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tv   U.S. House of Representatives  CSPAN  January 27, 2011 5:00pm-8:00pm EST

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>> where did the 15 seconds figure come from? >> that was the person's estimate of how much time they viewed it. they then prepared and signed a statement certifying to the which was subsequently certified by the ceo of their company. >> you have submitted the documents you outlined to us. we have received assurance from that there is noept objection to the committee's determination to do so, if we determine it is appropriate. is there an objection to those documents be made part of the record and released? >> not that i am aware of. >> that is the action the committee will take.
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>> you indicated that information was not proprietary information. is that correct? >> yes, sir. >> with the availability of that information with one competitor and not the other, the advantageous -- was that the reason you decided to level the playing field by swapping the information so that both companies would have the same spreadsheet of the other company? of the assessment of the other company? >> i cannot tell you. i am not privy to csx pacifically -- specifically.
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the government decided to provide copies to both contractors. >> how long did it take after the sheet was seized by the eads employee we are talking about? how long was it after that mistake was noticed by that employee did eads close it up and get it back to the government? >> what i read was that they immediately stop looking at it. because they were in a secure environment, they needed to partner with someone to close it back down. it was immediate. they wasted no time securing the documentation and a disk that was signed by security. >> and the other company, boeing, also caught the mistake.
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how long did it take them to close up that disk? >> it was as instantaneous as it was from what i read in the eads documentary -- the eads documentation. >> that is part of the record and people can look at that chronology and determine how many minutes and how many seconds it was after the mistake was noticed that each company locked up the disks and then got them back to the government. is that correct? >> yes, sir. >> that information is available in those documents, correct? >> yes, sir.
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>> you are a forensic expert, dmr. shirley. how confident are you of your conclusion or the department's conclusion as to what to data was reviewed and for -- was viewed and for how long? >> if i might describe the context. the defense computer taurines it -- forensics lab is manned by about 110 people. it is accredited by a professional agency. they validate that we have a reliable, repeatable process,
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that we have people who are certified and professionally qualified perform their duties in question. they are subject to periodic review and testing as a condition of the laboratory retaining its accreditation. when we receive the data, we treated it in the same manner as we would treat an inadvertent disclosure of classified information in a sensitive program. we decide, --we assigned a forensic experts who processed -- a forensics expert. we have a high level of confidence that the representation as asserted by each company -- let me say it this way. the forensics organization
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validated the findings. >> at boeing, they found a mistake and did not open the page at or read the page. the representation was that the same page was seen. you indicated this morning that because of personal conversations, it may have been a matter of minutes. according to the documents that are part of the record, it was for 15 seconds. it concluded it was a matter of some minutes. >> it was a short time. >> and then that person immediately closed at page and got the material back to the air force. is that correct? >> yes, sir. >> you are confident that that was the only place that was
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opened up by that person? >> yes, sir. >> based on your forensic capabilities? >> yes, sir. >> thank you. >> i had a chance to talk to both witnesses before hand. how significant is it. for the record, we can determine -- in opposition, are you able to say what percentage of the bid this represents? >> sir, i have no inside as to what percentage of our data represents in the process.
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>> since this information, however important it is, is often given to eliminate an element in the final bid process -- >> i cannot confirm whether or not that would be the case. it would be something that would be considered when the decision was made about how to address the inadvertent release. >> as a member of this committee, i would like to hear
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from the person who would be in a position as to whether or not -- it bothers me when something is disclosed like this. i do not know how significant it is relative to the bid. i'd feel that we should know. i would like to ask you for the record, if you determine after talking to the appropriate people house and it did it is, and try to get an answer to the question i just ask, would that be all right? >> yes. >> nothing else, mr. chairman. >> senator claire mccaskill. >> this is a case study in the incompetence at contract competition, this whole debacle from beginning to this moment. contract competition for something like this has to be a core competency. i want to know, in this
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instance, what punitive actions have been taken? we can call it an accident, but it is incompetence. what punitive actions have been taken from the person who made the mistake? >> from what i read in the documents, the people who were involved in making the mistake are no longer employed at the aeronautical assistance center. >> so they were fired? >> they have been moved. >> where have they been moved? >> i do not know. >> i would like to know where they are. i would like to know if they are making the same amount of money and if they will resurface in another position of responsibility. i have complemented secretary gates, because he provided accountability at the top level in many instances where we have had problems. i just think this is beyond the pale. there are so many things that
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are unusual. if you can state for the record, if you can, i would like this from someone else. it is unusual for boeing to file a protest after a competition? >> i could not answer that. i have had different experiences. >> that is a question i would like for the record. i would like to know from the defense department perspective whether or not it is unusual for boeing to file a complaint and whether or not it is unusual that all nine bases that they filed the complaint were all sustained at the general accounting office. i am confused about the screen. eads said they did not look at the data. is that correct? >> no. they did not say that. >> they said they look at it for
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a brief period of time. >> they look at the screen shot. that made them nervous and they realize they should not look at that. >> it appears to me that they are originally said they look at it for a short period of time. they might have look at it longer than they originally said they had look at it. is that correct, mr. shirley. ? >> what we were able to determine if the file was opened for an extended period of time. the statement by the employee we thought was consistent with what we saw in the digital media. >> can you pin down how long? why do you mentioned the computer was powered logger? >> it goes toward -- when we perform an exam, we look at the
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media at a number of different levels. one of the things that is associated with the computer being in a power state is that there is a feature called clock time that tells you how long the computer is in operation and what files may be manipulated while it is in operation. it is part of the context of trying to validate the employee's statement against what we saw on the computer. >> you are testifying today that you believe the screen was only viewed for the amount of time that eads said it was viewed? >> yes. >> these may not be the right witnesses to answer this question. to follow up on what senator inhofe said, should a file be
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used and retained in the final evaluation now? >> they determined it was still appropriate to lead in the competition. >> we will compose another question for the record to get to those individuals and get other rationale for that. finally, i know that these are not the right witnesses. it is my understanding that the department has taken a position that the wto rulings are not relevant to their decision. i would like to know where that is prohibited. it is not a level playing field due to subsidies by other countries, common sense tells me, from the midwest, that if somebody has their finger on the scale in terms of subsidies they get from their government, it is not a level playing field. i am trying to get my arms
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around the notion that that is not relevant. if either of you can speak to that, that would be terrific. we will try to track down the right person to get the answer. i do not believe there is anything in ifara that prohibits it. >> i will defer to the department. >> i understand the limitations on what we can ask since this is an ongoing process. these are some regulations writ large that the senate has to come to grips with. we have a firm bank in this country that is getting subsidies from foreign governments. from where i said, there is a company better equipped to handle this. the notion that we are not going to take into account, in light of everything that is going on in this country that we have
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got firm nations subsidize and companies and that is not relevant to our competition, the best we have got foreign nations subsidizing companies and that is not relevant to our competition. >> the purpose of this forum is to see what was done and the attempt to remedy it. there are appropriate forums for that to be argued. these witnesses are not called for that purpose. >> i certainly understand. i do not mean to be critical of these witnesses because they are not prepared to answer these questions. they are on my mind and i needed to express them. >> as is your right. senator sessions.
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>> thank you, mr. chairman. i would like to say first that the air force did start off with this process in an unfortunate way. people from the boeing company and the air force went to jail. senator mccain smelled a rat early on. this committee was the one committee that was not consulted in how that original contract was awarded. senator mccain, supported by senator john warner challenged the situation. what we decided to do was to have a competition. it was the right decision to do. it saved $7 billion. i remember declaring senator mccain to be the $7 billion man as a result of having a
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competition in this process. a fair, objective competition is what we need and what we have committed to as a committee, as a congress. on happy eve of this final decision, we have people with political interests and local interest trying to destabilize the process. i am not happy about that. i wish it had not happened. i understand how important it is. it would mean a lot to my state just like it would mean a lot for other states if it were to go another way. we have to be sure we are not doing anything that says we expect the air force to do anything other than what we have directed them to do. the question of subsidies and all of those matters have been discussed for one decade as we have gone " with this. we decided how we needed to proceed -- the question of
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subsidies and all those matters have been discussed for one decade as we have gone forward with this. we need to find out how this information error affected the process. i asked the chief of staff of the air force earlier about it. he assured us that there had been no unfair advantage gained through this process. mr. chairman, thank you for your leadership. i really believe, all in all, you have members on your side and others who want you to do this and the other. it is a thankless task you have got. i think you have conducted it in a fair way. i just would like to say, i think producing these documents is a bad idea. they have been read that it to exclude proprietary information.
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been redacted to exclude proprietary information. this truck the competition would reflect poorly on our committee. -- obstructing the competition would reflect poorly on our commission -- our committee. i do object to that. >> they have already been made part of the record. >> mr. chairman, general masiello, i asked general force in this rule last fall -- tz and he saidzkozt
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the disk or returned to the air force. he said he confirmed that by forensic evidence. i would like to ask you today whether or not you have any information that would indicate that either a competitor had acted inappropriately when they received the data that should not have been sent to them? >> by reading the statements that came from both companies, i was impressed by the responses on both companies' part when they got the date the date should not have had. they acted appropriately and certify to that effect. your. shirley, have been able to conclude that the disks -- that both responded
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appropriately? >> what we found on the computer was consistent with what they said in each case. >> what action did you take once you realize this error had occurred? >> the pco told them to pack their things up and get the disks back to the air force. they instituted an independent review team to find out what went on. so they could correct that immediately. they pulled in the defense service to examine the computers and kathy ceo's to certify the details that came from each incident on the company's side. it was a row.
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-- it was carol -- it was th orough. >> do you think the process was injured in any way? was there this -- was fairness in the process injured in any way? >> the fairness in sharing the same snapshot with the companies -- i would come to the conclusion that it would not affect the selection process. >> if either one of the companies felt they had been unfairly affected by this, what action, if any, could they have taken? >> a company can protest at any point, either pre-award or post- award.
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>> how long did the companies half to lie to a formal complaint as a result of this event? >> it can still be part of a post-award protest should they choose to do that. >> has either one process the? >> not at this time. >> there has been opportunities to protest and neither company has. no formal complaint has been lodged. >> that is correct as far as i am on aware. >> i suppose we have to conclude that this inadvertent disclosure did not affect them to the degree that they should ask for? would you agree with that? >> at this point, i would.
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>> november 8, 1930 "the new york times" article -- a november 30 new york times article pope paul said -- "new article says both companies inspected their own and their competitors' disk. "the new york times" reported the matter./
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>> both companies put the other company's disk in their computer. one of the companies realized what they saw on the disc was probably something they should not look at. the second company all but one of the files on the disk. that is the 10 line spreadsheet and snapshot that was swapped between the companies. both companies put the disk in their computers. one company opened the desk. that is the stock shot of the ifara data in question. >> mr. shirley, do you agree with that? >> yes, sir. >> we have heard that nothing significant was disclosed and it did not affect the competition. neither company has protested.
