tv Politics and Public Policy Today CSPAN February 18, 2016 9:16am-11:17am EST
that i hope all of you agree we have tried to encourage, since i became the director of fhfa, a philosophy of open, honest and transparent discussion and decision-making that helps demystify what fhfa, fannie mae and freddie mac do, and how those things relate to housing, finance stakeholders. the first part of my speech is easy because it looks retrospectively at some of the things we have accomplished, and how we have managed fannie mae and freddie mac, which i will call the enterprises in this speech, in conservatorship to accomplish these things. by saying that this part of the speech is easy, however, i want to be careful not to suggest that all the decisions i will
highlight were easy or non-controversial when they were being considered. but it has been my experience that, when decisions produce positive results down the road, we tend to forget how controversial or complicated these decisions might have been at the time they were made. the second part of the speech is difficult both because it looks forward, something i have shown much less inclination to do up to this point in my time as director of fhfa and because looking forward is inherently more difficult and almost always tends to tends to generate more controversy. after two full years as director of fhfa, however, i think it's timely for me to talk not only about our accomplishments, but
also about some of the challe e challenges and risk we face. some of which will surely become more difficult for us to control the longer the conservatorships continue. while my primary responsibility as conservator may be to manage the enterprises in the present as i have said on a number of occasions i believe that i have an obligation both in my role as conserbor and in my role as regulator to be frank and transparent about our challenges and risk. pi doing so i hope these remarks will ignite some dialogue that may well be difficult but i believe is also critically needed. some background is necessary to frame both parts of this speech. congress established fhfa in
2008 during the height of the financial crisis and one of the agency's first acts was to place the enterprises into conservatorship. some procedures for the stock purchase agreements, what i will call the pspas in this speech, the u.s. department of treasury has provided essential financial commitments of taxpayer funding to support the enterprise's compromised financial status. during the first four years of conserborship the enterprises drew a total of $187.5 billion from treasury but neither enterprise has made a further draw since 2012. fannie mae has approximately $118 billion of this pspa commitment remaining and freddie
mac has approximately $141 billion of its commitment remaining. since the beginning of conserborship through the end of 2015, the enterprises paid approximately $240 billion in dividends through the treasury department. under the provisions of the pspas, the enterprises' dividend payments do not offset the amount drawn from the treasury department. virtually everyone would agree that today we have a much safer and more stable housing system than when fhfa places the enterprises into conservatorship. i also think most people would attribute a significant part of these improvements for decision
made in cop serborship. guaranty fees increased 2.5 times since 2009 and our review last year concluded that overall, guaranty fee levels are now appropriate. stronger credit standards removed unsound risk layering and in a manner kipt with safety and soundness, we have increasingly focused on how to support sustainable access to credit for homeowners, one of the enterprises statutory obligations. clin constituencies and foreclosures have gone down on theette prizes legacy books of business and the number of r.e.o. properties held by the enterprises has decreased significantly. the number of hart refinances surpassed $3.3 million and the
enterprises have taken more than 3.6 million other actions to prevent foreclosures. the enterprise portfolios have decreased by over half since march 2009 and their portfolios are now more focused on supporting their core business operations. the enterprise multifamily programs have strong performances through the crisis and they continued to share risk with private investors. their multifamily purchases provide needed liquidity for the general multifamily market with an increasing focus on affo affordable rental housing. we have completed efforts to revamp and improve the representation and warranty framework and we have strengthened counter party
standards for mortgage insurers and non-bank seller servicers. we have started and significantly ramped up credit risk transfer programs at both freddie mac and fannie mae with both enterprises now regularly transferring substantial credit risk to private investors on over 90% of their typical 30-year fixed rate acquisitions. we have a target for freddie mac to start using the common securitization platform in 2016, and a target for the single security to go into effect with both enterprises using the csp to support their major securitization activities in 2018. in all of these things, we have
also placed greater attention on diversity and inclusion in the enterprises business operations consistent with legal standards and with projections that the future corps significance of homeowners, renters and the country as a whole will be more diverse. as this list highlights, fhfa's role as conserbor of fannie mae and freddie mac has been unprecedented in a scope, complexity and duration especially when you consider fannie mae and freddie mac's role in supporting over $5 trillion in mortgage loans and guarantees. this is an extraordinary role for a regulatory agency, also because we are obligated to fulfill both the role of supervisor or regulator, and the
role of conservator at the same time and pause we are now approaching eight full years of having these obligations. so let me also describe briefly how fhfa has managed these dual roles and responsibilities. like other federal financial regulators, fhfa conducts safety and soundness supervision with a tlib rat assistance from fhfa and the enterprises. members of our supervision staff, many of whom are located on site at fannie mae and freddie mac conduct examinations that focus on areas of highest risk to the enterprises. they produce reports of examination and make findings as to whether the enterprises need
to make corrective actions in particular areas. in contrast, our role as conservator involves a different kind of relationship with the enterprises. under the housing and economic recovery act of 2008, fhfa has the full authority of the enterprise's boards of directors, management and shareholders, while the enterprises are in conservatorship. this means that fha -- fhfa has ultimate authority and control to make business, policy, and risk decisions for the enterprises, and the enterprises boards know their job is to meet our expectations. however, managing these enterprises in conservatorship
requires much more of a joint effort than would occur under a normal regulatory relationship. for example, while an examiner would review board or management minutes after the meetings have taken place, members of fhfa's decision of conservatorship team attend management and board meetings as part of our conservatorship functions, and i personally attend and preside at executive sessions of enterprise board meetings. there are four key approaches that we use to manage the unique nature of these conservatorships. under these approaches, we have been able to fulfill our statutory obligations to ensure safety and soundness, to preserve and conserve enterprise assets, to ensure liquidity in the housing finance market, and
to satisfy the enterprise's public purpose missions. first, we set the overall strategic direction for the enterprises in fhfa's conservatorship's strategic plan, and an annual scorecard that outline our policy expectations. we set quarterly and year-end milestones for our scorecard objectives and we conduct regular evaluations of whether the enterprises are on track or behind in meeting our targets. our final scorecard assessments at the end of each year factor into the compensation calculations for fannie mae and freddie mac executives. second, we delegate the day-to-day operations of the companies to their boards and
senior management. with over 12,000 employees at the two enterprises, and considering the nationwide scope and technical nature of their businesses, we can't pull every lever and make every day-to-day operating decision. if we tried, i'm quick to acknowledge that their operations would grind to a halt. under conservatorship the enterprises continue to operate as business corporations, with boards of directors subject to corporate governance standards. the enterprise boards are responsible like boards of other companies for overseeing their business activities. they review budgets and set risk limits. they examine business plans and oversee senior management. when fhfa first placed the
enterprises into conservatorship, fhfa selected new chief executive officers, reestablished their boards of directors and approved new board members. fhfa has continued to approve all ceos and board members throughout conservatorship, and they are responsible for meeting our expectations and effectively running the companies. i meet several times a month with the ceos of freddie mac and fannie mae, in addition to my atendance at board meetings, i have regular conversations at, and engagement with each enterprise' board chair to help elevate issues that need to be resolved. third, we have carved out actions that are not delegated to the enterprises, that require advance approval by fhfa.
deciding which items we should delegate to the enterprises and which should require fhfa approval is a judgment call and finding the right balance is an ongoing process. their decisions are obvious choices force fhfa to make such as setting the core components of the guaranty fees charged by fannie mae and freddie mac others are closer calls. while we retain the authority to step in and make the call on any issue, even ones that we previously delegated, we found providing as much clarity as possible about roles and responsibilities serves everyone better. the fourth propping of our cop serviveship model is oversight and monitoring offette prize activities, and this is
something that happens on an ongoing basis. it's probably not an overstatement to say this takes place constantly. you could probably ask theette prizes about that and they would confirm that. in addition to atending meetings of the management committees, fhfa's staff members engage in regular dialogue with the management and operational teams at the enterprises. regularly review information submitted by theette prizes and take action where appropriate. managing the enterprise in conservatorship through this four-step approach with regular adjustments to account for changing circumstances has worked well. fhfa's conserborship decisions have helped navigate the enterprises through a financial
crisis and despite the substantial negative impact of the crisis helped prevent it from being far worse. however, an eight-year conservatorship is up precedented and managing the ongoing protracted conserborships of fannie mae and freddie mac poses a number of unique challenges and risk. this leads me to the more difficult part of these remarks. i have consistently stated that our responsibility and role at fhfa as conserbor is to manage in the present. however, as we work to appropriately manage challenges and risk in the present, we also have a responsibility to assess when these challenges and risks
may escalate to the point that they negatively impact the enterprises and broader housing finance market in the future. by giving this speech today, i am signaling my belief that some of the challenges and risk we are managing are escalating and will continue to do so the longer the enterprises remain in conservatorship. consequently, i believe i have a responsibility both as regulator and as conservator to identify and discuss this concern more openly. the most serious risk and the one that has the most potential for escalating in the future is the enterprise's like of capital.
