tv Key Capitol Hill Hearings CSPAN June 22, 2015 4:00pm-6:01pm EDT
terms of our faith. when i was finishing my residency at johns hopkins johns hopkins is the modern we were opening a new neuroscience center, so all of the bigwigs from around the world were there. one from australia took a liking to me. who says you should come to australia and practice in western australia. i said, "australia, you have got to be kidding me." i didn't think about, but that is what i was thinking. you drill a hole from washington and come out in australia. and i have heard they had a whites only policy. so i wasn't all that interested. it seemed like every time i turned around, there was someone saying "g'day, mate, how are you doing?" every time i turned the tv on there is a special about australia.
i said i think the lord wants us to go to australia. my wife started doing some research and discovered they had a whites only policy but was officially abolished in 1968. so we sold all of our earthly belongings and off we went to australia. our friends were saying you will be back in three weeks. little did they know we didn't have anymore money. we couldn't come back. [laughter] the biggest problem we had with keeping up with the dinner invitations. they love americans, and they like to hear your accent. when i would dictate an operative note, sometimes the ladies would comment and say dr. carson, we can't understand your accent. i said, excuse me, i am the american, you have the accent. [laughter]
the second problem every time i sat down to read a chart, the second problem i have, invariably, someone would come up and they can i feel your hair? [laughter] i would say you can feel it, but it will cost you 10 bucks. i couldn't remember their names because they all looked alike. [laughter] i realize why god sent me there because they were only four neurosurgical consultants in all of western australia. once they discovered that i knew how to operate, as a senior registrar, they left me in charge of the major teaching hospital. i was doing three or four major craniotomies everyday. if i stayed on at hopkins i would've gotten whatever whatever anybody else didn't want to do. but in australia i was doing , these fabulous cases for a year. when i came back to john hopkins to join the faculty, shortly after the position opened up, normally they would get somebody with a lot of gray hair, but
they said carson is very young but he knows how to do everything. there was, 33, chief of pediatric surgery at johns hopkins. but the lord had prepared me for that, and i began to understand how he always prepares you for what he wants to do. i thought it was pretty hot stuff. this little kid came in from georgia, and he had been diagnosed with a malignant brainstem tumor, and multiple opinions, everybody just told the parents to take him home and let him die. they ended up at hopkins. i looked at his skin and i said wow, this is awful. the kid was barely moving, barely breathing, foaming at the mouth. eyes looking in different directions. i said to the parents, there's nothing i can do about this. and they said, "but, doctor,
the lord is going to heal our son, and he is going to use you to do it." i said i will tell you what. let's get an mri. they were new at this time. maybe it will show something that was not the cat scan. we got an mri and i showed it to the radiologist. they say the same thing. but, "doctor the lord." the lord is going to heal our son. i said i'll tell you why. you've come all the way up here. i will do a biopsy. one in 1000 times the scans are wrong and maybe this is that time. i open his head up, went on the brainstem with this grayish red mask. i biopsied it. cambric high-grade glioma, a malignant tumor. i took out as much as i dared, closed it up, talked to the parents, and sent all the things you normally say. only god knows why people live for so long and may be served its purpose better and will understand it in time.
thank you, doctor, but the lord is going to heal our son. i just shook my head in amazement at their faith as i walked away fully expecting he would deteriorate and die. instead, his eyes became conjugate, looking in the same direction. i said, "what is going on? maybe we should do another scan," and we did and there is still a big ugly tumor. the tumor was in the corner. is it possible that tumors outside of the brainstem and its is crushing the point you can't see it and maybe i should go back in? they said by all means. i went back and in the nature of the tumor was different. i peeled away layer by layer. when i got to the last layer there was a glistening white , brainstem intact, smashed but intact. make a long story short, that
boy eventually walked out of the hospital. today he is a minister. [applause] interestingly enough, one of the oncologists came up to me and said i've always been an atheist, but now i am a believer. >> watch the rest of ben carson's remarks online. we go live to columbia, south carolina for a news conference with governor nikki haley. governor haley: this has been a very difficult time for our state. we have stared evil in the eye and watched good, prayerful people killed in one of the most sacred of places. we were hurt and broken, and we needed to heal. we were able to start that process, not by issues that talk
about issues that divide us, but by holding vigil, by honoring those we have lost and by falling to our knees in prayer. >> we are having some problems getting that video and audio from columbia, south carolina. we will work to fix those problems and take you back there live. governor haley: my children saw what true faith looks like. they saw the true hate can never triumph over pure love. my children saw the hardest role of south carolina starting from
there. i want to talk a little bit about the heart of our state. i want to talk about the people of south carolina i'm so proud to serve. the country and the world have watched our strength and resilience over the last two days. we are strong people who love god, our families, and have deep faith. we believe in neighbors helping neighbors. we hold tight to our traditions and continue to grow and change in ways as we move forward. we were recently named the friendly estate in the country and the most patriotic, too. american flags fly proudly from home to home in south carolina. in just the last few months, the nation watched our state go through another time of crisis when we dealt with the betrayal of one of our own in the tragic shooting of walter scott. south carolina did not respond with writing and violence, like other places have. we responded by talking to each other, by putting ourselves in other people's shoes, and by finding common ground in the name of moving our state
forward. the result, both republicans and democrats, black and white, came together in past the first body camera bill in the country. and i stand in front of you, a minority female governor, twice elected by the people of south carolina. behind me stands my friend, senator scott, elected by those same people as one of just two african-american members of the united states in it. five years ago, it was said in the last 50 years, south carolina is the state that has changed the most, for the better. that was true when i quoted it at my first inauguration in 2011. it is even more true today. we have changed through the times and will continue to do so. but that does not mean we forget our history. history is often filled with emotion, and that's more true in south carolina than a lot of other places. on matters of race, south
carolina has a tough history. we all know that. many of us have seen it in our own lives, in the lives of our parents and grandparents. we don't need reminders. in spite of last week's tragedy we have come a long way since those days, and have much to be proud of. but there is more we can do. that brings me to the subject of the confederate flag that flies on the statehouse grounds. for many people in our state, the flag stands for traditions that are noble. traditions of history, of heritage, and of ancestry. the hate filled murder that massacred our brothers and sisters in charleston has a sick and twisted view of the flag. in no way does he reflect the people in our state who respect and in many ways, revere it. no south carolinians view the flag as a symbol -- though south carolinians view the flag is a symbol of respect, integrity, and duty.