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mr. chairman, there is a lot more we could talk about. i would say it is important to every area of the company that is -- that has an interest in the outcome. it is important for this committee not to politicize this process. we have made the decision to go forward. we should not take any action that would suggest we want the air force to do anything other than try to select the best aircraft at the best price for the men and women who defend our country. thank both of you for the effort to get to the bottom of the error and to establish conclusively that there was no on fairness or arising from it. thank you. >> thank you, senator sessions. senator graham.
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>> i have a different take from senator sessions. i think this is something we should be looking at and talking about. as senator claire mccaskill said, this is not the finest moment for the air force and i happen to be a member of it. bottom-line, the sheet of information we are talking about, was it the price proposal the companies were making? >> yes, sir. the disk included no pricing data. >> why do we even care about this? >> it is an element of the decision process as i understand it. it is information that was double- >> was it an important event in the whole process? the information that was disclosed by one company and not the other -- does it matter at
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all? >> whether it is important or not, the important thing is -- >> do you know whether or not it is important? >> no, i do not. >> what is this hearing about? at the end of the day, the whole process has a conclusion to it. we are about to spend $35 billion of taxpayer money. i think it is important is not your job to lead to this question -- it is not your job to answer this question. we are setting a precedent here. the committee should be looking at this spring it is hard enough for american companies to compete already. the chinese yuan is already 40% undervalued. if we are what to be awarding
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contracts where one company gets a from a foreign government, that is what we need to talk about. we need to have discussion about that. mr. shirley, a person act eads -- at eads said they look at it for 14 -- for 15 seconds. how can you say that is roughly consisted? >> i will ask us to sit in recess for 20 minutes versus 15 seconds. you can see clearly that there is a lot back in time between 15 seconds and 20 minutes. the computer was on for 20 minutes. do you know what was on the screen for 20 minutes? >> yes, sir, we do. we cannot assert what that
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employee did or did not do. >> i am no forensic expert. the difference between 15 seconds and 20 minutes is a lot. >> we can tell how long a file is opened, sir. >> i have nothing further. >> mr. chairman, if the witness could finish his answer. >> do you know what they look at for 20 minutes? >> who are you asking? >> i am asking anyone who can finish answering the question. >> our laboratory found no evidence in conflict with the -- with either of first and the written statement. >> i know your findings. i am just asking a factual question. the computer was on for 20 minutes. the person said they look at it for 15 seconds. the point is, this whole idea that it does not matter and we
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cannot -- the whole idea that it does not matter, we cannot get to it because you do not know. the fact that you do not know is not your problem. it is my problem. >> our examiner concluded that the files were open only for the time suggested by either offer. >> i understand that. >> i am just wondering how you got to that conclusion. perhaps they can judge from examination of the media when a file was opened and how long it was open. >> you are saying it was only open for 15 seconds? >> yes, sir. it was open a brief time. >> can you say that this file was opened for 15 seconds? >> i will take that one for the record and we will send you the precise times on that. >> senator, if i can add something to this. while the individual look at the data, that individual was moved
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off of the program team into the administrative holding tank and was not allowed to participate in the program until they were released. >> i will sit questions for the record as to why boeing could not be used the -- could not use the [unintelligible] i want to make sure what we are doing here does not set a precedent for the future. if this is going to be the way we do contract thing, we need to think about the process of what information was shared and what i've come it had. it is precedent for the future. i am glad you had this hearing. i hope we will think more about what we are about to do and not less. >> on point.
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we have had three different statements from you, mr. shirley. we know from the record that the person who opened up the file said they look at it for about 15 seconds. when i talked to you and ask you the question, you said you determine foreign sickly -- forensically that it was open for a few minutes. now you are saying the computer was open, not necessarily be filed, was open for about 20 minutes. do i have it straight? it's not stick it out right now. -- if not, stick it out right now. how long was the file open? how long was that paid to visible? >> my recollection from the briefing was roughly three
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minutes. >> ok. i think it is important that we get our terms straight. >> from what i read in the documentation, the person responsible for opening the file and see it realize they should not be looking at it. the procedure is that the two person rule comes into play. they saw it and they could not use their own to get the other person there to help them close it and follow the procedures. they went outside of their classified area to use the phone to get ahold of this person to let them know that they had discovered something that they were going to get in trouble for and they did not want to get in trouble for. the screen might have been opened, but he was the only person in the room. he left the room to get the other person to follow the procedure and closed the day.
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>> that is the statement of the person who opened the file. in terms of how long the file was opened, forensically, three minutes. >> the air force is trying to make sure this is not a big deal. >> i am not trying to say if it is big or small. it raises significant questions. that is why we are here. i just want to get it straight. i am not trying to defend or attack. i am just trying to straighten out the facts. we had a statement here and we need to be clear on it. mr. shirley, the file was opened for 3 minutes. the person who opened the file said he look at it for 15 seconds. those are the times we are talking about. the significance of whether or not it is significant that
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eads had bad information for some. period of time -- whatever that information was that was seen by that person existed for beforeeriod of time to the two files were exchanged. for the time being, that is the time. thank you, senator graham. or give me, senator wicker. i intervened before i called on you. i wanted to straighten that out. >> i thank you for straightening it out. it was helpful. i appreciate the chair actually giving mr. surely -- mr. shirley
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an opportunity to answer the question. this is not a jury trial. we are able to leave the record open and get a full explanation. i think i see what is going on here, mr. chairman. there are some people in this town who be the the company that they favored -- who believet he -- believe the company they favor is about to lose a bit again. a foundation is being made for a protest. i do not know who is going to win the award. i regret the department of defense did not go farther with that contract. we would be close to having a tanker we could rely on. i see what is happening with this hearing. it is no it is general masiello
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and mr. shirley cannot answer these questions. -- it is no wonder that general masiello and mr. shirley cannot answer these questions. i thought this was going to be a hearing about the release. the file was opened for 3 minutes. it was a statement that it was viewed for 15 seconds. it is my understanding that we eads -- that the eads procedure is that once a file is opened, the person who opened it must get another person before
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the file is closed. >> i had to have another person. they instituted a two-person rule./ they took the disk and put it in a safe separate from working documents, isolating it completely from the rest of their specific bidding information. >> mr. shirley, is that consistent with the file being open for 3 minutes? when the employee opened the question, they were nervous about what had occurred and realize they should not be looking at that the chicken pieces of data. they went through an internal process to walk back from it and find another witness or a second party to instruct them about
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what they should do next. they thought they were into something that was awkward. that was why the computer was left on why they -- while they think it out the internal process. as they did, they shut the computer down and went through the process that general masiello just described. >> general, after looking at this and understand what happened, the air force decided to level the playing field. tell the committee what information has been shared with both of these competitors to level the playing field. >> as i understand it, it was the snapshot screen of the spreadsheet that the contractor saw.
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they took a picture of the screen that had the information and took the same picture on the disk of the competitor and swapped that information. it was a single piece of paper that had the spreadsheet from [unintelligible] >> it really would not matter if the person from eads had look at it filed for 20 minutes. now both competitors can look at each other's snapshot of the spreadsheet for an infinitely long time. is that correct? >> that is correct. >> i do not think there is anything more to ask about. it either comparator change their proposal significantly after this information was shared? >> i have no way of knowing that. right now, they still have the
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opportunity to change it should they choose to. >> there was a protest mentioned. with regard to this release of information, is it a fact that if there boeing or eads -- is it a fact that neither borrow -- or eads hasing protested this? >> yes. >> both companies are straightforward and relatively relaxed about this and neither company, having had an opportunity to file a protest, has done so. can either of you answer this
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question? i suspect you cannot because you are not about in the contract. your testimony is that this is not proprietary information. in the previous competitions, hasn't this exact dates have been provided in 20008? data been provided in 2008? >> i cannot answer that. >> mr. chairman, until i see a protest from either company, i am point to conclude that the air force saw an example of human -- i am going to conclude that the air force saw an example of human error and they responded appropriately and has
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not level the playing field. we should go forward and will not seek further delay in this important program. >> thank you. senator brown? >> thank goodness it was not highly classified information like we have had in other circumstances. been in the military, i understand the scenario -- being in the military, i understand the scenario. you move forward to make sure it does not happen again. i appreciate that. are you able to guarantee to this committee that the unauthorized relief -- release of this information did not give one company an unfair advantage? >> i cannot answer that. we have provided the same information to both contractors now. from what i can see and based on the air force having taken that
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action, it appears that they have leveled the playing field. .> you are right you cannot answer that. i am not sure why we are here. there may be other things happening behind the scenes to explain why we are here. sometimes, we need to publicize things a little more. the one thing i am surprised about is that it takes 10 years for the federal government to issue a contract. only in the federal government does it take 10 years to issue a contract it is amazing to me. i am not as new as i once was, but i am a maze ideas break down. -- but i am amazed by these
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breakdowns. why bother? it is going to take 10 years. it is going to go on and on. it makes no sense to me. i want to thank you for braving the elements even though, for massachusetts, this is a late snow. -- a light snow. >> thank you, senator brown. there was a previous contract award where a protest succeeded. do you know whether or not this data was made accessible --
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ifara datantractor's made available to the other contractor as a result of the protest process during the previous competition? >> i can answer that question. i do not know. >> we will ask that for the record. that is a question that is the actual and does not in any way seem inappropriate to know. that gets to the question of whether this data is relevant. it may not be proprietary, but it could be relevant. i am not saying it is. could be relevant. assuming that this data was known to the person or understood by the person or remembered by the person who saw it or somewhere between 15
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seconds minimum and a few men and maximum the-and a few minutes maximum, according to the -- and a few minutes max amount, according to the experts here. that data was available for the month before the switch took place. i will ask you the question of whether or not that would give an advantage, assuming it was remembered, to have that in 1's possession or that period of possession for that period of time before the data was exchanged. >> i will find that date. it was november 22.
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whether or not that gives advantage, assuming it was remembered, for that 21 day period or not, is not for you to say. is that correct? >> that is correct. if i were looking at a snapshot of the information, i would just have a snapshot of the information. they would not know what was going on behind the data at that point. the person who had the information was rebuilt from the program. they were not allowed to talk to anyone associated with the program. according to their certification, which was certified by the ceo, they have not talked to our told anyone what they saw in the data. >> you say it is level. i think you should be a little more cautious. i think it is an attempt to level the playing field. it may be a successful attempts. but there is enough.
