time when the federal reserve can start withdrawing the monetary stimulus that has been so critical to our recovery. but in my view we still face challenges. most americans are still waiting for the recovery to show up in meaningful income growth. long-term unemployment, while down, is still high. inflation continues to run well below target. as it has now for an extended period of time. so from my perspective, it's critical that the fed not put the cart before the horse and tighten too soon. you've said on multiple occasions that the federal reserve's timetable for raising rates will depend on the data. there are some who say the federal reserve should tighten preemptively based on unemployment or wage growth or at the first hint of inflation. without waiting to find out if it's a statistical blip. what would be the risk if the fed raises rates too soon compared to the risk of waiting?

>> well, if the fed were to raise rates too soon, senator, we would risk undermining a recovery that is really just taking hold. and is really succeeding, i think, in improving the labor market. as as i said, i don't think we're back to attaining yet conditions i'd associate with maximum employment or normal labor market conditions. things have improved notably. but we're not there yet. and so we want to see a healthy recovery continue. in addition, as you mentioned, inflation is running well below our 2% objective and while we think a significant reason for that is because of transitory factors, most importantly the

decline we've seen in energy prices, we are committed to our 2% objective. just as we don't want to overshoot 2% on the high side, we don't want to chronically undershoot 2% on the low side either. so before raising rates, we will want to feel confident that the recovery will continue and that inflation is moving up over time. there are also, of course, risks of waiting too long to remove accommodation. we have a highly accommodative policy that's been in place for some time. we have to be forward-looking. him as the labor market tightens, wage growth and is inflation can pick up to the point we would overshoot our inflation objective and him conceivably there could be financial stability risks and we want to be attentive to those as well.

so this is a balancing of costs and risks that we're trying to make in a deliberate and thoughtful fashion. >> i appreciate that. it's that balance that i hope your wisdom and those of your fellow board members can get just about right. because i could see entering and choking off recovery before middle class families actually feel its gains and trapping a too-low inflation or deflation set of circumstances. i appreciate that. let me ask one other question. i've heard several commentators say that the interest rate increased by the fed would signal quote-unquote confidence to the market about the health of the u.s. economy. and have a stimulative effect. do you agree with that theory? if so, wouldn't any so-called confidence effect be more than offset potentially by an impact of a rate increase?

>> i think it's fair to say that when we begin to raise our target for the federal funds rate, it will be because we're confident about the recovery and we are reasonably confident that inflation will move back to our 2% objective over time. but that confidence will reside in real improvements that we see in the underlying condition of households and businesses where we would not be attempting to somehow bootstrap an improvement in the economy that is purely occurring from a confidence effect that comes from our raising rates. there is reason, i think, to feel good about the economic outlook. households have gone through major adjustments in their balance sheets and are in better financial condition than they were.

the job situation is improving. and even though wages haven't been rising in real terms very rapidly, there are more hours of work and more jobs. so household income is improving. lower oil prices are boosting household income. housing prices have rebounded and that's helped a lot of households. and businesses are -- >> so in essence real confidence, not confidence that is spun. >> that's right. there's no spin here. it's our confidence in the economy has improved and when we raise rates, it won't be a signal in our confidence in the underlying fundamentals. >> thank you, mr. chairman. chairman yellen, good morning. thank you for being here this morning. >> thank you.

>> i'd like to change the conversation a little bit and talk about the insurance industry and its impact on places like south carolina where we have about $354 billion of life insurance in place. as we think through the transferring of risk that the insurance industry provides, i think it's a very important consideration. i'm a bit prejudice in this area. but i've spent 25 years in the insurance industry. i appreciate the fact that until the insurance company shows up the importance of how we impact the insurance industry to the fed i think will reverberate throughout the economy. i take very specific interest in the impact that the fed may have on regulating the insurance companies now that have been designated systemically important by fsoc and my thought is that last year, i believe it was, the president signed a law that clarifies the fed need not impose bank-like capital standards on insurance companies under its supervision. this is for very obvious reason. you look at the activities of banks, loans and deposits

comparatively speaking to the long-term risk that most insurance companies are holding their assets for, it's important to have that delineation and take a very different approach to insurance companies than we do other financial institutions. i know from experience that this is an important consideration. i guess my question to you is, what expertise does the fed have or plan to acquire as it begins to supervise insurance companies and how closely are you working with state insurance regulators? >> my answer would be that we have acquired expertise, we have hired individuals who have experience in the insurance industry and are trying to build our expertise there. we consult closely with the neic and with state insurance regulators and the federal insurance office. we're gaining experience because we are now in our fourth annual supervision cycle of savings and loan, holding companies, many of

which are -- some of which have significant insurance activities and of course we're -- several insurance companies have been designated and we're supervising those as well. we are taking the time and doing a the work that's necessary to understand their unique character statistics and -- characteristics and fully plan to tailor our supervision and capital and liquidity requirements for those insurance companies to make our supervisory regime appropriate.

they're very important -- there are very important differences between the risks faced by insurance companies and banking organizations. we have undertaken a quantitative impact study and are are actively engaged in working with the firms that we'll be supervising to understand the unique characteristics of their operations before promulgating supervision regime. >> thank you. you've answered my third question as well so i'll go through the second question at this point then. will the fed issue an advanced notice of proposed rulemaking before issuing proposed rules on insurance capital standards then? >> yes. we will issue proposed rules. we recently issued a proposed rule that pertains to our supervision of g.e. capital and we would do the same with the other firms. >> thank you. on on the issue of stress testing, i know the fed is through the supervision of bank holding companies and other bank nonfinancial companies, the fed constructs stress tests to determine how well the entity could with stand different

levels of financial distress. the fed currently has on its balance sheet about $4.5 trillion as a result of the q.e. program. much larger, of course, than any of the financial entities it regulates. but it appears that nobody is stres testing the fed. -- stress testing the saidfed. the proverbial fox is guarding the hen house, in my perspective. my question really is as you begin to unwind the fed's massive balance sheet, hopefully in the near future, what assurances can you give this committee that the fed will stress test its own q.e. exit plan? >> with respect to our balance sheet, let me say that we do stress test it and we have issued some reports and papers where we describe what stress tests would look like when there are interest rate shocks, how that would affect our balance sheet. and past remittances. but it really is important to recognize that the federal

reserve is not identical to an ordinary banking organization. first of all, capital plays a very different role in the central bank than it does for a banking organization. congress and the rules put in place regarding our capital were never intended to make our capital play the same role and it's not necessary for it to play the same role as a banking organization. importantly, unlike a bank, the federal reserve's liabilities are mainly reserves to the banking system and currency. and these are not like the runable deposits of an ordinary banking organization. so the risks that the federal reserve faces in our balance sheet are of a different character than those facing an ordinary bank. but that said, we do look at the likely consequences for our balance sheet of different interest rates scenarios.