fhfa suspended statutory capital classifications when the enterprises were placed in conservatorship, and fannie mae and freddie mac are currently unable to bill capital under the provisions of the pspas. the pspas require each enterprise to pay out comprehensive income generated from business operations as dividends to the treasury department and the amount of the funds each enterprise is allowed to retain is often referred to as the enterprise's capital buffer. this capital buffer is available to absorb potential losses which reduces the need for the enterprises to draw additional funding from the treasury department. however, based on the terms of the pspas, this capital buffer
is reducing each year, and we are now over halfway down a five-year path toward eliminating the buffer completely. starting january 1, 2018, the enterprises will have no capital buffer and no ability to weather quarterly losses such as the non-credit-related loss incurred by freddie mac in the third quarter of last year, without making a draw against the remaining treasury commitments under the pspas. there are a number of non-credit-related factors that could lead to a loss and result in a draw on those commitments. interest rate volatility, accounting treatment of derivatives which are used to hedge risk but can also produce
significant earnings volatility, reduced income from the enterprises retained portfolios, and the increasing volume of credit risk transfer transactions which transfer both the risk of future credit losses as well as current revenues away from the enterprises to the private sector. and of course, a disruption in the housing market, or a period of economic distress could also lead to credit related losses and trigger a draw. it is of course impossible to predict the exact ramifications of future draws of funds from the pspas' commitments, but let me offer a few observations. first, and most importantly,
future draws that chip away at the backing available by the treasury department under the pspas could undermine confidence in the housing finance market. the remaining funds available under the pspas provide the market with assurance that the enterprises can meet their ga guaranty obligations to investors in mortgage-backed securities, even while they are in conservatorship and don't have the ability to build capital. in effect, the treasury department's financial commitment to each enterprise under the pspas is a source of capital that supports mortgage market liquidity. however, under the terms of the pspas, these funds can only go down and cannot be replenished. future draws would reduce the
overall backing available to the enterprises and a significant reduction could cause investors to view this backing as insufficient. it's unclear where investors would draw that line, but certainly before these funds were drawn down in full. investor confidence is critical if we are to have, as we do today, a well-functioning and highly liquid housing finance market that makes it possible for families to lock in interest rates, obtain third year fixed rate mortgages, and prepay mortgage if they want to refinance or to move. if investor confidence in enterprise securities went down and liquidity declined as a
result, this could have real ramifications on the availability and cost of credit for borrowers. second, future draws could lead to a legislative response adopted in haste or without the kind of forethought that it should be given. i have been clear that conservatorship is not a desirable end state, and that congress needs to tackle the important work of housing finance reform. however, because of the intricacies of our housing finance system, and the extremely high stakes for the housing finance market and for the economy as a whole, if reform is not done right, i continue to hope that congress can engage in the work of thoughtful housing finance reform before we reach a crisis
of investor confident or a crisis of any other kind. while it's not my place to meddle in political discussions, i'm also not hearing much discussion of housing finance reform in any of the presidential campaigns. less discussed and related challenge posed by continuing conservatorship is fannie may and freddie mac's insulation from normal market forces that would otherwise inform their operations and business practices. there are differing views about the enterprise's business models leading up to the financial crisis but in conservatorship, the responsibility to create a regime of market discipline and appropriate competition falls squarely on fhfa's shoulders.
the longer the enterprises remain in conservatorship the greater and more complicated this responsibility becomes. this challenge presents itself in multiple decisions, including pricing. although the enterprises are not building capital while they are in conservatorship, fhfa expects fannie mae and freddie mac to determine their pricing as if they were holding capital and seeking an appropriate economic return on this capital. this is something that was very important to fhfa as we started to review and make adjustments to guaranty fees. we work with the enterprises to review the cost of capital as part of our assessment of the correct level of overall guaranty fees charged by the
enterprises. without such an approach, it would be challenging to decide what guaranty fee levels to approve. through our 2016 scorecard priority to timize a risk management framework, we are also working to further our ability to evaluate these kinds of enterprise business decisions. another challenge related to market discipline is the question of how the enterprises should or should not compete against each other. as i discussed earlier, we have consciously structured the conservatorships of freddie mac and fannie mae so they continue to run as growing concerns. we want them to continue to innovate, and we want them to compete on the kind of customer
service they provide to lenders and on the quality of their business practices. we believe that competition in these areas is healthy for the enterprises, good for housing, the housing finance market, and good for borrowers. however, we have also made a number of decisions that require the enterprises to adopt aligned standards in certain areas, such as an aligned counterparty as aligned counterparty requirements to avoid excessive risk being placed on taxpayers. in conservatorship we carefully determine when to allow competition and when to require alignment. requiring, of course, that all operations be executed in a safe and sound manner.
final challenge that being in protracted conserborships forces us to face is how to manage and plan for the future when there is tremendous uncertainty about what the future holds. experience demonstrates that it is difficult to manage the enterprises in the present without establishing some kind of plans for the future. hoar i'm not talking about plans for housing finance reform, but plans for everyday operations, including strategic planning, that every well-run business does, and project planning that's necessary to continue key initiatives. without looking somewhat down the road, fhfa and the enterprises would both lose their momentum and jeopardize
day-to-day success. the key dilemma when you have an uncertain future, however, is how far down the road to look, and how to retain the necessary talent to implement either short-term or long-term plans. this challenge drove my decision to authorize the increases in compensation for both enterprises ceos that proved so controversial. first, i recognize that our delegated model relies heavily on strong management teams to uphold their side of conservat r conservatorsh conservatorship. second, i decided that to be responsible, we needed to have enterprises engage in operations focused strategic planning over a three to five-year horizon. to do both of those things, we needed to ensure continuity by
retaining senior level staff and having reliable succession plans that minimize disruptions. of course, we have implemented the legislation that congress passed to reinstate the prior ceo compensation limits and it is not my intention here to debate the wisdom of the decision that congress made. having served in congress, i understand that it was an easy political decision. however, the issue of reliable succession planning is another example of the many challenges presented by a long-term conservatorship. the fact is that the enterprises run businesses that rely on a highly specialized and technically skilled workforce. retaining that workforce is essential to the enterprise's success and to fhfa's success as
conservator. with continuing uncertainty about conservatorships of indefinite duration, and what role the enterprises will play in the future of housing finance, retaining skilled employees will be an increasing challenge. we have made these ongoing conservatorships work thus far through the dedication of staff at fhfa and the staffs at bothette prizes and we of course remain committed to continuing this task. we know that the stakes are high for the housing finance market, and for the broader economy.ask. we know that the stakes are high for the housing finance market, and for the broader economy.his. we know that the stakes are high for the housing finance market, and for the broader economy. however as i indicated in my remarks today, there are substantial challenges and risk associated with the
unprecedented size, complexity, and duration of the conservatorships of fannie mae and freddie mac. after more than two years at fhfa, i can assure you that these challenges are certainly not going away, and some of them are almost certain to escalate the longer the enterprises remain in conserborship. i thank you for the opportunity to address you today, and look forward to the discussion that will follow. [ applause ] >> director watt thank you very much for a very frank, thorough discussion. i think we've all been treated to a real statement of concern by a person who has been in charge with this responsibility for our country. it is a rare treat to see, hear
such an analysis of the last two-year period and the period that preceded it, and then to lay out in clear terms language that the congress can understand, the american public can understand, the media can understand. process. to start the process, director, after two years what is the most impressive thing for you? what has made the greatest impression in terms of the overall environment of the housing market, the economy, fhf a's ro fhfa's role. what has surprised you or impressed you in this initial
two year period. >> i wouldn't say i was surprised, but i have been totally impressed by the level and quality of the staff at fhfa and the level and quality of staff at both fannie mae and freddie mac. these are some really, really committed people to work in an atmosphere where you don't know what your future is as an employee or even as an entity and what role you'll play going forward to have people and to be able to retain committed staff, leadership has been a major, major benefit to the american people, and, you know, i think
fannie mae and freddie mac's staff get a lot of second guessing and abuse but i think when the history of this period is written people will recognize that the commitment that these people have made and the people at fhfa, the staff at fhfa have made to stabilizing and solidifying the housing sector and housing finance is almost unbelievable the level of commitment that i've observed. so, it has been difficult. we operate under, under substantial constraints in that space to be able to retain employees, some of which i alluded to here. but -- and i think it's going to get more and more difficult as we go along, which is one reason
i'm kind of sounding the call for somebody to take action of some kind to clarify the situation. >> and as i listened to your speech and kind of searching for what is the action? i'm not asking for specifics of that action built are we fundamentally talking about the congress needing to step up and act on one or the other version of reform? >> well, i think some version of reform. i wouldn't characterize it as one or the other because there are multiple approaches that could be taken to this, but one of the things i found very clearly is that uncertainty gets priced in the market. and which is one of the reasons why we went out of our way to
refine and reform the representation and warranties framework. it was generating so much uncertainty that borrowers were pricing that uncertainty into the cost of borrowing funds. uncertainty has a price. so something needs to be done to tell the markets and the american people what to expect in the future and we don't control that so i stay out of trying to speculate about what that is or whether this approach or that approach or another approach might be the best approach. >> in your previous position in the congress you may have an opinion. >> i have some strong opinions over there. [ laughter ] i told the senate committee you would like to ask me about my personal opinion, i told them i don't have any personal opinions any more. i just have fhfa opinions now.
