Consolation. Bless as well the men and women who serve our nation this day in our armed forces. May they and their families be assured of our deep gratitude for their service. O god, you have blessed every person with the full measure of your grace and given us the bounty of your spirit, lead us this day in the ways of peace. We pray for peace in our hearts , that we will be freed from selfishness or envy, that we will replace any enmity with goodwill and hatred with charity so we might lead lives of generosity and kindness. May there be peace in our world among all nations. May each nation sense its shared destiny and in a new spirit of hope and trust, one with another. Help us to be men and women without excuse and may all that we do this day be for your greater honor and glory, amen. The speaker pro tempore the chair has examined the journal of the last days proceedings and announces to the house his approval thereof. Pursuant to clause 1 of rule 1 the journal stands approved. The pledge of allegiance will be led by the gentleman from california, mr. Tonko. Mr. Tonko i pledge allegiance to the flag of the United States of america and to the republic for which it stands, e nation, under god, indivisible, with liberty and justice for all. The speaker pro tempore the chair will entertain requests for oneminute speeches. For what purpose does the gentlelady from North Carolina seek recognition . Ms. Foxx i ask unanimous consent to address the house for one minute, mr. Speaker. The speaker pro tempore without objection, so ordered. Ms. Foxx thank you, mr. Speaker. As the unfolding scandal at the v. A. Demonstrates, the administration has a standard playbook for dealing with an unfolding p. R. Disaster. The first step is to say the president learned about the situation on the news and is madder than anyone else about it. Step two is to declare an investigation under way. Step three is to implore us all to wait patiently for the always slow investigation to be completed. Step four is to declare the scandal old news. The underlying theme is that we must allow the bureaucratic machinery to sort out the problems and we must not interfere with the process. Mr. Speaker, Samuel Johnson once said that patriotism is the last refuge of a scoundrel but in our political culture today, process is the last refuge of those who seek to avoid true accountability. I yield back. The speaker pro tempore for what purpose does the gentleman from American Samoa seek recognition . Without objection. O ordered. Faleomavaega mr. Speaker, as a vietnam faleomavaega mr. Speaker, as a veet mr. Faleomavaega mr. Speaker, to vietnam veteran i rise bring my support for general shinseki. Hes reduced veterans homesness by about 24 homelessness by about 24 . Hes also called for an independent review and nationwide audit giving his word that he will do all he can to fix a system that was broken long before he took over. So let us stand together to do right by our veterans. General shinseki is right for americas veterans. Hes a tried and proven leader, the highest ranked Pacific American in the United States, told the truth about iraq when no one else would listen. He will now tell us the truth about the v. A. And once the independent review and audit is completed, hell tell us accountability and all who have done wrong against our veterans. I say this to secretary shinseki, do not resign. We are with you. Go for broke. And lets clean up this mess that has been there way before you took over. I yield back. The speaker pro tempore the gentlemans time has expired. For what purpose does the gentleman from South Carolina seek recognition . Mr. Wilson i ask unanimous consent to address the house for one minute, revise and extend my remarks. The speaker pro tempore without objection, so ordered. Mr. Wilson mr. Speaker, a Firm Education prepares americas children for lifelong success. This year the office of the second Congressional District hosted the first annual Elementary School challenge where we encouraged third graders to write in and share their favorite part of South Carolina history. This from ul for those who participated. Students from over 100 third grade classrooms shared lessons of history which are very meaningful for today. Zackary, a student at round top Elementary School, won this years competition. He shared his story of the best friend of charleston, americas first regularly scheduled Passenger Service train which was built in 1831 between charleston and hamburg which is now near North Augusta on the Savannah River in akin county. His parents, wayne and susan, should be proud of zackarys accomplishments and the Bright Future he has ahead of him. I am confident that round top Elementary School principal and teacher will continue to prepare our young people for success. In conclusion, god bless our troops and we will never forget september 11 and the global war on terrorism. The speaker pro tempore the gentlemans time has expired. For what purpose does the gentleman from california seek recognition . Without objection, so ordered. Tonktonk foreign [speaking anguage] mr. Takano [speaking oreign language] mr. Takano [speaking foreign anguage] the speaker pro tempore the gentleman from california will provide a translation for the record. For what purpose does the gentleman from texas seek recognition . Mr. Poe i ask unanimous consent to speak for one minute, to revise and extend my remarks. The speaker pro tempore without objection, so ordered. Mr. Poe mr. Speaker, the United States is very quick to criticize other nations for human rights abuses. Especially when those abuses are caused by Foreign Government employees. By while the u. S. Is crusading against human rights abuses in other parts of the world, it should not ignore human rights abuses here in america. Allegations are coming to light that Government Employees of the office of Refugee Resettlement are abusing sexually immigrant minors that are detained in federal custody. According to houston chronicle, over 100 incidents have been reported where u. S. Federal workers had improper sexual contact with foreign minors. That includes everything from inappropriate touching to forced sex with children. Some minors were threatened with deportation if they ever told the authorities. The reports also show that not one worker has been held accountable or prosecuted for such criminal conduct. If crimes have been committed these kls need to be locked up in the jail house. The United States cannot be the world leader for human rights when employees of our own government sexually abuse foreign minor children on american soil. And thats just the way it is. The speaker pro tempore the gentlemans time has expired. For what purpose does the gentleman from california seek recognition . Without objection, so ordered. Thank you, mr. Speaker. I am proud to join with thousands of people in my district and millions across the country to celebrate asianPacific American heritage month this may. This month we celebrate the imnumerable contributions of Asian Americans and Pacific Islanders, to communities in every corner of our nation. Californias 47th district is a testament to the richness and diversity with which asianPacific Americans have added to the fabric of our country. Mr. Lowenthal from Little Saigon in the korean business district, to Cambodia Town and the filipino and Pacific Islander communities in long beach. This year also marks the 35th anniversary of the end of the cambodian genocide and the 39th anniversary of the fall of saigon. It reminds us of the courage and the bravery with which millions of asianPacific Americans made the journey to the United States to build a better life for themselves and for their children. Thank you and i yield back. The speaker pro tempore the gentlemans time has expired. For what purpose does the gentleman from indiana seek recognition . Without objection, so ordered. Thank you, mr. Speaker. I rise this memorial day week in honor of the brave men and women who have selflessly given their lives for this nation and the millions of veterans to whom our country owes a debt of gratitude. Sadly, mr. Speaker, we have recently learned that the department of Veterans Affairs has fallen disgrayfully below the standard our fighting men and women deserve. Mr. Stutzman misconduct, lengthy patient wait times and secret lists are all unacceptable for those who have served our country. Its time the Administration Takes action. On behalf of those who have fought for our freedom. I look forward to supporting the important v. A. Accountability legislation on the floor today and working with chairman jeff miller and my colleagues in the house to ensure that our veterans receive the care and the respect they undoubtedly earned. Thank you and i yield back. The speaker pro tempore the gentleman yields back the balance of his time. Pursuant to clause 4 of rule 1, the following enrolled bills were signed by the speaker pro tempore wolf on tuesday, may 27, 2014. He clerk h. R. 724, h. R. 1036, r. 1228, h. R. 1451, h. R. 3060,. R. 2939, h. R. R. 4032, h. R. 4488. The speaker pro tempore pursuant to clause 12a of rule 1, the chair declares the house in recess until approximately so does that mean the debate on the floor wont see any gun amendments . Not at all. This although the majority of debate time when the House Appropriations committee took this up earlier this month and because of the recent shootings at Ucsanta Barbara out in california, we really are expecting to see many of the same gun amendments that we saw in committee in addition to perhaps some new ones. That nifty c. Q. Breaks down the obama f. Y. 2015 request for the agency and a link to that chart. The chart showing that the department, the National Oceanic and atmospheric administration, getting a fair chunk of the money. Also with the Patent Office and as well for the National Institutes of standards and technology. Is this years request you said it was less than last years but is it about the same in terms of percentages . Its about the same although one interesting thing that house appropriators are looking to do, they want to cut about 24 from the Climate Research side of the National Oceanic and atmospheric administration. They want to move a lot of that funding to weather satellites. An interesting shift there. Democrats are definitely opposing some of that. They want to see some money continue to go to Climate Research. And well see what happens with that on the floor. In addition to the gun issue which may come up in amendment, theres also word that the issue of medical marijuana and Law Enforcement may come up. Yeah. Theres a very interesting combination of lawmakers from california that are looking to back this on the floor. Weve got states rights, very conservative republicans as well as some of your most liberal members who are looking to include a provision that would bar the Justice Department from prosecuting any medical marijuana users who have a prescription for it in states where its legal. And this is a measure or provision thats been brought up in previous years and it was actually turned down in committee. But given the increasing poll numbers for the legalization of marijuana nationwide, the number of supporters this will get on the house floor will be something well be watching. One of the groups opposing the bill has been the Heritage Foundation in a piece they accomplished online. Theyre writing about some of the spending in the bill. They write that congress should also require nasa to expand its contracting with private firms to provide space transportation and rockets. They point out that the proposed budget has funds established for food items for a trip to mars, despite the fact that nasa has no current plan for a martian expedition. When groups like Heritage Foundation put together a piece like this, does it have an impact on members . Absolutely. Especially some of your more conservative republicans. So well be watching to see how many of them break with groups like heritage and support the measure. This is the last appropriations bill, the last c. G. S. Appropriations bill