>> i think obviously reading the right books is helpful, but wrong book can be an education too. it's like seeing a bad movie, see what's done wrong to avoid the faults yourself. >> featuring stacy having advise for would-be writers. she spent time as a senior editor. >> i think every young writer should remember publishers out there are desperate for a good new book to publish and for an exciting new author to publish so there should be enormous hope for what is yet to be done. >> more with stacy sunday night on c-span's q and a. >> now a hearing on financial hardships that affect military families and how service members should be helped by consumer protection laws. this committee looked at so-called predatory lending, financial education, and how families are affected by the housing market. witnesses include holy petraeus, wife the cia director, david petraeus. she's with the consumer financial protection bureau. this is a little more than an hour and a half. >> good morning. good morning, and i'd like to call this hearing to order. earlier this week, it was reported ten executives was guzzled to receive bonuses totaling more than $12 million. given the current economic times and continued challenges in the housing market, i want to assure my colleagues that a call acting fa director to report to the committee as soon as possible. the details are still worked out, and my staff will be in touch with your staff. as a conservative of freddie mae -- approving proving the compensation and maintaining etiquette controls to oversee the day-to-day operations at fannie mae and freddy mack. this committee, congress, and taxpayers need to be confident that those controls are in place, and that the conservator has responsibilities. as we prepare to work home the last american troops from iraq later this year, it is important for us to understand the unique consumer financial challenges members of the military, veterans, and their families face. i take special interest in this matter, not only the father of a soldier, but as a senator from a state who has over 72,000 veterans and more than 3500 military personnel at the air force base. at today's hearing, we will examine how long personnel, officers, veterans, and military families manage their financial needs whether through mainstream financial products or products marketed to the military community. we will also learn about the important role, financial readiness plays in the mission. we will look at some of the tools and protections available to help military consumers navigate their complex consumer financial marketplace. it is important to remember our military consumers that differ from the average consumer. this population is young and offers itself to financial education. a lifestyle with relocations, finding new employment, and familying forced to sell their homes if they are chosen to live off base. their mobile lifestyle also meanses banking services that are accessible throughout the country and the world. when a service member deploys, he or she must be certain family members have appropriate access to handle bills and financial needs. it was with nose needs in mind that congress created the office of service members at the consumer financial protection bureau, and i'm pleased to welcome the first head assistant director holly petraeus as a military daughter, wife, and mother, she is very qualified to lead the office to educate and empower members of the military and their families to make the best financial decisions for themselveses. as importantly, once the cfpb has a director in place, the agency will finally be able to mon forthe non-bank financial institutions which are often at the heart of the military's communities financial hardships. i would also like to welcome bonnie from my home state of south dakota. bonnie runs a rushmore consumer credit resource center in rockford city. she'll explain the work she does and assistance she provides to the families stationed in ellsworth and to members of the national guard. admiral, abbot, thank you for being part of the hearing. we look forward to your testimony and importance of financial readiness and the work of the navy marine corp. society. we're also joined by retired major general kevin bergner and mr. frank pollack from the credit union. thank you all for your service to the country. both the pentagon federal credit union serve a large network of military consumers and they do an outstanding job in meeting the committee's needs. thank you to both of you for being here, part of today's hearing. in closing, i would like to recognize our veterans and the military and thousands of military personnel continuing to serve in harm's way in defense of our country. i'm grateful for their service. throughout my time in congress, it's been my highest priority to assist our service members and veterans. as chairman of the military construction and appropriations subcommittee and the senate banking committee, i continue to work to ensure service members and veterans have the resources they need and protections they deserve. i look forward to today's testimony. now, i turn to ranking member shelby for his statement. >> mr. chairman, thank you, thank you for calling this hearing. first, i want to respond to your statements you're going to call up the head of the federal housing finance agency. i think that's a good idea regarding high salaries and so forth. these high salaries at fannie and freddy, but i ask you bring up the treasury because they, the federal housing finance -- that's a mouthful -- they have to consult with treasury on this, and we need them both here to have a proper and fairer hearing, so i'd hope you'd do that at the same time, and if you do that, that, i think, we'll have a good start. >> i'll take that into consideration. >> sure. i don't know how you can have a good hearing without doing both. >> yeah. >> anyway, i have an opening statement here, mr. chairman, that's i'd like to give. the issue of consumer protection for military service members has long been a priority for this committee. during the 109th congress while i was chairman of the committee, the committee examined reports of fraudulent practices aimed at forces and their families, and this identified a series of problematic tactics used to sell financial products to military personnel. it also identified regulatory gaps and the lack of coordination among financial regulators in handling military consumer protection issues. based on the investigation by the committee, the committee ultimately passed the military personnel financial service protection act of 2006. this law protects members of the armed forces from certain unscrupulous sales practices regarding the sale of insurance, financial and investment products, and it also improved the ability of our regulators to enforce our consumer protection laws with respect to the military. service members and their families have unique needs with respect to their use of financial services due to the special circumstances caused by their military service. for example, military personnel moves regularly which makes purchasing a home a risky endeavor. in addition, military personnel are often very young and are away from home for the first time, and they often have to make important financial decisions without being able to consult with the family or with trusted advisers. congress and the states sought to address the problems to a variety of legislative and regulatory initiatives. as a result, at least nine federal regulators and state regulators in all 50 states currently have varying levels of regulatory supervisory and enforcement powers 234 this area. at the federal level, this includes the department of defense, the fdc, federal reserve board, the fcc, the occ, the fdic, the department of education, the department of justice, and most recently, the bureau for financial consumer protection. accordingly, i don't believe there's any shortage of regulators. the real challenge is making sure that regulation keeps up with change and technology and changes in the marketplace. in particular, i'd like to hear today whether new forms of lending to our military such as online lending present any new difficulties for enforcing consumer protections for military personnel. i'd like to know whether more can be done to ensure that our military personnel and their families receive the information they need to exercise all of their rights available to them under federal laws such as the civil members release act or scra. recently, banks settled claims under the servicemen's civil release act because they fore closed on members of the military while they were on active duty. in my view, that's the sort of problem no military member should have to worry about while overseas. mr. chairman, while there appears to be little we can agree, there's complete agreement, i think, on our joint commitment to supporting our men and women in uniform. i look forward to hearing from you today. i believe this could be a constructive hearing. >> thank you, senator shelby. are there any other members who wish to make a brief opening statement? senator chester? >> i'll get to the opening statement in the questions, but i want to thank you all for being here, especially you, holly, but specifically, i thank you, mr. chairman, for the hearing you announced on fhfa. i think ultimately in the end, we need to have the people here so we can get to the bottom of why those bonuses were given and and get accountability, but i appreciate you and your staffs scheduling that hearing. i think it's critically important. >> anybody else? >> mr. chairman, i just also want to put in a request. i think we're in a very dynamic situation with regard to u.s. exposure to the european banking system. i think you should probably call for an update on that because i am concerned that we may see a fairly bleak prospect of the current european stablization facility meeting its goals. i'm concerned about reports that u.s. bank exposure now is considerably more than it was, and activity and transparency led by this committee, i think, would help u.s. markets. >> mr. chairman? >> senator akaka? >> thank you, mr. chairman. i want to add my welcome to our witnesses today. i look forward to their testimony on a matter that many of us in the senate are deeply concerned about -- making sure that our service members and veterans are economically empowered to make the best financial decision possible. for year, by colleagues here on the banking committee heard me talking about financial literacy and economic empowerment, and my colleagues on the armed services and veterans affairs committees know that i'm concerned about the unique challenges confronting military families and our veterans. prolonged deployment and more frequent relocation create unique banking and budgeting challenges. our veterans come home from the middle east to the highest unemployed rates in the nation, and our forces are feeling the financial impact of sustained active service. it is clear our men and women in uniform now more than ever have to be educated in financial matters both before and after they complete service to our country. chairman johnson, thank you very much for convening this hearing on such an important topic. for many of the military families, financial education is tight to their -- tied to their readiness, and service members, veterans, and their families have sacrificed for us now it's our turn to do everything we can do for them in return. >> thank you. senator brown? >> thank you. i appreciate all the panel being here, and mrs. petraeus, thank you for the work you've done and will be doing. i said with chairman akaka and chairman tester and the stories we see especially in places indayton, the scams that appeal to a vet rans' patriotism, the scam websites, mailings, masked they're coming from the government or the department of defense or da, but they come from a dot-com operation that wants access to the financial information. it's packed with legal fees, and you know all of that. it's so important that we're on the side here of people who have or are serving their country, and i appreciate your focus on that. thank you. >> senator hagueen? >> thank you. i too just want to tell you how much i appreciate you holding this hearing today especially as we're so close to veterans day. it's very appropriate. in north carolina, we pride ourselves on being one of the most military-friendly states in the nation and having such a huge number of active duty and veterans living in our state, and i'm very concerned about the high rate of unemployment that returning veterans from iraq and afghanistan have. it's about 11.7%, and we also know that many of our military families are targets for predatory lenders and other schemes, so given these disturbing trends, we need to be sure that these returning heros are not subject to predatory practices, and that they also possess the tools and the skills that they need to make responsible financial decisions, so i thank the witnesses for being here today, and i look forward to your testimony, and mrs. petraeus joined me at fort brag recently to really talk about these issues, and i think it was -- she can bring such an important light to this topic for so many of the young people in our military today, 10 i thank you for doing that. thank you, mr. chairman. >> thank you, all. i want to remind my colleagues that the record book will be open for the next seven days for opening statements and any other materials you'd like to summit. mrs. petraeus, you may proceed with your testimony. >> chairman johnson, ranking member shelby, members of the committee, thank you for the opportunity to speak with you today about the office of consumer affairs at the financial protection bureau or cfpb. as a lifetime military family member, i've seen firsthand the devastating impact financial scams and predatory lending can have on our military families. i also spent six years as the head of the better business bureau's bbb military line program, and that was an education for me about the consumer issues and scams that impact the military. unfortunately, there are still too many young troops learning financial lessons through hard experience and years of paying off expensive debt. in january 2011, i was asked to join the cfpb and head up of office of service members affairs. the job is to educate and empower service members to make better informed decisions regarding consumer financial products and services, to monitor their complaints about consumer financial products and services and the responses to the complaints, and to coordinate the efforts of federal and state agencies to improve consumer protection meshes for military -- measures for military families. we signed a joint statement of prince. s with the judge advocate generals of all the services about how to coordinate exchange of information between us concerns military consumer complaints and the actions we take to protect service members. we have a working agreement with the department of veterans' affairs and referring any military personnel or veterans who call the hot line climbing they are in danger of foreclosure directly to the va home loan program. as to our educational mission, i think that it's important to get out and hear from military families about the issues that concern them the most. i visited bases all over the united states since i started my job. i've also met with the national guard in oklahoma, ohio, illinois, and indiana. what are the issues that have come up? first, the housing melt down hit military families hard when they receive orders to move. they can't sell their home enough to pay off the mortgage, can't rent it out for enough to cover the payments, and they can't get a loan modification or short sale because they are not late, and they cannot refinance for a good rate because it's no longer considered their principle residence once they leave. some members go alone to the new station when it's tough after they just had an oversea deployment, and now the family is facing another separation, this time for financial reasons. we are starting to see some positive movement on this issue. the department of the treasury has issued new