they also see it as a memorial, way to honor ancestors during time of conflict. that is not hate, nor is it racism. at the same time, for many others in south carolina, the flag is a deeply offensive symbol of a brutally oppressive past. as a state we can survive and indeed, we can thrive, as we have done, while still being home to both of those viewpoints. we do not need to declare a winner and a loser here. we respect freedom of expression , and for those who wish to show their respect for the flag on their private property, no one will stand in your way. but the statehouse is different. and the events of this past week call upon us to look at this in a different way. 15 years ago after much contentious debate, south carolina came together in a bipartisan way to move the flag from atop the capital doll. today, we are here and a moment
of unity in our state, without you will -- without ill will, to say this time to remove the flag from the capitol grounds. [cheers and applause] 150 years after the end of the civil war, the time has come. there will be some in our state who see this as a sad moment. i respect that. but know this, for good and for bad, whether it is on the statehouse grounds or in a museum, the flag will always be a part of the soil of south
carolina. but this is a moment in which we can say that that flag, while an integral part of our past, does not represent the future of our great state. the murderer now locked up in trust and said he hoped his actions would start a race war. we have an opportunity to show that not only was he wrong, but that just the opposite is happening. my hope is that by removing a symbol that divides us, we can move forward as a state in harmony, and we can honor than i'm blessed souls who are now in heaven. -- honor the nine blessed souls who are now in heaven. [applause] the general assembly wraps up there year this week, and as governor, i have the authority to call them back into session under extraordinary circumstances. i have indicated to the house and the senate that if they do not take measures to ensure this debate takes place this summer i will use that authority for
the purpose of the legislature removing the plaque from the statehouse grounds. [applause] that will take place in the coming weeks, after the regular session and the veto session have been completed. there will be a time for discussion and debate. but the time for action is coming soon. i want to make two things very clear. first, this is south carolina's statehouse. it is south carolina's historic moment. and this will be south carolina's decision. for those outside of our state the flag may be nothing more than a symbol of the worst of america's past. that is not what it is for many south carolinians. the statehouse belongs to all of us. their voices will be heard, and their role in this debate will be respected. we have made incredible progress in south carolina on racial issues, yes, but on so many others. the 21st century belongs to us,
because we have chosen to seize what is in front of us, to do what is right, and do it together. i have every faith that this will be no different. it is what we do in south carolina. it is who we are. second, i understand that what i have said here today will generate a lot of interest. what i ask is that the focus still remain on the nine victims of this horrible tragedy. their families, the mother emanuel family, the ame church family, and south carolina family, we all deserve time to grieve, and to remember, and to heal. we will take it, and i ask that you respect it. we know that bringing down the confederate flag will not bring back the nine kind souls that were taken from us, nor rid us of the hate and bigotry that drove a monster through the doors of minor -- of mother a manual that night. some divisions are bigger than a flag. the evil we saw last wednesday comes from a place much deeper, much darker.
but we are not going to allow this simple to divide us any longer. the fact that people are choosing to use it as a sign of hate is something that we cannot stand. the fact that it causes pain to so many is enough to move it from the capitol grounds. it is, after all, a capital that belongs to all of us. july 4 is just around the corner. soon we will once again celebrate the birth of our nation and of our freedom. it will be fitting that our state capital will soon fly the flag of our country and of our state, and no others. god bless the people of the great state of south carolina. thank you. [cheers and applause]
>> south carolina governor nikki haley, u.s. senator tim scott calling for the confederate flags removal today from the grounds of south carolina statehouse, joining a number of officials calling for the plaque to come down. in charleston, a bipartisan group of local politicians have been calling for the lowering of the confederate flag. sources say senator scott is calling for its removal. if you missed any of governor haley's news conference, we will be showing it again tonight. join us at 8:00 eastern time right here on c-span. >> to night, cochair of the congressional privacy caucus represented joe barton, on the recent sec regulation rules and the issues of privacy -- privacy
and cyber security. that is got the basic principle, whose information is it? is it automatically in the public domain because i choose to use a mobile app? you know that the way these things work, they go into the cloud and all that. or can i use it and still have a reasonable expectation of personal privacy? to take the longer view, that it is personal, that changes the way that you regulate and the way you legislate. if you take the position that im by act of being a part of, i am participating by using the app i am forgoing my individual right to privacy. that is a different issue in its entirety. >> tonight at 8:00 eastern on the communicators, on c-span2.
>> on capitol hill, the u.s. house of representatives out today. the senate have only an earlier this afternoon to consider two nominations including vice admiral peter never injured to become the next administrator of the tsa. later the measure on fast-track trade promotion authority. follow the senate live on c-span2. the house returns tomorrow with work later this week on interior department and epa spending. lawmakers can also return to debate trade policy, depending on what happens in the senate. watch the house live here on c-span. testimony from the director office of personnel management on information security and spending after massive breach of millions of federal workers and contractors records. catherine archuleta will appear before a senate appropriations subcommittee. watch live tomorrow morning at 10:30 eastern on our companion network, c-span3. next, a discussion about avoiding another global
financial crisis. it was held at the national press club. this is about an hour. >> lee's make sure your cell phones are turned off and any other vibrating or noisemaking devices. good morning and welcome to the national press club. i'm hosting this morning's newsmakers news conference featuring greg medcraft:. he has been at the forefront of global initiatives to head off another financial crisis like the one that devastated markets and economies not so long ago. millions of people were thrust into unemployment. the economic recovery, such as it is, has been a long time coming. since the meltdown, national and international regulators have focused a great deal of
attention and effort to change the way financial institutions are regulated in an effort to guarantee to the greatest extent possible global financial security and stability. thus was born the notion of the systemically important financial institutions. they face greater regulatory oversight but their failures will not take other institutions down with them. the german has been going club -- public with his view that regulators may have gone too far and undressed made it the effectiveness of regulatory tools that already exist particularly in the capital markets. he also believes that regulation should not stifle risk taking because it supports job creation. today he will describe what they do and the role in building capital markets that are underpinned by investors. capital markets that support capital growth. he will comment on where the
rate has been since the crisis and he will comment on where the debate might head and whatm iosco will do. a few procedural notes, once the chairman has completed his remarks, we will open the floor to questions. priority will be given to credentialed media and national press club members. when you're called on to pose a question, please identify yourself by name and by organization. greg medcraft: thank you very much, david, and good morning, everyone. i'd like to thank the national press club for the opportunity to actually talk about some very important issues that are
currently on the international regulatory agenda. as david said today, i'm here in my capacity as the chairman of the board of the international organization of securities commissions, or iosco. today i would like to touch on three key topics. one, is to briefly describe what iosco does, and our role in what i believe is so important for the future, which is how we build globally integrated capital markets. having a vision in 40 or 50 years, having a vision for fleet -- free flow of capital around the world, equity capital markets and health management and having those markets at the end of the day, to achieve that means having trust among regulators and investors in
markets. most importantly, i think we've got to remember that it is the role that capital markets do and will continue to play more importantly in the future in underpinning funding economic growth and therefore jobs. i think it is a very important theme of my speech today financing growth and jobs around the world. secondly, i'm just going to comment from a markets and financial services regulator perspective on where the international regulatory debate has been since the crisis, and third, i'm going to comment on where the debate might head, and what iosco thinks is required in particular in the asset management sector. i should say at the outset that i will limit my comments to the international regulatory agenda and experience.