[ laughter ] i'm not free to express any of my personal opinions any more. >> in the category of the things that impressed you, could you just say a word and then we'll go the questions, could you just say a word about your views of the housing market overall leaving fhfa and just fannie mae and freddie mac, but looking -- you have a unique advantage point for how the country is doing, housing in the context of the larger economy. are we in decent enough shape we could be comfortable about the role of housing in the larger economy? >> we're in much, much, much, much, much better position than we were at the outset of the crisis. or even once we put fannie mae and freddie mac into conservatorship. we made substantial progress. we stabilized the housing finance market.
housing values have come back. not uniformly every where. there's still a number of people that are under water but that number is reducing every month. in some cases the availability of credit swung to the point where it was not available as it should have been and we tried to get lenders to adjust back. that's not as a result, i would say, of fannie mae and freddie mac's credit box, it's a result of lenders not being willing to lend the full credit box that fannie mae and freddie mac will back. but i think we're in a good position. interest rates have been low, have helped.
and they seem to be staying stable despite what the fed is talking about, raising their base rate. so, i think we're in a good position. the question is can we sustain that in a period of uncertainty without these enterprises staying in conservatorship forever? this was never intended to be a permanent solution, and i think it should never be viewed as such. >> i think it should be noted that a true public servant talks himself out of a job and that seems to be what -- [ laughter ] >> i would be happy to do that. i was asked that in confirmation process. what if we wipe you out. i said well, you know, that would be a blessed day for me, you know. if you did the right thing to wipe me out, of course.
>> let's take some questions. yes, sir. if you could identify yourself. >> in the absence of housing finance reform, we're left with between fha and the gsc's pretty much total government dominance of the residential mortgage market. you talked a little bit about business decisions by the gsc's but you didn't talk about competition between the private sect or and the government. what steps is fhfa taking in that regard >> we're taking a number of steps to try to remove uncertainty where we can but we don't have any control over -- i mean i don't have lenders in conservatorship. if we did we might take some action. but i'm not suggesting that
would be a good thing. i'm suggesting where we are now in conservatorship should end at some point. i'm not suggesting that. the primary thing we've done is try to remove uncertainty by making clear what the representations and warranties framework will be. encouraging lenders to loan throughout the fannie mae and freddie mac credit box. you know, that's all we can do because fannie mae and freddie mac don't loan, we just take loans that other people make and take them off of their books or back them or securityize them. [ inaudible ] we have done in a responsible
way and continue to do what we can do on credit risk transfers. our concern is, will there be enough private investor money out there to sustain what we're doing now, and in a downturn will that -- will that still be available? so i don't mean to minimize the value of that. i think it's very important that we have done substantial credit risk transfer transactions and we will certainly continue to do that. >> there's a question over here. yes, sir. you go ahead. this gentleman right here. >> thanks. you spoke very clearly and eloquently about the ongoing risks of the indefinite conservatorship for the basic functioning of fannie mae and
freddie mac. could you talk more specifically how those risks in the indefinite nature of conservatorship how it affects affordable rental housing, product innovation, support they provide to the secondary market but their chartered role in that area? >> well, we're now controlling to some extent that innovation in conservatorship and we're probably more aggressive in our control than they might be able to be if they were not in conservatorsh conservatorship. we are serious about the statutory mandate to serve low-income and middle income people and that's not something we made up, it's in the statute
and we're serious about that and so we try to balance all of those things as well as we can. and we will continue to do that as long as the conservatorships continue, and i'm assuming that whoever is writing the future would provide for that on an ongoing basis going forward. but we set their goals. we just issued a proposed duty to serve rule, which will in the process of collecting comments on now and we'll finalize, so we shouldn't, nobody should understate our commitment to providing support for affordable housing because it's a statutory
commitment like safety and soundness is a statutory commit pentagon. >> on that question, a follow up, do you have some personal thoughts about the general state of home ownership as we viewed it as a segue to the middle class, a way for persons who have not been homeowners amass some wealth and savings and so forth. the general state of health of that issue as you see it. >> homeown ownership as a percentage is down. a lot of people got really adversely affected by the crisis. there's a general reluctance to go back into a market that in some case its burned people substantially.
and there are some changes that are taking place in addition to that, that are head winds against home ownership. >> demographic -- >> demographic. millennials i guess -- you're younger than me. when i was coming along, somebody would stay in a house for 30 years and so -- now people are moving, much more mobility. family start creation is being delayed. you know, there are a number of head winds. we try not to -- we try not to take sides between home ownership and rental. i mean, our responsibility is in both of those areas.
but it is true that a significant portion of wealth in this country and a disproportionate part of wealth in minority communities has been in home ownership versus stocks or bonds or other kinds of things. so it is over the years been a stable for building wealth in the country at large and in specific communities. >> you see that as a worthy continuing goal for the country? >> i do. but that's not my decision to make. >> i was really asking from the context of your whole career and the work that you did before in the congress. ron has a question here and heads the center and long associated with the b pc in multiple capacities. and habitat. and the champion of rental these days. >> well, i'm glad you spoke to it.