>> certainly very different scenarios between the fed and the banks, without any question. but $4.5 trillion and the way that you wind it down would reverberate throughout the economy in a way that no other financial organization would have impacted. the path forward is incredibly important to the economy. >> that's one reason that one of the principles of our normalization plans is that we want to wind down our balance sheet in an orderly, gradual and predictable way. and we've decided to use as our main tool of policy when the time comes for normalization something that is much more familiar both to us and to markets and that is variations in short-term interest rates. of course an alternative to that would be to say when the time

comes to want to tighten monetary policy, we could begin to sell assets. that would be another way of going about doing business. but we have more experience and markets have much more experience with variations in short-term rates and we want to proceed in that way that's familiar to us, familiar to market participants and the public and to let our balance sheet play a passive role, to gradually diminish in size mainly through ending reinvestment of matures principal. -- maturing principal. >> thank you. >> thank you, chairman yellen, you're coming down to the home stretch here. appreciate all your good work and this incredibly important balance to get right as we start down a path of unwinding.

but i, like many of my colleagues, share with inflation is such a low rate trying to get this timing right is so critically important. one of the things, we've talked a lot about the status of the u.s. economy, but i want to raise three quick points. one, after the january fomc meetings, in your readouts, one of the items you mentioned were international developments. obviously disruption, potential in europe with the ongoing struggles with greece. china's slowing economy. can you rank or how will these international developments affect the fed's decision on timing on monetary policy? >> there are a broad range of international developments that we monitor and they do affect the performance, the likely performance of the u.s. economy and factor both into our economic forecasts and our assessment of risks.

growth in europe has been very slow. growth in china is slowing. the huge decline we've seen in oil prices has had repercussions all over the globe. in some areas, very positive. in other areas, negative. it affects our outlook, these developments, both through trade flows and through developments in financial markets. the attempts of many central banks to add monetary policy accommodation is pushing down longer run interest rates in many parts of the world and that's, as i mentioned in my testimony, spilling over to the united states. so there are many channels through which these global developments affect the u.s. outlook in both ways positive and negative.

all in all, so, factoring all of those things into account, while there are risks, again, both positive and negative, stemming from the global developments, we still think that the risks for the u.s. outlook are nearly balanced. that we've got sufficiently strong growth in domestic demand and in domestic spending by consumers and businesses, that the recovery looks to be on solid ground. we've just, as i mentioned in my testimony, had a very strong growth in the second half of the year. and looking forward and analyzing the factors likely to impact domestic spending, we're saying perhaps not so -- not as strong as we just had, but nevertheless above trend growth. and that really factors into

account all of the global consideration -- >> obviously international factors will affect your decision? >> they do affect our decision. >> i also want to associate my comments with senator corker's comments about -- i'd like to make sure we deal in a perfect world with currency manipulation, but currency manipulation to one could appear as monetary policy to another. as we've seen japan and europe move towards more monetary -- move towards more monetary, thinkin obviously one of the , effects of that has been strength in the dollar and hurts our exports. speak to that for a moment, if you could, and let me get the last 30 seconds at the end. >> you bet. i think we should be on guard against currency manipulation. the g-7 and international fora

have agreed and i know our administration, in dealing with foreign countries, really tries to crack down on currency manipulation. nevertheless, i think certainly it's a principle of agreed in the g-7 that monetary policy oriented toward domestic goals like price stability or, in our case price stability in maximum employment, this is very valid use of a domestic tool for a domestic purpose. it is true that the use of that tool can have repercussions on exchange rates. but i really think it's not right to call that currency manipulation and to put it in the same bucket as interventions in the exchange markets that are really geared toward changing the competitive landscape to the advantage of a country. >> mr. chairman, i would just, with my last couple of seconds, want to make the point that one of the things that has been absent from this discussion today has been -- we've talked a lot about your work, we haven't

talked as much about our work and need to still address our own fiscal policies. i would simply point out that because of the extraordinary remittances from the fed's expanded balance sheet, we've seen north of $420 billion in net additional revenue that has diminished our deficit. but that is not something that can be projected onto in the future. >> no. >> and as we talk about the times of raising interest rates and trying to get back to normalized effort, i would simply point out again, you know, 100 basis point increase in interest rates adds $120 billion a year on debt service. >> yes. >> and even c.b.o. projections at this point will show that debt service, with our current $18 trillion in debt, will exceed total defense spending or total domestic discretionary spending in 10 years. and that is not a good business plan for our country. >> absolutely true. >> thank you, mr. chairman.

>> thank you, mr. chairman. thank you for being here, chair yellen. as you know, wall street banks could profit handsomely if they knew about the fed's plans before the rest of the market found out. and that's why any leak of confidential information from the fed results in serious penalties for the people who are responsible. but apparently there have been no consequences for the most recent leak. according to public reports, scott alvarez, the general counsel of the fed, was puts in charge of investigating a leak from the september meeting. of the federal open market committee. nearly 2 1/2 years later the results of this investigation have not been made public. and no action has been taken. on february 5, congressman cummings and i sent a letter to mr. alvarez requesting a briefing from him in advance of your appearance here today.

but so far we have not received one. can you assure us that the congressman and i will get a briefing soon? >> i might say by way of background -- >> i just need a yes or no. i just want to be able to get a briefing on what has happened. it has been two point five years and there has been no public report on what has happened. >> we are trying to work with their staff on the process. >> i'll take that as he is. >> yes. >> ok, thank you. as you know, this past december, house republicans successfully blew a hole in godfrey protections by attacking the repeal of the swat push out role to a must pass government spending bill. that will appeal, which was written by city approved lobbyists, will allow the biggest banks in the country to continue to receive taxpayer protection for some of their

riskiest derivatives and swap. now, a month before the appeal, mr. alvarez spoke at a conference at the american bar association, an organization that includes many lawyers that represent the banks that are affected by the fed's enforcement, mr. alvarez openly criticized the swaps push out role saying, quote, you can tell it was written in morning and so i think it needs to be revisited, just to make sense of it. mr. alvarez also criticized the new role that doctrine put into place for conflict of interest at credit leading agencies saying, quote, restrictions on the agencies really did not work and it doesn't work, and it is more constraining than i think is helpful. so, let me start by asking, does mr. alvarez's criticism or

affect your viewer the board of federal governors? >> so, let me just say that over the years, we have had feedback that we have given on various aspects of. frank. >> >> i appreciate that, but these have comments he has made on dot frank and i'm just asking if they reflect your criticism or the -- your criticisms or the criticism of the board. >> this has provided a roadmap for us to put in place regulations. >> i appreciate that, ma'am chairman. but i need an answer. do his criticisms reflect your criticisms. >> i'm certainly not seeking in any way to alter dot frank at

this time. >> do you think it is appropriate that mr. alvarez took public positions that do not evidently reflect the public position of the fed's aboard. especially before an audience that has a direct financial interest and enforces the rules? >> no. i think the fed's position and my position is that we are able to work very constructively within the framework of dodd frank to tell the rules that are appropriate to the institutions that we have supervised. we are not seeking to change -- >> i appreciate that. we know that the fed's staff is a critical role in shaping dodd frank rolls and enforcing them. in case the swaps push out congress passed the law in 2010

but the fed and the occ delayed the effective date of the role until 2016, getting citigroup and other big banks time to get the role of appeal before it ever went into effect. did mr. alvarez provide input into the fed's decision to delay the effective date of the push out rule? >> i-8, i don't know. we usually have faith -- reasons for complicated rules that require adjustments by financial firms. this has been true of all of the dodd frank rolls we have put into effect. >> i think this might be worth looking into. the fed is our first line of defense against another financial crisis. the fed's general counsel or anyone at the fed past staff should not be picking and choosing which roles to enforce

waste on their personal views. so i urge you to carefully review this issue and to assess whether the leadership of the fed's staff is on the same page as the federal reserve board. to her, mr. chairman. -- thank you, mr. chairman. >> thank you. always last, hopefully not least, chairman yellen, i want to thank you for your responses. i did want to ask you one question on what your definition is of patients. i will not do that. i want to look the future instead. they really out my mother concerns. we always seem to be fighting the united state's congress. you are a very astute and very prospective student of the american economy. it is what you do every day.