military related guidance for its home affordable foreclosure alternatives program, and fannie mae and freddie mack are tweaking their guidances as well. another issue concerning military education benefits and for-profit colleges. there's cases of very aggressive marketing by for-profit colleges to military personnel and their families of both educational programs and expensive private student loans. another issue is car loans. service members are often sold clunkers at inflated prices with high charges, and when the original clunker breaks down, rolls the existing debt into another loan for another clunker. there's yo-yo financing where service members drive away thinking they qualified for financing to be told later the financing fell through, and they will have to pay more. although we just have supervisory authority over the auto dealers who write their own loans, the federal trade commission and reserve coordinate with my office on auto issues, and we have started to do that. finally, a cannotting issue is the issue of indebtedness. many don't make much money, but it's a guaranteed paycheck and subject to garnishment outside the original court process that led to a lot of businesses looking to lend them money. it can be the mall selling electronics as higher financing, the rent-to-own furniture store, or the latest loans that manage to exist just outside the military lending act definition of payday loans. when members are behind in payments, their debt is turned to debt collectors. we are concerned about violations of the fair debt collection practices act. there's reportings of debt collectors calling service member units 20 times a day threatening with the military justice code telling them they'll get them busted in rank our security clearance revoked if they don't pay up. they call the parents and spouses of deployed service members to get them to pay the debt. there's a debt collector telling a widow she had to use the money from her husband's death gratuity to pay the debt immediately. i have to educate service members about their rights under existing consumer financial laws and give them the information they need to make wise financial decisions, and i will continue to work with you and other federal and state agencies to help identify effective consumer protection measures that work on their behalf. thank you for the font -- opportunity to testify before the committee. >> thank you, mrs. petraeus. ms. spain, you may proceed. >> chairman johnson, ranking member shelby, committee members, thank you for the font to be here today. our organization has been serving western south dakota for 37 years providing counseling, credit counseling, and financial education programs. we also create financial education programs that have been used by 1.4 million consumers across the nation. we serve military personnel. the readiness center invites us two or three times a month to provide financial education programs. they refer individuals to us that are struggling with housing issues or if they have more financial issues for our debt management program, and on the rare occasion, for someone to come in for prefiling. the military had housing issues they don't. when they have orders, they have to move. civilians choose if they move and when they move. the military cannot. if they take their family with them and leave a home empty, it creates financial stress. it's a difficult time. agencies that provide counseling can help military members and their families as they work through the difficult times while they serve our country. we helped one 21-year-old discharged for medical disability. he was told to short sell his house and couldn't find one to list his house. they are not accepting short sales. it's too much work, can't get it through, get the lender to agree first. they came in and talked to our counselor who was able to get the lender to agree to the short sale and the realtors are now listing the house. another military family was retiring from the military, and he was having difficulty selling his home, so he came in and contacted our counselors certified, and she helped work with the lend everies to -- lender to get the short sale through, but the lendser refused to forgive the mortgage and the military member repaid $10,500. military personnel are under pressure to keep their finances and credit good because collections can cost them their career, but they are vulnerable to lenders charging high rates of interest, and predatory lenders target the military. one young man coming to the readiness center had five payday loans charging over 36% interest. four received online, one locally. they sent him a letter and the lender said, that's all right, these are open ended transactions. we're not changing the interest rate. at that point, the military member has the choice of hiring an attorney, which they can't afford to do. the lenders know that. payday lenders know people don't ask enough questions, and online, you can find different sites that don't tell you where they are located, not in the disclosures or contact policy or privacy policies. they don't tell you the rates of interest, but they ask first for your social security number. we had one client who got a loan, but didn't realize the funds came from croatia. they had to close their bank account finally. another one -- another issue that we see the military struggling with is debt settlement. debt settlement can do more harm than good because people don't understand how it works. one young woman paid $1500 to find nothing to be done. another one, another family paid $6,000 in fees to have $600 set aside to settle the debts. demographics are shifting and people of all ages are struggling with issues. one young man came to us after leaving the military filing were bankruptcy and made every mistake he could. he got payday loans, went through divorce, and then he trusted, going overseas, a nice lady to pay his bills, and she didn't. when he was out of the service, he rented a car. he fell asleep, so the car was in the disat, and the insurance company sued him, so there he was, filing for bankruptcy. i tell you after 25 years of working in the industry, that financial education is key to helping people not be taken advantage of. it's important to be relevant to their personal situation. we also develop programs specific for rapid city. we took the funding and provided direct assistance to home owners that were behind and often have to come up with money. with $38,000, we helped families save their homes. they are used by bases across the united states including mountain home, fairchild, tinker, shepherd, shaw, randa, and the international guard florida, tennessee national guard, and virginia national guard. our programs have also reached overseas. we had a marine asking us to send the programs over to afghanistan this year. in 2007, we received requests from the army to send some programs over to northern iraq. in wrapping up, i want to recommend the following actions, just close the loopholes payday lenders use to charge military members over 36% interest, require online businesses to post locations and range of interest rates, strengthen regulation for the debt settlement companies that target individuals and are abusive, apply the same standards for for-profit credit counseling agencies that non-profits adhere to, continue to support financial education for our military, and allow the bases to use the funds to purchase materials they know are good for their agencies and their military, require home buyer education for first time home buyers. it's vital we help people seek homes to revitalize the troubled economy, and support home buyer education. military families need the assistance of trained foreclosure specialists and individuals to tell them what to watch for in the areas when they are buying a home. in conclusion on behalf of rushmore research consumer center, and more importantly the men and women we see, thank you for the opportunity to testify today. >> thank you, ms. spain. admiral abbot, you may proceed. >> thank you, mr. chairman, senator shelby, other senators, i thank the opportunity to be with you today to discuss what our members are encountering in the financial marketplace. in 2010, the navy marine conscious society, we saw 73,000 individual sailors and marines in the offices around the world, and some of them more than once. that's 100,000 cases or what amounts to one-fifth, one out of every five sailors and marines, 20% of the for the in a single year, so it's still a tough financial environment out there, especially for the junior troop. the financial assistance that we provided in 2010 is the greatest that we provided since the end of the cold war when the military services even when the marine corp. and military were substantially larger than they are today, and i'd like to say up front there is very good news. senator shelby referred to it, and it's the effect of the military lending agent that became effective in october 2007. it's dramatically curtailed payday loans, and we are grateful for the far sidedness and effectiveness of that legislation. to prove that point, i can say that our annual assistance to those who have become stuck in the payday loan trap has decreased from 1.4 million in 2006 to just $168,000 this year. vir -- virtually that amount went to retirees not covered by the military lending act. we credit both the military lending act and improved financial management education and training for this welcomed development. the lending act was implemented on a limited scope, financial institutions found loopholes in the regulations, and new predatory lending practices have rose which continue to victimize our clients. before my visit this morning, i contacted all 51 of our offices around the world to ask what practices they are seeing that send their clients into the downward spiral of debt, and so here are a few illustrations of the problems that are facing young service members. in fort worth, texas, we assisted a retire with rent and food because he used his payday loan with a rate of 277% and the finance chanch was over $216. in the interest of time, i'll skip over a couple of others of these and ask that they be included in the record, but i would like to focus on those that deal with the use of overdraft charges. at camp june in north carolina, we recently helped a marine lance corporal with food and utilities because his paycheck was entirely consumed, entirely consumed by overdraft charges and associated fees. in virginia, a navy e2, whom we saw one month after his 21st birthday with a wife and a child, had overdraft protection payments due at every payday, and when seen by our office, the member had six credit cards, one loan consolidation debt, and one perm loan. the society helped with a no interest loan for food, gas, and diapers, and provided him on the spot financial counseling and went to other sources for in- depth counseling. a similar story in texas, an active duty e5 with a small child and wife, were in overdrafts with a high interest internet loan, and the family had gone into the overdraft condition when the child they had required medical care at -- excuse me, at a facility in another town, but the distance was not far enough for tricare to cover the travel expenses. by the time the couple sought assistance, they suffered four back-to-back paydays when $500 was taken by the bank to zero overdraft funds and fees. here are the trends that my director reports. banks and credit unions on a near military bases continue to charge multiple fees associated with overdraft protection. with an overdraft protection plan, the bank agrees to cover transaction despite lack of funds in thing the, charges a fixed fee, and takes payment out of the next deposit to the service members' account before other banking transactions can take place. common overdraft fees range from $25-$35 per transaction. i mentioned earlier that i polled all 51 of the offices, and all but four of them listed this overdraft protection penalty as the top of their list. it's already been mentioned about online lending. it's hard to monitor. it's predatory. they evade state regulations by being overshore, and they hide behind anonymous domain registrations. the financial industry is adjusting its practices. by structuring loans for a longer pay back period and making them open-ended instead of close-ended and for a larger amount, banks and other lending institutions offer installment loans that avoid the 36% annual percentage cap that was instituted with the military lending act and can legally charge as much as 500%. a few recommendations. first, we need to continue to improve financial education and consumer awareness for these technically savvy, but not necessarily financial savvy men and women in uniform. two, legislators and administrators should plug the loopholes in the laws and regulations governing predatory predatory lending practices. three, the need for credit won't go away even with better education and better laws, so we should stimulate additional, responsible, low-cost alternatives to predatory loan practices. fourth, we should encourage direct dialogue between senior military leaders and banking and credit union executives including at the local level. fifth, the protection of the military lending act should be extended to retirees, reservists, guards, and to veterans, and sixth, banks and credit unions located on military installation should be held to a higher standard of service offering military families including military retirees lower fees and better prerks from med -- protection from predatory landing practice and offer financial education to inexperienced consumers before they commit to loan contracts and agreements. adopting better business practices would go a long way towards it if not fixing the problems that these service members are experiencing. some institutions are moving in that direction, and i applaud those steps. i sincerely appreciate the opportunity to appear before the committee today. >> thank you, admiral abbot. general bergner, you may proceed. >> thank you, mr. chairman, ranking member, and members of the committee, thank you for letting me represent usaa. i grew up in a military family, and my father served and my brother served for 30 yores, as did i, and i'm a proud father of a son who just returned from iraq from the united states army. these are important to me personally and professionally, and i appreciate the chance to represent usaa in this discussion. i had the privilege to serve as the deputy chief of staff for general david petraeus in baghdad and iraq in 2007 and 2008, and knew him well in 2005 serving in iraq as well. during that time, we were honored to live right down the street from one home hole holly petraeus who was a wonderful friend to my wife, and i want to take a moment to say how much i am personally appreciative of her service, willingness to continue to serve, and be an advocate for our service members and nation. our nation is well served with her. i'm humbled to represent the 2200 employees of usaa today. we were founded in 1922 by 25 army officers who found themselves in a situation where the risk they were exposed to and the mobility that coshedded them with their careers precluded them from finding insurance and security, and they came together and formed and association that has now grown to 8 million members today, but the founding values, their sense of service, and their commitment to one another endure and are still at the center of usaa as an association of a member-based organization. our purpose is simple -- help military families and facilitate their financial security. employeings today are broadly recognized for their commitment to customer service, and it manifests itself in how our members feel about their association. about 98% of the members stay with this association. about 94% of them say they will stay for life, and we have about a 97% satisfaction rate among the 8 million members of the association. the employment is driven by one simple pact that we have the best customers in the world, our member, and that's how we refer to them, as our members. in fact, we see their financial security as our national