Transcripts For CSPAN2 Tonight From Washington 20111022

communities. i can't think of a better symbol of a depressed community than what we see behind us. this significant, historic relic that is empty and unoccupied because of politics, because of regulations, because of taxation, and we're going to start the program now, and we'll start the program with the blej of allegiance and we are going to start the program with the pledge of allegiance, but due to regulations, we are not allowed to bring an american flag to the podium, so i -- [audience reacts] but herman cain being a problem solver said we're still going to do the pledge of allegiance. you go right to my lapel pen. [cheers and applause] michael, want to start the pledge of allegiance? >> please say the pledge with me. i pledge allegiance to the flag of the united states of america and to the republic for which it stands one nation under god indis visible with liberty and justice for all. thank you. [cheers and applause] >> think we're going to do the opening prayer. do i have someone to do the opening prayer? yes. >> thank you, sorry. sorry. ladies and gentlemen, bishop collins with the opening prayer. >> thank you, niger. let us bow our heads in prayer. all mighty and eternal god, supply the needs of your people by calvary's cross. bring forth your hand and strengthen this great man you have risen to the fore front of leadership for such a time as this. envelope him with your mighty power as he yields his life, fortunes, and sacred honor to serve the nation. as he takes this country by storm, touch the hearts and the minds of those who are voters to encourage them to move to the polls to put this man in the white house, to transform this country that we may return to those somedays in -- days in which the constitution lives in the heart of every american in which we enjoys the freedoms and liberty and the prosperity you ordained. keep his family, bless his children and his wife, bless all of those that are part of his cabinet. god bless america. god keep america in the name of christ, and everybody said amen. >> good morning. i'm niger innis. one of our country's oldest civil rights organizations. i've had the privilege to witness up close and in person this magical historic journey led by herman cain that started over ten months ago. herman cain has captured the imagination of the american people with his wit, his humor, his optimism for america. his message and his vision has electrified conservatives and non-conservatives alike. at a time when america is in economic, spiritual, and political crisis, problem solver, herman cain, is the right man for difficult times. [cheers and applause] we all remember in 2008, candidate president obama said he was fundamentally going to transform america. well, promises made, promises kept. he has made a proud people feel ashamed of their country, made the most powerful country in the history of man a ridicule, an object of ridicule and assassination attempts by lesser nations. he has taken the greatest engine of economic growth, the american people, and filled them with anxiety and dispair. in 1908s, ladies and gentlemen -- 1980, ladies and gentlemen, destiny called on a leader. in 2011, destiny is calling again, and in 2011, destiny is calling on herman cain and herman cain is answering the call. [applause] the beauty of herman cain's quest is not only that he inspires america with charisma and his personal story, but he stimulates us, he stimulates our minds with his ideas. his innovative 9-9-9 plan reset the entire economic debate. his 9-9-9 plan forever changed the economic landscape, and the way that herman's 9-9-9 plan reshaped the economic discussion, his opportunities, which we are here today to unvail are going to change the way we think about economically depressed communities all across our country. today, the unemployment rate is over 9%. for latinos, 12 percent. for african-americans, 16%. for african-americans in cities like detroit and many cities like detroit, the unemployment rate is over 25%. this is the depressioner ray status -- era statistics, ladies and gentlemen, but where some see decay, herman sees opportunity. where some see economic decline, herman sees fertile soil for economic development and growth. [applause] herman's opportunities owns plan will target these communities and create an environment where production can drive economic revival and promote economic opportunity. herman cain is well practiced at creating success where others see failure. he's turned around failing enterprises for four decades as a main street business man, and what he's done for the burger king corporation, the national restaurant association, he knows he can do for america. [cheers and applause] it is because herman comes from humble beginnings that he knows in every corner of our nation and every depressed urban center or rural center, there's untapped human capital that just needs an opportunity to succeed. the opportunity that will be catalogized by the opportunity's own. god bless you and thank you for being here today. [applause] now, i want to bring to the stage to make some remarks, state senator joe hewn from the 22nd district. >> thank you, thank you. [applause] what an honor and privilege it is to be here with the next president of the united states. i told mr. cain even though this region is home to a few other pizza joints, with his plan and vision for this country, we'll make room for the god father of god father's pizza. just take a look around. you will see obvious remanents of failed, liberal policies. but look at it on the bright side with a vision, the principles of mr. herman cain, we can get those failed liberal policied sailed right out of the window. and as folks in this region know, we certainly have had some problem, but the auto industry's making a come back, and, again, with herman cain on our side, he has a plan, a tax plan, that they are targeting every single day of the week now, but i'll tell you what, it's the american people who count, and it's the american people who are on herman cain's side. he's got a plan to put a better tax structure in place, a plan to do some tough love with entitlements, and a plan to get government the heck out of our way. [cheers and applause] so today, i have the honor and privilege of spending time with the next president of the united states, a conservative, principled, intelligent, and capable god father of today's conservative movement, mr. herman cain. [applause] before he comes forward, i have the opportunity and the privilege to introduce our next speaker, dr. alverta king. thank you. [applause] >> well, hello, america. this is our opportunity. if you did not get cain's vision today, make sure you get it. don't leave here without it. it's excellent, yes, yes, yes. revise, renew, rebuild. 9-9-9 now is our time. hush little baby, don't you cry. now is the time for a lull buy. to all the hungry children in america, have hope. to all the people crying for jobs, have hope. now is our time. can a nation be born in a day? only if we listen and obey. hear the still small voice. america now is truly our time. people are crying. people are dying, yet there is truly hope in america. yes, jesus loves me for the bible tells me so. remember that song? our children will sing their nursery rhymes again. our boys and girls will stay in school and not rot in jail. in 1963, my uncle, dr. martin luther king jr. had a dream, that there be one human race, not separate races, and we would come together in a beloved community then white men, black men, women, children, gentiles and jews would come together and sing, free at last. economic freedom can be a reality. take hope. listen. follow our leader. mr. herman cain is a leader for america. he is ready to be our leader for this hour. america has economic power. our companies can come home from overseas and bring our jobs back home. our troops can fight for peace again and war at seas. bring the jobs home. america, we can do it. this power can be revealed in the diligent hands of a proven leader. that's why so many krisics fight the -- critics fight the 9-9-9 plan. they didn't think of it first, and it's a solid plan to bring the jobs home. how will herman cain, our leader, bring our jobs home? think about it. right now, america pays the high education corporate tax rate in the world, a staggering tax penalty. this incredibly punitive business tax makes it extremely difficult for our companies to compete with countries like china and the global market. this punishing tax penalty forces our companies to seek cheap labor on shores far away from home. when mr. cain brings 9-9-9 relief from penalties to our jobs from 35% to 9%, the lowest business tax rate in the world, we will once again be competitive leader even with countries like china. we can go back to work and have our paychecks again. once freed from the dragon of massive corporate taxes, america will bring our jobs home. 9-9-9 means jobs, jobs, jobs. [applause] then, we can be charitable again and help others because by embracing 9--9-9, we also help ourselves. 9-9-9 offers hope and opportunity for americans of every walk of life, an opportunity to live in a good quality of life again. no more fear of how to feed and educate our families. 9- 9-9-brings jobs back from overseas. want to know why critics fight 9-9-9? it is because they didn't think of it first. a leader leads. that's why you are going to hear about opportunity, power from our leader. he has a plan. opportunity and economic justice for all. in 1963, uncle ml spoke of a check mark insufficient funds breaking the backs and hearts of america. our leader is ready to put the money back in the bank. he is ready to not only show us the money, but to give us the money. we will have jobs again. america, rich man, poor man, beggar man, safe, listen, there is hope for america. my country tis of thee, let freedom ring of thee i sing. life, liberty, the pursuit of happiness. america of thee i sing. no more killing babies, sick people, and old people, no more denying people jobs and homes and compassionate health care and healthy families. there is enough for everyone at the table. america, i am dr. alveda king. i have a dream, i am the dreams. i present the next president of the united states of america, mr. herman cain. please welcome him. god bless america. ! [cheers and applause] >> wonderful, thank you, thank you very much. thank you for being here today because this is a day that we have an opportunity to explain 9-9-9 without six attacks at one time. if you know what i mean. some people have asked me how did you come up with this? what do you know about economics? earlier in my career when i was at the pillsbury company, one of my jobs at one point of director of business analysis where i oversaw economic analysis for the pillsbury company. some people think that's just pepperoni between these two ears, but i used to work on economic analysis. in the early 1990s, i was asked to serve on commission with jack kemp, the economic growth and tax reform commission. we started the fair tax, the flat tax, and came to some wonderful conclusions about what a good tax structure ought to be. let me introduce before i go any further my senior economic adviser, the co-architect of 9-9-9, mr. rich lowry out of cleveland, ohio. [cheers and applause] i'm happy to be in detroit, but more importantly, i'm happy to be in america where opportunity is born and this is where dreams can be achieved. [applause] i know you heard a lot of disinformation about 9-9-9. don't believe it. look it up for yourself. this is why i want to review that before i get to the opportunity zone. first, 9-9-9, we had five simple principles that we wanted to satisfy. we wanted it to be simple. we wanted it to be transparent. so that you would know when and how you were going to be taxed. we wanted it to be first time. how many people here like spending money to get your tax returns filled out? that's not very efficient. it costs $438 billion a year to file and comply. we wanted it to be fair, not according to washington's definition of fair, but webster's definition of fair which means everybody gets treated the same. that's fair. [cheers and applause] we wanted it to be revenue neutral. the 9-9-9 plan throws out the current tax code. that's where we start. we have been complaining about it for decades. we know it's messed up, and so because we put a bold solution on the table, some of my fellow contenders have accused me of being too bold. this economy cannot wait. it is our life support. we need a bold solution, which is why we put together 9-9-9. [applause] the other thing the 9-9-9 does is level the competitive playing field. you see, on that first 9, the business can deduct purchases, capital investments, and net escorts. what that means essentially is it makes goods and products produced in the united states on a level playing field with everybody else in the world because we take out many of these embedded taxes. the third thing this approach does is it expands the tax base by adding in the national sales tax of 9%, the third 9. some of my opponents in this republican race have said, why do you want to give government another mechanism to tax us? my response is -- i want to take away the 10 million ways they have now to tax us. i'm not worried about one. i'm worried about the 10 million in the current tax code. [applause] one of the reasons that they are not going to turn 9-9-9 into something else any time soon, you can never they they will never change it. there's two reasons why they are not going to change it any time soon. number one, i'm going to be the president. i'm not going to sign it. [applause] they keep forgetting that. number two, because it's visible. you know what it is. you understand it. they start talk about raising it for no reason other than their still overspending, you are going to let your voices be heard. visibility of this plan is one of the biggest deterrents we have to keep the politicians honest. now, the opportunity zone feature has been in our analysis all along, but just like i accused my opponents the other night of having not read the plan, we now have proof they didn't read it. if their staff had done the proper job and read it all the way through, they would have discovered what i'm about to share with you because first of all, 9-9-9 captures revenue to equal existing tax revenue from five sources. the payroll tax -- you don't have to pay that anymore. corporate income taxes -- they are in the first 9. personal income taxes -- everybody's rates are between 10% and 35%. you capture that in the second nine. it also replaces capital gains taxes and the death tax. capital gains -- what if an investor wanted to do something with the bill behind us? what if they wanted to spend ten million to turn it into a mall or restaurant facility or a destination facility in this city? under 9-9-9, they would be able to deduct that capital investment in the year that they make it, and not have to deal with depreciation schedule as they call it, which are punitive to businesses. the fact that capital gains goes away, it allows that entrepreneurial spirit in this country to be financed by people with money to get together with people with ideas. imagine every one of these facilities that we are surrounded