host: tweet -- mike, republican caller. yes, i am interested in knowing, when we have a lot of power,d we have excess why can we turn some of that power into hydrogen and burn the hydrogen or use the hydrogen to make power when there is not any wind? guest: that is an excellent question and some in our industry as well as the r&d labs at the department of energy have spent time looking at different ways to utilize all the wind energy we produce because when you produce wind, it is free. there is no fuel price, so the best way to utilize wind energy is to make sure there is sufficient transmission capacity that we can move the power to

the demand center wherever it electricity is needed. there are several demonstration projects around the country looking at different ways, with battery or potentially hydrogen, looking at different ways to see if that makes sense. but right now with the amount of wind power we are producing, we can scale up to a fairly significant level of wind penetration, and just using the power grid and operating it is efficiently is the cheapest way, if we want to think about using the most portable forms first, the cheapest way to move effectively free power to the demand centers. there are lots of demonstration projects going on right now in combination with the industry and the department of industry -- and the department of energy to understand the opportunities such as the one that you mentioned that to be part of our system in the future. , thanklizabeth salerno you very much. for more information, go to a

wea.org. you can also follow them on twitter. that does it for today "washington journal." 7:00ll be back tomorrow at a.m. eastern time. enjoy the rest of your thursday. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] weat 11:00 eastern today will take you live to a senate foreign relations committee committee on capitol hill with several state department nominees, including the deputy secretary of state for management and resources. hour.overage in about an former new hampshire senator

judd gregg is now the head of the securities industry and financial markets association. the trade industry group representing securities firms, banks, and asset management companies. have live coverage of the announcement at 1:00 eastern. rick perry will be in iowa for the republican dinner, a venue for a potential presidential candidate. live coverage of his comments beginning at 8:00 eastern. "the des moines register" is covering his appearance and looks at what he is doing before the dinner. he will meet with selection of iowa business leaders while he is here for the fund-raising dinner. the small group meeting was arranged by americans for prosperity, which advocates for limited government and free markets. his first is making appearance in iowa since the last election cycle.

we will cover the dinner tonight on c-span starting at 8:00 eastern. bank of america ceo brian moynihan says the u.s. housing market is fairly stable, but that americans should rethink the real value of homeownership. -- the head of the second largest bank in america was interviewed by "the wall street 's" gerard baker. this is about an hour. brian, if i could start, this is an interesting time to be in new york, a change of political direction. it has been a very interesting time to be in banking in the last five years. five years ago, the worst financial crisis the country has had in three quarters of a century. five years on, much progress has been made. the financial system has been largely repaired, the economy is

at least not in the shape it was five years ago. yet we do not seem to be able to shake off the consequences of those -- of that financial crisis. what is going on in the government seems to be very aggressive still about going after what it perceives to be abuses that took place. we have seen what is going on with jpmorgan over the last couple of months. there was talk of perhaps other banks. you yourself have been involved in a number of civil and criminal cases. where are we in this process? are we still going to be working off these, going through these regulatory and legal issues for years to come? >> i think there are a couple of things to keep in mind. there so all out everybody sees everything going on and we do it every quarter. the thing that gets lost a lot is the perspective of history,

which is if you start back four years ago, i think the number paid out, not the number that we accrued but the number that week paid out, is in the $40 billion range, through settlements and all different types. the first quarter we took a charge of $19 billion, the second quarter, $11 billion. our strategy has been to work through one piece at a time based on the merits of that piece, and then the next piece and the next. we have settled many things that came out of the crisis. , we are an element now finished with the mortgage backed securities part. our company is winding its way through the courts with the larger cases. , think that is the perspective our company has paid a lot. you have to take that legacy and

encapsulated. you have to make sure the rest gets invested going forward. they are gaining market share at the same time you put it behind us. the next hour and a half and explain every case and what went on, but i am not sure that would be tremendously good for the setting we are in. it costs a lot of money. a lot of it is behind us. there is still work left to do. the real question is did you learn from it and how do you make sure it did not happen again. >> do you think this is -- is the government piling on now? is it a fair reckoning for the errors in the abuses that nobody denies before 2008, or is this now -- this has been described as a shakedown. , $40 billion and rising. -- thees look like

attorney general has made it clear there are many other cases to pursue. >> the biggest debate is around we bought a company called countrywide, an extreme situation. from my standpoint, what is fair restricting --n an interesting debate to have. >> would you like to share some of that? the companyu move forward, put stuff behind us, settled the company down? how do we build the capital so that people do not think the company is at risk? i would rather not engage in that dialog because i do not know what it does to help me do what our team has to do for customers. >> let's look at bank of america. as you say, over $40 billion so far.

there are other issues going on. you have the criminal case. -- the bank was found guilty of fraud. >> that was a civil case. >> civil case. know you do not publish your expectations of liability, but what can we expect in the next year or so? >> if you look in the queue, liabilities have accrued and we have a range of possible losses based on probable cases going on that we have published. on the litigation side, we publish those numbers. -- our rune strange rates changed dramatically. if you think of 2011 when the company lost, basically broke even. billion or had $25 $30 billion of charges. this year we had a couple

, a half ar one case billion, a billion. the numbers are smaller. >> what is your ballpark estimate of what this entire thing is going to cost? >> we will see. jpm, the estimates that i have seen that bank of america will be around $6 billion on fha. issue is all these cases are much different, so extrapolating from one to the other -- by the way, because we have settled on a lot of them and we know what we did versus what we think other people did. it is hard to speculate. >> so it is reasonable to assume the total cost will be up to $50 billion overall. >> the majority in the mid-40 billions. >> most of that was related to countrywide? all the but everybody,

pieces -- even like last year third quarter we settle the case around the merrill lynch transaction -- we settled a case around the merrill lynch transaction. this year there are other things in there. the biggest part of it is mortgage related, mortgage related activities that took place in the mid-2000's. we settled some discrimination suits hanging around for years and things like that, so there have been other things. what forid countrywide, $2.5 billion? >> that was -- >> is that one of the most memorable acquisitions of all time, could we put it that way? >> i am not sure that anybody could have known that mortgages would have done the same thing. the reality is nobody knew. do not fundamentally

dispute the government's case, what seems to be the public's view, that wall street behaved pretty outrageously touring that and 2007.ween 2002 and some of those practices, whether direct lending practices of companies like countrywide, or the bundling of securities and investment banks, you do not dispute that a lot of things went bad? that i agreeure with the premise of the question. but as a good reporter that is how you ask it. >> what should the premise of the question be? >> the lesson we have to take mortgages is that consumers over borrowed, the companies overlent. get to the modification project, it is an outcome of having a serious number of

delinquent loans we never intended to have. when you talk about litigation from, we had to build up 10,000 people to 58,000 people to modify 2 million loans. each one of those takes hours and hours to work through the customer. 58,000 people, all the way back people.30,000 where up with situations borrowers and lenders put people in a bad place, and we have to think through the process. what is the role of homeownership? is it as good as we think it is? we have to think about down payment requirements, the structure of the mortgage financing. those are keys and that is one of the lessons learned on the mortgage side. on the other side, the trading side, so to speak, we have to

remember we are in this business to help our clients and we have to do everything to help our clients. at the end of the day, proprietary trading is something our clients demand of us. we should be moving risk at every moment. that is how we are running these things for a long time now, and that is why rwa and risk measures down. is 25% of whatsk it was four years ago but we are making as much money. the two big lessons are how do we end up with a reasonably structured consumer mortgage finance that is fair to everybody and works. the taxpayer, the borrower, the lender, and everybody between. and then we have to make sure that trading stays within where it is supposed to. that we make it all happen and stay out of investment and

proprietary trading. >> you made a lot of changes. if you look at the lessons and the things that have been done -- as you say, capital ratios are stronger, liquidity ratios are stronger, management is better in shape, management of risk is better -- there are still some people who say that is not enough to really avoid the next crisis and that we still have this problem of banks that are just too big to fail. that the banks are so important to the financial system of the economy, that should they get into serious trouble, they are just too big and they will have to be bailed out. you know better than i, the likes of susan warren -- >> it is elizabeth warren. >> sorry, elizabeth warren, the senator of massachusetts, is pushing hard to break up the banks. are you worried that with this

continuing regulatory pressure that argument is going to gain ground? >> let me come back to why i believe the model, the universal banking model works because i think that is the fundamental policy decision. if you think about it from a customer, a client's perspective, the ability for a major company to bring both corporate banking and investment banking -- especially in light of the new capital rules, the fact that you have to make sure you are getting paid for using your capital -- is the superior is this model. it is the model the clients want. it is the model that wins. when you go to the trading side, you cannot do the first model without having the ability to distribute the bonds or equity out to the market, and that market -- universal model works. it is the model outside the united states and it has been.