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-- fair en -- >> fair enough. >> general, i just have a couple more questions. the remedy here, the attempt to level the playing field, which may or may not succeed, some people may want to argue that. what other options were considered by the air force to remedy this mistake? >> again, i do not know. >> that is fine. you have been called here for a specific purpose and you have been giving us information to
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the best of your ability. it is important that we get this information on the record. it may be of limited value. it is part of the overall picture of this contract, which took 10 years because there was fraud and corruption and ball at one point during this process. someone landed in -- corruption involved at one point during this process. someone landed in jail. with this information is used in and bans or after was, you can debate that -- used in advance or afterwards, you can debate that. this is intended to get factual
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information on the record prior to a decision. i should not say it clears the air. i do not know if it clears the air. someone may argue that it gives weight to one side or the other. it is important. it seems to me that all of the appropriate facts that can be made public should be made public before the decision. it seems to me we should get as much out there on the record as we can. so you do not know what other options were considered by the air force. i will ask, for the record, the question about what did the previous protest information was made available to competitors.
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will you take that for the record? the previous protest process. ok. senator sessions. >> let me just say in defense of the air force, thousands of decisions and interactions and communications have been undertaken in this effort. after the last incident in which fraud was discovered and boeing officials went to jail, the effort redoubled to do thi in the most fair -- to do this in the most fair way possible. it is basically a low-bid contract. whoever comes in with the lower
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price gets the contract no matter if the plane is more cable in every single area of ebay i wish it. they get little credit for that. -- whoever comes in with the lower price gets the contract, no matter if the other company's plane is more capable in every single area. general masiello, didn't the secretary of defense send an independent review team to come and evaluate the accident independently of the people who were supervising the contract? >> yes, sir. >> the air force tried to do what they could. they did everything they could do. fortunately, nothing serious happens to jeopardize the fairness of this contract. that is pretty plain.
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mr. smiley -- >> shirley. >> shirley, i am sorry. the cyber crime center takes pride in its independence in territory -- independence integrity. it concluded that there were no signs of network connections. no signs of attached storage devices were found. that was one of the findings. but that is correct. >> no sign of any documents been printed. no trace of k-76-b data.
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was found on the hard drives. that would indicate nobody saved the day that. -- saved the data. i think that is important. general masiello, senator wicker ask you an important question. the document that was rebuilt that was opened in the bile, a washat was revealed that opened the file, was that something that did not impact the fairness of the competition? >> i do not know the relative importance. whether it did affect our
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establish or create an appearance of unfairness, by swapping the same snapshot between the companies, the same type of information between the companies, that established fairness in the competition. >> with regard to the parties who aggressively competed for this and submitted the lowest possible bids for the benefit of america and the taxpayers, i understand there was a thin day formal complaint. bank. 10-e i am -- there was a day formal complaint period. neither company has filed a complaint.
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>> that is correct. >> the individual who saw the file was removed from the process. mr. chairman, i think it's fine that we have the hearing. we were briefed on it by the air force. general schwarzkopf testified on it in december of last year. i believe they responded well. i think both parties understand what happened and are prepared to accept the air force's decision or else they would have protested. this critically important contract is on the road to a final decision. i hope the air force will do so fairly and objectively and award the contract to the competitive that deserve to win ba. when we directed as part of the defense bill that this award
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would be a competition, we knew there were only two competitors in the whole world who could provide this. at that time, people raised some of these issues. there are arguments on both sides. we made the decision and we are moving forward on the final decision going forward. the two competitors in the world are submitting bids to produce an heir court -- an aircraft that will meet the standards of the air force at the most economic price paid we have done our duty without politicize the in the process to date. i >> mr. chairman, i want to take a moment -- after my friend from
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mississippi said he could see what is going on, want to explain clearly what is going on here from my perspective as a senator. am i in happy about the notion that a subsidized company from another country is going to compete on a level playing field with a company that is not subsidized? yes, i'm very unhappy about that. i've heard a lot of lectures over the last year about socialization and the notion that government should not be subsidizing private companies, and the idea that all of a sudden we could ignore that -- completely ignored that -- and decide that socialization is ok if it is being done in another nation, and a company being subsidized by another nation is going to compete on a level playing field with a company that is a free market company i think is absolutely wrong, especially in the department of
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defense. what if this company was owned by china? would we take that into consideration? ok, so they are our allies, and they are only subsidized to the tune of $10 billion or $20 billion -- and the senators completed all legislative work yesterday and are in recess next week. >> we should not be complaining about it if it is not relevant. this tanker is going to be in another space. what happened was fraud. they were criminals, and the process was not there, with all due respect, senator sessions. they did not bend over backwards to make the process there. because in a very unusual move, one of our main contractors filed a protest, and an independent auditing agency
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said it was very unfair, and that is what happened in 2008. they stacked the deck, and i will tell you, from my standpoint, what i think happened is that they were embarrassed. the air force is embarrassed that they allowed fraud to go on in this kind of competition, and they overcompensated, and they put out a proposal that the gao said every single basis was unfair. that is how we got here. it was not that the air force bent over backwards to make it fair after the fraud. we have an independent evaluation of that. i just want to make sure the record is clear about that because i would be this way -- i do not care where the jobs were going to be. i do not think the department of defense should treat companies equally if one is subsidized by a foreign government. i think it is a bad precedent. i do not think we should be
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doing it. i think most americans do not think we should be doing it, and i know jobs will be had here in various states, and we are competing for jobs just like american companies are competing for jobs, and i think at the end of the day, we should be doing everything we can do at least take that into consideration because the lowest and best price is relevant to whether or not they are subsidized. it is relevant. so i want to make sure -- i want to explain what is going on here from my perspective. these are not missouri jobs. this is a process that has been terribly flawed. a lot of what you testified today i think is there, and this is not a child. if it were, i would ask a series of leading questions that would highlight what i think is the case. a lot of what you testified is that you could not prove that they did not do what they said they did. in other words, the computer was on.
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you cannot prove whether they looked at it. there is no proof other than the man's testimony whether he looked at it for 15 seconds or three minutes, correct? you just cannot disprove what they said, correct? >> i think it would be wise for us to send you to the specific technical findings in a question for the record to clarify that. what we believe that we saw in that computer media. i did not read that employee's statement or see that material. the aspect that he looked at it fairly briefly, 15 seconds is something that i understand from conversations relating to preparing for this. we did see -- we had the media in question -- let me phrase it this way -- we had each company's computer that was forwarded to us based on the agreement of the companies and
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the program office, and it was delivered to our lab, and we suggested each of this company close to computers to a detailed forensic examination that is outlined in a very exhaustive technical report. i did not review the specific details of the entirety of that report because it had source selection. i cannot say this specifically, but out of the concern that it has source selection or other proprietary material, i wanted to understand that in directing the assets of our lab and our process that we receive those computers in the right fashion, that we look at those with the right subject matter experts that could deliver a technical report consistent with our processes and procedures, and then under the specific direction of our lab director, the process was conducted, and
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we generated or rendered, as i mentioned, the technical reported process as a result of that process. as i believe i mentioned earlier, the only files from the technical report, the only files open were the files that were identified in each of the respective written statements, that the files were only open for the time suggested by each of their respective companies -- >> wait just a minute here. i understand they were open for that time, but the only knowledge we have about how long the screen was looked at is what the individual said. we have no way of knowing whether they look at that screen for 15 seconds or three minutes. >> senator, you are precisely correct. >> that is what i wanted to establish. this is my question -- a yes or no question -- could they have
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adjusted their final best offer based on that final data? >> now that they have the exchange of information, both offers have the opportunity to adjust their proposal. >> i understand now, but after someone looked at the screen, could they have adjusted their data? could they have adjusted their final and best offer? >> i do not know because i do not know how much information is revealed in the quick amount of time they looked at the information. >> do you believe that based on the final day that that was on the page that three minutes would be enough time to memorize that data? >> i cannot speak for the individual. >> i do not want to ascribe nefarious motives to this company. i just am frustrated because of how this process has happened from the beginning to this moment.
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i'm very exercised about the notion that we are not going to have a policy in this country that does not take into account when we are having a competition that it is a company that is subsidized to a very large extent. if we were subsidizing bowing to this extent, there would be press conferences -- if we were subsidizing boeing to this extent. but somehow, it is ok now, and i just do not get that inconsistency, and that is why in this exercise as i am. thank you very much, mr. chairman, and thank you all. i understand you are here, and my passion about this has very little to do with the fine work you have done preparing for this hearing and the efforts you have made after this unfortunate incident, but nevertheless, i feel it is important that i explain what is going on with this senator. >> mr. chairman, can i offer for
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the record that the gao report found eight violations out of 111 complaints from where you should have been considered the purchase should have been of help, and i do not think the air force deserves as much criticism as my colleague suggests, and when i was referring to bending over backwards, i meant that after the final competition. >> i would agree with you on that. >> that will be included in the record. >> i appreciate senator sessions making that part of the record or offering to make that part of the record and the committee accepted without objection. i have information, and someone should correct me if i'm mistaken, but the information provided to me by my staff is that in september, the wto will
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that in fact, boeing received illegal aid from the united states government and as a matter of fact, wto has made findings against both of these competitors with regard to improper 8 from their governments. i stand to be corrected, but that is the information that i have. the information i also have is that the secretary of defense has determined that these wto rulings against both competitors will not be a factor in the competition. a determination was made in 2008 by the independent analysis -- analyst at the acquisition office that eads and their
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partner at the time had a bid for the best aircraft. i thought the criteria should be -- what is best for the united states air force? what is best for the fighting men and women who are going to depend on this? what is best for national security? in my judgment, that decision was made independently and correctly. i think by kicking the can down the road now to 2011, there is a real risk, mr. chairman, that the acquisition for major
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projects such as this will always be called into question, and i fear we have done great damage to the future of acquisition in the pentagon. let me make a final point about the three minutes versus 20 minutes vs 15 seconds. that information has now been shared with both companies. is that correct, general? >> yes, senator, that is correct. >> so it would not matter if the employee had looked at the data for three hours or first three days. each company now has that one little bit of information from the other company, and they have had it, and they can analyze it until the wee hours of the morning. is that correct? >> that is correct.