it's obviously not appropriate for me to talk about issues at a national level here in the united states. these are matters for your own regulators and policymakers. so let me turn to iosco and who we are and what we do. iosco brings together financial services and market regulators from over 120 jurisdictions around the world. we actually account together for over 90% of the value of global capital markets. equity capital markets, funds management, and derivative markets. a very significant part of financing the world economy. our members include regulators from the largest and developed jurisdictions to front your jurisdictions with tiny capital markets. our fundamental objective, if
you think about what we do as financial service and market regulators our fundamental objective is to allow the market s to do their job. in the way we do that, their job is to actually find the real economy and therefore economic growth, and therefore creating jobs. that is what we are about. and we do it by making sure that investors basically have trust and confidence in the markets and that the markets are seen to be fair and efficient and transparent, and that any systemic risk that may be posed are mitigated, not eliminated but mitigated. so basically, as i said, if markets cannot grow effectively, it may provide a key to
underpinning economic growth wealth, and jobs. and basically we work together globally in a number of ways all of which have cooperation and collaboration at their core. that is what we do. i actually want to focus on seven key activities of how we work around the world together to give you a much better feel for what we do. firstly, and most importantly, we develop guidelines for our members to use in deciding how they regulate. if you think about the ultimate mission of having global integrated markets, and having common global approach to how your approach regulation is really important. we look at whether it's in the area of human guidance in terms -- in terms of repertory supervision or enforcement, our two most critical tools as what we do is market regulators.
to give you an example, since the crisis, we've developed guidance among other things on regulating credit rating agencies. the iosco code of conduct is embedded in many legislatures around the world. on hedge funds, securitization asset management, in particular, in his country, on the money market fund guidance. most importantly recently in financial benchmarks. last week what we get along his lines is we actually published guidance on what credible deterrence framework looks like. basically guiding countries who are looking at how they can gain confidence that we all can rely on in terms of the whole enforcement solution. that's what we do. the second thing is not just giving guidance on conduct supervision and on enforcement
to help countries around the world have taken this to approach. we cooperate on enforcement and how in fact market regulators ensure that we can actually -- are able to enforce across borders around the world. so our multilateral memorandum of understanding between our members on enforcement investigation forms the absolute core of how market regulators enforce across borders around the world. through their cooperation, we are able to go through jurisdictions and get information we need. you may be aware that most of the changes -- exchanges around the world will not allow foreign jurisdiction located companies to list unless they are a member. there is that ability to cross borders. we have 105 members who are signed up and they use it to
prosecute cross-border market abuse, which in turn provides confidence to investors investing across borders. the third thing we do is supervising the conduct of those we regulate. we actually use principles of civilized record operation which we developed in 2010. if you think about regulation and how we can build confidence, these three elements are important. one is giving guidance in terms of regulatory standards. the second one is actually how you can incorporate supervision and the third is enforcement. it's pretty simple, those are the three key things that build trust and confidence between regulators. the fourth key thing that we do is actually what we do for tomorrow's engines of growth. which is the 80 countries in the emerging markets group. we look to help them build regulatory capacity.
and we do that across a number of different initiatives, so we have education and training programs. we are in the process of launching an online training program for regulators around the world and emerging-market. were also conducting in-house courses for regulators. importantly, we actually have an online knowledge database. we are regulators in -- where regulators in emerging markets can ask regulators in other parts of world on basic issues and developing policies in the country. it's all about providing resources to actually give them the information to fill the gap to help them develop their markets. we also undertake assessment program. we have just done one in the case of pakistan where we assessed them against international standards and identify the gaps. so that investors coming into the country can have an idea of
actually how their country fits with international standards. again, that is building regulatory capacity. also it's actually building trust and confidence in that country as an investment jurisdiction area most importantly, another initiative we decided last week's developing regional hubs on a pilot basis around the world in different regions of the world. that will define us as a global standard setter. and we will be based all over the world. some very excited about our regulatory capacity. the fifth area where we provide support, and basically when you think about it, is people. nothing is far more compelling than the opportunity for building trust and confidence around the world and in having the ability to encourage and support common activity among them. to that end, we have actually launched an international
comment register which allows regulators from all over the world to identify opportunities. the reason this initiative -- many countries have bilateral initiatives which others were not aware of. so frankly, it's about connecting the dots. that is how you actually build global cooperation, global integrated markets. the sixth area we focus on is getting our members -- helping our members understand emerging markets. if you want to be a good regulator, you need to be watching what is coming ahead of you in the future. that has been a major thrust of mine over the last few years where we have been focusing on digital disruption, cyber
resilience, what is happening with corporate governance. it's actually informing our members so they can be better at what they're doing and not actually resisting development but helping business harvest the opportunities that come from innovation, while mitigating the risks. the seventh area we focus on is collaborating with industry. the markets regulator, you have to be collaborating closely with industry. also with other international forums like the financial stability board where we represent the interest of our members. there are the seven key aspects of what we do. all seven of those contribute to building that global mission toward integrated capital markets. i will say that i believe that these activities are what has helped us emerge as a key global reference point to financial
services and markets regulation. that is the way we want to be seen and the way we are seen. and most importantly that we strengthen that perception in the future. today is a great opportunity to highlight to you exactly what we do in that mission. as i said early on, we have increased importance in the markets we regulate. these markets, i believe, the capital markets will continue to play an increasing role in financing the world economy. i say that for three reasons. first of all, there's a significant increase in the global retirement savings pool as a result of both democratic change in developed countries in some developing countries, and importantly, structural changes that are occurring in developing countries. as they evolve, they develop retirement systems. the second key aspect of why
markets will continue to grow stronger in funding the world economy is the impact of postcrisis regulation in the banking sector, high levels of capital required, high levels of liquidity. basically you end up with more being seen to be funded in the market-based financing sector. the third key aspect to why believe market-based financing will continue to grow his digital disruption. we all see basically, whether it's peer-to-peer lending crowdfunding, the challenge is basically inter-market-based financing. i believe that in the longer term, iosco's activities will help build integrated markets.