is thestion is, what scope of activities, how much capital, how much liquidity? think about last year's stress test that the fed went through. when we did the work across 19 firms in the united states. that test said take the scenario, we are as close to the great depression as you can get. run it through your models is if you ran through 100 miles per hour with no preparation. you're not allowed to say i had six months to think about it and don't change it. the standard which is pretty high, that is in the model, and the results of that stress test last fall -- or last spring -- that all the banks could continue to lend. it is not that they would survive, they could continue to engage. getting the banks to capitalize to that framework creates stability around the question that is much different.

so you put the stress test and those things into answer the question so that the probability of anything happening is that theis low enough question, what is the additional cost to society if it goes further, the model is superior. the discussion at a policy level does not hold merit. i understand that people are upset because it is complex to merit -- it is complex to manage. that is what they are worried about, could there be a mistake made. the reality is we are in a business taking risk, so our business judgment is on mistakes that are supposed to be made. is there capital, liquidity, and the resiliency to absorb it? >> with the universal banking model, when it works it seems to work very well, but the risk is when it goes wrong it goes badly wrong. the fact that as a result there is no question that because of

the risk, there is perceived risk, that people take risks with that money, that they are able to do and that ultimately imposes a burden on the government, on the taxpayer. >> that in the u.s. is a little different. the stress was severe, so i think now, if you visualize a in 2008,t went on people facing a crisis had to figure out creative solutions, if they were close enough to help solve, now they are all in the tent. the key is to never let that thought's a sleeve, whether it is on the consumer side with the consumer bureau, whether it is on the banking side, everybody has to be in the tent. so the rules and regulations -- all of us report every day all the risks of what is going on, counterparty risk, continuously.

you can see most of the risk is in the system, not sitting out here. i think those are good things to sort of protect it from happening again. it is not universal bank model. especially in the u.s., the deposit insurance model, that is what guarantees that. each time a bank fails, a percentage of that cost comes to bank of america and then we have to police each other. there is an intermingling on the balance sheet of banks. our security activities that you think about our -- our outside that. the macroook at picture, the macro picture, the macroeconomic and markets picture. bank, privy to organizing information where we are. let's start with the housing sector. obviously when interest rates start shooting up over the summer, there was concern about

what happens to mortgage demand and we see that with some of the banks results. markthere was the question about whether the fed was going to taper. what is your concern about the housing market and more broadly, the economy? >> the issue with mortgage production, mortgages where refinance homes and when higher interest rates go to lower interest rates. when rates rise, purchase continues to be stable, so the number of applications we get through the system every day on purchases is stable, slightly up from earlier in the year two now. that market is robust and that is the market you see with housing sales and things like that. then they move around a little bit. it is fairly stable in lots of , and in the 212 area --e you cannot buy a house

the markets in boston, dallas, san francisco, there is a shortage. the refinance went down, and that is more of an issue for us in terms of how to get the cost down. it is less of an issue for -- if you refinance a mortgage and save $100 a month, it is $100 a month. the real economic spinoff of houses, nobody buys a house and let it sit their bank. they paint, put new appliances in. there.let it sit they paint, and put new appliances in. they should get up above $1 million based on population. that creates economic activity. market, ise money it solid? does it continue to grow? if that goes on, the refi

creates activity, but it will not change people's course of history. a 20,000 points for dollar average mortgage is 2000 basis points per year. you will have a little more cash flow but the rates for refinancing now are fairly small. >> mortgage origination did drop. forward.ke it we saw what happened when the fed even talked about tapering in may. we saw bond yields shot up. we still do not know exactly when they will taper, when they will start withdrawing the stimulus, but presumably they will at some point. is what we saw over the last six month something that we should be concerned about? willdea that tapering happen, interest rates will go up and it will chill the housing market and the economy, is that something we are going to see?

>> why is the rate structure being held so low, and why is qe going on? it is to preserve the rate structure until the economy gets going. with chairman bernanke and all the different people who talk, who set the minutes themselves, they are on the side of making sure the economy does not go backwards because it is a big economy. 2.5 or whatever times the size of china. if this does in the wrong direction, the world is not really there to help it. i think rate structure stays low. taper, they set interestingly enough, they did not save a lot. the markets have taken a 10-year instrument, a 10-year treasury drawer a 30 -- treasury, or a 30-year mortgage. they got ahead of them and people got convinced it was

going to happen and then it did not. you saw the 10-year went all the percent. almost three it will be an adjustment, and there is no question everybody worries about that. we worry about all the time, what will happen, what will be the effect? the reason why the rate structure goes up is that h is growingy faster than people think it is. underneath it, the economy is growing. other reasons our mistake inflation. that is a problem. >> but from what you are saying, you don't think the rate structure is going to go up very much. you continue to expect this fed support for some time? is a little over 2.5% growth in the u.s., a little over 3.5% in the world. re-think i see in our data and that i hear from our clients,

that is fairly fundamentally sound setup. people write it forward. -- people grind it forward. you are still much higher than the target, whether it is a target that is assumed or announced. the markets believe the same thing. the rate structure stays here. back and do the research about how many days the 10-year traded under 3% in its history -- to have been another couple of periods, but it is all right now. are approaching five years. think about that. people say this could go on a long time. it already has. now the question is how much longer, and the market has 10 to 15, and i don't see anything that would cause you to feel differently. i guess that is a fundamental economy moving forward, there is

just the additional 3.5% growth. it go on? the fed balance sheet is now .lose to $4 trillion can they just go on like that without creating imbalances? can the economy go on being dependent on the fed stimulus forever? .> it is already in there they make their own estimates of how they are moving around. driving rates down. is $4 trillion, more than $16 trillion. the treasury did outstanding with $1 trillion of securities debt outstanding. it is big but not as big as people think. if you take some of the big asset management firms, our balance sheet, we buy per quarter.

their are a lot of buyers out is a, so i think it precedent to unwind and that is when everyone talked about. some of the other countries around the world, a lot of economists say you have a $4 billion balance sheet against they arerillion -- outsized relative to other markets. where it all seems to have gone over the fed stimulus, maybe it supported the simple, real economy a bit, but a tremendous amount is reflected in asset prices. tremendous run-up in stock prices, housing prices. by historic standards, very well supported. is this creating imbalances, that these asset balances are very important? >> the impact on emerging

markets and all this, there are probably better people to talk about it. if you look at fundamentally sound of valuations of abilities, take us. get our strategists and stuff talking about the s&p overpriced, but it is not out of range. others can talk to it better particularly. but you do not see -- it is not like it was around 2000 when companies did not have earnings. corporate earnings are in good shape. is it a little bit overpriced, but it is sitting on top of a ton of earnings as opposed to sitting on top of hope or something like that. i think people overstate that affect because if you draw lines of continuous movement you are getting back to levels that were there in 2007 and 2008. spending is higher in things like that. it just took 5, 6, 7 years to work through.

