Transcripts For CSPAN2 Today In Washington 20110318

some people would argue that we already have federal agencies that serve as regulating bodies. can you describe how it is that the consumer protection bureau is different from regulators like the federal reserve and the office of the comptroller of currency? >> yes. i think the big difference is about what people want to do. the fed is a traffic agency -- terrific agency. it does a lot of things. but the people who go to the fed go to the fed because they want to do monetary policy. that is how they are evaluated by congress. it was chairman frank, two years ago, who made the point that in 20 years of reports from the fed, the question of consumer protection never came up. what this is really about is saying that those powers that had been with the fed will now move to a new consumer agency. there will be someone who will act as a cop on the beat, who will be out there to look at how mortgage servicers, to pick an example out of the headlines, are executing on their obligations, whether or not they are following the law. someone there to watch. and someone to make sure and be able to say to the american people, no matter how big you are, you have to follow the rules. the laws are the laws. the office of the comptroller of the currency has done a lot of different kind of work, but principally they are on the work of prudential regulations. they have watched out for how they can protect the financial institutions. the difficulty has been that inattention to consumer issues, to consumer products like the kinds of mortgages that make it into the system over the last 10 years, turned out not only to be ruinous for american families, it was also ruinous for american banks. again, the idea that congress had was to say, let us take this functions and move them to the new consumer financial protection bureau, where we have a cop on the beat who make sure there is someone who is going to enforce the law. if we had had this agency six years ago, eight years ago, we would not be in the mess we are today. >> if i could interject here, it is also government intervention. perhaps if we had restructured this agency, but if we also did not have the temerity to believe that congress should go in and muffle the market and get down payments down to zero, if we had not had the temerity to pass the gse act and allow government sponsored -- a government sponsored enterprise to go in the business of arbitrating and over leveraging it 100 to 1. there are a number of factors, and some of it is because of congressional intervention in the market and because congress tied the hands of the regulators. i'm talking about the safety and soundness regulators. i witnessed all of that. i think that there is an additional consideration here. part of that is the idea that washington can better understand what the consumer demands are then the consumer. i will give you one example. it was overdraft protection. the presumption here is americans do not want overdraft protection. they do not want to pay for that. they will all have to opt in for that. what did we find? we found they all opted in. overwhelmingly. yes, people wanted that. the presumption here was that that was a waste of time. i just think the idea that government will dictate the market on a willing buyer and seller -- it is a consideration, as is the consideration of the fact that your agency is going to be able to act outside of the normal preparations process. that is unique. that is new. the idea that it will not be held accountable for the actions it takes in terms of the budget. my main concern is an additional one. this i have shared with you. it comes from putting safety and soundness protection behind consumer protection in the regulatory structure. we tried that with the gses. everyone has a right to own a home. and congress interprets that right to meet it if you do not have any down payment, he should have a right to own a home, why are the down payments not zero? why not mandate with a goal through hud that this has to happen? we do that, and we said at a bifurcated regulation where hud is driving the gulf, and on the other side you have the prudential regulated that was supposed to be regulating for safety and soundness. guess what. they could not step in and leverage the portfolios because the first consideration was not safety and soundness. we set this up so the first consideration was not safety and soundness. having gone through this, this is my issue. we have tried bifurcated regulation. we have had the regulators, current and past, who had this particular responsibility, both dallas this helped create the collapse of the housing market. -- both tell us this helped create the collapse of the housing market. had we had a single regulator, it would have been better. all of us have heard this debate. i just wanted your take on that. >> thank you, congressman, i think this is a really important issue. the point about safety and soundness also goes to the point about dictating products. i want to be really clear about the vision of this agency. what we are about is making a price clear to consumers, making risks clear to consumers, making itself families have a chance to compare two or three credit cards. the figure at two things. can i afford this thing, and have i gotten the one that is best? i think congress was very cautious on your point when it set up the new consumer agency. >> i'm going to interrupt you. i had an amendment that would make safety and soundness the first priority. it would have the credentials regulators sign off on that. the majority opposed that a minute. we were not that cautious. the mmm -- amendment was not accepted. >> you do remember the way it was set up, the other banking regulators, the safety and soundness banking regulators could overrule -- >> they had a very high threshold, as opposed to -- i have given you the example of what really happened. it could happen again. it is likely to. >> i think this is why the consumer agency was set up so that its rules of whatever promulgates, can be overruled by a combination of safety and soundness regulators, something that exists nowhere in government. i should say because i think this is important. for families to know the price, for families to know the risk -- >> we have no disagreement on that. >> i appreciate that. i know we have had good conversations on that. >> we are going to go to mr. watt of north carolina. >> thank you mr. chairman. i yield 30 seconds to the ranking member to clarify what is going on. >> i think we should all continue to clarify that the cfpb, any action can be overruled by the financial stability oversight committee. safety and soundness is their top priority. any action that the cfpb rights into their statute can be overruled by the financial stability oversight committee. i wanted to clarify that. i yield back. >> very high threshold. two-thirds vote. i just want to continue. >> i am happy to the gentleman. >> point of order. as one of the junior members on this, i am concerned about the allocation of time. he just made a five minute injection. >> good point. >> i think he identified himself for that five minute injection. he never yielded himself time. i assume that -- >> i ask for unanimous consent that the gentleman may have additional seconds. >> we are going to go to mr. watt. go ahead with your question. >> that does not compensate me for the time that was lost. 30 seconds does not compensate me. >> take your time. >> i appreciate that. let me welcome ms. warren here. thank you for being here. i want to start by, and i'm getting a copy of this speech that you delivered to the financial services roundtable. i'm going to put it in the record. i was there. i thought it was one of the most thoughtful speeches i ever heard given to a group that came into the room with an adversarial nature. they walked out of the room feeling a lot more confident that none of the horror stories or horror possibilities that had been postulated and tossed around rhetorically in the political context were about to happen as a result of the passage of dodd/frank and standing up of the consumer protection bureau. i want to compliment you. i came the that very night and complimenting you on the speech and asked you to send a aye -- i came to you that very night and complemented you on the speech and asked you to send me and a number of the financial service people in my congressional district a copy. when they have raised concerns, many of the same rhetorical concerns were raised. i want to compliment you again on your presentation, the 30 pages that you have given us that outlined how this agency is being stood up. i want to recommend to my colleagues, particularly in light of the debate that we had yesterday and the day before about how the consumer financial protection bureau has no oversight, i want to particularly recommended them pages 18, 19, and 20 of miss warren's testimony. these outlined, in detail, the amount of oversight that this agency has been given that far exceeds any oversight than any other financial regulator has, including the point that the ranking member just made, that any rule that this agency promulgates can, first of all, be reversed by this oversight board, and then second of all, if we are not happy with them, we can reverse them ourselves as we can do with any other financial services or any other regulation that is promulgated by a federal government agency. with that, my time is waning. i do not know how much time i have. >> you have more time. >> i do want to ask unanimous consent to put into the record the speech that was delivered to the financial services roundtable leadership dinner by elizabeth warren on wednesday, september 29, 2010. even with her personal note to me saying, with thanks from miss warren. >> without objection, it is included, including the personal note. >> i want to commend that to my colleagues. if that does not send them at ease -- i am probably undermining your credibility with the consumer groups out there, but i am speculating that at the end of this stand- up, it may be the financial services industry that is the biggest advocate for ms. warren to be the head of the consumer financial protection bureau because of her approach to these very tough issues. streamlining regulation, getting down to simple forms -- the kinds of things that both sides of this committee have advocated and have been the primary focus of advocacy of my republican colleagues on this committee. this is not an ogre, a stand-up person, nor is it an ogre consumer financial protection bureau. this is an important ingredient for consumers in this country. i regret i did not have a chance to ask you any questions. i am just advocating for you. >> we go now to mr. mchenry for his questions. >> thank you, mrs. warren, for being here. i understand your political point -- >> would the gentleman yield for just a second? >> and -- >> just so i can be clear that this is in the record. did i get unanimous consent? >> you got unanimous consent. >> ok. i am sorry. i ask for unanimous consent for the gentleman to have 30 additional seconds. >> you are a political appointee in the white house, and you are a political appointee in treasury. i want to go through a scenario with you, just to get context for folks on your position. walk with me here. this is more of a mind exercise. i want your judgment on the merits of this. it is shortly after the enron scandal. let us rewind. the justice department has a special task force to go after ken lay and enron. would, in your opinion, it be inappropriate for the white house assistant to the president to call up the attorney general and get advice on how to deal with the enron matter? >> congressmen, as best i remember following the enron scandal, the justice department asked for advice from a number of specialists. >> did they ask karl rove? >> -- outside of government. i am not sure. i do know they called my teaching institution. >> that is different. we're talking about a political appointee in the white house. i'm trying to see if you understand why the position you are currently in is controversial. do you have an understanding that you are in a unique position, the fact you are a political appointee, you have not been confirmed by the senate to have this institution that you are directing, you have no statutory authority to engage in these matters that you are engaging in -- do you understand why this is controversial? it is similar to karl rove having a similar position in the white house. if he injected himself on settlement matters like this, there would be a hew and cry. do you understand that this is a bit controversial for folks? >> congressman -- >> yes would be a good answer. >> i work for the secretary of the treasury. in my work for the secretary of the treasury, i have begun to help put this new consumer agency together. we have tried to build already a lot of expertise on a lot of different issues, on credit cards, on mortgages, and on credit reporting. when the secretary of the treasury came to me and said, we would like your advice, i was glad -- >> don't you answer directly to the president as well? >> when the president asks for my advice -- >> yes or no. do you answer directly to the president? >> i answer when the president asks for my advice. >> ok. it is in your title. i am trying to make sure you have an understanding of the magnitude of the challenge faced on your unique position. under what statutory authority are you acting? >> i am an employee of the treasury of the united states. >> sounds eminently reasonable. i want to get into the settlement question. media reports are saying that there is a $20 billion settlement. it is my understanding that if the u.s. government reaches monetary settlements with banks, the funds would go to the u.s. treasury. that is how -- a very standard process over the course of our nation's history. it would not be legally permissible for the hud or cfpb or any other regulator to resolve these matters by having fun is directed to any other place then back to the taxpayers. to allocate some funds, which you need to come back to congress for authorization to spend? -- would you need to come back to congress for authorization to spend them? >> congressman, we are not involved, we are not negotiating with anyone at the consumer agency. this is a law enforcement matter. it is headed by the department of justice and their financial fraud enforcement task force. >> you are not engaged in these discussions? >> negotiating -- >> reclaiming my time. are you engaged in these discussions? >> negotiations with private parties are entirely directed by the department of justice, by the state attorneys general, by other federal agencies. >> so you are not engaged in these discussions? >> we do not negotiate with private parties. we have been asked for advice, and wherever we can be helpful, we are proud to be helpful. >> thank you. mr. hinojosa, five minutes? >> thank you, madam chairman. professor elizabeth warren, thank you for your valuable advice to the u.s. treasury and to our president. i have had lots of meetings with representatives of financial services. i want to say that texas this is the overt act fees. banks also are concerned they might this another key source of revenue. having seen how consumers are struggling with the increase in the cost of groceries, gasoline, many having lost their jobs and homes, i cannot help but want to troot for your work and say that consumers need protection. they do not have the lobbyists and we have been congress working to protect the representatives of all the financial-services. tell us what we can do in congress to ensure that this law is implemented and that it will help our consumers get jobs and hopefully put our country back into what we experienced during the 1990's. >> thank you. that is a heartfelt question. i wrestle with the issues you describe everyday. america's families have been on the r opes for a long time. many families have turned to debt only to find what they thought would be temporary was far more dangerous and costly than they had anticipated. this agency is here for american families. it is also here for america's banks. i met with community bankers in san antonio, texas when holly petraeus and i went down to the air force base. we listen to their concerns. it really has become clear that what we can do as a consumer agency to cut regulatory burdens is to make risks and prices clear. it will be good for credit unions. it'll be good for the financial institutions. they are willing to put up a pradesh pretending it is at one price. these competitors take families away from the founder banking systems. they need a stronger economy. that is what we are here to do. >> thank you for that response. i heard my friend talked about all we have in the bill. it seems like they are the voice for medium-sized and large banks. explain to me why they are so concerned? >> many thought the business models are a way the round -- the world is. we need to figure out how to turn the revenues. king it impossible to compare one project with others. some of them are very concerned. >> thank you very much. >> thank you. >> thank you. i appreciate the opportunity. we appreciate your time coming here. i want to explore that a little bit and find that your views on these organizations and with a bit and whether you believe they should fit. i have a background in real estate and developing. the first time i ever vested was a two-family on 17th street in michigan which is a very rough neighborhood. the families that living there and the families that looking at trying to make an opportunity for themselves really were not going to be able to fit into those conventional boxes. we were talking about big and medium-sized banks. many have been able to service people. whether it is people holding land contracts, i