but i want to talk a little bit more about the rental situation in this country. if you're not a homeowner, you're a renter or staying with your parents, right. the rental housing situation in this country is worse than i've ever seen it and i've been in the business for 45 years. we have more than a quarter of our renters paying more than half their income for housing. we have more than half of the renters paying 30%. renters make on average $31,000. but we're losing affordable rental product all the time. the only production program of consequence i'm aware of is low-income housing tax credit. it's not near enough. i was wondering if fhfa had from congress some responsibility to see that this situation is improving because it's deteriorating, i think, every day. >> it is deteriorating and much of it is deteriorating because of the lack of supply of rental housing, and that's generated because there's so much more
demand for it. now people having moved away from homeownership on to the rental side creates more demand and supply has not yet caught up. now last year multifamily market exploded. we have projected it and the economists have projected it will explode again this year. so building is taking place. and we have put a major emphasis on fannie mae and freddie mac being involved in the affordable space, being involved in the regular rental space only to assure liquidity in the market but aggressively involved in the affordable space and that's why we made a differential -- we put a cap on fannie mae and freddie mac's regular multifamily
housing financing backing, but we didn't cap the affordable side. so they can develop -- they can take as much on their books or securityize or finance as much as they can on the affordable side we have caps on the market because we don't want them competing with the private-sector and the private-sector has been more willing to step into that part of the market. but we have a responsibility, i think, on the affordable side, and we're trying to aggressively pursue that responsibility. >> just one point on the explosion. explosion is largely in the marketplace side. >> it is. >> half the country cannot afford that. so there's not, with the exception of low-income housing tax credit, to my knowledge there's not any new infomercial housing being created that the
bottom half of the country income wise can afford. >> that's probably somewhat of an overstatement but you're right that that is not enough which is why we put our emphasis at fannie mae and freddie mac on the affordable side because there's just not enough of that being built. we're trying to make it easier for affordable housing, rental housing to be constructed, and for what's already there to be retained as affordable as opposed to converted to fill the high end of the market. yes. >> director, thank you for honoring the bipartisan policy center by bringing these point here today. thank you for being available to answer some questions from the public. you can see there's a lot of interest in the media and in the house. yes, sir. >> i spoke too long. >> that's okay. it was full of content and full
of substance. thank you for your public service. there's an irony in the fact that we obviously need to move beyond conservatorship but you have created through your management skills a workable system and there's, you know, trust in that. so it's actually worked in some ways. but you today have issued a call to action, and it demonstrates the kind of wisdom and courage that you've shown throughout your public service and to bring this message here today is very important and we all appreciate it. please join me in thanking an outstanding public servant. [ applause ]
you can watch this event again with federal housing finance the director mel watt on our website. if you missed any of it go to c-span.org. there are several road to the white house events coming up today starting with jeb bush campaigning in columbia, south carolina. c-span will have that live starting at 11:45 eastern this morning. at 2:15 today ohio governor john kasich holds a town hall meeting
in clemson, south carolina. c-span will have that. it will be live and we'll talk to some attendees and take your calls. south carolina one of the states holding its republican presidential primary on saturday. hillary clinton is in nevada tonight at a get out the vote rally at the laborers union in las vegas. live coverage starts at 11:30 eastern. c-span's coverage of the presidential candidates continues this week with campaign events in south carolina and nevada. leading up to the south carolina gop primary and the nevada democratic caucuses on saturday february 20th. our live coverage of the results starts on saturday at 7:30 p.m. eastern with the candidates speeches and your reaction the results on c-span, c-span radio and c-span.org. for fine magazine's website out today with a story just a couple of hours ago, google ceo has given tentative support to apple in its fight against court
order that would force it to effectively hack into an iphone by creating a special version of the devices firm ware. apple ceo tim cook said wednesday that apple would fight the order because it created a chilling precedent for bypassing the security of iphones. in a series of tweets google's ceo fell short of outright agreement with apple's stance but said tim cook's letter was important and suggested the fbi's demands went beyond traditional cooperation between tech firms and law enforcement.h here's more with the reporter covering this issue.rning we talked with her this morningi on today's washington journal. >> ellen nakashima, what exactlg is the government asking apple to do? >> hi, good morning.th thanks for having me. the government went to court in california to get an order to force apple to essentially create new software for a particular iphone that was usedh
by one of the san bernardino shooters, software that would essentially override one of the features on the iphone to let the fbi have a chance to try to crack the password that was protecting the contents of the . phone, that were encrypted. so the fbi basically wants the government, the government pple basically wants apple to build custom designed software that will get around the feature on the iphone that wipes all the data off the phone after you tried ten times and failed to enter the correct pass code. >> why can't the fbi do this wc themselves and can apple do this? technic technically can apple do this? >> according to the experts, apple, in fact, can technically do this because it's a question of writing new software.ftware
and when it comes to software, you can almost -- you can sicall basically doy anything. so they would be writing and placing software that's and currently on that iphone. the question for them and the policy question is, is it a good idea?a? do they wantt to do it? and apple is making the argumenh that to force them to do this would be to force them to drastically weaken security of this phone and by extension y users of the iphone because they feel if they make this l if t concession to thehe government o this phone, they would be asked to do it for other phones, and ? where would it stop? >> why can't the fbi do it themselves? >> because this is software that apple has written. it's proprietary.ietary it might be important, but it would be more difficult for thed
fbi to do it and they might even say not likely to succeed unless, you know, it were the only -- the writer of the software themselves who write it. >> the apple ceo tim cook put out a statement saying ng the implications of the government'e demands are chilling. if the government can use the ag all writs act to make it easier to unlock your iphone it would have the power to reach into anyone's device to capture their data. is that true?if they if they unlock this one phone, does it then allow the government to and put at risk all of apple's consumers.legal >> it's a legal argument that td will be i tested in court. the government obtained the court order based on a law that dates back to the colonial era, which is called the all writs
act which has been interpreted as authority to ask to do things or order someone to do things where there's no written statute to explicitly direct them to do things. so it's kind of been a catch all statute of sorts. but it has been used previouslyo a number of times to authorize companies including apple to dos things suchuc as unlock phones, iphones. it's just that this is the first time that we know of, at least where it's been made public that the government is asking to write software, special software to override a certain feature on the iphone in order to enable the government to crack the password. >> okay. >> that's the novel point. >> finally, ellen nakashima,
does this set a precedent or would the fbi or other national security agencies have to continue on a case by case basis asking tech companies to open uo phones or other devices? >> so, there's the technical question there and a legal precedent there. on the technical side the government is saying we're just asking for help with this one phone. asking you to, to write universal software that lp willly apply to all phones and the way we're not even asking we you to unlock the phone itself, we're just asking you to help us, you know, override its feature, the functions so we cat have a fair crack at trying to break the password. the company contends that well if you're asking us to design e software for one phone, it will -- you will be asking us to design software for other phones and once you design software
it's a trivial matter to subs substitute a newti serial numbe for each phone and then you'll ask us to do this for other phones and that will weaken the overall security of the regime. and a legal precedent would depend on what happens in the courts. right now this is an issue in san bernardino and limited to that one court, but likely get appealed whichever way it goes and go up to the appeals court. if there's another ruling in lii another districtn elsewhere in the country which is at odds with this one then you could see it go up to the supreme court. so, you know, lots of significant issues here. >> ellen nakashima, national security reporter with "the washington post." thank you. >> thank you. the president's special envoy to coalition fighting the
islamic state brett mcgurk to fight isis. also the humanitarian and syrian refugee situation, efforts to counter isis messaging on social media and the world of other countries in the region to the aid conflict. mr. mcgurk appeared last week s before the house foreign affaird committee. >> this hearingil willl h come order. today we will hear from the administration's point man on at its effort combat isis. he is back before the committee again. now this is an issue that this committee has raised repeatedlyb since isis first began its agais attacks andt we begin calling fs air strikes against isis.