build a free flow of capital around the world. markets which have been -- have the trust and confidence of those that participate in them markets where regulators have that mutual trust in one another and can rely on one another. markets where investors issuers, and participants can actually access those markets freely wherever they are whether they be investors or issuers, whether they be in new york, london, johannesburg beijing, by, or jakarta. and most importantly, markets that actually find the real economy and economic growth and jobs. let's talk about my second topic, the post crisis reform agenda. i would like to make to particular comments which i believe are important in terms of the context of where i think we should be heading.
the first is about the type of issues we've had to address since the crisis. the second is about how we have gone about addressing those issues. many of the issues we've had to address since the crisis were cross sectoral in nature requiring cross sectoral solutions. for example, our work at iosco something i'm very passionate about, is securitization. it's a very good example of that. it is now seen in many countries around the world as an important technology to facilitating funding of the real economy. the other issue that we focus on is money market funds and work we did there has been well received around the world. in addition, any of the issues raised in the post crisis have been new. the regulation of derivatives is
an example of what has largely been greenfields territory. at the national level, financial services and markets regulators have had to work central bankers and banking supervisors more intensely than ever before. and i would hope as equal partners. which is most important. globally, iosco has had to work with the fsb and the basel community more intensely than ever before. also as part of the post crisis i talked about before, the increasing importance of markets regulators is now strongly coming into focus. it has been a challenging exercise for all of us, and i think a very fruitful one. i think we have come a long way. as i said, my second comment is actually about how we have
addressed those issues. let me focus on the reform agenda for what has been called shadow banking. the key aspect of the reform agenda. what we would now prefer to call sustainable market-based financing. i have a real issue with the bedeviling of the name, shadow banking. frankly, i'm not sure it was the right name. now the fsb has taken on this name of sustainable market-based financing. three points. the first is the fact that the agenda has for some time been driven necessarily by financial stability and systemic risk considerations. as david said earlier, there were dark times back then. and there hasn't been really a focus on the role market-based financing can play in funding
the real economy. i think that is now where we are today. we need to focus on not what happened then, but how we can take that sort of market-based financing technology and use it to help now, moving more into a growth agenda. again, i think what's important we need to forget about how we assess the risk posed by market-based financing. the international regulatory community, i believe, may have been too willing to draw conclusions about the nature and the style of risk posed by market-based financing to financial stability. again, as i said given our traumatic experience in 2007 and 2008, that is not surprising. but there is a concern that the international regulatory community may have gone too far in seeing problems and has underestimated the effectiveness
of the existing tools to regulate market-based financing. it's a very important message i want to deliver today. the third is about thinking that has gone into policy prescriptions since the crisis to address those risks. these tools have tended to be based on those used by provincial supervisors, not market regulators. while they were in the banking sector, they weren't necessarily working for market based financing. at iosco, we have grown increasingly concerned about these development. they don't fit with the way we look at the world as our responsibility as markets and financial services regulators
the markets that we regulate are built on the idea of risk taking. that's what happens and markets. people gain money, they lose money. that's markets. in that risk taking is actually the essence of the capitalist system. it's the essence to economic growth and jobs. we see regulation and markets is about ensuring that they accurately and fairly priced those risks and that market participants act with integrity. if you think about it, at the end of the day, we all should be aligned in markets with participants. at the end of the day, if you don't have the trust and confidence of investors and issuers, you don't have markets. it's very simple. trust and confidence in markets of investors and issuers is
essential. so that's what we are about making sure that must and confidence -- that trust and confidence is there. regulation should be careful not to stifle risk taking. that is what markets are about. and making it prohibitively expensive. the tools that we develop and use should be tailored to the risks we think warrant regulation and supervision. in the market space again, in the market space, it's not about prudential regulation, it's about conduct supervision and enforcement. that's how you regulate markets. that's how you regulate markets. it's not about how you regulate sign. i'd like to outline how i think these concerns should be taken into account in charting a path
forward in international work. particularly in relation to asset management. you will be aware it has been underway for some three years work on the designation of non-bank, non-in sure, systemically in or to financial institutions. acronyms are something interesting in the regulatory world, coming from investment banking. this work has extended to the asset management the fsb is now embarking on further work to understand and address the risks posed by this sector. i want to touch on two issues which iosco is flagging and will continue to flag for discussions with the fsb. these two issues are judgments
about the asset management sector and the need to act or not, and secondly, actionable solutions that we need or may not need in this sector. let me touch on the first item. judgment about the asset management sector. the first issue is about being careful of jumping to conclusions about the nature and extent of risks in this space and the need to act. frankly, if you think about it, as regulators who focus on enforcement before we take something to court we have to make sure we have enough evidence to make a case. here we need to make sure that we have fact base decision-making. evidence-based. our view is that we should only progress thinking about solutions once we are satisfied
there is strong evidence of a problem. it's pretty logical. i want to make three points on this. the first also is about the quality of evidence. this should not be theoretical and drawn from academic tapirs based on what might've happened in the distant past. it should be based on what we are currently seeing and what we might think happened in the real markets which we regulate. that is our real experience. that's what we do every day of the week as regulators. the second is about making sure that the evidence is collected jointly and collaboratively across all sectors, but most importantly, and i know from my days of 30 years in business
banking, is with industry. with industry having critical data access. it's important to work in partnership with industry before you draw conclusions. then it actually has a proper evidence ace. the evidence is not just simply data. it's about how fund managers are, and about industry practices they take in addressing risks, about the effectiveness conduct supervision and enforcement. that's why you cannot do things without -- without engaging industry. they want to run their businesses for the long-term. so it's really important, that collaboration. the third is about how we go about deciding when a problem or risk is so important that it needs to be acted upon. this means being very clear about the objectives and the
balance we want between -- and i think this is important. the balance we want between financial stability and security and economic growth and job outcomes. so again, i'm not convinced there is evidence that asset managers put financial stability at risk, simply because they are large. as yet, we do not have concrete evidence that this has been or might be the case. in this respect, i find the industries recent commentary compelling. if you think about it, during the depths of the financial crisis, net outflows from funds were small and certainly not on a scale to impact the broader market. another aspect of this study is the echo system of fund
management. the focus here is really restricted to mutual funds area it excludes sovereign wealth fund, pension fund. look at the echo system. that is important. getting back to mutual funds basically the reason with the crisis actually reflects the nature of mutual funds by their nature and definition, they are investors who are generally in it for the long haul. they generally take short-term fluctuations in their stride. they don't necessarily rush to redeem. that is the behavior we have seen. in rare instances where they might, the industry managers have tools in place to manage the flow of redemptions. however, there is scope to explore the extent to which some activities of asset managers might pose broader market risks.