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>> i appreciate what the air force has done. clearly, human error is unfortunately going to happen. any time an organization is shot through with people, you are going to have human error occur, and i appreciate what the air force has done. they are my branch, too. i love them all, but i'm an air force veteran and an air force reserve veteran, and i think that the air force acted very professionally and has corrected this inadvertent mistake. thank you, mr. chairman. >> thank you very much, senator. let me for the record put in a chronology here. this committee has been following the modernization program closely for a number of years. in 2002-2003, we directed a
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series of reviews and held hearings that identified serious problems of was the sole source lease originally proposed by the air force that ultimately led to or helped lead to the cancellation of the contract. that was the time when the correction was discovered, and that was described earlier today that this committee played an important role in uncovering that, and senator mccain particularly took the lead on that, but a number of us very much supported that effort. 2007-2008, we closely followed the air force's unsuccessful second attempt to award a tanker contract. it was unsuccessful because the general accounting office of health the protest to that award, so now, we are trying to do what we can to get on the record for consideration. the fact that surrounded this release of information that
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obviously never should have taken place. there was significant incompetence that led to this release of information. everybody acknowledges it should not have been. whether or not the effort of the air force to level the playing field succeeded or not is not a matter for this deliberation. we are not looking at that aspect of it. that may or may not be debated by one or more parties later on. that would be the issue, it seems to me, as to whether or not that playing field in fact has been leveled. there clearly is an attempt to level it, and i commend the air force trying to do that. whether or not it has been levelled or whether there was some advantage during that 21 days that existed, assuming that the information that was made available beyond that one person close the mine, but also, the question as to whether or not this information is the
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possession of one party or the other, even though it is in the possession of both, that it advantages one party more than the other party. i do not know if i said clearly there what i meant, but you can give somebody -- this analogy probably does not work at all, but you could give somebody who is wealthy a dollar, and you could give somebody who is broke the dollar. the fact that you gave them both the dollar clearly advantages the person who is broke more than the person who is wealthy, but you gave them both the dollar. in this case, and i have no opinion on this question, but it seems to me it could be the issue as to whether or not the exchange of the same information advantages one-
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party more than the other for whatever reasons could exist. the intent to level the playing field is clear. that is clear. the attempt to do that is the right thing to do, but whether it succeeds or not is a different issue, one that i'm not able to expound upon because i would have to know exactly what those arguments are, but i think we have to at least leave open that possibility. >> colleagues, thank you all. i want to thank our witnesses for their presence here today, for coming during this weather challenge. i know, particularly for one of you, you came a long distance, maybe had no sleep. i will not identify which of the two of you is because both of you deserve credit for your
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testimony. i very much appreciate it, and we will stand adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> the senate is in session today to consider a number of changes to operating rules. members agreed to consider five resolutions that range from filibuster rules to the ability of senators to secretly block legislation. votes on those resolutions take place this evening at 7:00 eastern. all require a supermajority vote to pass. live coverage on c-span2. the house is not in session today.
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members completed legislative work yesterday and are in recess through all of next week. follow the house live on c-span when the chamber -- in tuesday february 8 at 2:00 p.m. eastern -- when the chamber dabbles -- gavels back in. now, today's white house briefing. outgoing secretary gives says protests in each of represent an opportunity for the leader of that country to enact necessary political reforms. we also get reaction to the latest economic forecast from the congressional budget office. this is an hour. >> i certainly would have cancelled if i had known genes was appropriate. -- jeans was appropriate.
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i appreciate changing into a plaid shirt and putting on a tide. that is funny. i feel awfully overdressed. everybody's shoes looked -- go ahead, i'm sorry. >> can you comment on the investigatory commission, and do you agree with the findings that the crisis was preventable and that current members of the administration were partly to blame? >> let me say this, and i think treasury has a statement on this. we certainly applaud the efforts of the commission to explore the causes for the financial crisis that occurred in 2008. our biggest task in assuming office as it related to the financial crisis, was getting our economy back on track and taking the necessary and appropriate steps to ensure that
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it never happened again. that is why the president put so much effort in -- into wall street reform to ensure again that what happened leading up to and during that crisis never repeats itself. we are obviously focused on taking all the necessary steps to implement that legislation to ensure that that is the case. >> one member of the commission said today that the financial system is "not really very different" from prior to passage of the reform bill. except to say assets are more concentrated. what would you say to that? >> again, there are a host of authorities, resolution authority being one of them, that is markedly different. we saw in the crisis, taking
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aig as an example, a fairly successful insurance company that somebody put a hedge fund out on. instead of being able to break the company apart, the hedge fund caused government officials to have to put quite a bit of resources into the overall company, rather than just dealing with some of the root causes of the downfall. so we now have new bills to break those things apart and deal with them very separately. i would point out in my example with aig, money has been paid back to the government as a result of some of the steps -- management steps that have been taken since the president came into office. >> on 1 different topic, on the white house's use of social media, which seems to be
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increasing, what is the thought behind that? is it something you will be continuing to do? >> obviously, david is a big believer in social media. are you talking about the state of the union, some of the interactive stuff around the state of the union? it was a reprisal of i think something we did back in 2009. i think the president looks at something like youtube as sort of the online town hall meeting. obviously, a number of us use different types of social media like twitter to communicate what the government is doing to the people in this country. i think it is just another way of bringing people a little closer to the decisions that get made here and why, and i think the president and the entire
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team will continue to look for avenue is and opportunities to expand the use of those entities. again, whether that be twitter, whether that be youtube or other aspects of social media. yes, sir. >> two questions -- the imf singled out the u.s. as well as japan as heavily indebted advanced economies that need to lay out clear production plans before the market turns against them. how confident is the administration that investors will be patient with the u.s.? >> i think that the president demonstrated the seriousness in the issue of deficit reduction that must be taken. as you heard the president say, we are the future, on tuesday at the state of the union.
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the president understands we have to take steps to reduce the level of government spending. he outlines very specific steps as an opening bid of sorts in the state of the union to freeze non-defense discretionary spending over the course of five years, saving $400 billion, and bringing non-defense discretionary spending as a portion of our economy, to its lowest level since president eisenhower was in this building. we certainly understand and the president certainly understands that this is an issue that has to and will be address. >> do you think the imf's concern is legitimate? >> i have not focused on the report because i think the president believes it was legitimate several years ago. again, we did not get into this. we are not dealing with a for
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the -- $14 trillion or $15 trillion debt because of the last two years. this is a problem many years in the making, and it will take a concerted effort by democrats and republicans working together to find the solution. >> in egypt, street protesters are continuing to protest. does the administration see him as a viable alternative? >> let's broaden the discussion and have a little bit of discussion about some of the events in egypt. first and foremost. i said this yesterday, but i want to reiterate that there is an obligation by the government not to engage in violence. there is an obligation by those that are protesting not to
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engage in violence by burning government buildings, so first and foremost, this is a process that should be conducted peacefully. that is one of our primary concerns. i'm not going to get into different personalities, except to say that we believe that this represents an opportunity for the government of egypt to demonstrate its willingness to listen to its own people and to devise a way to broaden the discussion and take some necessary actions. those are issues that the president talks with him about
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every time they meet, and i doubt there is a high-level meeting that happens between the two countries in a bilateral nature where those issues are not brought up. >> does that threaten yemen, which is a key base for al qaeda? >> i think it is important not to -- because every country is different and every country is as a different stage in its political enveloped -- development, to not generalize across the platform, so i think you heard the president talk about the people in egypt, and i think myself and the secretary of state have said quite a bit on egypt. again, i hate to generalized across a whole series of countries at different stages
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in their political development and history. >> does the white house believe that the existing government is stable? >> yes. >> [inaudible] >> again, i think it is important -- this is not a choice between the government and the people of egypt. egypt, we know, and the president has for several decades been a close and important partner with our country. every time the president meets with him, and i would point you to the speech in cairo, in 2009 where the president also specifically addressed this as well as the readout that we put out on the september meeting that the president had as part of the middle east peace process, we consistently have advocated for the universal
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rights of assembly, free speech -- all of those are important, and we have at every turn encouraged him to find a way to engender that political discourse in a positive way, and we will continue to do that. >> on the youtube and other social media, in addition to this being a chance for the president to reach out, is this also an effort by the president to engage younger voters? >> i think again, this is just an opportunity -- it is not a demographic will slice and dice. it is an opportunity simply to go and talk with people directly about the decisions the
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president is making and that the government is making. i think cnn hosted the youtube debate back in 2007. >> are we any closer to naming a successor? >> as soon as the president and team have announcements to make on the job of the press secretary and others as part of the reorganization, they will be made. i do not know when that will be. it could be later today. it could be tomorrow.
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>> is the president confident that the new system will be able to convict the americans appropriately and effectively? >> it is designed to try to take some of the uncertainty and confusion out of -- and you have seen this from both democrats and republicans, who agree that while they did while there is some utility to this at the beginning, it has caused some confusion, and the secretary is going to speak on this very shortly at george washington. >> on the jobs front, the tv a projected this week that the unemployment rate will be 8.2%. obviously, with the reelection campaign coming soon, do you
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think the president will think the message of "it could have been worse" will resonate with voters? >> the president is not focused on what the unemployment rate will be in the first quarter of 2012. he is focused on what the unemployment rate is in the first quarter of 2011. i think that is what animated his decisions in the tax agreement in december. again, a payroll tax cut, which analysts have said will increase economic growth and job creation. tax incentives. we saw some of this yesterday. they did allow companies to accelerate expensing of investments, which we and others believe will help businesses expand and, we hope, hire more people. i do not think people are
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flipping through to the fourth quarter. >> nelson mandela is in the hospital. has the president been briefed on his condition? >> the president, to my knowledge, has not spoken with anybody. we have seen reports that he is in the hospital. president and first lady -- their thoughts are with nelson mandela, and we will try to keep up-to-date on his progress half. >> on egypt, the leader of egypt and the united states has worked with him for a very long time. by not vocally supporting him but simply saying we support the people of egypt, is that sending a message to the people who are out there protesting against him that they should just go full-bore and is that going to inflame the situation? and is that what the president is trying to do? >> no, again, i -- >> it sounds like he's being tossed aside to a lot of people. >> no, no, again, it's what i
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said to dan, chip. this isn't -- our government and this administration and i presume previous administrations aren't here to pick the leaders of countries over the people of those countries. we stand for the universal rights that are enshrined in our constitution and what led our country to be created more than two centuries ago. we think that and believe strongly that those rights are held by those throughout the world. just recently when president hu was here, the president discussed universal rights. we do not see this as a choice between one or the other, and i don't believe it should be. we think that -- again, he is a close and important partner. >> he is? >> he is. and every time the two meet the
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president talks about the steps that he believes that president mubarak should be taking to have that fuller conversation and to make some important reforms as it relates to political freedoms, we believe -- and they'll have an opportunity to do this later this year -- to have free and fair elections. we believe that the emergency law that's been largely in place since 1981 should be lifted, and spoke out in a statement by me that its extension was not a good thing. it gives the government obviously extra judicial powers, which we don't find to be necessary. so all of these things we will continue to push and prod president mubarak on in order, again, to create a situation peacefully -- peacefully -- and i think that needs to be
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underscored, both the government and the protesters -- to get into a place where a political dialogue can take place. >> since he has been so heavy- handed for so many years and you are saying that the most important thing here is adherence to international human rights or the international rights of the people of egypt, would it be a good thing if he were overthrown? >> i'm not going to get into picking the leaders of egypt and that's not what the government of this country does. again, i think that what is important is we can -- president mubarak and those that seek greater freedom of expression, greater freedom to assemble, should be able to work out a process for that happening in a peaceful way. >> the perception by many on the ground in egypt is the united states is taking sides here --
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not with mubarak, but with the people out there protesting. is that accurate? >> again, i'll say this for the third time. this is not about taking sides. this is not about choosing -- >> but i'm saying the perception there is that you're taking sides. >> well, let me try it a fourth time. this is not about taking sides. so i hope you'll perceive to them that, again -- >> we don't perceive -- they perceive from you, not us. >> well, i hope you'll play each of the four times in which i said it's not a choice that you make. >> and one other question on this -- >> because, again, let me just -- when president mubarak was in the oval office in september, these were issues that were brought up. when the president spoke with president mubarak around the events that were taking place in tunisia -- again, go to the readout that we put out about that. it's very explicit that the president talked about the political reforms that have for quite some time needed to take place in egypt. so this is a sustained and
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important message that we want to deliver to president mubarak, to the government of egypt, and we think they have an important role to play. >> there are some analysts who believe the president is expressing that message much more forcefully now than, for example, he did during the iran uprising; that he was a bit slow and cautious then in supporting the people out in the streets but he's not now. >> again, i think our response has been quite similar in speaking out in support of universal rights. the president i know spoke with you all in the rose garden prior to the iranian elections. and, again, as i said earlier, i hate to -- political conditions and development in different countries are different, and i would hate to generalize.