by having an entrepreneurial and an investing getting creative in order to do something with these depressed economic properties. that's what built america. [cheers and applause] we need to renew and unleash that same spirit, so here are two of the features my competitors didn't get to when they didn't read the plan. number one, how do we deal with the poor? those that are at or below poverty level? we already had the provision in there and we still raise the same amount of money. if you add up the below poverty level, your plan is not 9-9-9, it's 9-0-9. say amen, y'all. 9-0-9. in other words if you add below the poverty level based on family ties because it's a different number of each one, then you don't pay that middle 9 tax on that income. this is how we help the poor. the other way is we get the economy going so we can let people find jobs. for economically disstressed cities, detroit has an unemployment rate of over 20%, and there are other cities just like that. it's getting worse, so the opportunity zones will allow cities like detroit to qualify for additional exemptions relative to the first nine. right now in the first nine, you can deduct purchases if you're a business. you can deduct capital expenditures, net exporteds, but -- exports, but for those cities that qualify as opportunity zones, you will also be able to detucket a certain -- deduct a certain amount of payroll exeanses, so you will be insented to put people to work. the other thing about the opportunity zone is that it just doesn't apply to certain kinds of businesses located in the zone. all businesses would qualify for those kinds of extra exemptions. [applause] another thing i believe in is helping cities to empower themselves, empowering workers and individuals to help themselves. this is not an entitlement program, and so the cities have to step up and remove some of the barriers that are within their city limits such that if the cities do what they can do to help themselves, we will have the 9-9-9 legislation so structured that they will get additional benefits, and so it starts with the national opportunity zone, that if you are at or below poverty, your plan is 9-0-9. now, some people will say if you're at poverty, then you're not concerned about that first 9 anyway. that's not true. i know a lot of business people that are barely making it. barely making it, and so, yes, they would get 0 for the middle 9, and, yes, nay would get special deductions if their in an opportunity zone, so all of the critics who want to say that this plan is not this and not that, i invite them to take a look at an article that was published just a couple of days ago by one of the most renowned economists on the planet. he worked with president reagan during the reagan administration. he is currently head of his own company. i'm talking about dr. art laffer. he's currently head of laffer associates and the laffer center for supply side economics and author of "return to prosperity," and he wrote an article published in the "wall street journal" the other day that refuted all false claims made against 9-9-9 the other night during the debate. before i say what he concluded was his own analysis, it never felt so good being shot at. never felt so good being shot at because as aveda king says, they didn't think of it first, and they don't have a credible plan. to the activation that a new sales tax could be raised in the future, dr. laffer responds so could any other tax. what makes that one any different? to the accusation that it is not revenue neutral, dr. laffer concludes, i believe his plan, herman cain, would indeed be stat tick revenue neutral and with the boost it would give to the economic growth, it would bring in even more revenue than expected. two, -- to the accusation that this will not generate economic growth, dr. laffer points out, output will soar as will jobs. tax revenues will also increase e enormously, not because tax rates have increased, but because marginal tax rates will decrease under the 9-9-9 plan. bottom line, folks, 9-9-9 means jobs, jobs, jobs. [applause] let's renew the economy of this nation. [applause] this is the greatest country in the world, and we have people that are apologizing for america's greatness. as your president, i will never apologize for the greatness of america because of the spirit of america that build this great country. ronald reagan, one of our greatest presidents, used to describe this nation as that shining city on a hill, but in the last several years, that shining city on a hill has slid down to the side of the hill because of this struggling economy, because this administration is weakening our military, because of foggy foreign policy around the world, and because of a severe defirst deficiency of leadership. i believe that the american people are saying loud and clear that they want to move this shining city on a hill back to the top of the hill where it belongs, and i believe that we can do that in november 2012. [applause] there's two things that people haven't figured out yet. some of them are still trying to answer the question, why is herman cain doing so well in the polls? he doesn't have the greatest amount of money. a lot of people didn't know who he was. i can tell you what's happening that they don't get yet. number one, the voice of the people is more powerful than the voice of the media. [cheers and applause] you, the people, and you're listening. [applause] secondly, message is more powerful than money. america is hungry for solutions and not more rhetoric. that's what they are paying attention to. not only our 9-9-9, jobs, jobs, jobs, plan, but our approach to the many other crisis we face, and we have become a nation of crisis, but the good news is we can fix things. the american dream has been hijacked, but we can take it back. i know that because i have lived my american dreams, and then some. so have many of you. ever since my first grandchild was born in 1999, and i looked into that little face for the very first time, and the thought that went through my head, which it had to be coming from god al mighty, what do i do to make this a better nation and a better world? this journey has unfolded for the last 12 years, and i am convinced that the spirit of america is boing to renew america -- going to renew america, and i'm convinced the american people are ready for a problem solver in the white house, and not another politician. ronald reagan, who i'll refer to again, describes this thing we call freedom as something very fragile, very delicate, and if we allow it to get away from us, we might not be able to get it back. reagan reminded us that freedom is never more than one generation away from extinction. we can't pass it on in the bloodstream. it must be fought for and protected for one day we will spend our sunset years telling our children and our grandchildren when the united states of america used to be like when men were free. i'm not going to have that conversation with my grandchildren, and i don't think you want to have that conversation with your grand kids. in the fourth verse of the star spangled banner are some words that people rarely recite. on all of our currency, it says, "on god we trust," but right in the middle of the fourth verse in the star spangled banner, it says in god is our trust, and that's why we are going to take that shining city on a hill back to the top of the hill where it belongs. this is the greatest country in the world, and we are going to keep it that way. thank you for being here. god bless you. [cheers and applause] >> thank you, all, so much. suspect it symbolic of this campaign and the future of our country that as herman cain was speaking, the sun came out. [cheers and applause] can we say 9-9-9 is morning in america again? [applause] i just want to close out by introducing my two fellow co-chairs of the opportunity zone, herman cain, has asked us to join his army, and we saluted geraldo oregon -- gonzalez, of the business round table, thank you. with these two fine gentlemen and over a dozen advisers, volunteers, and supporters, we plan to take these opportunity zones to every depressed region in the country and change our country as we help elect herman cain, president of the united states. [applause] let me ask to close out bishop holmes to do a closing prayer. thank you, all, for coming. >> thank you, niger. this time with bowed heads, almighty, eternal god, creator of the universe, we bow our heads in the spirit of humility giving thanks with this gift of a leader you have imparted untoe this nation for such a time as this. as we are confronted with life and with situations of challenge, we ask that you restore the hope of america. you give vision and clear and con size revelation to this leader, and as he embarks upon this journey from the grass roots to the white house, set his feet in the white house to bring redemption to this country, wrap your living arms around him so no evil can harm he and his family, in the end, let us all enjoy life, liberty, and the pursuit of happiness. war without end, god bless america, and god bless you today. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> it spans the base, take care of the poor. see, they going to ask me what do you think about their plan. i'll say, well, i'm going to read the plan before i comment on it. >> [inaudible] >> i'm going to read the whole thing, and then make my assessment, you know? >> hey, herman cain, can you sign this? [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> you know, we are in a few organizations. >> sure. >> but i just admire you, you know, and the 9-9-9 -- [inaudible] [inaudible conversations] [inaudible conversations] >> i'm not personalizing it, i have too many to do, but i appreciate it. talking jobs, jobs, jobs, how are you? >> you said you got one plan, you got two because you have 9-9-9 and 9-0-9. >> that's right. >> you got to say both of them. >> all right. >> last one, and then i have to go to this media. [inaudible conversations] all right, got to go to the meeting. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> what is the scientific evidence that being gay is a matter of choice? can you point to studies that determine that position? >> well, show me the scientific evidence that says that it's not. next question. >> there's plenty of scientific evidence. the fact is you can't point to anything that supports that notion. >> my question is over the last couple days, there's back and forth on -- [inaudible] do you see yourself as flip-flopping? your opinion on guantanamo, abortion, a series of them. >> in a couple instances, and we have to take them one by one, i said i misspoke because of the pace of the particular entity. i don't flip-flop. i'll explain to people what i really meant. let's take the guantanamo. we were talking about israel and the decision that the prime minister benjamin netanyahu had made, and i tend to make a point he has to consider a lot of things, i'm sure, before we make that decision, so on the surface, i couldn't say whether or not i agree or disagree, and then changing the subject so you know, you think you would consider doing something, and i didn't immediately associate that. i didn't backtrack. i explained that i misspoke, and then i moved on. i was misinterpreted talking about the whole abortion thing. it's clear where i stand on abortion. i'm pro-life from conception, no exceptions. i will sign anything to defund parenthood, i will not support government money spent on abortions, on down the line. when you talk the abortion issue, the different components of it, and they took it totally out of context. i would rather correct something that i said than to try and leave it out there such that it can be misinterpreted. >> sending mixed messages -- >> no, it doesn't send mixed messages. it shows i'm willing to correct myself, you know? i'm willing to correct myself if, in fact, i need to correct myself for clarity. that's what i'm trying to achieve. >> mr. cain, what do you see as major obstacles to winning michigan especially with mitt romney from the state? >> the biggest challenge in winning michigan will be getting my message out to the citizens here in michigan, going up against the amount of money that i'm sure governor romney will be able to throw against it. >> how do you overcome that then, sir? >> i'm just going to be here a lot. that's how you overcome it. we have a plan to be here a lot in order to directly take my message to the people. >> herman cain? >> yes, sir? >> when you step out from front of that building behind you? >> when i look at the building behind me, i see opportunity if we get capital gains out of the way. there are a lot of people in this country that have money, and capital gains is a wall between people with money and people with ideas. this economy was built based upon people with ideas that entrepreneurial spirit, but because taxes and regulations have gotten so bad, people with money don't want to take risk. one of our guiding principles for the whole 9-9-9 plan is that risk taking drives growth. that is the growth opportunity right there if we open it up for people who have money would be willing to take the risk. [inaudible conversations] >> the attacks in your plan is unfairly going to -- [inaudible] >> it was in the original analysis. i simply -- we simply chose not to talk about it earlier such that we should get people used to the whole concept. we didn't want to put it all out there at once even though it was right there in the analysis. we wanted to treat this separately so people could build upon the information we had, but it's been in the analysis all along, people just didn't read it, and they dent get to that point, and 5 lot of these false accusations are now proven wrong. >> have you talked with the owner -- [inaudible] >> no, i have not, no, i have not. >> he's a billionaire, he had the building for 20 years, he's allowed it to rot. how does capital gains have anything to do with that? >> well, it would depend what he wants to do with his money. maybe it's not that billionaire. maybe that billionaire is sitting on the building waiting to sell it so he can avoid capital gains. i don't know because i don't know that billionaire. if you remove the wall, maybe he will do something with it. >> [inaudible] well, it would still be 9-9-9, but on the first nine, the choice, if they qualify, would make additional deductions that everybody else could make. for example, and it would require some analysis and the reason that i can't give an exact number is because there's a lot of things in the tax code we have to work out, you know, with congress through the budget. here's an example. right now, the first nine, business can deduct purchases that they make from u.s. companies, especially, to produce their product. you can't deduct payroll, but if you qualify as an opportunity zone, you might be able to deduct part or all of the payroll which lowers the amount and lowers your taxes. that's just one thing. >> well, thank you all very much, and remember, 9-9-9 is jobs, jobs, jobs. thank you very much. >> will you give us a song next time? >> probably not. [laughter] >> it wasn't that bad. i saw the youtube clips. [laughter] [inaudible conversations] >> thank you, sir, thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> hey, how are you? >> i'm great. >> roger, yeah, i remember you. how are you doing? great to see you, man. >> mr. president -- >> who said something about backing down. >> i did. >> i ain't backing down. >> thank you for that. [laughter] >> appreciate it, appreciate it. very good. [inaudible conversations] >> i got -- [inaudible conversations] [inaudible conversations] >> got to do it while we walk, while we walk. thank you, sir, thanks for being here. thanks for being here. hey, young man, hey, did you get it? can you get it? hold the pen. [inaudible conversations] >> thank you. >> appreciate it, man. >> thank you, appreciate it. [inaudible conversations] >> i appreciate that, thank you. thank you very much. i appreciate that. [inaudible conversations] >> all right, i got you. thank you, ma'am, thank you for being here. let me sign that. [inaudible conversations] >> thank you, darling. thank you for being here. keep me in your prayers. thank you, sir. >> keep the bus on the move. >> all right. thank you. how are you doing? thanks a lot, folks. thank you, thank you for being here, it's wonderful. how are you? hi, michael, how are you doing? good to meet you. thank you. thank you very much. i appreciate it. okay. [inaudible conversations] >> thanks 5 lot. how are you? >> good. >> thank you for being here today. thank you so much for being here. here we go with these baseballs again. you all know how hard this is? [laughter] that's right. there you go, man. >> thank you. >> thank you, sir. