my first question is fsoc -- i'm over here. >> sorry. >> it's all right. the one of the principle creations of the fsoc so look at the systemically -- of our institution. because obviously that was a big problem with what happened in 2008. would you say today our institutions are more or less systemically connected than they were pre2008? >> they are obviously very closely tied but the most important thing we've seen is they hold much more capital against risk and are funded much more conservatively. and noigs that there's been much more progress to make sure there's much more conservativism in the money market ps and for those reasons, it's much less likely that a particular shock would damage the strong, not just the weak, and much less likely that pressures on a weaker institution would spread to the stronger. >> would you say those effects we're seeing are from the european situation which is billowing over and affecting our markets and our financial institutions? doesn't that kind of play into that systemically connected issue? and in my speaking with

is that the fsoc view, to? you certainly for your agencies have the ability to do that. >> that's right, but we are very confident that we're going to be able to put in place a regime, for example, that mandates the margin requirements in derivatives. and that combined with the stronger capital buffers and the move to central clearing with stronger safeguards in the clearing houses, that that mix of factors leaves us with a much more stable system than we had. not immune to any crisis, much more stable than we had. we are trying to get that balance right. and we are, this is a terribly complicated task. and we are slower than we hoped to be. but we are slower because we are trying to err on the side of getting it right and not to rush the. we want to make sure that we not just get the substance right, but we have the ctc and the fed outlined so we have a better chance of getting london, frankfort, paris, zÜrich, singapore, hong kong, aligned, too. because we can't put ourselves in a situation where this stuff j

what is it that fsoc can do to move this particular process forward? because i believe, again, it is the uncertainty of the rulemaking process and frank thirty certainty of bad rules that is inhibiting a lot of our job creators today. >> i disagree with you but i'll respond the following way. if you talk to community banks across the country as i do. most of them will say they recognize that they were largely and almost completely left out of in the dodd frank act. but they are concerned they're under too much pressure from examiners to tighten beyond what they think is necessary. they don't complain about the regulatory frame work. as you know the people who work support the bill and they are privileged in many ways but say the concern is getting all the heat from the examiners it's hard to justify that examiners are trying to do their job. >> we're running out of time but it's clear we're speaking to a different universe of community bankers but i appreciate your testimony and yield back. >> i thank gentle woman miss maloney. >> first of all, i'd lik

the chair of fsoc, you were to make that a top priority that the regulation process was well coordinated. in fact, i think you said this morning that failure to coordinate rulemaking will be enormously expensive to the economy and create opportunities for regulatory arbitrage as. as the overseer of that process, what are you doing to go above and beyond to get these agencies to coordinate? >> under the law congress passed, i was given responsibility to coordinate but not to enforce it. i am doing it to try to get it together and make sure it is being sequin stanley a sensible way. of course, this has cost and we are trying to make sure it's done in a way to make sure it's done. but you did not give me the authority to compel them to work closely together. they are going to be protective of that, but where they have the flexibility to be more aligned, they are moving closer to being aligned. i think an example, particularly on derivatives and conduct standards, there is obviously not mutual agreement on those. those are very important issues to the economy. i think you make a good point.

in particular, the financial stated oversight committee, the fsoc, met frequently to assess potential risks and supervises, you know, the benefit from the inside of this work to work closely with financial institutions here in the united states to strengthen the financial institution's capacity to deal with potential risk events coming out of europe. >> what is the role for the g20 in coordinating policy responses? >> the g20 played an important part and continues to play an important part. one area where it's role is crucial is in the financial regulatory area. you know, the dodd-frank legislation has put in place a very strong, high standard regulatory requirement in the united states, but it's important that the leading financial centers around the world also adopt high standard regulatory frame work consistent with what we are doing in the u.s., and the g20 plays an important part in making sure that this is achieved. the g20 also provided a forum in which challenges to global state and those in europe are discussed, and where key countries can also express their concerns. for exa

ability to figure out counterparty exposure and overall -- this is not directly your area but with fsoc in place at this point the financial stability oversight council, we have seen a lot of published reports about u.s. bank exposure to greece, but do you have a level of confidence at the regular -- regulator level, the fsoc level we have enough knowledge not only for exposure but if you could talk about money market exposure counterparty exposure. obviously direct and indirect exposure. we have a freezing of the credit markets, a percentage of our financial exposure to europe were to decrease at all goes out the window but do we have enough current real-time knowledge in terms of our financial institutions exposure to both greece and some of the other countries that are talked about it being a path path of passive contagion? >> well i think as you indicated, some of the reforms underdog frank and some of the conforming reforms in the international system under the fsb will help over time although these are in the process of being implemented as we speak. the fsoc has spent time on the