for subCommittee Chairman frank wolf of virginia. What will his legacy be in terms of this bill and of the overall appropriations process . Youre going to see a lot of provisions in there that are his legacy issues. Particularly related to gang violence, which is something that has been an issue in his Northern Virginia district. He also cares deeply about science funding and hes proposing the highest level of funding for the National Science foundation. I believe in the nations history. So hes going to definitely step out and defend those science programs from some of the more conservative republicans who would rather see that money spent elsewhere. Looking at the debate ahead. The u. S. House tomorrow you can follow her on twitter. Thanks for the update. Thank you. [captioning performed by national captioning institute] [captions Copyright National cable satellite corp. 2014] and the house coming in later to debate that bill. Also later today, house Veterans Affairs committee will hold a hearing on the phoenix Veterans Affairs health care system. Three witnesses from the v. A. Are scheduled to testify. This as the v. A. s Inspector General interim report says the phoenix v. A. Hospital waited on average 115 days for their first medical appointment. Well hear more about that this evening at cr730 during that hearing. That 7 30 during that hearing. That will be on cspan2. Meanwhile the chairman of that committee, jeff miller, sent out a statement earlier today calling for v. A. Secretary Eric Shinseki to resign. His statement saying in part, today the Inspector General confirmed beyond a shadow of a doubt what was becoming more obvious by the day. Wait times, schemes and data manipulation are systemic throughout v. A. And are putting veterans at risk. Again that hearing this evening t 7 30 on cspan2. The problem now is future peace. That is your job in germany. Your conduct and attitude had onguard in germany, you could lay the groundwork for a peace that could last forever or just the opposite. You could lay the groundwork for a new war to come. And just as american soldiers had to do this job 26 years ago, so other american soldiers, your sons, might have to do it again. Another 20 odd years from now. Germany today appears to be beaten. Itler out. Swastikas gone. Nazi propaganda off the air. Concentration camps empty. Youll see ruins, youll see flowers, youll see some mighty pretty scenery. Dont let it fool you. You are in enemy country. Be alert. Suspicious of everyone. Take no chances. Youre up against something more than tourist scenery. You are up against german history. It isnt good. In the first of a fivepart look at hollywood directers who made u. S. Government films during world war ii. Real america features Academy Award winning director frank capra. Well also include commentary from author and journalist mark harris, sunday at 4 00 p. M. Eastern. Part of American History tv, this weekend on cspan3. As the 2008 financial crisis began to unfold, Federal Reserve chairman ben bernanke told a room full of congressional leaders, quote, unless you act in a matter of days, the Financial System of this country and a good part of the world will mement down. Thats one story told by former Senate Banking Committee Chairman chris dodd during a discussion on the doddfrank law. Hes joined by the bills other namesake, former House Financial Services Committee Chair barney frank. The office of the comptroller of the currency and Boston University host the event. Its just over an hour. We dont really have to deal with them anymore. And i also want to thank barney frank for getting with the spirit of the program. He knew that we were going to have an Abraham Lincoln lookalike contest so he grew a beard and were delightful for that. Amy friend is take no offense, but i think if you read robert kysers book an act of congress, she and jim siegel are as much responsible for that statute as are messrs. Dodd and frank. Amy is Senior Deputy comptroller of the currency and chief counsel. And this is her second session at the o. C. C. You could say that shes o. C. C. Through and through with a brief stop off at the promentoly grew group. If you read that book youll have great admiration for somebody who acted in congress in the good old days when people acted as though there was a tomorrow, when they had to deal with the same people the next day. And sadly those days are gone. Hopefully just temporarily. So im not going to occupy any more of her time other than to say welcome, amy, welcome, senator, and welcome, barney. Good to have you here and we appreciate your taking the time to be with us. Thanks very much. Thank you. So, its really my pleasure and privilege to be joined by senator chris dodd and congressman barney frank, former members of the u. S. House and senate. And of course theyre well known to this audience for many reasons but particularly as the architects of the sweeping financial reform bill that bears their name, the doddfrank wall street reform and Consumer Protection act or doddfrank. So today we have doddfrank on doddfrank which is a real treat i think for me in particular, having worked so closely with both senator dodd and congressman frank in enacting this legislation which is truly historic. Chris dodd is a former senator from the neighboring state of connecticut and he was the chairman of the Senate Committee on banking, housing and urban affairs, all through the crisis. The year leading up to the crisis and then through the passage of doddfrank. And barney frank is the former congressman from this great state of massachusetts and the chairman former chairman of the House Financial Services committee so you know them well for doddfrank. But also as chairman of the Banking Committees and House Financial Services committee. They were responsible for tarp, for the credit card act, which overhauled the credit card industry, the regulation of the credit card industry. They also worked on and passed the housing and economic recovery act which created the federal Housing Finance agency, actually provided the authority to put fannie and freddie into conservatorship and the government backstop. But beyond that they are also incredibly accomplished legislators for many other reasons. Congressman frank worked tirelessly on affordable housing, budget issues, on equal treatment, antidiscrimination issues and senator dodd was the author of the family and medical leave act, also worked on a number of childrens issues and latin america. So its really exciting for us to have you here today. And having worked with you on all of these Banking Committee issues i felt i had a front ree to history and row to history and get to see your formidable legislative skills in action. So we are six years to the month when bear stearns collapsed and bear stearns collapsed. In september of 2008 was when the crisis really came on full, full force, and we are close to four years from the passage of doddfrank. So im wondering if you can talk about whether the confidence in the u. S. Financial system that we saw evaporate really quickly during the crisis, whether its been restored. Well, first of all, thank you for inviting us to come here today. Its a pleasure to be with amy and jim and the introductions appropriate. We were blessed to have remarkable people on our staffs that worked a tremendous job in putting this all together. The names dodd and frank are on the bill but the reality is an awful lot of people, including our colleagues, republicans and democrats, contributed significantly to the legislation. But staff does deserve a great deal of attention and dont often get it. So, amy, thank you. A pleasure to be with all of you. I think its coming back. I still think we have a long way to go. Were not there yet. It was shattered obviously by the events beginning a lot earlier than 2008. With bear stearns, going back in fact. The republican senator from kentucky, along with jack reid of rhode island, held hearings in 2005 and 2006 on the Residential Mortgage crisis. So while people Pay Attention to what happened with bear stearns, what happened in september of 2008, the problems began a lot earlier and the difficulty was getting people to Pay Attention to the problems that were emerging. The shattering of confidence, ill just tell you one quick antidote that relates to the subject matter. I recall having a conversation a number of years actually before these events with manager of a sovereign wealth fund. I was curious as to why he parked as much of his nations wealth in the United States. Ill never forget his answers because i think they were reflective in terms of where we are. He said, for two reasons. One, he said, no other country in the world is as good at making money as u. S. Financial institutions are. But he said, my second reason for doing it is more important than the first. He said, ive never lost a moments sleep worrying about whether or not the integrity of the Financial Services structure was sound and safe. I lost money, i made bad bets along the way, dont misunderstand me, but i never lost sleep over the confidence ive had in the structures, the financial architecture of the country and that was shattered. No question in my mind. Its coming back in my view. But we are still not there yet. In my mind i agree with what chris said. Id make a distinction. I think there is more confidence in fact as reflected by peoples behavior than there is in their opinion. That is, as i look at the financial structure, i dont see people sending their money elsewhere or putting it in the mattress or any kind of thing. But theres still this perception. And part of it, there are got reasons for this there are two reasons for this. The main one i think is selffulfilling prophecy on a particular issue and thats on the question of the two big too big to fail banks. I am convinced, and chris said its one of the bipartisan things chris worked on with dick shelby, although shelby later disowned his child and paraded it, but we did i believe the maximum that could you do legally to make clear that if a Large Financial Institution encouraged debts it cannot incurs debts it cannot pay, its out of business and no taxpayer money will be used. In fact, the most interesting critique i hear these days and tim geithner repeats it in his tough s that we were too on the antibailout, that we did not leave successors enough flexibility to bail out the system in general. But what weve got is people who argue that somehow our system for putting these banks out of business wont work and they then point to the fact that they still enjoy, some people argue, a kind of edge in financing but to the extent that they do it, its because the people keep denying that its there. Ive looked at the reasons they give, why too big to fail wont work. One is the stupidest point of argument ive ever heard and ive heard a lot. It is that if a Large Financial Institution got into trouble, despite a law that says it would be a felony for the secretary of the treasury to use public funds, there would be overwhelming public pressure on the administration in power to bail out that institution and keep it alive with public funds. I have only one question to people who say that. In what country . Anybody who lives through what we had in the United States, how they would argue that is just inexplicable. But i think as they said, just to central it up, peoples behavior shows that confidence i think is coming back. If you poll and ask them, they still say, oh, were worried, etc. , etc. But i think the behavior is more important than the attitude. Just to make a point on that too big to fail. It was the very First Amendment on the floor of the United States senate as we began consideration of this legislation. And dick shelby offered the amendment, i was the cosponsor of it, the shelbydodd amendment. On too big to fail, it carried 925 on the floor of the United States senate. Its the first of 60 amendments in that debate over two weeks, two or three weeks. But clearly that bipartisan effort on that language that is designed, today what we did is against the law. Not