know many people who been involved in real estate. they hold millions of dollars of personal funds and land contracts. you hit on a phrase just in this last answer of serving americans families. there are a number people wanting to do that. they are afraid of some of the directions that this appears to be going. they not -- they may not be able to function. what are some of your views that are less than conventional. whether they may be disabled are may be low and moderate income, there is a marketplace that needs to be served. >> thank you. this is a very important and thoughtful question. the first we thought was for $23,000. we were not conventional buyers. i understand the importance of being able to serve american families across a wide variety of circumstances. i think it has been one of the important things that community banks and credit unions and also non-bank lenders when they come to visit have talked about with me, how it is that they build a business model around adjusting to the different needs of different customers that they acknowledge. they acknowledge the importance of relationships banking. they know how to customize projects. i think the best way i can say this is that we are working with those to serve families. we are committed that prices should always be clear. they should never be a family ready to take down a mortgage. there should never be a family considering taking out a mortgage that does that get what the basic risk is. there is never be the case that a family get information in a way that they cannot make some straightforward comparison of one market to two were three other. that is the direction we have been driving it since the first day i have been there. we have tried to do it at the end of the agency and to the entire attitude. old simile, that is what you want to be able to predict ultimately, that is what you want to be able to do -- old simile, that is what you want to be able to do. it serves the american people. that is our job. i appreciate that. if anybody has refinanced their home are few have been buying it, there is plenty of paperwork that you are assigning. i am concerned about the redundancy and whether some of these things are necessary. how will this work for the lenders. how will this work for the broker. but colet and implement here. they have about 1 million in land contracts. he says he will not be able to function. i like to hear how that would be taking care of. >> >> i want to commend you for your work to do it in plain english. i heard from consumers that they are very frustrated because it is unreadable. i've also heard from community banks. it is easy to forget that most people were trying to make it. they are trying to do right by people. they felt like they had to simply regurgitate the language of the wretched state -- a regulation or statute. they felt that was the safest thing. it is a service to consumers and to those who are trying to make an honest living. i do remember with respect to the first proposal that financial institutions offer a plain vanilla project. that dropped quickly. they offered an amendment that they can not require any financial institution to offer any project. when there were complaints that the sovereignty may be threatened by consumer protection, it cannot be required to do something that would be impossible for them. they have to do things that they will to stay in business. >> that is correct. the argument about consumer choice reminds me about the argument a century ago. it would depend upon the right. it turned out consumers and not want to buy beef. they wanted the assurance that there were buying pure beef. if they wanted. they could buy it here and let it rot. they did that give you the right to buy spoiled be. i have yet to talk to anyone who actually chose some of the products offered in the last decade. i cannot think of any size. as some of the can identify someone that qualify for a prime loan that wanted a key 28 with a monthly payment of 30% or 50%. i asked if he could identify someone that shows that knowingly. i mentioned over jobs. i want that. i do not want the pranks to be able to process overdrafts not in the order in which they come in. or that the atm machine ptomaine that funds available to you know people that wanted that? i do not. i made that offer on the house floor. if anyone knows someone who really wanted those products, let me talk to them. let me understand how they would have chosen it. one of the criticisms is that it does not say what the banks supposedly did. usually when there is an enforcement option, but that they cannot do it into a settlement. it is bad for us. did you know that they ask that there be some detail. >> i have no knowledge. that is what i understand. >> thank you. >> thank you. good morning. i think all of us here want to steer clear prices in regard to lending. i want to make sure borrowers know the rest -- the risk of the loan they are taking. there are other issues flaring up. i do not want to beat a dead horse. i want to go back over what your role is here. there are two jobs contemplated. one is that there will be a director. the president will nominate someone. the senate will come from. it is perfectly clear that some went best to get this agency up and running. but that is why i am asking the question. it walks like a duck and >> like a duck, it is a doubt. -- and quacks like a duck, it is a duck. he might say that you work for the treasury secretary, but anyone who looks at what is happening agrees as though you are behaving as though you are the acting secretary. we want to see confirmation from the senate. this agency provides a voice for the american people. i look at this. we are the voice of the american people. when we do not have any oversight, i see that as incredibly problematic. that's all right. thank you. it is between the time the president signed this bill into law and the time the agency received the authority under the statute. this is hiring in signing contracts. it is you. it is the secretary are there. they ask me to come in and spend my time doing this. it has been a 14 hour a day job. >> i agree. i know exactly what you are talking about. had he been confirmed? >> i am acting on the secretary of treasury. let's let me move on. it appears that you are not the acting director. they all have five member board. they are consolidating this. the primary right -- be there. there is the believe that having a single director and have someone doing banking may still more efficient operations. there are involved in important areas. but they work well. >> they are not banking examples. >> would you be opposed to a five member board? >> what i will say is that this was there. >> are you opposed? ? congress made the decision appeared >> i'm not asking about congress. are you opposed? but i think it was the right decision. >> this leads me to my next point. i think d.c. concern with my colleagues. they agree with what you are doing. it deals with safety and soundness. it is a 10 member board. we did a super majority. all we need is one more. our time is up. >> thank you. thank you. >> and want to start off by saying thank you for your great work. i have been on the oversight committee. i have seen you in action. i think you do a wonderful job. despite all the criticism, i hope you understand that those to really understand what happened, you are the champion for consumers. i hope that you are nominated. he has shown a lot of coverage to stand up against the folks you stand up against. there are lots of people the stand up for the big banks. they said that for financial institutions. they are heavily financed. to there are lots of lobbyists. you are in the teeth of that. i ask you to keep at it. i think you are fighting the good fight. you are on the side of the angels. hopefully, you will be nominated. we hope for that. understand this change. there is this great investment and the status quo. we see this. people are nervous. i do think -- bank of them and allowing them to be overruled. it does permit a short circuit in place where if it was unwise, it might happen. there is a failsafe there. that is certainly warranted. the damage done to american families cannot be overstated. it is done to the market. investors -- they feel that the arrangement is rigged. there is insider training. they do not believe the system is honest. they think it has been compromised greatly. they are hoping he might be part of that. the complexity of the market is growing. and asking you to try to explain to consumers that are out there about your role as someone it confirms my help rebalance the power there before consumers and financial institutions. >> i appreciate that. the banks will be heard from in washington. the question is whether ordinary families will be heard from. they want to provide good projects. this is about this agency. it is a real belief in a market so long as they are honest. i do not care how big you are. everybody follows the law. the laws are directed to you folks a you can have a real chance in this financial marketplace. the risks ought to be clear. it ought to be that you compare one product to two or three others. >> thank you. black thank you. i like to ask a bay have this. i sought out a second mortgage. it is a five-year prepayment penalty. i probably paid for% or 5% more than the going rate to be able to get a second mortgage on my home. i was able to repay debt and the film my dream. they know that they can do it. the government is going to tell them that it is a bad deal and they cannot do it and not allow businesses to make those loans. i appreciated your visit. there are a lot of young businesses that are just getting started. they use a lot of their own personal credit to finance these things. more than 47% of small-business owners use personal credit cards as opposed to business credit cards. that is in nature. i want to sit between an individual using credit cards to buy fancy clothing and a small business owner obtaining credit. >> thank you for a year hospitality. i want to be clear about what we are trying to do. but we compare one product to another. they said the small businesses. they keep it from there and birds. i know how they struggle. >> how are you going to distinguish that individual here is unique it for business from selling here is using it for personal use. >> they are excluded. there are clear. there is a question about whether you buy good-looking clothes or ugly clothes. but what is this going to be mean that almost 50% of business start-ups and business people that use that. they are putting us again. if your agency regulates their activity, what does it mean to the sector that is growing. >> i heard two weeks ago from a group representing small businesses. small businesses are very concerned. when they finance this, risks are not made clear. this agency is about making a clear. they need to know how much they are spending. it to be segregated. >> impersonal credit, it is about making this clear. >> they have 10 billion in .ssets par what part of my business practices with your business are regulate. >> it is not regulate the ordinary banking activity. this isn't area like home mortgages. we talked about how it is figuring it out. they make it come earlier. we are focused on the consumer credit card that and whether or not those to using them are actually following the law. >> thank you. >> i would like to ask unanimous consent to insert the comments. >>. -- thank you for allowing me to have unanimous consent to be a part of this. elect to thank her for her service to the country. i believe that you are doing a very difficult job. i trust that you will continue to serve your country as well as you have. i like unanimous consent in report from the americans for financial reform. it is a proper support dated january on page 4 of the report, there is an indication that there is a need for a permanent director. they see him as a transitional person. but there are no objections, may been submitted to the record. >> without objection. she has submitted this to us. believes community bankers and credit gainers and made it clear regulatory crisis. they go on to indicate that this is hiring lawyers to investigate the complex rules. importances small banks and credit union cannot be overstated. they are disproportional -- disproportionately providers a small credit to business can the community bankers are excluding early importance. they have made it clear that there is this that they proceed. they are regulated out of business. is it possible within the bounds of the ethics for us to work together to help the small banks continue to provide a good service for consumers? also, how are you may delete embracing this crisis that they perceive as one that may cease to function. >> thank you. i see this very much the same way. i worried about our community banks. i worry about our providers. we are clear about the projects. they are willing to make this clear. they are doing what they can on the consumer side. there are better. >> >> let me state this. in your report on page 18, you indicate that in addition to the fundamental strength congress has imposed, you indicate that specifically you are required to submit the agency annual reports. we indicate that they conducted each year. he had to submit financial .perating plans when i the mention that over said was there. i mention these things because i wanted to relay some of the concerns. it has more oversight them less federal agencies. cracked a couple of observations, we see this straight up. >> you are demanding this from the people you enforce. >> he testified. i like to believe in it. online to think about the sec and mr. madoff and believe that in two years ago be operating exactly the same. it might fall short of maybe you are going to be the government agency that the idea that you propose on page 4, we believe we have a market place in american families. when i go to a bank and ask for a low, the first thing i go to has made it clear. it is concise. we are trying to enforce consumers who do not like the answers they can from institutions that have the paper work. you aren't going to enforce the standard on institutions and more only answering the demands of people to come and get project because it cannot get the project somewhere else -- i remember in the state legislature. they wanted to regulate payday lenders. they charge $20 for learning keep 100 per month. i felt like that is too exorbitant. it was 1000%. one guy came up and said what damn business is it of yours if i buy $100 a day and want to pay back $120. that still rings clear. at some point, you should ask that to your agencies. the question at i have -- it is my understanding that we will not be here if the basic rules of the road were consistently enforced, protecting in -- protecting consumers. i get that you believe that there was no enforcement for mortgages. they did not do their jobs. nobody has this. >> i think the evidence is very clear. they did not do their jobs. >> maybe the government asked the banks to give loans to people who cannot afford it. they did. the government insisted that banks give loans to people who could not afford it. no loans with payments for a from made. the loans without the ability to be paid was lumped into bonds. the exotic instruments were created out of that. that is what was not regulated. he is giving a project that is not in compliance. >> i think we can agree that the crisis in home mortgages and then the rest of this economy was not caused by community bankers or credit unions. it was caused one mortgage at a time for mortgage brokers. they put out products. it was deceptive. i think that is the evidence of what went wrong. >> the race those. >> -- the release of those. >> thank you. >> >> thank you. in your testimony, you indicate that many rules making noncompetitive. diplomatic competitive disadvantage. >> they have this on the better pirro. it is fairly complicated. they depend on this from more than 15 years. it comes to one agency. we will combine its. they originally these marriages. it is the most efficient way to do that. and might actually produce this. >> are you going to look at the cost benefit? >> we certainly but that the costs. >> liking the the numbers all day long. >> been they have work to the community banks. >> answers the question. i'm sorry to interrupt. i want specific answers to specific questions. at what point is it too costly to implement? we are required by law to do a cost-benefit analysis. >> i know you are. a costa million dollars and a billion dollars. at what point will you say no. >> that is what it is. >> i think your question about the point is important. we are communicating right now with the community banks about the changes they want to see. they think there are cost savings from them that benefit consumers. they are going to put a new form in place. now have to put the front and the back. you are going to be the new examiners on the block. >> ones with more than $10 billion in assets. in the consumer agency will be the primary supervisor. >> dave will be based. -- the transfer date is july 21 of this year. that is one the other seven agencies stand down in some of their responsibility for enforcement and bills of writing. >> what else have they been doing? >> we will be doing something different. we will be enforcing it. >> by evelyn to the collecting them. >> -- are you going to be collecting them? >> thank you. i want to thank you for taking the time to do this. i would like to continue down the lane in terms of how you think this will impact small- business this. consumer enters into the transaction were full disclosures. are there any reasons on which you are the agency could possibly invalidate the transaction? if so, what are the possible reasons? >> i tried to make it clear. it is about making the crisis clear. the