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> two more. one, two, three. >> appreciate it. it's a pleasure, pleasure. >> i hear you. >> thank you, detroit, thank you. >> thank you, mr. cain! [inaudible conversations] [inaudible conversations] >> watch more video of the candidates, see what political reporters are say, and track the latest campaign contributions with c-span's website for campaign 2012. easy to use. it helps you navigate the political landscape with twitter feeds and facebook updates from the campaigns, canada bios, and polling data and links to the partners in the early primary and caucus states at c-span.org/campaign2012. >> and here's a look at the room on the campus of the university of iowa in iowa city. this is where we expect to hear shortly from republican presidential candidate, texas congressman ron paul. he's appearing as homecoming weekend starts on campus, and he's speaking on this youth rally on his two-day campaign tour through iowa. tomorrow, east in des moines to speak to the faith and freedom coalition, but while we wait for congressman paul to arrive, we'll take a look from earlier today from vice president biden in new hampshire as he filed campaign paperwork on behalf of president obama for the presidential primary. he also took questions from reporters. this is about five minutes. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> hey, everybody, how are you? [inaudible conversations] >> good to be back. >> old hand at this. >> yeah, i'm an old hand at this. i'll tell you what, this time i got the right guy. last time it was me. [laughter] how are you doing? [inaudible conversations] gee whiz. you can't tell us apart. [laughter] [inaudible conversations] this is to make it official that barack obama is running for president of the united states. [applause] give that to you i assume. >> yep. [inaudible conversations] >> they told me you were just going to -- >> no, the thing i'm going to say is that, you know, the first primary in the country, which -- [inaudible] we're coming back to new hampshire, get underway to win, and that's why we're here today, officially file them, and we are looking forward to competing for the road that's supportive in new hampshire, not really for the primary, but the general election. thank you, all very much. how are you? how are you? nice to see you. hey, man, how are you? [inaudible conversations] good to see you. all right. okay. thanks, guys. don't jump. don't. [laughter] all right. thank you all, very much. >> quick question? >> sure. >> the president's 41% right now among new hampshire voters. what's your message to voters right now? >> well, in essence, just listen to what their solutions and listen to what our solutions are. look, at the end of the day, the american people, the people of new hampshire are going to make a choice. they are going to make a choice as to whether or not the road we have put the country on, 19 months of creating jobs, is not enough, but every year creating private sector jobs, finally bringing control to wall street so that they can work like it's supposed to work, allocate the capital, and -- [inaudible] out of the candidates who debated here suggest that is or isn't the lack of deregulation of wall street, what we had for ten years before the crisis, believe that we have the -- should continue to provide additional tax cuts and i believe -- [inaudible] how to get it through, and the best example is the jobs bill. we can do something right now to get in the economy again. we can do something right now, and it's being held up. the united states senate wouldn't even let us get to a vote. 51 senators are for it. couldn't even debate it. couldn't even debate it, so i think there's a big difference as to the position. the one thing that is fairly clear to me listening to not all, but there's no fundamental difference between or among any of the republican candidates, so it's already pretty clear whoever the candidate's will be in terms of how we see the future of america, and what -- [inaudible] [inaudible] okay? thanks, everybody. i really do appreciate it. [inaudible conversations] .. we talked to a reporter with "the washington post." >> lindsey is a national staff writer with the washington post. she covered the session and the senate this week. why does the senate want to change the no child left behind all? >> gwyneth no child left behind was enacted in 2002, it was an unprecedented reach into education by the federal government, and this was a bipartisan plan. it was championed by president bush and the late senator kennedy. they argued that states that get federal money ought to be held accountable for results. so for the first time states were required to test their kids to set performance targets and to work every year to meet those goals. but in the nine years since, schools, states, teachers, they complain the goals are unrealistic and the sanctions if they don't meet those goals were draconian so there was a lot of pressure on the congress to change the law. >> what did the senate education committee accomplish in the markup session this week? >> it basically represents a serious retrenchment of the federal government in classrooms no longer will the states have to sit achievement targets for the kids. they still have to test them every year but they don't have to have rules for achievement. so they won't face any penalties if the kids, you know, aren't learning what educators think they should be learning senator harkin wanted some kind of teacher evaluation. he wanted to be able to tell good teachers from bad teachers and require the states to somehow measure your issue that's been wiped out of there as well. and only 5% of the country's worst performing schools will face some kind of federal oversight. they did leave 5%, the lowest of the low. they are often called dropout factories. the 5% would still be subject to some kind of federal oversight but for the majority, 95% the government basically is hands off. >> the obama administration already moved ahead of policy changes to the original law. what have data on? >> the obama administration is frustrated because law should have been ray authorized four years ago and congress didn't act. and there was all this pressure building up from the state's saying we can't work with this law it is not workable. helpless. seóul obama directed secretary of education arne duncan to issue waivers to states to relieve them from the burdens of the law. today we have got 39 states in the district of columbia who indicated they want weavers. they want out. the ad administration moved ahead with that and that kind of woke up the senate. they decided they didn't want to be on the sold lines, they didn't want the administration basically rewriting the law sets why we saw all this action of a sudden after four years of inaction. >> on their be right how likely is the new education to the persian by congress this session? >> that's a great question. i don't predict these things because it's pretty hard to tell on the house side the republican leadership has wanted to do reform of the law in a piecemeal fashion. they've got three bills out of committee. only one of them passed the house floor. i don't know how committed they are taking on a comprehensive rewrite which is what the senate version is so we have to see what happens in conference if this one gets passed on the senate floor. we will find out. >> lyndsey layton national staff writer with "the washington post" and you can read her articles at washingtonpost.com. thank you for that update. >> thanks, bill. we had now to the university of iowa in iowa city where republican presidential candidate texas congressman ron paul is going to be making a campaign stop on this homecoming weekend at the campus. he will be speaking at this huge rally on a campaign tour of fallujah and earlier he was and newton, davenport and tomorrow he will be making a stop in des moines and to speak to the state and freedom coalition. you are watching live coverage here on c-span2. >> i'm not exactly ron paul the way to entertain you for a couple minutes. >> i would like to introduce myself. i'm the midwest meet regional director for you for ron paul and on behalf of the ron paul 2012 campaign the youth for ron paul and university of iowa i would like to welcome you all for coming tonight. [applause] as a to youth activist and a student who studied political science for many years i've studied the phenomenon is the youth vote. that is to say the historical vote turnout rate from the youth and a lot of people say that the u.s. are just lazy or maybe they will care. they are not motivated to actually turn out at the polls. but i think that define a problem in that they don't understand who the youth are. the youth people in general have this in herron to urge to change the world they have a passion that is installed in each of them. [applause] they have a passion that is instilled in each of them to change the world. they see the status quo and realize there are many problems with what is going on and realize we must fix this now. but the reason that we have had such a low turnout rate in the past is because we have been giving candidates choices that have failed continuously to the teacher administration is the same from one to the next simply throwing money at problems and hoping to fix them both. expanding the entire band going about with endless words of aggression, continuing in the field system ignoring all of the warning signs. however, now we have something different. we have a candidate who actually offers these changes that we wish to see in the world. [applause] [cheering] and you know, i hear it just so happens this man can turn out a crowd with a thousand people on a friday night in the middle of iowa during homecoming. imagine that. [cheering] so i say it's time that we and the idea that the vote of the young people does not matter, that we don't have the power to change the world because we do. we have the numbers and the power and the candidate who shows the change in presenting to him tonight, pretty excited about one. the so, without further ado i would like to welcome the university of iowa chapter leader joe b. gallagher -- [applause] he has played a major role in the turnout light and the passion on campus so i would like to give him one more round of applause. [applause] >> it's an honor to be here in iowa. i'm originally from chicago so this is the most -- this is the most conservatives i've ever been around. i truly believe though that america is ready for a leader that is based on honesty and principles. are you ready for a leader that is based on onerous and principal? [applause] without further ado, the texas congressman, ron paul. [cheers and applause] >> thank you. thank you very much. i was told this was a special weekend and not many would show up. thank you for coming. [cheering] the >> i do want to welcome my family members my wife carol. [applause] and two granddaughters, lisa and linda. [applause] it is great to see such a nice and enthusiastic crowd. i give speeches on occasion in washington. i don't get any applause at all. [applause] and, you know i'm very sympathetic to the younger people, those under 30. they seem to understand what liberty is all about, so much better than some of those individuals that have been in washington wait too long and they don't have the idea of what liberty is about. [cheers and applause] but tell you what, i get encouraged a whole lot when i visit with the young people, the college students, because i know that the future looks bright when i meet with you. so enthusiastic. i hope i can encourage you because the stakes are high. the stakes are very high on what's happening and that is what is happening is people are coming to realize this. but liberty is my real issue to talk about economics and balanced budgets and foreign policy and federal reserve and a few other things but the issue was liberty. i believe our country has been the greatest and the most prosperous because we have a better understanding about liberty than any other country. we didn't have a perfect constitution. but it's very in perfect now not because it became more imperfect but because the people who were supposed to be following it became less a perfect and totally ignored so we need a new generation that cares about law and the constitution. [applause] i think of liberty as being very simply self ownership. who owns you, who owns your life, who has the responsibility for you? i come from a natural rights the point which is similar to what jefferson talked about, natural rights, god-given rights, that our lives and our liberties come outside of government. the government was not created there to allow us to have liberty. if we are going to have government, and which should be limited, should be precisely to protect those liberties that are rightfully our own. [applause] the misunderstanding of ownership of course it means it's your body and people shouldn't tell you what to do with your body. it tells you what he can do with your liberty. you should use your liberty for my viewpoint and my advice use it in a productive manner. i see liberty as the release of creative energy coming into the purpose is to work for excellence and virtue. believing that once you deliver that responsibility, the government, all they do is undermine liberty coming and it ruins the efforts to be productive and to improve oneself. but if one is convinced that we have this responsibility it means two things, one, you deserve to keep the fruits of your labor which means there shouldn't be an income tax. [cheers and applause] now that part is easily understood. the second half of it is n now that part is easily understood. the second half of it is not quite as easy, accepted by some. but that is if you have your rights to your life and