only is it against the law, i would defy anyone to stand up and offer on the floor of the congress or the United States senate a proposal to give 700 billion to Financial Institutions. We specifically two things. First of all, the secretary of the treasury, its now against the law for him to use public funds. He can advance funds, he has to, hes mandated to recover them from institutions. Secondly, the Statutory Authority that ben bernanke used section 133 of the Federal Reserve no longer rifts in remotely comparable form. So the no longer exists in emotely comparable form. Do you think that congress would support something right now . I think, a, they would itch peach and convict of itch peachment any official who impeachment any official had who would do that. We had a hard enough time getting tarp passed. We had a republican president , a democratic congress, that was before bipartisanship ended and what ended bipartisanship was the selection of barack obama and the republican response. Bushs side. We worked hard on something that was essential and i think its very clear, history will record that the tarp program was the most highly successful, wildly unpopular thing the federal government ever did. And the notion that you could do it again is bizarre. So we have definitely had a about ation this morning too big to fail. One of the things that has been discussed is breaking up the big banks, restoring glass steagall. There were amendments to that nature during doddfrank and now there are bills in congress. Im wondering if you can talk about why didnt they gain traction then and should we be discussing that . Breaking up the banks is an entirely reasonable idea. A, to what size . If we are going to break the institution so no one institution is big enough to threaten us, then presumably they all have to be no bigger than Lehman Brothers was in september of 2008. Because that failure was one of the precipitating causes. Secondly, how are we going to do it . Whos going to buy them . I dont understand what the mechanism is. Theres the volcker rule and other things in there that do move them in that direction. As to glass steagall, as i look to the causes of this, i think 100 securitization was a big part of the problem. Nothing in glass steagall would have prevented countrywide from making those lousy loans and securitizing them 100 . Nothing in glass steagall would have stopped a. I. G. From screwing up as they did with derivatives because i dont think they ever heard of drisktives unless they were very foresighted. People want to break out the banks and they may be too big to manage, we didnt deal with that. Even on glass steagall, im it was not the repeal was not in any way the cause of the crisis. And i agree with what barneys just said as well. My view is that, one, the issue isnt so much the size of an institution but rather the risk that institutions take on. And to that extent, whether its capital, liquidity, other measures determine whether or not the institution is in good shape. Really making an assumption because of its size, it poses substantial risk, i dont think holds water in my view. So im inclined to want to first of all first of all the United States and our banks and neighboring countries of ours that arent as large as the u. S. Banks per se, but we need to focus the attention on risk instead of size. But secondly, if youre that interested in doing it, we provided the authority to break up institutions in the bill. In fact they have the power and authority to break up institutions. So we provided for it under certain circumstances. Obviously it ought to be very rarely engaged in my view but nontheless the power does exist in the legislation that we adopted. I would repeat again, there are people here who can tell me, how small is not too big . What is the biggest we can let them go . I assume its below lehman. To what maximum size if we were going to take that position should we allow a Financial Institution to be . Glass steagall, i agree with barney on this i voted in support. The issue in that bill had to do with the Community Reinvestment act, was a huge debate during that bill. It was the general adoption of the notion that somehow we can create fire walls in the 21st century and we dont need to have the kind of separation hat glass steagall called for. Doddfrank deliberately pushes risky activities out of the Banking System like the volcker rule. We have seen some assets move out of the Banking System because of higher capital which is directly aligned with doddfrank and compelled. Does the act sufficiently address the buildup, the potential buildup of risk outside of the traditional Banking System such as through fsoc and is it the right way to go in the long haul . I believe so. With fsoc and the Consumer Protection bureau, particularly fsoc, is the idea that every time something emerges, new product line emerges or some new institution emerges, you cannot go back and pass legislation every year or two. We are talking about a global marketplace. We care deeply about this. Someone is going to lead on these issues around the world and if we didnt, someone else would. I want to play by someone elses rules. The United States once the lead on this matter. We are getting some compatibility. It is a harmonization of rulemaking in the European Market particularly as well as here. The idea of pursuing that pproach may tremendous sense to me as we went forward. So, again, my hope would be that what we have done was provide the ability to look over the horizon where you can watch product lines and respond to it in a timely fashion. Is amazing it took legislation to create it. It should have been occurring naturally. We had regulators meeting up periodically with each other and talking about what was occurring. It did become the crisis of september 2008. Consumer protection to me was stunning in a way of the objections of having a way of consumer products. In this day and age, the fact that was such hostile opposition to the creation of a place where consumers of Financial Products could not find some grievance was stunning to me. We did actually deal specifically with to important risks two important risks. We are promarket. I found myself more promarket that some of the people we were regulating. We affirmed my view. Enator Warren Magnusson once said it is competition. I talked to two insurance ompany executives. It required the companies to make derivative trading more transparent. He other was says you cannot do that. We have a deal. We have to publish our price. Somebody can come in and undersell us. His older colleagues said that is not our position. We did only one thing did we ban and that was giving Residential Mortgages to people who could not pay them back. I believe the mortgage thing the other great risky area we did it was substantive rules requiring derivative trading to be moved from almost all oneonone into and more marketplace situation. One of the heroes of the implementation was gary gensler and did a very good job of it. I think in those two areas we did some substantive things. We dont regulate institution so much as activity. Even though the activity is moved out of the bank, they are still regulated. You cant be sure of all this. Particularly there is one thing im worried about. One part of the implementation that worries me. I think what one of the most important things we did was to say there has to be Risk Retention when you securitize. That was the transformative thing. The lender to borrow discipline was done away with. To get the bill through, one of the things i would hate to hear was when chris called me and said somebody has decided that he or she was the 60th senator. There were a lot of people who became the 60th senator. We had to weaken so much of the requirement for Risk Retention. We adopted a section that had superstate mortgages to adopt Risk Retention. The regulators at one point were proposing to have the exception eat up the rule. Hat troubled me. If we could get some Risk Retention in there, think we could build systemic rotection. That is very much a live debate among the regulators. It is in the middle of a pending rulemaking with some on the other side expressing concern that that may impact credit availability. That is one of the things i want to talk about. Transitions are hard. The transition from having hundreds of thousands of people aggravate you to private life is a good transition. That was not hard. [laughter] we used to have a lot of mortgages made in america before there was such a thing as securitization. You have people convinced that if they have to do Risk Retention they wont give mortgages to those people. I dont believe that. I know it is uncomfortable now but i believe if we have a 5 Risk Retention there would be a demand for mortgages. There will be a supply of mortgage holders and you would get over it. I have a comment now that i have changed jobs. Ive been asked a lot about that transition. I left one group of bad actors for another group of bad actors. [laughter] transitioning now. During the formulation of doddfrank, there was some discussion particularly in the senate about regulatory consolidation. Senator, you had a proposal that would have taken the Supervisory Authority from the fed and the fdic and consolidated it along with the occ into one federal supervisor. Congressman, i think that was something you decided not to pursue. Can you both talk about why you went there or why you didnt and what were the impediments . We did abolish the ivision. The o. T. S. I had two proposals. They were the regulators of a. I. G. I had an alternative proposal. One was to abolish them. F we could not do that, change name the of the office of figure leaf dispensation. We had the votes to do the first. The next big thing chris talked about. Taking it out of the fed. Alan greenspan always argued if you did have some Regulatory Authority over the fed, you would not be able to have monetary policy. At any rate, that was not the major problem. The major problem came and the representative of one of the objecting groups is here. This state chartered banks and the small banks came to us and they said we do not want to be regulated by the o. C. C. Because you will be throwing us in the same arena as the big National Banks. One of the things i should say the big National Banks had very little political pull. Nobody liked them. They had representatives only in a few cities. The political problems with the deal with game from the credit unions, from the insurance gents and the Community Banks. The Community Banks way outweighed to the big banks and the Community Banks said we will oppose any bill that puts us into the same regulators. That was the reason. That is what stop that and we could not have overcome that. It was something i thought about before but it was just no way that you can pass a bill over the strong objection of the Community Banks. They refused and were ready to lobby hard against getting put in the o. C. C. Because they didnt want to be in with the big banks. In 2009, i proposed a draft, a discussion draft of a bill that did basically consolidate and provided a single potential regulator. In the midst of all of this, the political considerations. You have to get enough votes to pass anything and the reaction to the single regulator was overwhelming for a number of reasons. The regulator didnt want to be out of the job so they were opposed to the idea. There was no constituency interest in the matter at all. I say respectfully of our colleagues, they didnt know what they were talking about so the idea of consolidation we got rid of it. We actually grew the regulators. I had a magic wand one consolidation we wouldve done was in no rational world would you have a security change commission and the Commodity Commission sharing urisdiction. Tim geithner, was reading his book and he reminded me. He asked me if it was possible to consolidate the two and i said yes but not in the United States. The notion that they will be thrown in with the city slickers, it never made sense. Other countries have done it. Brazil consolidated. T