i'm going to give you a chance, you have heard a lot of opinions and received a lot of advice from this panel. i'm going to give you a chance to give us some advice. when you look at leading and lagging indicators, especially leading indicators, what troubles you and what keeps you awake at night about the american economy in the next 10 to 15 years, and what advice would you get to the united states's congress in addressing those concerns that you have, looking right now at those indicators? >> well, i have said on a number of occasions, that the rise we have seen in inequality in the united states is a great concern to me. >> we discussed this last time you were here and you offered no solutions toward that problem. you might recall. >> i think there are a variety of different things that the congress could consider and policy measures that might be appropriate, but this really

isn't -- but this really is a domain for congress to consider. so that is one of the concerns that i have. >> so no advice on income tax credit? >> i'm not going to weigh in on things that really are in your domain to evaluate, so i think that is important and i would say something also in congress's domain is longer run issues with the federal budget. i think congress has made painful decisions that have now really stabilized the deficit very substantially and stabilized for a number of years the debt to gdp ratio but eventually debt gdp will rise and deficits will increase again as the population ages and

medicare, medicaid, social security get to be a larger share, a larger share of gdp undercurrent programs. there are a lot of ways in which these are problems we haven't known about for a long time. i also worry that if we were to again be hit by an adverse shock , that there is not much scope to use this fiscal policy. it was used in the early years after the financial crisis. we were in large deficits, but in the course of doing that, the gdp ratio -- the debt to gdp ratio rose and for another negative shot to come along, it is questionable how much scope we would now have to put in place, even on a temporary multi-year basis expansionary fiscal policy. i think it is important to deal with these issues. >> but for the congress to do

so. >> but your concern about scope does not lead you to believe that interest rates should be adjusted at this point to give you the flexibility to use interest rates, should we receive another shock? >> well, the fed would of course use the tools that we have to try and achieve domestic and but, i think, having fiscal policy the available as a tool is important, as well. >> if we look today at the american economy and some of the challenges, and you and i have been privately about this, the millennial's. savings patterns and consumptive patterns, the shared economy what concerns you about the now eight years of change behavior and consumption. what concerns you about those issues and do you see those changing long-term consumptive

patterns that may present some interesting patterns for the american economy? >> i think we are just beginning to understand how the millennials are behaving. they are certainly waiting longer to buy houses, to get married. they have a lot of student debt. they seem quite worried about housing as an investment. they have had a tough time in the job market. and, you know, exactly as the economy strengthens, i expect more of them to form households of their own, by holmes -- by homes. >> for that they experience a change in consumptive patterns that show unique challenges whether it is sharing automobiles, not buying homes doing the things that they have

now been to accommodate their economic challenges in the long-term. and i think that one of the things that we need to do much more carefully in the united states congress is to begin to look at not just having a discussion about monetary policy, but looking at fiscal policy, whether it is tax reform or whether it is in fact taking a look to look at the market to begin to develop an economy that the millennial's will fully participate in. and i hope you continue to think and provide us with advice that is extraordinary valuable. to i. >> thank you, mr. chairman. madam chair, to our four year service. i apologize i have had to go in and out of other committees. i know this subject has been brought up.

, but the issue of wage stagnation that we have seen an issue -- and student debt, when we look at the student debt and the numbers are so high, but when i graduated from college, you could work an entire summer and wind up paying about half of what your tuition was. you may not have an exact measurement, but one of my great concerns has been, in some areas of the country come how do you build up the housing market when the young people who want to buy a house, the money that i saved up, that time a 20% down payment, is now in many cases being used to pay off a student loan and it is a box you can almost never get out of there at how big a drag do you see that being on the economy? >> so, it is a little bit hard to tell. the housing market is it not recovered in the ways of i

would've anticipated. household formation has been extremely low in the united states. it is hard to tell. you have many young people who are living with their families still. it is hard to tell whether that is because of the student debt for because of a weak job market. my guess is that the economy continues to improve. we will see and approve an in-house formation. we will see many young people who may decide they would rather rent than by holmes. that will give rise to a boost in multi family construction even if not so much the single-family construction, but the housing market has been very depressed.

nevertheless, in spite of that the economy as a whole on the job market, has had sufficient strength to recover. >> my other concern in that area is when you see a young person who looks up and is dealing with the $100,000 in student debt and they have this big chunk of money that goes off every month to pay that down, those dollars are dollars that are never used to go to a restaurant, never used to maybe buy a car, never used to travel somewhere, and so overall, job wise, it seems to hit or make it more difficult in all the areas to continue job creation. >> it is true, but it also remains true that the higher education boost income and is tremendously important. it is not always the case, not for every individual, that it is a good investment, but certainly on average it has been a very important and worthwhile investment.

i think to my mindset, i think of the other side of that. >> i completely agree on how wonderful and investment it is. i just want to make sure that we can get that wonderful opportunity without saddling yourself for years and years as you look ahead. >> the debt loads are very large and may have increased a great deal. >> one other area i wanted to ask you about his cyber security. i know that the fed has certain things they focus on on a constant basis. in the area of cyber security it is, from all the financial i talked to, it is a concern. how big a risk to you see that and how big an effect on the financial institutions do you see this being? >> well, i think it is on everyone's top list -- the top

of the list of concerns that we have about the financial system about the problems facing financial organizations. i would include the federal reserve and that, too. it is a top concern of viral, -- it is a top concern of our own, given that support systems for the consumption in of the payment system of the u.s. and global economy. internally we are paying a great deal of attention to make sure that we are addressing ever escalating threats to our own operations. the banks that we supervise we are very attentive and have experts who work with those banks to make sure they are attentive, it is a larger problem. this is one where cooperation is needed among the card systems,

retailers, and others involved in the financial system, and conceivably, legislation might be needed in this area. >> thank you. i will conclude with this, for the state i represent, indiana we for many years were hit very, very hard in the manufacturing sector because of currency manipulation among very -- many other areas. i know this has been mentioned but i would like to make sure that you keep a close eye on this because when we talk about manufacturing, the ability to be competitive, and all that was ever said to me by our manufacturers were, if it is a fairfield, we will do fine. if the game is rigged,, i do not know how we win the time of -- that kind of game. i have always had the same feeling and my ranking member in ohio has dealt with this a lot

with his manufacturers, as well. that is currencies are fairly valued and we are not successful as manufacturers, they have always said to me, if i cannot win a fair game, that is not me. but if i wind up in a situation where it is the manipulated against my company, it makes it awful tough to keep those workers working and to keep our economy growing. so i would just ask you keep that in mind as you move forward. thank you so much for your service. >> thank you. >> madam, chair. you mentioned that the current unemployment is listed at 5.7% however, one alternative that seems to fully capture a better sense of labor force participation is the u-6 measure that was total unemployed and underemployed at 11.3% as of january 2015. this measure has not dipped below 10% unemployment since

before the crisis. according to the bureau of labor statistics data, there are now 12 million more americans no longer participating in the workforce in january 2009. do you agree that the unemployment number that you cited, 5.7% in your opening statement paints a rosy or better picture of the two unemployment rates that i just said? >> senator, it is the u-6 that is a broader measure of unemployment. it includes large in the attached and discourage workers. and also unusually large number of individuals who are working part-time who would like for them jobs. so it is a much broader indicator of underemployment or

unemployment in the u.s. economy , and while it has come down, it was 12.1% one year ago, it has come down from there to 11.2%. it definitely shows a less rosy picture than the 5.8 -- 5.7% number. i will mention that we don't at this point, despite the unemployment rate has come down we do not feel that we have achieved so-called, maximum employment in part of these recent labor force percent despotism -- participation has come down and is trending down. that is something that will continue for demographic reasons . i do not expected to move up over time, but i do think a portion of the press labor force participation does reflect a

reciprocal grease -- weakness in the star job market and more people enter. >> but you basically conceived that 11.3% of underemployed people, that is not good in this country, is it? >> that is an abnormally high level and it signifies weakness that would be good to address. >> the financial stability board, fsd, plays an important role in implementing financial reforms. including completion of capital framework that you alluded to four banks. the federal reserve is a member of this fsd, the financial stability board. given that the financial stability board is not accountable to congress or to any branch of the u.s. government, to my knowledge where do these financials stability reforms sit in the

u.s. regulatory system? my question is, does the federal reserve treat them as mandated directives or suggestions or what? on what statutory basis does the fed have to implement the financial stability board's reforms for bid and question mark do you think that the fsb decisions are important enough that they should be fully vetted by the foc before implemented in the u.s.? they are all tied in. >> a number of u.s. regulatory agencies participate in the fs the, including the use administration -- fsb, including the use administration and regulators. nothing that is decided in fsb has affected the united states unless relative agencies proposed rules and those are publicly vetted through the normal public comment process

