in short, we cannot again allow huge, unregulated markets. in modern times, capitolism depends on regulation of institutions and market participants and on the institution of corporate functions. far from constraining markets, these are essential elements in the essential operation in the public trust. in my world, the absence of these elements makes our task very, very challenging. i like to set the scene for a few of my observations. for some of the most difficult accounting and reporting issues emanating from the financial crisis stem at least in part from the lack of proper regulation and risk management, unsound lending practices. under such conditions, accounting and valueation are significantly challenged. proper accounting and valueation require that companies identify and understand and correctly value wait risk and returns and be able to ascertain exchange prices. it is not surprising many of our issues we have had to deal with over the last 18 months surround the determination of values and inactive markets and the use of off-balan

for example, any unregulated holding company with a strong credit rating from the underlying operations could have underwritten credit default swaps which played an important role in the current financial crisis. in addition, we think it is also relevant to consider the systemic risk that may be presented on an aggregate industry-wide basis. for example, even if a particular community bank or insurance company would not present systemic risk, the widespread failure of community banks or insurance companies could a natural or man made catastrophic event or series of events, for example, could cause more than an isolated failure of property casualty insurance company which is in turn could be systemically significant. there are two elements in particular that we recommend for your consideration at a reform proposal. mandated, internal enterprise risk through board-level risk committees and substantially enhance requirements related to risk. i must emphasize that our two recommendations are not intended to be a comprehensive solution, but instead we believe any solution should include thes

>> we operate the regulated transmission business and unregulated generation business.the regulated tran mission business provides reliability 99.99% of the time to a regional planning process. it works and works well. that is regulated on rates based on our doft service. unregulated generation basis always has to consider the cost of connecting to the grid as part of its investment strategy and fully bears that cost. we need to dispel the notion that renewables are not being built because of the transmission system. renewables are not being built because we're not sending clear price signals. this committee deserves recognition of doing that. the next thing i expect to hear from people if only we refrigerated freight trains. it doesn't make sense to ignore the transportation charges. >> i want to thank all of you gentlemen again for your time and expertise and your patience. before i adjourn, i need to ask unanimous consent that two letters from ferc to chairman markey are put in the record. without objection. so ordered. and with that our hearing is adjourned. [captio

it is incredible we have had an opportunity that's gone basically unregulated. and of course the idea that you could put cherry-flavored and strawberry-flavored and cartoon figures -- that is not aimed at the 30 or 40-year-old tobacco user but aimed at children, the 3,000 or 4,000 that begin a day, 1,000, by the way, who become addicted and half that number die prematurely. there are people that smoke, i guarantee you, mr. president, there is not a smoark in the country who is an adult that wishes or hopes their child would begin smoking. in fact, i guarantee that almost virtually 100% of adult smokers have man wishes for their children and one wish, i guarantee they have, is that their children never start the habit they did. we're told by health officials, health experts, the average person who smokes and tries to quit tries seven times before effectively kicking the habit -- seven times they try. i'm a former smoker. let me tell you, it is hard. it is hard. and i know others have not smoked and my colleague from wyoming talks about his own family members. man

they call it a derivative and it's completely unregulated. we need to make sure that credit default swaps, similar derivatives are classified as insurance and are subject to reserves. i yield back. >> thank you, mr. sherman. we'll hear from mr. royce for two minutes. >> thank you, mr. chairman. i would like to briefly thank mr. skinner for making this trip here to testify and also congratulate him on his recent election. he's been a leader in the european union and in parliament. he's been a leader and champion of the solvency ii directive which provides an important, yet relevant example of an effort under way to create a more efficient regulatory structure. yesterday's op-ed in the "the washington post" by larry summers and tim geithner noted the importance of international coordination among regulators and reiterated the administration's commitment to leading the effort to improve supervision around the world. unfortunately, with our fragmented regulatory regime over insurance, we are lagging at this point, not leading the rest of the worl

the farm bill last year that gave the commodities futures trading commission the oversight over unregulated trading of larger oil contracts. i think we have to go further. i recently learned that the commission, the cftc is utilizing its authority for the first time. and i believe what we have to do is give them further tools to go further than just discretionary oversight, and that they should be able to regulate all energy trades. so, in addition to the sanders amendment, ultimately i wish that the senate would consider a bill that i filed that would simply turn the clock back to december of 2000 when the enron loophole was passed before these sweeping changes were made that allowed the rampant and excessive speculation in our energy markets. mr. president, i want to turn to -- madam president, i want to turn to one final topic, and that's the nomination of inez tannenbaum to be chair of the consumer products safety commission. they have faced a number of new challenges: inadequate staffing, insufficient funding, a product testing facility that was a joke. as a matter of fact, we saw a pi