was under a general. [laughter] it means something. That was the supervisory function. We tried to find where you can actually point to minutes in fed conversations where the supervisory function had never been a part of consideration on monetary policy. With all due respect, the supervisory function, i can never find anyplace i can exercise so why would you keep in a place that doesnt use it . The idea of moving that off to get better supervisory activity seemed to be a natural inclination. The bottom line i think i got three votes for the idea of all of these ideas at the time. The whole idea is at some point someone needs to look at the fed system in a way. You go back 100 years to Woodrow Wilson in the creation of the Federal Reserve system. Regional banks, you have two in issouri. The whole idea of going back nd reexamining that role. There was no support for these things which is an important point in all this. Is something barney and i have dealt with everyday. Ive been asked a million times since the summer of 2010 why did we end up with 3 . I gathered the smartest minds in the world to sit down and talk about proprietary trading, with a long discussion, in the end i had a bunch of people that wanted zero and 10 but i could get 60 votes for three. You have to keep in mind if you dont get the 60th vote in the senate, everything dies. These numbers are not magical. They are based on the reality is that if you dont end up with a con of support you need. We had to do things we were not overly enthusiastic about. You have to be mindful all the ime. If youre not able to keep the majority of the house and a super majority in the senate, this is nothing more than a nice discussion. The best example for me was the bill giving the Federal Reserve system, which it hates having, the authority to cap the amount of credit card issuers can harge retailers. I didnt like that. You voted against it. It got 60 some odd votes in favor of it in the senate. You mentioned the two Federal Reserves in missouri. The president of one of them had been a fairly vigorous dissenter. On much of fed policy. When you are mending things, how about a law that says they cannot have two Federal Reserve presidencies . Like senators. When i ran for senate, jim buckley decided to running connecticut having served in the senate for new york. The constitution is rather clear on that point that each state gets two senators, not each senator gets two states. [laughter] i am going to take you back a bit before i do, have to say on behalf of the o. C. C. That we regulate over 1,500 Community Banks. Barney was terrific on this. The Community Banks were tremendously constructive and helpful in putting this bill together. Had it not been for cam working with us, this bill would not have been passed. We can have a dual Banking System, you have dual regulators to reflect the state federal. Even at the federal level. I want to take you back in time to september 18, 2008. It was the day you both were called to the speakers ffice. Ben bernanke came in to tell you about what was happening with the Financial System. I was wondering if you describe what happened in that room and what your reaction was. It was one of those days that become seared in your memory. That evening at about 7 30 when 14 of us gathered in that room. The leadership of both the house and senate. The respective chairs and ranking members of the committees and jurisdiction. There was quite a conversation. The moment i remember most clearly was ben bernanke saying the following. I can tell you word for word hat he said. Ben bernanke is not the type to engage in hyperbole. He does not raise his voice. Is a lowkey individual. He turned to all of us midway through the meeting and said the following unless you act, speaking to the speaker and john boehner as well as harry reid and Mitch Mcconnell unless you act in a matter of days, the Financial System of this country and a good part of the world will melt down. That is the chairman of the Federal Reserve of the United States saying to the leadership of the congress about the significance of the moment and the importance the act. The oxygen left the room. In may of been just a few seconds. I left that room with a sense of solidarity and working together. I was fortunate to have a counterpart on drafting the legislation. We were able to put together a ill. Hank paulson sent me a 2. 5 page bill that said give me 700 billion and no court or regulator could intervene. The country erupted when that became public information. We were operating in that environment. We were trying to come up with wrapping around ideas such as the votes. A greater sense of security about what we were about to do. We went through it. 40 days before the National Election, we passed in the senate 7524. Ted kennedy was the only issing vote. I will never forget that night because i went around to democrats and republicans 40 days later. I said to them, i have the votes to carry this and this is the kind of vote that could end your career. If youd like to take pass on this, ill never repeat your name or tell anyone you did so. Gordon smith, republican senator from oregon, i went to him and said you were up in 40 days. If you need to take a pass on this his colleague was going to vote against the bill of the ime. He said he has the face the constituent tomorrow morning. He is not sure how to explain the vote. He said the constituent is the mirror. I have to believe this is the right thing to do for the country. He cast a vote for it and 40 days later he lost his seat in he senate. The point is that was a tough vote. I couldnt agree with barney more. I will go to my grave believing we did the right thing for the country at that moment. Had we not done so, we will be looking at a very different place today. I know historians will talk about it endlessly. We have recouped the resources but stabilizing the Financial Institutions at that moment was absolutely essential. A Democratic House and senate ith a republican president we were able 40 days away from a National Election to get beyond partisanship and do the right thing for the country. [applause] we were not as successful in getting beyond partisanship in the house. The republicans voted against their president. Absolute power corrupts. I have always thought that needed an amendment. In some cases it is impotence that corrupts. The republicans in the minority felt free to vote against it. The first time they voted against the overwhelmingly and the second time after the crash they voted against it still, ot by as much. As to that night in 2008, about every other weekend after the markets close on a friday, i would get a call from paulson. We have this problem and that problem. They had credibility in particular because they were not telling us of this until Lehman Brothers went bankrupt. I think they try to save lehman. I do believe they were honestly surprised by the depths of the eaction. We all said, this can be as bad as the great depression. It couldve been worse in this meltdown. During the great depression, you still had granularity in the world. Something can be happening here, it wont be affected there. By 2008 we were on one financial grid and the whole thing was grinding to a halt. It didnt occur to us to say o. One other thing about the initiative and a time like that is inevitably with the exception. We had two choices. Either say no or say yes with modifications. There was no option of that. In fact, you gave enough authority that they could change their approach because you remember in tarp they were going to purchase assets and you gave them the authority to provide these equity injections and thats what they did. They have paid back. At some point, you determined that legislation beyond the tarp was needed to reform the system. Do you think that providing the emergency relief to the system under the tarp created the urgency to pass reform legislation or did it undercut it . I dont think it was either. We were aware of the need before that. I first became educated that we needed to do something more systemic with the bear stearns failure because what paulson and bernanke both said to us was, we were not happy with having to do this with bear stearns but we had no option. Paulson began arguing all during that time until lehman. Other people gave him a different opinion but the lawyers of the treasury and the fed were convinced that in the case of a Large Financial Institution faltering, they had two options. Either they can let it go bankrupt with no special rules, just flatout bankruptcy or intervening and propping it up. What paulson argued was, i need an alternative, i need a way we can put it out of business but not bankruptcy. We also, as chris noted this is one of the great historical misunderstandings we had both been working on the question of trying to curtail the irresponsible lending. I know theres his argument that the liberal democrats were trying to beginning in 1994, liberal democrats were trying to slow down loans. The more conservative free market people who are trying to blame us for this crisis never had any problem with subprime loans, both in theory or in practice, until the crash shut down. Well, i became chairman of the Banking Committee. He senate is not a meritocracy. You hope your friends get defeated. Move up in the food chain. So i sat on the Senate Banking committee for 30 years and when Paul Sarbanes decided to retire january of 2007, i became the chairman of the committee. Ive been on the committee for a long time and heard hearings and the first was one in january of 2007 on subprime lending. He came to testify about china. He didnt want to talk about the subprime issue i said, fine, come talk about china. I knew my colleagues wouldnt spend a lot of time on china and obviously got into the subject matter of the mortgage, growing problems with mortgages. Held 90 hearings, i did, in 2007, on this subject matter over the next 12 months. I remember the first some of the first witnesses were people calculating what they thought could result in in terms of foreclosures in the country. I remember the first witness talked about having a million foreclosures. Was highly ridiculed the next ay or two in engaging in hyper bollicbolic political talk. Four million to five million foreclosures occurred over the coming years. Despite all that activity it was just a refusal to acknowledge the growing problem in the Residential Mortgage market. Of course on st. Patricks day, you have bexar sterns. It really wasnt a systemic issue. A ludicrous proposition when you think back on it obviously. When people talk about, wasnt it wonderful in september of 2008 everyone sort of rallied and saved the country . Where were they . There were a lot of information out there in 2006, 2007, about what was occurring and yet people unwilling to acknowledge this and offer ideas. I believe, again, had there earlier on rvention we would have had a crisis. Never the magnitude we saw. Never the 12 trillion in lost wealth. Never the 26 million jobs that were lost. Never the 4 1 2 million to five million homes that were foreclosed. None of the finest institutions that occurred. Insurance companies and the like. It was a disaster. In my view it didnt ever have to come to that had people been willing to acknowledge the growing problem that was clearly the evidence of. When you have brokers that were unregulated being paid instantaneously for selling momes at an Adjustable Rate Mortgage when the banks knew those a. R. M. They couldnt afford it and they were selling that mortgage in eight to 10 weeks in a securitization market. There was no liability whatsoever. So all of that was occurring and unwilling to step up, in my view, but it could have been truncated earlier on had people acknowledged the magnitude of the problem that was growing in front of them early on. Let me build on that because when fannie mae and freddie mac which was being laid at our doorstep, the republicans controlled congress from 1995 through 2006 during which period nothing happened. No legislation passed. In 2006, hank paulson