and the role making process. unless we go through all rulemaking process, but there is a good reason for us to participate in these international fora. financial markets are global. if we take actions to stiffen supervision and regulation and the united states and other major financial centers do not act in similar ways, we will just see activity move out of our borders to other parts of the world. i do not think that would make for a safer global financial system, so we do want to be part of international discussions that lead all countries to work harmoniously together to try to raise the standards and maintain

a lawful playing field and that slightly participate. i think we do play a leadership in this organization. >> but you don't need to accept the fact that their recommendations are verbatim? >> no, we do not. and after we have put in place tougher standards that came out. >> ui. "the wall street journal" recently reported that the federal reserve surcharge for the largest banks is hurting u.s. banks because it is not on par with what for regulators are applying to foreign banks. the article also indicated that the fed's proposal is going beyond the international standard, roughly doubling the surcharge of big u.s. banks. we all want our banks well-capitalized. i think that is very important but does the fed's proposal indicate its belief that foreign banks are not adequately

capitalized question mark that has been said before. when they have stress test they're more stressed probably a lot more than our banks are. >> our proposal embodies our own analysis of the cost to our economy and financial system of possible distress is the largest and most systemic organizations we chose to propose surcharges -- capital surcharges that rose above the levels that we had internationally because we think this will make our financial system safer. there are other jurisdictions that will similarly put in effect the super equivalent regime.

switzerland is an example of that and there are other countries that have gone a similar route. we look forward to going think it is important for the most systemic institutions we did think it is important for them to hold appropriate capital and especially when it is an advantage and not a disadvantage. >> madame, chair, some of the large foreign bank sector business in the u.s. comedy, do you hold them to the same capital standards that you do our banks? and if not why not question our >> well, we have just put in a

rule pertaining to foreign banking organizations that would ask them if they require them to form intermediate holding companies that would contain activities in the united states. that is a way to subject them to the same capital and liquidity standards as u.s. firms doing business in our markets. >> shouldn't -- in other words, the foreign banks, as i understand what you are saying, they should not have an advantage of lower capital standards that are banks, when they are doing business in the country? >> well, to the extent that they are doing business in this country, we are going to subject them to the same standards as our banking organizations. >> to eye, mr. chairman. just do, and a couple of questions and then this will wrap up. i understand, madame chair

your reluctance to weigh in on specific policy issues that are the province of the congress such as the earned income tax credit. i appreciate your bringing attention to those issues by which taxpayers and workers will benefit from the itc. try to force is another matter. your predecessor had labeled currency manipulation and effective subsidy, his words. ohio manufacturers as indiana senator mentioned, must compete against foreign competitors that are subsidized. i agree with your statement that this needs to be addressed to questions, first about living wills. the fdic, last summer, seemed in a position to clear -- to declare the living wills of some of the nation's largest banks not sufficient. instead, the fdic stepped back and together, you and the fdic asked for re-submissions in july. a few questions -- a two-part question, are you prepared to declare living wills during this

round of submissions not credible if in fact they are not? and what actions were you to get living wills are deemed insufficient? >> so, we have worked, as you mention, closely with the fdic to give guidance to the largest firms on what we want to see what changes we want to see in their living wells in order to improve their resolve ability. there are significant changes we have asked for, some pertain to their legal structure, the ability of critical operations that support an entire organization to confirm the situation of the stress to supply and make sure and hold the company structure that would be functional to promote early

bankruptcy. we agreed with the fdic on what we want to see and we are working with the firms to make sure they understand what we expect. we expect to see we submissions of his plans by july 2015, july of this year. >> let me interrupt. are you willing -- are you unwilling to accept by saying you have a us enough information to comply by july? are you unwilling, will you not accept that answer? >> i feel with adequate information and detailed feedback, and if we do not see the progress we expect, we are fully prepared to declare the living wills to be not credible. >> ok, that is good to hear.

earlier this month, the story broke about account holder data that reveals that their swiss banking arm collaborated efforts for some of the holders to engage in tax evasion on february 10. i asked ms. hunter what steps her agency, the fed, your agency, had taken in regards to the allegations. i had gathered from some individual u.s. account holders that have been undertaken by irs last week, geneva prosecutors raided the private bank officers of hsbc as part of a new money laundering investigation. we know hsbc has a history of major u.s. sanctions, major money laundering violations, they now face major new charges of facilitating tax division. i know you may be unable to address the details of an ongoing investigation, but summarize for this committee, if you would, madame, chair, what

the fed would normally do to pursue allegations like these regarding tax invasions by a major financial institution. how long you would take an investigation to take, not specifically here if you're unable or unwilling to share that, but how you would normally do it. what kind of steps you would normally take with other federal officials with other countries regulators. >> well, we would have some responsibility for this if it affected the operations of a bank in the united states. in this case, the information has been provided to the justice department. the justice department has primary enforcement responsibilities related to u.s. tax laws, along with the irs and the justice department normally cooperates with us and provides information to us if they think we would have

jurisdiction that thinking loss of been violated in the united states and that we should take action. in this case, the justice department has not provided us with information. >> do you ask them? unless they make the first move? >> we have not been privy to any of this information and if they thought it appropriate, we would expect them to reach out to us. >> don't use reports suggest that there was no harm, but perhaps reason for you to ask the justice department for any of this information that they might think importing to this country;s financial system and to the banks and to you? >> this is pretty recent news reports that we have learned about this. >> ok. >> madam chair. thank you for appearing again before the committee. we look forward to further appearances.

this will conclude the hearing. thank you. >> the meeting is adjourned.

saying that. on this weekend's "newsmakers" our guest is bob good latte of virginia. he talks about president obama executive order on immigration and the debate over funding for the homeland security department. watch at 10:and 6:,000 p.m. on c-span . this sunday on "q&a" anthony matte on the challenges of police the city. >> it was clear to me that i still had an issue with public trust and people believing thinks that were said. regardless of the fact that i stand in front and say you are down 46% courtesy complaints are down 53% that lawsuits are

down that officer involved shootings are down and we are moving in positive ways people in communities say we don't believe it. >> sunday night at 8:00 eastern. >> we have received entries from schools in this year's student c-span on the three branches and you and during washington"washington journal" we will announce the winner and show the documentary. following the announcement see all 150 at studentcam.org. >> at cpac's ronald reagan dinner, mike penns was at a time speaker, a former u.s. representative who served six terms in the house from 2001 to 2013. c p.a.c.'s multi-day event is hosted by the conservative

union. this is 25 minutes. [applause.] >> thank you. thank you john. thank you for that warm introduction. good evening to you all. it's an honor to be with you among such a large group of so many americans, men and women who represent the bulwark of the leadership of the conservative movement in the united states of america. i appreciate that kind introduction but the introduction i prefer is a little bit shorter. i am a christian a conservative and a republican, in that order [applause.] you know there is an old saying

when you, you see a box turtle on a fence post. you know one thing for sure, he didn't get there on his own. that's certainly true of my life. and other than my faith, my family my beloved wife who is with me here tonight and my fellow hoosiers i rise to pay a debt of gratitude to you. i owe so much to cpac, to this movement, to the namesake of this dinner for the inspiration and opportunities i have been given. it is good to be back at cpac the premier conservative gathering in the united states of america! [applause.] we gather in 2015 in a challenging time in the life of this nation: an administration paralyzed by ideology and incompetence has weakened america's place in the world and stifled our nation's economy. the challenges we face are

daunting the choices we must make to meet them are not. 50 years ago, ronald reagan helped to birth our movement with his iconic time for choosing speech. today, i believe we are come to another time for choosing. you either choose to view america as a shining city on a hill that inspires the best in all mankind, or you don't. you either want america to stand by her friends and stand up to her enemies, or you don't. you either are for limiting the power of the federal government, or you are not. you are either for protecting the unborn and the religious liberty of every american or you aren't [applause.] i say tonight after winning both houses in congress more statehouses than ever before and electing 31 republican