so it's now been two years since president obama dismissed isis i as the jv team. today the administration claims dos goal is to degrade and ultimately destroy esisis, but still doesn't have a strategy t. get that job done.ed the tide has not turned in terms of the growing influence of isis. instead these fighters on the hs back of these pickup truck, to use the president's term, have grown into a global force, a aa force capable of striking in an europe, in asia, in africa, and, yes, capable of striking here at home in the united states.ortin there are now in terms of groups supporting isis, there are 50 1 isis linked groups on the ground in 21 separate countries. and it is every where in cyber e
space. and every where in cyber space it spews that deadly message to kill.the ambassador mcgurk just back from the front lines with syrian kurds will note some encouraging developments. ramadi in iraq was retain in december and after some much oll theded loosening of the rules of engagement isis controlled oil installations in syria have beeo finally bombed. been this is good. but these gains have been too slow to come and too limited. every day that isis makes u advances, seemingly unchecked, it draws recruits, it draws recruits to plot new attacks i abroad, including the united as states. andit meanwhile the iraqi government hasn't been able to deliver as it should. the iraqi kurds long denied better arms are desperate. sunni forces key to any success do not trust baghdad as the
government has failed to includd them in their view, to include a them in then government and to n include them in the armed force a faemeaningful way. and across the region the u.s. is perceived the perception is we're only willing to back nonsun nonsunnies. now this only elm powers isis and militarily the size of the i recently announced special operations force to target isis leadership is a fraction of what past efforts have entailed. our air strikes are still s averaging only 23 a day, a fraction of what a serious air campaign looks like. a in the failed state of libya, ii wheres militants don't face a threat from the air, isis has e doubled in size. these 6,000 fighters are several
hundred miles from europe, they have their sights on libya's d' oil, a tactic that made it the world's richest terror group and despite years of warnings about libya's course, the administration's response has been poor. in afghanistan too, isis is onl spreading. buten only recently has the hey president lifted the rules of engagement that were preventing our troops from targeting this deadly group. last week u.s. air strikes finally destroyed an isis voicen of the caliphate radio station there in afghanistan. so, what took so long? isis propaganda operations are d in over drive, they are gettingm better every day.er messa yet our government's effort to counter message led by the broadcasting board of governors remains in disarray and when ite comes to syria, tragically, theh u.s. responsete has been down
rightt shameful. the slaughter goes on. train and equip failed. in december the u.s. joined russia to pass a u.n. security council resolution that required humanitarian aid and the end of civilian bombing as part of its plan for peace talks.an but rather than stand firm and put pressure on russia to abide byk this resolution, secretary kerry pushed the opposition to the negotiating table even as ns the russian and assad regimes intensified their bombings.r and the result is predictable failure. as syria hasars imploded over a years, rather than tackle the ss problem the obama administration has sat on its hands paralyzed by a series of what ifs. today assad and russian forces have aleppo under siege.u.s. they are relentlessly bombing
u.s. backed sunni opposition is forces that is critical to the fight against isis. just yesterday lieutenant general stewart head of the defense intelligence agency warned that isis will attempt attacks on the u.s. homeland, ie his words, in 2016. if we are to truly defeat isis,c and we must, the half measures and the indecisiveness must stop. i yield to the ranking member from new york for any comments he may have.u v >> thank you very much, mr. airs chairman, teen our witness, pe welcome to the foreign affairs committee, special envoy mcgurke brett, i've been impressed for many years by your record of service to our country. i want to thank you for it. you've nochd another remarkablee
achievement working to negotiate the release of five american prisoners who were wronglyal he by iran and i join the families of these men and with all u a americans in thanking you for your efforts. today we're glad to hear from you about the fight against isih and the dynamic threat the group poses. the way the organization is adapting to challenges and growing. the united states is with has spearhead a coalition of 66 unte partners with the goal of destroying isis.finan different countries play different roles cutting off isis from its finances, stopping the flow of foreign fighters, providing humanitarian support,u countering isis propaganda, joining in air strikes, buildine capacity of fighters on the ground, this shared burden i prevents the united states from being drawn in a long war. be must defeat isis but cannot and should not dot it alone. we between 10,000 coalition air strikes and relentless press of local ground forces we seen som
progress.at fr isis has lost a quarter of the populated territory itth once hd in iraq and syria and yet the reality across the region remains grim. syria has continued to flee the assad regime in droves.ime. assad has been given another nte lifeline by russia's bombardmenn of civilian lalg areas attacks that continue to kill women andb children. on to these deplorable actions to use for n recruitment and propaganda. mi iraq has also had to rely on shi'ite militants loyal -- shia milltions loyal to iran.s as a result iraq remains divide along sectarian lines as iran gains greater influence in iraqs this allowed isis to thrive in , the first tplace.erm si if we don't address the political void and sectarian me tensions there will be no long term stability. same themes are playing out in l libya andik yemen. terrorists love a vacuum.
in the absence of real stability rule of law and effective government, isis will fill the void. focusing in on long running tensions in this country will gn a long way in denying isis safe-haven. i hope we can have a good hr discussion on how the united states should respond to the threat. how cananho wew stem the growth isis.s.s how doom we stay one step aheads them?fheart sometimes, unfortunately, ited seems as if we're only half ith heartedly going after isis and half heartedly helping the freey syrian army and others on the ground. as you know, for many years three or four years i have been calling on aiding the free syria army and i believe that when we didn't aid them they withered oi the vine and isis moved into the void. ro we will be part of a robust campaign, not a tentativu one, not one that seems like we're dragging ourselves in, bu
a robust campaign to destroy an isis and get ride of assad.ld i under that we cannot do it alone nor should we and we need ourth arab partners and our mide east partners and other partners on the ground, the kurds and thk others to help. but i think we have to lead andw i think it's important that we ou that. so i look forward to hearing wie from ourss witness on these f questions and o thothers.ayed eg i'm glad that congress is the staying engaged on this issue i various ways. another step we can take is to push for a robust foreign affairs budget. the president sent his budget request to congress the eet th on this abopepe we committee will make neelded investments to meet these challenges and all our challenges abroad. i hope we'll soon take up an authorization for the use of military force which gives the president what he needs to f ano grappleth with this threat witht running the risk of another full scale open ended commitment of american forces in the middle east.t tr ife we're asking american servie members to risk their lives in
the fight against isis, we in should at the very least do our job as well. so thank you again, mr. mcgurk, thank you, mr. chairman, i yield back.>> t >> thank you, mr. engel. this morning we're pleased to be joined by special presidential o envoy brett mcgurk. rece mr. mcgurk was recently promoted from deputy special presidential envoy for the global coalition to counter isil. prior to these assignments ser special envoy mcgurk served as the deputy assistant secretary of state for iraq and iran. mr. mcgurk has been a valuable voice in the administration, pressing for a morrow bust u.s.a role.tion, i appreciate that.d without objection the witness'sr full preparedd statement will b made a part of the record and members will have five calendar days to submit statements,
questions and extra neous materials. so wek yo askchairm if you can your remarks. >> thanks mr. chairman, ranking member engel, other members of the committee.ppear b it's a real honor to be here. i first appeared before you in r november of 2013 to talk about what we knew was al qaeda in nu i aq and the emerging threats of isil. i've been back a number of timeo since then. this i deeply value the partnership with this committee and i thank four leadership on this pressing national security.sul i was iran iraq when mosul fellu in the summer of 2014 and the ae situation couldn't have been more serious or dire. baghdad was under threat. see thousands were being massacred. collapse of the iraqi security force, the situation seemed almost hopeless. when he to balled foundation toi inght back. and that required a new iraqi government, better intelligence picture, military strategy to e strike isil and train local force and a political strategy to reflect the realities on the
ground.gn we alsoi hadzing to build at international coalition from sn around the world recognizing this is a global challenge liked none we've seen before. the at one point with more than so w 30,000 foreign fighters from 120 countries around the world. we acted. we acted aggressively and now beginning to see some results.ce however, while the progress is clear which i'll discuss the challenges and tloets ohreats t national securityrem remain acu. isil remains quote our preeminent terrorist threat. mai so how do we analyze isil. how do we make sense of it?n only by making sense with data, analysis and impericcal are underpinning. there are eight affiliates. i wantnt focus on this introductory statement on the e- core. the core isaimed key.calipha
the phoney self proclaimed ets caliphate that isil establishedr and one of the main magnets that's attracting people from around the world. so let me start with some factst what we're doing. isil has lost 40% of its d ha territory in iraq.y 10% of its territory in syria.od not won a single battle since may. as you can see on the map that r i'vee projected here, the green areas are areas in which since the summer of 2014 we've retain from isil.ter. the figures, for example, 40% of territory really does not in matter. what's important is that thisras strategic ground. in iraq the iconic cities of tikrit and ramadi.ty 90% of the population is back.ro ramadi first test of iraqi security forces acting on theirh own toe liberate that iconic da. city. in syria it's not just the data h it is the, what's on the map. the green taking away the entire border area which used to be
controlledat by daesh.vele that border is green because of what happened inn kobani. i traveled to kobani and broughe to the site of where we dropped supplies, where president obama ordered an air drop of militaryy equipment and supplies at a ke moment in november of 2014 whena that battle was about to be een lost. i spoke with one of the kmaners. he said without that air drop r they would have been overrun. it was from that air drop and de working with forces on the ground they were able to defeat isil, 6,000 isil fighters lost their lives in kobani and expand their presence outward and takec away that border from isil.alles it's a testament to the courage of some of the partners we haveo on the ground and the many a challenges ahead. h i was able to travel to syria ro hacause we now have a presence on the ground invi syria and there's no substitute for that. having a presence on the groundf we gain better insights every day. our better intelligence picture is allowing us to eliminate isil leaders including 90 senior to
mid-level leaders, including abu bakr al baghdadi's deputies andt theor number one finacier. we collected more information in that raid and we learned more than we could have ever imaginee about isil's financial networkst from there we pulled el intelligence from acrossli the coalition from our department much treasury, state department and intelligence communitieswe 50root their financial apparatus and that's what% we've been doing. stil is cutting their salaries for theirri fighters by 50% andm we'res seeing the effect that's having on strikes on their trucn moving oil, oil platforms and fy cash storage sites. let me go around the map brieflh just to bring you into the overall campaign and how we're r approaching the core. number
one is a 90 kilometers stretch of border that isil ke mintrols with turkey. we've worked very closely with t our turkish partners including a number of meetings with the y president just in the past few months then doing quite a lot. they are increasing patrols. sharing intelligence.border setting up risk analysis. conducting cross border strikes.to this is having an impact. it's much harder for isil fight' towers get into syria now than andwas even six months ago. they can't get in and when they get in they can't get out they will die in iraq and syria.m from the summer of 2014 when thw high end decimate of 31.5,000 fighters in isil now down to 25,000. the tide of that number is starting to turn.y we know from their own publications they are now i telling theirs fighters don't come in to syria, goes elsewhere. go tori libya. much harder to get into syria.