says this in his memoir, he told the president he wanted to try again. A lot of the president s people said, no its, its too much trouble. He got the right to do it. He talked to us and fannie mae and freddie mac were reformed and he was given the authority he wanted in the first two years of democratic control. I mean, thats what happened is you have this general deregulatory view. In 2006, as chris and i were about to become chairs after the 2006 election, i was asked to go to a chamber of commerce conference at which they were discussing the Serious Problems facing the American Financial community overregulation. People go back and look at it. They were complaining there would never again be as many initial Public Offerings in america because we were too stringent. Sarbanesoxley, etc. Chuck schumer and Mike Bloomberg commissioned a report for mckenzie saying we had to loosen it. Harvard law school. So as we took office, there was a staunch defense on the part of people who said they were the market defenders of an unrestricted subprime regime and a claim we had to cut down further on deregulation. So we really didnt start from zero. We started below. So there clearly came a time you agreed you had to move forward . Amy, people like hank paulson and others, people had been talking about reforming the financial architect of the country for a long time. Again, its a classic case. Congress never acts unless theres some sort of crisis around it. Just sitting back and recognizing they probably need to sit back and do something about this in absence of some crisis its awfully difficult to do. You could never today you couldnt pass doddfrank today. You couldnt pass it in 2006 or 2007 or 2008. The time you could do it is when we did it. To come through tarp and what was out there and to walk away as if you somehow dealt with the issues in front of us would have been a travesty in my view. In my view you had to make an effort that others had talked about it for a long, long time. How do you reform this in a way that makes sense . That stabilizes, strengthens the Financial Institutions, provide the kind of protections, transparency needed to have some ability to look ahead, not try to sort of to micromanage every detail but to provide institutional framework in which future institutions can respond to emerging product lines or institutions that people cant even imagine today might exist . And so my feeling was had we not moved when we did, we were just functioning as if the world still existed as it did in the fall of 2008, we would be in a mess again. Part of it is the dynamic of politics and the voters who sometimes are part of the problem. Tarp, as i said, was very successful and very unpopular, but the success didnt factor into peoples opinion. Heres the problem. In doing the tarp, we did something unpopular that staved off disaster. Heres the disadvantage politicses are at visavis economists. Economists can write articles and do analyses in which they invoke the counterfactual. They can talk about why this was a good thing because they can talk about the counterfactual, what would have happened. Politicses are not allowed to use the counterfactual. Any elected official goes gst up there and says, look, i understand youre is up set but i saved it from getting a lot worse. So frustrating. I actually had a slogan which jim segals brother printed up wayed from using in 2010. It said things would have sucked worse without me. That was my political [laughter] but the problem was we got all of the negative political vibes from the tarp and very little public. Thats why it was still very tough to get the bill through. So you mentioned obviously the crisis providing the impetus for getting something done. To what extent was it the crisis and a congress and administration of the same policy that did it or the personalities and your relationships and the relationships with others that allowed you to move forward . Well, all those factors contributed to it to some degree. I mentioned something at the outset of your questions, amy, and barney and i think very strongly about this. Again, our names are there and we teasing i remember it was about 4 00 in the morning when a congressman from pennsylvania made the motion to call this bill at the completion of the conference to call it the frankdodd bill. And barney said, no, theyll think its one person. You cant do that. And i say, i know what youre thinking. O one remembers hallys halllees name. Barney can speak to that. In the senate, this bill never could have been done an awful lot in this bill but for my republican colleagues. As amy knows and barney knows, i didnt tell even my staff i was going to do this. I invited the republican and democratic members to meet in the Foreign Relations Committee Room on the first floor of the capitol. The old historic room where they meet after a vote one night about 7 00 at night and i announced before ever telling anyone. I took a democrat and republican on the committee and assigned them responsibility to be in charge of drafting and dealing with various subject matters. So i asked mark warner and bob corker to deal with too big to fail. I asked jack reed and judd gregg to deal with the derivative sector. Every democrat and every republican on the committee was asked to Work Together on that particular issue. It was more than it was just too large of questions for the committee to deal with it. So an awful lot of this bill, while their names are on not on it and while they necessarily not voted for it, but in a sense it was disserving to have people with provisions they wrote or in the bill walk away from the product in the end in a sense. So that was terribly disappointing to me. Because had there been more participation on some of these issues, the bill would look a little different today than it did you say dus. I think we wrote a good bill. I regret we didnt have a strong provision on ratings. I would have loved to have us deal, once again, with fannie and freddie, with Housing Finance. Banker law needs to be dealt with at some point. A lot could have been dealt with in a some sense. Im glad that corker and warner and gregg contributed. When i asked for their support in the legislation they couldnt do so because of two issues and this is there are two issues that basically drove people away. The creation of a Consumer Protection bureau and say on pay, Corporate Governance issues. Those two. Er volcker volk rule. And the derivative protection. Those are the two factors that caused this bill to not have more bipartisan support. I think that question sets the stage for me. If you said, was it necessary to have a democratic president in the house and senate . No, but it would have been a different bill. It would have been possible if we had a republican president and Democratic House and a democratic senate. It would sadly not have been possible if we had a democratic president and a Republican House and senate. Im very explicit. We showed much more willingness to cooperate with a republican president than they showed every bill, even barack obama. It would have been weakened. You mentioned the housing bill. That was a major piece of legislation. It reorganized fannie and freddie and gave the treasury power to do it. It created the first efforts to try to deal with foreclosure. It dealt with a very large chunk of things, giving large authority to the section of the treasury. That happened with the Bush Administration and the Democratic House and senate. Yes, it would have been passed if it was a Republican House and senate but it would have been a less liberal bill, and they sort of did us a favor. Now the other thing in the house, the republicans just signed off and but heres the other important point i want to make about public opinion. We sent the bill over to the senate and the norm on things like that has been with a democratic majority in the house and you need an absolute majority and chris needed 60 we could be tougher and then hes got to make some compromises to get to the 60. In fact, part of the problem is the public wasnt paying much attention when we were dealing with it. Health care was dominating the media. So i actually lost a couple votes on the floor on derivatives. The bill that went out of the house was weaker in the derivatives section than i wanted. It was moderate democrats and republicans voted no. And the sumpings was, when they got to the senate they could weaken it. Bob kaiser talked about in his book about expectations on that. And chris went to work and i think what was transformative was the passage of the Health Care Bill in april. When the Health Care Bill passed then we became the center of attention and at that point public opinion, which had been sort of sitting out our fight, came in to some extent on our side. I think that was very helpful. Let me mention something i mentioned in other settings. I was incredibly fortunate to have barney frank in the house. Im about to get him in some trouble with his former colleagues. House members have a healthy disregard for the senate and for obvious reasons over the years. But you need to have a house chair that understands the role of the senate and how it functions and had we not had barney as the chair of the house committee, then dealing with the senate might have been so much more difficult. I couldnt have had a better ally when were trying to work out the compromises in the conference than to have barney who understood and appreciated how difficult dealing with the senate was and the 60 votes to get done. Im not saying i mentioned this in other forums around the country but in your own home state here i want people to realize you played an incredibly Important Role because you understood that dynamic which unfortunately is not well understood. Said senators representatives dont like the senate. Understanding is not what rily liking but i really meant you can count the difference between 59 and 60 and thats where we got the 3 on the volcker rule. Thats where we got to an exception on the question of Risk Retention and where we got the one thing where i think the bill went further than it should have originally and we rolled it down some and that was the lincoln peament which said the banks couldnt do any kind of derivatives even if it was for themselves. It was almost implicit in your question. If you got an activity that is necessary, why is it a good idea to move it from the more regulated to the less regulated forum . Those are all those are all things that happened because we needed a and the other thing, too, about the senate that makes chris crazy. The senate is a very democratic place. Everyone gets a chance to be number 60. Enabled by the fact we had a couple democrats who voted no. Like wes fine gold who said it wasnt perfect and wasnt going to vote for it. Every other day every senator decided to be number 60. And it kept changing the number of democrats and republicans. And senator kennedy died. And then senator byrd. Byrd. Just it was constantly a moving farget. Let me mention Something Else as well to this audience since plane in the room are in the business today. Barney and i left the congress, but as i look over my and i have great reference for the institution i served reverence for the institution i served in and its going through a terrible time. Its difficult from those that come from the perspective of the Financial Services sector. When you have people like a john chafee and a howard baker and so forth, bob dole, are gone. The new crowd, believe me, in a sense look at these issues in a very different way. You have what i would call sort of a its a populism that is worrysome to me in terms of how they look at the Financial Services sector. One of the classic examples we had in a sense that barney went through when you had rand paul who offered the language on the Federal Reserve to require an audit for the Federal Reserve. Of the open market committees on interest rates. Not on the Financial Transactions but on the voting process by which the open Market Company sets the rates. There was a proposal to offer the exact same