used

when one uses deadly force against another. books ins exist on the over 25 states across the united states of america. the indeed have in -- have ignited a national debate and forth individual communities, scholars, policymakers, and even the aba to grapple with many very important questions. thetions such as, whether policy concerns which underskirt the enactment of stand your --und laws were justified underscore the enactment of standard ground laws were justified. whether they strike a balance between public safety and individual liberty. what impact, if any, do stand your ground laws have on the criminal justice system? altered, you or know perceptions using force? to stand your ground laws and courage or his courage violence? do they make communities safer?

importantvery questions and issues that the aba coalition on racial ethnic justice and the entity that forced -- that formed the task force thought the aba should look into by holding public hearings and embarking on a national comprehensive study of the impact of these laws. you will hear testimony from a for i.t. of experts and stakeholders, community leaders, -- from a variety of experts and stakeholders, community leaders -- before i turn to the speakers i would like to acknowledge the task force members and members of the advisory committee who are present today. i would like to acknowledge joshua harris, who is an attorney from philadelphia. our task force reporter, a saint jonsson university in florida.

.y cochair, jack middleton and i would like to thank rachel patrick. she is the staff director of the coalition and she is putting countless hours in time and energy in making this project a success. i hope that you enjoy the testimony here today. i hope the questions and issues raised by her speakers causey -- by our speakers cause you to think more about the loss. ouruld like to introduce keynote speaker, edith patterson. she is a civil rights attorney and cofounder and president of the equal justice society. a nationalader of strategy group that focuses on reclaiming the 14th amendment and its constitutional safeguard against discrimination. she previously served as the executive director of a lawyer' of civil rights. she was part of a rod coalition that-- a broad coalition

faced gender discrimination. you very pleased to present this patterson. -- ms. patterson. [applause] >> good morning, how is everyone doing? welcome to san francisco. the weather will clear up by afternoon. don't worry. i'd like to say thank you to president bellows, to justice hyman, to the other presenters who are first rate people who know a lot of things about the law and justice and the like. i think it's fair to say that the reason we are here today, because of the murder of trayvon benjamin martin -- that was very disturbing for many reasons. it raised the issue of the great racial divide in this country. groep --ghlighted the the notion of standard ground laws.

many people wrongfully say that's dan your ground was not an issue in the murder trial -- wrongfully say that stand your ground was not an issue in the murder trial. the judge did mention it in the jury destructions -- jury instructions. some of the jurors said stand your ground did enter their mind in terms of whether tor not mr. zimmermane if was guilty or not. >> you should get a raise -- usually get a raise for commenting on see an end. -- on cnn. he helped me a lot on his presentation. my summer intern get a lot of work for me as well. i want to acknowledge their help. laws were ground first passed in florida in 2005, msnbc.ing to nsn -- to

there was a man in a trailer during hurricane isaac and he shot an intruder. it took months to determine whether or not to prosecute him. this single incident led to the passage of standard ground laws in florida. they are now apparently in 30 states. there are over seven states were they are pending but after the murder of trayvon martin everything came to a screeching of thesehe advancement misguided laws. i hope that will give the aba some firepower in terms of stopping these laws and the subsequent acquittal of george zimmerman as people think twice about this. they make the use of deadly force if you feel threatened in a place that one has a right to be. i think the important term for what i am going to talk about and the important phrase that i include a focus on later is "if you feel threatened."

instead of having a duty to retreat from a dangerous situation, a person is justified in using deadly force when he was she recently -- he or she they should do so to prevent bodily harm. there are lots of problems with this type of law. there are people more in tuned with law enforcement to give more protects -- give more context to the problem. here are a few of the problems. it encourages vigilante law. judge,zimmerman was the jury, and executioner of trayvon martin. and the stand your ground laws allowed that to happen. msnbc thisning to morning and apparently there was another incident where there were is a bunch of people -- where there was a bunch of people who threaten someone with a stick. most of the people laughed and one person stayed and ended up

shooting and killing the threatening person. stayed and one person and ended up shooting and killing the threatening person did he will not be prosecuted for murder. one of the critical problems of the stand your ground law is before, that person would have had the impetus to leave. he could have saved really -- safely got away. stand your ground laws allow people to stand, shoot, murder about consequences. another problem with the laws is the apparently do not have a mature affect. andudy was done by texas a then that found that standard ground states murders and manslaughter is actually increase i seven percent to nine percent. it doesn't deter crime at all. it actually results in more crime. another problem is that self- defense laws were adequate before the passage of the stand your ground statute. you are able to use lethal force in self-defense if you felt pin the or cornered but you had

obligation to leave if you could leave safely. attract that if you could retreat from easily us capable situations. it now allows people to stand, fire, shoot, murder, and be out on the street with no consequences. another problem with the standard ground laws is in some states it immunizes you from civil litigation. kentucky and other states, if you say you are standing your ground you cannot go after the perpetrator of the crime or the murder. people said that there is a lot around the case. one person speculates the reason they did not use it as a defense zimmerman would have gone on the stage and stand and explain what he did. even though he did not use it as a defense, the judge gave it credence in the jury instructions.

what i really want to spend time on -- there are going to be two amazing speakers later today who are going to go into more detail in this. they are incredible scholars in the areas of racial bias, unconscious racism, and the like. i want to talk about racial bias and the impact that the stand your ground laws had. what i want to do is commend the aba and this task force. one of the things you're looking at specifically -- explicitly is the impact of standard ground laws on communities of color. i am not a criminal lawyer, i am a civil lawyer. all of us were riveted on the trayvon martin case. we were heartbroken and angry and upset and the implication and connections and racial impact is why we are here today. when i come to speak at events

like this, i feel very privilege because i feel like i get to be in rooms where a lot of my community are not. i get to tell you things you're probably not going to get here in polite conversation. as i was thinking about this today, that is what i really want to do, touch your hearts and minds and activate you all in your continued effort to do something about the standard ground laws. researcher, who is a senior fellow at the justice policy center at the urban institute, released a report last july. here are the statistics on standard ground states. as i was rehearsing my remarks to myself to make sure i did not run over time, i found myself pounding on my desk with anger. you will understand why.