so i am encouraged by the fact that financial stability board has now embarked on work to better understand these risks. work which will inform regulatory guidance in this area. i see this is a very good outcome of their work. my second issue was about actionable solutions, once we decide whether there is work to do. i am firmly of the view that we should not look to find new and possibly inappropriate solutions before we understand what we are already using. what refinements we may need to existing tools we currently have. let's not re-create the wheel. in the asset management space market regulators and asset managers, asset managers themselves, already have
toolkits at their disposal which i believe have been effective in managing disruptions over decades in markets, in jurisdictions around the world. these include rules on eligible assets, on liquidity, on restrictions on leverage, on stress testing on knowing your investor requirements, and most importantly, in terms of more recent times, redemption restriction tools including side pockets and suspensions. i have seen them working in my markets and other markets. so iosco as the regulator of fund management around the world , we prescribe these tools and have provided guidance on when
and how they might be used. we've actually presented these tools -- i did this a few months ago to the financial stability board to explain to them, that's what we do. here is how we work. part of this is about education. we are very happy to educate. in 2012, we published the principles on suspension of redemptions in collective investment schemes, particularly in providing guidance on when and how the managers of schemes should suspend redemptions. i report there set out to market regulators around the world alternative measures which could be used to deal with illiquidity based on real experience around the world. not just theoretical possibilities in member jurisdictions. real world regulation for real-world possibilities. four of logical, really.
in 2013, we also published the principles of liquidity risk management again addressing that issue, which includes guidance about managing the quiddity on a day-to-day basis. based on real experience. we publish the recommendations on the use of these tools for money market funds in 2012. if we decide there is an issue then surely the work we have already done in terms of suspension on liquidity management should be the starting point for any future work. we should not use tools developed for banking and insurance space as our starting point. this is markets. we understand markets. this is what we are looking at. these tools were developed so we have different risk from saul --
different profiles. frankly, it's like creating a square pad for a round hole. it's got to be appropriate for use. we are dealing with something that is so dynamic and so important as funds management and as i said before, in terms of facilitating the funding of the real economy. let's be careful how we tamper with this. so at our meeting in london last week, the board of iosco discussed how we should be progressing our work in the asset management space. let me outline to ur decision last week. we decided three things. the first is that a full review of asset management activities and products should be the immediate focus of our work in identifying potential systemic risks and vulnerabilities in the asset management space.
the second is that this review should take precedence over further work on methodologies for the designation of systemically important asset management entities. let's sort out if there is a problem first. and then third once this review is completed, the work on designation should be reassessed. our thinking was that this review should focus on four areas. the first is actually about ensuring that we've got the data to monitor and understand the risks in what is clearly a dynamic space. after that, collecting more and better data than we currently have. that then will inform better decision-making about risk management. and monitoring. to that end, i think the sec has
published a rulemaking proposal on looking at better data from the asset management sector. europe has done a similar thing. if you think about it, what we really need is to have ultimately some sort of and are template, where regulators around the world can actually share better the data about this sector. it is logical in a modern world particularly if you want to have locally integrated capital markets. basically having an ability to share information on a consistent, easy fashion. frankly, we know the tools are there, it's just a matter of harnessing them. the second is about liquidity management, the us didn't of liquidity -- extent of liquidity management. it's at the heart of asset management. talk to any asset manager.
we need to be comfortable with liquidity risks and how they are being effectively manage. that is something we will focus on. in particular, thinking about -- tailored to particular types of fun the stress tests that might be appropriate to the fun. not to a bank. the other thing we're looking at , and this is what we do, is debt capital markets. we have a study at the moment looking at the risk and structural issues in bond markets around the world. because that is what we do. the third area we want to look at is leverage, and the fourth is about developing a better understanding of the risks posed by the transfer of investment mandates in times of stress. it's a logical thing for a
regulator of funds management to think about. so wherever we land after this work in whatever guidance we develop, we will need to be sure we don't unduly stifle risk taking. it has to be measured. it's characteristics of markets that reregulate and a characteristic of markets as they take risks, which ultimately deliver wealth, economic growth, and jobs. in conclusion, i want to flag the importance of being careful and of being cautious in driving regulatory work on market-based financing, and in particular, in the asset management space. what we need to do is ensure that our work is not just about ensuring the stability of the financial system, but recognizing the role markets
have to play in funding economic growth and creating jobs, and facilitating that role. at the same time ensuring recognizing that markets are all about taking risks, and they've got to be regulated in a very different way to banks. we need to make sure we have a very good case before we act in these areas. we need to ensure we recognize the tools and approaches we currently have as market regulators, conduct supervision and conduct supervision are great starters and should be the basis for this in any area. at the end of the day, we recognize fundamentally that for markets to do their job to fund the real economy you got to have investor trust and confidence.
and everything we do and conduct , supervision and enforcement is directed at that because that is what -- why markets exist and want to make sure they can do their job. but equally, we need to make sure that trust exists around the world so that the market can do it not only in a single country, but integrated throughout the world. thank you, everybody. and thank you again for the opportunity to address this group. >> thank you. a very interesting discussion. it looks like we will get a lot of questions out here. this is the q&a part of the program. please identify yourself and the organization you represent. if we could wait for the wireless microphone. >> i'm with writers.
-- reuters. there's a team that supposed to go up with rules for asset managers in november, i believe. what do they think about what you are saying now. -- saying now, and have you coordinated your message with them? >> iasco is an independent body on behalf of the world's regulators and we are -- we participate in the financial stability board. we coordinate with them. and i spoke to mark following morning when we made our decision. i believe he is supportive and understand the reasons for why we have taken our decision. that is where we stand. >> you think that package is the
going to come out in november? >> i think what is important is we have a meeting in new york tomorrow on the standing committee of the risk fsb. we will discuss our position. let's face it, and the end of the day, we are the regulator standard for the funds management around the world. it is not the financial stability board. i think that is clear. >> this gentleman in the center. >> i'm with politico. a thing like just a few months ago fsb and iasco were doubling down on asset managers. can you walk us through how you got from that to basically reversing course on the whole plan? >> from my view on these things, and i've been involved with this for a while and my background was in asset management, is that
i think it has been a journey. this is what i was saying before, that the journey should be to establish the problem, establish the facts, and then decide a solution. we seem to be developing a solution before we developed the problem. i think that is why we have ended up where we have. i think the fsb, it is a second consultation where we have selected the instance. i think you will continue to see a more assertive caller: -- assertive iasco from now on. we believe what we regulate which is the market, will simply play a more important role in the world economy. >> a follow-up question.