governors in states like maryland and massachusetts and i will now, the american people have made their choice, and we are on the verge of a great american comeback for our ideals [applause.] i believe that because i believe in this movement. my grabbed father i am granted from this country from ireland. my 2k5d built a gas station business in a small town in southern indian. when i started in politics as a democrat when i heard the voicein southern indian. when i started in politics as a democrat, when i heard the voice voice. it all change for me. i lived the dream of becoming a congressman from that small town. and now i serve as governor of the great state of indiana. [applause.] >> you know i served 12 years in the congress and i love to say, if i only had 12 years left to live i would want to live it as a member of congress because

that was the longest 12 years of my life [applause.] the truth is, we haven't had a government as good as our people in washington, d.c. for some time. but it's worse today than ever before. at home, the errors of this administration are almost too numerous to account, whether it's the government takeover of healthcare or now the internet the president's unconstitutional executive amnesty or the war on coal. this is sapping our national vitality and threatening our prosperity. most americans understand you cannot improve healthcare by ordering every american tor buy health insurance whether they want it or need it or not. you cannot expect the internet to thrive under regulation. you cannot change the laws of this land by executive fiat and build an energy policy by raising the cost of electricity

on working americans. it should almost go without saying: obamacare must be repealed. the fcc's rule must be reversed. the president's executive action rescinded and the epa's war on american energy must end [applause.] but tonight t allow me to offer some advice some advice to the rising generation of leaders who are gathered here at cpac and may be looking on from across the country of how we might confront the challenges we face with renewed focus at home and abroad. first, let me submit the 2006 theme could actually be the first foreign policy national election since 1980. sadly, this administration has reduced our army to its smallest size since 1940. the navy has fewer ships than at

any time since 1916, and our air force has its smallest tactical fighting force in history. now, history teaches that you cannot reduce our military strength without provoking our enemies. weakness arouses evil. as we speak, isis is setting up franchises across the middle east and is on the offensive across the arab oral. now the president says the jobs are the answer to violent jihad. well mr. president jihadi john doesn't want a job. he wants to see paradise and i think we should help him get there as quickly as possible [applause.] and with the growing threat of home-grown terror, it's important to remember that our first line of defense is the right of self defense. now, more than ever the right

to keep and bear arms must not be infringed on the american people [applause.] but violence jihad is not our only threat n asia china is massively expanding its military. just last month the pentagon admitted that china's satellite and ballistic militants technologies real glaring parity with our own. a new iron curtain is descending down the spine of europe as modern russia seeks to redraw the map of europe by force. unlike the former soviet union that respected the strength of the west putin's russia ignores talk of sanctions, claims land and supports rebels in ukraine with impunity. and if we didn't know enough about the threat we face from iran, the heritage foundation's annual index of military strength released just this week

lists iran as quote by far the most significant security challenge facing the united states and it's allies and it's eye interest in the middle east. in a few days you are, our leadler come to washington, d.c. to warn congress and american people of the gathering storm he believes will strike his country and threaten ours if we allow the oral's most dangerous regime to obtain the oral's most dangerous weapons. traveling to israel last december i met with prime minister netanyahu in his private quarters on the very day that the palestinian authority was trying to force a settlement on israel through the united nations. it would have compromised israel's security. i saw firsthand the resolve and determination of this courageous leader who stands too often alone in times of great peril across the middle east.

speaker boehner was right to invite prime minister netanyahu to address our congress and our nation at such a time as this. israel's cause is our cause. israel's enemies are our enemies. if the oral knows nothing else let us know this: america stands with israel [applause.] the truth is, you cannot command the respect of the oral when you spend years apologizing to our enemies and abandoning our friends. lecturing the american people about the crusades while refusing to call islamic extremism by name is an abdication of leadership. as president reagan taught us peace comes through strength. providing for the common defense of the united states is the chief responsibility of our national government. with everything happening in the world, i believe my fellow

conservatives, i believe, it is i ammperative that consume -- conservatives embrace america role as leader of the free oral and the arsenal of democracy [applause.] i believe the time has come to dramatically increase defense spending to confront the knowable and unknowable threats of this still new century. without rebuilding our military no strategy or innovation no matter how brilliant will be sufficient to protect the american people and the sovereignty of the united states. among other measures we could revive the future combat systems of the army and the marine corp, resume the most addvanced fighter aircraft in the world the f-22 and rebuild our navy,ing a safer and more secure america is a stronger and more prosperous america [applause.]

of course our strength begins at home in our families, our communities and our businesses. and in our states. so second, let me suggest that our movement also put the promise of federalism and state-based reform back at the center of the conservative agenda in the 21st century [applause.] >> as president reagan said, it's important to be reminded -- and i quote, that the federal government did not create the states. the states created the federal government [applause.] >> our states are not territorial outposts of the federal government. they are a well-spring of our vitality and reform. he i should know. i come from a state that works [applause.] in indiana, we balance budget did and have a aa sachlt bond rating. that's a lot bet ten washington, d.c. we passed the largest state tax

cut in indiana history. we have the largest educational voucher program in america. i am proud to say indiana was the first state to withdraw from common core and amidst the shifting sands and amidst the shifting sands of contemporary culture and law, we have stood without apology for the sankctity of life, the importance of marriage and the freedom of religion t [applause.] it is working. our first two years in office unemployment has dropped from over 8% to 5.8%. we have seen 100,000 new private sector jobs created, and last year we led the nation in manufacturing jobs created. graduation rates are up. test scores are up and life is winning in indiana. abortion is in decline in the great state of indiana for the 5th straight year in a row [applause.]

now i didn't come here to brag on indiana. well i didn't just come here to brag about indiana. i came really to encourage you encourage each of you here today with a progress that's being made in indiana and in other republican-led states and to urge you as leaders and activists in this movement, to taken couragement from the successful results conservative policies are achieving in states across this country. after 12 years in congress and two years as governor i am more convinced that the cure for what ails this country will come more from our nation's state capitols than it ever will from our nation's capitol. so let's put state-based invasion and reform back at the center of our national agenda lights look at the example of republican led states balancing budgets and crafting solutions to the most intractable problems

facing our nation and that includes getting run-away federal spending under control room. when it come to most public assistance programs states are simply better equipped to innovate and manage anti-poverty programs than a fiscally responsible left. states can't print money. during my years in congress, i honestly never recall anyone focusing on revenue forecasts when we passed a spending bill. in indiana where we have balanced budgets, this year's budget will only be completed when we get the final revenue forecast to make sure that the income meets the out-go. states are better equipped to innovate and reform those antiquated programs. in indiana, we ended traditional medicaid for all able bodied adults and replaced it with consumer driven healthcare and health savings accounts. we have expanded access to healthcare not through government mandates and taxes

but your market based reforms grounded in personal responsibility and self reliance on education because we believe all honest work is hon ravnlt today, indiana is crafting plans to be the first state in america to make career and vocational education a priority in every high school in our state again. let them power the states with renewed flexibility with alternatives. let's give each other room as a movement to try new ideas and innovate without reflexively rejecting policies that break new ground. let's wean ourselves off defendant washington-centered notion that every problem must find an answer in the nation's capitol. some say the next nominee of our party should be a governor. i am certainly sympathetic to that view. all kidding aside what i can tell you i am looking for is not somebody that says send me to wafshtdz and i will run our

nation's capitol the way i ran our state capitol. for those of us who served in the city, you know, washington, d.c. is not a state litted really or figuratively. i am asking for someone who says: send me to washington, d.c. and i will make it more possible for the next person running my state to run it with more freedom and more flexibility. that's what constitutes it. when we reelect a republican to congress let's make it our aim to permanently reduce the size and scope of the federal government by restoring the states the freedom action flexibility and resources that is theirs under the constitution of the united states of america [applause.] finally, finally, as we drive to be the party and solution at home and abrought. let's be relentlessly positive i said for years i am a conservative, but i am not in a