the crisis started in 2006 and 2007. ,pril think it started in 2008 but the reality was the housing prices had a problem in the third quarter of 2006. and we are still not back to those levels. there is still work to do. housing prices being out of control -- if you go back, you are basically back on the curve. we had a crazy up and down and then back to normal. >> you have millions of customers, millions of credit cards. you see pretty much in real time how the american consumer is behaving. what is your current read on that? , total spending by bank of america customers on credit and debit cards was about 12.ver october that is a pretty consistent

number we have seen, so that is good. . i do not know what october data showed. but consumer spending and spending is a little bit more on credit than debit. some can be rewards-driven. spending on the internet growing 15%.o people are using cards on the internet. internet retailers of headstrong growth results. -- we seeer spending that is good. the only time that that really fell off in the last four to five years was early this spring, february of this year, when he had a triple whammy of the year-end on people's mind and the unemployment taxes. it was the flattest year.

levelyed at about a 5% since july. 6% is what we have seen in the better months. consumers are spending. >> consumer confidence dropped around the time of the government shutdown. did you see much evidence of that? >> iwatch what they do, not what they say -- i watch what they do, not what they say. i did not feel very good at that point either. but if you watch what they actually do, you did not see a break in spending. consumer spending drives a lot of activity for the world. we have to be careful as we go along. consumer confidence, stockmarket levels, trading levels, spending levels, all that is very critical. people will stay employed, make more money, and be able to spend

more money, and that is critical to the world economy. >> it was not a pretty spectacle to watch, what went on in washington with the shutdown. they are back at it again now, trying to get a fiscal deal. are you optimistic that we will get any kind of sustainable, long-term fiscal arrangement? think it will be a political discussion. what i am or can't -- i am more confident than i was a couple months ago. inabilityze how much to make this not be an issue -- that is too many double negatives. 2.5%, and maybe it will be moved north. default is not a question. two things those off, now you are on the political side. it is a question of spending.

that is a debate the congress, president, and both parties should have. the consequences of having extraordinary measures or think there is much more seriousness, much more sobriety about that question. i think it is getting more divorced. let's not create a problem for the economy, but let's begin the debate on spending. >> you are very much on the sharp end of the regulatory sphere, if you like to go over the last few years. you have come through it stronger, and the bank is in much stronger shape. can i ask about the broader regulatory environment? you think we have a balance right now? clearly, there was a political consensus in this country in the

2000's thatto early maybe it was to lose. since 2008, there has been a whether itsive mood, is dodd frank or the various enforcement actions that have been taken. it is a much tougher regulatory environment. have we gone too far or are we roughly where we should be? that is hard to assess because there are still things going on. that overall if you think about the pieces that were put in place, the question on consumers was -- did we end up the financial services industry doing things for consumers that turned out not to work the way the consumer thoughts and they cannot understand, so the consumer bureau came out of that and tried to simplify?

we have to get a balance. an organization was started in the middle of this thing, which is pretty tricky to do. but the principles are the right ones. we have to be more streamlined. onquit doing overdrafts debit cards. people were trying to figure out the mechanisms on the payments and how they work. we got ahead of this. the consumer side of the bureau, there is still work to do there. but you can see the set of rules and how it will work which leads to a simplified consumer model for a company like ours. we do not sell insurance. we have a bank account, lending for cars and houses, and credit cards. you get out insurance and all this stuff that people build over the years, and that is very straightforward.

we do not do subprime and stuff like that your it on the institutional side of the house, i think the impact of the capital, leverage tests and things like that, which are good to make sure it never happens again, there is still an adjustment that will go on. people -- major investors bignd the world, they are institutions and we are big institutions. if we have to hold more capital and liquidity, that will have an impact. that is a trade-off. is it too far and will swing back? it will get level back. the key is to get it done so we can help society. this is a technical matter. we have to let the regulators work through it. and we have taken care of the problems you are concerned about, and focus on that. there are things that have unintended consequences that everybody knows about, but it is hard to fix them.

any give back is a give back. as time goes by, my experience doing this over the years now is that heads will prevail. it will be but -- it will be much more type than it was before. frankly, as you run a company and think about it, from my standpoint as ceo, it makes my life easier. >> are you concerned broadly about the political climate was to look there is a few out there. there is still a lot of resentment. createdsis was largely by financial institutions and you can argue by borrowers as much as by banks themselves. but it was a big financial crisis. five years on, stock market is up. people with money are doing better. unemployment is still very high. the worldeople around are still very resentful. there is a kind of populism

rising, and understandable one. city, peopleork are feeling it. we have had years where the rich have continued to do very well and the middle class got the shaft. how big a threat do you think that is? took the people that paid at certain levels, the growth rate at the lowest levels of the highest. our own world, we are trying to do that. the issue is that the jobs are not there. word financial crisis, which is fine, but it really was an economic crisis. the basic job creation mechanism allmoved, and we were covering it up by doing things we probably should not have your government-level borrowing.

of two.o make three out all of that came to roost the cuts the amount of leverage in the system came crashing down. places again crashing downward the two places that had the fundamental issues and the work their systems could do was going other places. we did not address it well. around the world are focused on how to make sure they can employ and have employment-ready graduates from high school, technical school, junior colleges, and colleges. relationshipiotic between the group i have coming out of high school or junior college and the employers. it is a jobs issue. that is what leads this thing. we have higher unemployment than we should. -- the question

is how to create the jobs. as an industry, we have to get people comfortable that we are fixed enough that we can focus on the other issue which is how to create jobs. up to's open it questions. please, there are microphones rotating and people holding them -- more importantly. if you could i'd -- identify yourself, your name and your organization. bessemer trust. what does bank of america stand for for its employees and clients -- what do you stand for as an organization today? isthe purpose that we have to help our customers and clients live their financial lives through the power of every connection. first, it is their lives. our job is to serve and help

people with their lives. whether that is the individual consumer trying to live their lives and we are providing or we'reonal accounts helping them do and acquisition is to investor client, it help our clients and customers live their financial lives. the second part is critical. 230ave been in business years if you go back to the oldest part of our company. for the first time in history, you have the capability to cross the four or five core products customers need in the company. taking merrill lynch wealth management and combining it with u.s. trust, we had the trust capabilities in every market ,hat we can help serve affluent wealthy clients at a level that never existed. tank the investment bank and take the thinking -- investment bank and corporate banking, it is the best it has ever been.

it is for the customer and client and that relationship. it is not like we're trying to take a product that is not one of the best standalone products in the world -- it is not an inferior product. we have the best standalone products in the world. the purpose is to help people with their financial lives, their lives, serve them. we facilitate. the second question is that we cannot do it one product at a time. we have to connect it. give them more value. it is true for the retail consumer and more. >> thank you. two questions. softball and one a little faster. big bad. big banks bad. second question -- [laughter]

do we need champions? of the bank mocha next recession comes, things are bad. the object is to sell the pieces off. a company comes to you and asks if you want to buy it. the attorney general says i promise we will not go after you. are you going to do it? >> i think if a large institution failed, i would find it hard to believe that they would want to make one of our very large institutions larger. i think they would go to someone else. that is my guess just by the nature of it. is big bad? we can do great things for clients and customers based on our skills. take the consumer, it is about what is valuable. provideat the costs to rob asked to consumers and increase the functionality which

allows us to not charge the overdraft fee. you cannot do it if you do not have efficiency in the system. we are down 700 branches from our peak. 40% more deposits. the customers are up. 2013 fromom 2007 to 14,000bile customers to signing up per day. mobile deposits. probablytment cost, half $1 billion we put into mobile and online in the past few years. that is our biggest good. it allows a tremendous feature functionality to the customer at a lower cost for them. we're limited by law to do acquisitions. so your concept is -- >> not the whole thing. [inaudible] >> we trade portfolios all day

long, but i am not sure we need to acquire anything. we need four or five cities to get the top 30 in every market. we're just not doing acquisitions. >> big is good but you are not planning on getting any bigger? ,> what has been interesting when we are in davos and european banks are talking about 2000 eight,-- combine institutions probably close to $3 trillion. think about that. that is a pretty good size institution. the capital has doubled. business -- even today, we still have tens of billions, maybe $100 billion. there is a lot of growth. there might be a day five years

out where the growth comes through. of the $40rid billion of home equity loan ,till left over from the crisis those type of things. we only have $90 billion in home equity loans. half will run off and half will be replaced. so we can grow without growing. >> thank you. another question? essmy name is ivan from tigr financial. it seems to me that thinks seem to be most aggressive when they should the most conservative and most conservative when they should be most aggressive. not aggressively loaning against real estate. they were running away from real estate when prices were addressed. were inflated.