amendment on the floor of the sflat. Had that amendment been adopted, i dont think barney and i could have gone forward with the bill. In good conscience, i couldnt do away with the independence of the Federal Reserve. Whatever concerns i had about the system, destroying the independence of the Federal Reserve could have easily brought the whole bill down. As a result, but they came very close. The amendment was about to be offered by Bernie Sanders of vermont, joined with the most conservative member of the senate, joining together on that proposal. To his credit, Bernie Sanders, i went to talk to a great length and he went and modified that substantially. As a result, the amendment was not offered. As a result, we were able to drop the house provision in conference. Had that exact language been adopted, could you not get rid of language thats adopted equally in both bills. That would have brought the whole bill down. But thats an indication of what were looking at today in terms of how congress and members of Congress Look at the Financial Services sector. So when people talk about repealing all of this and doing away with it and going back to the fall of 2008 as if somehow you can create out of this system a reflection of what used to be in terms of members how they look at the institutions. I would caution you to be careful what you wish for. And im somewhat partisan. There was this problem with the increasing conservatisms of the republican party. You just saw conservative republicans sabotage the effort to improve the i. M. F. The ukraine bill passed only after now, every other country in the world agreed to rearrange the voting instruct unit of the i. M. F. In ways it would do us no damage but the i. M. F. In fact when i was still there the republicans tried to get an amendment through it was after chris left that actually passed in the senate to tell the i. M. F. We would withdraw if they participated in the rescue of europe. That they had to stay out of dealing with the european crisis. And you also had this attack on the fed. It has some leftwing objection and some very conservative objection. I would hope that the Business Community would work with some of their republican allies that they support to tell them please stop frying to destroy the i. M. F. And the Federal Reserve. I have to tell you, i thought it was a pain in the ass to be defending the Federal Reserve against i would have Business People call me up and say, gout to protect the Federal Reserve and they go out and give money to the people that was trying to destroy it so that wasnt nice. So we have time for one question. So no pressure on that one questioner, but if someone wants to get up and ask the one. Really, not one brave soul wants to get up and ask a question. Its not as much fun to pick on former members of congress. Over there, amy. Ok. Repeat it. We can repeat the question. Or the parts of it we like. [laughter] if you dont hear it you can ignore it. So i think everybody here respects your efforts in trying to make the Financial Sector uch safer and we all i think theres a lot of people who think that the Financial System might actually be at greater risk today than it was before the legislation was passed because not just as a concentration of the big banks and still the ongoing size of the shadow Banking Sector and their significant leverage, but because the government is less able to bail out the has less flexibility, now you say we have under doddfrank much better foresight, these committees will meet to look at all these indicators but we do know, i think bexar sterns was selling at a good price a week before it collapsed, lehman had bonds triple a rated before it collapsed. The ability to foresee the anic, its very difficult. So have you in some ways i know you made things safer. Have you made things riskier in some ways . Have you done enough for to make the thing more less opaque, the system, and have less leverage . My question. The suggestion that we as a result of the bill the system is less safe is nonsensical. You do make two criticisms which i heard but rarely from the same person. [laughter] one is one is that the institution theres too much bank concentration, which often more often comes from the left. The other is we havent left enough bailout authority. As to the first, the bill did nothing to advance concentration. What happened, as some of the bankers pointed out, one fact it will increase concentration was something we have resolved. Bank of america got bigger when it took over Merrill Lynch at the federal governments request. Jpmorgan chase got big whern they took over bear sterns. We provided a mechanism to there would no longer be the Federal Reserve and the treasury telling the biggest banks become bigger by taking on some weakened activity. As to their leverage, and amy pointed this out, that really is more basel 3 than us. But the leverage is more substantially reduced than much higher capital standards. As to the no bailout authority, there is an ability in the Federal Reserve to set up a facility that can lend to institutions, not just a one off to one institution but can set criteria so it can advance funds to institutions which are solvent but illliquid. Beyond that, the notion that we would have a situation where the taxpayers would be paying off the debts of these Large Financial Institutions with no penalty to them know thats not politically possible. Let me say and it goes a bit beyond your question and something we havent talked about here. Barney and i didnt write something thats biblical. We did our best under the circumstances. Ive never seen a piece of legislation that was more than a page or two long that didnt have didnt maybe overstate something, didnt understate something. Time will require us to go back and review in time. Obviously the regulatory process, the implementation is taking an awful long time to go forward. And i know there are costs associated, but i mention some of the costs rarely discussed when you talk about what happened to the environment that causes much damage to the country and to the world. But my hope is people get forward and you have intelligent people stepping up and offering intelligent ideas and making this bert. Thats the process of the reviews and so forth that require. Youre not going to shock me to find out that some changes need to be made in this legislation because of unintended consequences. Neither of us have a problem with that. But you dont not pass legislation because youre fearful that some changes are required down the road in what youre trying to achieve. The job of the o. C. C. And s. E. C. And other organizations, which are doing an incredible job under the circumstances, in my view, given the pressures theyre under, here to come out and make sure were doing here the banking regulation is 25 pages long in the 1930s, gave all the power to the regulators and never said anything about the definitions. We tried to provide some parameters Going Forward and leaving flexibility for those that know a lot more about this and have the benefit of a lot more comment to make sure theyre making the price decisions in a regulatory framework. Im confident that can happen still. Slowly, unfortunately, but it will happen, in my view. One last point, ok. Yes, as chris said, people who are in the business, people who have experience can play a very constructive part in improving it. But not as long as they are still wishing that it would drop dead. The price of participation in improving something is a willingness to accept its reality and work with it. And thats been one of the problems that weve encountered so far. So please join me in and ing senator dodd representative frank. [applause] i would like to add my thanks. Wherever you come out on doddfrank, the passion that they bring to this debate is phenomenal. Hope he all caught senator dodds biblical references. That was a subliminal reference for you to go see noah this weekend. [captioning performed by national captioning institute] [captions Copyright National cable satellite corp. 2014] the house begins legislative work, 10 bills dealing with human rights issues and also the department of Veterans Affairs and also today begin work on the spending bill for 2015 for the departments of commerce and justice. Well have live coverage of the house when they return here at 4 00 p. M. Eastern on cspan. On Veterans Affairs tonight at 7 30 eastern on cspan2, house Veterans Affairs committee is holding a hearing. Theyll look at the phoenix v. A. System. This is reports today an internal a temporary report or shortterm report from the Inspector General office at v. A. Says that the phoenix v. A. Hospital waited on average 115 days for the first medical appointment. The chairman of that committee, jeff miller of florida, calling on the v. A. Secretary, Eric Shinseki, to resign. News conference this hour, so re senators flake and mccaine. That is 7 30 tonight on cspan2. The problem now is future peace. That is your job in germany. By your conduct and attitude while on guard inside germany, you can lay the groundwork of a peace that could last forever or just the opposite. You could lay the groundwork for a new war to come and just as american soldiers had to do this job 26 years ago, so other american soldiers, your sons, might have to do it again another 20odd years from now. Germany today appears to be eaten. Hitler, out. Gone. Cans swatikas nazi propaganda off the air. Concentration camps empty. Youll see ruins. Youll see flowers. Youll see some mighty pretty scenery. Dont let it fool you. You are in enemy country. Be alert, suspicious of everyone. Take no chances. You are up against something more than tourist scenery. You are up against german history. It isnt good. In the first of a fivepart look at hollywood directors who made u. S. Government films during world war ii, reel america features Academy Award winning director frank capra and offer commentary from journalist mark harris. Sunday 4 00 p. M. Eastern part of American History tv this weekend on cspan3. Earlier today, mike rogers, the chairman of the house intelligence committee, and the ranking democrat, marylands Dutch Ruppersberger participated in a discussion on International Cybersecurity efforts. They were joined by the president of estonia and this portion is about half an hour. Lets jump right into the questions and lets start with our congressman, congressman rogers, congressman ruppersberger. If you had to rack and stack the threat environment we see today we heard a little bit about what estonia is doing to defend not only their country from a National Security perspective but also their citizens from misuse and breaches of the like. If you would rack and stack the environment today, where would you put the various actors . Because i mean, we tend to speak of these issues loosely. Computer network exploit is not the same as Computer Network attack. They may have intent to steal secrets may not necessarily to attack. If you look at the threat environment, id love to hear from the two of you where you see that and then you guys have both passed Bipartisan Legislation on the house side. I think its fair to say you cant move forward without information sharing. Why arent we moving forward on that front . So congressman rogers, let me start with you. And congressman ruppersberger. If you think about the last 30 days of general alexander as the National Security agency director, they stopped 41 million separate attacks on. Mil ment of defense or or. Gov. 41 million. You think of the level of that threat and they are getting very sophisticated and thats from a low level attack to a high level attack. If you say what is the threat matrix out there today . Today it looks than it did 24 months ago, even than it did 12 months ago, even than it did six months ago. Its constantly changing. You have high quality actors starting to come in. If you look at the target attack, this was a nonnation organized crime who used nationwide tactics to get in, develop a rake tool that was able within a fraction of a fraction of a fraction of a second