it went unnoticed and unregulated by mr. geithner while he was president of the new york federal reserve. people as far as him repulse and did not see it coming. i think there is a search and promiscuity in nor, the notion of too big to fail means they can do anything they like. host: here is a question by the twister. will you offer any words of wisdom for younger folks? guest: let's start with i have an 18 year-old who is going off to the university of minnesota this september. i said you have to learn something useful in college. if you get a liberal arts education when i was young, you could get a perfectly good job as a young executive and have a future. today you have to yet learned a useful skill in college. you need to learn a very useful skill. the other thing i would say is if you want to be an entrepreneur, there really are three basic disciplines outside of the medical profession that defined the world. engineering, finance, and a lot. -- and the law. it is important to learn to of those three disciplines. unfort

the notion that the financial industry was unregulated is simply not true. you had huge amounts of regulations and economists have said time and time again that the financial problems we had were due to financial regulation. banks were forced to make loans to people they did not want to. there would face large penalties if they did not make loans to individuals not able to put down down payments on mortgages, or to individuals -- those who only had welfare or not regular income. not only that, but you saw large subsidies through freddie and fannie that would create incentives for places like countrywide to make those types of loans. we had huge regulation of the financial industry. the notion that that has not contributed to these problems i think is wrong. host: your brief response? guest: i will try to be brief. i think that is a distortion of what happened. we have regulations that were poorly enforced and regulators took a walk from their jobs. of the institutions that lettuce into these problems at mortgage institutions were those not under -- the led u

the close relationship between the regulated securities and futures markets and that no, mostly unregulated, markets for otc derivatives. for example with respect to the securities markets, when otc derivative references an issuer of securities such as a public company or security itself, it can be used to establish synthetic, long or short exposures to an underlying security or group of securities. in this way, market participants can replicate the economics of the deray purchase or sale of securities without purchasing or selling the securities themselves. because market participants can use these securities related the otc derivatives, to serve as synthetic substitutes for securities, the markets for these otc derivatives are interconnected with the regulated securities markets. moreover, the market for these securities related otc derivatives implicate the policy objectives for capital markets that congress has set forth in the federal securities laws, including investor protection, the manus of their and orderly markets in the facilitation of capital formation. for this reason it is im

so you see it's not an unregulated process to begin with. first it's the office of conservation of the louisiana department of natural resources. louisiana department of environmental quality. and finally, the department of health and hospitals which tests potable water. additionally these agencies already work closely in association with existing federal regulations under the e.p.a. it is illustrated in these graphics, current industry practices ensure multiple levels of protection between any sources of drinking water and the production zone of oil and gas. that's what i'm going to illustrate. the speaker pro tempore: the gentleman's time has expired. the speaker pro tempore: the chair recognizes mr. inglis from south carolina. mr. inglis: thank you, madam speaker. last night in spartanburg, south carolina, we had a town meeting and folks were joining in this debate we are having here this week in washington about climate legislation. there were folks who spoke passionately about the need to take action. and i'm in agreement with them. the

complex and risky stretchers' securities and derivatives that would then spread across a pig in unregulated markets around the world. when the risks became evident the lack of basic supporting infrastructures in terms of timing and accurate information flows clearing mechanisms and price discovery compound the problems. leading to freezing credit markets plummeting at the markets and significant downward pressure on economic growth. however, one very welcome development arising from the financial crisis i believe is that a much broader constituency is common for a greater transparency as necessary ingredient for recovery and rebuilding of investor and public confidence. included in this has been the need to improve and strengthen certain accounting and reporting standards. while accounting to not cause the prices and accounting will not indent it did reveal the number of areas requiring attention and so over the past 18 months we have responded vigorously but the number of new standards and enhance disclosure requirements relating to this to transitions and credit defaults slops and credit

unregulated business always have to is considered the costs of connecting to the grid as part of its investment strategy and phillippe beers that cost. we need to dispel the notion that renewables are not being built because of the transmission system. renewables are not being built because we are not sending clear price signals. this committee deserves-- and now the risk of being a little flip the next thing i expect to hear from people is that if only we had refrigerated freight trains running free of charge from the north pole are local server market would get its ice cubes four nehr priveleges does not make sense to ignore the transportation charges. >> i want to thank all of the gentleman again for your time and expertise and your patience. before i have geren, i need to ask unanimous consent that the two letters from burke to chairman markey are put in the record. without objection, so ordered and with that our hearing is adjourned. [inaudible conversations] >> how is c-span funded? >> i have no clue. maybe government grants? >> i would say donations. >> advertising for product

we have been working closely with other federal agencies to bring the unregulated world of credit default swaps into the sunlight. operating under the limitations of the current legislative structure, we recently issued temporary orders to facilitate the establishment of central counterparties for clearing credit default swaps. in the coming months, we will also tackle issues related to municipal market reform, stock lending, trading in nontransparent markets or dark pools, and hedge fund oversight. i look forward to working with congress on these issues. the financial crisis has reminded us all just how large, complex and critical to our economy the securities markets have become. at the sec, our 3700 person staff now oversees more than 35,000 registrants, including about 12,000 public companies, 8,000 mutual funds, 11,000 advisors, and 5,000 broker dealers. and it is a number that is growing rapidly. nonetheless, during the same period, the sec's resources have fallen. between 2005 and 2007, the agency saw three years of flat or declining budgets and lost 10% of its employees. this has