point is to get an informed consumer. i believe that american families are good at making decisions when they have the information up front. >> i cannot agree with the more. the way it is written, there'll be one person in charge. >> it may choose to enter and a financial transaction. they have unformed practices. there are certain practices that are getting an unfair. there is that will come to the consumer agency. >> can you give me any sort of an idea in how you plan to reduce the regulatory burden that adding another regulator into the mix. people, it is the uncertainty that the their creating another level of uncertainty. especially the power being put into the bureau. i take is that they will wait. >> are you concerned that this expresses it? we will take transfers of the authorities that are currently there in seven other agencies. we will put them in one agency. we will hold accountable. " we have tried to do is reach out to all potential stake holders. we have talked to nonbank lenders. we have gone out and have had extensive conversations with the investment community. they have had questions about how this would be set up. if you are going to make these a little more obvious for consumers to understand, let's add some of the risk. >> it is greater than in several people making a mistake. kenny turner. tell me right now? it is a temper some board have a way to overrule it? >> that would be with a 2/3 majority. >> i would like to add two minutes. >> thank you. thank you for yielding my only question deals with the idea that we are protecting consumers and doing the things that eat away at their ability to pay their mortgages. we are here to protect the consumer. we are here to make it easy for consumers. >> there have been basic rules on the road. i was wondering if you are going to be the champion of the consumer as it comes to inflation. they realize with the most big practices right now is what is taking trillions of dollars away from the bank accounts. is your protection going to log into the really heavy duty pie? d.c. roldan? >> i am sorry. -- do you see it roldan? >> i am sorry. our policy is not in there. >> i thought we were going to protect anyone. i appreciate it. i yield back. >> thank you. thank you for being here today. just a couple of quick notes. we heard about anyone who landed money that is considered morally reprehensible has been called out. i would like to think that it that was the case, there was no marriage is on the part of the democratic majority or president that allowed it to happen. secondly, we have heard from our colleagues about how spoiled before us once opposed by people who wanted to eat it. that is a fair point. no wanted to eat it. where there is a legitimate concern for governmental action to prevent a social harm, we wind up going from the inspection to prevent spoiled be. it is to the elimination at half the bills at the levels. in your eyes, with the fact that we to not in nearly appropriate to your entity, what do you believe are the appropriate limits for the agency that it will never do and what is the proper role in congressional oversight. as you know, of the banking regulators are part of the appropriations process. congress has repeatedly made the very wide decision that pulling a banking regulator, somebody who has to stand up to the richest and most powerful and say, sometimes, no, is not a good idea. and congress has never done that. as it stands right now, the other banking regulators stay outside the process. the consumer agency is the only one of the banking regulators who actually does not have full control over its own budget. its budget is effectively set by the fed, unlike the federal reserve's the ability to set its own budget and the other agencies. so the consumer agency is more constrained on the financial side and it is subject to being overruled by esoc, unlike any agency anywhere in government. i am convinced that this consumer agency will be a voice on behalf of american consumers. but congress, quite reasonably, in setting this agency up made it the most constrained of the favorite -- of the federal agencies. >> i appreciate that, but not necessarily bias. it happens to be in the constitution and that the entity within the government that is most responsible the people is the house of representatives and may be the richest and most powerful people. thank you. cfpbid someone call the siep about a complaint about a mutual ?und - >> i believe the boundaries on our jurisdiction are pretty clear and that the consumer agency does not do -- >> they don't get involved with investors. >> i think investment issues are left to the sec. >> in your letter to congress and randy, dated january 31 of this year, york -- your concluding paragraph says, "does sincerely appreciate your thoughts and council regarding the task ahead of us. i hope we can work together on behalf of the millions of americans, large banks, community banks, credit unions, and investors who are counting on us to build a strong and effective consumer bureau to make the markets work for everyone." you used the word "investors." >> i did, congressman. i have been reaching out to investors -- >> but you said that investment would be left to the sec. >> know, you ask me that if there were a consumer complaint, would it be directed to the consumer protection bureau. >> the answer is in no. >> the answer is no. the investors i have spoken to are those who invest in financial stocks. i have been meeting with them because i actually believe they are stakeholders. >> invest in financial stocks, but there would also be covered by the sec. >> if you will permit me to explain -- investors in financial stocks want to understand about what faces -- >> i understand. the issue of jurisdiction, who has stressed action over this? you or the sec? >> it is clear that the sec has jurisdiction if a consumer has a complaint. >> so you will stay out of that whole area. is that what you're telling us? >> no, congressman. congress has made that boundary. those who invested in bank stocks, the same way that those who invest in their plan stocks -- >> but that is not your jurisdiction. is that correct? >> my jurisdiction is consumer financial products. among the people who are interested -- >> i understand that. i thought you had entered the question clearly and now you're backtracking. >> i am not backtracking el. >> does the bureau -- i am not backtracking at all. >> does the bureau provide protection to those who buy stock? >> its is the jurisdiction of sec to deal with consumer complaints about stocks. there is no reason for the consumer agency to be involved, yes, sir. >> so you will stay away from that area. >> we will not go beyond our jurisdiction. >> ok. >> the other question i have is, in going through your testimony, it says on page 6, fine print in passengers full of legalese make it impossible for the customer to know what is really going on. this is wrong. they should not struggle to understand the basic agreement. would you not agree that the legalese that the banks and credit usance -- and credit unions are using is because of legal requirements? >> sometimes, congressman, the fine print is there because of regulations. >> most of it is. when i practice law in real estate transactions, we had one page. i could close in 20 minutes. now regulation z. in hud 1, multiple pages, it takes two hours or more. the consumer cannot read all of this stuff. how will you go against all of these agencies? >> congressman, when the transfer date comes and we pick up from the other seven federal agencies -- >> the gentleman's time is expired. we have more questions that we want to get through. mr. ackerman. >> i am buoyed by the notion that anyone who can take the kind of badgering and defend yourself and the agency will be doing an incredible job to defend the consumers of this country. against those who exercise the kind of greed that has been exhibited. >> just a quick question. at the beginning of a last decade, subprime lending and predatory lending, i asked you if you knew anyone who qualify for a prime mortgage and got a subprime mortgage. i outlined some of the predatory terms. you answered a that you did not the gentleman from georgia offered himself as an example. it was hard to tell what his circumstances were at the time. one term may have made it predatory. i am sure he thinks he is a smart businessman, but they probably snickered and gave themselves high fives when he walked out of the room. but he also said that he could not otherwise get a loan. even after you have now heard the example of the gentleman from georgia, do you know someone who qualified for a prime loan, but consciously picked a subprime loan with the kind of terms that became prevalent in the middle of the last decade? >> know, congressman, i cannot. >> thank you. -- no, congressman, i do not. >> thank you. >> there is not a lot of beating around the bush in listening to your explanations. one of the things that troubles me -- i do not know how i wound up in your buddies sucker list, but i get a lot of junk mail. there is a whole group of financial institutions in various sectors that send you mail, which are solicitations for programs and offers, and they do not identify themselves on the envelope. there's no return address and sometimes the return address thais a post office box somewhere. but you can see through the usual window that they have in the such promotions. besides your name and address, if concerns your account at a financial substitution which you have an account at. you're anxious to open it because this is coming from my bank, credit union or what have you and you open it up and it talks about selling you an insurance product or life insurance because you have just refinanced your mortgage or opened a mortgage or an account, which becomes a matter public record. and you think, because of the presentation on the olive, that this is from your financial institution. you can read three pages worth of information and sales pitch before you realize it is from someone you do not know or have a relationship with. i do not want to interfere with anybody's right to free speech or advertise or promote or inhibit their business in any way, but is meant to be deliberately deceptive to the potential consumer and making them think that this is from their bank. would to be amenable to exploring a method of requiring some form of identification and could i have somebody in your staff meet with me and my staff so that, at least, you know on the all-pro this is from rather than being -- you know on the envelope who this is from rather than being deceived? >> congressman, we would be very pleased to send someone over from the consumer financial protection agency to work with you and see how we can help. >> understanding is under constitutional rights of the producer to do that. >> congressman, we want to be as helpful as we can. i want to offer one small caveat. we're just getting started. you may have to be a little tolerant with us on timing. >> we are today i am just getting started myself. >> think -- i am just getting started myself. >> thank you. >> i want to start with a brief statement. in your statement, you compare the bureau to other banking regulators. but i believe that is done in a proper comparison. you stated specifically that congress has consistently provided for independent funding for bank supervisors to assure that banks are examined regularly and fairly for both safety and soundness and compliance with the law. but your agency does not have a safety and soundness aspect or mission to it, does it? yours is consumer protection. so the reason why it other banking regulators have independent funding is because of this safety and soundness function. that is authority. you do not want members of congress with the political aspect getting involved with anything that has to do with the safety and soundness in financial institutions. you have a consumer protection function. the others have a funding mechanism that goes through the appropriation process, unlike your spirit yours is a consumer perfection agency, just like the other ones and should go through the appropriation process. if you worthy -- if you're like the other banking regulators, would do not have a board as a checks and balance as opposed to one lead authority, which is where you are? all the other ones have boards in their framework. yours does not. i do not think your comparison to bank regulators is the appropriate line. therefore, the appropriation process should be as we said before, having checks and balances for what comes out of the agency. let me go to questions. i appreciate the fact -- you have been commended on your yes and no answers. talking about the little settlement and servicing issue out there right now in the news, is there a difference -- to you believe there is a fundamental issue between penalties for criminal wrongdoing vs mere paperwork violations? is there a difference on how those should be treated? >> congressman, there is an ongoing legal enforcement action -- >> right, that is what i am asking. >> it would not be appropriate for any member of the government, me or anyone else, to comment on what is involved in those negotiations. >> let me ask you this. have you pushed for or advocated a recommended dollar amount with regard to the other regulators involved in this situation? >> congressman, i know that, given the level of problems that have been uncovered with mortgage servicing, the acting director of the comptroller of the currency has been hindered in congress to talk about violations of state law and local law -- >> what about you? you are here today. just tell us what your doing. are you giving suggestions to the other regulators? >> as the government is trying to negotiate with those servicers that the occ has found have violated the law, they have asked that nobody speak about the content. >> can you tell us what your role is in this? >> i can certainly tell you what our role is. >> can you tell us if you have made recommendations? is that part of your role, to make recommendations to them about dollar amounts? >> of the secretary of the treasury has asked us, the consumer agency, to give advice. the department of justice -- >> so you have given advice -- so the answer is yes. >> on behalf of the american people, they have asked -- >> will the gentleman yield. >> i only have 30 seconds he left. >> the department of justice has made clear that they do not want people who are part of the government -- >> i understand that. what legal authority does a political point have with regards to this? >> congressman, i think we need cops on the beat to enforce the law. >> great, but we need to know what the law is. can you inside with the authority is to enforce the law? >> we need to enforce the law. >> can you tell us what the losses? -- what the law is a? can you cite what the legal authority is for you to do these actions? >> the gentleman's time has expired. >> i just wanted to thank you for your remarkable public service and four serving so well in two jobs, as a special assistant to the president of the united states and a special assistant to the secretary of the treasury. i truly do hope that he appoints you to be the first permanent director of this body. you have worked extremely -- you are a chain been, really, for consumers and you have been balanced and fair. i compliment you on your work hand on your testimony today and on the fine job you are doing. thank you. >> thank you. i would like to thank you also, prof. warren. i would say that the duplication in the financial education across the board of the gao study, there is a great concern of the gaps -- if this agency does not have a leader in july and regulations that are moving toward and what will happen there -- they're a lot of players at the table who are concerned about that. i appreciate you coming in and testifying and i would say that the chair notes that some members may have additional questions for this panel, which they may wish to submit in writing. the record may remain open for 30 days for members to submit written questions for this witness and to place their responses in the record. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] mr. chairman, to be able to be asked to use $1.5 billion as needed just to meet the cost of eligible projects for this year so we're basically paying for projects of past disasters using money that we're supposed to be using to prepare for future disasters. now, i've sent a letter to the president, i would very much like you and the ranking member to look at this letter, to co-sign this letter if you could, because we're going to find ourselves back in the same position we were before katrina struck, which is under funding our preparedness for future disasters and not being ready when it happens. specifically, and i'll submit the rest to the record, the house resolution is cutting $68 million of i.t. funds ranking senator snowe's point, this is exactly the money that's necessary for fema to keep up their computer software and reporting mechanisms to cut down on fraud and abuse. so on one hand, we're asking them to come down hard on fraud and abuse, on the other hand, we're taking away their money that enables them to do that. that is not right, that is not fair. in addition it is projected we are going to run out of money three months before hurricane season starts. this happened last year, mr. chairman. if we don't weigh in with the administration and with our colleagues on both sides of the aisles, it's going to happen again. the only final thing i'll say, and i'm looking forward to reading the details of the report, there is some encoura encouraging news, mostly because you and senator collins have done such a good job staying on point, i'm proud that i held dozens of hearings in four years on this exact subject and hopefully some of the hearings that we held contributed to some of the steps that have been taken to improve, but on the issue of fraud and abuse, i just want to submit to the record and i know that senator collins is very concerned about this, and i am too, but on behalf of many people in the gulf coast, i have to just add to the record, that some people are being accused of fraud because they could not provide title to their home or insurance documents. i mean, in floods and in earthquakes, documents are lost. some people are being accused of fraud or put in the column of fraud because they couldn't provide free and clear title to their home. it's been in generations for years. they simply don't have a clear title among several generations. there's some that are in a column or a cue for fraud and abuse just because there's a mix-up or admission of names like junior instead of senior or senior instead of junior or boulevard, drive or highway as opposed to what it's supposed to be. i know that fraud is a serious issue. i join senator sessions and others in clamping down, raising the fines, increasing the penalties for people that would try to gain the system. it's particularly horrible, i think, for people to try to game a system in the middle of a disaster. their penalties should significantly be higher in that regard. and they are. but we have to be careful, calling some of these misclassifications fraud when they really aren't in my definition of fraud. and finally, when we go to collect this money back, particularly senator snowe, i just want to say, that i hope that the money we put into collecting these, you know, these funds back, are cost effective because some of these funds were put out in a thousand dollars or $2,000 and there are hundreds of thousands of people that we may have to track down. i know letters went out this week for 5,000. but let's just be careful that when we seek to get the money back, it's a good expenditure of taxpayer dollars and not just throwing bad money after good money after bad. i'm going to submit the rest of the record. i thank you very much to the chairman and to the ranking member. >> thanks, senator landrieu, for coming off the floor while you're managing the small business bill, but also for your leadership of the subcommittee and we'll continue to try to carry forward with your assistance. thank you. let's go to the witnesses. again i thank you for being here, all three of you. we'll begin with the honorable craig fugait, administrator, federal emergency management agency at the u.s. department of homeland security. good afternoon. the question is, how ready is fema for the next big disaster? >> thank you, mr. chairman, ranking member collins, and senator landrieu. in response to the event, i'm going to try to go through my oral statement here and give more time to questions. i think this is really, i think, a better setting for the questions that you have in response. but just kind of a summary. you know, we've been looking at this since i've been at fema from the standpoint of planning and what do we do in a catastrophic response? as you pointed out we respond to a lot of disasters and implemented the stafford act to provide assistance. that's not the same thing as a response that requires a coordinated federal where we have a lot of different resources that have to go quickly to an area where we may not have a lot of information. looking at the back drop of what's happened in japan and again, you know, i can't even imagine what my counterparts are doing, how they're standing up to this. this is what we are in the business for. it's the most challenging thing you can deal with. not only the losses, but our counterparts knowing what they're going through now and the challenges they're facing and trying to step back from that and go what if it happened here and what would we do? from that approach, will be the thrust of my comments. the thrust of my comments. we have been supporting, as you know, the lead for international response, international development, in support role to the teams that have gone to japan top assist in search and rescue. the urban search and rescue teams, again, authorized as part of fema. 28 team, two of which are dual supported by both us and uscid, designated the international response teams, that have been to haiti, most recently christchurch and now into japan. we stand by the uscid but japan is an industrialized city. the events that remind us disasters, you point out, don't always give warning or follow with season and often don't happen where we have expected to have the worst impacts. for that reason, a term we use in fema is we can't plan for easy. we have to plan for real. we cannot look at what we're merely capable of. we have to look at what the m y impacts would be to our communities and change the outcome. we put a lot of emphasis on the first 72 hours. we see this as key. we saw it in katrina and in other disasters. if aid is not reaching the people that need, it not secure, not able to do the search and rescue, not get there quick enough it becomes extremely different for the outcome of the survivors t survivors. to do this you changed things with the format that stated it was the intent of congress we would no wait for a system waiting for help, waiting to help. that the fema family could begin mobilizing when we determine something happened or think it's about to happen even prior to a formal request from the governor. we've used that provision numerous times since i've been at fema, from the american samoa tsunami to the flooding in tennessee, to most recently the tsunami issues issued for hawaii and the west coast in moving in prepositioned supplies as you directed us to do. >> talk a lot more an that. i think it will be interesting to people who are listening or watching on tv. >> well, previously, this is one of the findings and concerns you raised during katrina. it was not always clear, could fema begin moving resources particularly in tasking our federal family and moving supplies such as food, generators, cots, blankets prior to a greft a governor. in looking at that, you clarified under the stafford act at the direction of the president fema could activate and use the drf, the disaster relief fund to begin sending missions to various federal agencies as well as deploying resources. >> before anything happens. >> before anything happens. >> merely upon, the tsunami warning centers in hawaii and in alaska, began issues tsunami warnings -- >> last weekend. >> last weekend. last friday. actually, i got my call about 2:00 in the morning. and this then occurred a little after midnight our time. our regional office, region 9 which covers the pacific was already stood up. we made the decision we would stand up fully fema's support to the west coast and islands and territories. we began moving supplies out of our logistics centers which you've authorized to provide additional funding to have nor plies on hand. >> you got the centers disbursed around the country? >> yes, sir. strategically located around the country so we're closer to the areas we would need assistance. a facility at moffett field in california and began the process of getting supplies loaded up. >> what kinds of supplies? >> in this case we thought the primary event would be destruction along the coast. people displaced, people possibly in shelters. so we have a distribution center in guam, a distribution in hawaii and then the distribution we activated on the west doecoa to begin moving shelf stable food and one of the things that came out of the commission on children's disaster, we sent the shelf stable meals but don't send formula or baby foods, it's not help to the young. they mapped their greatest risk from tsunamis. like we do for hurricanes and map the coastal area, along the west coast they've actually mapped those areas at greatest risk for tsunami. we know where the populations areas would be and ra relative whisk. we didn't know how big the wave would be. given the magnitude of the earthquake, the size was one to suggest you could see as much as a 2 meter or almost 6 foot tsunami. this isn't like a wave breaking on the beach. if you saw the videos in japan you get the idea, a six-foot wall of water literally rushing in, pulling in, not going out and how devastating that could be. we also had folks in hawaii that went into the governor's d.o.c. in hawaii as he was activatingen evacuating his coast and had supplies ready to go there. this process comes back to the critical moments when we think there may be an event. we had a trigger we knew a major earthquake occurred. we knew the tsunami risk was there, had the forecast but didn't know the impact. we began moving the supplies based upon what we projected what we call our maximum maximum. the worst case impact we'd see along our coast, and began moving for that. again, it's a process that says we have sow understato understa close contact, communicating and doing it as a team. not just fema. talking to the admiral, to the state counterparts. anything they're concerned about or need to adjust. so this process really comes back to, i think, the heart of what you try to get to in post-katrina format. fema had to be more agile, able to build a better team, recognize a lot more capacity and capabilities than just what we bring but we have to move fastener these events. at the senator points out, we have to declare when are we stable and when do we need to engage safeties to make sure we're not going things that are no longer necessary. we define outcomes we want to achieve in this additional response such as life safety and life-sustaining activities. it goes back to one of the harder issue. had we can't do that we fault it back to the monetary assistance props because we couldn't get enough supplies in to meet the basic needs and found ourselves with not many options. part of this is working in partnership and also the private sector. the other thing we never did. we always came up way government response to disasters. never realized before that disaster happened in every community there were grocery stores, hardware stores, gas station, pharmacies. we would oftentimes plan our response ir. >> reporter:less -- irregardless of what they were doing. now they're part of the fema team and response center here in washington helping us coordinate with them so we don't compete with the private sector. we go where they're not, where they have the difficulties or destruction so we can focus our response on those areas of heaviest devastation, but also in the unique populations as you point out, mr. chairman, i know senator collins' fatalked about this before. people being prepareded. we talk about this as one of our spornts. i want people to understand why we tell people to be prepared. they're going to be heavily impacted areas that should not have to compete with sthoez these of us who could have been prepared an should have been ready. they shouldn't get in line behind us. those people that don't have the resources, that don't have the ability to do these things shouldn't get in line behind us bu we didn't get ready. these type of catastrophic disasters, the government needs to focus on the safety and security of the bottomless populations working with the rest of the crew, the organizations and businesses. it's important that the public recognizes to the ability that they can prepare so that those first critical days they're not competing with the most voweler inable impacted populations is key to our success. we talk about are we prepared for a catastrophic disaster? we've made significant improvements whip the tos toolsu have and have much work to be done. looking at the processes that need strengthen to ensure not only can we be rapid and fast as i like to say, we want to be fast. we want speed. we don't want haste, or we have waste and abuse to the system. thank you, mr. chairman. >> thanks, add minister fugate. we look forward to the question and answer period. mr. skinner, richard skinner, thanks for returning to capitol hill. it is your report of last september at fema's preparedness for the next catastrophic disaster. an update that led us to plan this marrying a long time ago. it comes obviously in the immediate context of the tragedy in japan. so it's just inevitable that we will be looking at the report based on what's happening there now, but it's a great piece of work. typical of the high standards that you reached throughout your career in public service and we welcome your testimony on the report now. >> thank you, mr. chairman. ranking member collins. it's a pleasure to be here again this afternoon. i don't really feel like i've retired yet and i've been spending a considerable amount of time actually preparing for this hearing, but it is a pleasure and honor to be here. i can't agree with you more. the tragic events that are unfolding today in japan is a stark reminder of hour important catastrophic preparedness is. can and will happen here. it's just a matter of when. if you asked me if we as a nation are better prepared than we 20 years ago, 10 years ago, even 5 years ago, the answer to that is, yes, of course we are. we've made tremendous strides, particularly over, like you pointed out, over the last four years since hurricane katrina. if you ask, are we as prepared as we can be or should be? then the answer to that is, no, we're not. fema has made -- while fema's made notable progress over the years it's doing so at least in my opinion at at snail's pace. after 32 years in existence and many years learned from past disasters, such as hurricanes hugo back in the late '80s and eric andrew in the late '90s and katrina in the earthquake at northridge, in the 9/11 attacks, we as a nation should be much better prepared than we are today. there does not appear in my opinion to be a sense of urgency with fema to turn words and plans into action. fema is an agency that in my opinion, my observations and my association with them over the last 20 years seems to be an agency that's always in a constant state of flux. at least during the 20 years that i know that i haven't been working with feel moo. many concerns outside of fema and with identified hurricane katrina, and nearly 20 years same, the same identified in its september 2010 update of katrina the disaster preparedness capabilities. they've created task group, working panels and counciling to develop remedial action plans to address these issues that produced libraries full of lessons learned, and draft documents, many shelved and took a back seat to the urgency of its missions demand, to respond to the latest disaster. consequently, momentum towards finalization and the implementation of key initiatives were slowed or lost altogether. the four issues i talked about today that concern me the most are, one, the failure of fema to build a strong management support infrastructure to sustain its disaster operations. this includes information technology development and integration. financial management's, acquisition management, grants management and human resource management. these functions are absolutely critical to the success of fema's programs and operations. yet whenever there is a major disaster or whenever fema is required to reduce its budget, these are the first activities to be cut as evidenced by the president's 2012 budget to congress. and the many budget cuts posed by congress itself over the years. this is short-sided in the long term will cost increase or raise the costs of disaster operations and disaster programs. it will increase fema's vulnerabilities to fraud, waste and abuse, adversely affect the quality of service the individuals and communities affected by disasters. in january of this year the dhs reported fema's -- i was still at the ig at that time -- we reported that fema's existing i.t. system was not integrated do not meet user needs ar are cumbersome to operate and do not provide the i.t. capabilities needed by users to carry out disaster operations, response and recovery operations in a timely, efficient and effective manner. furthermore, fema doesn't have a documented inventory of a system of support disasters nor does it have a comprehensive strategic plan with clearly defined goals for its components. program and field offices we found are continuing to develop i.t. systems independently of the cios office and slow to adopt fema standard i.t. development approach. without modern, integrateded systems, fema's hard pressed to perform at its best as evidenced by the fraud, waste and abuse that has plagued the agency since its inception. it cannot prepare timely and reliable financial reports from which to make financial or informed financial management decisions. cannot readily share critical information with its own ranks or with its federal partners, the federal, state and local levels. it cannot track its disaster workforce. the status of its mission assignments or work peeg performed by its contractors and grantees, at least not with any reasonable degree of reliability. until these issues are addressed people fema's taxpayer dollars wasteful spending and poor performance. similar to unneeded travel trailers after hurricane katrina or the millions paid to ineligible disaster assistance applicants or the millions paid to unscrupulous contractors. granted, fema recognizes and is attempting to remedy many of these problems and weaknesses and has actually made headway, because, as you can see, and have heard from the administrator today, the question is, however, does fema have the resolve and wherewithal to sustain those efforts? the ability of fema to do so is fragile. not only because of the early stage of development that these initiatives are in but also because of the nation's economic involvement in the constant destructions caused by the inordinate number of disasters fema must service each year. ness unless there's a sustained commitment, there is a good chance we'll talk about these same problems five or ten years from now. the second issue that concerns me is a lack of performance standards in metrics to measure the level of disaster preparedness at all level, federal state and local. in july 1993, 18 years ago, gao reported that fema had neither established performance standards nor developed a program for evaluating federal, state and local preparedness for catastrophic disaster response. until that is accomplished, before the gao, fema will not be able to judge the nation's readiness nor will it be able to hold itself or its state and local partners accountable. in 1998, 13 years ago, fema claimed to be in the process of developing a methodology for assessing hazard risks and escape capabilities. until this day, fema has not finalized this nor the performance of metrics in processes necessary to track and measure emergency management capabilities and performance. state and local governments received billions of dollars over the past eight years and are estimated to receive billions more over the years to come. either without a bona fide performance measurement system, it is impossible to determine whether these annual investments are actually improving our nation's disaster -- furthermore, without clear performance stands, fema lacks the tools knows make informed funding decisions. 