liberty and property, you also have to assume responsibility for any bad choices and you can't go to your neighbor or your government to bail yourself out. [applause] it is accepted in this country that these principles been you have a right to deal with your spiritual life any way that you see fit. you can ignore it and not pay any attention to it, or you can practice your spiritual life any way you want as long as you don't hurt other people. you are also allowed to pursue your intellectual life any way that you see fit. we don't hopefully never get to that point. we shouldn't be in the business of book burning and saying you can't study this, you can't study that. it should be you that makes the decision, and for the general -- in the general sense, the american people have accepted this motion fairly well. far from perfect but very well. i fink where we have fallen down, and this is across the political spectrum, it's this idea that it's your own body. that means if your spiritual life, which is a serious responsibility and your intellectual life is a serious responsibility, why is it that if we assume that you can have free decisions there, why should we have free decisions on what you eat, drink, smoke and put into your own body? [applause] [cheering] spiritually we can argue if you make mistakes you have to deal with that and maybe another life. intellectual if you make mistakes you have to deal with that yourself. but if you make mistakes, making decisions about what you do with your own body to consider the consequences. but, if you want to embark on this notion as our country has now for hundreds, you know, hundreds of years essentially that we have reneged on this and assume that the government will protect us from ourselves, a very dangerous mission if the government assumes its responsibility to protect you from yourself it has to deal with every habit that you engage in and it is impossible to do that. and still of a free society. it is a wonderful thing because i see it as opening up the opportunities for creativity. but if we accept this notion that the government should tell us how to run our lives, the most important practical or in practical result of this is that it destroys to the productivity of all of us. it means you will be poor. if you have this idea that we should all be free and prosperous and do what we want on our own and be responsible for ourselves we will be prosperous. the evidence is overwhelming throughout history that the free society no more prosperous the society and that is what our goal ought to be. [applause] now there are many new challenges to the notion of a way to the extreme communist socialist viewpoint to the extreme welfare who believe the government has to regulate the economy for the benefit of one group over another but it does create the prosperity but one of the hardest parts for people to accept is if you have a free and prosperous society where you can use your own incentive to advance yourself guess what, you don't have an equal society, and that is sometimes hard for people to understand, but if the results are that you have the most prospered, the largest middle class, the best distribution of wealth by far it is the best system to argue for it to work for. [applause] >> if it is the government's job to make anybody equal the are capable of doing it. right now they are working very hard on equal the. but guess what, we are working on the quality of poverty. that's what we are working on unfortunately. [applause] now the free-market austrian school of economics teaches one thing that government intervention doesn't work. it doesn't even come close to achieving what it pretends to achieve. but there is another basic principle when it comes to the monetary policy. any society that the marks on the destruction of the currency, that is by inflating the currency, increasing the money supply without anything behind the currency itself and devaluing the currency, there is essentially always a transfer of wealth from the middle class and the poor to the wealthy. and just think of this today how what is the main complete? there is a large segment who is hurting and there's a small segment getting very, very wealthy. i see this as very important, and also a little risky on how we deal with this because there are in a free society i said it was unequal and there will be some rich and some poor. but if it's -- if a person is rich because the of the unsuccessful, and because the tiffin voted to be rich by the consumer, see, the only democracy of course is a risky venture, pure democracy undermines the minority, and we don't want pure democracy. but in the economy, democracy really her veils because every single person that spends every dollar on voting on the product, and that means if we could have a society where nobody does the special privileges, where nobody got benefits, nobody got the age by the government force and a government contract, and then somebody is capable because they are white and they will work harder and produce a product that week, the consumer like, the individual becomes wealthy we have voted him his wealth. we voted him the wealth because we like this product. but if an individual becomes wealthy because they have an inside track to easy money and easy credit, and also when they gamble with this money in the derivatives market and they go broke and then they go crying to the government and say look, we are broke if you don't bail us out there's going to be a depression, give us more money, if that happens, if they got rich the wrong way and get bailed out the wrong way, they deserve a lot of criticism. [applause] unfortunately we have a lot of that going on. everything from subsidies and special privileges and special contracts and of course we have this whole idea about how we spend our military money. that is, you know, enriched many. bonnie weapons we don't need and bridging the military industrial complex. that is complicated by people being talked into for patriotic reasons you can't resist any military spending and you have to endlessly fight the war if not you are not patriotic. so, in order to attack that we also have to understand foreign policy, and the foreign policy of a free society in a society that protects your individual rights, the free society under those conditions says we as a country have the right to defend as if we are under attack but we have no moral authority to force ourselves on other people coming and we have no moral authority -- [applause] the have no moral authority to accept this notion of preemptive war. degette sound fancy like we have the preemptive war because they're going to attack us some day and they might get a weapon so we have to go and get them. that just is open-ended. it's also called aggression. we are drafted in the direction, and the world doesn't like it. we don't win friends around the world. what we do is we based our money. we become more in danger, and we develop more enemies. so, -- [applause] so we have to address the subject and your generation will have to do it because this system won't work. i have argued for many years about and on interventionist foreign policy and i have been convinced i will win this argument. we will win this argument. our side will win. i wish they would win just by being convinced on a moral basis and that the constitutional basis and on just practical reasons that we shouldn't be doing this but we will win the argument about getting our troops home. not for those reasons as much as we are going broke, and we can't afford any more. the sooner we bring all of our troops home the better it will be for our economy. [applause] [applause] this is not just bringing them home from the war. we bring them home from the left over from the old war. why are we in japan? come home from japan come, from korea, come home from germany. there's no reason for us to be subsidizing them. [applause] now come as a constitutional president, i would be very cautious to be looking toward the proper procedure and working with the congress. but in the area of foreign policy and the movement of military troops, the president does have this authority. i don't even have to ask permission to move the troops around. there are no declared wars. so if we are able to achieve this victory, we can immediately bring the troops home instead of building more and more bases overseas like we are doing now -- we have 900 basis, we are building more of these strong bases just aggravating the people of the world -- i would say bring the troops home. open up some of those bases to close in the 90's. the close the bases in the 1990's at the same time they were building bases in saudi arabia, causing more trouble. so it's really time at least to get those troops home immediately. let them spend the money here at home for awhile. that would give us a bit of a boost. [applause] one of the reasons i went into medicine -- because i do remember world war ii and korea, and i haven't decided what profession to go into -- one of the things that motivated me to go into medicine was the fact that i never wanted to carry a gun. i never wanted to shoot anybody, and i thought well, i will probably be drafted some day and i certainly not going to play that game in war. and lo and behold all i was drafted in 1962, ended up being in the service for about five years. but the military draft, if you think about it, it's still on the books. you still have to register. it's always the assumption that position taken to make sure that the government knows that they own you and they will take you and put you in the military when they want to. so, in a free society you normally don't have registration, but you never have a military draft either. [applause] we should be willing to defend our country, and it should be across the spectrum. age shouldn't matter, sex shouldn't matter if we are under attack. but this idea that we go and look for wars to fight because we are spreading our exceptional some. you know, america had been an exceptional country. but this whole idea that we are exceptional now that we are going to force it down the throats of everybody if they don't accept us we are going to bomb them to oblivion and we call that american exceptional was some i would say -- i would say that if we want to spread our goodness and our good value it's become good and become valuable -- [cheers and applause] before we preach to others and enforceable law or to enforce the laws of the practices of practicing civil liberties, make sure everybody in this country is protected from the -- from our government interfering with our civil liberties. that's what we need to protect, setting a good example. [applause] you know, the claim that we are the war against terrorism, and the use that term rather loosely because terrorism of course is in the country how can you declare war against terrorism? it is a tactic. it is a wicked and a amine tactic. timothy mcveigh was a terrorist in that sense. but because he was an american, nobody decided well, we have to attack america because timothy mcveigh was an american. so this whole idea that we have to have a perpetual war going on is only there to make sure that we are intimidated and that if you don't obey exactly what they want, that you are unpatriotic, just like what happened in world war ii. the bigger the war, the unlikely they are to underline our personal liberty. just look during world war ii how we had concentration camps for the japanese americans. once again, it was a violation of the principal of who owns that life? the people who were incarcerated didn't commit a crime, and yet it was assumed that the government owns that life and they can do what they want. the tax code is built on this assumption that the government owns your life because they say that if you are -- tax rate is 40% and i offered to limit to 30%, the people in big government come back and say you can't do that, that will cost the government to much money. think about that. how was it going to cost the government money if i am giving your own money back or not taking as much from you? it's based on the assumption the owner of your income and you'll get to keep a certain percentage under conditions. so, thinking about this ownership of your life and economic terms or in personal liberties of the draft, very important. but we have gone and drifted away from that come in and i have been too casual about it. it is easy to blame a lot of different sources and a lot of different people for this. we certainly can plan our government because they've been negligent whether it is the executive branch, the judicial branch or the legislative branch. but in reality, the government reflects what the people have allowed to happen. so it is a responsibility of the people as well. and this is why we need to get a whole generation, plus many more, energize in the understanding of what the true liberty is. we were on the right track to constitution gave a pretty good start. we don't even consult with the congress anymore. we don't get a declaration of war so vague not only do not have a president that consults with the congress, just think of libya it's a great victory the president bragging about it i got another one. you know, but how can we be proud of that? no matter how bad, whose responsibility, it's the responsibility of the people of libya to make their self-determination and deal with that we've in the up paying for this. it was our bombs and weapons that do this and believe me it will be a burden. it's not going to go away. just think of all of the billions of dollars that we gave to egypt to prop up and pretend that we have peace in the region. then finally, our dictator its overthrown and now it is more dangerous than ever. this is what we did with saddam hussein, he was our ally and gave him support and then finally, you know, we decided we had to change that, and we did it with noriega and we were involved in iran. they were on their way to developing it for the democratic system so in 1953 we said no we don't want you to have democracy might keep all of your oil. as we wanted to have our dictator in so we installed the shock and was brutal. then after what, 53 at 79, what did they do? a stir up hatred, antagonism, not only against the sharnak but against us. and just look at the problems. there is a long time ramification. the unintended consequences, the blow back from it. what about when we were in afghanistan actually attempting to be on the right side of the issue when the soviets were in their. we were actually on the same side as bin ladens a look they have invaded this country and we are going to help to throw them out. the whole problem is after the soviets got thrown out, we decided it was our country and we were going to stay. it makes no sense whatsoever. it's a schizophrenic foreign policy. you know, i've always said that we only have two options. one, we tell the dictator what to do and if he doesn't we give them a lot of money. if he doesn't do it, we kill him. i thought those were the only two options. what if you look at pakistan, they have actually come up with a third option and the third option is we will do both. we will keep bombing you and telling people and making them at their own government because their own government supports us and we give the government money. and we wonder