bad mood about it. we need to be cheerful partisans, happy warriors. we need optimist. i was reminded of that when a man walked up to me a conservative older gentleman with sad eyes and a weary look about him. he said governor do you think the country is going to make it? he had all of the tail tail signs of excessive cable television viewing. i put my hand on his shoulder and said of course we are going to make it. we are americans. we always make it. we always find a way but you know that man and millions like him are worried, understandably about our country and our future

because of the failings of our national government. let's stop confusing the american government with the american people. ronald reagan said it best: we are a people with a government not the other way around. you know i learned that lesson a long time ago back when indianapolis was hosting all of the living recipients of the medal of honor. we were dedicating our memorial to all of those great men throughout history. i was a talk radio show host at the time. i had a privilege of interviewing those heroes. one was a man named jack lucas born in 1928 in north carolina. he enlisted in the marine corp in august of 1942 at the age of 14. s in august of 1942 at the age of 14. he was so determined to join

combat he stowed away on the ussdewell as they went into the south pacific. he turned 17 at sea just a few days before landing at iwo jima. on the day following the landing he was crawling through a ravine with three men and his rifle team when three grenades landed nearby. he used his own body to cover both hand grenades and saved his fellow marines despite suffering horrible injuries. he was say warded the medal of honor by president harry truman. i had him on my radio show and we talked about his experience exchanged pleasantries. he spoke with with humility about his extraordinary courage. and then i asked him a question.

i said, jack you are part of the greatest generation so you are probably really world about this country when you see young people these days. no moment, jack's countenance changed. >> old soldier looked at me and said son, you obviously don't have the first idea what you are talking about: i laughed nervously. i mean this was live radio and i said well why don't you enlighten me? and he did. jack said let me tell you something. he said growing up in the 1930 did, we didn't have any more sense than kids do these days. he said we wasted just as much time we partied just as much but when the time came we stepped up because we are americans. kids these days will do just the same thing. [applause.]

well as we say, you know, i have been told... i didn't know how right jack was until a few years later on a sunny morning in september of 2001. >> day, i found myself in my first temple as a member of congress on capitol hill. sirens blairing in every direction, columns of mud brown smoke billowing from the pentagon and the next day, there were lines outside every recruiting station in every city and town across this nation. jack was right [applause.] in the years that followed. in my trips down range to visit our soldiers in afghanistan and rack i saw the sacrifices of the new greatest generation who

just like jack said stepped up and did what needed to be done. so, i say with conviction tonight the american people today despite all of the failings of our national government, the american people today are every bit as strong and patriotic and generous and selfless and resilient and freedom-loving as they have ever been throughout the great history of this great nation [applause.] and our nation deserves leaders of our party and this movement who believe in the american people with an unshakeable faith and faith is my final point because we are not in this alone. the bible says we are the spirit of the -- where the spirit of the lord is there is liberty. when we hold the banner of liberty high, when we take up the cause of freedom at home and abroad, i believe, with all of

my heart we make his cause on this earth our very own and we do not fight alone. so my fellow conservatives, let's be confident, and let's have faith faith in america's unique responsibility in the world and in the founder's vision of limited and constitutional government faith in the boundless capacity of the american people especially in our states to craft solutions to the complex problems that are facing us and faith in him who will set this miracle of democracy on these wilderness shores that he will fulfill his promise for this last best hope of earth. we have come to another time for choosing and i believe with all my heart, with your help and with god's help once again america will choose freedom [applause.] thank you and god bless you.

>> kentucky senator rand paul was another speaker at this year's cpac conference. he talked about a number of issues including healthcare, the role of government and taxes. his speech is about 20 minutes.

thank you. thank you. thank you. there comes a time there comes a time in the history of nations when fear and forgetfulness cause a nation to hesitate, to waiver, and perhaps even to suck k /* subcomb. those who love liberty must rise to the occasion. will you -- will you lovers of liberty, will you rise to the occasion? when politicians accept censorship, when politicians accept imprisonment without trial, when politicians accept

torture even of the innocent as necessary then lovers of liberty must rise [applause.] we must rise and stand with our forefathers who stared down the king. we must rise as free men and women and reclaim our birth birthright. we must protect and defend the constitution against all enemies, foreign and domestic [applause.] our freedom is at risk from a supreme court that fails to protect leb irtty. in the mistake of the century, justice roberts affirmed the power of the government to force you to buy insurance. justice roberts argued that we must presume obamacare constitutional. i've got a better idea.

why do not we presume liberty? [applause.] just as we are presumed innocent so too, we should be presumed free. president obama's fundamental promise that if you like your doctor, that you can keep them, was a lie. obamacare at its very core takes away a patient's right to choose. i promise you this: as a doctor, i will take it and make it my mission to heal the nation reverse the course of obamacare, and repeel every last bit of it [applause.] we must remember that our rights are unlimited unenumerated and given to us by god.

don't let anyone tell you otherwise. the 9th amendment says that those rights not listed are not to be disparaged. you do have a right to privacy. your rights are who you are. your rights are what you are. your rights are in your dna and the government can quite frankly get over it [applause.] to defend our country, we need to gather intelligence on the enemy. when the intelligence director lies to congress, how are we to trust them? are we to trust them to collect and hold every american's phone records? i say that your phone records are yours [applause.] i say that the phone records of law abyiding citizens are none of their damn business [applause.]

from within our freedom is threatened by death and by a government that regulates everything that moves. we borrow a million dollars a minute. the president says he doesn't know where to cut. how about we start with a $2.4 million they spend on oragami condoms? don't tell me there is no place to cut. our freedom is the threatened from outside our borders. we must protect ourselves from jihadists without losing who we are as a people in the process. we must think before we act. we should promote stability not chaos. in the middle east one form of tierney replaces another. when secular desbespots grow

stronger. hillary's war in libya is a perfect example. hillary's war made us less safe. libya is less stable and radical jihadist run amok. they swim in our swimming pool. hill's war in libyas allowed thousands of surface to air missiles to fall into the hand of islamists. as she was declaring victory when i asked her if she ran ambassador's stephen's cables for help, she answered curtly, "no" as if she had more important thins. i believe hillary clinton's abdication, refusal to provide an adequate defense for benghazi should forever preclude her from higher. [applause.]

it's time for hillary clinton to permanently retire [applause.] in the middle east a dangerous and bar barrick cult has arisen. isis has become a threat to our embassy in baghdad and our consulate in erbil. it grew as a safe haven by arming rebels in the civil war. when i voted against arming the islamic rebels in syria, i warned that these arms might end up in the hand of jihadists and that one day, we might be forced to go back to fight against our own weapons. within a year that prediction came true. without question, we must now

defend ourselves and american interests from this barbarous aberration, but it troubles me we must now fight against our own weaponses. we need a national defense robust enough to defend against all attacks modern enough to deter all enemies and nimble enough to defend our vital interests. but we also need a foreign policy that encourages sainty not chaos. at home conservatives understand that the government is the problem not the solution [applause.] but as conservativeses, we should not succomb that a government will shouf become successful abroad [applause.]

that a government that can't even deliver the mail will somehow be able to create nations abroad [applause.] without question we must be strong. without question we must defend ourselves. i envision an america with the national defense unparalleled, undefeatable and uninencumbered by nation building. i envision a national defense that promotes, as reagan put it peace through strength. we must realize, though that we do not project strength by borrowing money from china to send it to pakistan [applause.] it angers me to see mobs burning our flags and chanting death to

america in countries that receive our foreign aid [applause.] i say it must end. i say not one penny more to these haters of america. at home our nation needs new ideas and nuances to old problems. martin luther king spoke of two americas. he described them as two starkly different american experiences that exist side-by-side. in one america, people experience the opportunity of life, liberty and the pursuit of happiness. in the other america, people experience a daily ugliness that dashes hope and leaves only the fatigue of despair. i was born into the america that experiences and beliefs in

opportunity. but my trips to ferguson and detroit and atlantaa and chicago have revealed what i consider to be an under current of unease in our country. liberal policies have failed our inner cities [applause.] liberal policies have failed our poor communities. our schools are not equal and the poverty gap continues to widen. it's time for a new way a way predicated on opportunity and freedom. those of us who have enjoyed the american dream must break down the wall that separates us from the other america. the president's answer is to raise taxes again. i believe we should do the opposite. i propose we cut everyone's taxes from the richest to the poorest [applause.]