the cycle has continue throughout banking history. and thecific thought general thought. looking at commercial real estate or commercial lending in general, just not the issue in this cycle. remarkable. it was the issue in the fallen angels cycle in 1999 through 2001. most the commercial real estate issues that we acquired we ran through pretty quickly. i do not think commercial lending was a problem. that does not mean it will not be a problem next time. that is what we have to be careful of. the general principle i focus on is balance. all things in moderation and most people think their grandmother made that up but it was actually roman philosophers. you have to keep it in balance. then me give you a real example from our company. at the peak of the we probably

had about $250 billion, largely credit card portfolios. billion. about $100 if we keep that at $100 billion to 110 billion dollars and the economy breaks in way we do not think about mocha that is not a life-threatening event at all. charge offs rent $1 billion a day and could go up. in one quarter which urged about $14 billion in credit cards. that threatened the capital. the key is not to be good at underwriting credit cards. it is also to keep the balance of the portfolio in light of the $2 trillion balance sheet. even if you are wrong mocha you are not real wrong. you're right mocha the hardest time to have that discipline is in good times. your back is against the wall and you have a portfolio you have to get rid of. , how youink about it

balance the company, we have great consumer lending, commercial lending, markets, and try to keep them in relative size so they are not dependent on the volatility. thehey can withstand recession and have enough capital to get through it. so the test will be, over the next few years, can we maintain the discipline? when i was talking about the nco, and we talk about if we need to grow faster, and i said you would have a new one because i will not go through this again. i am 54 years old. i went through the crisis in the late 1980's. we try to keep that on our manager's minds every day. the term we use is responsible growth. market but not exceeding it because then you

get risk. sustaining the not the fastest growth rate. >> thank you. dell, formerly of cnn. i have a political question. there seems to be a growing sense of resentment will -- among the traditional republican establishment, and i assume most bankers are part of that establishment, towards the growing influence of the tea party on the republican party. what is your view of that? >> i am trying to think of what upside there is. [laughter] that our company's job is to help people understand the facts of what we see. we try to stay out of one side or the other in politics here at with this question of the government shutting down, here is what really will happen -- if

you do not give us the money, we cannot put the money in social security recipient's accounts. it is a real pain. i try to stay at that level. my personal political beliefs should not shape this company. that is just not right. we have a deep engagement with everybody. we mostly try to say -- what is the right thing for america? at the end of the day if you think about who we are and what goinglect, if america is fine, we are going fine. so i try to stay out of it. >> [inaudible] >> going back to the other question -- what worries you? youquestion earlier was, know, we tend to have this kind of contrarian or pro-cyclical approach. wen things are going well,

add fuel to the fire. when things are going badly, we make things colder than they are. what worries you? what can go wrong? >> well, that whole thought process and how to keep people's expectations and the investment base, employee base, and customer base, we are trying to stick to what we do. that might make some people unhappy. you have to be customer focused but not to the point that you kill yourself. it worries me about getting managers to stay focused on responsible growth. remember, we can mean and move a lot. put another $100 million in credit cards. if i drop mortgage prices, i can get a lot of mortgages. how to stay in the middle, that is what worries me.

you have to be careful. , out of thees for a guy that ran strategy for eight or nine years, one of the best things that came out of it is the director level, supervisor level, manager level, focusing on how to stay ahead. capital in the future. that gives you more of a guidepost. with companies like ourselves that cannot make acquisitions, you have to retrain yourself as an industry to be like companies with organic growth. issue becausering you cannot do an acquisition or something like that, so you only have one choice.

what worries me? i mean, i still worry that we have to get through -- we cannot let the debt issue in the united states be a problem. we have to get europe moving along because it is also a big economy. teenage drivers, those types of things. >> [indiscernible] >> we got lucky this year. it will take us 10 years to think about it again. >> another question. >> i am with the "wall street journal" on the business side. about talent, what is your philosophy on recruiting and developing talent within bank of america? company, we think about the history of the company for the last 20 years or so and there was always an acquisition. we always had two people to do a job, if not more. that has changed now. we have development of processes. we have talent processes.

we look for the best we can find. but it has changed dramatically in how we think about people going forward, we get picked off more than we pick off people nowadays. segment that is $3 billion after-tax, and that wealth management business is the fifth largest bank in america on its own. our talent is very experienced and capable. how do youthen save, groom people into the business? we are very robust at hiring. not only talent acquisition but also diversity. we have stayed on college campuses. huge acceptance rates for juniors to seniors. the biggest change is what we do in our leadership development programs have switched a lot.

there is the question of organic management across decades. you want to see what will go on down the road and plan five to six years out today which has not been a requirement. basically, we did an acquisition every so often that changed that. as a leader, the biggest job of my team is to develop the talent. that is hard because a lot of them are raised as operators and want to run the business. it is tricky that way. the third element is training people to deal with complexity, the complexity of the outside world. i grew up in a business that was very well-contained. and then we hire from outside. we hire experienced people left and right. the big challenge is the tradition of the training which are now the court

dependency to get that right. >> any more questions? hello. i am with the "wall street journal" news guide. you mentioned you have worked for the last few years to put a lot of your legal troubles behind you. i am curious if, at the time you started the process, did you ever think about the possibility of a global settlement, of trying to settle everything at once? also, if you think that is potentially a better way to deal ,ith these legal headaches because potentially you can sort damaged the reputational that years and years of legal battles will have? >> i do not know if you can accomplish that.

these are very different cases. the merrill lynch securities legation is completely different from the other case. they have nothing to do with each other. no, and claims. you really have to take them as they come. the servicing settlement was a global settlement. there were pieces. there were the settlements of fannie mae and freddie mac risks.the put-back a truncated the risks and put it behind them. but that doesbia, not mean you settle with fannie mae on some thing. there is a relationship but they are not at all common. privateannot combine litigants.

it takes chopping and chopping and chopping at it, and we have been doing it. >> live to a senate foreign relations committee hearing. this is live coverage on c-span. the hearing is to get underway in just a moment. [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute]

hill are live on capitol this morning. start.aring is about to heather higginbottom. wall will be part of the second panel. also, richard stengel. sewall, and richard stengel,oal, --

nominated to be undersecretary of state for public dependency -- diplomacy. they will be responsible for the development of policies of who will be in the position to represent america and how american values will be reflected around the world. our first panelist is heather higginbottom, who will play a key role with respect to priorities of mine, determining who represents the united states abroad and our policies to protect them. i have been pressing the department on the issues for diverse of the and minority recruitment and retention. all foreign service personnel should merit the diverse it best -- everest the of the nation. last year state completed a hiring effort to increase the workforce area for department that ranks near the bottom and it comes to diverse city, one would expect a focus on doing more to diversify the workforce.