security responsibility to this nation. i wanted to share one example of how that commitment comes to life on a daily basis. this is an example that took place a few months ago, and it was an army captain serving in iraq who called usaa because she was about to lose her home in the states due to foreclosure. her mortgage was not with usaa, but she's a member of usaa. she spoke to a service member representatives whose name is norma, and she understood how important it was for that captain to get back to the important duties of her deployment and the special circumstances surrounding that, and we had to find special circumstances to take care of her. norma agreed and arranged a short term loan at a competitive rate to keep this captain current with the other lender and got her started on an application to refinance her mortgage at a lower rate and kept her in her home. not with usaa, but a usaa member. norma represents the commitment of our association and the other 22,000 employees she serves with to understand the military, understand the special circumstances and support them in those. about one in five of the employees is actively serving in the military, has served, or is a military spouse, so that's how we understand what it means to serve and go the extra mile for our members. some of the things we do specifically unique to their circumstance is we have a deployment kit specifically for those that are deploying to help them get their finances organized, our insurance policies do not have a wartime exclusion. our checking thes are truly -- checking accounts are truly free and refund the atm fees other banks charge the members when they use them. also in 2010, we adjusted the payment terms on about a billion dollars on credit and loans, loan balances enabling members to continue to meet their obligations on 72,000ing thes, to keep -- 72,000 accounts to keep them up to date. we empower our service members in the financial services sector, and we very much look forward to the discussion today, and thank you for the opportunity to be here. >> thank you, general bergner. mr. pollack, you may proceed. >> good morning, mr. chairman, and distinguished members of the committee. on behalf of the board of the directors and pentagon federal credit union, thank you for the opportunity to testify today on these important issues that affect those who are sacrificing so much to protect our nation. when we think about financial issues within the military community, we believe that more can be done to provide financial education and tools necessary for service members to better manage their money. too many service members are ill-prepared to protect themselves from those who would take advantage of their lack of financial sophistication. we would never send the troops into battle that way, but we have not similarly focused on their financial preparedness. i would be remiss if i failed to recognize the laudatory efforts of credit unions in general and the defense credit union in specific because defense credit unions are member owns, non-for-profit cooperatives, we create programs to fit the needs of military member, and i'd like to share the programs that the pentagon federal credit union has and provides to the membership. the lack of education and in conjunction with the pen-fed foundation, we established relationships with partners with university and math to develop financial education materials to assist in teaching military personnel how to properly manage their money. we provide the services free of charge to members between the ages of 17 and 25. all the materials and legal documents are already in plain english, we do believe that the lack of clear and easy to use disclosures prevent members from comparing and thus selecting the best financial options available to them. as a result, in collaboration with the pugh trust, we have a checking account disclosure that's transparent and enables members to easily understand the fees and costs associated with their account. we hope to roll out similarly easy to use disclosures for all savings and loan projects by the end of the 2012. the disclosure format created by the trust creates a better way forward for all financial institutions, and we're proud to be a leader in rolling this out. the fact is that when a service member's fidgeting -- fighting in afghanistan or iraq, they should not have to worry about their accounts, even when they make a mistake. if 2009, we introduced a program called warrior's advantage waiving checking account fees associated with insufficient funds up to two occurrences in any rolling three month period. we also waived atm surcharge fees on all atms and we have free bill fee services to the members as well. by the military time's newspaper, we had the lowest fees of any financial institution serving on the military basis in the united states. importantly, we intend to continue driving fees lower looking to the future. our efforts extend to borrowing as savers because we do not price based on risk every qualified member receives the same price for a loan. our present rate for used car loan, a staple in the military community, is 2.49% apr. we provide a credit card offering that has no annual fees, no late charges, no foreign transaction fees, and at annual rate is 7.49%. we are trying to do everything we can to ensure the military member has low cost credit available to them for any need they may have. we know that military members can and do get into trouble with debt. when they do, some turn to payday lenders for assistance. for the past eight years, we provide alternatives to our members in such circumstances. through our loan, we provide up to a $500 emergency loan for flat fee of $5. if a rollover is requested, the member is required to go to consumer credit counseling, free of charge, to develop a plan to get them out of trouble. we allow for five rollovers free of charge for any others that are necessary. we cover the losses for 12 other defense credit unions who participate in our loan program. our foundation's dream maker program provides matching grants up to $5,000 for active duty service members seeking to purchase their first home. because we have never done subprime lending or late and losses have remained low, as a result, our collection efforts are focused on helping members in trouble or get out of trouble rather than harassing them. we are but one of many institutions that view this as a labor of love for those who defend the country. the men and women of the military deserve nothing less. thank you for the opportunity to testify here today and thank you for your time to focus on the long term security of our nation. thank you. >> thank you, mr. pollack, and thank you very much for your testimony. as we begin questions, i will ask the clerk to put five minutes on the clock for each member. mrs. petraeus, many of the abuses that have been raised in testimony today are committed by non-bank financial institutions. do we think the cfpb would be better able to protect service members and their families from abusive debt collectors, for-profit college, and scrupulous lenders if it had a directer in place? >> yes, chairman, i do. there's an array of things we can do to help service members, and one is certainly education, which we're already working on. another would be enforcement, but the third leg, if you will, is supervision, and without a director, we can want do that supervision of the non-bank entities like payday lenders, debt collectors, private student lenders, the ones you mentioned. >> yeah. ms. spain, would you please describe for the committee some of the regular financial literacy trainings you and your partners conduct for the south dakota national guard? >> we provide a program called money in motion, and it's a two-hour basic financial education program. what it teaches -- what people understand is they know they should budget. they don't know why. they need to care about the credit score, and they don't know why. the programs explain the why. you budget to reach your goal and cover your bills. you want to know your credit score because it depends on what interest rate you pay, and what interest rate you pay determines your car payment and how much money is left for other things. we apply a six-hour credit education program called credit when credit is due, and the third program we provide is called make your move, a guide to home ownership, a six-hour home buying education program that shows them the current forms as well as the information they need to know in any community, what they need to ask, and those are the programs we're currently providing. we provide programs upon request from the family readiness center. >> yeah. admiral abbot, general bergner, and mr. pollack, there's different challenges for service members and their families, especially during the deployment. what tools are available to military consumers to make these transitions smoother? admiral? >> the military lifestyle is one that as mrs. petraeus described in recent years involves many rotations that creates the difficulties for the families that are staying back at the up stalllation and the dilemma that's posed for them whether they are going to, in fact, remain at the installation or, in fact, move to some of the location where they might have other, more family-oriented support, particularly difficult for the junior members, and so we, for instance, at the navy marine corp. relief society will see clients, individuals who have come into us to ask for assistance in dealing with some of those circumstances where the military member is deemployabled over -- deployed over a substantial period of time, the spouse is back alone at the installation, and, in fact, may choose to move to a location where she has or he has more family. >> general bergner? >> mr. chairman, one of the biggest challenges our service members face today is the mobility challenge. we send him hither and beyond, all over the world. their ability to maintain their credit and at the same time have access to their financial services that they so deserve is one of the biggest challenges they face, so one of the tools that we have recently deployed is something called auto circle. you can access it on your mobile device, and there's arranged discounts with car manufacturers to provide those to the service members, and on average, they save about $4500 on the purchase of an automobile by using that, but most importantly, it puts the facts in their hands so no matter where was services take them, they have the facts available to them to make a decision that's the right decision for them that's not going to be a car lender or dealer outside their gate. we do the same with home purchases and home mortgages, allowing them to access them on line, fill out the application online, and pursue that mortgage online, so being relative to the mobility is something we commit to with our members. >> mr. pollack? >> credit yiewns do a lot, and similar to the usaa, we have a deployment kit. many members serve in overseas bases, and very few of the locations make any money. we do it at a loss, and the issues are as the general pointed out that when you move that frequently, you're spouse and family may be at home, and you may be somewhere along way away, so we provide online services too 24 hours a day, seven days a week, a member stationed overseas can call us, we reimburse the government for that so they can reach us 24 hours a day, seven days a week if there's an issue, and in our case, we are live, realtime in our computer system 24 hours a day, seven days a week around the globe so that if a military person deposits money and their spouse needs the money in washington, d.c., the money is available at the same time it's deposited. those kinds of services enable the military person to be far away from their family and able to take care of their family at the same time. >> thank you. senator shelby. >> thank you, mr. chairman. mrs. petraeus, in your testimony, you discussed you joined the bureau in january of this year to start an entirely new office, the office of service member affairs. how many people have you hired to work in your office, and how many do you hope to hire, and what's your budget, and lastly, are you getting the resources that you need here? >> thank you for the question, ranking member shelby. we now have six employees working for me, so over a small but mighty office i hope. i don't expect to have it much larger than that, at least not for the moment, and, of course, everybody has a wish list. there's nobody that if you ask any of the employees, they wouldn't say no, and i do have a wish list of a few more to extend our reach, but there are other decisions within the cfpb we are able to tap for their expertise as well, so we don't have to do everything ourselves. budgets are still being hammered out, and my deputy is doing the numbers, so i'm removed from that, so i can't give you accurate information on that right now. >> you think you're getting the resources overall that you need thus far? are you -- i know you are just getting started in a way. >> yes, although, the resources are there, but, again, it's a frustration now not to be able to do everything people expected us to do. when i started people were excited there's an agency now to be able to do something about the people who prey on the military. i'm excited for the day when the non-bank supervision team, if i can use an analogy, stop circling the airfield and get permission to land to start doing their work. >> as you well know in 2006, congress passed the military lending act giving the department of defense the authority to promulgate unscrupulous lending practices involving the military, and after dodd-frank legislation was passed, the department of defense still continues to have the sole authority to write regulations implementing that particular act. what's your view of the effectiveness of the act in stopping unscrupulous lending? >> well, i think we heard from admiral abbot that there's been success on the definition of the payday loan. .. require first-time home buyers and to receive financial education in some sort before they can obtain the va injured loan in other words counseling, serious counseling as to the implications of the obligations of a loan. >> in my opinion and would be yes. the reason that i say that is by means of the home again is a complicated process and allows you are a realtor or mortgage lender you can't know everything you need to know. islamic it is a big bite for most people. >> it is the largest purchase will ever make. >> admiral abbett, have you and your testimony among other things you state that the military lending act has dramatically curtailed payday loans to active-duty service members. we are glad to hear that. you also point out however some financial institutions found loopholes in the regulation that the department of defense promulgated in 2007. they always do this and you have to come back. have you contacted the department of defense regarding these issues and if so, what has been their response to close some of those loopholes? >> yes, senator. we did in fact in the year immediately after the act was passed and then implemented have a period where we examined its effect and we reported the results that we had seen to the department of defense one, and it had already begun to be clear that it was having a positive effect and also the same phenomena that you just described the of the worker rounds coming would. the narrowness with which we saw the hat implemented gave us concerns at the beginning and now we in the light of four years of experience, it continues to cause concern, and that is the correction that the financial the industry has gone in using that particular limited application of the closed end loans and certain circumstances to in fact offer new products that were essentially new pay loans. regarding on-line lending in the road there are there additional steps that the dod can take to ensure that the act adequately covers online lending and that those people will be resourceful to get around anything? >> you know, senator, i believe that education may be the single most important weapon in that particular