shays. let me introduce the panel. understand you are going to deliver remarks, is that what you are signaling? [inaudible] >> i definitely will. it never goes away, does that chris? [laughter] chris was in their comic he would always be buzzing over sharing-- [laughter] mr. michael j. thibault services the co-chairman was appointed by house speaker nancy pelosi and senate majority leader harry reid. from 2007 to 2008 mr. thibault worked at the navigant consulting and prior to that he was the chief compliance officer at younis is bedell systems. mr. thibault served as the debt the director of the audit agency report from 1973 to 2005. mr. thibault holds a b.a. from seven oregon university and a master's apart from central michigan university. the honorable christopher shays serves as co-chair of the commission of wartime contacting and was appointed by house minority leader john boehner. from 1987 to 2009 mr. shays served in the house of representatives where he represented the fourth district in connecticut. during hi

shays on that. so today the subcommittee on national security and foreign affairs is going to continue its sobersided defense spending issues. with a hearing to discuss what is becoming all too familiar issue in recent years, aways, fraud abuse and lack of accountability in wartime contract thing in both iraq and afghanistan. with hundrs of billions of dollars the united states taxpayer dollars invested in these two theaters since 2001 and more to come, it is critical we continue to strengthen our oversight in contracts in these areas. before i begin my remarks i want to address a procedural issue for the benefit of subcommittee members and the public. we did have an arrangement with the commission earlier on that we would have the report released to us and not by the press until the evening of this hearing. that did not occur, and i want to apologize to the other members on that. were about to find out why that didn't occur a we wanted to give the members in opportunity to be prepared and to ask qu

shays but i am up around a dozen now. one of my jobs before i came to the congress i spent a lot of time on construction sites and have a construction engineering degree and i am surprised we get as much work done in iraq and afghanistan given the contract arrangements we have. i have seen horror shows. i've visited a lot of construction sites in iraq and afghanistan and i think that the special former special inspector general for iraq did a fantastic job but for my business to afghanistan i think that the situation and inspector general in afghanistan is far less able, he is new or but far less able to police the contract situation so i am very apprehensive about our ability to lose money and afghanistan wasted through incompetence as well as fraud. one of the earliest hearings we had back in 2003, 2004 all iraq i asked the director for the dca, the defense contracting agency, i said how many contractors, excuse me, how many of the terse do you have an iraq and he said we don't have any. at this point, we are spending b

shays, this is all about working together. obviously you have been that this only a few months. your staff tre plan together and i think you have done a remarkable job in many respects and appreciate the interim report. i have a number of questions and will start up with procedural things. we will get to some of the other issues on that. but one comment mr. thibault made is there is a significant number of reports and recommendations coming from those reports, many of which it not been implemented. that should disturb us all. you also said later on there are issues outstanding that weren't getting enough attention and you indicated that in the context of course i was working in some respects the security incidents bing sichta finley down. .. it's interesting to note one thing i mighthare, and it's something we are going to talk about and try to evaluate. we and now we are out on the field of four bases and camps and victory in afghanistan and, you know, joint task force 101, the universal, they were supportive, but universally they said if there's anything this commission can do

shays, this is all about working together. obviously you have been that this only a few months.your staff tre plan together and i think you have done a remarkable job in many respects and appreciate the interim report. i have a number of questions and will start up with procedural things. we will get to some of the other issues on that. but one comment mr. thibault made is there is a significant number of reports and recommendations coming from those reports, many of which it not been implemented. that should disturb us all. you also said later on there are issues outstanding that weren't getting enough attention and you indicated that in the context of course i was working in some respects the security incidents bing sichta finley down. .. he talked about how this could best be coordinated so all those issues are covered. you are attempting to investigate why some of these suggestions are not implemented. whether this was executive in action, or whether we're not having enough hearings to work on this. >> we intend to take those 1200 recommendations, in those reports and we int

shays, when he was in the house of representatives. he was in the house of representatives. we've submitted comments on legislation and participated in the comprehensive lessons learned projects conducted by special inspector general for iraq reconstruction and accountability office and in 2005 conducted a formal joint lessons learned review with commanding general of the army. we know the commissioners appointed to conduct this review and had the opportunity to work professionally with many of them during the past and we worked professionally with senior commission staff and each and every individual brings expertise and perspective to these important tasks. we also have the a fraternity to work with the key federal agencies involved in developing the requirements including the oversight activities and special inspector general for iraq reconstruction. we appreciate challenges they faced and commitments they've shown to fulfill the government's mission. we've also been privileged to work with dozens of companies and hundreds of executives from across the membership in the i