you said governor carney was supportive. >> you understood where we were coming from and understood what we were saying. >> do you expect fsb to follow your lead, or is it too early to say? >> we are an independent body and do not report to the financial stability board. we have a voice there and we would like to have a stronger voice their because we represent a small -- a stronger voice t here because we represent a small percentage of that right now. we would like to have a more vocal voice. >> i'm a freelance writer on the assignment for risk freelance magazine. two questions. you said at the beginning that identify and monitoring emerging risks have been one of your priorities.
what emerging risks do you see? >> clearly, we think -- the thing about risk for the moment, i see probably four megatrends. the first one is clearly structural around the world. more is moving out of the banking system into the markets which for the reasons i mentioned earlier is just going to keep going. the percentage that is funded through markets will be greater next year and it will just keep going. the second megatrends is clearly digit is jason -- digitization of the economy, digital disruption. and in particular the digital disruption of financial services and markets and we see that right across the train -- the chain. generally, the reason digital disruption happened is because
there seems to be value between the consumer and the originator. i always say, let's look to see what we can do in harvesting the opportunity and mitigating risk and what i also say is, look, and into the day, the outcome we want is the same. we want to make sure that investors have confidence and the process to get that confidence in the algorithms or whatever it is a month it is just into thinking and you have to think about how you enable those startups to actually talk to you. the issue is the financial system is not yet that adaptive to the digital world and one of the things we have done, for example, in my country is set up an innovation hub with advisory
committee and thinking helps and staff. innovation is important. another aspect is cyber resilience. that goes hand-in-hand with what is happening with digital. and there we have been concerned about making sure -- and i think we call it cyber resilience because you cannot be completely protected. the u.s. national security standard and its framework, i believe, is a fabulous methodology. we are looking at what we can do across the various primary market, secondary markets, funds management derivatives, what we can do in terms of guiding and setting various parts of the system for risk management approaches. that's important, how we can share information.
i think it's not surprising that probably the cyber attack is probably the next black swan. i think that is the second thing. the third area for us is always what i call in a hundred -- innovation driven complexity, whether it be in markets technology -- markets or technology itself. we are doing a lot of work on that at the moment. innovative bankers and product manufacturers are looking at that. the other one in markets is the high-frequency trading dark pools. the fundamental thing of markets is to fund the real economy. it is actually not to facilitate gambling or trailing -- trading that can actually affect
confidence in the market. there we just got to be careful with balance to say dark liquidity is outside the main markets, for example. i guess the fourth key for us is getting that balance between allowing the free market to do its job and balancing that with investor conference -- confidence. but if you think about it, the two should be in line. and if you don't have trust in markets, you don't have free trade facilitated across the system. the other one that is a big issue that is emerging in terms of trust and confidence is confidence in culture. i think we will hear more about this. what frightens me is when we peel the onion and what we see underneath in banks is quite frightening. i think it is quite frightening for banks and i do believe they
have taken on the issue of the need to take -- to change the culture. i'm very passionate about it because i don't think that we were headed post crisis which is creating armies of people and red tape is the solution. frankly, it is doing by -- it is doing right by your customer and getting that culture back of banking 40 years ago getting back to just doing the right thing is probably what we have to think more about. unfortunately though, i think it is a carrot and stick approach. the carrot is where we see issues of culture in our company with surveillance, being proactive with the top management and the boards and saying "i think your problem," i think that is important. -- "i think you have a problem," i think that is important.
but equally, i think, is the stick. it is important, unfortunately because we know human nature is often driven by three things. people who have just -- what happens if you get caught? the third -- the second is culture. we need to make sure that management is responsible for individual accountability, probably more important than for fines, because at the end of the day, corporations are simply people and if we're going to get culture right into the future and have an confidence in the financial system and in banking, the way to win that back is to make sure the right checks and balances are there. this is the area where i think we will hear more about. it is what we are seeing around
the world in foreign exchange and benchmarks. >> we have hit the fifth anniversary of dr. frank. --.-frank. how well have the global regulators -- of dodd-frank. how will have the global regulators done with getting the different countries on board? with 12 different regulators, it is kind of difficult. how good a job has it been with the global conversion? >> i think it is incredible. look at the otc derivatives. suddenly, you have countries working together. i had breakfast this morning with tim masard. it is incredible how regulators around the world cooperating.
we might argue about which team view is prevailing but look at the financial stability board. we want to be more inclusive at exit -- at fsb so we don't get the wrong answer. globalization is a fact of life. that is the other trend i did not mention before. the markets are globalized. frankly, we are globalized. we are in markets. therefore it is essential we work more and more globally, and a do believe it is working well. something's work well another things are still in training. i believe the issue of derivatives -- and if you look
at the history of crises throughout history, one thing we know is that normally it is fine to recognize that markets have changed and become more global. quite often, you end up with a process. history doesn't repeat itself but it rhymes very well. we are just going through another lesson of history. and we will learn again. we are shaped by change. >> dam easy with thompson information services. given the global --dan macy with thompson information services. given the global nature of what
you're doing, does that apply to the asset history? >> i think it is a great initiative of the financial stability board. that ability to track through is very important. i cannot comment on asset management at the stage, but i do believe integrating -- it's a great initiative and i welcome. >> dave michaels with bloomberg news. you mentioned during the crisis that output with me to a funds were not significant, but you also talked about liquidity risks moving forward. could you elaborate a little more on what specific kinds of funds you see as posing a liquidity risk? and you mentioned bond markets in that part of your talk. could you elaborate a little bit more on what your concern is about bond market? >> a lot of this work we are doing is reassure the financial stability board and markets and
the tools we have our appropriate. and if there is a need to change, to identify it. as i said, we will be looking at the activities and funds and how they do with liquidity mismatches and adjust. i cannot pretty the outcome, but what is appropriate is dependent upon the structure of the fund and the redemption capabilities, for example, stressing it to see how it acts in a liquidity stress. and then just making sure that people are confident the system works, or would work in a stress scenario. and then communicating that stress scenario to everybody
under a stress scenario, this is how it would work. equally in the secondary bond market, we've all heard about structural issues in the bond market. we are doing a survey across the world of bond markets. my background is in fixed income markets. i must say in this area, it's quite interesting. generally, we know there is a lot of talk about market-making will stop -- market-making. generally the issue of market-making is that when you need liquidity, it's not there. what i was in markets, i never necessarily relied on market makers to be there when i needed it. you have to think about other options. on the one hand, you've got discussions, people saying, you get the world has changed. if you think about it, you have
a mass of liquidity on the books. what we want is sustainable markets. sustainable bond markets, whatever markets we have, we want them to be sustainable. and i never thought that what we had pre-crisis was particularly sustainable because it was driving liquidity out of the bank. you have people saying, we've got to do something and i don't think that is the solution. he got other saying, if something really goes wrong then the central bank can provide liquidity. i think fundamentally, what you've got to do is about, you know, i think the industry needs to think about what real investors really need to build real liquidity into on markets. and what they often need is, you know, they want to buy bonds upon the index in which they are
managed. issuing bonds that are actually in the index. it's a bit like equity markets. we all know that when you get into the index mother liquidity goes up because you are buying in the volume. that is 101. the regular issue is, they actually thrive on building liquidity with their investor base. they issue the change. they make sure the documentation is simple. another issue is making sure you got it good derivative market. you may want to keep the liquidity position but tell off the risk. making sure you've got a good derivatives market is an example. a recent situation with pimco, they round back their positions and a matter of days. it was a pretty good test of liquidity in the market. before we start rushing off drawing conclusions, let's
understand the problem stop talk to the experts. -- understand the problem. let's talk to the experts, talk to the industry, and make sure we understand how it works. that is the we do. >> that rest of this session today. chairman metcalf will be available for questions afterwards for a few minutes? but we have come up on the end of our hour. i appreciate everyone showing up today. i hope you gained a lot of insight from the chairman's comments. >> make you very much and i very much appreciate you all coming. [applause] -- thank you very much and i very much appreciate you all coming. [applause] [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> today we will show you a news conference of governor nikki haley speaking about a confederate flag at the state capital to be taken that.