fight. general, guinn usaa -- i know tr organization is unique -- what are some of the ways usaa is qualified to serve the military? i know that is your focus and their families. >> sadr, i think it starts with the best customers in the world, and we recognize that and it has been followed by the best employees in the world to do that and the combination of those generates a level of commitment that really is at the center of hell we can truly put their needs first. a couple ways that it manifests itself we look at every person out there from the member needs perspective, and so that is where we start and finish. last year we saved those members about $165 million through the refinancing of mortgages and savings and the auto purchases specifically. that is a tremendous amount of savings for service members who are exposed to the kind of threats that mr. petraeus is talking about, so it is a member focused effort. essey ra is another example and it caps 6%. we kept the exposure of 4%. and so it's going that extra mile for the service members. it's the right thing to do. >> thank you. >> it's my understanding there are at least nine federal regulators and regulators in all 50 states with the authority to regulate and supervise and possibly enforce service members by both banks and non-bank lenders. in your view have any of these regulators found to properly oversee lending to military personnel, and if so, which ones? because we need to point this out, because the regulators need to do their jobs. >> i'm not sure i can actually answer your question, but i do believe it is an issue of education. if we properly educate our young people in america, it would meet some that they make today. >> dewaal agree the worst thing that a lender can do is overload anyone but especially a young service member, 19, 20, 21 years of age with debt they can't carry? it just makes no sense financially, and it's to the service member is it not? >> yes and i've been doing this for 33 years and for 33 years we have had that problem that a young person enters the service and the first thing they do is buy a car they can't afford and second, take on more insurance can't afford and before they ever did going they are in trouble. >> thank you mr. chairman. >> senator reid. >> thank you very much mr. chairman for your testimony. first let me make three points. i want to commend you for adopting the disclosure reform for the financial institutions throughout the country. thank you. second, i think one of the most satisfying aspects of the act for me was working with senator brown to create the office of service members affairs and particularly in light of how petraeus is meeting it. some think for what you're doing. third, in the mid 70's before that i was an executive officer of the company richmond every day i got letters from creditors and young paratroopers telling me how the 25,000-dollar trucked on the income. but what i have heard today is i think even more outrageous in terms of what is being done to the military personnel particularly now in a time of war, so what we have done it is not enough and we have got to do more. let me focus on a particular issue to the testimony. thank you by the way, sir, for your selfless service to the mutual aid association, to the marines and sailors and our colleagues in the army and the air force. but we have facilities that operate on bases and the expectation i think is that they are on a military base from the individual service members that this is gold addition to get it got the stamp of approval sitting there. i know they operate under the operating agreements, so the question i want to address to mr. petraeus and to the admiral is are those operating agreements efficient, and force, and i will just say there is indication in the army times story that some of these facilities are charging far in excess of the fees for miss payment or failure to pay on time that is normal. ms. petraeus? >> i will say as you mentioned they do have a contract to operate and they are expected to do certain things. part of the contract is to provide financial the education. certainly it should also be transparent with what they are charging and when that contract comes up for review that is an opportunity for the services to decide if they are treating their customers right. i will say that we're we are taking a look at the issue of what are the special products that the financial institutions are providing for service members for the federal register notice end, and about a month and a half ago asking for input from an across the field saying let us know what you are doing and we are going to have a forum next month where we discuss both of the issues and some of the things being done that are on the positive side, and hopefully that will serve to put the word out about what's being done on wiltz commendable and what are the issues that need to be addressed and we look forward to the cross pollination if you will. i hope we will look back at that and say what can our institution whose line pleased about that. >> there is a credit union that operates on the air force base, and the support financial the education to the grants that allow us to provide the education. the military members and the family readiness center haven't had complaints regarding the particular credit union. >> and you can he elaborate on your comment. >> senator, i know that our service members and i, our clients are grateful for the services that they get from the finance industry on base. it's a great convenience and we are grateful for it. i do agree that the renegotiated the contract is spot to which they're not to be frank discussion about practices and that the local leadership should be empowered to discuss those issues with the bank and credit union leadership. we've heard today about some commendable best practices. i personally believe there is an opportunity for a discourse consolidation of those in a way that would benefit all of the military installations that have those facilities. >> my time is about expired. general, i don't want to upset your premise that you have good customers because i've been a good customer for 40 years, so forgive me. back in 1971i ensured a very dashing triumph. the years have passed and malae and ensuring the 1991 ford escort. that's what happens as you grow older, so thank you for your service. thank you. >> senator >> caller: . >> this petraeus, the guard and reserve forces in have been called up to fight alongside the active duty counterparts at the high europe to ensure the nation's safety. what do you see as differences in the consumer protection needs for families of reserve components when they are on active duty nurses when they are in the air reserve status? >> i had the opportunity as a mentioned to talk with a number of national guard officers and enlisted in their families on my trip back to the states and i try to do that when i go out because the issues are a bit different. for a great amount of their time the families consider themselves to be civilian families and some of the challenges for that change of circumstances when suddenly become a military family, and they have their guardsman or reservists and deploy. they don't have the installations that the active duty force has with the offices that they can walk into and get information. a great deal of it has to be delivered virtually come and through the web they've come a long way. there's great initiative now. the yellow ribbon program they do provide information before they deploy come and then also they circle back around after they come back. but the delivery of information is certainly a challenge for them, and again, just making the family is aware of what is there for them in the way of benefits, and i will add the economy is a challenge for those families as well and employment is a big issue for them and they are not on active duty and also for their family members. >> thank you. >> on average members arrive at their initial training assignment with $10,000 in debt. this means they may already be behind before they even consider how to manage their finances. in your experience, does this initial bet influence their reliance on high interest loans to meet their short-term needs? >> when they come and have it it does affect them because they've become targets, they know they have to make those and if their car breaks down or whatever happens they become more vulnerable and that is why they fall prey to the lenders that are charging exorbitant fees, so it does make a difference. they are allowed to come and talk to the first term which makes a huge difference and provide them with the education so that they know that they have options and ask questions very carefully and to know there are other programs and assistance available. >> ms. petraeus, i want to congratulate you and wish you the best to focus on important topic of financial the education and consumer protection law for military families. if there was one thing we congress could do to have the fee will better protect service members and their families with, what you think it would be? >> confirm a director for us. we can use the full array of what's there. i agree education is vitally important, but we need to be but also exercise supervision to go and to give a good practices of some of the non-bank lenders the turnout there and actually i heard a quote from a ceo of a federal credit union in ohio we have a branch of hours near a pawn shop and a paid a lender and the only one that is regulated is us. so we need a fair playing field, and to do that we have to be able to go in and supervise and look at these folks and then as needed. >> thank you. ms. petraeus, has operations come to a close in iraq, we will begin what to see and strength numbers decrease and veteran's numbers increase. what are you doing now to partner with agencies such as the va or identify the financial needs or vulnerabilities of those veterans status how long are they different? i was glad in your statement you did mention that you are working closely with va. >> we are and we talked to them both as i said about the homeowners that they come to us that we might begin to tell the and we've also talked to them on the issue of education benefits because we will have a lot of the veterans getting out and looking to use the g.i. bill which is a wonderful benefit, and we want to be sure that they use it for college programs that provide them the best bank for the dhaka to welcome and unfortunately, very heavy marketing right now because a military education benefits don't count and than 90% of the for-profit colleges they can only get 90% from the title for education funds to have to get 10% of their funding elsewhere and the military benefits are a part of that elsewhere, that 10%. so they are heavily marketed, and we have been talking to them, again, hopefully to make it more transparent when you look at a college what is its track record, what is the default rate on loans for the graduates and what is its accreditation. and then the office of students has put out a know before you owe worksheet which is a good first step. we want the veterans to come out and become productive members of the society and we also work with the department of defense offices of the transition on that as well. >> senator tester. spriggs before mr. chairman. i have a question i want to dovetail the ranking members question i think that senator akaka to have gotten the answer, too what i want to be the reason than on bank supervision team is still circling to use the words that have not been received permission to land in other words recently cannot regulate the non-bank financial folks but everybody on the panel referred to as being somewhat of a problem as regard to the military focus because we do not have a director of this efp be; is that correct? >> that's correct. >> thank you. i want us to go back on what you just finished up with and that is the for-profit schools you brought the attention to us as be unethical recruitment and marketing practice of the bad actors in this industry and they are not all bad actors but some of them are. what are you doing about it? is it in education patrician? how are we reaching out to the military personnel and are we being successful in that? >> i think it is a work in progress right now. i think a lot of it just has to be education where service members know to ask the right questions. the two competing priorities in a way with a service member is on active duty and has what is called tuition assistance benefits they may be looking for college credits for promotion, so they want someone they can get quickly and easily if you will, possibly online 70% of the courses are given online. that may not be the best college credit for them when they get out and want to apply that to a job, so right now it is mostly education. our jurisdiction, if you will come is limited to the private student lender side of the market. but, you know, i have a broad mandate to work on the consumer protection measures with federal and state agencies and i will continue to do that on this issue. >> we appreciate this work. i want to talk about for closure for a second and this is a question for you too major general. right now the service members are protected under the service members civil relief act when it comes to foreclosures, and correct me if i'm wrong on that. can you tell me what is the mechanism for the service members to determine if there is a deployment status of the service member coming and how was that handled? when trying to get at is it my understanding there are some services the starting for closure before while the service members deploy do not believe that as legal under the law, correct me if i'm wrong, and what's being done about that. i will start with you, holly. >> first i have to fess up, i'm not a lawyer. stickney three am i. i'm not going to give legal advice here but when it is a question of foreclosure is not the obligation of a service member to tell their mortgage holder that they are going on active duty on like the interest rate reduction provision where you have to tell them so the protection from the nonjudicial foreclosure it is on the lender to determine if you are on active duty and they can do that by going to the defense manpower data system and looking that up. you are right. judging by the recent announcement by the department of justice system at large, large scale settlements obviously, the servicers are not doing that before the for those. >> major general could you just address that from your perspective? >> senator, i think i go back to the efforts are made in my opening statement. she's probably the best example i can give you of our commitment and the way that it plays out on a daily basis, so this was the benefit from the training necessary for the member service representative to understand what the scra requirements are and remember, in my head recollection, she was not -- this was not a loan that we had even made. >> i guess the question that i've got is that we have heard a lot about mortgage servicers and it hasn't necessarily been good in a lot of cases. do we have to ramp up the penalty? what do we have? i mean i'm not digging stick but by the same token, and you know this better than anybody come in and tell me if i'm wrong if you have got a service member and theater in very stressful conditions, the last thing you want is to have their head back at home thinking about a house that is being foreclosed on. so, what do we do about this? >> senator i think it starts with a sense of ownership and starts with a sense of ownership an obligation to the service members and that is what is at the center of our commitment. even when the loan is and with our financial the institution, we will work with a service member to protect them from foreclosure and do everything humanly possible to keep them in their home, and then not to mention the law requires us to do so. >> i appreciate -- i appreciate you and i appreciate your company. unfortunately there's a lot of other folks that do not share the same commitment, and i don't appreciate them near as much as i do you. i want to think you all for your testimony and the good work that