an important topic for -- important focus for the fsoc as they consider -- >> it seems to me that exposure and risk might be two different things. i understand the mitigation of the risk, but do we have exposure and through the imf or through some other organizations, if and when, because i think i agree with my colleagues here as well, i'm very concerned about what may be happening and how does that translate, and then, you know, adding into that some of the requirements that may be coming under basel 3 and those types of things. how does that play into their ability to recover? >> the u.s. government has minimal direct exposure. we do not lend significant sums to countries like greece. we are supportive of the imf playing a significant role in helping europe to deal with this crisis. the imf has provided about a third of the financing for countries like greece, ireland and portugal, and the united states makes a financial contribution to the imf. however, this financial contribution does not put the u.s. taxpayer at material risk. the imf has preferred creditor status which means it gets

fsoc has spent time on the risks from europe and it does provide a forum for sharing of information among the supervisors and regulators so that they have, assessments of risk. as you said, there is the direct exposures, particularly to the most vulnerable periphery countries are relatively modest at this juncture. there is also -- >> not just depository institutions. >> direct exposure from depository institutions. in terms of the intermission have on some of the other entities in the system, there is much greater information, much more detailed information available now. money-market funds and that immigration is publicly available and that is a critical development. i think we are going to see that moving along at a rapid pace as well. of course the reforms that are just in the early stages on derivatives will provide extremely important transparency into what was previously a very opaque set of markets between central clearing, between the information being reported on a real-time basis, trade depositories, those reforms will make a material difference in terms of our regulators and s

fsoc, one of its principal creations was to look at the systemic connectedness of our institutions. big problem with what happened in 2008. would you say that our institutions are more or less of systemically connected? >> obviously, they are closely tied. most importantly, they have more capital against risk and are funded more conservatively. in addition, there has been dramatic progress in making sure that there is much more conservatism in derivatives markets. for those reasons, it is much less likely that a particular shot would damage the strong as much as the week. >> would you say that the effects that we are seeing in your statements, the effects being seen from the european situation, which is building over and affecting our markets and institutions, does that not kind of play into this systemic issue? my thinking with some of these institutions is that they are saying that one of the problems was that they were to systemically connected. why are they not unwinding both systemic relationships? maybe that would alleviate any kind of possible collapse, such as we sought. >>

fsoc has spent time on the risks from europe and it does provide a forum for sharing of information among supervisors and regulators so that they have, assessments of risk. as you said, there is the direct exposures, particularly to the most vulnerable periphery countries are relatively modest at this juncture. there is also -- >> not just depository institutions. >> direct exposure from depository institutions. in terms of the intermission have on some of the other entities in the system, there is much greater information, much more detailed information available now. money-market funds and that immigration is publicly available and that is a critical development. i think we are going to see that moving along at a rapid pace as well. of course the reforms that are just in the early stages on derivatives will provide extremely important transparency into what was previously a very opaque set of markets between central clearing, between the information being reported on a real-time basis, trade depositories, those reforms will make a material difference in terms of our regulators and super

an important topic for -- important focus for the fsoc as they consider -- >> it seems to me that exposureand risk might be two different things. i understand the mitigation of the risk, but do we have exposure and through the imf or through some other organizations, if and when, because i think i agree with my colleagues here as well, i'm very concerned about what may be happening and how does that translate, and then, you know, adding into that some of the requirements that may be coming under basel 3 and those types of things. how does that play into their ability to recover? >> the u.s. government has minimal direct exposure. we do not lend significant sums to countries like greece. we are supportiv of the imf playing a significant role in helping europe to deal with this crisis. the imf has provided about a third of the financing for countries like greece, ireland and portugal, and the united states makes a financial contribution to the imf. however, this financial contribution does not put the u.s. taxpayer at material risk. the imf has preferred creditor status which means it gets r

[laughter] now, i do know the fsoc report includes the statement that, um, the member agencies need to strengthen the system, quote, which includes developing a framework for the return of private capital to the system, closed quote. what does that mean exactly, and what's the timetable for concrete action? >> i just want to start with one observation which is that congress did enact a fundamental change to the basic framework of oversight of the gses and the home loan bank system in september of '08. ahead of dodd-frank. but, you're right, that with that foundation which department solve all our -- which didn't solve all our problems, dodd-frank did not go further and lay out this fundamental problem of fixing the housing sector, and that's still ahead of us. so what are we trying to do? we want to set up a framework where the private system plays the more dominant role in housing finance once again and that we gradually phase down the government's role to a more limited, more targeted, more sensible role. for that to happen, we need to have a clearer set of rules in place across the

is it the regulators, isn't it the regulators who are a part of fsoc if those who make up fsoc want to consider who is creating systemic risk the to to to look in the mirror. if you are correct and banks are not taking enough risk, i would submit to you the problem doesn't lie with the officers in the regional banks it lies on the regulatory approach of the very members of of fsoc. we've all been saddened by the news of steve jobs def but his life should remind us the entrepreneurship and private sector and innovation with in the private sector that creates jobs he worked to make his company the most profitable it could be and by doing so enriched the lives of people told the world through is company's innovative products. without those companies jobs wouldn't have made pixar a success and could improve the cell phone and the ipod and tablet computer. many of us were disturbed to hear president obama questioning whether business had a right to earn a profit. i hope you don't agree with the president on this point. there is a real and powerful concern among many americans that the incre