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mike. >> robert, i'm curious what the president's thoughts are on this metropolitan area's response to the snowstorm last night? (laughter.) >> honestly, mike, i have not talked to him about it. >> how long did it take you guys to get in from the motorcade? >> it took a little while to get in. i think -- >> no, it took more than a little while. >> i think if you were -- anybody here that was in the in-town pool? yes, i think you could -- jackie can appropriately report that based on the conditions on the suitland parkway, it was somewhat evident that we don't get a lot of special treatment as it relates to that. [laughter] i think it took a -- it was interesting, last night it seemed like everybody was on the room and this morning it seemed like nobody was on the road. so obviously we hope -- and you see a lot of stranded cars. i know some of -- even some of our staff coming from andrews found the conditions to be too hard to travel through and
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parked their car in a parking lot and took the metro. so i certainly hope that everybody is safe and accounted for in an arduous natural disaster of sorts. >> does the white house believe the financial crisis commission was a good use of time and resources? >> well, again, we applaud their efforts to look into what caused and -- what caused the crisis and what steps might be taken to ensure that it never happens again. that's -- again, that's why the president spent so much time over the course of the previous two years trying to ensure that the steps that we took in wall street reform ensured that we don't need a commission like that ever again. >> following up on something
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sunlen asked, doug elmendorf said that the natural and sustainable unemployment rate of 5.3 percent probably won't be back until 2016. does the white house agree with that or -- >> i would have to look at what estimates folks have. i know there's an economic report that we have coming out. look, i think what we saw was in many ways a perfect storm. and we've seen it with the financial sector, we saw it -- it continues -- we see the continuing effect of the downturn in the housing market. and i should have it -- i should always have it, the graph that, again, just shows the level of job loss. applesthey're not quite to -- red apples to red apples comparisons because obviously the size of the economy is
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marginally different. but if you look at the job loss in the recession in the early '80s, the recession in the early '90s, and the recession in the earlier part of the previous decade -- 2001, 2002, 2003 -- all of those dips added together don't equal the amount of job loss that we saw -- more than 8 million jobs -- as a result of this calamity. so it's going to take some time. the key, though, is very much the path the president outlined in the state of the union. and that is, we have to take steps as manufacturing jobs have left or as companies find it more profitable to set up shop in some other place, to provide incentives through research and development and manufacturing and exports right
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here. that's what the president focused on in the state of the union: how do we out-educate, out-innovate and out-build countries? how do we reform our budget and our government in order to lay that foundation so that the jobs that we need today and tomorrow are created here; that companies are expanding and doing business not just in different parts of this country but in different parts of the world as we see emerging markets take place? and i think that will animate almost all of what the president does this year. >> part of the state of the union, the president was talking about green energy. some of the more traditional energy producers say if you want the economy to do better, maybe take some of the regulations off in terms of making it easier to drill or to gather coal until you can develop those green energies. >> well, i think what's
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important is -- and i think is embodied in the promise that the president -- or in the proposal the president made and the promise to increase the amount of electricity produced through clean energy sources, to double from 40 to 80 percent through 2035, is not to take an either/or approach. if drilling were just the answer, if nuclear was just the answer, if solar was just the answer, if wind was just the answer, my guess is the problem would have been figured out long ago. but instead of picking this, this, this and this, you see in the standard that the president put forward is, yes, let's do all of that. let's do wind, let's do nuclear, let's do solar, let's do clean coal technology. we have an energy problem because too much of our energy
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-- we're dependent for too much of our energy on other places in the world. and the creation of the jobs around the newer forms of energy we can't lose out to a place like china, as you heard the president talk about yesterday. so let's not pick just wind or just solar. let's pick a whole -- let's pick everything. and that's what's embodied in what the president laid out on tuesday. and i think it's -- i think that's, quite honestly, why democrats and republicans can all find something to like about that. and the question is, are we going to have the courage to take the steps to do something like that, to continue to make those investments? and the last stop yesterday in manitowoc, at tower tech, watching the manufacturing process of creating a wind turbine that might sit 100 meters upright and harness and create electricity, harness energy through wind, that's putting people to work right there -- creating the steel in
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some place, moving it in, manufacturing those towers, shipping those towers out, putting those towers up. we're going to have to decide whether we're going to import that type of technology from china or india or someplace else, or whether we're going to put americans to work, back to work, creating those energy sources right here. i think that very much embodies what the president was discussing on the state of the union. >> robert, would it be easier to be on the side of the protestors in egypt if the egyptian government weren't such an important ally to both us and israel? >> no. again, i think, chuck, that we very much recognize the right that those in egypt want more freely to assemble and to speak, and to be involved in political reform.
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that's a bedrock american value. and i think the government of egypt and the president of egypt need to find a way to ensure that this is -- this type of dialogue and these types of reforms can happen. >> you say, though -- you say that the president has spoken to president mubarak about this in the past, and all these words, but financially we don't speak that way. i mean, this is the -- in the top four of foreign aid, egypt is. and so, if -- why -- i mean, why not use a carrot and stick approach if we were so concerned about the democratic -- the lack of democratic reform in egypt? >> again, chuck, this is just as the president talked about with china. we have a whole host of bilateral concerns in
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relationships. but that does not change our desire to see in egypt free and fair elections, the ability to assemble, the ability to speak more freely, to be involved in a healthy democracy. >> is that our policy for jordan, saudi arabia and yemen as well? >> again, i don't want to -- we certainly support -- it is our policy to support the universal rights which i've spoken of and which you've heard the president speak of. again, i hate generalizing across different platforms, but when you say that -- you said you know that the president brings this up, again -- and i'll be happy to circulate some of these because i know sometimes when we put out a readout of a call or a meeting and it's not on the front page
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of the newspaper or in the first five minutes of newscasts, it's understandable that you might not immediately focus on some of the things that are in those readouts. but, again, whether it was the president's meeting with president mubarak in september, the statements around the extension of the emergency law, or even the readout that we did just recently on the call to president mubarak about the tensions in tunisia, these are things that are brought up on each and every one of those calls. >> a couple other issues. one is the republicans are trying to get rid of the matching funds, the tax check- off, to use it to basically save some money for the government. how committed is the president in supporting this? would he veto any sort of bill that had this in it? >> well, let me recirculate the statement of administration --
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>> i understand what his position is, but is it a -- is this one of these he will veto this if it shows up in any appropriations bill? >> i don't think it's getting through. >> you think it will die in the senate? >> i don't think it's getting through. laura. >> with the government reorganization project and housing development that you're entering on, do you expect it will result in -- (cell phone rings.) >> was that me squeaking or was that one of you? you don't have your ringer on, do you? [laughter] >> got a new one, too. >> go ahead. >> play it. >> go ahead. >> i could make this question into a ring tone -- it would be very popular. >> you should do that one. >> that's a good idea, next time record it. "my question is right here." >> right, and you just play it. >> do you expect it will result in savings to government outlays -- saving government money in the end? >> i think the hope would be to
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see some savings, yes. but i think what's primarily most important in a reorganization like this is that we -- and i think you probably would see some savings as a result of the duplicative nature of many departments or departments and agencies and what have you, all having certain equities in the same basket of issues or ideas. but, first and foremost, i think as the president talked about, it's reform for the creation of a government that hasn't been reorganized in decades and needs to be more fully tilted toward the challenges that we have now and that we face tomorrow. i think those are the president's objectives. about when we're talking the debate that happens in washington over the size of government and how much we should be spending each year --
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and that obviously is a very active debate -- is this something that should be part of that, that is part of the administration's thinking about this? >> i think so. but, again, i think it's important to understand, as the president outlined in his state of the union, domestic discretionary spending -- if you did away with it all, you'd still have i think what most people would consider to be a deficit number that we don't want to live with. so, again, i think there's -- i don't think people think that we're going to balance the budget based on a reorganization. >> sure, but this is part of the administration's response to that conversation? >> i think that it is. again, i think from the viewpoint of the president and the team here, it is to align -- it is more so to align the priorities of our government
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with a structure that is able to more efficiently and adequately address those problems. >> why is the president not going to colombia or panama on this upcoming trip, given that we have trade deals pending with those countries? >> well, look, i'm not entirely sure how each country was picked. i know that the president seeks to expand our alliances in a very important region of the world. and my guess is you could spend -- there's reasons to go and see virtually -- or most countries down there. we are, as we talked about in the briefing that we did around the state of the union, hopeful that first and foremost, we can get the korea free trade agreement through congress as soon as possible, and that the ustr and others can continue work on panama and colombia.