why there is chaos in that country. but i tell you what, there is another option of those three. and that is the one that the founders and feist, george washington and feist very strongly in his farewell address. and that is making friends with as many people who want to be friends and trade with as many people who want to trade. not to try to get involved in an internal affairs, not to get involved in entangling alliances. i can't think of anything more entangling than getting involved in the imf and the world bank and the united nations to go into the war. [applause] [cheering] so as bad as it has been over these decades of a sliding into the and declared war it is actually getting worse because we went into libya, now in ugonda, with no consultation, no consultation with congress and say this is the problem we have and try to make the argument is for the national security. none of that. it's just totally ignoring the people and the congress and going and getting permission from the united nations and the troops going in and the money going in under nato. this is a major step towards world government. and also, many that like world government are very much aware of the same thing that many others are aware of, that our financial system is very, very shaky and there will have to be a new monetary system because money printed out of thin air eventually self-destruct and we are in the middle of seeing this self destruction. so most people realize there will have to be a new currency. finally good way to get started on that. why don't we look and find out what the constitution says? it says only gold and silver can be legal tender. there would be a good start in the right direction. [applause] but there are many planning that the reform would come there will be in the currency. would be paper money loosely tied to gold that would be run by the united nations. this is when we would have to make a major decision on whether we think we should maintain our national sovereignty. you know, i think the state should run most of the government. the government was never meant to be large in washington. [applause] but over the decades we have allowed so much of the government to go to washington and now shifting into international government. but once again we have to decide where our national sovereignty comes and personal liberty comes from and decide what we want from our federal government. the founders, the question why should the role of government be and they didn't like the world. i tell you would come from my estimation and others, the role of the king was rather minor to what the king in washington is doing to us today. [applause] but there is no doubt this government could not be this big if we would not have allowed the control of money to get out of the hands of the marketplace and out of the hands of something of real value and of course that occurred in 1913 with the introduction of this notion that we should have a federal reserve system. they do a lot of mischief and the very first thing that we should be demanding which i have been demanding for years and we got a partial done that is the need a full-fledged audit to finance exactly who their buddies are and who is getting the bill. [applause] [chanting] so you know the next step. very good. [applause] the fed will be ended but it will be ended like what we have to come home from overseas. but the thing that i would like to do is help prevent the crisis from coming. we end up and literally with runaway inflation. it is the great danger. the destruction of the dollar, the abandonment of the dollar and the rapid transition into the inflation that could have been rather rapidly any time. right now we are they are still taking our dollars and the bible, the bond and the dollar bubble is still building. but it should not really sure anybody and it isn't because the world is in flux. all you have to do is look get the news. you don't have to go to greece to find out the unhappiness and the how disgruntled people are. all you have to do is go to a few of our cities. so, people will becoming very much aware of a serious problem. the big question is what are we going to replace it with? hopefully we will have the right explanation to replace it with the proper form of government. the kind of answers that our founders gave us and they read a document which was intended in no way to restrict you. it was written to restrict the federal government. [applause] as long as there is a federal reserve system and it is allowed to exist, it facilitates the deficit financing. if you have sound money and if you couldn't print money out of thin air and you have somebody that wants to spend a lot of money on the entitlement system to buy votes or allow this money to be spent on policing the world to satisfy special-interest, we could tax the there wouldn't be enough money and we could start borrowing. there wouldn't be enough money and that is when they resort to the inflation. the amazing thing is that our government and our country has gotten away with it for so long. but the world has trusted us because we have and still are probably the wealthiest country in the world and we have a lot of weaponry so there is a false illusion that we will be there forever. but now that we are the biggest debtor in the history of the world ever that we know that this end is coming and we have to replace it with something. so it is the basic question we have to ask what should the role of government be and what does liberty mean? this liberty means something to us? are we frightened by it, and we feel insecure? to be whatever government to take care of us from the cradle to grave and make sure they will protect us from all dangerous? basically we are not safe because we have a big government, we are not safe because there is a lot of -- we are safe because people assume they have to protect themselves and one of the reasons we were given the second amendment to make sure we were safe. [applause] unfortunately in my lifetime there's been a transition away from the way we look at our local police, let alone the federal police. we have a 100,000 federal bureaucrats now who regulate us and our property and marched into our business is and they are carrying guns. i would say those are the guns we ought to regulate. [applause] even the local authorities have become more authoritarian the way in force what they consider the of legitimate law. right now there are 50,000 break-ins by police without proper search warrants that are sting operations looking for somebody that might be smoking cigarettes were smoking marijuana, so they break into these houses and i read a terrible story today of a -- one of the operations. they broke in and was in an ex-marine's house. been to iraq. the put his family in a closet so he pulled his gun but he heard somebody banging on the door and busting answer he had a gun in his hand and the door opened and he never shot a shot. he didn't even take the safety of his gun and he ended up with 32 bullets in his head and his body and he had nothing in his house. so what are we doing to ourselves? yes, we take an oath to defend our constitution against all enemies foreign, but right now i fear for the destruction of my liberty in your liberty from domestic threats today. [applause] not only did the founders understand exactly what self ownership meant, they also translated that into seeing that was a whole piece. it wasn't in part. today we sort of break up. because of economic liberty and personal liberty. we actually even have the freedom of speech broken up into places. we have political speech and advertising or commercial speech. but speech is a speech and freedom is freedom and economic freedom is the same as personal liberty. it shouldn't be mixed up. [applause] so we have to put back together again, and we have to have the confidence that a free society is the best and right now i'm afraid of the minority side of this we are believing that only the government can take care of us as we have to have a new understanding and a new conviction that what we want to have is to live in a free society and at the right to our lives and our bodies and the rights to our fruits of our labor. this will give us the property though we really want and i believe that if you translate that into the proper forum policy this is what is going to give us peace as well. if we can have a system of peace and prosperity, how can we lose the argument. so, we don't do this, the problems are going to get much worse and there will be more undermining of liberty. and in that case, then it's going to become more chaotic. if we don't do something about it and get a handle on it, my suggestion in the campaign right now on getting a handle the budget is in the very first year cut a trillion dollars out of the budget and get serious about it. [cheers and applause] i start with getting rid of five of the departments. there's too many departments in washington. we don't need them. [cheers and applause] and i cut the military budget. i don't say defense. the military budget down to 500 billion. and the year nearly hysterical because in washington are not even allowed to cut a nickel out of the budget whether it is democrat or republicans because then you are an american and you do not support the troops. one thing i am the proud boast about in our campaign last go around and this go around even more so is the fact i have been accused of not supporting the troops and that i am not patriotic in volume of american because i will support the war. but when it comes to donations i have the three top groups of individuals a chemical the computer and within the category of what their occupation is. the top category of donations coming from individuals come from the u.s. air force. [applause] and the second is the u.s. army. [applause] it third is the u.s. navy. [applause] so this whole notion that people going to the military just to fight the war coming useless war already declared is complete nonsense. they are willing to defend our country but they don't want to just go to the war for the sake of war. let's go rarely if you have to go with it and do it properly to make a proper declaration by making sure we really have an enemy and don't make it so vague and that's coming from our military, people. [applause] now there is another candidate and i will let you guess who it is that he's in the polls right now, and we looked at his top tree donations and they all came from three big banking institutions. [booing] i wonder if the get to get federal reserve for just a bailout. but we do live in crucial times, and we need to -- we do need a reenergize the defense of liberty. we need to understand what it is, put it back together because we do have a wonderful tested this country. we have the freest country and the most prosperous country, we have the largest middle class ever. but it's not there anymore. the middle class is shrinking. the poor are growing more numerous. other rich are getting richer, the small number, and most of them are making money off the system. so, this, this is being challenged we have a great system. but now we don't have that. freedom has not been overly successful in that not many countries enjoyed it. even today think of how many countries do not have real freedom, and also we don't have real freedom anymore but there's so many that throughout history that has been that way. most of history has been dominated by tierney, and today the americans are unplayed and confused at times and i don't know if they clearly interest and the the major problem is we are having less and less freedom and more and more tierney and it is going in the opposite direction and we need to change that direction. that is my goal and my intent to fight for the cause of liberty to make sure that we have the maximum allowed us prosperity in this country. thank you very much. [cheers and applause] [chanting] [cheers and applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] the [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [cheers and applause] tomorrow, ron paul will be in des moines on the second day of his bus tour to speak to the faith and freedom coalition. a number of the other republican presidential candidates will be there as well you can watch the remarks live on our companion network, c-span, starting at 7 p.m. eastern tomorrow. now former fdic chairman sheila bair talked about the problem of the too big to fail financial institutions today and how federal regulators have prepared for major bank failures. she spoke at a conference on the dodd-frank financial regulations law at george washington university for about 45 minutes. [applause] i would just know two things that i think showed the kind of regulator -- u.s., both in terms of being farsighted and actually been able to say no when she needed to say no. so about 10 years ago she was actually assistant secretary of the treasury among other things became aware of the burgeoning growing problem of subprime lending and tried very hard at that time to raise that issue to the public consciousness and to work with the industry. i'm afraid to say the industry didn't respond perhaps the way they should have. she became chairman in 2006. she was i think by far the most outspoken break up a corrupt that time, warning of the dangers of the subprime lending boom in what needed to be done to address it. another thing she did what you think is very relevant to today's situation. people say the problem started here, why is europe in such bad shape? why are european banks apparently worse off than ours? i'm sure there's many, but when answers this question we have what is called a leverage ratio, but if you're a bank must maintain a ratio of about 5% of your assets. and that is not adjusted for any perceived risk or lack of risk. in europe, there was no leverage ratio. for example, they were that jazzier capital for something that, even greek dad as i hate to say. the european banks are about half or less were sometimes quarter or less capitalized as their base, which is why such a serious problem here. they were major players in this country that wanted to get rid of the leverage ratio of about six, seven years ago in the last four or five years. it's her great credit that chairman bair was that those who said no, we're not going to get rid of it. it's a critical safety cushion that we need and thank heavens chairman bair succeeded. without further ado, please welcome chairman bair. [applause] >> thank you, that was the very nice introduction. i'm in the process of writing my memoirs right now. and i am reliving a lot of these experienced this and msm are not very happy memories. i'm through 2008 on the pain is somewhat a keogh. but you know, in 2006 i became chairman of the fda's the and in june of 2006, one of the responsibilities was being a member of the oslo community and as arthur pointed out, we were in the process, the fdic was art in the process of the big fight with both the other domestic regulators here as well as the foreign regulators over implementation of something called the basel to ratings-based approach, which in my view is basically a way to let her decide for themselves how they want to risk assets. about a thousand pages of rules. if you have the day that was kind of where it came out. so we are fighting not, but were also