let's watch. [video clip] >> for many people in our state the flag stands for traditions of nobility and history. our brothers and sisters in charleston, in no way to see reflect the people of our state who respect and in many ways revere it. those south carolinians view the flag as a symbol of respect and integrity and duty, and they also see that they memorial, a weight on her and the two came the service of their state during a time of conflict. that is not hate on or racism. at the same time, for many others in south carolina the flag is a deeply offensive symbol of a brutally a passive -- brutally oppressive past. as a state, we can survive and
indeed thrive as we have done while still being home to both those viewpoints. we do not need to declare a winner and loser here. we respect freedom of expression and for those who wish to show respect for the flag on their private property, no one will stand in your way. but the statehouse is different. and the events of this past week call upon us to look at this in a different way. 15 years ago after much contentious debate, south carolina came together in a bipartisan way to move the flat from the capitol dome -- the flag from atop the capitol dome. today we are here without a little to say this time to move the flag from the capitol grounds. [cheers and applause]
150 years after the end of the civil war, the time has come. there will be some in our state who see this as a sad moment. i respect that. but know this, for good and for bad, whether it is on the date house grounds -- statehouse grounds or a museum, the flag will always be a part of the soil of south carolina but this is a moment in which we can say that flag while an integral part of our past does not represent the future of our great state. the murderer now locked up in charleston said he hoped his actions would start a race war. we have an opportunity to show that not only was he wrong, but just the opposite is happening.
my hope is that by removing the simple that divides us, we can move forward as a state in harmony and honor the nine blessed souls who are now in heaven. >> just a quick look at what governor nikki haley had to say earlier today in columbia. it will have her entire remarks tonight at 8:00 p.m. eastern here on c-span. and in light of governor haley's comments, senate majority leader mitch mcconnell tweeted in part the -- the confederate battle flag me different things to different people, but that it continues to be a painful reminder of racial oppression too many suggest to me that it is time to move beyond and a time for a state to fly has long since passed. >> tonight on the communicators, cochair of the congressional caucus, texas republican governor -- texas republican joe barton on the issues of cyber security.
congressman barton: you got the principle, whose information is it? is it automatically the public domain because i choose to use a mobile app and the way these things work, they go into the cloud and all of that, or can i use it and still have a reasonable expectation of personal privacy? if you take the latter view that it is personal that changes the way you regulate and the way you legislate. if you take the position that i am by act of being a part of and by our dissipating -- by participating in the act, i am forgoing the right to privacy, that is a different issue entirely. >> tonight at 8:00 p.m. on the communicators on c-span2. >> and tomorrow on washington
journal, virginia tech survivor -- shooting survivor colin got her looks at the gun control debate. and in coulter discusses her new book discussing history of illegal immigration in the u.s. and we take your phone calls, facebook comments, and we. wash -- and tweak. washington journal is live at 7:00 a.m. here on c-span. also, data security and spending after security was breached that could affect millions of employees and veterans. she will speak before a senate appropriations subcommittee lacked tomorrow at 10:30 a.m. eastern on seas and three -- c-span3. >> c-span gives you the that
covers, live coverage of the house, news conferences, and every morning, washington journal -- is life with elected officials, policymakers, and journalists, with your phone calls. >> earlier today, connecticut senator christopher murphy discussed foreign-policy issues and highlighted eight points for a comprehensive foreign policy overall, including climate change as part of that debate. he currently serves as ranking member on the senate foreign relations near east, south asia and central asia and counterterrorism subcommittee. this is an hour. >> i'm executive vice president of the andrew wilson center. the wilson center, as you know, is both a trusted platform and
space for non-partisan dialogue on global issues and deals with regional issues, issues of technology and environment and women's leadership and other areas. we are very excited to have senator murphy with us today. in the past couple of weeks alone we have had the pleasure of hosting some of his colleagues from hill. this is a rather unusual number of senators from both parties including john cornyn and senator bob corker, chairman ed royce, and congressman henry cuellar. let me introduce the two speakers. i will introduce the sensor second. aaron david miller is our moderator today. he will ask a few questions as well. he is the vice president of initiatives here at the wilson enter and a distinguished scholar. he served previously in the state department as an advisor to republican and democratic
officers of state. he has received the departments meritorious honor awards and is the author of many books. and most recently and i forgot to bring my copy of this, but i like to show it, it's a fabulous book and i recommend you go out and get it, "the end of greatness, why america can't have and doesn't want another great president," a book that he published just this fall actually a few months ago. senator chris murphy, our main speaker today, is a junior united states senator elected in 2012. murphy serves on several committees, including appropriations, health education, labor pensions and the committee on foreign relations. prior to his election to the u.s. senate, murphy served connecticut's fifth congressional district for three terms in the u.s. house of
representatives and also served in local politics in connecticut as well. it gives me great honor to welcome to the podium senator murphy. thank you. [applause] senator murphy: well, thank you very much, andrew, for that kind introduction. thank you to the wilson center for hosting me here today. i'm really looking forward to a conversation with aaron david miller in absentia. let me think my great friend jane harmon for all the fantastic work she's doing here. in connecticut, we are very proud about our largely unpublicized connection to the history and legacy of president wilson. very few people know this, but he actually started his academic career teaching at wesleyan university and many credit his positive experience with his teaching job there as an inspiration to keep him in the profession. he spent, as did his first wife, many of their summers in old lime, connection. she was part of the old artists
colony and he made most of his decisions sitting at florence griswold's kitchen table in old lime. so we love the connections that we have to the wilson legacy and to this center and it's really wonderful for me to be with you here today. i remember this particular day that i'm going to talk about like it was yesterday. it was the spring of 2011. i was in a small, small village called parmacon in harat province, afghanistan. it was my third and really my most memorable trip to afghanistan. president obama's afghanistan surge was under way. and icef command had sent us to this tiny little village to see general petraeus' counterinsurgency strategy in action. we went out to parmacan where we met with 100 army commandos
which was led by a young man from a town of goshen, connection. they were wildly impressive. there was no doubt that they had brought a modicum of piece and stability to a parcel of harat province that had been under the thumb of the taliban just months ago. after a briefing in their ramshackle headquarters, they led us on a heavily guarded walk through the town, along with a collection of village elders. it was a stunningly beautiful walk. rocky, dirt roads surrounded by acres and acres of the most beautiful flowers that i had ever seen. irrigation canals maintained with u.s. dollars protected by our newly arriving soldiers. a half dozen workers were busy harvesting whatever crop these flowers provided a canopy for. i finally asked one of our hosts, one of our elders what that crop was. poppy, of course, he said plainly. what do you do with it once you harvest it?