in the coming weeks i will propose the largest tax cut in american history, a tax cut -- -- -- a tax cut that will leave more money in the paychecks of every worker in america [applause.] my tax plan will get the irs out of your life and out of the way of every job crater in america. [applause.] my plan will cut spending and balance the bucket in just five years [applause.] to fix washington we can't have business as usual. often bills are plopped on our desk with only a few hours to review. no one and i mean know one is able to read what is in the bill. i propose something truly

outrageous. congress should read every bill [applause.] congress should also live under the laws they pass. i have a constitutional amendment that says congress shall pass no law that exempts themselves. and finally if they won't listen we should limit all of their terms and send the career politicians packing. and while we are at it, maybe we ought to limit at a time terms of out-of-role federal judges as well.

spauz we need to return to our founding principles stand up for the entire bill of rides our future can include a road back to prostearty, back to respect at home and abroad. it should include a balance budget and a simple fair tax system. it should include a government that protects your rights and your security. it should include a stronger better, more agile military. it's time for a new way, a new set of ideas a new leader one you can trust one who works for you and above all, it's time for a new president [applause.]

[chanting.] >> thank you. i believe that america has much greatness left, but we must believe in ourselves, believe in our founding documents, believe in the economic system that creates more stuff for more people than in any time in recorded history. american innovations have changed the oral for the better. america is an idea factory and there are ideas yet to be born. you and your friends create those ideas. you are america's greatest hope america's dream, our best days are ahead of us. it is not the desire for wealth that drives us. what drives us is the desire for freedom, the history of man is the history of men and women striving to restrain the power of government and expand the realm of freedom. will you stand with me. will you fight for freedom? will you vote for freedom?

[applause.] let let us rise as one and shout from the top of our lungs for freedom now for our god-given liberty. let us stand together to make america once again the leading light for freedom and prosperity for all. thank you. god bless you. and god bless america [applause.] >> senator? >> thank you. thank you. >> senate? >> thank you. thank you. senator i am actually here standing with rand to ask you a couple of questions which have come from the audience here in the hall and from others throughout the building and we are delighted to have you here, and we appreciate the fact that you are taking the time to answer these questions from a

live audience. first of all, what do you think republicans have to do in order to win over libertarians mod rats and independent voters? >> >>? >> good answer. good answer. i think as republicans, we do a great job of defending the second amendment. and everybody knows that. it's good. i am a great defender of the second amendment. but we have to defend the whole bill of rights. to defend the second amendment, to defend the second amendment, you have to defend the fourth amendment. if the government can come in your house willy-nilly without an appropriate or a judicial or constitutional warrant then we don't have protection of the second amendment. you need the first amendment to protect the second amendment. but if you want to talk about people who haven't been concerned about being a republican or listening to go a republican the 5th the 6th we should have speedy trials in our

country. caliph browder was a 16-year-old boy, an african-american kid from the bronx accused of a crime. he was sent to reichers. he spent three years there. he was never tried. he tried to commit suicide four times. if you ask caliph brown or his mom or anybody who lives around him in the bronx whether or not the bill of rights is being defended, he lives in that other america that martin luther king talked about. if we want to get new people in to our party and get libertarians and others who believe in privacy, what we have to do is we have to say to people like caliph browder that big government is not only a problem as far as regulations and taxes. big problem is a -- big government is a problem with sometimes not giving justice. >> somebody knew the answer you were going to give, senator and they sent us this follow-up question. if you could have just one

constitutional amendment what would it be? >> term limits [applause.] >> senator, what is your biggest criticism of congress right now? >> that they are dysfunctional. >> even whb we knee on things, we can't get anything done. i had a bill last year with the majority leader and couldn't get it done with the democrat majority leader. couldn't even get a vote on it. there is a dysfunctionalty to the place. we go week after week after week and we don't get things done. one of the biggest problems is the dent. borrowing a million dollars a minute. the debt continues to grow and grow by leaps and bounds because congress doesn't do their job. wir supposed to have 12 individual spending bills. we don't. we lump them all together. we lurch from one deadline to another. it's like hurry up.

the government is going to shut down or you have to pass all of the spending grouped together in one package. so what i have been saying is: why don't we just do our job? why don't we pass each individual spending bill on its own and control the power of the purse? >> time for one quick one and a quick follow-up senator. how do you respond to some conservatives and republicans who say you aren't tough enough in your stand on foreign policy? >> i think the question of foreign policy is a valid one and a very important one. when i look at government i think that the most important thing we go at the federal government level is defend our country without question bar none national defense is a constitutional function. it's the most important function we have. when i look at spending when i look at what we should spend money on this or national defense or this or that or national defense, for me the project site prior to always social security national defense [applause.]

when we get to foreign policy, though, we are not the same. not all are the same on foreign policy. there is a spectrum. on one end, there are people who believe we should never be anywhere outside our borders. on the other end there are people who believe we should be everywhere all the time. i think really, in the end, what we should do is obey the constitution. the constitution says that war, when we go to war should be declared and should be initiated by congress. (applause.) >> final question, senator and we appreciate you being with us and is the naturally curly hair. >> my only comment on that is people keep saying is that really his hair? can it be that bad? so one time i was at a rally in lynchfield kentucky a woman grabbed me by the hair and said i wanted to see if it was real or not.

>> thank you, senator? >> thank you, everybody. thank you. >> more from cpac with donald trump. he spoke at the conference for 25 minutes. thank you very much. it's such an honor to be here at cpac. we have done this before. the response has been so great. i love you people. you are really my kind of people. you are conserve tich. you work. you love the country. it's very. so a lot of people -- you're fired. >> you are fired. a lot think i am doing this for fund, it's good for my brand and i am here and i am doing that and i am a big successful guy. i am not doing this for fun. i am doing it because we have to take our country back.

our country is in serious serious problem. we have a president who is either incompetent which i think he could be. or he's got hisina gentry a which i know he does. i mean he does definitely have the agenda. washington is totally broken and it's not going to get fixed unless we put the right person in that top position. it's just not going to happen. now the problem i have -- i am not a politician thank goodness. politicians are all talk no action. we have dealt with them all my life. the king of zoning. i deal with politicians. that's what i do. i deal with foreign leaders. i deal with people. in this country, our politicians all talk no action. i am a conservative.

i am a republican. i look at what's going on with the republicans. i am almost more disappointed with the republicans because -- [applause.] you can go right now. i mean right now they are sitting over there going to make a decision on whether or not to fund and i guarantee the answer is we are going to fund. we are going to if you wanted. we are going to keep doing it. our president broke the law when he did what he did. and you are going to have to take a tremendously strong action or you are going to have people just flowing into this country worse than it's ever been. they are coming in now by the thousands and it's going to only get worse. so the republicans have to toughen up. they have to toughen up on the irs. they have to toughen up on benghazi. they have to toughen up on everything and most importantly other than immigration they have to toughen up on obamacare, which is a total lie and which

is a total and complete disaster. and when it kicks in -- because it really kicks in, in 2016. when it kicks in you are going to see some catastrophic results. people are getting out of business. companies are closing. all because of obama kay. so they have to do something about that and they have to do it now. now, when was the last time you heard something good about our country? well we won. we beat china. we beat mexico. we beat somebody? we never win. you don't hear good news about this country. we are in a position where we just never win. that's because of our leadership. you need somebody who wrote "the art of the deal," one of the great business books of all time. a little bit example. somebody said i can't believe