gainsd, we saw only some by asian-americans and african- americans and virtually no gains for hispanic-americans. inir raw numbers decreased terms of percentage. i look forward to hear your assessment in terms of recruitment policies. --security, as desegregate as deputy secretary, i would like to know how you plan to remain involved in transparent about security issues. personnel andt facilities will likely continue house al qaeda and other groups continue to wage a global war against us. recent military style suicide consulate,nst our although successfully repulsed, is evidence of the resolve of these groups. in addition to

your views of about how you would steer the state department through a time in which resources are likely to be scarce and will recur careful management are issues i hope to hear were thoughts on today. let me turn to the ranking member. >> thank you for having a hearing, and thank you so much for taking the time to come to our office and be willing to serve in this way. we would be much at her off listening to you and me, and we will do that and have some questions. thank you for being here. >> with that, you're. it will be included. i will ask you to summarize it in five minutes so we can enter into a dialogue. if you have family or friends are, we recognize that service is an extended service family, and we appreciate their willingness as well. feel free to introduce them. >> thank you.

it is a great privilege to appear before you as the nominee for deputy secretary of state for management and resources. i am humbled by the confidence that has been placed in me, and honored to be nominated to follow in footsteps of jack lew and to have the opportunity to serve alongside one of our nation tossed finest -- nation's finest permits. i will introduce my family. me aents who inspired in desire to pursue a career in public service, i've brother and sister in law, and my husband, danny paul the the, who has been my best supporter. we thought it best to respect the regular order of this committee and not bring my one- year-old daughter. >> we are child friendly. >> as someone who began working for senator kerry, i start with a deep respect for this institution. i welcome a shared

responsibility for american foreign policy, and if confirmed i pledged to help make both diplomacy and development more effective and more agile their daily professional path i have ever known has been public service. from my time in the senate to my service as deputy director of a white house management and the domestic policy council, to my appointment. over the course of my career, i have learned how to get results. i have seen it takes a determined effort to seek and reward innovation, the willingness to make tough theetary decisions, and outreach across the out. those are all skills and experiences the president and secretary carry out were essential. if confirmed i will share in the global responsibilities for u.s. foreign-policy and have brought management and programmatic oversight for responsibly to the state department.

thiscome the input of committee. i would like to share some areas i would like to focus if confirmed. my top prior date will be ensuring the safety of our people under posts. the president has made it clear we need at the permits fully engaged wherever our national interests are at stake. that is why i will work to make sure our processes and culture keep pace with the rapidly evolving threats facing our diplomats and professionals. i know congress shares this commitment, and i look forward to working with you to make sure we have the tools to deliver on it. if confirmed i will work to better prioritize the resources and programs at state and usaid. i will see our limited resources are going where we need them most and are being used responsibly. this is important as we continue to right size our engagement in places like afghanistan. my third area of focus will be management reform and innovation.

job of do a better aligning our functions with our foreign-policy and national security priorities. i will work to ensure the remarkable men and women at state and usaid have the training tools and skills they need to succeed. if confirmed i will oversee the second quadrennial diplomacy development review, which will identify aussie shifts, areas for innovation to address things that face us today. secretary carry is determined to effect lasting change, so i look forward to authorize legislation for the state department and usaid. the fourth area will be better targeted and coordinating development efforts. investments are not just the right thing to do, they are the smart thing to do, because helping to promote stability and create opportunity for future growth is in our interests. if confirmed i will build on the

great work that has been done to strengthen the state department's economic impact. said, todaytary has foreign policy is economic policy. i will work to help our embassies and consulates do even more to fight for american companies and promote foreign investments. career, i my 20-year have had one overarching objective -- to ensure our government delivers and that we make it work for the american people. our foreign-policy investment at budget% of the federal is national security interest. it is one of the best investments we can make for our future. i believe we can and must do everything possible to increase the return on that investment. if confirmed i will work each promiseake good on that and make sure i diplomacy and development help contribute to the kind of world we want to see, one that is more peaceful and more prosperous. thank you, and i look forward to your questions.

>> take you for your statement. let me start off with a few questions. i appreciate the priorities you listed. i think they are appropriate. let me start off with the embassy and diplomatic security. this has been a concern of mine since our experiences in libya and continues to be a concern with high-risk posts threat to world. throughout the world. the 1999 report which was a bright product of the report in the wake of the bombings in nairobi and other places, recommended the hermetic security be removed from the long-standing undersecretary reportingement structure and place diplomatic security either in a separate undersecretary along with the bureau of counterterrorism and international narcotics and law

enforcement's, or report directly to the secretary of state. the recent best practices panel recommended the creation of an undersecretary for diplomatic security, underscoring the department's present wretched makes a visionary diplomacy operating within an increased number of temporary and permanent posts requires an organizational paradigm change with an undersecretary for diplomatic security as something necessary to enable the department's mission. my question is there are those who may agree with that or those who may have a different view, eighteningning -- h the importance of our people a bride, that minimizing those risks are important. do you intend to meet with the members of the best practices panel, and have you had an opportunity to review their recommendations and if so, what

is your view on their recommendations? >> thank you very much. i have had the opportunity to be at the department for the past several months and can say that everyone is united in the effort to ensure that the tragic attacks that occurred in benghazi will never happen again. it is a top priority for me if confirmed. i have reviewed the best practices panel and the other independent reviews and inspector general report and are taking all those recommendations seriously. as a relates to to the recommendations for undersecretary am i inc. it is important that the debit the secretary office establish the appropriate processes and accountability mechanisms as one of the top officials reporting to the secretary, and i intend to do that. one objective i have if confirmed is to look beyond -- work to implement the recommendations, but look the on benghazi as our processes, our

culture, looked at the limitations that have been made in the wake of benghazi and figure out how we are best to minimize risk around the world. i have not yet met with the best actresses panel. i look forward to doing that. i had the opportunity to look across the spectrum of recommendations and look at some of the recommendations from previous -- which has been pointed to in the wake of benghazi come and i think we need to have an annual report where we get progress feature that would come to me to say where are we on this and not just on the recognitions as a relates to benghazi, but for all of them. i will take this seriously. >> how do we ensure structurally within state that there is a clear line of communication and authority and responsibility, because my sense is that that was lacking before this incident , so that when someone at one of our missions abroad, embassies abroad, feels that there are

concerns and we look at intelligence in a different way, not just specific threats, but the nature of environment threats, are how are we going to ensure that there is a structural line that goes strictly to the secretary if necessary in order to get action? >> a good question. our nominee to be the assistant secretary for diplomatic security has said on many occasions i know i take up this with the secretary whenever i need to. i think one of the most important recommendations from the --and that we have to execute on is establishing process that, particularly when we have a national interest, to be in a particular place and we have a difficult threat and firemen that we bring this together in a regular process that feeds up the chain so we

are not just having one side or the other decide what the answer is. that process is being developed right now and is something that i would be engaged in, and those difficult calls need to go to the secretary and be discussed and made a call in that way. oflet me territory question diversity at the state department, something you and i spoke about. it is pretty alarming to me to see the largest, fastest-growing part of america's population, the next america, dismally represented at the state department, not just as a question of participation, but as a question of promoting american values abroad as evidenced by who we are as a nation. when i was in china recently, it was great to have met with -- andnts where attorneys, struggling rich represent human rights activists and others, and our person in

charge of that was an african- american, created a whole historical perspective. it was a powerful message. i think about the realities that the state department has one of the most dismal records of hispanic representation in it. and i think there are arbitrary measures bybjective which it impedes the opportunity for hispanic-americans to participate. so where the state department recruits -- the fletcher school is a great school. that is not going to get the most diverse population. by way of example. oralhe question of capacity is incredibly subjective. some great people

from the state department who clearly have a powerful validity to indicate orally, and i have met some people who have not reached that standards. if hispanics seem to get filtered out in that respect. i would like to ear from you, because this comes from the top. we're never going to achieve progress if from the very top there is not a comment and a position in which measurement for reviews of people we -- we have a whole host of pam -- promotions pending, and part of that has to be because management gets the message that ,reating the ability to promote to have people enter into the foreign service that is more diverse is a measurement of judgment as to how well they are performing. if not, it will never move forward. i would like to hear what you would do if you were approved by the senate, both as to