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mark. >> robert, when the president is ready to announce your successor, will he do it in person? >> i doubt it. >> really? could be paper? >> or trumpets. >> or trumpets? >> ring tone, maybe? >> ring tone? >> on twitter? >> no, i don't think it will be on twitter. but i assume it will likely be on paper. >> and on yesterday's snow gridlock, does it raise questions that if there were an emergency and the president needed to get back to the white house or get to andrews in a situation where there is no marine one available, does it not raise national security concerns? >> well, i talked to some of the detail leaders when we got back to the white house. and based on the resources that
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it would take in this instance to get enough equipment, manpower or what have you to fully block off that route while we were having this emergency, they did not necessarily think made sense at that time given, again, how many people were also trying to get home. that having been said, obviously if there was -- if we were coming in a weather emergency like yesterday and needed to have that happen, i have no doubt that that could easily happen because, again, it just was a matter of the resources that you move out there and then ultimately how quickly those resources you might need to get back. >> and does it raise questions about what might happen were
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d.c. to be evacuated because of a national emergency? right probably not the person in terms of an emergency management official to render something like that, but i can see if there might be an appropriate agency to address that. >> tomorrow morning the president is going to be speaking at the health care families u.s.a. health action conference. can you give us a sense of the kind of message he'll be delivering? >> well, i think the president will take the opportunity to largely reiterate a lot of what was in the state of the union, to talk about the economic challenges that we face, what we have to do. and i expect that he'll also reiterate what was said in the state of the union around health care, the progress that we've seen in getting benefits to the american people as a result of the passage of the affordable care act.
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and no doubt, as we talk about the fiscal impacts of decisions the government makes, what would repeal look like to the fiscal situation. and we know that the cbo says that the immediate impact is a couple hundred billion dollars. >> also, on corporate tax reform, when the president addressed it in the state of the union it was in the context of the corporate tax rate in the u.s. being higher than anywhere else in the world and it really hampering businesses to compete. is addressing the corporate tax rate an area that jeff immelt and his new -- the competitiveness and jobs panel would advise the president on? would there be a recommendation coming from that panel on it? >> i don't know if that's the primary policy -- let me get a little bit better answer on that. i don't think this would be the primary policy driver, but at
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the same time i think the president would certainly want to hear from members of that group and other members in business and -- economists, academia, that want to weigh in on that. i think this is a process where the president and the team will engage stakeholders in a process that typically takes quite some time. >> would ge, the global reach of that company and jeff immelt, is he somebody that the president would counsel on corporate tax matters? >> again, i think the president -- i think whether it's mr. immelt or a whole host of those with direct experience, he's certainly eager to hear their opinions. >> can you talk about your successor, the process of picking your successor at all, about what kind of things the president has looked for in the person -- what the process has been? can you discuss it at all? >> i'm sure we'll have occasion to do that. i wouldn't do that today.
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yes, ma'am. >> i'm going to follow up on julianna. when the president was deciding what to do or how to proceed on tax reform, and there had been talk for weeks that it was going to be limited to corporate tax reform, he did say in his speech -- he left open the possibility he'd do individual as well. ben bernanke, when he ben bernanke, when he testified recently before the senate, said that he thought tax reform should be done in a comprehensive way, individual and corporate together. that's how it was done, of course, the last time the code was overhauled. could you tell us a little bit what went into the president's decision-making that he's sort of singling out the corporate side of the tax code? >> yes, well, i mean, look, i think each of these are going to be longer-term projects. obviously -- and that may indicate sort of a bit of a
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reason for the bifurcation because i think the complexity on the individual side and obviously discussions that are had as it relates to the fiscal side are going to be important and probably, again, take some time, even as we -- as we did tax reform in the mid-'80s, or i should say, started in the early '80s and ended in the mid-'80s, we know that it is a process that takes quite a bit of time to do. i know the president is eager to address corporate tax reform as we need to take the steps to make our country more competitive and create those jobs -- create jobs here rather than create those jobs overseas. >> when you say each of these is going to be a longer-term project, does that indicate he's not far along on the specifics on the corporate side, won't have any, perhaps, in the -- >> well, jackie, i think -- and
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we talked a little bit about this yesterday -- i think this is -- i think the president wants to have and wants to hear from stakeholders, democrats and republicans, about what they want to see as part of corporate tax reform. i don't think this is the president has a take-it-or- leave-it plan and you take it or leave it. i think the president wants to engender a discussion on the size, the scope, what all that may look at. and i think we're certainly eager to have that conversation. >> now that the house oversight committee has had its first hearing, do you have any thoughts about the tone and content and what it bodes for the future in terms of oversight? >> no, i don't have a -- i traveled yesterday and didn't see a ton of the hearing. again, i think our posture hasn't changed from even before congress was sworn in. there is an obvious and necessary role for needed oversight.
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there is -- and there has to be vigilance that it does not become and get into political witch hunts where we try to dredge up or fight the battles of many, many years ago. and we're certainly -- we will certainly cooperate on ensuring oversight and efficiency. yes, ma'am. >> on the storm yesterday, is the president satisfied that the welfare of federal workers, the way they were released yesterday, many of them stuck in hours and hours of traffic home -- that's under the executive office of the president, isn't it? >> yes, ann, i've not had an occasion to speak with him on this this morning. let me see if i can get some further guidance from opm on that, which may honestly be the
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best place. i mean, look, you have a fairly large city that has few ways home, to be quite -- >> why weren't they given more time to get out? >> let me see if opm can address that. >> and would the president sign a continuing resolution if it has any earmarks in it? >> i think the president was clear about -- i think the president was pretty clear about earmarks in the state of the union. and i also -- >> even if it meant the government had no money to continue after -- >> well, i think the president would tell leaders in congress before the bill got here not to send it up here because he's going to send it back. >> and he'll tell senator reid that? >> there's 535 people that he told that on tuesday, and he's happy to reiterate it.
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i mean, i think that -- i also think we're entering into a period -- i mean, i think there's a reason why the piece of legislation that was contemplated at the end of last year never made it, because i think the days of those types of things have passed us by. >> robert, senator reid doesn't seem to have gotten that memo, though. i mean, he said the president needs to back off. he said that the earmarks are coming back because he plans on being around for a long time. i mean, that's a serious area of disagreement between the president and the leader of his party on the hill. >> it is. >> so, i mean, has the president talked to senator reid about that or is there -- >> no. >> -- is there going to be a "come to jesus" meeting or is it going to end in a veto? >> i don't know who would be jesus. (laughter.) no, i don't -- again, i -- >> you must be getting at the
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end of your reign here. (laughter.) >> no, i just -- no, no, i mean, again, i think -- >> first jesus reference. (laughter.) >> i think the -- again, not to be flippant or funny but to go back to the original answer. again, the president was clear on this. we can't -- we're going to make some very, very tough decisions, as the president talked about in his budget. we're going to make some decisions that cut programs that democrats and republicans alike would both say are important. but we're doing that because we know right now the government spends far, far more than it takes in and that that can't continue. so i don't know why or how you could ask different agencies and different places to undertake an exercise that those on capitol hill are unwilling to take themselves. that's what's animated the president's decision to include not just an end for earmarks but a specific pledge that if they show up in that legislation he will veto it and he will send it back.
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and he said that after the election in an interview with 60 minutes and i take him at his word. >> thanks, robert. can you talk a bit about the president's domestic travel schedule this year? do you think he'll be traveling more domestically than he did in the first two years? and also, he went to wisconsin, an important swing state. might there be a special focus and concentration on swing states that are part of the 2012 map? >> well, we picked yesterday because, again, i think you saw three fairly dynamic companies. they'readding jobs, innovating, they're meeting many of the challenges of tomorrow. and it was -- they were good examples. that's why manitowoc was picked. i can assure you, several days
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after the bears lost, we wouldn't have so closely targeted a suburb basically of green bay to -- but i think that -- i do think you'll see the president travel more, and i think you'll see the president -- i think the president always feels better when he gets out of -- i don't mean out of the city, but out of -- you live and you work in the same place, it's nice to get out, it's nice to see and talk to those that -- like yesterday -- that are innovating, that are building. we'll take trips to schools to see decisions that are being made at a local or a state level to better educate children. and i think you -- for those that are in the pool, i think he goes on these tours with a genuine amount of curiosity as to why they're doing certain things, what they're building. and i think to be able to get out and talk directly with those that are putting those projects together, they're fun trips.
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yes, ma'am. >> just a quick clarification about what you said regarding a press secretary announcement. you said it could be either today or tomorrow. do you mean that it will come either today or tomorrow? >> it could. (laughter.) it could. >> might it come later? >> it's either going to be today or tomorrow? one or the other? >> or -- what i said was -- i think the beginning of the answer was the announcement will come when the president and all his -- >> how about before midnight saturday? >> i was going to make an odds joke and that will just get me in trouble. again, i think the decision will be announced when all the decisions have been made. >> on the question about the jobs and competitiveness council, when will the president make a decision about those members?
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and a related question about -- is anything going to change about how the president interacts with that council, compared to the previous one, in terms of it doing its new mission? >> well, i don't have a timeline for some of those appointments, but let me check and see if there is anything updated on that. look, i think the structure of setting up perab and -- took some time and that probably got it off to, in terms of presidential meetings, a bit slower than the president and i think members of the perab would have liked. this i think -- i do think the president will have the occasion to meet with this group on a more regular basis. and let me find some guidance on timing of that. bill. >> robert, two quick ones. first, back on the press secretary. if it could come today or tomorrow, does that -- that means a decision has been made,
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just not announced, correct? >> i have not been told that, no. >> and the other thing is unrelated. do you have any idea what governor palin -- former -- meant when she said that the president's remark about -- >> governor palin's -- >> remark. >> oh, okay, i'm sorry. >> when she said that the president's comment about sputnik in the state of the union was a wtf moment? >> are you asking -- >> i know what it means but do you know what she meant? >> i was going to say, we should talk (whispers.) (laughter.) i'm sorry, what -- >> what's she trying to say -- a wtf -- >> i'm sure all the answers are on her twitter account. i probably -- >> world trade -- >> do you think it means world trade? what is -- what would -- >> winning the future. >> yes, winning the future.