you got the old post office right down the road meaning on pennsylvania avenue. i wish it were right down the road. i have a building the old post office. everybody wanted it. gsa gave it out. we are doing an amazing job with it. it's under construction now for six months. the gsa gave it out. obama gave it up. trump got it. now, is that good negotiating? it was in the history of the gsa one of the most sought-after properties everybody. trump got it. people said to me how the hell did you get it when obama is in charge of the gsa? but that's the way it goes, folks. maybe that's what we need some of. so, it's really, really important that we have people at that top position that know because the country has such tremendous potential. unbelievable potential. and we just are not using it. now, on itunes nobody if i

decide to run and win nobody will be tur than donald trust. nobody. (applause.) i would hit them so hard that they wouldn't know what happened. i would find a general. remember the old days of general macarthur and general patton and these gate generals, we must have something in there. but i laugh as i say through tears, look. they are announcing when they are going to attack the other side. how often do you see that? two weeks from now we are sending soldiers over here general macarthur is spinning in his grave when he sees what we do. you got to hit them hard and firm and you can't play games. you've got to go hard and fast and firm. there is somebody there that's

going to do the job. now, we have a thinking, we sell, we make a deal. bo bergdahl we traded for five terrorists who are trying to kill us. this is the kind of thinking. you don't hear anything about it. it's like the one-week schedule. they forget. the bo bergdahl deal is emblem attic of what's going on in this country. all our deals are like that. we can't let it continue to happen. now, iran, they cannot have a nuclear weapon and we must protect israel. we must protect israel [applause.] as far as our borders are concerned, we need strong borders. we need a wall. if i run i will tell you the

king of building buildings, the king of building walls, nobody can build them like trump. >> i can promise you. i can promise you that. executive order, we have got to knock it out. we've got to knock it out fast. common core is bad. bad. second amendment is good. now, really good. now they want to take away your bullets folks. i don't know if you have seen it. they can't get the guns. now they want to go after the bullets, but the common core look. i came down very hard on mitt romney because he let us down. he really let us down. >> should have been an election that was won. >> was an easy election to win. i actually think probably ease year the next one coming up. there was no excuse for not winning that. i came down very strong. likewise jeb bush he is in

favor -- >> -- he is in favor of common core. it's weak on immigration. now, think of it for a second. in faufrn of common core. he's weak on immigration. remember with the statement they come over for love? that was his stanchion on immigration. i don't see them winning. i don't see there is any way. you people are going to have to make your own choice who knows? we have to rebuild our infrastructure. i go throughout the world. i am all over the oral. and i see china and i see accudabaccu see abu dhabi. you see bridges and tunnels and airports and roadways that are so magnificent paved in gold and you come home and land and laguardia or lax in los angeles or kennedy airport in new york

and they are like third-oral places. our roads are crumbling. everything is crumbling, and we are rebuilding china. it's got to stop. we have the cards. remember that. we have the cards. social security -- i am the only republican that's going to say this and i don't know if people are going to love it or not. but we've got to make this country rich again. we can do it with seminared leadership. when we make it rich >> we can save social security medicare and medicaid and not cut it like almost every republican wants to do. let's cut social security, cut medicare. now, you go after fraud and abuse but you don't cut it. we make the country rich again. we take back the jobs from china and other nations, and you are not going to have to cut social security medicare, et cetera. and nobody else is going to tell you that. wir 18 trillion in debt very soon going to be a lot more than that. and we are going to reach 24

trillion dollars. when we do that, that's a sacred number because that's a number from which there is almost no recovery. so we better get going, and we better get going fast. i just want to leave this with you. to be a winner you have to think like a winner. our country hazing' been thinking like a winner. we are on the defense. we are being labeled at all over oral for our stupidity. we are giving things away. isis you know where they have their military, they take it for we leave it for iraq. isis comes in and takes it. i see trucks and beautiful tanks. american tanks. we have to use our head. we need brilliant leadership. we can make america great again. there is tremendous potential in this country and my whole concept: make america great again. we can do it. thank you. thank you. thank you.

thank you. thank you very much. [applause.] >> now we have sean hannity. where is sean? come on sean. get out here, sean. >> here i am. >> give it up for mr. donald trump. ya'll doing okay? >> thank you. >> they have chairs. or will we stand? >> let's stand. >> okay. first question. by the way, it's great to see you? >> nice to see you. >> don't read into this. do not take that as an indication that i am committed. >> buy them at macy's. that's right. >> i am going to get fired. the first question, many of my friends ask, okay. you kind of flirted with running before? >> yeah, i did. i thought romney could do it, and he let us down. i love building. i am building all over the oral. i love it. more than anything else i love it. but i love this country.

my children now have grown. yvonka, eric they are ensconced in the country. i can let them run things but when you are building it's hard for a person like me to run because i have a lot of things happening. a politician they run. what do they do? run, run, lose they run. with me, i give up a lot when i do this. i already told the apprentice people, nbc wanted to renew. i said i am doing something else. it's very important to me. i am doing something very important. on so i am looking at it very seriously. i don't want what happened to mitt romney to happen again because that was a tremendous blow for this country. >> okay. if i had to ask you on a scale of 1 to 100, where are you on the scale in terms of where you think you are in deciding to run? >> 1 to 100, i would say 75 and 80. i am really inclined. i want to do it so badly.

it's my theme, make america great. we could do that if we have people who know what they are doing, people who are competent. >> let's talk about -- i just had an opportunity to speak to this great crowd and i talk about at a time economic problems we have. you are known for being a businessman? >> yeah. >> 50 million americans in poverty close it. 50 million americans on food stamps. 92 million americans not working. we don't count them. they are not working. >> as i said, we don't count them. they say 5.3 and 5.6%. i think it's over 20%. during the speech. >> >> i said 25 how would donald trump get these people back to work? >> you have to take jobs back if china. you have to take the jobs back from mexico. in iowa, companies are leaving for mexico. tough to take it. they give an incentive to leave our country and go to places like mexico. mexico is the next china. mexico, folks is not our friend. i hate to tell you this and i am

not just talking about the border. mexico is ripping off the united states big, big league t johns to china, mexico brazil everywhere but here we have lost manufacture can and lost our manufacturing base. sean, you hear about, as tan example annel. sure sure. it's based here they do all of their work. they make their product in china. it's a wonderful place. wonderful. i have tremendous experience with china. i have made a lot of money with china. i had pretty hard times with china and i was the one who came out on top. believe me this country can come out on top. >> okay. let me ask. i think everybody has got to have a vision. if i were to ask you if you become president your top 5 agenda items, what are they? >> okay. let's start with isis. you have to hit them and hit them hard. you have to get rid of that whole situation and, you know if you were going to ask me that

question two years ago probably it wouldn't have been the first thing on the agenda but it's become so severe so bad and i always said take the oil. they have the oil. isis first. obamacare, i would repeal it and i would get something that would be so much better than obamacare, so important. you look at every aspect of government. you look at regulation the epa. you can't move. you can't do anything. everything you want to do is stopped. you have to do that. i would build a tremendously strong military. our military has been -- has been let go and has been let go badly. you know being in the real estate business, all the time, i get these list cans for army bases for sale. i said aren't we can go to have any army basis all the time? so many basis are for sale. i say what are we going to do about it? the vets. i would straighten out that whole mess. these vets are great people amazing people. i would straighten out that mess like you wouldn't believe and i

would be in there fasts and i would be working iran. i would help israel big league. there wouldn't be speeches made behind my back. i would help israel out big league. iran has bad intentions. when you look at this is negotiating 101. you look at a president who is negotiating and he drops the safrningsdz. i would have said triple up the sanctions. so now they are not doing anything. they are not coming to a good conclusion and i hear the deal is terrible. so when netanyahu comes here it will be interesting. we have a president who doesn't know what he is doing. >> let me go back to specifics. we see what the jordan cranes and e jimingsdz are doing. what would specifically you do to a stop iran's nuclear program and, b to defeat isis because i don