recruiting a more diverse workforce in the foreign service, as well as how would you go about to ensure, for example, would you support a fellows program similar to successful pickering fellowship, and would you meet a consistent basis with the new director general, that is before the committee, for the foreign service, which i hope at some time we will confirm this year. as all efforts of creating a process that would change this reality at the state department. >> thank you, mr. chairman. i appreciate the opportunity thiswe have to discuss issue. i appreciate you have a focus on this and you're holding this accountable. i do not think anyone would agree we are in a position and at the place we want to be on this. it is a particular passion and commitment of my that i will bring in to the position if

confirmed and i know that secretary kerry carries about this as well. you mentioned the nominee for the director general. i have spoken to him about this and we have begun to share ideas about how to really take this on in a more systematic way, but creatively, thinking how to reach students when they are younger, thinking about what a career in the foreign service would be. there are a lot of best practices from the private sector. i think we can try to bring into our efforts. it has to be a priority at the highest level. we have to do more to create an environment once people enter the foreign or civil services at the state department that it is supportive and meets their needs, and there a lot of work we can do. --n the thomas greenfield linda thomas greenfield recently did a lot of good work on this and has established some good programs within the department, but i believe there is more we

can do. i look forward to working with you on it. it is important we have a dialogue about this. there is an opportunity for us to build on what the foundation we have now. the fosters programs are wonderful, -- the fellowship programs are one tool. chairman, andmr. thank you again for being here, and your willingness to serve in this capacity, and we appreciate you having family members share. when people bring their children , they usually get dealt with in a much easier way, but i do not think that will be an issue today anyway. we talked a little bit in our office about the fact that you have certainly done some very contributedd and a good bit in the public arena. one of the questions is with your years of experience, if you will, emmie into the state department. where change

happens very slowly, if at all. many of the bureaucrats there, as you and i both know, when someone like you comes in, they say heather will be here for three or four years and we can't wait her out. how do you expect overcome the culture that you know and i know and everybody at this bias knows exists within the state department to really put in place some of the reforms and changes that you would like to see place -- to see put in place? >> thank you very much. it is important to be clear eyed about the challenges, and i have a lot of enthusiasm and commitment to the opportunities that we have at the department if confirmed into this role. that is not enough. i need to bring into it my sprints is as well as the support of the senior leadership, and that starts with the secretary. if i were confirmed i would sit down right away with the secretary, with the deputy

secretary come up with our undersecretaries and say this is where i think we need to go, this is what i need from you to enable us to get there, and this is how we are going to be held accountable. i have managed an agency, been in government, worked across interagency, and am familiar out what you refer to that we will be a long time and you will be here a short time. when i was at a one b i was part of the leadership team, 500 staff, and 40 political stuff, and i was the ceo of that agency, and was there at the time of very low morale that we turned around. i understand how to break out some of those barriers, but it really requires the commitment from the senior leadership, and i have that conversations with the secretary as well as senior leaders and they believe in the opportunities to bring our diplomacy into the 21st century and avail ourselves of innovations and make reforms that are necessary. i recognizent, but

the challenge and am eager to take it on. >> one of the things that we talked about the would be helpful, and you agreed, and you mentioned briefly in your written testimony, we have not had a state department authorization since 2003, which is beyond belief. in other words, the united states senate has not taken the ofe to do an authorization the many programs and activities that are taking place in the state department for 10 years. we mentioned that we discussed that that would actually be something that would be a thatndous asset to you, if the senate so chose to take the time and do the work we were hired to do, relative to the state department, that that would be an asset to you in putting in place many of the reforms and changes that you would like to see take face. i wonder if you might respond to that. >> it is my pleasure, thank you, senator.

i worked in this body. i am a believer in regular order. there is real value to be gained from a regular authorization process, something that drives our consultations, that allows us to update our authorities. under this committee, there has been an important discussion about embassy security. there is an asset to update our authorizations. these are important dialogues for us to have, and a regular state authorization bill would provide that. i am supportive of it and look forward to working with you on it. >> thank you, and i agree we may have an opportunity to have that done. i know the chairman and myself and many members of the committee work together on the embassy piece, but overall it would certainly be helpful. i thank you for your those comments. the issue in libya -- the chairman spoke to it -- has in

some ways the company political football. at the same time there is a lot of substance there, too. one of the things that has been pretty shocking to me, i was in the country right after what happened, just a few weeks later, and sat down with our team there and have since talked to a lot of folks. i think it has been pretty shocking that when you read the cables and you see everything that happened during that time realthere has not been any accountability for americans -- accountability. for americans were killed, and to my knowledge, not a single person at the state department has been recommended. that is odd to me, very different than what happens in military operations, very different than what happens in companies all across our country, and i wonder if you might speak to some of the issues that i know the chairman raised about accountability and is there a way for you to change that culture where the bar for

your job, or your employment, is set at such a level that whether you perform or do not perform, it does not matter? >> thank you, senator. i know this is an issue that you have been very focused on and i appreciate that, that it is a difficult set of circumstances. secretary kerry, not long after he came into this office, initiated and review of the performance of the individuals who were identified by the accountability review board, review their performance as a related to benghazi, but also their overall performance in the department, and concluded all should be resigned from positions that they held it in positions of lesser responsibility. none of them have responsibility for worldwide security today. that was appropriate. i understand the -- made a recommendation that they would in the future, like their statute change in the future, be able to make recommendations about discipline, when there are

management failures, and that is important. the department is updating its manual to guide that, and we have worked here in this committee to get that change as well. those are important steps, but i think we have to set of processes that make clear where the decision-making lies and who is accountable. thepe in the wake of incident in benghazi, with all of the review of our processes and procedures that are taking place and all the reforms, that we are eating into that issue. when i say as i did in response to the chairman, that i will look at the processes, organization, and culture, that is part of what i'm talking about. we need to understand how decisions are made and who is accountable. i look forward to engaging with you on it. >> one of the things you will be involved in is helping establish the balance between engagement and security. and it is obvious that that particular incident would highlight that more than any we

have seen, and i look forward to your work in that regard. i look forward to working closely with you. on the issue of the -- it seems to me like that is something we should be able to resolve really quickly and easily. i look forward to talking with you about that. thank you for your desire to do this. we look forward to you to a really good things at the state department. i am glad you are willing to do this. >> thank you. >> thank you, senator corker. let me say i appreciate the ranking member's desire to have a state authorization and there is not anybody who would want to see that more than that chair. i would hope that maybe we can get there. what we will need from members of the committee is a commitment to an authorization that is not a christmas tree of seeking to have their foreign policy views become the policy of the state department. if we want broad approaches for the day to partner in terms of how it structure might be and

what we ultimately want to offer his eyes -- to authorize in terms of its missions, those are great and i totally support that. but the reasons we have not had a state department authorization and nearly a decade is it became pursuele for members to their individual foreign policy desires. it went far afield from an authorization. if we can get there, i would love to be able to do that. respond, since there are editorial comments being given, none of the folks on this side of the dais were even hearing 2003, so i think we should be given -- >> the good news is that i should not that -- i was not here in 2003 either. >> i wanted to talk about the things that i wanted to put on that -- [laughter] i will make a statement and i think your answer will be yes, so you agree our fourth

assistance should reflect our values, right? >> yes. ideas about how we do that in our foreign aid and other programs? had do we tie our interests and values in our foreign assistance programs? >> thank you. tois a balance we have strike. we must ensure our assistance is directed to those places where we have a national security or a vital national interest. then we need to assess when we have concerns about a particular activity or statements of a country, what we are doing with our assistance. are we directing it to civil society groups, pretty democracy, and what are we doing with that, and that is an important principle we need were through. balance --ioned as a i would argue and you would agree that oftentimes there are actually not -- they are not mutually exclusive.