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oh, wow, that is -- you're hired. (laughter.) mark. >> robert, just to go back to egypt for once more, for 30 years presidents have been saying to president mubarak exactly what you say president obama has been saying to president mubarak with no effect. what additional leverage does president obama have and can you blame the egyptian people for seeing just the presidential pro forma statement of, well, you've got to do more on human rights to be more than pro forma after 30 of this -- >> i don't want to -- i don't know the level that -- i don't know the level of seriousness or exactly how each of those conversations transpired prior to when we got here. i can only speak for our time here and that is this has -- as i said, this has been an important part of not just president obama's dialogue with president mubarak but, as i said, in talking to those here that are involved in senior meetings around government with -- that would interact on a
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bilateral basis with the government of egypt, these are topics that we push on each and every one of those times. i think what makes maybe this unique is -- and i'd refer you back to the statements on this where we say this is an opportunity for president mubarak to seize in order to address the decades-long concern and -- concern that the people of egypt have for their lack of rights. and i think our hope is that in a peaceful way we can all witness the government of egypt, president mubarak, and the people of egypt come together in an important dialogue and a forum where these rights and these universal values can and will be addressed. and, again, i think it's important to reiterate one more time that as these discussions and as these protests happen,
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that first and foremost we want to caution both the government and the protesters to do so in a way that is peaceful and respects the very rights that we're having a discussion about. thanks, guys. >> hey, robert, afpak, did you
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go, any news? >> i did go for about three- quarters of it. the president -- and you guys have a roster of who was there -- the president got an update on the situation on the ground in afghanistan, both from a counterterrorism perspective as well as the security situation in afghanistan. the bulk of the meeting was spent discussing our goals for afghanistan and pakistan in 2011, goals and objectives and how we're going to meet those. that was the bulk of what the team went through this morning with the president. and, look, i think the assessment of where we are security-wise is not a lot different than when you heard
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the president in here during the afpak review, that we've -- while we've seen progress, we understand that that progress is -- can be reversed if we don't continue to take the steps to ensure that as we clear, that we hold, that we build, and that ultimately the goal, as enumerated in lisbon, begin to transfer those security operations back to the afghan government, the afghan people, and we see an increase in the training and their security forces. >> and is joe biden right that it will be more than a token withdrawal of troops in july? >> i would point you back to, again, what the president has said repeatedly and reiterated in the state of the union just
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on tuesday. thanks, guys. hos[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> 9/11 redefined the presidency. it made it clear that my most important job was to protect the country. i may controversial decisions to do that, many of which i described in the book. if i had to do them over again, i would do them again. >> former president george w. bush, talks about his best selling memoir with students at southern methodist university sunday at 8:00 p.m. on c-span's
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"q & a." >> not a discussion on the findings of the financial crisis inquiry commission. host: sewell chan wrote the story yesterday "the new york times." what will this it today when they issue the report? guest: it casts a very broad not of blame. it accuses regulators of falling down on the job. it accuses wall street banks of taking too many risks, to foolishly, and corporate executives and directors of mismanaging, and been incompetent. host: there is this in "the wall street journal caracol --
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journal." they say they dissent with what the report will say. why? guest: the commission was not able to reach a consensus. the majority of the report is the democratic view point. the four republicans have two separate dissent. three of them wrote one dissent, and the fourth wrote another. the minority dissent that you refer to, is not 180 degrees different, but it's as the main report is too broad, too many causes, confuses cause and effect, says too much, and these republicans have said factors that they think caused the crisis. one way of thinking about the disagreement is they think they are pointing to more structural forces that we could get into that helped create the
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conditions for the crisis. that is not like the democrats to name names, and are a little bit more critical of the individual failures. host: what will be the impact of this division? gee, i think it makes a harder for the report to have the type -- guest: i think it makes it harder for the reports umph that the authors could hope for. host: let's start with the majority opinion. they name names. who will be made? guest: alan greenspan. they sit under his leadership the federal reserve failed to promulgate mortgage lending set -- standards. they could have cracked down on the screen of risky mortgages that went into the pipeline in the early 2000's. they may many corporate executives. they named the bush administration and treasury secretary hank paulson, who handled the bailout, saying that
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the bush of administration handle the inconsistently. so they do not say it should not have happened, but they say that bailing out bear stearns, freddie mac and fannie mae, and not believe out lehman brothers, treated uncertainty and panic. host: the current secretary timothy geithner was working with hank paulson. does he get the blame? guest: he gets a little bit of the blame. the new york fed was not the primary regulator for those institutions. even ben bernanke, what the time of the crisis was federal reserve chairman, and still is far, he comes under blame. as late as 2007, he was saying the sub-prime crisis could be contained. host: what about congress? guest: they come in for blame to the extent that it passed the
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report. among other flaws that the report finds is that 2000 law that modernized commodities trading, and specifically exempted over-the-counter derivatives from being regulated by the federal government. that was passed by congress under president clinton. host: what about fannie and freddie? guest: they come in to blame, but they are less blamed the and some republicans would like. the report says that they contributed to the pressures in the system, but were not the primary cause. this finding, in particular, is likely to aid their conservative republicans who think that government housing policy, and the use of these two government- backed, but the extensively private entities to support the mortgage market was a major part
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of the factor. host: is that what they are are doing today? guest: there are less focused on fannie and freddie than the last republican. he has his own 99-page dissent upset government housing policy and fannie and freddie. host: what do these republicans are you? what are they saying? guest: beige book housing bubbles. they look at macro-economic forces that are internationally and -- that are international. capital needed a place to go. the u.s. headed deep, liquid financial markets with mortgage- backed securities. money came crashing into the united states, and helped build up this bubble. that imbalance of those countries having a trade
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surplus, and our country been an over-consumer. host: here is "the washington post" story. they talk about peter wallace and in here. they say from the beginning, the report was limited. it was caused by the light -- and the regulation or lack of regulation, predatory lending, greed on wall street. what is he talking about here? guest: he has been singularly focused on government housing policy. for him, it is an original sin. without these, the sub-prime mortgage crisis, he argues, would not have happened. the other republicans disagree. they say his account does not account for how the sub-prime mortgage mess, which were fairly
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tightly in terms of losses themselves, how did become magnified into been the systemic crisis? you have to look at how risk was concentrated. there is partisan division, but it is not like one person thought it was mrs. peacock in the parlor, and another person thought it was colonel mustard in the kitchen. there were many, many causes. all agree on that package -- agree on that. host: what will happen next? guest: the report goes to congress and the president. one of the major responses legislatively has already happened. that was the dodd-frank wall street overhaul that was passed largely by democrats and signed into law by president obama last july.
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that lot is consistent with democratic findings today. if you believe that regulators fell down on the job, you would believe that more regulators, or better regulation is the answer. obviously, republicans and others disagree with that. host: do you know how much they spend on this? guest: the original budget was small for a commission of this size. it was maybe $10 million or $50 million. they had a staff of less than 100. they started very late. the commission was appointed two months off their may of 2009. it took time to get off the ground. host: we're talking about a final report of the financial crisis inquiry commission. long island, new york, democratic line. go ahead. caller: i wonder if you
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gentlemen have scrutinized the presidential pardon that was granted and rescinded. they say the final act of any government is to lead the treasury as they leave office, which seems to be was taken place. ask a presidential pardon was rescinded because it was so obvious as the gentleman had stolen $30 million in one year alone, and then paid a $10,000 fine, and was granted a pardon on top of that? host: what is best to do with what we're talking about? caller: people got thrown out of their houses, and they resold the houses. they did it over and over each time. every dollar was given to these crooks at the top. host: is there a tie? guest: there is discussion about the role the mortgage fraud
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played in developing this crisis in the report. some credit it as a major factor. host: in the majority or the minority report? guest: i did not think anyone denies there was a lot of fraud on the ill-informed borrowers. host: did dodd-frank address that? guest: it did lead to making sure consumers have more information. host: what has the consumer protection agency been up to? guest: mostly hiring a staff as it prepares to take over responsibility from a slew of other regulators. 's the transfer occurs, they
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cannot get to creating legislation. host: will they be given one year? guest: there is not a lot clarity about whether ms. elizabeth warren wants the job. she is an acclaimed bankruptcy and consumer protection lawyer. it is not clear all too well whether the bureau has the legal authority to do the rulemaking's as a permanent director. host: let's hear from a republican in columbus, indiana. caller: the main thing i agree with is that this financial crisis was definitely avoidable. but, why was it not avoided? i want to read a quick exit from his testimony before the house financial service committee in 2003, years before.
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here it goes. "despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting some capital costs to other uses creates a short-term boom in housing. it cannot last forever. when the housing crisis false, homeowners will have experienced difficulty as their equity is wiped out. furthermore, the holders of the mortgage debt will also have a loss that will be greater than they would have otherwise had not government policy to encourage other investment in housing." guest: that is a valid input -- criticism. the economy has had baubles and bursts before without generating systemic crises. the attack bauble. the economy went into a mild recession. there was not the requirement of
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trillions of dollars in bailout. we are faced with the question of why did this bubble result in a financial crisis? that is where you have everyone arguing that it was the constitution of risk -- the process of taking lows, packaging and selling them to investors, and then making bets on those products. you have to look of that layer of the cake. how does that translate into half of wall street's investment banks failing or been sold? you have to make that connection. host: the caller started out saying why was this unavoidable? guest: that is a great question. in a way, i do not think the reports point out what could have been done to avoid it. the majority points out so many
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different failings, but never says had this one thing been different we would not have had the crisis. they point instead to the secretion or accumulation of two years by regulators, wall street executives, corporate directors and managers over two decades. they point to that has been a grand cause. they do not set on a certain date, had this been done differently, we would not have the crisis. host: of the democratic line, chris joins us from houston, texas. caller: i agree with what mr. sewell chan is saying that i agree with the policies i have been put in place now -- and i agree with the policies that have been put in place now with the new program. guest: of the dodd-frank log?
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-- the dodd-frank what? caller: no. host: the consumer protection agency? caller: yes. i am a part of 12 investors. we did best in the different industries. one of the industry's we look at is green energy. without government involvement, we cannot and bust as far as our view. what do you think of that? do you not think the government needs to get involved before you can put money into it? guest: i did not have personal views on clean energy or energy subsidies. host: bill, republican line. caller: no not on you, it seems
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like you are doing good work, and are well-informed. i have not read this report. but basically, we already know this. it is funny. it reminds me of the 9/11 commission. they have no idea of what the conclusion is going to be, and they sent everything into it. that is fine. host: let's get a response to that. did you learn anything new? guest: it is interesting. the parallels this gentleman raises to the 9/11 commission is a very interesting one. before the commission's report came out in 2004, people knew about intelligence failures. yet, the report became this surprise best seller. it was a very compelling read. i am not quite sure this report will be the same thing, so to
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answer the question, i would not say the revelation has to be the barometer that we used to measure these reports. although he is sort of suggesting that maybe there should have been some shocking new finding, but i think it is more a question of what you want to emphasize. the story is complex. the causes are multiple in nature. it is a question of whose narrative you want to accept. was it the economic forces, or more because of institutional and individual phthaleins? my job is to describe the points of view. host: let me ask you about the report. did anything surprise you about it? guest: i have not read the entire day of it. i have gone through much of it. i was surprised by the skating to home, frankly. -- skating -- scathing tone.
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its strength is the comprehensiveness of its indictment. arguably, the weakness is that it cast blame so widely and leaves no one unscathed. where do we goals from there in terms of policy? host: after you put your story of online, is anyone getting blamed responding quickly? guest: i think people are holding their responses until a final report. host: kansas city, patrick, a democratic line. go ahead. caller: i understand why we cannot comprehend what happened. he is not severable -- sat immobile.