you do. good luck. >> senator menendez. -- before mr. cherry and all of you for your testimony. i want to pick up where senator tester left off as the housing subcommittee chair we have taken a particular interest in stopping for closure on the military families, and at one of the hearings that i chair, we invited dick to testify who represents military families who were foreclosed upon by some of the largest banks in violation of the service members act and it seems to me from his testimony and from other sources that the act is either not well understood on the side, we will say that, or simply not followed and it needs better enforcement, for the simple bank of america, morgan stanley and jpmorgan chase collectively agreed to pay $80 million to hundreds of military families who they for close on, so ms. petraeus, my question is what can the csb be doing to help the problem of service members and their families being threatened with for closure on high interest rates when they are on active duty. >> i've had the opportunity to talk about this issue and i did hear the testimony on the house side the young captain who had been impacted being foreclosed on while he was deployed. i should first point out that is all the service members it is a monologue that the cfpb will enforce it remains with the justice department civil rights division and its part of because and as you said it is a very complicated law. there's a lot of pieces to it, but we did want to take steps so if we got complaints that came to us, first of all that our consumer response will be able to identify something that was a potential scra complete suite of on some training in our own systems of people recognize it and we also met with nick the justice department and we in the -- team found a joint statement of principles and one of the main drivers of that was to make sure that scra complaints didn't fall through the cracks and we would have the procedure for what we would do with them if we got them to see that they would be addressed. >> i appreciate that because the justice department of course sometimes is a matter after the fact when you have gone to the nightmare of foreclosure while you are stationed abroad and while you may get relief at the end of the day, financial relief by an action taken by someone like some of those families that doesn't mean you solve the problem of keeping the home and so i hope will you may not have the director jurisdiction we would love to work with you all to try to have a more vigorous approach that has those who give mortgage products to understand the responsibility they have here the end of the day so we can prevent that action versus deal with the aftermath of foreclosure. >> it's better to be proactive than reactive and frankly it all boils down to the person on the other end, and if they don't -- if they are unaware of what they should be, what protection they should be extended then you are going to have a problem with that service member. >> is the justice department considering bringing in the largest mortgage entities and giving them a little bit of a primer here on what they are supposed to do on with the discussions that led to? >> i have not heard that particularly from them, but again, a lot of what they do they don't announce publicly. i did have the opportunity i went ahead and i wrote a letter to the ceo of the 25 largest banks several months ago saying this has been an issue and i hope that you will be on the practice is making sure that you are not doing this to the service members who have accounts with you. >> we appreciate that. let me ask you collectively i knew that some of my colleagues before have talked about the military lending act, and i just want to get a bottom-line answer since the act that capped annual interest rates for consumer credit to military or worse at 36% including fees and charges but has been narrowly defined in the paid a lender loans and the hinkle title loans and tax refund anticipation loans, but they don't include the cost credit cards, they do not include open draft loans, overturn installment loans, any forms of open-end credit mortgages, auto loans. if the public policy in one universe is to protect service members at the end of the day from such high interest fees and charges, is there a public policy reason not to extend that to this broad universe for service members? >> i'm all about consumer advocacy, so i would love to see the broad protections, but i know that it was in the detail to write a rule that does it in a way that doesn't have any unintended consequences, but yes i am for the broad protections. >> anybody have a public policy why that's not a good -- >> i was going to climb on the side of saying devotee that there is a public policy reason to extend it for the same reason that the original legislation was put in place because of the effect that it was having on the service men and women on their condition on their loss of security clearances on the loss of readiness to deploy, and the morphed measures that have been taken to deal to go around those measures that were in existence have effectively produced the same circumstances, just with slightly different products. >> thank you, thank you mr. chairman. senator? >> thank you mr. chairman and i once again want to say how thankful i am for you holding the hearing today. we've gotten the information and i also think what we've discussed speaks volumes about the need for financial literacy education in our public school systems. i don't think we do enough of that. i keep saying it's not rocket science. we just don't teach it, and i think so many of our young people in the military could benefit greatly if they had had a financial literacy education course while they were in high school so it's something i'm advocating for and i certainly hope at some point in time we can accomplish that at the state level and at the federal level. but i did want to ask you a question. i knew that many years ago when many of our military bases were in very remote locations there was a one base and one bank rule that came into place, and i heard that this limits the number of financial institutions on military bases. can you describe this to me and discuss the benefit to service members pro and con? and then anybody else? >> senator, thank you very much. we do not operate on the military installation as a single bank, but we do have an educational foundation that will produce about 4.1 million pieces of material on everything from cybersecurity to financial management to the car seat safety things that truly do matter to service members and their families, and without regard to a product endorsement or even a mention of the company that produced sponsoring the educational foundation. one of the challenges that exist is access to the military service members to support their requirements and their needs. so, for example, we have been asked by our me community service and family readiness groups to provide such educational material and support them and because of the one bank rule, that is sometimes limits our ability to provide those even though they don't have any reference to a bank or another financial activity. so i think to the degree that we can level that and make those kinds of resources available there's the opportunity for the nonprofit educational foundations to help fill the gap in financial literacy. we will give about 900 presentations this year from the educational foundation on financial management. many of those to service members and many of them to the national guard and reserve components are located far away from the footprint of army community services. so i think there is an opportunity for us to deal to enable the foundations like our educational foundation to serve some of those purposes. >> anybody else care to comment on that question? >> senator, i think we need to be careful in the overseas environment, because the credit unions are not making money overseas and to the extent it would put more financial institutions on this overseas i think what actually counterproductive. states are different issued overseas we need to be careful. >> thank you. admiral, you mentioned overdraft practices in your testimony. what can be done on this front, and are the high overdraft fees, and on base in the financial institutions? >> senator, yes. i would have to assess it as probably the top problem that i am observing right now in the young servicemen and women who are getting into a condition that they can't cope and therefore come to see us come and it's the magnitude of the fees that they pay. i read a statistic that in 2011 the national cost of overdraft fees will be $30 billion of course the military members are only a small fraction of that but 25 to $30 a time, in some cases of to as many as seven per day. so for somebody who has overdraft protection and $500 worth, seven times 25 doesn't work out very well, and their needs to be and there are a number of proposals that have not only been made but implemented by credit institutions which improve the circumstances we don't advocate one specific list of them but are encouraged that they are being discussed and we think it is going in the right direction. >> is certainly seems like something that once again education would really help up front on this issue. >> i would like to strongly agree with that and also add that it's not a one time inoculation that you have to repeat financial management education throughout the career of the individual because the problems will reader there had again. >> chairman i have one more question or should we -- >> go ahead. >> in your testimony you state the cfpb will focus that the understand the dynamics of student loans, and so many of our student members and in particular in many cases first time first-generation college students and mcveigh are being offered opportunities for a lot of different areas. can you describe a little bit more about what you are looking at in that regard as far as advising them and giving advice? >> i think that there are some real concerns. again, there's such aggressive marketing right now to military come and it's not just the military members but it's their spouses and children as well because the jihadi bill now those benefits can be transferred to them. i talked to an army wife that at fort campbell kentucky she started her, and at my roundtable by saying i met in the military affiliated college, and i thought so i asked her the name of saddam of course it wasn't, it was a for-profit but they had marketed themselves here in such a way she thought they had an official military affiliation, and she said that when she filled out a court of inquiry they called her ten or 15 times a day until she enrolled and once the first class happened she was having trouble logging on because it was an online class and she couldn't find anybody to take her calls because again the had her money at that point and she ended up not passing the course because she couldn't get logged on and off times to do so but the money was definitely committed. again, i have a real interest in were folks being able to make more informed decisions than just based on the military friendly economy 15 times a day and i think we need to get some tools out there to make it easy for people to come here and say what is the track record if it is for profit and costs more is it worth the extra money i may have to spend beyond my military education benefits which will not cover the whole cost. >> in that instance did she get her money back? >> no. >> thank you mr. chairman. >> to the panel, thank you all for your testimony and for being here with us today. i'm grateful to the brief men and women who have served our country and to those whose concern use surf. i will continue to work to make sure that the service members and their families have all the tools and protections they need and deserve. this hearing is adjourned. [inaudible conversations] energy secretary steven chu says global energy is fierce and the u.s. should have a comprehensive energy policy. he focused on renewable energy and a conference hosted by the washington post. this is 45 minutes. [applause] >> good morning, everybody. last year when the "washington post" held its first energy forum, the discussion was all about the news at the time. there was a schoolboy in the gulf and on capitol hill for energy and climate legislation. today on a day when we've gathered many of the most influential thinkers the country has on energy all in this room the conversation is quite different in the focus. today the focus is on the economy, listing it, creating jobs and using technological advances in the energy field to help to that. clean energy, smarter uses of energy and energy efficiency. individual consumers and business owners want their bills for their homes and for their offices and factories reduced, and they want to do the right thing for the plan at. today we are asking those in the note to talk about the biggest picture, national security issues, energy security, the shifting geopolitical map of where the new demand and the new supply is coming from and we are also going to ask for specialists to go into the smallest of detail to help us with that saturday morning decision of the hardware store about which light bulb to buy and tell us what cars are going to look like in terms of mileage and shape and engine and even a couple of years. but start on smart energy with a man in charge of our nation's energy department. steven chu is the united states secretary of energy. his job descriptions implement president obama's agenda to invest in clean energy, reduce dependence on foreign oil, address the global climate crisis and ed dress new jobs. how was that for a job description? steven chu came to washington as a distinguished scientist, he is well known as the winner of the nobel prize for physics comes something actually few members of the cabinet if any have had. he's also served as a director of the department of energy lawrence berkeley national lab where he led the pursuit of alternative and renewable energy technology. please welcome steven chu. [applause] >> thank you for that nice introduction. i want to start with some lessons in america's past take you back to kittyhawk december 17th, 1903 where the wright brothers launched the first airplane and with it a whole new industry so the next several years those brokers led the world of aviation. what is less appreciated is the loss in the technology lead a few short years later and by the beginning of world war i we were hopelessly behind. although the u.s. military was the first major customer of the wright brothers and their competitors between 1908 and 1938 the u.s. rate hit 12 in government invest in an aviation. the lack of purpose showed and when we entered the war in 1917, we were so far behind in aviation technology that they convinced us to produce european designed aircraft, and we did. after the war and they said we can't compete with europe. we saw the leadership in this industry as a national security imperative and an economic opportunity. and we launched an agency for the research and development pass legislation to allow the private aviation company to carry them out. demand from the military and postal service kept the industry during its early years and laid the foundation for the commercial aviation industry. the second thing i want to give is the history of the automobile in '85 the modern combust engineers invented in germany. henry ford didn't invent the automobile. he invented the assembly line which greatly increased worker productivity. america became the dominant automobile manufacturing force in the world by becoming a low-cost high-quality mass producer. as the price came down the market exploded. more factories were built, more workers were hired, and america dominated the auto industry. my final lesson about information technology. american ingenuity creates the technology upon which modern electronics are born with federal support helps usher in telecommunications era. the u.s. saw the potential of the emerging industry and took steps to foster its growth. the military was the early adopter of transistors and computers and the defense