steal credit card information. They did it by not attacking the company, they did it by finding down the logistics chain of that company and swam upstream until they got where they needed to go. If you think just there attack, which probably wouldnt have happened 18 months, 19 months, 20 months ago, you see this organized crime group with the capabilities and getting better. We just hosted the head of europe and over 85 of their investigations are russian speaking. Its getting difficult, by the way, to determine between russian organized crime and russian intelligence services. I think thats where the president was going to go. Its kind of hard to figure out [laughter] who was behind that clictedy cadillac. Vladimir putin, thats a different place between organized crime groups and the blend of the vote. So you have clearly the chinese have gone absolutely unavetted in their ability to steal intellectual property and repurpose it. Thats a longterm economic problem for the United States of america. The russians are also in that game, not to the same extent. Now you have other nation states who see this that are investigating in this investing in this capability, including terrorist groups who are now advertising to find the right people with the right qualifications to help them do cyberattacks. You do have a nation state who is interested and eager for a disruptive terrorist style attack, the nation state of iran, who has been probing our Financial Institutions with pretty low level, we think, style attacks but we know they have better capability laying on the shelf. This next week if you ask me what the threat matrix is it will change. Next month it will change. Next year it will change. What hasnt changed is we have meyered this problem long enough. Admired this problem long enough. Next year well admire it as well. Dutch and i have worked together to find that bipartisan solution that at least gives the private sector the opportunity to defend themselves. Congressman ruppersberger. You ask the question about the threat. Number one, other than weapons of mass destruction, i think the cyberattacks generally is probably the second biggest threat to our world. And we if you look 10 years from now, we will be the pioneers and we, not in the United States, but in the whole world, have to come together and set some type of standard on how were going to protect ourselves. Every citizen in the world is really on the front line of what could happen with respect to the cyberattacks. As positive the internet is. Mike talked about the issue with stealing. Its been estimated by our cybercommand that we lose, the United States, over 300 billion because of theft, mostly from china. And just recently in the last two weeks, we indicted five people who work for the Chinese Military in china for stealing. We all have we all countries have espionage. Thats what weve done since world war i to protect us, but we dont steal from other people, from other countries. We are not stealing to make ourselves richer and thats what some of these countries are doing. Now, you talk about the legislation that mike and i worked with. I do want to acknowledge mike. Were getting a divorce. Hes leaving and were negotiating all our Child Support and custody. Mikes a very unique individual. We made a commitment, each one of us, but a buss our committee before, we took leadership. Did not work well together. That the stakes were so high. Not only cyber, but terrorism, space i shall are use, all these issues that we had to Work Together. As a result of his leadership, we have tried to do the best we could to deal with this issue of cyberthreat. The first thing we did was this bill called sisfa. We realized we had to have a way, we had to have a law that would allow information to be sthared with the private sector. 1947 law basically says theres a law that the government cannot share information with business and other groups unless theres a clearance issue there. So an example, if you see Hurricane Sandy coming up the east coast and youre a meteorologist and you cant warn anybody, thats how we feel until our bill spaffed. Now, unfortunately, the public generally has some mistrust of what our intelligence agencies are doing. And unfortunately, also, its misplaced because thats what our job is on the intelligence committees, thats what justice does, thats what we have a lot of checks and balances to protect our freedom and our liberties and our constitutional rights. So what we did, we educated our republican and democratic members and we put this bill that would allow for information sharing so that when the United States, basically n. S. A. , but other intelligence agencies see these attacks coming in, we could take that information and share it with the private sector. What most people dont realize, 80 of the network in the United States is controlled by the private sector. So there has to be this partnership. So after working and educating people and about security, we passed a bill, very, very strong vote and it went to the senate. And chairman rogers and i worked with senator feinstein and senator chambliss to come together to make sure we get proper legislation and this is the bill. Well, the senate was getting ready to move and all of a sudden we had the snowden leak and everything came to a stop. Unfortunately that was a very dangerous to our country what occurred. A lot of this information. But more importantly is that it became viral as if the United States and n. S. A. Was listening to people illegally. There was not one violation of the law. So mike and i had to come together to get the confidence of the public back, to let them know we follow the law, we have more checks and balances in this country as far as listening to people than any country in the world. I think were number one with us tonia but well argue that with estonia, but well argue that later. We have the privacy groups to the table. We norbleted and we had overwhelming vote of over 300 members last week which is unusual in this congress. Its almost a miracle but we did it because the left and right came together, understanding the threat but understanding we need we care very much about privacy. Now we passed this bill, hopefully the senate will pick it up and well get back to the cispa issue. Target is pack taking a big hit. They might lose 1 billion. Their c. E. O. Was released. These threats are there. There are two different threats. There is the threat of stealing information which china is doing a lot but its a destructive threat that are really concerning. Your infrastructure, your electric grids. These destructive threats. Its been said by the media that iran attacked saudi arabia, iranco, the Largest Oil Company in saudi arabia, they shut down 5,000 of their computers. These are things that can happen every day if we dont set standards. Thank you, congressman. I want to pull on one of the points you made and i know you have a pressing hill meeting but i want to get your point and go to the president before we talk about the some of the geopolitical issues in russia. I think you highlighted an important nuance and difference. Do we engage in espionage . Of course. Every country does. Its been called the second oldest profession in the world. To protect our National Security. The difference is when you have nation states using National Assets and resources to benefit companies. Thats a big nuance. Thats a big difference. First, id like goat your thoughts on whether you think the indictments and looking at economic instruments are the right way to go . Actually, i want to build into the russia question. We are also indicting were also sanctioning individuals there. Are we looking at the day of micro sanctions, micro indictments . And is the International Community ready to have that conversation, the difference between National Security collection and economic and industrial espionage . Id first like to get the members thoughts on the indictments, right way to go . Where we said enough is enough, as the attorney general said, and we need it to move since we havent seen any changes in behavior thus far . I agree with the indictments. I agree with certain visa restrictions and start are targeting those individuals. This cant be done in isolation. It has to be part of a broader program. My problem is they launched the indictments and the very folks that are going to suffer from this are people who dont have a healthy defense from the United States. Which is 85 of the networks are networks already under siege by these people. I will tell you it has gone unabated. Yes, it was the right idea. Great for the press release. Great for the glitz and the glamour but there was nothing followed and thats where i think the biggest mistake was made here. This should have been part of a coordinated effort to slowly start tightening the noose on chinese economic espionage operations which by the way is growing. If you read the indictment, its something weve known for years, its getting worse in the sense that people were working for the government for the first eight hours of the day or nine hours of the day and then they looked down the list. The government is giving them a list saying, we want you to go fill in the blank General Motors manufacturing techniques for x or something other and down the list is the hydraulic lifts for the things that lift up your car for oil change places. Thats way down the list in their grand scheme of things. These people would go down, pick the company that was way off the list and call up that company in china, listen, youre way down the list for 30,000, i have my nights and my weekends for free, ill steal it for you. Now you have a problem of eight hours a day. Now you have a much larger problem because they doubled their output of thievery and repurpg it. Right idea, wrong execution. If we can only get that second piece of this which includes cispa, by the way, that allows the private sector to protect themselves. I fear for whats going to happen in the next few months. I am going to pull on that active defense and look at the role of the private sector defending themselves. But congressman ruppersberger. The gree for China Private information, the gift that keeps giving. We have to let china know, who is a very powerful country, one of the most powerful countries in the world, that they got to grow up and be big boys and they have to stop stealing. I think theres a per exception in perception in china that we do that and other countries do. We dont. Thats a message to china, you got to stop. Now you have to get the world coal rigs together, just like we do with sanctions, like were doing in russia, say we have to set standards and theres going to be sanctions if you continue to do this. Its just too much. Its been estimated, again, i said it before, 3 billion a year has been stolen from the United States. That equates to about 500,000 jobs. This something that has to stop. But its just not going to happen overnight. This is the beginning salvo. It cant just be the United States. Its got to be the world coming together to set these standards. President ilves, are we ready to have that nuance conversation on an International Stage . Well first, your thoughts on the indictments. The moral equivalence is made. Well, its the first step. Estoniy is the home of skipe. Microsoft bought it but skype. Microsoft bought it but r d happened. We have the same problem as well. The name for this used to be mercantilism. States working for their economies and stealing and doing whatever it takes. I think one of the things, the direction were going to have to go in, and its going to be very tough, is actually we built up in the world democracies a clear firewall between the private sector and public sector. For very good reason. Those are the countries that are uncorrupt. But were going to have to do something, develop much better cooperation with the private sector. In terms of security clearances, what were dong the government side. The government side trusting the private sector. That also requires a certain degree of fwroge up that im not sure