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what the research did along with donald p. morgan, the conclusion has come about that it was actually the bankruptcy laws in 2005 that remove the safety net for americans to take risk. they remove the safety net of bankruptcy. host: you are breaking up a little. are you following that? guest: i am a little. i have not heard a lot about the change in the bankruptcy code. if you walk away from a mortgage, or default, a and do not pay, debtholders cannot go left to your other assets. i do not think that was a major role in this crisis projected bankruptcy as a separate subject. host: here is a tweet
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guest: i think fannie was privatized in the early 1970's. the issue was that for 30 years, they existed with the implicit understanding that if they ran into trouble, the federal government might have to bail them out. that the implicit assumption or fear was obviously made true in 2008. what was the other question? host: is the private sector still dumping balance into fannie and freddie? guest: right now, the market is not active. there are not really any sub- prime loans that are being put into the new pipeline. most of all loans coming in are of a much higher quality than they were in 2005 and 2006. host: here is "the financial times this morning.
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they have been quietly lobbying to cut the dividend as a part of the government bailout can you decipher that for us next -- bailout. can you decipher that for us? guest: i am not entirely sure. the future of that is still to be determined. it is one of the things left off of the table and got frank was passed last year, the obama and administration plans to issue blueprint for the future of housing finance later this year. host: it says a lower dividend will allow the two to begin repaying taxpayer 8, and pave the way for a restructuring of the company. guest: a lot of people say it is a little bit of a non-issue. essentially, since their government owned conservatorship, it is shifting
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from one arm to another. host: phoenix. welcome to the conversation. caller: i used to work for country right. i will say that not only was an unavoidable, it was planned. i remember reading of book 30 years ago called "the protocols." it details how to bring the american economy in line with the rest of the world to have an even playing field. guest: cannot ask what protocols you are referring to? i think that is well-known as anti-semiteic. caller: that is what i have
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heard what is it forged from? guest: this is off topic, but it was written by agents for the russian government at that time. host: it has been dismissed. tampa, florida. john, the democratic line. caller: how do you feel about people that wants to blame barney frank and the fact of the government wanted to make homeownership easier for the american people? guest: i feel i kind of address this. this is a big debate. i would strongly suggest you work.out peter wallison's he has written an accent -- expensive 99-page report. there are others let's say that
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the crash of the housing bubble, even if it was brought on by the government, does not explain how the ed morse into a giant financial crisis. previous bubbles did not become financial crisis. those people are saying you have to look at how all of these institutions concentrated all of these risks on their books. in other words, the big banks made bad bets, and they all made the same bad debts. how and why was that permitted? host: on thursday, we get the unemployment numbers. becausethe numbers rose of snowstorms. applications rose to the highest level since late october.
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host: bloomfield, mich., rod, a republican line. good morning. caller: what i have not heard said was the crash because by alan greenspan played short-term interest rate parity should have understood the absorption penthouses one of the market so fast that the bottom -- absorption. houses one of the market so fast that the bottom fell out. people found that the guy down the street put and his up at a lower price. guest: there is surprisingly good news for alan greenspan in here. the commission, both the democrats and republicans largely exonerate the greenspan fed that they kept interest rates too high, too low.
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it has been a huge debate for a long time whether the interest rate policies promoted this disaster. both democrats and republicans say it was a contributing factor, but by no means a primary cause. the criticism i mentioned earlier was by the democrats, and focused on the failure of the fed under his leadership in its regulatory role. in its role for setting monetary policy, the news is actually good. both reports say not guilty. host: glenn, an independent line, a caller: all these other things and our health care. talking about the damage the illegal immigrant population is doing to them. host: we are talking to sewell
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chan about the final report from the financial crisis inquiry commission. the story was on "the new york times" website yesterday. caller: i want to go back to the social engineering of freddie and fannie and ask your guest if he has seen the "60 minutes" special where the rainbow coalition and other groups had blackmailed banks into giving bad loans. they had guests who had gotten loans for five under thousand dollars homes when they had in comes with -- they had incomes of $20,000. guest: the question is whether we should blame homeowners who did not know what they were doing and signed paperwork they did not understand. i assume they deserve some
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responsibility. this report looks at a much faster -- much vaster array. and then to the giant financial institutions, using exotic instruments like over-the- counter derivatives and collateralized debt obligations. finally, aig with its credit the fall swaps that gave insurance to people. it is a large, long chain of complexity that i think goes well beyond individual relationships between home borrowers and mortgage origination. host: charles on the democratic line. caller: good morning. i have two questions. the first one would be -- i do not know why anybody has not
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talked about the politicians giving themselves raises and then their own parachutes. the other question is, i still don't understand why the corporation has the same rights underneath the constitution as human beings. a lot of it seems to be that most of the politicians are taking jobs as soliciting other politicians after they are out of office. it seems to me kind of like a conflict of interest. guest: i think you raised some great questions. i think there's a lot of outrage out there. why have institutions and not been held more accountable? why have politicians not been held accountable? why have there not been more criminal charges? why haven't any bankers, even those of the firms that utterly failed, lost fortunes?
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very few have. can you name a major wall street banker who has ended up bankrupt because of the financial mess? it's very hard to name that. these basic issues of accountability. i think the report is potentially going to raise a debate over the nature of political oversight and the weakness of congressional oversight all these years that led to the crisis. also, how much scrutiny the government should give to wall street and corporate america in general. obviously, the results from the last election shows there's a lot of anger over the bailout. there was a major theme in the last election. i think many officeholders, particularly democrats, lost their seats because of that. host: does the inquiry commission look at the issue of bailouts and comparing the different types? guest: it does a little bit.
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overall, the consensus in washington -- it does not see t.a.r.p. as an improper response. it's much more concerned about the erratic nature of the responses that led to t.a.r.p. host: becky on the line for independents. good morning. caller: first of all, thank you for c-span. what i do not understand is why people are not even looking, educating themselves about the federal reserve. basically, we did not have the federal reserve until 1913 the. before that, our dollars increase in value. it has done nothing but a decrease in value since then. the federal reserve was supposed to stop all these baubles from occurring in the first place.
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all we have had is bubbles bursting ever since then. host: sewell chan? guest: you raised some very valid points. i should note that there were many, many terrible crashes and burst bubbles before 1913. you do raise an interesting issue about the role of the fed. there was a major effort to strip away the fed's regulatory duties. most people know about the fed's role in setting interest rates and supplying the amount of credit to the economy. they're not amount -- not aware of its role as a regulator of financial institutions. there was an effort to give that to other regulators. that's not what happened in the end. the legislation, in fact, strengthened the fed's role as a regulator of systemic financial institutions. the largest, most interconnected companies, will be seen over by the fed. host: here is "the financial
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times" this morning. it says the federal reserve made a upgrade and kept its asset purchase program. the most important change to the statement was a reference to rising commodity prices, saying that although they had risen, longer term expectations have remained stable and a measure of underlying inflation has been trending down. what do you make of that? guest: inflation has been very low and unemployment has been very high. the fed has used that as justification for its plan announced in december to inject $600 billion into the banking system. this is not congress. this is the fed using its power to create bank reserves. it is essentially a license to print money. they're using the six under billion dollars to buy treasury bonds, which has the effect of lowering long-term interest rates. why are they doing that question of they are ready lowered short- term interest rates to zero. now they're working on the
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longer-term interest rates. the criticism has been that if the fed does not act carefully enough, these bank reserves that are -- that i referred to earlier could trigger inflation down the line. the fed says it is mindful of that and aware that there has recently been a rise and commodity prices and food prices. it is saying that inflation does not seem to be a big concern now. there are obviously people who are skeptical about whether the fed will be able to manage that transition from its current policy of monetary expansion and ease to a policy of monetary tightening. right now, with inflation and unemployment, the fed thinks it is doing the right thing. host: steed is joining us from michigan on the line for republicans. caller: let's all stop the blame game. i mean everybody.
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you cannot blame president obama or bush. they did what we had to do. we would be in a depression instead of a recession. what we need to do a shore up the fed. how do we do that? oal ine almost unlimited cal this country. we have almost unlimited oil. north and south dakota, due to a geographical surveys -- there's eight simple answer. quit blaming everybody. guest: it is a very optimistic message. i do not know very much about the natural energy resources. yes, it is an interesting question of how much is gain from an exercise that is potentially backward looking and focuses on casting blame. a lot of people think it is important from a historical perspective to get an authoritative account of what
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happened. as we discussed earlier, with all the partisan divisions, it's hard to see that this will come away as a definitive account that everyone can agree with. host: the two chairs, the commissioners, have any of them talked about trying to push more reforms or doing something more after they conclude today? guest: the top democrat and republican, no, they have not. they have been that significant loggerheads since last december. host: any of them individually talking about continuing this type of work? guest: there are certainly individual commissioners that have been very involved in financial regulation. a very seasoned attorney was the chairwoman of the commodities futures trading commission in the late 1990's. it was she who in 2000 advocated coverage of and regulation of the over-the- counter derivatives. at the time, they were loosely
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regulated instruments that allowed companies to make bets on the movement of prices. she was shot down by people who included larry summers, who was the treasury secretary of the time, alan greenspan, the fed chairman at the time, and she is on this commission. people like bob rubin and greenspan have testified. in some ways, the majority report has indication of some of her positions. the decision to not regulate these derivatives was a turning point. host: any of them talking about writing a book. guest: i have not heard about that. that will be interesting. they will have to see how this book today sells. host: how much does it cost? guest: $14.99.
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they're waiting to see how much it picks up. it is called "the financial crisis inquiry report." host: vanessa on the line for republicans. caller: thank you for c-span. on the other side of the derivatives, people do not talk about this a lot. they changed the law. it helped me to get a home. in 1998, me and my husband goes on it. by 2003, after paying all those years on an adjustable rate mortgage, they told us we could get a flat rate or a fixed rate after a couple years. that did not happen. this continued until 2004, when we finally got a foreclosure letter. when we got our letter, i was not even 30 days late on a pavement ever. i have equity in my home. i bought it for $117,000.
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i had paid it down to $101,000. by the time we got to an attorney, we wound up losing our home. nobody talks about where the scam was on the other end. they sold our home after they foreclose on it in 2005 for $123,000. they have done it twice since then. how does that story relate to -- guest: i'm sorry you lost your home. there were many cases of fraud and abuse and deceptive practices by banks and mortgage lenders. one of the things the new consumer financial protection bureau was set up to address precisely the situation you are describing. host: before we go to the next phone call about the commission's work, this book is 500 pages. where will the profits go from the book? guest: first of all, i think it has to go -- they may have to
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pay some production cost. there's no individual profit that will be made. whatever proceeds come from the book will go back to the treasury. host: the commission will put out the final report today at 10:00 a.m. in washington to we will be covering it. if you want to find out when it will air, go to our website, c- here's a list of all the people who serve on this commission. chicago, steve on the line for democrats. caller: i'm curious if anything was mentioned about these bond rating companies that rated these at a-ratings when they were junk bonds. guest: the report describes them guest: the report describes them w cogs in the


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