whether it is the issues of modern day slavery or religious liberties or any other human rights causes, so i think that is important. do we have an example that we have to look at and say this is a place where we have found the right balance or we have been able to use foreign assistance and foreign assistance programs and engagement as an opportunity to do both, to further our interests and our values simultaneously? >> you're right. not mutuallyously exclusive. there are many places around the world where we have been able to -- address our values and i would be happy to go through those. it is important that we understand what we're trying to achieve with our assistance and what outcomes we are looking for. -- itan afford to bring is an important thing to bring into the equation. l 1271 --e

familiarknow if you're with that, but i would encourage you to look at it and see how we can gain traction on that, because we live in a time where if you do these polls, everybody wants to balance the budget, but the only thing they are in favor of doing is cutting foreign aid. you cannot cut the budget by doing that. it be counterproductive. we have to the able to justify to the people why at a time when we have such extraordinary challenges domestically we are still engaged locally. part of being able to make that argument are having programs that have clear goals and any instances where that money is being misspent and wisely spent undermined that argument. this is a challenge we face him and it is important and i would urge you and others to get behind the idea that we need to

do that is not just the right thing to do, but also as a way to ensure that the long-term viability of our international engagement, and i think that is important. an editorial remark i would make is increasingly over the last 10 years so much of our foreign policy has been viewed in the lens of military engagement as that is the only tool in artful box when our most powerful tool is proactively engaging around the world with assistance programs that further our values and interests and prevent these situations from arising and helping our allies transition to a more sustainable pathway. my last question is in january the international advisory board ofommended the implemention a process for security capacity building programs, measuring effectiveness against goals, and not just for money or inputs provided. in april the president issued a policy directive hedging to

inform ozzie with rigorous analysis and assessments and evaluations. can you provide us any explanation of what measures have been taken thus far to further that rigorous analysis assessment, etc., as a relates to security sectors? >> thank you very much for raising these issues. i have a great deal of interest in enhancing the capacity of the our analysis use and evaluations to inform our budgeting, to inform our policy. i would like to work with you on the legislation you have introduced. if confirmed, when working at the office of management and budget, i was working as part of a team to ensure we were doing more data and houses across the government to inform our budgeting, and it is an important tenet of the work we can do together. is important and justifying 1% of thement, where

federal budget is in foreign affairs. secretary kerry police we need to make the case for this investment. it is important for us to understand that programs do not work and why. i would be happy to follow up with you on the specific question you raised about the scrutiny assistance program. i think there have been some good steps taken, but we will follow up on more detail on that. >> i had one more, and this will save us a paper here. the 2010 quadrennial diplomacy development review process acknowledged that the state department had a shorter to of skills necessary for modern-day diplomacy. if you could describe what that gap then is and what you view this at start take to develop our professional skills of our foreign service offices? >> i think there are a set of skills we need to hone in on to align what our policies

objectives are today with the skills and training that our foreign service officers get. i mentioned in my testimony our economic impact, economic diplomacy. we did not write now train our economic officers in the foreign service and how to engage with u.s. business and the folks they deal with overseas at their posts how to make those connections. that is where we need to do better in. there is discussion around our language training, but i would like and i have talked to the secretary about this, really evaluate where our guests are in training and what are the best ways to fill those. one of the most obvious places to begin is with the economic developed work. thank you. >> thank you. senator johnson? >> thank you. i would like to welcome you and your family here, and also i appreciate your willingness to serve. i also appreciate your top priority will be injuring people in posts are safe and secure.

i come from a manufacturing background. of continuousa improvement. a vital step of any improvement process is looking at what went wrong and try to get to the root cause of it and truly evaluate that. we have to learn lessons from the past. with that in mind, i would like to ask you how much have you delved into what happened in benghazi? which of the reports that have been issued have you read? let's start there. >> thank you. i have read the classified and unclassified versions. i have read the inspector general's report. i have read the management review that was recommended by the -- and one other i cannot think about. i have reviewed most of the major documents that have come out. >> the committee of homeland security issued a report -- did

you read that one? >> there are five committees on that one. have you also received other briefings on benghazi? >> have not received secure briefings on the offense of benghazi. i have been engaged in conversations around implementation of the renditions from -- and the other reports. >> you are pretty thoroughly briefed in terms of what happened. i want you to put in your own words what is wrong there. what was the breakdown? securityclear that the was insufficient to deal with the attacks that occurred. -- theere insufficient use of fire as a weapon and other tactics that were used overwhelmed the security and the officers who were there and it was a breakdown in security. >> why was the security insufficient?

what was the breakdown at the state department, because there were cables going back and forth , the teacher ration of security situation seem to be pretty well requestsd there were that basically were denied. people within state said do not ask for additional security. what went wrong in the state department? >> accountability review board when looked at this found the request came up the line for security measures and personnel in benghazi were largely granted , but there was clearly a problem and it was insufficient. i am committed to ensuring that going forward we have the right processes in place -- >> let me stop you. are you saying you really believe that the request for security were granted by the state department? is that your understanding of it? >> many other crests were granted. -- many of the requests were granted. i am nominated for a position moving forward, looking at

security. i am looking at how we will implement the regulations and the other reports out there to ensure this is not happen again. i am not an expert on everything that happened at that department before i got there. >> i think you need to fully understand what went wrong in the state department, because those security requests were not granted. they were denied. not only was it pretty not beefed-up, but it was ramped down. you need a thorough understanding. the american people need a more thorough understanding, which leads me to my next point. assuming for my constituents they continue to demand to know am incredibly i frustrated that we have been denied access to the survivors to get information. do you believe that the senate attackmonths after the -- do you believe the senate should be refunded survivors of the attack? >> there are discussions right now with congress about access to the survivors.

the department of justice has raised concerns about their testimony and their briefing of congress as it would relate to prosecution of the criminals in this case. the state department has raised concerns about the security of our professional security officers, and i am confident and accommodation can be reached, but there are legitimate russians being worked through now. >> do you think 14 months is long in terms of gaining access to survivors? >> there has been an arrest him out of court nation between the state department and congress. secretary kerry said he was committed to working with you to answer any legitimate questions respecting the oversight responsibility. i feel the same way. i look forward to work with you going forward, and i'm confident in the case of survivors that we can work through an accommodation. >> that is a allen sing act. press getting individuals that we do not seem interested in picking up for identifying or finding versus the american people's right to know and

congress'oversight responsibilities. can you give me your evaluation of the balance between those two? oversightgress' responsibilities are important. i worked in this body for a long time. i checked its proprietorships -- its prerogatives. many hearings, lots of briefings, and that cooperation will continue. we have to take into consideration when we are having a discussion about accommodation with the impact would be on the prosecution of the criminals who perpetrated this terrible crime. we have to think about the safety of our officers at the state department. i do not inc. -- i do not think that we cannot come to agreement to work together on this issue. >> i'm not a lawyer or prosecutor. congress,members of maybe in a secured briefing, getting information and being in to inter--- being able

interview survivors, how would that affect prosecutors when we know exactly what they did? how will that harm the prosecution? >> i will not speak for the justice department, but in communications, they have indicated that should identities become known, it would be impossible for the defense to do research on them, that their safety and security -- >> that speaks to me we should do this in a secured setting. >> this is not for my decision. i do not want to speak for justice, but i look forward to working with you if i am confirmed. >> i think the whole smokescreen of having prosecutions need a reason we are not able to get access to the survivors is strictly that. it has no basis. it is an excuse, a very poor excuse. thank you, mr. chairman. >> thank you, senator. think that our colleague might very well want to

recommend himself to the justice department to pursue that as well, that i think the nominee has limited capacity in that give a legal analysis of where the justice department views are, but i understand your concern and that made the an appropriate way to get to an accommodation. one final question -- international affairs spending has gone from 2% of the budget in 1965 to less than 1% today. which means that the challenges havewe have faced globally dramatically multiplied. we are doing active diplomacy terms.r less in relative so one of the most significant challenges i think or have an one of the assets i think you can definitely bring to this job , i would like to hear you thinking about, how do you think about international affairs