's in today's economic climate, it's critical that fema concentrate its limited resources on those hazards that pose the greatest risks to the country. third, the third issue that concerns me is the lack of transparency and accountability in the use of the disaster relief funds and prevent fraud, wait and abuse of the funds. literally hundreds of audits and investigations over the years demonstrated that fema programs are extremely vulnerable to fraud, waste and abuse, yet fema still has not developed a robust program to curtail fraudulent use in its program. the extent of the taxpayer covering year after year, the past 20 years since i've been associated, is unacceptable and needs to be addressed aggressively. unfortunately, there's a long-standing mind-set with fema, with the fema rank and file that fraud prevention is the exclusive responsibility of the oig. many believe that fema's responsibility is simply to doll out funds to individuals and communities affected by a disaster. and it is the oig's responsibility to catch those who have received those funds through fraudulent mean. this flawed mindset a costing the american taxpayers millions of dollars each and every year. fraud prevention is a shared responsibility. in 2007, response to a new i.g. proposal, fema create add fraud prevention unit to address the complaints widespread fraudulent activity after four disasters struck florida in 2004. since then, renamed and placed in fema's office of the chief security officer. although the concept behind the fraud unit was sound it is understaffed, underfunded and lacks the latest in fire prevention technology to be effective. furthermore, organizationally buried in the bows of the ages and very little if think visibility between the rink and file. consequently, if utility is not fully unite liesed's feel mae noods to expand its scope of responsibility to includes after disaster relief programs nationwide and mandate fraud prevention training for all employee. this should help strike the balance between providing assistance and ensuring fiscal responsibility. a good model that fema may want to immolate is the one developed by the recovery accountability and trans, and also provide fraud and abuse from nearly $800 billion in economic stimulus recovery programs. with nine months of its creation, the board developed and put into place government-wide systems to provide transparency and accountability and to identify and prevent fraud, wait and abuse. ace a result of this, economic stimulus funds have been kept to an absolute minimum. there's no reason why a small agency such as fema cannot do the same. we as taxpayers deserve to know our tax dollars are not wasted and spent on fraudulent activities fop that end i believe fema should review and incorporate many of the precedent-setting measures used by the recovery board in order to assure proper payment of taxpayer dollars. i'm concern about the many emphasis placed on community outreach and awareness to provide hazardous projects and litigations. many consider this the core of emergency management. helping to prevent disasters or reduce the effects of disasters when they do occur. in the late 1990s, fema launched and aggressive community outreach and awareness campaign to educate the public about the importance of yid gatien and provide this for public and private sectors to collaborate on the development and implementation risk-based all hazard mitigation strategies and project it's. unfortunately, this initiative lost momentum dupe to the change in administration and the tragic events of 9/11. america's attention turned to fighting and preventing terrorism and mitigation faded into the background as an emergency management priority. as a result, fema is now struggling to bort and develop a strategy. to lessen the impact of a catastrophic disaster, mitigation needs to be held, again, as a top management priority. fema needs to relaunch its campaign to educate the public and its mitigation partners about the importance of developing and implementing mitigation strategies an programs. in conclusion, not withstanding the em initiatives under the way. in resolve, sustained effect, sisht strategy and program. fema's increased involvement in routine disasters coupled with the reasons economic downturn and the impact was having on government bfts at all letters, could easily derail the many kmishtives currently underpaper. were were -- mr. chairman, i'll be happy to answer any questions you my have. >> thanks, mr. skinner. that was directs as we expect from you. maybe i'd call it the tough love that we expect from a great inspector general. and when we get to the qs and as i'll ask mr. fugate if he wants to respond. our final witness is william o. jenkins jr., director of homeland security and just is issues at the gao. >> chairman lieberman and ranking member collins i appreciate the opportunity to be here today to discuss fema's efforts to measure, and assess, natur capabilities to respond to a natural disaster. my comments echo that of mr. skinner. the heart wrenching videos from japan vividly illustrate a catastrophic disaster. the response capabilities of the affected areas are almost immediately overwhelmed and substantial outside assistance kirchs assistance -- katrina response resources from almost every state in the lower 4. basically prepares for disasters required identifying what needs to be done, by whom and how well it should be done. more specifically, this includes identifying one, the nature of the risk faced in the pacific jeer graph gee graphic areas. two, the types and scale of the specific disaster arising, three, desired outcomes in addressing these consequences. four, the capabilities needed to achieve the desired help comes. five, whose should fund, develop and maintain specific capabilities, and six, metrics in which needed -- are needed tore deployment. details for who should do and and how the many players are managed an coordinated. training the performed assigned roled and capabilities should be coupled with exercises to test and assess the operational plan and identify areas of strengths and gaps that need addressed. federal government provides more than $34 billion to states, locality it's to prevent, respect, respond and recover from major disasters. post-katrina emergency management gave fema responsibility for leading the nation in developing a national preparedness system, developing measures of desired capabilities and assessing the resources need to achieve them. this is a complex and daunting task. as mr. fugate notes in many public presentations it is a task feel may may lead but whose partnership -- as well as the american public's in in december 202, the local state tribal and federal task force of preparedness agreed there was no method for assessing preparedness or to the engs tent federal grants enhanced disaster capabilities and preparedness. they suggested a three-year timeline with an associated task for developing net crick's pt sim -- fema charactered most of the methodologies its developed as guidance or tools that non-federal employees can choose to use or not. one result of this asproech that available data or a large self-reported, difficult to validate and not necessarily comparable across reporting jurisdictions and entities thus making it difficult. a picture of national preparedness. each of the efforts today has partially advantaged the ability to find and mischer. however, they have not been -- to access national preparedness as envisioned by the post-katrina act. until it does have an integrate the approach, fema will not have mpment of a disaster preparedness across the nation. nor will it be able to effectively target grant resources to the areas of greatest need and potential benefit. it is said in a a useful way -- with catastrophic response roles an responsibilities. fema embarked in a new initiative calmed whole of community which incorporates 13 corresponds with an emphasis on stabilizing a catastrophic disaster in effect in the first 72 hour. this approach will be tested in the national level exercise this year using a major earthquake on the new madrid fault. this whatever approach is used, thag be a designed end. assessing where we are in ability to achieve that and roles and responsibilities are clear and we rigorously test and periodically rei valuate the assumptions on which the sdamp planning is based. according to news accounts, japan experienced a significantly bigger earthquake and tsunami. than the one for which it had planned and prepared for the geographic area hit by the disaster. it faceded coupe la -- any one of could would have been considered a major disaster. all events provide opportunities for learning and assessment'. this is not different. this can be useful in our own future disaster planning and preparations. that includes my statement, mr. chairman and i'ding please to respond top questions your ranking member might have. >> thanks very much, mr. jenkins. it was a very helpful statement. were the min traitor, i want to give awe chance to response to the testimony of mr. skinner and mr. jenkins. i want to offer you also the opportunity to file written response to the -- we want to get to other questions. particularly on the various elements of management to respond to what mr. skinner said. >> well, thank you, mr. chairman. much of what is in the i.t. report we're not disagreeing with. i think, again, to say that we're not taking steps, wr are. and to say it's rot a-the results may not were there, but an oompg, ampexample. it was basically a piggy bank when i got involved used oftentimeses in way that was not the intent. we found ourselves funding positions that weren't tied to disasters oftentimes used, if something wasn't going right, go look at the drf when it wasn't a disaster. one of our first stepsing recognize what were no longer disaster work. funded particularly from the katrina era that had become something you'd already funded in positions. we worked with they to elimonite -- we had a two-year transition period and were successful do that. the other thing we looked at, the cost of disasters. in many cases we were setting up large numbers of folks to and bill built upon a con sthaept was already there. a virtual field office. work from the reach's and avoid that cost. doesn't slow down the response to do the recovery but it does reduce the overall cost how we administer the disaster itself. for fraud and waste we have been working to make sure that we have the acquisition staff. a large percentage of ouring kwa zigs staff is contractors. getting them over and served by. requiring that not only those people that by law are required to have avid training but require all female employees to take training annually. working on, pointed out, huge in response. katrina was not having strong acquisition and having people that can go out and ute nice -- appropriately that we could use in a disaster. and if we do have to do acquisition, these were things we haven't done yet. we take a lot to heart. a lot of the implementation are not as fast or smart as you'd like but i think we're moving forward. a big part of this, getting the staff hired and trained. and we're no longer responsible for the day-to-day management. looking at our management structure. in putting a higher priority on the backbone systems require to do the day-to-day businesses, but also support disaster response. sole while i will not disagree with the findings i found, i state it is not a black of record that may not be showing up if we continue to build that capability. >> we'll continue to monitor, obviously. after a period of time, come back and do another oversight hearing. hopefully not in the shadow of a catastrophic disaster. somewhere in the world. lt. go to some questions that have come off of what's happening in japan now. this will be obvious to you. fema's not responsible for the safety -- fema has responsibility along with other entities for being prepared to respond to an accident, at a nuclear power plant. the effect of weather was in this case earthquake cts or the terrorist attack on a pawer plants. >> i'm interested since wreev all concerned unnorly about weather reactors. whether the plans per response that you have are affected by the particular designs of nuclear power plants, or whether that gets to a level of -- of detail and nuance that, that's hard for you to get to. yerds, whether you evaluate the resto restont -- >> mr. chairman, this goes back to the bindings from three mile island required at that time the new fema created in the reorganization that president carter signed that under the nuclear regulatory commission regulations fema was responsibilities for administers the preparedness program, which was to work with local and state governments, and at this particular program, the terman and base upon finings after three while island. they are not specific to the reactor but to the regulations ang the regulations require that planning for individuals is based upon a ten-mile planning zone around the facilities when an additional 50-mile planning zone for what is determined to be ingestion or possibility of food pathway risk. these plans has are din and require to be certify for the plan are conducted on a recurring basis against the standards and regulations. it would be something where the nuclear regulatory commission would make determinations as to modifications to the distances or actions taken. our job is to make sure we work as execute the protective mesh es which may include evag wags, decontamination, health is everying and other that officials would wake in the event that an accident occurred. >> so let me ask you the baseline question. maybe the circumstances answer it, but if an event like t-- if they're heard here in the u.s., would fema be prepared to respond? >> given what we're seeing there,s it would go, i think, far beyond what we currently have in our radiological program. fortunately, we built a lot of capability with the national guard, with the department of defense, but also with the local hazardous materials teams that received these grant fundings. particularly when we look at the threat of itch pro vise ed vise capabilities that norcom has to vee spond's in is respond to these team that would be the lead of the nrc. the ability to monitor that as a team effort, ability to do decontamination and support the evacuations. there's a lot more capability that goes beyond what we have and the safety flam couprogram could be brought to bear. mainly because of improvised devices or disposal devices. >> that's an important answer and i hope people are listening, i find. reassuring. one is we live in a world with a lot of risks, but the capabilities to respond to a terrorist attack involving here in the united states, those capabilities also obviously can be brought to bear in the case of an accident such as the one, or a natural disaster such as the one we're watching in japan now, which may already is, but may have significant radiological consequence. i think it's very important to state that since -- well, since 9/11, and intensely since katrina, we've developed extra capacity that fema can bring to bear, particularly wing the defense department. as you say, the response teams, which are right there and probably apart from local responders, and secondly, specialized skills and specialized units that are stood up at the national level with the defense department to come in and deal with the radiological consequences of such an event. i guess my question is, have i got it right? >> yes, sir. it's what we call a multilayer all hazard approach that many of these teams that were originally designed for commercial nuclear power plants actually give locals the capability to respond to other threats, conversely the funds and building of the teams respond to the threat of a disbursal device that gives us more capability to respond to any i vent that cevent that cann accident. we try emphasize, when we bead thighs capabilities oftentimes we're belding them against known threats or in a case of terrorism. the ability to use them for things you did not expect, greater than what you planned come back to the heart of what we're trying to get to. planning for likely maximum events and realizing that it takes the ability to leverage all resources not necessarily has the original plan was but how they could be utilized at part of the team if we saw this type of event. >> finally, i yield, i'm under my time, under northern command, the command of our military, which has responsibility now for homeland security, we have two units, 4,500 people in each one. one active duty. one reserve. they are specially trained to respond to events of this kind and to get there as quickly as possible. certainly with the window you talk about. thanks. senator collins? >> thank you, mr. chairman. administrator, you pointed out that the nuclear regulatory convention would be the lead agency if the united states were to experience the kind of accident or level of damage at a commercial nuclear reactor that is occurring now in japan, but fema under the national planning scenarios is responsible for the operational planning under a number of scenarios, one of which is a major earthquake. another is a nuclear attack. another is essentially a dirty bomb. what has fema completed the operational plans for those 15 scenarios that clearly outline the -- outlines the roles and responsibilities of all of your partners? in other words, is it really clear who's responsible for what if, got forbid, we had the kind of multiple catastrophe that japan is experiencing right now? >> in looking at the 15, planning scenarios, and i think some of those show that there's actually if i think, collapsing some of it down to one of the things we respond to that are similar and what are the unique authorities that are different across this. this comes back to when we're doing the all-hazard planning and looking at the catastrophic, we're actually looking at an improvised nuclear guise. the earthquake scenarios. and in looking at, what are the total nun r numbers of casualties, impacts and response to support that and going back to the authorities of which federal agencies would have different pieces of that? one of the things you'll note that the nuclear regulation and regulatory agency is responsible for the power plants, but if an event occurs outside of that, that's not a regulated facility, that's actually the department of energy that has the lead on the radiological response. it's our ability to go tluz these and look at to see where we have the authorities. 