fighting keeping a leverage ratio as a complement to risk based capital. if you only have one without the other, you can have perverse incentives, where they really voted up in on the higher yielding, high-risk sovereign debt because they could give it a zero risk. and the u.s.a. for 5% leverage ratio, 5% of capital can't be held against exposures. that was not the case in europe. anyway, not knowing better and went to my first basel committee meeting in a sober 2006 and a told will make the chairman of the basel committee that i wanted to bring up the idea of an international leverage ratio. so we're fighting to keep you here. i was going to tell them they needed one, too. so that wasn't not very well. i really got raked over the coals and part of it was coming in and who did i think i was? but it was amazing the french and the germans really went after me in daily to story to the economist. it was like i've just been shot three or four months. they're trying to throw attenders of all the sophisticated work on myspace capital. so the rest is history. we finally did an international leverage reissue in 2010. it's only 2%, not 5%, but it does cover off balance sheet exposures. but still, i think it's going to be a struggle to implement even not appear so it's really unfortunate. but you just have to keep fighting. i did apropos the topic at the conference. i did want to share some news with you on dodd-frank. it's obviously a very big law, so i won't be able to cover the full waterfront. but we did want to talk about a few areas and provisions that are sort of topical and ones that i think are very important. one obviously is too big to fail -- ending too big to fail. this is certainly my signature issue when congress was to returning dodd-frank. you know, i went to the crisis having to do things i didn't want to do in terms of dealing out and supporting institutions i thought it been quite poorly managed. we just didn't have the tools they need to turn the crisis with the information to do with the situation in any other way. a big part of the problem with the resolution authority only applied to ensure banks. so much of this is occurring outside of ensure banks. i think one of the lessons -- the historical lessons of this crisis is after the s&l debacle in the banking crisis in the early 90s, congress really tighten up in regulating insured banks, as they should have. a guy pc in stronger capital standards and a lot of good things. what ended up happening is yet better capitalization of supervision within the insured things, that you had everything coming -- popping up outside of insured banks. when the crisis hit, so much activity in distress is even within bank holding companies, really the activity causing the problem was outside at the bank. but there is really no way. we also did not good enough rules to separate the insured bank from the nonbank pieces. there wasn't a way to resolve the institution a a way that would not involve the stomach risk in a holistic manner. so really, what we needed was the ability to resolve both the nonbank pieces and the big pieces of the holding company for the very largest institution and that is pretty much what dodd-frank gave the fdic at 32. you know, i just heard this -- a republican candidate, dodd-frank institutionalized too big to fail. it's just not true. it's the opposite. prior to dodd-frank, there was something called the systemic risk which gave the fdic authority with the super majorities in my board and the sad and the secretary all in green to provide individual open bank assistance to financial institutions. dodd-frank got rid of that. it says you're not going to daylight individual institutions anymore. we're going to give regulators authority to provide systemwide support to help the institutions who have a truly systemwide event, where everybody is having trouble. at the individual one-off poorly managed institutions have to be put into receivership. we don't care how big they are. they need to be put into receivership and resolved in accordance with the fdic's rolls which are very, very much like bankruptcy. some people call a sufficiency bankruptcy and that's an accurate description because the same claims priority with equity shareholders and unsecured creditors taking the losses if the institution goes into resolution. so it's a tough love. i think if people read a lot they will see that. we've toughen it up more and implementing rules. for instance, dodd-frank does give the fdic ability to differentiate among creditors, but with a straight claims priority similar to that if you have a bankruptcy. there's discretion as the reason bankruptcy. it is necessary to continue operations in the franchise. each day employers, vendors, security people come the people that all blondes preview can make those creditors hold to maintain essential operations. you can also differentiate what maximizes recoveries. again, similar to what you have in bankruptcy now. we actually use that with insured banks now frequently when we feel a failed bank auctioned it off to other bidding institutions. they were typically get us what we call in all deposited, which means that the bidder does not want to impose haircuts and uninsured depositors. so if you're uninsured come your subject to loss by the fdic, but the acquires we find the want to pay more to keep those uninsured deposits whole. which actually will save us money if we sell the whole deposit then as a poster haircutting that depositor. they want to die because typically the big business customers don't want to impair those customer relationships. so in that kind of limited situation, we would make an shirted depositor because that makes more sense to us mathematically speaking a maximizes recovery. you could do the same type of thing with the nonbank resolution now. those are two very narrow exceptions to differentiate. they are somewhat objective i think an easy to determine. so we have put out raids to say very strictly these will be the narrow circumstances that we differentiate a lucky step further and say you know what? if you're a term debt holder than a year, will never differentiate because we've had dozens of resolutions and there's never been a situation where we found that he turned unsecured debt holder needs to be paid off to maximize recoveries are to continue operations. it's just not the nature of the liability. so that was even tighter than wide dodd-frank provided. of course anybody shorter than not come your also subject to loss, but there may be for short-term liabilities the trade-off where will maximize recoveries if you maintain this relationship. so, the fdic even made it tough for. and you know, i think too big to fail well and -- of course it's over. the fdic restarted as soon as dodd-frank was enacted. we started internally. we have resolution plans in place for other major institutions now. i don't think anything is going to be happening, but this is a matter of being prepared. there are strategies come a lot of skepticism, the strategies can be used now to resolve these very large institutions. one instructive document you might want to look at if you're interested is to go to the ftc's website and take a look at analysis of the lehman brothers bankruptcy and how that could've been resolved in resolved and that dodd-frank.franc provision. how could it have been resolved under title ii? and there's also a lot more creative thinking, both at the fdic as well as internationally, using something called bail and that. i know if he talked about that or not, but the point of resolution within fdic resolution, all the unsecured data is available for losses for haircut. the idea would be for a large institution, hopefully with this resolution plans will able to get large institutions into marketable pieces. part of the planning process is to get them to a separate legal subsidiaries that can be sold up in marketable pieces appeared for lurch and become another strategy is to recapitalize that. one of the ways you can do that is by converting some piece of the unsecured debt into an equity position. but that is another thing we've been in robust discussions and there's a lot of issues there in the report. that's another strategy is very actively considered at the fdic and they will be presenting similar papers and roundtables on that subject because it really is important for the market to understand the kinds of tools that can be available and would be used in that situation. and again, we are going to entity to fail unless the market itself is convinced that you know your money's address and you invest in large financial institutions, government will not bail you out anymore. before you invest, each kick the tires come as he was on the balance sheet and what kind of management they have. baby about to charge more of a risk premium for buying that debt because there is no more bailout. i was very gratified to see the rating agencies to eliminate some, not all do some of the bump that they give the largest financial institutions for so-called perceived systemic support. when i talk to the rating agency, it was funny, s&p went out for, not a question of how they should rate and i actually broke them a comment letter saying they should be downgraded, that i didn't want to see a bump up anymore and the wall street editorial board says something is wrong when a bank regulator is asking for a bank to be downgraded. [laughter] i want them to stand on their own two feet. i don't want anyone to think the government will come anymore because they're not. you will feed the beast if you maintain too big to fail. they will continue to access market funding and lower premiums than they showed because people are thinking the government is going to come and bail them out and not let them fail. so when a too big to fail is the biggest thing that dodd-frank does. take a lot of dodd-frank, it's a lot about implementation regulators using the tools that they have. but these resolution pants will be huge. we really were flying blind during the crisis. i felt like we had -- i had one arm tied behind my back because our information systems really justify to the main. we didn't have much information outside the bank in the sec of ephedra in better shape, but they would acknowledge the information they had was not as good as it should've been. consider requiring resolution plans -- you know, resulting entities is really nuts and bolts. a lot of it is being able to map the business lines to legal entities. if your mortgage origination platform is than 500 legal entities, it's kind of hard if you decide you want to break at the entity to even identify the legal entities and package them and sell them off can be operationally quite difficult. suggest requiring this entity is not their business lines to the legal entities and only to simplify as well. they are far too complex, especially ones that have undergone rapid growth over the years through of acquisitions. this will have a tremendous benefit to the risk management at the institution as well. these are the two nations are huge. when you look at the charge of the legal entities, if not impossible for regulators to figure out completely what's going on, but it's impossible for the boards and managers as well. simplifying the structures and getting understanding of what's inside the institutions will be very, very helpful to boards of directors as well as the senior executives. it's a part of this process the regulators in bank should be looking at creating more separate legal subsidiaries with their own boards and management teams. servicing is a prime example. but in the world is going on air? i mean, everybody was doing it. just rampant disregard for state laws and rules in having documents in order. have been under the nose of managers and supervisors, but i do think it's a good example of how these institutions are just too big to regulate and too big to manage. so maybe there are synergies or you can share your i.t., share premium, but having separate legal subsidiaries that are separately managed and run with separately accountable management could do a lot to improve the management and risk control is that these very, very large institutions. as you probably know, dodd-frank gives regulators authority to order structural changes and they don't include that in the resolution plan. if they still can't demonstrate their institution is resolvable, there is authority to order them to downsize and start divesting. these are very, very powerful tools i think to make sure institutions can be put into a resolvable form. again, like with most of dodd-frank is really, will regulators be willing to use them? i think and i hope that they will. another feature is ending today to fail as it's interesting if you look at dodd-frank on the resolution plan, the goal of the resolution plan is for the institution to demonstrate that the nonbank components of financial organization can be resolved of bankruptcy. not with title ii, but without systemic implications is a very, very tough standard and one which is not going to be reach for several years. it's not so much the banks because the banks have real work ahead of them. but it's also the bankruptcy code. then a few bankruptcy lawyers out there, let me just pitch to you for a few mins to reach a lot of bankruptcy courts because winnebagos and to resolution, frequently there'll be a bank holding company that will go into separate process. that's what happens at the smaller institutions. i've got to tell you, if iraq quagmire. first, the way derivatives are treated. all the counterparties have super priorities, so they have two close at their position, close collateral. that's what you saw with lehman. average was point not collateral, trying to the hedge and that was really, more than anything, what froze the market. with our resolution process, we cannot counterparties continue to perform and accept to repudiate tributes contract performance. but that hopefully many disruptive impact you have an derivatives counterparties are trying to pull out at the same time. remember too, bankruptcy is just a really over litigated process. maybe the group of lawyers that doesn't sound like that to you. but you know, i look at the lawndale bankruptcy. it was result three years ago now. it was immediate. deposits are transferred, lending operation transferred. no deception in the credit functions of the institution. depositors have continued access. look what happened to the holding company. there's about a billion of value and it is still not been paid out. lehman brothers is the same thing. with lehman, i have read administrative costs or it exceeded $2 billion now. now what is up with? cannot blame the bankruptcy. i think they do a great job. consider all the things they have to put up with. but i think what taxes is because the process takes so long, what i call the real creditors, dig it out and sell pennies on the dollar. and the scavenger funds currently pay anything for it. so it's really litigation takes and it just really creates a quite unpleasant situation and one that does not serve creditors well because it takes so long for the money to be paid out. most of them get out by selling very, very steep discounts. out of this part of this come in the congress to take another look at bankruptcy because it soper track did