moving to number two, raqqah remains their headquarters, orks their hub, where their leaders are, where their external plotting networks are f ar established. ku workrd with our an local partners in syria, collection of arabs and kurds te push on raqqah and isolate them in raqqah and that will be ongoing in the coming months. i'll move quickly in interest or time over to iraq.will rem i'll skip to number five and mosul. mosul remains a tremendous challenge. there's a million people in iti wosul. politically diverse city.mi to get it right we have to worke politically and militarily hand in glove .th when i was in iraq last week wen meti with leaders including ther prime minister and we now establish adad joint operationa headquarters and that's where r we'll pool sunni fighters, kurdish peshmerga with our ion commanders and iraqi command
towers plan deliberation of mosul. this will be unanimous at thefot grated campaign along multiple lines of effort.use of not a d-day like campaign. not start on a date certain i because it's already starting. we're caught off road access to mosul. we're learning more about what . daesh is doing in mosul.on cam so the mosul liberation campaigl has begun. however, it will be an extremely difficult endeavor and we won'ti put a timeline when mosul will be liberated. moving south i'll go to number t seven which is tikrit. tikrit an iconic sunni city.the it was depopulated by sill. not only that killed thsds of ba people. iraqi force were able to liberate the city and we're not focused on defeating isil but what comes after isil. i give the prime minister great credit into devolving powers,
delegating powers to local u. leaders. we have been ablee top return te population to tikrit. u.n. reported that 95% of i citizens of tikrit are now backe we're building on those lessons now. i'll go to number eight which is ramadi. ramadi was the first significant fost for tick rather security force. this was anal operation which wh done entirely by the iraqi security force and local sunni y tribal fighters.it sunni tribal fighters in anbar continued to grow in capacity.. we have 10,000 of them now. we have liberated ramadi but ths city remains devastated from the fighting. w nearly every other home is booba trapped or has ieds. without getting the counter iedo teams back in there to dewire these homes which have been booby trapped it will delay then return of the q population, something we're working on right now quite aggressively. i'll moveoug finally, mr. chair,
i can go through this map in some detail in my testimony buta i want to point out number 11. number 11 is where you see darko red.f as we push isil and squeeze thet they are trying to fill spaces in the soft underbelly of syria. cllmyra they took some time ago. wet heading towards jordan is what we're focused on. jordan is one of our closest partners in the region. we're focused on jordan nclu security. we have $200 million for borderd security. i'll be in jordan next week.der to see his majesty and talk a about the threats to jordan, how we'll make sure they protect their border.f that's a very, very brief and id very quick summary of the most complicated situation imaginablt
but i look forward over the nexo two hours to answer your question. i want to thank this committee s for the leadership you've shownu witthis issue. i value this partnership and noh that we look to accelerate the campaign over the next year i look forward to close partnership that i've had with u you going forward. so with that i look forward to your questions.ba >> thank you, ambassador.oc briefly here, asked the administration about the importance for local partners in isis held territory. i certainly agree with that. sunni partners are very important. so if aleppo which has been llah encircled, if that falls as the russians pull med s pummel it a attempts to collapse aleppo wil we have any partners left. the other concern i have in rstd terms of the sunni population, is i understand the shia led
government in iraq is using then justice system totr further pus out the sunnis so if the central government in iraq is unwilling to nake reforms needed in order to create a more inclusive government, and inclusive security forces, what will be wa left of iraq? what will be left of this effort to include sunnis in our effortc to put down isis? quest >> thank you, mr. chairman. it's a critical question and something we work on every day e not only n on the local level where the fighting against isis is going on. i'll start in iraq. iraq just passed a budget repres through its counsel of representatives with a very the important p provision. it allocates 30% of what you call the popular mobilization forces. it comes from provinces fighting isil.he st that authorizes almost 30,000 sunni fighters enrolled in the s state securityt services to ut
fightfight$682,7 isil. they are being paid. a being paid about $680 to $750 a month. and that might not sound like q much to usi but the rural labor earning for an nch iraqi workerr is about $36 per month. to prime minister has put his money where his mouth is. he tells us every single day he wants to get the local sunnis in the fight and we're helping them. when ramadi fell president obama made the decision to deploy u.sf special force to the airbase imich is on the map just east of ramadi right in the heart between ramadi and falluja. we integrated sunni tribal fighters into the fight and a that's been a success. our special forces are working with three local tribal tribes fighting asill. we're gaining capacity in iraq. in syria, mr. chairman, you hit
something on the head because what's happening with the russian air strikes is that theg focused on the opposition and what is happening with opposition force, we were working with to fight isil feigt look -- and if you look on thisith , we were work with local opposition forces to move east d to fight isil. that was a very sophisticated o endeavor. as theeppo russian air strike campaign has begun those fighters now peeled off that cu line to gosi fight the regime bs advance and this is causing us real problems for the counter isil campaign.al e we tell the russians this very g clearly. we say you're fighting isil buti you're having a detrymentsal effect. this remains a very serious concern. >> thank you.asngel in addition to this job as mr. p engel pointed out, you helped negotiate the release of the ile americans being held by iran and last year the families of these
americans sat at this table anda three of these families are overjoyed by your work and of course we all want answers to mr. levinson's whereabouts. i'm concernedran a on the same o these americans released the department sent iran a check for another $1.7 billion on top of the $100 billion that was released at that time.i fo and i was going to ask you what you knew about that iti entertainment?nces. i found that in politics there are rarely coincidences and a state department spokesman saide that iran raised this payment with you as part of the talks on the americans, and iranian besieged commander called this $1.7 billion ransom, in his bmit words, and as you know, i've submitted detailed questions to the secretary which we're anxious to receive.>
>> well, first i look forward tu answering your detailed negotia questions. this is a very complex negotiation that went on for 14i months to doirnsdt of prisoners. the issue of the haig settlemen was a parallel process. we have three areas of negotiation with iranians over the last 30 years.0 the hague tribunal process. u in that process over 30 years ve almost 4700 private u.s. claims single private u.s. claim has been adjudicated by the hague. that hague negotiation with our lawyers at the state departmenti who have been doing this many nur decades would be happy to come up and discuss with you inf some detail, they were foll negotiating with the iranians over a number of issues at the hague over the fall and came to some important settlement agreements on fossils and o artwork and opportunity opened to settle this very important issue having to do with $4 ver million yfsm claim.k a
lawyers were able to close thats out which was very important and be happy to talk to yound aboutg why this is in the interest su u.s. taxpayers and united states. we're facing substantial, as substantial liability on this d claim. as i under it we're at the een courthouse steps.bill there was going a judgment and it would have been potentially . in the multibillion dollars more than we settled on. ao i think we have your questions, mr. chairman.ys will i know we'll be looking forward to answer those.ils. we'll give you the details. >> some of the de ta should've probably been been shared with us are in negotiations. let me raise this last point. the newbies away for a while we passed, you now have a situation of foreign writers traveling to libya for training. it would be possible under that law to categorize foreign nationals to travel law to categorize foreign nationals who travelled to libya as qualified as not being
qualified for visa free entry ring ihe united states and i was wondering if you were involved in discussions with home land security or if the administration was on that problem? otherwise we may find some of the same challenges we founduned when out of syria, through turkey, to europe we had isis fighters who could have taken advantage of the visa waiver program. >> mr. chairman, i have not been precise in those bevolv discussions. i'm concerned about the situation in libya so i'm sure -- >> i'd like to have libya added go list. >> thank you. >> thank you, i'll go to mr. engel. >> thank you very much, mr. niairman. in a recent op-ed in "the washington post," former senior