every country is willing to do. But its clear its not enough companies are being swamped, basically. And they need the help of their governments, at least in the world democratic countries. And the argument is why invest in that r d if they can be stolen . Exactly. World market share. What can we do to induce changes, in behavior, that will have a real effect . I think there are Public Private partnerships. Is there anything in estonia . We looked on the cyberdefense league, is that a model you think . Just so people know, basically since no government, even the u. S. Government, cannot compete with getting the best and the brightest in cyber, because theyre being paid so much or making so much, so we switched it around and said, well offer you the chance to actually work in a the equivalent of National Guard cyberunit. So people who actually make so much money, never pay them that, offer their free time, thursday nights they get together with other geeks and they what they get is get checked up. They get a nato security clearance because thats the prestige part they get out of it. They feel like theyre doing something for their country. They feel good being in nato and they work out very sophisticated stuff because, i mean, we could never buy. As a government you couldnt buy either. Maryland National Guard is actually following the same model right now. I think thats one way of doing it. To get the people who are good at it into the into thinking about these issues and working on these issues and you see Knowledge Transfer of people. When youre working on cybersecurity at an almost military level they go back to their companies and say, wow, we ought to do this too. I think thats the beginning, but we have a long way to go. I was just going to jump in on this point. The comment about Public Private partnerships. I worked at Thompson Reuters two years as head of Global Regulatory Affairs and the reason i mentioned it because as a company there was great interest in bonding with other companies and looking at the cyber question. In fact, up in new york they sponsored at least three in which they brought in governmental representatives and also like minded businesses and to literally like minded businesses and to literally look at what is our role in this, meaning from a business standpoint, and also, what do we expect as a government . I think youre going to see much, much more of that. That was, mind you, several years ago and im sure that interests continues. So theres a very strong desire to think about ways in which what can the private sector do in terms of its preparedness and also what can the government do in reaching out to the private sector. Awesome. Im going to pull in congressman ruppersberger. Please give a quick thanks. [applause] thank you. But i want to pull in governor poe lenty. Polenti. Hes heading up the roundtable which includes all the banking institutions. Weve heard already about some of government sponsored attacks iranco but saudia also american institutions. First of all, thank you to all the panelists for your great leadership and public service, particularly on these issues. Mr. President , its an honor to see you again and thank you for being here. Chairman rogers, were going to miss you and i think the countrys National Security posture will miss you and your leadership. Thank you for all youve done. I want to talk about the Senate Version of the cispa bill. I think the congressman indicated its hung up postsnowden because of postsnowden concerns about personal information. Although the bill, as you know, chairman, is about threat information sharing. And given the magnitude and pace and increased sophistication of these attacks, time is of the essence. I know youve done a great work of reeducating the public of snowdenlike concerns and threat concerns. But another 12 or 24 or 36 mopts down the road seems potentially too light for a senate cispa bill and i hope you can give us more hope of what they can do short of that elongated time frame. Thank you for that, governor. Were in constant conversation th feinstein, saxby, chambliss, the chair of the Senate Banking committee and the ranking member. I think we made tremendous progress in the last few months. I hate to say it, if we dont have something moving by august, i think it gets lost in the haze. It will be a very long time before we actually get a bill that can pass, that actually functions. Lots of bills out there, most of them wont really have an impact. It will make people feel good. It wont impact the problem. The cispa bill, bipartisan bill, does impact the problem with a very tight touch. No mandates. Its not the government getting in your business. So we think we made some progress. We have narrowed it down to just a few short issues. One of them is the portal. How does the information get exchanged between the business and the government sector . How does that happen . If it doesnt happen in real time, if this is a phone call or a disk transfer, too late. It doesnt work. So were very close on getting an agreement on what that portal looks like. How does that information get shared in real time . Who gets the clearances . You want to catch as far upstream as you can. Im cautiously optimistic that we can find some agreement within the next 30 days to try to get something moving. I will promise you it will be the fastest Conference Committee known to man, because ill be the chairman of it, to try to get some movement and agreement on what the final piece of package looks like. And i agree with you. In is a simple thing that is so incredibly important for the defense of our intellectual property as we move forward. The banks have done it right. All the Financial Institutions were kind of the canaries in the coal mines on all of this. And you have systems in place. You cant have Financial Institutions fighting nation states. Ooh, and by the way terrorist groups and oh, by the way organized crime groups all at the same time. It is unfair fight. We wouldnt ask the banks to engage in missile defense. Why would we ask them to try to stop what is an absolute tidal wave of daily efforts to bring down a Financial Institution . So i agree with you. Were hopefully if we can get the public to understand this threat, target was a great example, i think people finally said, oh, i guess this is serious, 80 million credit cards. The problem is somebody is else paid for it. Most people say, it doesnt matter it didnt cost me anything. Well, thats really the wrong answer it will cost you something eventually. We were hoping that that would be the catalyst for people to understand just how serious this is. Havent gotten there yes. Close to an agreement. 30 days. Encourage you to pick up the phone, work your senator. Tell them we need an agreement of some sort to get this in the Conference Committee. Thank you, governor. D. O. J. Finding does help a little bit in terms of indemnification from liability of information sharing, does it not . I dont think were going far enough on what we can do. This liability if you dont have Liability Protection it wont work unless youre going to have a heavily government mandated system of reporting and sharing, which i just dont think will work. Not in the age where technologys going to change in six and eight and 12 months from now. So you have to have liability for protection. If theyre doing it within the spirit of the law in real time, sharing malicious code, which is what were talking about. Not about sharing when talking about personal data. Were talking about malicious code president ilves, ill ask one question and then well go to the geopolitical issues. We have a different approach in my country and that is the government should step in very rarely but should step in when you have market failure. The two cases of market failure that make most sense i would say, for people to understand what it means, we do not mean given the possibility of having genuine secure transactions that a bank cannot write off a stolen credit card or hacked account as a business loss because they are not just doing the right things. A Power Company that goes down because of a cyberattack should not get insurance because its an act of god, because it is not an act of god. It is an act of a man or men or women. And so this is the place where the government steps in to guarantee the security. That requires a fash more sophisticated far more sophisticated system of identity, as i said, but there has to be a willingness to adopt that system. We have that the government will guarantee you a secure ommunications at a level well, given the experience, we know a higher level of encryption hey couldnt break lava bed at r. S. A. 512. We are at rsa28 which is good. It requires people to use this, this system of encryption and guaranteed identity. And i think ultimately thats the way countries will go because everything less than that, anything that is not offer a by nairy key binary key code can be and hacked. For the next 20, 30 years we think not. The reality is the initiative remains with the attacker here. I think thats a given. And to be able to get to the point where we can build true Resilient Systems we need to articulate what it is we want to defend against. And oh, by the way, we dont deter things. We deter actors. And at the end of the day, we need to start discussing what it means to Deter North Korea is not china, china is not iran and iran is not russia and you name the other countries. And so we got to get to the point where we can articulate a strategy to dissuede, deter and compel. I dont think were at that point yet. Ill ask one more question on cyber, and then well turn to russia. But sort of an unfair question. A lot of discussion on mr. Snowden, and i think mr. Snowden did reveal some legitimate questions domesticically that we need to have conversation about. But the reality is he also revealed a vast majority of what hes revealed is National Security secrets that have nothing to do with what the community is allegedly doing domesticically or not. Why russia . Why is he in russia . If you were to get to your list of countries that are most transparent and most open and most freedomloving, i dont think it would be at the top of the list. Fuel leeway at the bottom. Id like your thoughts and then, congressman rogers. China. Yeah. Noes bastion of internet freedom. I have no idea whats behind it all. Its more the damage has been so huge. I think its probably the worst most damaging thing thats happened since the end of the cold war. I think only the biggest wedge thats been driven in the Transatlantic Alliance has been this. He effect in europe has been disastrous. D overcoming that is as a transalanticist, its not been great. This is a magnitude we have not ever seen in the postwar era, i would even say. Here we are. You see a lot of the trust has been broken. New legislation is being proposed by all kinds of people in europe that would in fact weaken the transatlantic link. Why . Mean if you ask me why what were his motivation . I dont know. But certainly the effects have been really the u. S. House gaveling in next for legislative work. They will take up 10 bills first. Several dealing with human rights issues overseas, and also with the department of Veterans Affairs. Later they will begin work on 2015 federal spending. Debating a 51 billion commerce, justice and science spending bill for the next fiscal year. This years bill, a 38 million cut from the previous year. Live coverage now on the from the u. S. House here on cspan. He motion to suspend the rules on which a recorded vote or the yeas and nays are ordered or the vote incurs objection under clause 6 of rule 20. Record votes on postponed questions will be taken later. For what purpose does the gentlewoman from florida seek recognition . Ms. Roslehtinen mr. Speaker, i move that the house suspend the rules and pass h. R. 4587 as amended. The speaker pro tempore the clerk will report the title of the bill. The clerk h. R. 4587, a bill to impose targeted sanctions on individuals responsible for
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