inexpensive and the treatment is so disruptive i think it's going to be difficult here if they want non-banks, they really need to make some changes to the bankruptcy code. that is something that has not been looked at as much as it should be a i hope that we will get some more intentions. let me talk a little bit more about the local rule now because it's obviously very topical. i for one and still plowing through it. it's very long and complex if you've noticed. you know, i think the length and complexity underscores a broad concern about the dodd-frank rulemaking process. i do think dodd-frank is a big law and it needs to be big. there were a lot of things that needed to be fixed. gone the other hand, already regulation the subject to political pushback and pressure, a lot of lobbying activity. now more than ever we need broad public support. we've got to have it. the regulators cannot stand up to all of this if they don't at least have some broader public support. that kind of support is difficult to obtain. these rules are so complex you, you can't explain what they are trying to accomplish and how that benefit the broader public. so i do think, you know, the rules are complex for a couple reasons. i spotted the fdic, a couple things happened. one is to try to prevent gaming. and i'm talking the lawyers. lawyers especially do this. they were going to have this basic rule on proprietary trading and risk retention for securitization or whatever they try to start trying to anticipate ways that could be gained. some of the thinking is good, but sometimes he gets in areas that may or may not play out. you can build into the complexity, a prime example. it's a small thing, but when i was at the fdic, they started resolving banks, i discovered tremendous complexity we had with regard to how the insurance limits applied to trust accounts. my gosh there were complex rules about, you know, your granddaughter could be a beneficiary, the grandmother couldn't be. so all the different relatives that could account and couldn't count to know that. people got confused and they're naming the beneficiaries and that they didn't think their deposit insurance or ended up not having it when they thought they did. so i said, why, why are you doing up at? and they were really worried about being gained. they said maybe someone could just bought a phone book and start listing inside of the phone book and see their beneficiaries entitled to unlimited deposit insurance. i said why would somebody do that? are going to be leaving their money to some but people. so we changed. so we said coming because i beneficiaries. we want names and addresses. you cannot fight beneficiaries and that's really all you need to do. i mean, everybody understood it then. it's so much easier when the resolve of bank. but it's one example of how was the best of intentions you can build complexity to address things that are going to happen. more fundamentally, it frankly is industry lobby. you start it with the principal and it found good, but they can send and says goodbye to do it this way. and you get that from everybody's trying to be accommodating and all of that. and pretty soon you have a lot of exceptions to your general principles. i hate to sound like nancy reagan, but sometimes you just need to say no. senator jax, say no that to bank lobbies. you've got to say now. [laughter] you do. you just need to say no. [applause] i do think that's important and i think the principles need to be in there and i thought that the staff and support staff. the staff i think that is very important to let the staff know they just want a good clean quality rule. it's probably harder to write a simple rule than it is a complex role. so i think this is something the agencies need to be very, very focused on. all that said, i will say the poker was tough because activities restrictions are always tough. it's hard to decide to these restrictions. i would note that the report in the u.k., they are doing a bit of a different direction. they are basically saying, okay, keep high-risk activities in the larger financial organization, but we are going to have a retail bank and of higher capital and then we will have what they call us on the joke casino bank over here. you can do a lot of bad stuff over here come the boule benefits of traditional banking functions. and so i think a couple things on that. i think it might help with the volker rule because of difficulties in defining bright lines in the proprietary trading as for the great areas to basically say, okay, we're not sure about this activity, but we know we are going to put it outside in the investment bank to require multi-applicants. and i think trying to look at legislation would it be as placed in having enhanced provincial decisions could resolve complexity and trying to fine-tune what is and is not proprietary trading. that said, why don't agree with the report is a suggestion somehow you need rest speculation. i think they have that upside down. if you're going to go that route, you want more capital, not less in the harvest banking activities. again, goes back to derivatives and relationships. having less capital unless potential supervision over the investment banking functions i think it's a cannot say down. obviously as a performer deposit insurance is my strong belief. the bank holding company or organization should be a source of strength, not weakness for the bank. this is why we push hard for the collins amendment, and other provisions of the dodd-frank mother says the holding company has to have capital standards that are at least as strong as we have for the insured banks. it's been weaker in the past anything that was huge, but again, looking at where the activity is conduct and how much capital is held against it may be one way perhaps the volker rule could be simplified a bit. you know, just a couple more things. on the enhanced provincial standards, which is something the fed has charged under dodd-frank and opposed standards under the larger bank holding companies and other entities designated as systemic. again, we need stronger, not weaker regulation for these holding company structures. the one thing i hope that the federal focus on, they don't have the rules out quite at, but one of the things that is supposed to be in the enhanced provincial standard is limitation on interrelationships and that relates to a piece of the living will called credit exposure reports in that piece actually has not been proposed yet. it was not in the rule that the fdic finalized. basically what a credit exposure report is telling the financial organization, you need to tell us who your counterparties are and you also need to tell us who out there is going to hurt you. that's really important information. i think the knee-jerk reaction was always to bail out because of uncertainty. for that bank expert on foreign trust company go down, who else is going to go down? we just enough clarity on that subject. the credit exposure reports are huge. ticket information is important, making banks and bank holding come nice he is important, but limiting the concentration credit exposures will be equally important for the fed. if there is one thing which i doubt we tackled urgently enough, it is the center relationships. i look at what's going on in europe now and i keep hearing this. we can't let kris default for the whole system will come down. my gosh, look at 350 billion euros of outstanding greek -- and greece cannot default without our entire financial system -- global financial system coming down. what is wrong with our financial system? first of all, the statements are exaggerated, but it does point to a larger problem. is this domino effect, especially with derivatives and credit default swap. so identifying credit exposures, limiting credit exposures, especially with credit default swaps by putting more stringent limitations on concentration, especially cbs, it will put more pressure to move them into a centralized clearing, which would be a good thing. these interrelationships are something that really is very urgent attention and i am hoping that will be part of what is addressed in the fed's enhanced provincial standards. let me just say final comment is i think the best regulations and most effective regulations are the ones that aligns economic incentives and let economic incentives work to make the market work week showed. that's why lakes can indicate requirement spirit i like high capital, risk retention ending to be too sad because the market will take was how america will do a better job of marketing financial institutions. capitalism cannot work if the people responsible for the decisions that caused the losses are absorbing losses. securitization was a prime example, where nobody was holding the list and the investors were happy relying on breeding agencies and they didn't hold the risk. so you had a situation throughout the incentives came to generate large volumes in. that amounts to several of us getting paid up front and no one thought they would have a problem. it was going to be someone else's problem if you have losses later on. so i think risk retention, capital, skin and again whatever form form you can find. making incentives work for u.s. regulators. i also think on risk retention rules, another piece of dodd-frank -- this may not be a popular view, but the presumption -- the general rule is 5% risk retention for a securitize their issuing mortgages into a securitization. they need to retain 5% of the risk. i would like to be higher, but the statute says 5% amazing exception for something called a qualified residential mortgage. basically this is something that kind of got put in in this tells regulators to fine gold standards are really safe mortgages, were we look at standards and they just have to be so safe that we know we don't need to retain it. i think that's highly problematic. i think trying to write to a new page rules to define the save mortgages have a lot less efficient than saying if you're bridget made it, even if you put in securitization and every time there's a lot some out loud how they'll take 5%. i think that's a much, much better discipline on the origination standards. so i don't know a great leaders will do with this, but i hope if anything the titans if you are in standard and not listening because again, risk retention, skin in the game, making people pay for mistakes will be the best disciplined against excessive risk-taking and leverage going forward. i thank you for the opportunity to share and i'd be happy to take some questions. thank you. [applause] >> so as moderator will take prerogative to the first question from which you mentioned economic incentives matter light and your agency is one of the few that is gone after executives at major institutions that have caused big losses. how do you think her approach to holding senior executives and traitors personally responsible, will show that played quite >> that's really good question. another disadvantage of the bailouts is the people that were responsible, their institutions didn't fail. again, so much regulatory structure was fashioned with the notion that the entity would be inside insured bank said it was then. and so, we went and answer the fdic can see the officers interact tears who were responsible for the losses. if the institution doesn't fail, there's no capability to do that. so we do very vigorously go after folks the cost was 10 in my view when i was chairman of the shikoku personal assets. there's always a cost benefit analysis that is sometimes easier to set easier to set in the case if you and make it in terms of the discipline effect of the signal you want to spend. going after personal assets is important. there is a lot of talk about people should be going to criminal prosecutions in some cases that might be exactly right. for a lot of this, we probably did not breach the line of criminality. but i too think people should pay out of their pocket and pay severely and again because the bailouts, mechanisms we have in place to pursue those recoveries just as they are. >> either questions in advance? >> if i could add one more thing. under title ii, we can just automatically forfeit two years worth of pay for the senior executives, which is good. i'm sorry, go ahead. be not thank you. hi, i'm angry at the source of bank analyst from new york. thank you for coming to speak at this event. i'm curious -- there are examiners on-site at the big financial institutions 52 week side of the year the occ and i'm not certain about the fdic, but i know if it is a state bank is in there annually. while the counterparty risk analysts -- i mean, how committed they weren't interviewed come to understand voters that capital will translate it than my last question is, you get to see where there is some kind of sharing that the data. and i had kind on the fed had in its detailed in the revenues the unrealized cash gains from the performing mom, you know, were you at real operating cash flow versus all of this fake stuff i was unrealized, non-cash going to the income statement. so the fdic sees them. so how come along when you folks who knew that the fed was that really -- that the data could help you distinguish what was real honest cash flow versus state earnings, that later analysts were scrutinizing the data that was going to be collected for consolidated enterprise and the nonbank subsidiaries. >> well, a couple things. i think you are right about the analysts. we should be engaged more. we created a complex financial restitution when i was at the fdic and we have a monitoring unit that we find more private analyst reports. there is more ongoing exchange of information with private analyst. so i think that is number one. i think the information is still complying primarily to insured banks. at least the stuff coming my way was going to insured banks. that is not to say that we couldn't her authority services including financial statements, perhaps could've done a better job of looking at that and we didn't. but as deposit insurer, perhaps our systems are geared toward supporting what is going on where exposure was. i think to the extent we have broader questions about the holding company we should have been asking, but again, we're thinking we're not holding company regulators in the information would've been brought to us by the holding company regulators there is cause for concern. but looking back, i found out a lot of things that we should focus on earlier. but our systems just for such a. i mean, we could be honor of getting into the fed's business and looking at the consolidated financials and asking what was going on outside of the bank. but again, i think it's always a challenge in diplomacy to do that and it was not within our mandate. and so, we didn't. but the good news is we're doing it now and dodd-frank giveth back up authority so the mindset going forward is looking more broadly at the entire financial organization. >> thank you very much, chairman bair for talking to us. i'm a third-year student has he mentioned nancy reagan before and i am wondering if looking back on writing your memoirs you have a time where you wish you would've just said yes? last night >> said yes? boy. i said no so much. [laughter] i know, that's right. you stumped me. you really have. you know, i think