state department officials nicholas burns and jim jeffrey i concluded that relying on diplomacy alone will not be obreative in syria and said thah and i quote them, the obama team would have to reconsider what it has rejected in the past. the creation of a safe zone in northern syria to protect civilians along with a no fly aone to enforce it, unquote.uot a safe zone would allow for refugees to have a place to go where they would not be under constant bombardment by assault or russia. since assad is a magnet for extremist, the longer he remains in power the longer they'll be s fighting isis in syria. assad's regime exasperates the zone and however, ann patterson said late last year, there's no notion on the table that does not require a massive a, massivu
amount of air support that would then detract from a the effort against isil. unquote. so let me ask you this, ambassador.what under what circumstances would the administration consider supporting a nost fly zone, wha are the challenges in establishing a no fly zone or safe zone and how has russian military involvement impacted the prospects for a safe zone or no fly zone because absent a safe zone, i don't know how innocent syrians protect themselves. >> congressman, it's something to look at all the time. we have a number of internalim discussions about the possibility of establishing some sort of no fly zone. and you should talk to -- speak with some of my dod colleagues details about establishing it. it's been fully looked at, but everybody would agree with you, the situation is totally unacceptable. i am leaving tonighteptablelei'f e we for munich
where we'll have a meeting tomorrow with everybody in this international support group fort syria which includes saudi e t arabia, turkey, qatar, iran and russia, us, everybody around the table and there's a recognition that this situation is completely, totally unacceptable. we are closerd in to vienna to cease-fire, and we're going to work hard over the coming days to try to put in place a cease-fire. as long as this conflict going on it makes my job against isil all the more difficult and the humanitarian consequences of what is happening is just -- it's truly atrocious and ct. terrible. getet to a way to ul de-escalate this underlying conflict. to de-escalate the underlying conflict there has to be a f political process that can leadn
to the transition in damascus. the struggle we face from time to time, the collapse of the regime in damascus will open up a vacuum that terrorist groups can fill. so we want a political process that can lead to the transition. that's something that secretary kerry in particular is working veryhing seckerrys beenidunobo c but nobody can underestimate the difficulties. we are hopeful in munich over the coming days we can make some progress on a cease-fire and most importantly on the humanitarian corridor. the ruptions claim they're cut -- russians claim they're cutting off thetheycutff orridors supply corridors but they're actually cutting ofi the humanitarian corridors. they need to put their money where their mouth is and open up corridors to all the areas. led >> we werenow saying not long a that assad has go and assad has got to go before we have the discussions. and now we're sort of hedging our bets and saying, well, you know, assad can sort of go at t the end of them or as long as assad understands he cannot be part of a new syrian coalition. doesn't it seem like we just keep back tracking and back
tracking? >> i think there's -- everybody looking at the syria situation recognizes that so long as assa. is in power, there's never a ini stable tysyria. r too much has happened. the crimes against humanity, everything he's responsible for, he will never be able to govern -- it will never extend to the rest of the country. in these conversations we have in vienna the russians understand that.ha the iranians don't seem to understand that. but it's a complete fantasy to . think that the assad regime is ever going to be able to establish its writ over syria. we have to find a way to have a political transition.n.bt but we do want to do it in a managed way through a political process that doesn't open up further vacuums but i agree witv you entirely, congressman. assad cannot remain a power if we're ever going to get out of thisis in incredibly difficult situation. as i mentioned -- discussed with the chairman, my job on isil inn
fighting isil, we had some real progress to push across what we called the amari line and the russian forces have pulled them to fight the regime. so what russia is doing is x directly enabling isil. that's one of the reasons we're getting together in munich tomorrowis'llry diffi . but this will be a very difficult three days coming up. but , you know, we're going to be very firm. the situation is totally unacceptable. causing a humanitarian capacity. strengthening the regime oft do, assad and that fuels the extremists on both sides of the sectarian divide. it fuels the isils and the abia nusras so we have to come a together as greatwa powers.herwe turkey, the u.s., saudi arabia, russia, figure out a way to seto this will conflict down. otherwise, it's going to come to haunt all of us.ne >> i have one final question. i have been having discussions -- in fact the chairman and i have been having d scussions with some of our sunniions a arab friends, and t
expressed to us frustration at the united states not being more of a player that's deeply involved, that we seem to be reluctant to be involved. they paint a picture of the fact thati they're ready to come forward if we come forward. if we lead, they're ready to do it. ut they describe a reluctanceat on the part of the united states to get involved and they say that they believe that russia moved in to syria because they knew that the u.s. wasn't moving and wouldn't really be able to do anything or wouldn't be willing to anything against the russians. how do you answer that? they paint a picture of just ul reluctance on our part of us not really leading, of usd -- they b would be willing toith be with but we are recalcitrant.
how do you answer that? >> well, in terms of the isil ub campaign, done over 10,000 air s strikes now. and we have done some real damage to isil and we're looking fores to join us. to tell you the truth.h. that isn so that is something we're we have led and in factetary ca se carter is meeting in brussels today with the defense ministers of the coalition and one of the things he's putting on members of our coalition including a number of the arab partners is, you know, isil is a threat to you.to saudi arabia, one of our closest friends in the world, isil is in saudi arabia. we want them to do more, we want all of our partners to do more. this is a constant discussion we have.onstscussio selecte our interests don't always aliga directly with many of our partners' interests. c this is natural in foreign policy with our friends but this is something that we're discussing constantly. forr was h hyeste foreign mini was here yesterday. we'll see him in -- i know he
saw a number of you and we'll see him in munich tomorrow to l try to align our approaches. but you know as the leader of the coalition, it's something i deal withrdi to get a focus on try to align the forces. but when it comes to the assad e regime we have to get a political process on track. otherwise it will continue to go on. that's why we're hopeful in munich we can make some progress. >> thank you. >> ileana ros-lehtinen of ur florida. >> thank you, chairman royce.gn welcome back, special envoy mcgurk.ate it is an honor to be with you. i continue to be stunned that the state department dlieves be still that russia and iranian engagement in syria could be a positive development with the help oft iranian forces and russian air power. we are seeingut f assad's forcei creep closer to aleppo as has been pointed isout.
a strong base for the opposition. and the regime is on the brink of encircling the city in order ulattarve the population withare ther russia indiscriminately bombing residential areas. assistant secretary patterson testified to a question i asked her in november in a hearing thathe assad's atrocities are a recruiting tool for isis. and thatr it is not possible fo us to defeat isis while assad's massacres continue, with iran and russia's achelp.oppos so what steps is the administration taking to preveni sumassacre ofta syria's remaini someratepp opposition? when will we air drop humanitarian supplies to the people of aleppo? is that still something that we're going to do? and you have said to the charge and the ranking member that prooes th a problem. i but does the administration intend to a take any measure to stop russia from bombing syria's civilians and how can we justify
asking the syrian opposition to drop the condition that the cocrimes ale, russia and iran cease committing these crimes t against humanity as a conditionp to continue the geneva talks? so i look forward to that answer. but let me just bring up two quick points, mr. ambassador.inu i wanted to ask you about the future plans for the iraqi jewish i archives.nd can they stay in the united states? we have worked together with you and i thank you because you have been very engaged on this with the iraqi government. i don't want the state department to return these precious artifacts, the iraqi jewish archives, and what is the fate of the archives after the exhibit ends its run at my alma o mat mater, florida international university? lastly, now that iran has been legitimized through the a jcpoa received billions of dollars in
sanctions relief through which it can continue itsar reign of terror, what guarantees have you received from the iraqis and have you brought it uprest to protect the residents of camp liberty from this newly strengthened and well funded te regime in tehran? you can give me a written response on that. will we be providingnd aerial a protection which is what the residents want now to the camp liberty residents and are with putting t-walls in place north?s if you can ask the question about what we're doing to prevent athank massacre, and thp of the air -- the air drop of the supplies. thank you. >> thank you. i want to thank you in particular for your s. ros- cooperation on the very difficult issue of the iraqi jewish archives and we are very honored they're on display in your district.