department research to help lead the development of the internet technology to beat the purchasing power of the air force, nassau and other agencies guaranteed a market that drove down cost of the semiconductor technology. this all need them affordable, widely available, and disseminated around the world. the lessons from these examples are clear the u.s. government recognized and economic opportunity and made a choice to compete and took the necessary action for the industry and now once again there is a huge opportunity before us, a global clean energy market that's already worth an estimated two entered $48 billion a year and is growing rapidly. in fact, it's very reasonable estimate is that the solar system's alone represent a global market today of more than $80 billion a year to $80 billion is a lot of money. it's about as much as we spend on the air every year. however this is a faster growing market. the united states solar cells, wind turbines and batteries were all invented here but were no longer leading on any of these technologies. keeping with the comparison with the year in 2009, we spend $7.000000000 on potato chips, that's $2 billion more than our federal investments on energy research. history is repeating itself just as we took the lead from germany and other countries have studied the book and are using it to take the lead from us to read while some people in washington are debating whether the clean energy economy is real or whether we should compete, other countries are seizing the opportunity. nowhere is this more evident than and china. last year in shanghai currently the leading photovoltaic manufacturer of the world to soak away material from the united states because electricity required is to define the cost much less in the u.s.. the ad for high-technology steps in china in a highly automated factory. some tech is not only the low-cost leader of the time of our visit, they held the record for the highest efficiency solar cell in the world. they are trying to do to us what henry ford did. another secret of the success is china like many countries have learned from the united states of the government can support critical emerging industries. last year china have over $30 billion in the government financing to a solar company including 7,000,000,003 of least ten countries have adopted the renewable electricity standards and more than 50 countries around the world offer some type of public financing for clean energy projects. for example, germany and canada operate the clean energy lending programs and the last several months the u.k., australia and india have now announced plans to the same. since the first day in office president obama has been working to strengthen the u.s. competitiveness in the clean energy using the grants in the r&d project and advanced the factory tax incentives which is supported nearly 20,000 renewable energy projects to finance innovative manufacturing of the renewable energy. while we made progress the united states is at a crossroads. many of the clean centers are expiring in 1705 program post of september 30th, and we've obligated virtually all of our recovery act money. are we going to recognize the opportunity and a clean energy race or will we wave the flag and watch all the jobs go to china, korea, germany, and other countries in asia or europe. the global competition is here. for the innovative technology comes with inherent risk. not every company, not every product will succeed but there is no reason to sit on the sidelines and kim seat leadership and clean energy. some party to throw in the towel and write off the clean energy industry. they don't think america can compete or they don't think it is worth trying. others think the best thing that we can do is for the government to get out of the way and let the free market work. we had this debate in 2008 and 2009 about the u.s. of an industry. a lot of people in this town was said we are ready to give up on the u.s. of a manufacturing. president obama refused to let the auto industry collapse. today, ford, gm, chrysler are creating jobs and quality products. after seven straight years of decline, america's automobile manufacturers expanded their output by 35% this year. the president to the action because the automobile manufacturing is the lifeblood of our economy, for the research report found that nearly 8 million jobs were impacted by the u.s. automobile manufacturers, suppliers and dealers. this includes jobs to mexican a kit from the manufacturing and other jobs that benefit the workers paycheck. the critics were wrong about the auto industry. i believe they are just as wrong today when they say we shouldn't bother investing in vehicles were clean energy. play recently read a paper of a friend of mine who was one of the 2001 of economics and he wrote about draw the transparency and looked at the data between 1990 to 2008 and divided it into two sectors. when he called the treatable jobs, these are jobs where you mix of like your -- the second sectors called mom tradable jobs, these are jobs that cannot be treated like the real estate sector, hotel and restaurant, health care professionals, government jobs on the u.s. secretary of energy, not trade. we added 27 million new jobs in the united states in 2008. the bad news is the job growth was virtually all in the monmouth trade sector. in other words our job growth in the sector of our economy we did what have to compete. you don't have to be a noble laureate to conclude our economy is not competitive internationally our prosperity will decline. some people say it doesn't matter where they are manufactured as long as we invest them in america. the simple fact is the continued improvement in productivity is a henry ford pioneer are due to the interplay between engineering and manufacturing in the long run production and manufacturing and research and to submit false production engineering. china and other countries in asia and europe regard clean energy and other high-technology products as critical to their future prosperity. other countries' economies are largely fuelled by oil, gas and mineral don't say our future is secure because we are blessed with these natural resources. the leaders of those countries know their supplies will eventually run out. they have a finite window of time to develop the knowledge based economy. for those in washington who say we can't or shouldn't compete, i say that's what we are in america when we fall behind we don't give up. we dig in and we come back. why should we concede one of the biggest growing markets in the world that is our sweet spot? technologically and manufacturing innovation. america has the opportunity to lead the queen energy technology of the world, provide a foundation for our prosperity we will remain the most innovative country in the world but invented in america is not good enough. we need to ensure that the technologies are invented in america, made in america and sold around the world and that is how we will prosper in the 21st century. thank you. [applause] >> thank you so much. i have to ask you is it harder to school and trapped atoms with lasers the work you did that won the nobel or to work in washington as a member of the cabinet? >> is that a softball question? [laughter] >> it is. i am interested. >> they are different, but they require many of the same talents you have to have the path to go forward, you go there step backs will happen. you look for another the user rates and go forward and in that respect to research and science is very similar it is not unusual to have been president and a member of cabinet to both have that so what is the no will answer between the two of you? >> we can't do that, that is a secret handshake. [laughter] >> have you had interesting conversations about this? >> a little bit. again, it's i think we are very much -- i do my best to come as you say enact the agenda that is still important for the country. i think that you heard this word, solyndra and i guess my question is if you were given a pile of money today, what would you do differently? >> well, there is i think the program was an important part of of the recovery and its 50 million job growth and an important part of the grand similarly what we need to do in the future to secure modeling jobs today but our future economic prosperity that's why other countries have similar finance programs. i think what they would want to do differently, you start with the idea that we, congress and the administration can design a better program that shows on the upside there is a recognition in congress when they both read the statute that not all of the loans would succeed, but we think we can design a program so that you can actually be self paid and still stimulate the most innovative industries. as we look at what happened in solyndra, hindsight is often cited it to the 2020. in this case i think some of it is 2010 or even better, clairvoyant. there were things where the market took an unexpected turn. the cost of solar, modules dropped tremendously in a short period what time. we've been watching all those market conditions, but going forward i think knowing what we knew at the time doing these things i think one has to take risks in order to promote innovative manufacturing. .. >> i think it's a very important discussion that the administration should be having with congress, and the american people, and how does one go forward and promote the industries we know will be rapidly growing industries in the world 689 there's a huge growing market for all the things that i talked about, and it's in our technology sweet spot. if we -- we can compete with high technology manufacturing. we can compete in those areas, and germany is competing in those areas, other countries are. there's nothing that says we can't. quite frankly, i go around the world, and i look at the truly inventive discoveries and innovations coming from american universities, national laboratories, start up companies, and matrix company, and these are all great things. >> and so what is it that we're not doing that we need to do? you said we need the conversation with congress and the american. what happens? >> i think it's very important that we create a demand for the clean energies like other countries are doing so there's the market. i talked about the market for airplanes, the market for semiconductors. i think there are ways to level the plays field. other country, again, coming from the united states use the united states' play book. that play book works, and i believe it still works as do other countries, and so we continue to guide and with private sector investments. in the end, there's private sector investments that make the difference. >> we're going to open this to the floor. we have two microphones, one here and the other here. you were talking about the interesting technologies that are coming from the labs. tell us about the exciting things you see coming out? >> for example, there's been remarkable development of battery technology. as i mentioned, america invented the lithiur ion battery. >> that's very interesting. >> but there have been improvements, actually, that came out of fundamental discoveries in one of our national labs that you put in a little magnesium, and the batteries are higher density, 50% higher energy density. they become inherently safe e and they become less expensive to manufacture. those batteries, the patent, the ip for those batteries is already in the first generation volt. we see a lot of other ideas now in the laboratories going towards manufacturing. another example is, for example, in biofuels. we think there's tremendous capacity for biofuels. biofuels based on plants designed to raise energy, not food crops. biofuels where you take this woody material with a lot of agriculture waste and turn it not only into ethanol, but already there are developments that have come out of national laboratories and gone into companies where companies are now piloting plans. you feed them sugar, and out comes drop-in replacement fuel for diesel, jet fuel, and gasoline. it's not yet economical, but we see a path where it could be -- it's not economical in the united states. actually, the sugar -- it's economical in brazil now because sugar grows abundantly in brazil, and it's cheaper feed stock than the starches we have in the united states, but we want to go to ultimately stocks, wood residues, and make drop-in fuels. there's a possibility some of the most rapidly developing areas in science are in biotechnology. >> you mentioned china and a lot of people i worried about have fallen behind in clean energy, especially to china. what do, you know, i know you talked a little bit about it, but is there something china's doing, i know it's a different political something, but anything we should be copying? >> well, they are making financing available. they're just -- in the united states, there's a competition between states who attract industries. there's a competition in china among their states and provinces and cities, but china sees the opportunity for all things in the energy sector that consider it not an opportunity, but it's considered critical that it's clear anything from the highest voltage transmission lines to solar industries that are now the world's leader, and they are also the world's largest market internally for renewable energy in the world, so it's not just for export. that's a myth that some people think. they are the largest market. they -- so you look at solar, look at wind. they are trying to get into the wind industry. they are trying to catch up from other countries abroad. they are trying to get into electric vehicles. they are building about two dozen nuclear reactors. they need very much and want very much to diversify from coal as their major source of electricity production because it's polluting. they recognize the climate risks, but -- >> is there something they are doing that we wish we could just do here, like if we could just do that? >> yes. they have a national energy policy, and they are working behind that, and they remain focused, and, again, i think the -- they recognize the economic opportunity. we're still debating this in this country. >> and there's a lot of debate on capitol hill, and some people say it's paralyzing. what are your thoughts about congress and how helpful or not they are in energy policy? >> well, my job is to do my best to educate anyone, congress, especially, about what the opportunities are. my other job is whatever resources that they do give me with administration backing, to do what we can to promote anything in the innovation chain of the basic scientific research, the deployment, to the deployment of the new energy technologies. again, this is vital to economic prosperity in the united states. this is a major part of what we do in the department of energy. >> and any thoughts on congress? >> well, i hope, you know, i try to remain optimistic and hope that one can see -- this is essentially a nonpartisan issue. i know there's many people, republicans and democrats, actually know we have to remain competitive in high technology manufacturing, that the opportunity of high technology manufacturing in the clean energy sector and energy efficiency is there, and we shouldn't walk away from it, but seize that opportunity. >> when you left your lab, and one of the reasons you came to washington was your passion about climate change, and you wanted to do something about it. now you've been here for awhile. are you, at all, disheartened about the lack of movement? >> well, it could be faster. i think we are moving -- it's true we don't have a comprehensive energy policy, but consider things that happened, you consider, especially all the things that are advanced in terms of developing renewable technologies, driving down the costs. it's only a matter of time when solar energy will achieve parody and become less than the generation of energies of fossil fuel. the debate is whether it's in this decade or a decade and a half from now in the united states, and so, again, when that happens, it's -- the demand will explode worldwide, so we have done a lot in the department in sponsoring a lot of the research in solar