if anything -- i'm sorry, but i feel like i should've said no more. i think during the urgency of the situation and money to make decisions very quickly, you know, if you do why the consequences are less severe than if you don't do enough. and so i think in retrospect, i'm only through 2008, but so far i think if i have regrets, is that i should've said no more to be honest with you. [inaudible] >> in 2006, you are invited to a hearing before the house subcommittee on guidance on commercial real estate and he was a pretty rough hearing. you and the other regulators. a couple years later, 322 banks went down in the fdic analysis was, g we should've done more to restrain commercial lending -- commercial real estate. same thing happened with the subprime guidance. the same thing happened with fannie and freddie basically trying to stifle the regulator that might've stopped them from getting into as much trouble. i am wondering if there is a problem that the industry too often lobbying against its own best interests. >> yes, there is. and you know, you're absolutely right. i'll never forget it the commercial real estate, mortgage guidance and subprime guidance which we initiated that. i will never forget we were pushing subprime guidance in an industry group came in to meet with me and it was the most unbelievable name. the subprime delinquents were going up significantly. we brought this database of private label securitized loans and loan level data. i couldn't believe what i was saying. the industry came in and said now, it's not our fault, not the mortgage fall. as for borrowers. the borrowers don't care about mortgages anymore. if they need a washing machine to go buy one instead of pay their mortgage. it was all the borrowers fall. i just could not believe it. so it was a bit of a struggle, but we did get the subprime guidance finalized in june of 2007. of course the other piece is so much damage had been done we are trying to get loans restructured and we're very concerned about what was going to happen. we had a series of roundtables to talk about the legal authorities that the servicers had to restructure loans and we had accountants and tax workers and originators, everybody there and we were able to establish they did not have authority to restructure these loans. we got commitments and chris dodd got public minutes they were going to do it. and then movies.com did a report in august or september of that year, basically saying less than 1% of these prime loans are getting restructured. everything was going into foreclosure. and i went public into an op-ed. and what to speak to another industry group in the securitization industry in new york. i said to them coming in to get these loans restructured and you need to do in a systemic way. to the extent they redoing it was this one by one laborious negotiating process and the volume of such -- we've joked that they step over a dollar to pick up a nickel. there were so worried that some borrower would get some great they shouldn't have. they were going to have to go and get whatever they could from each individual barring of course that was just against their self-interest. so anyway, i gave this speech and a hand shot up in the back of the room. it was not well-received. a hand goes up in here again they said you can't help these people. you can't help these people. you give them a break on their mortgage, they'll just go out and buy a flatscreen tv. so i said okay. if you feel that way, why did you make a mortgages to begin with? [laughter] film of her day, he said bad regulation. so, it was my fault. why didn't i figure that out before quite this is securitization industry. these aren't even bankers. and i just couldn't believe it. all these years of the self-regulating market. as soon as things go bad if the regulator's fault. we still hear that a lot. so it is shortsighted not industry's part that was one reason why i felt so strongly that we were not going to go borrow from taxpayers to pay for the losses we are suffering because of this crisis. we ask industry to pay. we have $75 billion from the crisis to cover losses for the resolution of field names that they did pan out they take pride in the fact that they paid them cut their insurance fund self-funded. i knew the minute we went to text here borrowing, that would be a very bad signal and who knew on how long it would take us to pay a factor may get pressure from the industry not to assess and i didn't want to do that because it is their deposit insurance fund and they need to do this game. economic incentives are in the consequences. next time around if we make sure the industry absorbs this, maybe they'll think a little harder when we try to tighten up on bad practices. that theory has been met with mixed results, but i still think of is the right thing to do. >> i know the chairman has a tight schedule, so we should probably let you go. but not without thanking you for your wonderful speech. [applause] [applause] [inaudible conversations] [applause] [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [applause] >> before introducing simon johnson, who will be delivering pacers made you laugh: lecture, i thought it might be appropriate first to say it the words about manny coad, whose memory, the law school honors each year with this lecture. danny was from brooklyn, went to brooklyn college in brooklyn law school and started as a junior attorney with the sec in 1842, a few years ago. he rose through the ranks, as they say, and after being named an fcc commissioner, he was named chairman of the fcc and served as chairman from 1964 to 1969. so imagine a staff attorney today at the sec actually becoming chairman of the sec. but he did that. he was described by one of his successors as quote, one of the most sec's most energetic, dedicated and brightest leaders and in a gw law review article written after his death in 1877 called him quote, the greatest public servant the fcc ever had. gw law school had the good fortune of having manny on its adjunct faculty for nearly 20 years. we are similarly fortunate today to have simon johnson with those to give this year's lecture. simon is the curse professor of entrepreneurial ship at m.i.t., the sloan school of management. if i could, having heard simon a few times, i would enroll there just so i could have them as professor. he is also a senior fellow at the peterson institute for international economics here in washington. previously, simon was bitterly a next-door neighbor to the law school, when he served as the imf's chief economist. in simon spare time, he is co-authored a best-selling book about the financial crisis, 13 bankers. he writes a very informative blog called the baseline scenario, which i would recommend to all of you. he appears on cool tv shows like the colbert report. and just this past wednesday, i saw him on the "pbs newshour." now, there's a lot i could probably tell you more about simon, but i don't have the time. but i will tell you one interesting thing. when i googled symons named and got a huge list of simon johnson related articles and whatnot popping up, there was an ad on the right-hand side of my computer screen. and simon, i am not making it up. the ad said and i quote, do you know simon johnson's criminal history a searchable? [laughter] i didn't go there. at any rate, simon, i think you could use a good defamation lawyer. simon is very energetic, engaging, enlightening, witty, has a keen intellect in his words carry a lot of weight. the simon is not all sunshine and light. in a talk given last april, well after dodd-frank's enactment, simon told his audience quote, we have done nothing to prevent another financial crisis from happening again. so i am sure that in his remarks today, simon will address the theme of this symposium, whether we are on track or of course. anyway, simon, is a great pleasure and honor to have you with us today i hope all of you will join me in welcoming the 31st memorial lecture in a good friend of our law school, simon johnson. [applause] >> thanks very much for the invitation to be here. it's great honor to give the code and lecture and it's a wonderful program. and that's a very nice introduction, although i'm going to go do your name, john, right after this. in fact, i may have to buy some google ads. last night. 80 years ago, almost exact way, ought to avert 1831, people like you and people like me -- and people like the former officials who gave his speech in washington felt that the crisis was behind them. the crisis of course to them at that moment was there had been the great crash of a covert 1829. two years later, the view among people occluding the worst have been avoided. of course when we let that from a distance, this is hard to believe because those people were staring directly into the face of the world's greatest depression. in fact, looking back now, it's obvious to everyone who writes the history that the depression had really begun to unfold earlier. crake i'm scholz, the great austrian bank had collapsed in the spring of 1931. the british have gone in september. the shockwaves were already washing through the american financial system. and not only was nobody read the in official circles, nobody understood what was going on. in fact, the most senior people, the most distinguished americans , the most accomplished people in the private sector were absolutely convinced that their policy frameworks, the way it seemed the world, their established operational procedures were exactly what was called for. and they were wrong. and the question i think we should all address, not just today, but every day at the moment does he read the newspapers, as we talk to our colleagues, as we pay attention to the beginning for the presidential election campaign, the question i would put before you today is a very simple and very direct question. and i apologize a little bit of as too dramatic. but i think the question is, are we now staring into the face of another great depression? is the crisis of people talk about the financial crisis and then they put a date 2,072,008, you can choose various permutations. was that crisis perhaps not the crisis of the 21st century, but a forerunner, a precursor, the warm-up to something that is now facing a common something much more serious heading our way, actually heading our way because of the combination of the shocks -- incredible shocks coming from europe, particularly through its financial system and the nature of our financial system, how about version how policy asks and has that good, including the dodd-frank legislation. are we now looking to wreck lee and another great depression? let me start with europe. are there any europeans here? i see one hand. i'm sorry, we are going to talk about you. [laughter] i will try to be polite. i was hoping to avoid that. [laughter] the situation in europe is obviously complex. there are many dimensions to what has gone wrong, not all of which are about thinking. i'm all of which are about politics, but many are about the way that those have become intertwined in europe. i hope in "the new york times" there'll be a spectacular graphic that lays out for you many of the dimensions of your that crisis. are having trouble fitting it on the biggest page available, but it should be in color that should be receiving a pretty bad at all. and then you check boxes off to thank you for the ncaa is to follow process to the various rankings. let me try and cut to the essence of the moment now in europe. what is on the line? what is the fear that gripped the markets? but legitimate fear? it is not greece, but that i think is the default of some major restructuring is pretty much a done deal. it's not portugal. it is not ireland or spain. it is italy. think it's very useful situations to think about the numbers. the time government debt outstanding, gross debt of the general government is in excess of 1.9 trillion euros. now that is a lot. that is the third-largest bond market market in the world after the united states and japan. it is larger than the gdp of italy. i'm sure you've seen that in the newspapers. the gdp of germany to give you another benchmark is 2.5 trillion euros. germany is not a heading into the country, but they have about 60% debt relative to gdp and the size of their economy. they are not volunteering to take on a lot of the time and death. the great default for the for the infinite great default conveys the impression and actually the accurate impression that something similar -- that's on a smaller scale, but something similar could have been to europe. now, the european banks -- whatever you think about the management -- u.s. thanks lachman tobacco everything to better capital climates and regulatory framework of dodd-frank and i'll certainly talk plenty about that. all of these i mention are much worse in europe. just as an example to try to get this across to you, when they talk about one of these better, stronger banks in europe because they think at the moment, it is good to talk about the stronger financial institutions, not the weaker ones. deutsche bank at the end of the second quarter had total assets on its balance sheet of about 1.85 trillion euros. it had capital, shareholder equity of 60 billion euros. that is 36, 37 times leveraged. by the way, just for that command, who is the ceo of deutsch and also very important person this time is the chairman of the board of the institute of international funds. i didn't mean to point when i said international funds. mr. ackerman says the bank is no problem spending itself and so on. but deutsche bank, according to the european -- the stress test they ran or courtney may come in the bank was considered to be well-capitalized thing. by the way it was considered even better it was considered even better it was considered even better it was considered even better it has become nationalized. now how does deutsche look relatively good in terms of the so-called basel capital ratios? beaufort 10%, 12%, how is that consistent with leverage of 37 times? dancer in sure many you know, it is a sudden and calculations are done on the basis and risk weighted asset. so you take your assets and the risk weighted small, close to zero that reduces the size of your balance sheet for the capital calculation. what is a risk-free asset? in the european context or any context. leading the france of its sovereign debt. if there's one thing you should know, whether you should take away from this talk of you go home and say what did simon johnson say? to say no know, it's very complicated. last night there were enough a lot of numbers. but i do remember one thing he said, one historical fact actually, one thing you should know about sovereign debt. it's not risk-free. the great republic according to my colleague, and reichart and i spent a lot of time covering this, the great republic has been in default on its debt for about 40% of the time since it became independent in the early 19th century. you can call it a currency union. you can call the calling page, you cannot come it doesn't matter. it is in default for a significant fraction of the time. is sovereign debt. the europeans have built a banking model on the presumption that the banks mostly in with the regulators perhaps, know what is low risk

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