when i was the iraq ras, i worked on it very much. they're scheduled to run through the end of the year and let me take that back to the state department and get you a very detailed answer on that on t al question. omek.folkon thes aidd that's something i continue to follow quite closely, we have made some progress in getting a those folks out of iraq.questi many of them going to albania, but i'll get you a written answer on that.t. on the question of the humanitarian situation in syria, i'll repeat what i said. it's completely unacceptable. the failure to hu provide liga humanitarian assistance to tityu besieged communities in syria io not only a international law obligation, but anchored by a s. brand-new security council resolution. this is something that we have to open up these corridors, period. ane o first and foremost on the agenda when we get to munich iss the humanitarian corridor issue. there are besieged communities across of syria, millions of people.of some of them are besieged by ha isil and most of them are besieged by the regimes. some of them are besieged by more extreme elements of. nciple o the
opposition. all should have humanitarian access. as of a principle international law. it's bounded by a u.n. security council resolutiononprois that agreed to as part of the support group process and first and foremost on the agenda at munich. i'm hoping to come out of municr with an agreement on that. >> thank you very much, sir. >> we go to dr. david cicillinei of rhode island. u thank you for being here. i want to address the terrorist financing of isil and i know yoe indicate in your written testimony that isil controls 80% of syria's energy supply and accounts for 50% of the revenues, about $500 million a year since 2014. and so my first question is whou is purchasing this oil? generating the $500 million of revenue. andso in you also indicate that
are so100 members of a centralid management team as well as 1,600 energy related personnel. what are we doing to get to those individuals who are facilitating the financing of this terrorist organization? >> thank you, congressman. billi so i'll elaborate what is in the written testimony. you're right, we believe it's $1 billion a year, less than that now. that's $500 million from energy products.eneroducucyou you know, it's purchased by a lot of middle men, hard to tell where it's going. the russians claim turkey is buying most of it. ha that's actually not true. the regime is buying a lot of isil oil. but what's happening, it's sold to middle men and goes to the third party so it's hard to trace from isil to the end user, eamwgnifican e aficant revenue stream that we are significantle degrading. they're not able to do what bec they're able to do in the past. we had a big debate amongst ourselves about when to target the trucks. ri most the truck drivers, most
out,hem are ordinary iraqis and syrians. so what wewe did, a very sophisticated campaign in which we -- i won't say exactly how, . warned them if you're t driving trucks here, your days are going to be numbered.rucksrm we're able to destroy about 400 trucks in one shot with very limited collateral damage or civilian deaths. it has had a tremendous impact on their ability to move oil around. so we're -- we'll continue to dt that. but it's a fundamental priority of the overall campaign.n not just taking back territory, but denying the revenue sources. in mosul because of our intelligence picture, we're able to target where they had cash ts warehouse sites. that's how they pay their fighters in mosul and that no longer exists. >> we have seen a lot of the success of isil using the w internet and social media, both to promote their propaganda as well asw recruit.ev
i want to hear about what we're doing and what we're doing to counter that narrative. this is obviously a religious a an false argument, but effective one and i'm not sure we can effectively respond to it, but are there efforts under way so that someone is responding in the same medium to stem the flow of additional by recruits and final question i'lm ask so you'll have time to answer both of them, i know there was a commitment made by a germany ofre $1.2 billion, the d united states over $600 million but we still aren't seeing the same kind of level of support from saudi arabia, uae and ot kuwait. this is a huge humanitarian crisis of r counprecedented magnitude. what can we do to encourage the other countries to play a more l generous role in dealing with humanitarian crisis? >> let me address the messaging issue because it's really critical.they
you know, isil we have looked aa this in some detail. they have three main messaging campaigns. one is the glory of the caliphate. the sun drenched scenes ofco a t l children eating ice cream conesi is a total lie but is a majority of their content.t of second is a religiously based n message and then third is what gets a lotot of attention whichs the gore and the kind of the -- the executions, beheadings. that's the smallest number of 2d their content, but we're er combating it at every single level so we have a 24/7 hub now in the uae. the uae has been a critical partner4/ here. g these are young people from all around the region working 24/7 to combat the messages. they have had a pretty good all effect, particularly with the campaign that highlighted the defectors from isil that told the world what it was like to be under this organization. tion so i think we're actually making
some progress on the messaging campaign. and e working withes twitter. facebook and twitter took down 125,000 affiliated isil relatedt sites and the messaging gets 20 easier when we're making progress. if you're doingwh a messaging n campaign for the washington redskins when they'retheir f wil it's easier than when they're losing. when they put out the videos oft the flag going from iraq to syria to italy and to rome, they really can't say that with anyn credibility anymore.xpl their message is now -- their spokesman, most of his statements now are defending the fact, explaining why they'ret, losing so muchin under territor. so it's changed quite a bit. but we have to remain at itimild 24/7. we want to set up a similar hubs in malaysia, because there's a different messaging propaganda component going out there and in
east asia. huian at a24/7.k that in terms of the air bein contribution, the saudis put ine millions in a critical moment and i'll never forget that being in iraq. it was a critical need and the money went to good use and saved lives.the d i'll have to get for you, conf congressman, the donations from those states at the recent london donors conference. i think there was some pretty good contributions. but i'll have to come back with the details. >> thank you. back. rsethank h >> thank you, mr. chris smith of new jersey. >> thank you for calling thisth, ome t inistr important hearing andat mr. mcgurk, thank you for your good work. let me ask you a couple of the questions. while the administration's focus is on isis, how is this n str impacting the growth of al nusra? does the focus on isis risk allowing other groups like al nusra to grow in strength and da what isft the plan to defeat itm and other like minded groups?deg and let me point out you -- youa
point out that the foreign fighters are coming from a at yondred countries. the flow back and forth, how many are u.s. year to date, if you have that number. and when you talk about groups likeoa boko haram, are terrorists fromand boko haram making theiry back again or is there no flow there? b and i'm glad you do about degrading the global affiliates. with regard to boko haram are wm training the nigerians of course with vetted troops how to do counterinsurgency that will make them more effective because obviously go boko haram is on tear in its terrorism. w >> thank you, congressman. i'll go through your good questions. nusra is a problem as we focus a ond isil, we can't take our sigt
off of nusra. the leader reports directly to ayman al a harry. and we think most of them are s syrians who are kind of under the banner of nusra because that's just where they're going to survive.e. e to but we have to unravel nusra. when we see a threat emanating from nusra, we target ore.it. the corzine group is something we talked about before. we completely eliminated. we are focused on nusra. it's important to remind us it's not isil, buttoo hhand nusra asi threat toat the united states. let me jump to boko haram and the affiliates. many who are raising the bannert of isil they're pre-existing terror groups. boko haram is a good example. not like suddenly they became an affiliate. it's a problem that's uniquetor that part of the world, to
nigeria. we have to work with our local partners to combat it. i think you haveave a asked goot questions about making sure we have a credible force to credibly combat it. but the affiliates with isil, i libya for example, that's where it wasn't a pre-existing movement. they rose thed mand a flag of isil and it drew them like a magnet. we have seen the direct flow of resources of command and ing, we control, of propaganda from isil core into libya. again if we see a threat emerging we will not hesitate to react.r on the president ordered an attack on the number one leader in libya and he wasry eliminated. he was formerly from iraq so that shows the connections core andnd libya and v it'se concerning.my the number of h foreignea fight in the united states i think we. have the specific numbers. i don't want to give it off the top of my head but i believe it's in the low hundreds.all e d but our fbi is all over this problem. and agre they're doing a great e
protect the country against fig these threats.>> be and they'll continue to coso. but i'll follow up with you on the precise figures. >> appreciate it. before my time runs out t -- theewe boko haram fighters any exchange between fighters? do anyll go to syria to fight? is al shabaab a part of this as well? >> al shabaab is not a formal affiliate, but we have found somalis on thehembioti battlefi iraq. you know, these jihadist networks there's a symbiotic relationship. the good thing about iraq and syria, as i mentioned in the statement they're unlikely to get out. we'll maketh sure we kill them iraq and syria. but libya is an emerging threat from africa. >> thank you very much. >> th >> thank you, we go to mr. gregory meeks of new york. let lline sa, mr. chairman.irma
let me start with this. i want to kind of follow-up with what mr. cicilline said. he asked about saudi arabia's contributions on a humanitarian level.in s in fighting against isis, isil, in syria, et cetera, i'm concerned about -- because a lot of this is sunni, shiia and what the arab states and what the sunnis and in particular in saudi arabia are doing on the military level. you know, on the ground. some io are they -- initially they sent out a jet, et cetera.ution t whether they're still fighting. what are they doing or what are the contributions that they're making on the military level in regards to this fight? and ao how does thatw play int equation? >> so it's something that secretary carter has discussed quite a bit publicly. he's discussing in brussels today with air our partners. most of the gccc states were with