345 make sure they're clear and part is in the exercises. we most recently conducted exercises looking at nuclear power plants and looking at where those authorities are there and what we would operate under. going through the scenarios, that's what we're doing is. going back and submit that in writing because each scenario has various components completed or have been completed for the planning scenarios. >> mr. skinner, mr. jenkins, are the rules an responsibilities clear in your judgment under the 15 that the operational plans is not yet pleaded for? i'm sort of answering my own question, because if it's not completed it's unlikely to be cleared. what's your assessment, mr. skinner, i'll start with you. >> first of all, we haven't done a stud ty to determine the clary of this. they were able to determine the responsibilities are becoming clearer, and this is a direct result, i think, of the result of the confusion we witnessed after hurricane katrina and people have sat down in a room, and started more clearly defining who's on first, who has the operational responsibilities and who is in charge. in that regard, after katrina, we have feel comfortable that the clarity of rules are becoming clear. again, a lot of these things are not complete. so it's -- we're really trying to use a krcrystal ball to predt how it's going to play out in the future. in regard to earthquakes, that administrator fugate referred to and as well as nuclear tests, results of some of our exercises with regards to nuclear detonation, and hurricanes, major hurricanes, ef-5 hurricanes, those, as a result of that work, we feel that the roles are relatively clear. >> mr. jenkins, do you agree? >> i do agree with that. definitely there's been progress made but one of the issues we're concerned about, and until you get these plans completed, one of the things that's important for state, local and other, what's the fatality of the roles across the scenarios and what are the capabilities that need to carry out those goals and responsibilities effectively? it's really important to know the totality of that. this is what i'm responsible for. this is the kind of capabilities i need to build. >> mr. skinner, you put out a report in december that revealed that fema had stopped attempting to recover improper disaster assistance payments that were made after hurricane katrina and rita. and you identified approximately 160,000 applicants that had received improper payments totaling more than $643 million. is this in addition to the improper uses of the $ 2,000 debit cards given out in the wake of hurricane katrina? >> it is. it is in addition to and also does not include those cases of fraudulent activities that we investigated. i'd like to make clear something that senator landrieu made reference to, simply because you filed an incomplete application or have an unclear data on your application does not automatically put you in a bucket of a fraudulent applicant. it puts new a bucket as a potential ineligible applicant. >> and there's a difference. absolutely. >> i'd like to make that clarification. >> i'm pleased that you did, because i was going to ask you that very question. i want to ask you a series of questions about that, but since my time on this round is almost expired i'll wait for the next round. >> thanks, senator. thanks for being here. >> wouldn't miss it. i don't think i have, actually. so -- happy to be here, obviously appreciate you holding this. a report published in the, in a boston paper indicates that the bay state nuclear power plant is the second highest in the nation for the potential suffering core damage from an earthquake. any of you familiar with that report at all? >> no, i'm not. >> no. >> mr. chairman, senator, i think i'm familiar with the -- is think the ranking of the power plants? >> right. >> the one done by the nrc that went back and reranked the probability of events? >> yes. >> i've seen that report, sir. >> so in light of that, my number two, apparently, you know, has there been any efforts by any of you at all to reach out and make sure that we're squared away? >> senator, we work with what's going on inside the plant, the regulatory part of that, the nuclear regulatory commission, but around each one of the licensed nuclear power plants, fema support local governments to do the exercises they do for certification and exercise in drills for those plants. so unless we -- this really goes back to the report is from nrc. what we do at fema, prior to this report, based upon regulatory requirements to do the exercises and things we exercise against. that's an ongoing program. i'm not sure what the nrc is, with this report, what, if anything, would change from that. regarding the plant. >> if pi want to find that out have to reach out to them. >> yes, sir. >> okay. let me just backtrack for a second. god forbid anything like this happens. just take this particular plant, it's near the ocean. very similar situation. apparently number two in the country. how confident are you that if something like this happens in the u.s. that you'll have the ability, and i understand apparently from some of the testimony, what i've read is apparently you guys are in charge. in terms of implementing, you're the go-to people now? is that accurate in terms of dictating who does what and who's in charge? an ongoing plan that's developing? >> in response to nuclear power plant, the inside of the facility is regulated by nuclear regulatory commission. outside of the plant is actually the local and state responders with fema supporting them. if you have a scenario that resulted in release, the most important thing to occur is successfully evacuate people away from that plant. those the type of things that the exercise plans work on. these are the things that local and state officials train against, and our role of the federal government, to support them we additional resources required in the event of an evacuations had to take place. those are the thing, and i think from a standpoint of your question, if you would like senators to have our staff, reach out with the state and give your staff and update on what the plans are to look at that and get a better idea of what -- that would be great. i'm concerned, who's in charge? i just see in listening and doing some of the work on it, i have a great concern. it's like the left hand is similar to a katrina situation, is going to be, a lot of breakdowns. i know there's been a lot of improvement. i want to obviously make that well known, but now that we're getting to the point where we always seem to be reactionary instead of, you know, obviously keeping ahead of the ball game. i don't want to take the thunder from senator collins' comments about the $643 million fraudulent and ineligible, but -- i'm just going to make a statement which is, i find -- i find it amazing that we just give away millions and millions of dollars and really no accountability. if, in fact, we've improperly paid somebody, then we go after it. you know? we get a collection agency, go after it. get our money. give them one-third, collect it, do what we got to the do. i was in a medicare, medicaid, talking $76 billion given out. whether through ineligible or fraudulent. bottom line, there's a breakdown somewhere, and being one of the newer people here, still over a year away, i'm flabbergasted at the amount of -- a million here, a million there. we're fighting for millions. my state could use millions, whether it's headstart programs, the fishing industry. i'm hopeful that -- i'd like to hear, i have to run to another hearing, but i'd love to hear, senator collins, like, where's the money? is it coming back? and why did they give up? i don't want to take away from that but i do have time for one or two more questions. the -- when you talk about the all hazard approach, i think it's an extension of what i was just asking. if you could maybe follow-up again with my office or do it off-line, with everything that's happening -- i've been following it, like, what happened in japan, like everybody else. it's just so devastating. i can't imagine that there's going to be one agency in massachusetts who just says, you go here, you here -- i'm concerned not only in massachusetts but throughout the country if something like this happens, i'm not confident yet and i'm hopeful someone can give me the information that make sure that we all know what to do. you know? is it evacuation? is it command and control? is it military? i think it's a combination of everything. can you shed any light on my thoughts? >> in timely, i can start and then like to have an opportunity, senator brown -- >> just do that. i don't want to take the senator's time. >> i want to make one point. >> i think you're asking an important question. >> okay. >> i'd urge -- >> many of our disasters -- we always start with who's going to be the closest responders, no matter how big the disaster. it's always the local responders. we saw this, they can be destroyed, in the disaster itself. we saw this in katrina and in the tsunami. the next is the governor and their team including unimpacted communities in the national guard responding. next the federal government. one of the things that is different this committee oversaw the fact previously fema would have to wait to call for help before begin mobilizing federal resources including department of feds. this community changed the law no longer do we have to wait until a state is overwhelm pd even if there's an appearance they may need the help, we can mobilize resources. a key thing, as a coordinated effort with the local official, governor and their team and then the president's team as directed under the homeland security act, stafford act, to coordinate federal assistance so that governors don't have to go shopping to federal agencies to figure who's coming or who does what. this is one thing this committee focused on after katrina. had you to make sure the governor then responsible for coordinating response in their state has that one place that's going to coordinate on behalf of the president, all the federal resources including the department of defense in their disaster. >> i'd love to talk to you off-line. maybe someone from your staff and i can connect. >> am i not right that once a year fema and the nrc and perhaps local officials go through a dry run about a disaster at every nuclear plant in the country? or am i -- is that right? >> it's actually a little bit more than that. we do a formal evaluation exercise where we actually grade the operator and the local government, state governments and that's every two years they actually have to be certified. any deficiencies or areas requiring correction have to be addressed. they perform about four drill as year. those could be anything from a decon exercise, we're actually taking vehicles, how you'd watch them down or monitor, the warning systems or other parts of the plan. generally, they also have practices built into that cycle. rather than just every two years do one exercise, there's a series of drills and exercises and then the evaluated exercise is where they're actually graded on their able to perform those functions and again, it's done against those regulatory functions that say you have to warn the population in this amount of time, from the time the event escalates. you have to be able to shelter and evacuate the populations with these time frames, be able to do all of these things against the population at risk. it's actually based, who lives there? what's that population? >> right. >> it's adjusted to that particular community and that local and state government response. >> so in the case of the power plant in massachusetts, there is a plan, if something should happen? >> i would imagine if you went to the local phone books you could actually find a map. this is generally how we do stuff, get information out, people know if you live inside this zone, this would be an evacuation zone. you'll generally find outdoor warning systems, sirens, telephone notifications systems, emergency alert system tied to that area. you'll find the local responders have a lot more equipment for radiological monitoring detection than you would normally find. these are things because these are, again, point-specific hazards that we plan against and you exercise against, they're very well known to the local officials and the state officials who do that planning. >> thank you. senator? >> thank you very much, mr. chairman and senator collins. thank you for holding this hearing. i also want to extend my thank you for witnesses for being here today. i would like to recognize fema, particularly region nine, administrator nancy ward, for collaborating extensively with hawaii's civil defense and joint catastrophic planning. she does a great job. my home state of hawaii in the pacific territories face unique challenges, as you know very well, because of the remote locations and limited logistic base in hawaii. so there is still much for us to do, and i'm so glad that we are having this hearing. administrator fugate, as you know, states rely on neighboring states to provide critical assistance in the event of a disaster. however, hawaii is over 2,000 miles from the mainland. so other states may not be able to provide timely support. fema has a disaster supply warehouse in west oahu, and one in guam. should a major disaster strike hawaii, either damaging the warehouse or overwhelming our supplies, what plans does fema have to help quickly resupply the hawaii warehouse? >> thank you for that question, senator, and also i have to thank the state of hawaii and the hawaiian national guard who helped us respond to the america samoa when the tsunami hit there. the challenges, again, as we know, in the pacific, the distances require us to both leverage what we have in the fema warehouses, but also our close coordination with paycom, pacific command and their resources. nancy ward, you point out, one of our regional administrators, starts to talk with counter parts in hawaii or in the territories, in the event we see something coming, again, we know the distances, we know we can't wait. we are looking at how we'll start to ship or fly resources in. this is the close coordination we have, the ability to charter aircraft and work with the department of defense for those most critical supplies. as you remember in america samoa, one of the key issues the governor had was generators and couldn't wait for them to come by barge because he had to get his critical systems back up. so we were able to task initially d.o.d. and later extractors to fly the generators in there. it goes back to the authorities. this can be vested. we know we have tremendous distances we oftentimeses have to make decisions when we have requests or all the information to start moving. particularly in the most critical life safety, life-saving supplies, because we won't have time to make up. so those are the contingencies plans. in guam as well as hawaii, we base those supplies on the time 2-it-would take to ship supplies recognizing if they are impacted we would actually be flying supplies as soon as airfields were available. >> well, i'm so glad that relationship with the military really makes a good difference. administrator fugate, as was evident in recent events hawaii and pacific territories face the greatest tsunami hazard in the united states. the national oceanic and atmospheric administration manages federal tsunami detection and warning efforts and partners with the federal agencies to reduce tsunami risks. how is fema working with noaa to coordinate tsunami preparedness and response plans? >> we work very closely. as they are the subject matter experts on the hazard and then supporting the states and territories as they