technology and biofuels and automobile efficiency. we've done a lot in developing more of the fundamental research, and, you know, there's the other part of this nuclear security, and con -- and i think we've strengthened those capabilities as well. >> there's been talk written about the changing, the shift away from dependence on middle east oil, there's more with greater technology and digging deeper into the world into the ground that we have more supplies in our hemisphere. what are your thoughts about the keystone pipeline? >> well, actually, before i answer that, let me say i forgot one very important thing, the mile standards in the united states have been markettedly increased. this, i think, will be one of the single most important stepping in decreasing our dependency on foreign oil, so that's another great thing. >> the standards for cars? >> the standards for automobiles and trucks, that is correct to go to 55 miles per gallon, and it's standards like that that make our cars made in america competitive because we're reaching what people around the world want to buy. they see the long term pros pelgts -- prospects of what's happening. regarding the keystone pipeline, i think this is a very complicated decision. it's before the state department. let me beg off of that. >> oh, come on, you're the head of the energy department, the massive pipeline from canada to texas, surely they want your brain on this. what do you think? >> well, let's just say -- well, it -- do i expect to be consulted on this? yes. [laughter] >> and what would you say if you were consulted on this? [laughter] >> these are -- these are very important decisions, and let me just say that this is very important decision, and i'm going to not commit one way or another. >> oh, boy. okay. we'll going to take questions from the audience now, and you can go to the mic. just go to the mic and identify yourself, please. >> dr. sam hancock here in washington, d.c., and we talk about the things we can't do, what's not happening with congress. based on your estimation, what are some of the things we can be doing like the research in the national labs and working with the various state and international universities that we have here in the united states? so focus on the positive and what do you think we can do to really move forward over the next five to ten years? >> well, i think i was, in my remarks, first of all, saying that there's challenges, and i should step up to the challenge, and many of the things, we are doing. as i said, the research enterprise in the united states, a lot of it is supported by the department of energy, but what people don't realize is we support more of the physical sciences and engineering than any other agency in the u.s. that we supported the work of more nobel lawyers than any other agency in the world, and this research has been the corner stone for all the innovation that's come out in the last two-thirds of a century, so that will continue. we, in the department, are beginning to, for example, create rpe, a new funding agency within the department, able to recite an extrord -- recruit an extraordinary number of individuals, the national academy of engineering, who come -- people from schools like berkeley or mit who are -- but members of the national academy who were legislated in their 40s -- elected in their 40s or are still in their 40s to come, and people of that extraordinarily high caliber are really what makes this program so special to be able to identify very, very innovative ideas knowing they are high risk, but we're looking for the homeland to change the landscape. that's a very successful program, and that's really transforming, and it's got raven reviews from industries, from the world, from the universities, and national labs. that's something we started. there's other things, energy innovation hubs that bring together teams of people across disciplines, bring together an industry at the very beginning to say how can we solve the problem just as we did this to develop the radar and things of that nature, so these things we had those programs, so there are things like that that are starting. we are wanting cross energy and sciences along the lines of business, solar, batteries, biofuels and saying where can the department of energy spend whatever precious funds we get in the most effective way to help ultimately american industry keep leadership positions in these critical areas? those things, we think, are going in the right direction, going very strongly in the right direction, and i'm very encouraged by that. that largely is less visible in washington, but people out there in the business community see these things. >> take another question -- >> i just want to say thank you for the program, and it's excellent and quite visible. >> thank you. another question over here? >> yes, mr. secretary, i'm bob, retired after 40 years of federal service. the last 30 i worked on energy, and i worked with doe labs, and in the last ten years promoting the use of combined heat and power in multifamily housing, and now it's coming on in smaller buildings including single family. i don't see anything on the agenda addressing the potential for combined heating power, producing already 12% of the electricity in the u.s., and i'm hoping you can say a few words in support of the eight regional clean energy centers, and the efforts that the department has been making to support it. >> yeah. well, as you know, we have been huge advocates of energy efficiency or combining power that is one of the things that is very important of more efficient ways of using energy. combining heating power is a known technology that's going on in the world. we certainly promoted it. it's something that -- it's a known technology. it's very effective. there's other things we're adding to it. for example, sometimes you want the heat, but not the power, and other times you want the power, but not the heat. we have a very active look at how to store similar energy in a way that's very, very first time and cost effective, so you can really have these power plants work at their true optimum, 80% of total efficiency all the time. there's things like that we do. we're promoting ways to get the technology out we know works today out in the field in commercial and residential homeses and buildings intravenous systems of -- and systems of buildings and cities. it's on building efficiency, and part of that is looking at those systems. >> well, i'm glad to hear your reference to the district energy systems. in the 80s, hud worked with doe to promote that, and the brooklyn navy yard co-generation system is an example. glad to hear you're taking another look. >> on to different top ticks, -- topics, but you spent a lot of time this year looking at the oil spill. >> uh-huh. >> can that happen again? is there something you've learned from that that's a safeguard? >> like everything else that happens, when things happen, you go first, the government plays an important role on stopping the leak, but beyond that, there are always things you can learn from incidents like that. there's things we learn from fukushima and things we learn from any incident, and one goes forward, and when you say can it ever happen again? no one can guarantee that something is going to be accident proof, but you can certainly do things that make the probability less, significantly less, and so that's one of the things that will undoubtedly is coming out of what we're learning there. again, the important part is when things happen, we didn't say, okay, no more offshore drilling. well some people said it, but i think as a country we didn't say no more use of oil. we said let's learn, pick ourselves up, move forward, make it safer, and i think with any incident whether it's an airplane accident or a gas explosion or an oil -- sorry about that -- or an oil accident or any other accident -- >> you think drinking is safer now? >> drilling has become safer over the years. it will continue to become safer. offshore drilling, especially and deep offshore drilling will be made safer. >> okay. another question here. >> good morning, secretary. i'm john from everblue training institute. we started a training company four years ago and train tens of thousands of work force employees from companies and we partner with universities so we teach all over the u.s. and see demand for work force education, but if you read the news, one of the criticisms and one of your bullets mentioned earlier was the mission to create jobs and generate, essentially, employment in this field, and i was wondering how you define success? if you read the news, there's criticism there's no definition of green jobs. i don't necessarily agree with it, but how do you define success on the jobs front? >> we define success on the job front when the unemployment rate goes significantly down. today is intolerable causing great hardship, so that is how -- that's easy. that's how you define success. the charges that we have created new jobs simply doesn't make sense to me. the u.s. oil industry was -- had a near death -- some say a death experience. it could have been catastrophic, and if you think of all the jobs associated with assembly of cars, supply line chains, the services, the.pro, and all the sec -- the dealerships, and all the sectors, we're bouncing back. jobs were saved, new jobs are being created. the production's increasing for the first time in p seven or eight years by 75%. that's tremendous. i think we see, already, very clear examples of job creation. the other thing that's very important is just as the henry ford example. he made a highly productive assembly line, so if you think you only make x number of cars and go to hyperproductivity, oh, that's not many jobs, but no, he drove the price down so it was a mass marketed item. he wanted to build the car for the multitudes, and that mass marketed item was accessible to a much wider population creating much more job growth, so what we need to do is look for those areas where there's going to be a new thing that can be affordable for our people that adds value and comfort to their lives and to make those things in america, so it's new markets. you know, the ipad and iphone was invented in the united states, but it's made in china and korea. we would like to make the chips and have the assembly plants over here. there's a lot of engineers over there in china, and, again, to say it's okay to invent here, but not to engineer? one of my best friends, we went to graduate school together, lived in the same house for four years, worked for hp labs for most of his career. that part of hp was sold off to a private equity firm, and in the last part of his career, he wants to bring a product to market, just -- the product he's bringing to market is an on opticle mouse for apple. he comes home at 9 p.m. every night. why? because he has to stay up to talk to the engineers in china about the design of the mouse. >> john, a war veteran who started his company creating new jobs. how many jobs has the stimulus money for energy created? >> it's something in the neighborhood of what we would call direct jobs, i believe it's something around 60,000-plus jobs, but those are very direct jobs. in the world, very concerned roles -- we give a loan or grant to a company and they subcontract out, we're not allowed to include those jobs. we're not allowed to include supply chain jobs. >> right. >> so it's a very conservative number, and -- >> and overall of the billions given in stimulus money, do you feel it was well worth and well spent? >> yes, yes. >> and on november 17th, i guess you go up to the hill to talk. can you tell us what you're going to say up there? [laughter] >> mostly, we'll see what happens, but certainly my message to congress is more along the same lines of what i said here today that this is a key time in american history. there's key opportunity to seize the opportunity, to not walk away when there's a stumble. you can learn from those and keep going because this is the direction i believe, the president believes, the administration believes is the direction which is key to our job creation today and our future prosperity, and so i think that is something that's very clear to me. i hope i can make it clear to members of congress. i think with all my heart and soul this is true, but i'm not alone. we said there are many dozens of other countries out there who are also believing this. >> can we expect to see you in a second obama administration? i know other candidate members have been saying lately that they are exhausted and even if obama wins, they are not going to stay. how about you? >> well, this is between me, the president, and our secret handshake. [laughter] let me just say i came to washington because i did believe in the importance of the mission of the department of energy. there's nothing that's happened that has said that ever has it been known, maybe it was not the right belief -- i believe this more strongly today. >> and the last question is did you see the john stewart skit? >> i saw part of it. >> what did you think in >> john stewart is very funny. [laughter] >> well, i appreciate you coming. you're a busy man. you have a 345szive port -- massive portfolio. thank you. >> steven chu is scheduled to testify before the oversights committee about the now bankrupt company in two weeks on november 17th. [applause] >> members of the house and senate appropriations committee met thursday to begin work on a bill that would provide $128 billion in spending for the departments of agriculture, commerce, transportation, and housing. this is the first conference committee on a spending bill in two years. because the house had vote succeed yules, this open -- schedules, this open meeting is about 15 minutes. [inaudible conversations] [inaudible conversations] >> this will come to order. good afternoon, everyone. welcome to our first conference meeting of the fiscal year 2012 in the appropriations process. happy to see so many of our old friends. from the senate with us today. look forward to working with senator inhoe, and i'm honored to chair this conference in the long tradition of alternating between house and senate on each appropriations bill as luck or unluck would have it. it was the house's turn on the underlying bill. mr. chairman, good to see you, and thank you for your dead cigs to returning to the regular -- dedication to returning to the regular order. today's meeting it another step forward in completing our important work on agriculture, transportation, and housing and commerce, justice, and science appropriations bills. this meeting marks the first conference meeting, conference committee meeting since 2009. when i became chairman of the committee in the house, i made it my goal to return to regular order and do business the old-fashioned way and bring back the open process that traditionally has been the hall walk of this -- hallmark of this committee's work. ranking member dicks has been instrumental in making this happen on the house side, and i'm delighted that senator koch run and members of the committee see it the same way. i'm proud of the steps we took this year to meet these goals. we've not had a perfect process as we all know. i would have preferred to bring each of the bills to the floor separately. it's been a huge improvement, though, over the last few years. just as importantly, we've laid the ground work for a more complete and efficient regular order process for next year. in addition to the great strides we've made to return to regular order on the house side, we've also paired back government spending to more responsible and sustainable levels. by holding the line on spending with a level agreed to in the budget control act, a trillion, we've cut overall discretionary spending for the second year in a row, a remarkable achievement that will save taxpayers billions of dollars and help get our budgets back into balance. within the three bills before us, we found a variety of integral federal agencies and departments, maintaining the critical services and programs the government provides and our citizens rely on. in addition, there's many policy items in both the house and senate versions