spending most effectively, and efficiently in the context of what is our stated foreign- policy? >> thank you. it is an important investment of just 1% of our budget. our mission has been getting smaller. it is not getting less complicated. we have to look at both sustaining that investment, but also how did do more with less. at ai was at omb it was time when overall appropriations were coming down. we had to look across the entire federal budget figure out how to make difficult trade-offs in order to fund our priorities and make cuts and trade off some programs. that experience and perspective is what i would bring into this position if confirmed. gives us andr opportunity to look at what our policy programs should look like, and that helps our roadmap

for how we should structure the budget. we also have to, as i was saying to senator rubio, we have to do more in terms of our valuation and analysis to inform the efficacy of our programming, and we can look for efficiency in the system when violating them and find out where there are duplications and where things are not working. we have to make the build trade- offs in some of our programming when we find some of ourselves with reduced overall appropriations. we need to do that smartly, need to ensure it is consistent with our policy and refax our values. the concerns are relevant to what we are living in today, living with sequester and looking at discretionary caps for the next several years. >> [indiscernible] [laughter] >> i hope it is an old books and. >> one of the areas i hope you at confirmation is our alignment with confirmation with aid, and there is concern

that that is coordinated. seeing no members before the committee who want to ask a question, the record is going to remain open to the close of business tomorrow. there may be questions for the record for you. i urge you to answer them themts initially -- expeditiously. you're excused out. >> thank you very much. >> let me call up -- i'm going to call them up and get them ready. our second panel today are dr. sarah sewall and richard stengel. i asked them to come up to the witness table. mewe bring them up, let introduce them briefly. is nominated to be

civilian secretary of security, democracy, and human rights. she will oversee conflict and stabilization operations, counterterrorism, human rights, and labor and international and law enforcement population, refugees, and migration. the new mandate of this position is to build and oversee a therent capacity in department that promotes stability and security and conflicted states and supports human practices and policies. it is a large and complex portfolio. i understand having three teenage daughters that maybe you can, was all of that with a large and commerce portfolio. i am interested to hear your intentions when it comes to civilian security in latin america. syria plus growing refugee problem, and human trafficking. i'm interesting in your plans of your role for coordinator

for veterans of affairs. richard single is the secretary -- is the nominee for the under secretary of state for public policy. he would manage all resources and oversee efforts to build lasting ties to cultural diplomacy. he would help shape foreign public opinion, including oversight of the first should she counterterrorism committee cases. he is a journalist, managing editor of "time" magazine. i look forward to hearing your around thefforts world. i would be inefficient in your views about how we might maximize the role of new media and technologies in our national interests. that senator schumer wanted to also be part of welcoming you to the committee, and when he gets here, we will

certainly pause for that opportunity. but in the interests of time and the fact that there will be votes shortly taking place, i would like to move your hearing along. as we did in our previous panel, if you have family and friends, please feel free to introduce them to the committee. we welcome all of them, as i have said. service is an extended reality for families, and we appreciate beilies' willingness to part of the sacrifice of that service. your full states will be included in the record. we ask you to summarize them in five minutes so we can enter into a dialogue with you. we will start with dr. sewall. you can put your microphone on, please. >> thank you, senator. i am i am almost hunted in light of the -- i am almost tented in light of the articulate defense of state department programming put forth by senator rubio and yourself to associate myself with the remarks. >> that will not hurt.

senator menendez. thank you, all members of the committee. i am deeply honored to be with you today and to be considered for the position of undersecretary of state for civilian security, democracy, and human rights. it is the trust placed in me as a nominee by president obama and secretary kerry. if confirmed i pledge to work your colleagues to advance american values and strengthened the security of the american people. i would like to thank in advance, although not a knowledge in person, my husband who is a public service himself daughters as well as our youngest sophie, not quite yet 18 years -- not quite yet a teenager. they cannot be here today, and their enthusiasm for my return to public service is an arrest give. having worked on capitol hill i

have respect for the institution of congress and the members of the house and the senate. me themitchell taught value of listening carefully to alternative perspectives and ideas in the legislative process. he always made time to consider the views from both sides of the aisle and it is in that spirit of openness and respect that i appear before you today and with which i would serve if confirmed. if confirmed, i would be eager to work with you and learn your thoughts about this new undersecretary position and how it's nearly $4 billion in programs and numerous people overseas and in washington and more effectively promote good governance and human freedoms. j is a highly operational identity, that for the first time combines hard and soft power tools and policies. the undersecretary must prioritize synergies among these programs, strengthen and civil

andety partnerships, help the people understand why it is in their interest to make these investments in human security. budget mike turner has focused on protecting civilians and promoting human rights. i've done this from different vantage points. i served in the pentagon as the debbie assistant secretary of defense peacekeeping. i have always been most interested in how the united states can best realize its policy goals through actions. that is why during a decade of teaching at harvard i focused my research on operational challenges to realizing human rights. teaches the best policies will fall if they do not have effect of the limitation. today, in light of tightening budgets, the united states must

make civilian power more efficient and creative. if confirmed i will work with you to use our resources strategically walk continuing to ensure these programs to liver results for america and for our discussions -- our department's friends. words ringer king's true today, when the world a safer, americans are safer. when the world is more prosperous, americans are prospering. when we invest our values in preventing conflicts, we reduce the odds that the military will be asked to sacrifice for us tomorrow. in our nation is true to its principles of it is all that stronger. i share secretary kerry's view that strengthening civilian an arrestffers return on investment, not only in the conflicts we avoid, but in the well-being of future generations of americans.

it would be a privilege to bring mike's princes and convictions convictions to the office. i thank the committee recommitment to these issues and for your consideration of my nomination. i look forward to your questions. thank you. >> well, professor, you did not use her full five minutes. that is remarkable. [laughter] call uponl, before we you, we have a vote going on right now. we would like to have your full statement. and then we will recess before the questions are asked, go vote, and the return. >> mr. chairman, i will not be able to come back because of a meeting with our u.n. ambassador, and i want to thank you both coming from the private sector, wanting to serve in the public-sector, and i will forward some questions for the record down the road, but i meetings inh have our office that i thought were

perfect, and i want to thank the chairman for calling this, but i will not come back. it is not new to a lack of respect, ok? thank you. >> thank you, standard or -- thank you, senator worker. >> mr. stengel? >> chairman menendez, members of this committee, it is an honor to be here today and i'm humbled by the trust placed in the by president obama and secretary kerry. your admonition about bringing children, so i did bring mine today. my two, mary, is here, boys, gabriel and anton, and my myce, amended, who is a -- knees, amanda, a senior at georgia. there's one person who's absence i greatly missed, who is my father who passed away this summer. he served in world war ii in the air force, and he always wanted me to go into public service,

and so i am said he could not be here today. be new confirmed, i will to government, but i have been engaged in a form of public diplomacy for much of my life. as the editor of "time those quote for the past seven years, it was my job to explain america to the world and the world to americans. he did that for more than 50 million people on every platform under the sun, twitter, facebook, google plus, even paper. and before that, i was ceo of the national constitution center in philadelphia where my mission was to affirm the centrality of the american constitution them up for the record public, and for foreign visitors. and then a decade before that, i had the privilege of working with nelson mandela on his autobiography and while he was writing his country must constitution, and it was inspiring for me to be there in africa while they were writing a constitution, a modern constitution, based on those same principles that have been

articulated by our framers 200 years before it. they day, everywhere around world, there's a great global debate taking place. it is about the nature of freedom and fairness, about democracy street corners, coffee shops. it is also happening on all of these new social media platforms. the rage, the scale, and the speed of that debate is like nothing before in history. i have been involved in that debate my whole life. america must be involved in that debate and we must leave it. every day there are attacks about american foreign-policy that cannot be left to let stand. -- pat moynihan famously said, you are entitled to your own opinions, but not your own facts. or and more these days, people seem