this is not a unregulated market that is terrible. it is way too complicated. >> how you propose flooring insurance companies over had? >> again, i think this is another case of where we are aiming at the wrong target. i don't like fancy suites and million plus a dollar bonuses, etc. but it seems to be what do we want to focus on? we pay you and assess you're quality of care. how you achieve that, that will take experimentation and a lot of different kinds of initiative and i am less worried about that. as a matter of fact if we paid them and demand high quality care i don't think those perks will have a lot of money left over for that. it seems to me what we have got to do is focus what we want out of the system instead of trying to find evil people everywhere and say that is the problem. chief executives and pharmaceutical companies, too rich chief executive hospital too much money coming there are more than enough evil people in that arrangement. seems to me we want to focus more on how to create a structure where people are trying

between the cracks of the two agencies and that we don't leave large swaths of the financial markets unregulated and uh unaccountable to the american public. . >> do you think that would be done better if you were combined? >> my personal view, there's a logic and an efficiency that can be achieved from the two agencies. but short of that, i think the two agencies can do a better job of working together to ensure the protection of the investors. >> my time is up. >> i was just advised by my colleagues there's a vote on and i'm going to continue asking until someone returns, but i ask the indulgence of our witness and those of the audience as we try to balance things here. the number of attorneys at the sec decreased 11% between 2004 and 2008, and some believe that resulted in delayed cases, reducing the number that can be brought to trial and potentially undermining the quality of cases that were pursued. how have resource constraints impacted the sec? >> there's no question but that -- and there's a recent gao report that suggests this as well. that the resource constraints have hindered the ab

you have alan greenspan and other defenders of completely unregulated market suggesting such a downturn as normal, that it is part of a normal business cycle. that was completely unavoidable. arguing that it was almost like an act of god as random and unpredictable and natural as a 100-year-old flood to use greenspan's language. there is nothing immoral about what the world is experiencing today. to suggest otherwise smacks of a let them eat cake il elitism that shows alan greenspan is removed from the actual pain and suffering the crisis is causing the average american family. similarly, be suspicious of those that try to blame capitalism generally for the crisis. capitalism has done more to create growth and reduce poverty and inequality in the world than any economic system in the history of the world. let's be careful not to throw out the baby capitalism with the bathwater. a global capitalism knows no country borders and recognizes no national boundaries so it is not surprising that it has helped -- is this working -- it is not surprising it has helped the worst of the world in chi

all private, all pretty much unregulated. president clinton in the early 1990's decided maybe we should have a direct government program so students could borrow directly from the federal government. you you know what happened? banks brought their interest rates down, the banks started to provide better service, the banks just based better. that's exactly what we'll do with this public plan. the reason conservatives here, the reason that people in this body who are major recipients of insurance company money for their campaigns, the people whose philosophies are always business can do it better, the people who have aligned their political careers with the insurance company, they all oppose the public option. you know why? because it's pretty simple. insurance companies will have to cut down their administration costs. maybe they'll have to change some of their marketing practices, maybe they will have to be less wasteful and behave better. that is the point. public option, public student direct loan. public health insurance o

and unfortunately, they did it in an unregulated and unsafe and unfound fashion. >> i wanted to say, they didn't do it in a very superior way, did they? >> no, they didn't. >> so if we had to say anything of making the government creating a second market, and wall street left to its own designs, wall street in the last two or flthree years became an absolute disaster. >> yes, and going forward we need a private sector market, and there is a lot of activity going on -- >> well, we will try wall street again? >> a much reformed version with much more transparency and much stronger underwriting. last night i had an interesting dinner with mr. simon, who is a financier, and quite renown in the united states. he made a proposal to us. i think it merits consideration. i'd like your opinion. what it roughly is, he feels one of the major blows to the securityization market was the failure of the rating systems to the institutions that were there to create and did infact create all these triple-a ratings that we found out much later on were nonsense. no at his suggestion and opinion was that

and reduce transparency and liquidity and encourage legitimate businesses activities to move to unregulated foreign markets. another amendment would revise the nuclear advanced fuel cycle initiative to set a policy for clean, safe nuclear energy. i oppose this rule and the bill. the speaker pro tempore: the gentlelady's time has expired. the gentlewoman from california. ms. matsui: madam speaker, i yield 1 1/2 minutes to the gentleman from illinois, mr. quigley. the speaker pro tempore: the gentleman from illinois is recognized for a minute and a half. mr. quigley: thank you, madam speaker. it's interesting earlier today someone asked me how can you vote for this measure because global warming is a hoax? my answer was, it's very simple. i remove the blinders there that exist with some of my colleagues who think that global warming is a hoax. i remind them that there are zero peer reviewed scientific studies that say global warming is a hoax. there are hundreds of peer reviewed scientific studies that say global warming is real and that man's actions contribute greatly to that increase in t