of the bills, and i know that my colleagues at each chamber have different funding and policy priorities. it's by intention, as i'm sure it is yours, to represent the values of my constituents, my caucus, my country in the negotiations over these items. we still have a lot of work to do. these are just the first three of the 12 bills we'll need to wrap up between now and the week of november 14th when this conference report must come to the floor. conferees on each subcommittee need to come together to find commonground on a host of issues. this will require hard work and tough choices, and i'm sure we will not see eye-to-eye on each line of each bill, but these challenges are not insurmountable, and i know that we can and will work together in good faith towards completion of this package. i expect that in the end we'll have a good product, that we can successfully move in both chambers, and we can report to the president. we have some additional challenges. next week, the house will be in recess. i've asked and expect our members on this side to be prepared and available over the recess for continued conversations and negotiations. likewise, chairman inohe and myself will be in contact and keep everybody advised on the schedule and work diligently to bring this conference to a close immediately after the house returns. i look forward to working with you to meet that end. it's important that we conclude this process as quickly and as respectfully as possible with the commonty that's long by a tradition of the appropriations committee. i want to thank all of you for taking part in this process and your dedicated staff for your work up to this point and for your continued effort as we work through this process. chairman inhoe, good to be with you. you're recognized. >> [inaudible] i'm very pleased we've finally arrived at our first conference, and therefore, our 2012 fiscal year. as you pointed out, it's unimportant that -- unfortunate that we find ourselves holing this conference so late in the year, but after the discussions and negotiations of the cr followed by equally heavy negotiations on the debt limit, severely limited and delayed the committee's work. clearly, as you've indicated, mr. chairman, the time has come to make the best of a bad situation and move forward with our bills as rapidly and first timely as possible. the senate's passed four bills. it is my hope and understanding that the senate will consider and pass additional appropriations bills as quickly as possible. i applaud the willingness of chairman rogers and the house committee to work with us on our current schedule. while this approach, indicated by you, mr. chairman, is short of the regular order, i think we can all agree it's superior to acting on a single act of finding ourselves again forced into a series of continuing resolutionsment like you, i join you in thanking the members of this and their staff for all the hard work in managing and writing the three bills we consider today, and i look forward to working with you, sir. mr. chairman, over the coming weeks as we seek to conclude our work on all 12 appropriations measures. thank you very much, mr. chairman. >> thank you, mr. chairman. thank you for those words. mr. dicks. >> thank you, mr. chairman, and i'm glad that we're having this conference. i think it's important that we finish our work. i do just want to say that it has been a pleasure. we had six of our bills to the floor. we also did hr1, took a week on the floor, gave members a chance to offer up amendments and do it like we used to do it, and i'm glad we're trying to get back to that approach. i think it's in the best interest of everyone. the only other thing i would say is as we finish these bills, i hope that everyone will look carefully at the product because some of these cuts are going to adversely affect the economy. there's just no question about that, and we still need to grow this economy to get people back to work, and the one thing i worry about is that next month, for example, that we're going to have a million people exhaust their unemployment compensation benefits, and yet, some people are still talking about cutting food stamps and some of the other safety net program, so i just hope we can think of the people we represent. i know that all the members here are sensitive to that, and, again, i want to thank the staff, the staff has done a great job. we have a great staff. they work together, and i'm glad that we've restored bipartisan cooperation on this committee. thank you. >> thank you, mr. dicks, and what a great colleague he is to work with. senator cochrin. >> mr. chairman, thank you very much. it's a pleasure to join you and other distinguishes members from both sides on this committee. it's an honor to serve with all of you and a pleasure to have worked closely with many of you over the years. i'm hopeful we can, you know, work together in a fashion, but careful and thoughtfully bring these bills together and produce a result that reflect credit on our institutions of the house and senate, and at the same time, carry out the responsibilities that our subcommittees have for identifying the funding levels and the way in which our agencies' programs are administered. i thank you, all, for allowing us to get to this point today. a lot of hard work is already gone before us in the form of hearings and other deliberations, meetings with administration officials, a lot of work, and i think we can, you know, be appreciative of the thoughtful leadership that both committees have. thank you, mr. chairman. >> thank you, senator. does anyone else wish to make an opening statement? hearing none, we want to thank all of you for being here. the chairs and ranking members of the three subcommittees that is the subject of this three-pack bill will now continue their work in resolving the differences that exist between the house and senate versions. agriculture chairman and ranking members, the congress justice science chairman, frank wolff and ranking members hutchenson and fed chairs murray and ranking members collins. those subcommittees will now bear the brunt of the hard work in the next few days. we're on a very, very tight schedule. the cr, as we all know, runs out the 18th of november, so we -- we must have the conference report ready for signatures -- is it friday or monday? >> monday. >> on monday, the 14th, so that we would be able to have the bill on the floor then on the 17th. that's ambitious schedule, but i'm looking at a lot of ambitious people here, and i have confidence that you can make this take place. we look forward to working together. chairman and distinguished panel, thank you for your hard work. we will be now in recess subject to the call of the chair. [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] >> now, a hearing on china's role in africa incoming its investments in health care and infrastructure. subcommittee chairman, senator chris coons, says that china is, quote, "winning the battle of the hearts and minds." this is a little more than an hour. [inaudible conversations] >> i'm pleased to convene today's hearing of the african affairs subcommittee and honored to be joinedded by the ranking committee member and the minority member of the full committee, senator lugar. thank you, both, for joining me today. i want to thank our distinguished witnesses, david shin, and former ambassador to ethiopia, professor at american university and senior fellow at the international food policy research institute and mr. steven hayes, president and ceo on the -- a look at the expanding role of the continent and how it affects american interests. the u.s. is not just seating its potential economic leadership to commie that, but seeding moral leadership there as well. we'll discuss whether china's expanded reach should serve as a wakeup call for enhanced u.s. trade and investment and whether china's growing influence may counter or undermind u.s. development, diplomacy, and other values driven goals in the region. finally, we'll also consider areas of common interest between the united states and china and africa to provide the basis for enhanced bilateral and multilateral cooperation. china's reach has grown in the past decade, and the rate of increased chinese trade and investment in africa is staggering. between 2000 and 2010, trade in the nations grew more than a thousand percent. u.s. trade with africa grew during this period as well due to the passage of the africa growth and opportunity act, but the average rate of growth in china's trade with africa outpaced that of the united states by 100%. china sees africa as a continent of immense opportunity being home to the six of the world's ten fastest growing economies in the past decade, vast natural resources, rapidly growing middle class, all made africa an increasingly important player in the global economy. as the continent has grown economically, it continued to have significant development needs. the u.s. and china are both investing in that development, but doing so in very different ways. while we share common interests in africa that are helping, we have to be clear-eyed about the nature of our engagement. the structures are different. the u.s. clearly distinguishes between government assistance and private investment or the line between public and private sectors in china is blurred and involves many state-owned enterprises. the chinese government offers financing to governments to build large infrastructure projects, in some cases with no intles required for 20 year, and negotiating contracts with those same governments were mineral and oil extraction. while the u.s. invests capital in the promotion of democracy, human rights, and freedom of expression, our leverage is significantly weakened when those regimes can turn to china for support with no values strings atamped. if there's one message, the long term american objective of promoting open societies in africa embracing transparency, democracy, respecting the environment and human rights is being challenged by china's approach to africa. by offering an alternative source of investment and development, china offers regimes economic opportunity at times at the expense of government reform in a manner that's not directly ben fifthing the average -- benefiting the average africa. this is another key distinction. the u.s. government has been investing in the people of africa while the chinese government has been investing in the infrastructure of africa. it's tough to say precisely given a lack of transparency, but experts estimate 70% of chinese assistance to africa is in the form of financing or roads and buildings built with chinese materials and labors. they are transferring significant technology to africa nor employing africans. this chart shows spending is directed towards investment in the people primarily lo problems 20 combat hiv/aids and other diseases. this builds upon the strong legacy of u.s. investment of strong health established by clinton and bush. america's extensive public sector investments are not as visible as those of china. many can point proudly to chinese built roads, buildings, or hospitals without realizing that many of the doctors or nurses there are trained by americans, medical supplies provided by the u.s. government, many rural health clinics are saving children are in fact, u.s. funded. we may be in some winning the war in disease while losing the battle for hearts and minds. as we think about next steps for u.s. public and private sectors, we have to gain a better understand of chinese roles and motives and take steps to ensure the u.s. is not missing out on critical opportunities in africa. senator durbin, pleased he's joined us today, proposed legislation to do just that. aiming to create jobs in america by creating exports to africa by 200% in ten years. this is critical because china outpaced the u.s. in growth of exports over the last decade by nearly 3-to-1 shown by the last chart. i thank senator durbin my initiating this legislation. we need a comprehensive trade strategy to work with existing resources with opec and banks to find ways to expand the opportunityings. selling goods in africa translates to more american jobs. there's tools by which we can and should take an approach of expanding the scope of u.s. investment in africa, and the u.s. government must pursue a strategy to capitalize on africa. we cannot afford to lose out to china in the private sector while in the public sector we have to ensure our values are not undermind by an expansive political and economic agenda by china. i look forward to hearing from the distinguished witnesses, how the united states can achieve the objectives, but fires, i want to -- but first, i want to turn to senator isakson for his opening statements. >> thank you for calling the hearing with regard to the role of china and africa. i traveled with senator coons to west africa this year going to ghana and nigh nigeria seeing the benefits of u.s. investments and particularly in ghana seeing the execution of the compact, coming back for a second compact, and as president mills told us in his office that the focus on lack of corruption, focus on better governance which was a quid pro quo made ghana a better country, and i commend president mills on his movement towards democracy. nigeria, the first successfully elected president with minimal violence taking place will follow the role of president mills and president yahi is moving forward. their report project, also an mcc compact, is in its final year and it's been an excellent example of the mcc challenge investment in africa, but no question that the chinese have a significant role in africa, and i think the chairman has done a good job of outlining the role they take which is more in their own self-interest than the interest of the african people. their investment is higher in dollars, but our investment in the rights, health, and safety of the african people is greater. i hope overtime that wins the hearts of the africans, because i think africa is the continent of the 21st century for the united states. they could be a great energy partner, great consumer of our goods and services, and we can have a great partnership to grow and prosper together. what started in the bush administration in terms of mcc compacts will continue, and i certainly intend to support both of them as i have in the past as well as i want to acknowledge what the chairman referred to obliquely that is the private sector investment by americans compassionately in africa. malaria doesn't exist in zanzibar, it's easier to control, but tharngs tots inest -- thanks to the investment of bed nets, it's amazing the effect we have on that. same is true with measles and polio and of others. it's the number one national project, the eradication of tetanus in africa which is also critical, and coca-cola company as well is investing $30 million a year in clean water project, and senator coons and i drank clean water out of a coca-cola provided treatment facility in a village that never had clean water before, and they are charging them 7 cents a day. they turn the plant over for nothing to the african people, but they pay for its continued maintenance and upkeep for the water they get every day. a lot of the principles of our competitive free enterprise system and the compassion of the american people pay benefits, but it's not unnoted that some african leaders prefer no strings ataffed, and they look china for that reason. china abuses its interests, and this week human rights watch is issuing a report that alleges the chinese are routinely bribing or threatening miners from keeping them from reporting accidents which is an example of looking the other way of the human rights on those people. our investment in the health, safety, and welfare of people is important, and we cannot allow china to buy away the friendship from the united states. thank you, mr. chairman. >> thank you, senator isakson. senator lugar, did you want to make an opening statement? >> no. >> senator durbin? >> thank you for this hearing, and i want to thank the witnesses who were here, and many of them have worked with
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