map their inundation zones, one of the areas we help them in in their new mexico ready progra tsunami ready programs is in the warning systems. the governor did not have a tsunami warning system prior to the last event, particularly the outdoor notification systems which we saw worked very effectively in hawaii during the last crisis. so we continue to work with noaa as they give us the warnings to activate through our national warnings system was how we originally got the calls out to the states and territories we did have a tsunami warning and working with the grant programs we provide for them to build and develop the warning systems. this is the other part of looking at where we are making progress with the homeland security funds is building warning systems for these type of events that fortunately we had a lot more warning. as we saw with american sow mow wh , the mapping and understanding of those hazards are key so local officials have the information about how far you have to evacuate and supporting them through the warning tools we have so we can warn that population in time. >> administrator fugate according to census data nearly 25 million adults in the united states do not speak english well. fema must communicate effectively, of course, during disaster response and recovery with the large and diverse population of nonenglish speakers. my question to you is what steps has fema taken to make sure that it can do so? >> we continue to look at our populations, and one of the concepts that is not new, it's actually i thought was pretty much a reflection of what this committee was trying to drive it, we needed to quit planning for easy and plan for real. eng lush doesn't cut it if i'm deaf and hard of hearing and all i know is american sign language and all you gave me is closed captioning and that's not my prime language. if i don't get the information i need. we work very closely with our state and local partners to look at the languages and needs and recognize that we have to make sure that we're providing information in the way that people need it, not what's convenient to us. and so we have worked to provide more and more of our preparedness information in multiple languages. we have created in addition to our ready.gov website, a full site in spanish as well as ensuring in the various languages in our states where they have identified significant populations that we provide preparedness information in those languages. that we have those language skills available to back up our registration centers. most importantly we understand that american sign language is a language we have to communicate in and we can't depend on text messages or text crawls to reach that population. >> yes. well, i thank you very much for the work that you are doing and the responses you have given me on my questions and i wish you well. >> thank you. >> thank you very much, mr. chairman. >> thanks, senator. the reports that i have seen, administrator fugate, indicate as a result of the earthquake and tsunami in japan there are more than 400,000 people who have been forced from their homes and are living in emergency shelters or with relatives. apparently another 24,000 or 25,000 are stranded. obviously, these are the nightmare memories we have of katrina with people pushed out of their homes and not an adequate system to give them shelter. i know that fema recently signed an agreement with the american red cross to co-lead efforts for mass care and sheltering after a disaster, including what we called today a catastrophic disaster. what's -- what will be the capacity in most parts of the country? in other words, i know 430,000 is an enormous number, but how many people will under fema's current organization will we be able to shelter who have been made homeless by a catastrophe? >> mr. chairman, a lot of times that's going to be based upon the state and the type of hazards they have. in the state of florida where i came from, we had shelter capacity getting up to over 800,000, but we would not expect to use that because very rarely would a hurricane produce that big of an evacuation, but i think this comes back to what the general accounting offices is really coming back on. when we talk about preparedness, unless we're planning against a number, we don't really -- it's like how do you get traction because everything is always localized or state-based. so in our strategic plan when we said we're going to do all this stuff, i said put a number against it because i can't measure it. so we started looking at if you look at our -- what we call the maximum maximum, you look at improvised nuclear device, the most catastrophic thing we could think of in a metropolitan area, if we looked at our worst category five hurricane hitting the most populated areas, we looked at large earthquakes, what are the upper end numbers? and we start finding the numbers actually look primarily at the numbers we're seeing from japan, we're actually -- we were actually looking at these types of numbers. >> that it would be potentially over 400,000 or in that range? >> yes, sir. we have looked at for casualties requiring medical assistance several hundred thousand. this is why we're trying to plan our logistics to move to the area we know we have a risk and also where we didn't see it coming but it's there. for about a million and a half. can we get enough supplies and provide enough capacity. what may happen su may not be able to shelter people in the surrounding areas. you may have to move people to where you could shelter them. that's one of the advantages of working with red cross is other organizations. we saw when we were in katrina, we could move them to areas out of that that. this is in the short-term shelter phase of getting people where we're meeting the most basic needs of medical care, food, water, and a roof over their heads until we can see what's next. is this some place we can get back to or in the case we're seeing there, this devastation will not be repaired quickly. you're not going to be doing temporary housing there. you're going to have to find a longer term housing solution as people make a decision about what's the next step. >> so are we prepared now to temporarily house that number of people? >> i think we could say it would not be in any one area. we'd have to distribute those folks across the country, but these are the things we're planning against, and i think this is where we're looking at what does it take to get there and how do we build that capacity based upon the local and state but where do we fill the gaps. if you go to certain parts of the country, yes, they have that canability because of the threats they face. what if it occurs somewhere we weren't expecting that, we sill have to meet that need. this is where we're trying to go with national preparedness is looking at take these events, add them up, and go what's the upper number? can you move enough supplies in to provide emergency food, medical care, and basic sheltering for that population, and if you cannot bring it to them, can you take them from that area and get them to where you can. it becomes critical when we're talking about housing. this is what we're planning against and also looking at the time frames to do it. >> did you have a response you wanted to offer to that? i noticed you -- >> i agree. fema from the lessons concerned with katrina has taken some very positive steps towards short-term housing, sheltering and short-term housing, and they're also experimenting with different types of housing, and it can be a very complex issue. one of the concerns that we have we're witnessing now after katrina and as well as the disasters in florida is not the short -- the sheltering or the short-term housing but it's the long-term housing. and that's the issues that i think need -- still need to be addressed and there's still some thorny questions or relationships that have to be built to accommodate the population for its long-term housing because these things will often times last, two, three, four years before you can move back home. >> right. thanks. you know, one of the things our committee has done h we feel various times we've got to ask kind of extreme questions, and we've done some hearings and work on what our preparedness would be to respond to, as i mentioned earlier, the explosion of a radiological device by a terrorist or a nuclear weapon. and one of the striking conclusions is that how people behave in response to that can actually save tens of thousands of lives. in some cases a decision not to run to evacuate will save your life. and we heard expert testimony that what's particularly critical, and, of course, it would be critical in the case of an event at a nuclear power plant as well, is public messaging. so i wanted to ask you, administrator fugate if you could give us a status report on where fema is on effective messaging to the public in the case of a radiological incident. >> mr. chairman, the first thing people have to understand is that as surprising as it may be and this is what the experts told you, a nuclear debt nation is actually more survivable than people realize if they know those important steps. what we started doing, and it kind of got overshadowed, we did what we call a webinar with our citizen corps program with the department of energy, and their experts started talking about messaging and sheltering in place and working with our citizen corps councils. so we did this as part of a webinar to really start bringing up these topics that have historically been so difficult to talk about. we often times didn't. trying to break this and get over it and say, look, if this does happen, these are the things people need to do. this was a webinar that was done this week where we brought people in and it allows us to bring people into an environment where we can have suggest matter experts briefing them. starting this process using the citizen corps councils thinking about how do you message this locally, what is going to be effective, and there's actually a book with this title "how do you think about the unthinkable" and communicate that in a way that's not based on fear. so we're working with the department of energy experts, their national laboratories are really who are the experts. we were conducting this webinar this week on how we work with our citizen corps councils and talk about something that's very difficult to talk about. >> so that's a work in progress now. >> yes, sir. >> but obviously you are working on it and i presume you would train all the local areas around the country to use both existing communication systems, public ones like radio and tv, but also obviously now internet and cell phone and the like. >> yes, sir. again, how do -- this is what i really challenge our team on. there's a tendency we make people xun kat the way we're set up to communicate and do not always recognize there are different tools and the people aren't using the same tools we are. how do you start incorporating that in and look at how people communicate versus the way we are prepared to do it. so looking at things in social media and other tools that -- i'll give you a real short example because i know we want more questions. we provide information to the public on web pages. most disasters if i'm evacuated in a shelter, do i have a computer and a web page i can get to? but i may have a smart phone. we've seen that many of our events, the phones are actually working even in haiti after the earthquake surprisingly, so we went back and said let's quit making people go to a web page when if they're going to be on a mobile phone, let's change our delivery. we created a mobile fema page m.fema.gov that works well on a cell phone. you don't need to see any of our pretty pictures or graphs. you need the information about what's happening. we're trying to look at how people are using these tools, what makes sense, how are they going to get information and try to put it in a way that was useful to them, not in a way that's convenient for us. >> good work. that's very sensible. senator collins. >> thank you, mr. chairman. mr. skinner, in your testimony you gave us the depressing news that fraud and improper payments have plagued fema for a very, very long time. i remember when i was chair of this committee back in the good old days that i held a hearing to look at fraud after hurricane andrew, and we found improper payments and it was senator bill nelson who suggested that we have those hearings. then katrina hit, and we found out just terrible -- hundreds of millions of dollars in improper payments, fraud, and abuse. it's troubling to me that you can go back decades apparently and there's still a lack of attention to this problem. i was thinking about the fact that the president's budget cuts fema's budget, and it cuts it in ways that may actually be harmful because it cuts some i.t. projects out. but what is even more disturbing to me is perhaps these cuts wouldn't be necessary if we hadn't lost more than $1 billion over the years in improper payments. certainly that money could be put to better use. could you help guide us on what should we be asking fema to do, what kind of controls should be put in place so when the next catastrophe inevitably hits, we don't see a repetition of widespread fraud, waste, and abuse? you referred to the work that was done with the stimulus bill, and i agree with you that the transparency and the accountability was much better, but what specifically would you recommend be done? >> i think, first, administrator fugate coined it very concisely. that is we need to be -- fema needs to be fast but not haste, and with regards to the individual assistance programs, there's a mindset or a tendency that we have to have the money out on the street and we have to have it out within hours, and, therefore, we will make payment, a blanket payment, and worry about the fraud later. unfortunately, fema doesn't have the resources or the wherewithal to go back and look and try to get payments that were improperly distributed. so if we impose internal controls, now, it may slow the process up a few hours but not days or weeks or like the old days in hugo where it took months to get payments or andrew where it took weeks or northridge where it took weeks. we can still make timely payments to those that are deserving that are in need but at the same time be able to offer a screening process and have the internal controls and red flags in place to put aside those applications that are in question, whether they be just because of poor information or because it's a fraudulent application. second thing is i think with the public assistance programs we can do a better job there as well with regards to providing our oversight. the recovery board under the -- for the recovery funds, the $800 billion, were able to produce reports -- we required anyone that's going to receive any funds, any state or local or primary contractor at the subgrantee level is going to receive any funds, they must report to the recovery board. and the system is already in place. anyone can use this system. department of energy introduced this system years and years ago, and it's something i think maybe fema might want to consider because i believe, and this is what we believe at the recovery board, is that transparency drives accountability. what you don't have a just one ig looking at you, you have millions looking at you a because when the local citizens see where the money is going, how it's been spent, they can report in there's something amiss here, that the money is not going where they say it's going or that contractors are receiving preferential treatments or are not performing as they should be. that's what drives the accountability. if we can produce that type of reporting after a disaster and train the states and locals, and it's not difficult, everyone thought it would drive costs up, it did not. the technology today now allows you to take that information and transform it into very usable formats that can be manipulated for your own personal assessments. reporters may want to take the data and manipulate it to determine what type of demographics certain funds are going to. state and local governments could take it to see what type of projects -- are we spending money in the -- in education versus highways or airports, things of that nature. it can be now manipulated to meet your individual needs, and at the same time we at the recovery board developed a screening process to assist program managers, and that is when contracts are awarded, we can take those contractors -- we can take a look at those grantees, run them through open source information as well as closed source information, law enforcement information, and give you some type of association, whether these firms have association with companies that may have tried to defraud the government in the past. and we're able to stop those grants, those contracts early on before money was spend because once the money is spent, it's very, very difficult to get it back. >> don't you think there's also a deterrent effect when you announce that there's going to be an aggressive effort to prevent waste, fraud, abuse, mismanagement, improper payments? i think one reason that the recovery board was successful largely is it was set up from the beginning, it was very well-publicized. there were websites to track spending and enlisted the public to help be the eyes and ears. but i would also argue there's a deterrence impact if you go after some of the fraud. i know fema has argued that it's too expensive to go after some of this, quote, small dollar fraud that in a cumulative sense is huge amounts of money, but, in fact, i think it's worth the money of going after it because of the message it sends that it's not going to be tolerated. >> absolutely. and i personal witnessed that after andrew, after northridge, after