huey long was the quintessential at including daniel shays who was a revolutionary during the constitutional convention comment joseph mccarthy, george wallace, david duke even with his little burst and louisiana was a demagogue. and there also have been in history when i talk about is the paradoxical eight you can have a demagogue if the definition is they cast aside the rules of they are unjust. there is a chapter of british history were demagogue was used as a term of praise. so you have some demagogues offer something to people and they can do good in a paradox way but most of the time the term accurately is a negative or a harsh of some way that does threaten. >> host: what is an example of a good demagogue and why? >> guest: the woman in charge of solidarity apple went that was a beneficial boris yeltsin in russia was beneficial, then there is a paradox huey long was a very dangerous figure in american politics but he also paved highways and build public hospitals and build schools and gave textbooks of his relationship was routed on his own ambition and his boundless willingness to ma

of medicine and shays western university and chief of clinical cardiology at metro health medical center and ice we haven't dr. herman taylor in 1998 arrived in jackson mississippi to new in jackson study, the largest base that a have that undertaking involving african-americans, the study both sought to answer questions about cramer's to a disease then the black community and provided historically black colleges experience in large scale epidemiological research. dr. taylor is a founder of hard to hard to in nonprofit organization that provides cardiac services for children from the developing world. then we will hear from dr. barbara howard, the senior scientist and former president of a red star is a two and holds faculty appointments in the berman even bredesen and a permanent biochemistry at howard university and his past year of the american heart association on attrition, physical activity my pastor of the nutrition committee of the american heart association and past chairman of the nutrition studies section of the national institutes of health. her major sea -- major research is

would your system have kicked in ats' mind and you would call the ceo of aig and shay you're at $200 billion and you're down, you can't do this anymore. would we have stopped aig? >> it's always hard in hindsight. i think a number of features here would have slowed down and maybe even stopped. aig put on an enormous book of business without putting aside capital or margin, and what happened just last fall, when the rating agencies downgraded aig, all of a sudden they had to post significant collateral. i think it was over $30 billion within a day or two. they would have had to have done that across the daily basis. it is a harsh discipline, i know, one that i learned when i was in the investment banking business but one i think it an important one, is to value on a daily basis or weekly basis the risks that a firm mass -- has and put aside capital and margin and aig wasn't doing that. >> senator johanns we're doing another round this is a complex topic and we're fortunate to have the chairmen and chairman and miss white from the federal reserve. let me just ask one question. we're en

daughter mary shay. our youngest son cormick who calls himself coco. and my sister tina and my nephew glisten as well is here and our good friend bonnie motes is going to do the honors of escorting them out as soon as we're done with the opening statement. so -- and, of course, i owe everything to my parents. my father, bart mcdowell, a native texan, passed away just this past january. and my mother martha mcdowell passed away not quite four years ago and our thoughts and prayers are with them always. but especially today. i would also like to extend my public congratulations to genachowski and his beautiful family on his nomination and if we are both confirmed, i look forward to working with him in the same bipartisan manner i pursued for the past three years. furthermore, i want to acknowledge the warm friendship and support i've received from acting chairman mike kopps and commissioner jonathan addlestein. i've enjoyed work with them and especially in the past six months. although we don't always agree, our disagreements are almost always pleasant.

to follow-up on commissioner shays first point, i think that we need to think hard as does the subcommittee. there is an inherent implied concern that we have too many contractors. whether we do or not i'm not prepared to answer that and the joint staff is in fact got a task force looking at what things are procrit to be contract out, and it goes to governmental and those things. but how did we get to this point? and then what decisions were made by the services, what decisions were made by osd, omb and by the congress that get us on this one to one ratio would ever it might be? i think more important is what are the options? do we increase the force structure within the dod and state so that we have not just the contracting oversight expertise but we have got folks to do some of these jobs being done by contractors. do we change the emphasis within the services to push more things into the system meant force out of the operational force? do we provide just less services or less quality services or do we just accept the fact this is the way we are going to go to war? and i think those quest

like many quickly shays that was not entirely true and i was just that they were not the only ones who created the modern world of structure credit by any means, but it turned out to have a lot of veracity as i later discovered. so i left to that conference in nice went back to the financial times determined to try and unpick the strange new credit john go in, on the other hand, to try and keep an eye on why and how the morgan alumni played a key role in building this credit world. and for the next two or three years we labored away in the capital markets team and i was just we because it was a group of us, not just myself, trying to make sense of this vast shadow debt and derivatives world that was growing apace. and in the last year or two and became fashionable to try and unpick or work out who predicted this crisis and who didn't. i ever wanted or not claim to have predicted the scale of the horrible financial cataclysm that has overwhelmed us, but what was clear to us back in 2005 and 2006 was that not only was there an extra nearly -- external revolution going on in the credit wo

we have that the shays and all these sorts of things. if that does not work, we have a big one. it is a defense department. weech issued them. you never use trade as a weapon and these are basic, simple mistakes that are of enormous consequence. and i don't mean to belittle this administration. it is not just these