katrina. a good example is in northridge we tried to early on get anywhere from a dozen to two dozen arrests within the first two weeks after the checks went out. when we made those arrests, we publicized it in the radio, television, newspaper. within days $20 million, $30 million was voluntarily returned to fema saying, i received these funds in error. i witnessed the same thing after andrew, after we made four arrests the following day, $11 million was returned to fema. they thought they were next. it has a deterrent effect. also when you're transparent the last place you want to steal money from is -- a contractor does not want to be stealing recovery funds because of the transparency that exists there. we know where it's going. we're watching it. we're able to do screening, and so that in itself for those contractors who have bad intentions to steal will often times back off knowing it's just too risky. mr. fugate, you've heard what mr. skinner has said, that it is worth going after this money. i realize you were not administrator at the time of katrina, but, in fact, there's been a new bro ses that the chief counsel had for recouping improper payments that's been languishing since late 2008. yesterday we received word that fema is going to start implementing the new process, but that's a long gap. that really sends the wrong message. so i guess i'm asking for you to give a commitment to put in those internal controls. i think it's a false choice between providing the money quickly enough and providing it in a way that guards against fraud. in today's world with the technology we have, that's -- it's not an either/or proposition. so i want to encourage you, i'm going to ask you are you going to go after some of these improper payments? >> the answer is yes. particularly those recoupments where we know that we had duplication of benefits and if it was fraud, i think they would agree if i found fraud as soon as we know it, we refer this and those that did this willfully need to be treated as fraud. where we have those who have lack of information, duplication of benefits, we seek reimbursment. the idea was correct in that it has to be speed, not haste. the question is why are we giving them money? i think it's not the size of scale to reassure you that it would scale up, but in the floods in tennessee where we i believe it was about $100 million in assistance in the first 30 days. nobody got a check unless they registered, had their home inspection, and they received their funds. and, again, we were working on speed. we got the inspectors in there. often times the turnaround time was several days. and we also worked very aggressively with hud to go into the shelters because these people that were in shelters were going to need disaster housing assistance and get them into the disaster housing assistance programs. so i think that we -- it was not to the scale we saw in katrina but many of the things that say we want to have a positive var fi vation that you're actually living where you say you were, that we had the inspector get there, verify the damages, and, again, as we go through this and look at the recoupments on that disaster, did we drive that error rate down. and the other piece of this is again in responding if we can achieve the goal of meeting those basic needs and decrease the need to defall to the financial assistance, which certainly is a sign you can't get supplies in, you're not able to get enough critical infrastructure up, and you're not meeting basic needs so what you're going to do is give money to people and say go figure it out yourself. that comes back to that aggressive response at the front end and look at the financial assistance not as the primary tool but to help them as they move into the first steps of recovery. >> weren't those $2,000 debit cards just an invitation to improper spending? i mean, look what they were used for. firearms, bail bonds, diamond rings, entertainment. they weren't used for food, water, medical supplies in far too many cases. should we be giving out $2,000 debit cards with few questions asked? >> i think, you know, the senator -- >> you weren't there at the time. >> i think the senator makes a point that again i think this is something the ig can go back and say in hugo and andrew and other cases, if you're not meeting the basic needs, that's often times the fallback and it does invite a lot of challenges. >> i want to hear a no on that. we're not going to give out $2,000 debit cards. >> we're not doing debit cards, and that program went away. but i have to be cautious in going, there are those situations where we may not be -- an example would be the tsunami itself. we may not be able to get in to do home inspections. so we may have to look at other ways to verify that people lived there. this is where the ig has given us recommend dags to use tools like using the types of things you do when anybody is applying for a loan. utility bills to verify it. where as everybody in this zip code is going to get assistance. we may not be able to do an inspection. are there other ways to minimize the number of people applying for assistance by showing us some way they were in that area without necessarily be doing a home inspection but where we can it makes it very, i think, efficient to be able -- i have asked for help, i have an inspector go to where you were living. i think that's a huge step to reduce the level of fraud and then often times we will see if it was ineligible or duplication of benefits because of insurance not because we were in such haste. >> i realize i have gone over my time. >> not at all. it was important and the answer was no about the debit card program. as i look back to hurricane katrina, first off we had an extraordinary natural disaster event as, of course, has happened in japan. but part of what happened is that all levels of government, including the federal government and fema, did not act quickly and preventablely. and as it became clear that that was so, particularly with the television coverage and everybody became horrified about how people were being treated or not taken care of on the gulf coast, in some sense the government overreacted and started to kind of throw out assistance in a way that was just terribly wasteful and was also inviting fraud, and that's just what we got. mr. skinner, do you want to comment on that at all. >> i think it's exactly what happened. it's the same thing after andrew because the cavalry was slow to arrive and the best way to treat the situation was to get funds out on the street as fast as possible whether you were eligible or not. >> yeah. and something you said earlier, mr. fugate, about getting supplies out there, meeting the needs. once you do that you don't have to start throwing debit cards or money around. >> the other issue is because the amount of funds we provide are really not designed to make people whole, the less money that we give them incrementally that takes away from the total amount, because it comes back to the issue if they lost eferl, don't have insurance, you want as much of that money going to their recovery not their immediate needs. this also comes back to the preservation of what the intense of these funds were. it's never been the intent of congress to make you whole after a disaster. it's to help you start recovery. if we're putting these funds out ahead of type and they're not getting to you that point, it decreases the ability to support people when they really should start now to manage things on their own and be able to use these funds to start that rek recovery process. if the basic needs aren't being met and we are in this situation, we go from being fast to a lot of haste and then that in turn leads to fraud, waste, and the inability to really make sure we're good stewards of the funds. we put a high premium on this idea of stabilization and speed to support this and drive then the next steps of that initial recovery with these funds so they're going towards the intended purposes. >> right. do you want to respond to that? i wap nt to ask you one factual question which may be of interest to people watching. there's been a certain amount of confusion about what the potential danger is to the u.s. from the nuclear plant problems in japan and particularly as the media has been following the last few days and the sense that the pocket of a meltdown at one of the plants or an explosion, the emission of a large amount of radioactivity goes up. people have been worried about the extent to which the west coast of the u.s. particularly hawaii obviously guam, maare th subject of danger. >> i'll refer back to the statement made by the chairman. in looking at all these scenarios they do not see any radiation reaching the u.s. that would be of a danger or require prodeck tiff actions. they have a system called rad net that 24 hours a day, seven days a week monitors various channels, air, water, other types of things across the country. and so if we were to detect, we may detect things well below levels that require any action, but we did not have any monitors in our territories, particularly gu guam. so we were in the support role, epa is in a lead role. they deployed monitors out to augment that network they already have as well as supporting alaska with additional monitors. this is a two part. one based upon the scenario that the commission does not see this reaching the u.s. territories or the west coast but we also had an active monitoring ske that epa expanded to be able to do active monitoring to provide that information. the epa is gep looking at this not that we think we're going it get something but we have to be able to answer the question, are you testing, are you monitoring, are you sure? this was the decision to send these monitors out to guam and the commonwealth of the northern marianna islands and the aleutian islands. >> as i understand it, we have more than 100 existing monitors on the west coast. >> you can go to our web page and look at where the sites are. and what they monitor and the purpose and history of the program. >> so i presume that just trying to be helpful that people including on the west coast should not yet be taking potassium iodide pills because right now there's no risk and there is some slight risk of side effects from those pills. >> yes, sir. as i understand it, the public health departments are telling people this is something they should not be doing, there's no indicator to do this, and their recommendation is that people not take potassium eye o dine in this event. as you point out there, may be other concerns. both state health offices are telling people they do not recommend this and they would not want you to take this based upon this event because they don't see where there would be any need and we do have the active monitoring that is taking place now. >> i appreciate those answers. i hope they're helpful to people. i think the three witnesses. senator collins and i were commented to each other that in a sense we were conducting two hearings at once, one on the ig's report and on the management of fema and the other on what's happened in japan. we tried to bring them together. i appreciate the patience epps of the witnesses. i appreciate the work on of thenesses. all of the comments will be included in the record. we'll keep it open for 15 days. senator collins, do you have anything more? thank you very, very much. with that, the hearing is adjourned. good morning, everybody. before we begin our hearing, we have a quorum. i'm going to ask the committee to consider two civilian nominations and a list of 252 pending military nominations. first, i would ask the committee to consider the nominations of michael vickers to be under secretary of defense for intelligence and joey rooney. there is a motion? >> so moved. >> second? all in favorer say aye? motion carries. i would ask the committee to consider a list of 252 pending mimt nominations, included in this list is the nomination of general martin dempsey to be chief of staff of the u.s. army. all nominations or the nominations have been before the committee again the required length of time. motion to favor the report? is there a second? all in favor say aye? opposed nay. motion carries. >> today the committee receives testimony from under secretary of defense for michelle florinoy and david petraeus international security assistance force. thank you both for your years of service to the nation and sacrifices made by both you and your families. we also -- excuse me. we cannot express enough our gratitude and admiration for the men and women in uniform deployed in afghanistan and elsewhere. they are doing a phenomenal job. morale is high. our proops are truly awe-inspiring. please pass along our heart-felt thanks to them. it's now been a little over a year since president obama's speech for the strategy in afghanistan. 30,000 u.s. troops to help reverse the taliban's momentum and seize the initiative and the setting of a date 18 months from then or july 2011, for when u.s. troops would begin to come home. the setting of that july date also laid down a marker for when the government of afghanistan would assume more and more responsibility for that country's security. during his visit to afghanistan last week, secretary gates determined that we, "would be well positioned for transitioning increasing security responsibility to afghanistan and beginning to draw down some u.s. force necessary july of this year. "12346789 president karzai is expected to announce next week the first phase of provinces and districts throughout afghanistan that will transition to an afghan lead for providing security to the afghan people. we have heard two messages in recent months relative to the july 2011 date, when u.s. troop numbers in afghanistan will begin to be reduced. message number one. secretary gates before this committee recently said the july date was needed as a way of telling the afghan leadership, "to take ownership of the war and as a way to grab the attention of the afghan leadership and bring a sense of urgency to them." message number two. secretary gates speaking at the nato defense minister's meeting last week said, "there's too much talk about leaving and not enough talk about getting the job done right." now, some may dismiss those messages as inconsistent or that secretary gates is speaking to two different audiences, but i disagree. secretary gates well knows that with modern global instantaneous communications, the world is the audience for every utterians. the unifying threat in the two messages is that both are needed for success of the mission. success requires afghan buy-in, afghans taking the lead and afghan ownership of the mission, all of which in turn depend upon their confidence in our continuing support. both messages and the thread that unifies them are part and parcel, i believe, of general petraeus' counterinsurgency strategy, which is so instrumental in turning the tide in afghanistan. the success of the mission depends on afghan security forces holding the ground, which they are helping to clear of taliban. and that, to use general maddis' words is what undercuts the enemy's narrative when they say we're there to occupy afghanistan. the growth and size of apability of afghan security forces and control of territory by those forces is robbing the taliban of their propaganda target and bringing us closer to the success of the mission. that's why i have pushed so hard to grow the size of the afghan security forces and to keep metrics on how many afghan units are partnered with us and being mentored by us. and how often afghan units are in the lead in joint operation. that's why a number of us are pushing so hard, including with the president himself for approval of the pending proposal of up to 70,000 additional afghan troops and police. a nato training command in afghanistan has done an extraordinary job, not only building the numbers of the afghan security forces, but improving their quality as well, focusing on marksmanship, training, leadership and literacy. this success in recruiting and training afghan troops reflects the desire of the afghan people to provide for their own security. that success is why taliban suicide bombers attack recruiting centers. young men signing up represent the taliban's worst nightmare. during our visit to afghanistan in january, senator jack reed, senator tester and i saw how the afghan people have growing confidence in the ability of afghan and coalition forces to provide security, in former taliban strong holholdsmund and afghan provinces. as the afghan people see their own forces, providing ongoing protection after the taliban are cleared out, afghan confidence in the army and police grows. the number of tips from locals increased significantly in con district, enabling afghan and coalition forces to find and clear a much greater percentage of improvised explosive devices. the increasing support of the afghan people across hellmond and kandahar allowed partner special operations forces and afghan commandos to target large numbers of insurgent leaders the last few months, but the vast majority being captured without a shot being fired. the growing support of the afghan people for their security forces will make the transition to an afghan security lead more achievable short term and sustainable over time. certainly challenges lie ahead. general petraeus said there will be a taliban spring offensive and secretary gates warned this spring's fighting season will be the acid test in his words, as the taliban tries to take back the terrain it has lost and engage necessary a campaign of assassination and intimidation. afghan leaders need to bring a sense of urgency toem proving governance, delivering services, fighting corruption and other practices that prey upon the afghan people. if they are

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