he said we sell it. we sell it to the taliban, who comes and buys it for a pretty good price. that's what he said within ear shot of u.s. soldiers who no doubt knew all about this arrangement. an arrangement for which they were sent to provide cover and protection. now, i can't say that i was stunned because by this time i had heard it all during my trips to afghanistan and iraq, but this was as clear cut an indictment of our presence in those theaters as you could imagine. 100 troops in far western afghanistan. they were buying us temporary space, and we could credibly claim that we had purged the taliban from control of that town. but the taliban were lying in wait. they still surrounded the village. worse, they were marching into town to collect the revenue that would fuel their return once we left. we were achieving our military objective, no doubt. but we had done nothing
meaningful to change the underlying long-term susceptibility of parmacan to extremist influence and control. they still had no way to feed their families other than producing poppy, which was being sold to the very guys that we were sent there to eliminate. local governance was either irrelevant, corrupt or nonexistent. all signs pointed to the disturbing but to me increasingly unsurprising reality that our military success was practically meaningless there if we didn't have a viable strategy to change the economic and political reality on the ground for these people. now, in iraq, this contradiction played out with even more devastating results in the aftermath of the late bush administration surge. waves of u.s. troops and even bigger waves of u.s. cash provided a security blanket over parts of iraq, while political and economic progress went in
the opposite direction. the u.s. handed out bags of cash to sunni tribal leaders, a short-sighted, impractical strategy for the long term while prime minister al maliki waged a war against the sunnis, to the point that when our troops left, they were happy to align themselves with anyone who was willing to fight the central government in baghdad. now, today i'm confident that the vast majority of our high level military planners and diplomats fully understand this failing of our u.s. military intervention over the past decade. plus just last week army chief of staff, a battle hardened veteran of iraq said this when he was asked about calls to deploy troops back to the middle east to fight isis. he said, quote, my worry is could i put 150,000 soldiers on the ground and defeat isis? yes. but then what? it would go right back to where we are. a year later it would be right back to where we are today. before we even consider anything like that, we need to solve the political problem. and of course secretary bob
gates remarked upon leaving the defense department that any future president that contemplated sending combat troops back to the middle east should have their head examined. and yet there are these creeping signs that we're on the verge in many ways of repeating the very mistakes that we should have learned. the architects of the iraq war are back, unapologetic and in charge of republican candidates' foreign policy. the intraparty fight between john mccain and the interventionalists and rand paul and the isolationists is over with a convincing neoconservative victory. republican senators right now are calling for thousands of american troops to march back into iraq and maybe into syria too. and recently, these senators are making an interesting claim, one that we wouldn't have thought possible a year or so ago. they're saying that the american public is on their side. interestingly, they have a few polls to back them up. there is numbers on both sides but a few recent surveys suggest that americans are scared to death by isis and they want washington to do something about
it, something dramatic something that answers the ferocity of isis with the kind of powerful shock and awe response that only america can muster. so mccain and graham are right that some polls are showing that americans support putting combat troops into the fight against isis. these polls also have something else in common. they ask respondents a battery of questions about how concerned they are about isis and how they feel about how president obama is handling the problem. but then when it comes to possible responses, they ask only one question. do you support combat troops or not? there is no other option, there is no other alternative. send troops or effectively do nothing. given how scared people are of the real perceived threat that isis poses, they choose to do the only something that they're presented with. but polling and simple organic voter touch and feel tells us that america is still very weary about war.
witness the unexpectedly ferocious backlash against the president's plan to bomb syria in 2013. and no matter what the neoconservatives and republican presidential candidates say, the lessons of places like parmacan and mosul haven't gone away. that's why i believe now more than ever that americans want an alternative vision for how america can protect itself from threats like al qaeda and isis and the taliban that are something more than simple military intervention. americans will responsible to a new forward-looking, progressive strategy that meets these new threats with new tools, rather than simply relying on interventions that were designed for a time when armies marched against each other and grand peace treaties ended conflicts. and to be political for just a moment in a place that i know is not supposed to be political this is a moment for progressive democrats to seize the opportunity to lead. i'd argue the congressional democrats, especially over the last few years, have been absent from a serious interesting debate over the future course of american foreign policy. yet we weigh in on the weighty
issues that demand our temporal attention, but it's only president obama and the republicans that are attempting to offer a broad vision for the rules of how we engage in a world full of very new, very scary threats. now maybe our vision silence has been understandable since we've frankly been able to lean on a president who we broadly agree with. we read the president's may 2014 west point speech and in it there's really little to argue with. but we only have his cover for the next 18 months. now, i support secretary clinton and i support her foreign policy ideas, but in a 50-50 country, we can't simply hold our tongues and hope that she wins. we have to show some leadership and show it now so that the american people have a choice when evaluating how to respond to these new enemies that we face. so this is the context in which we decided to produce a set of eight pretty common sense principles that we think should guide american foreign policy and congress' foreign policy
ajeblda as we reorient our policies to meet these new challenges. first we argue that america's nonkinetic tool set is dangerously underresourced. we seem to have forgotten the lessons of post-world war ii in which we were spending 3% of gdp on foreign aid in an attempt to rebuild stability in war-torn areas. we learned the lessons from after world war i and we invested gigantic sums of money in rebuilding our friends and our enemies to use economic development and political inclusiveness to stomp out instability that could undo the post-war balance of power. today foreign aid is 4% of what it was in 1950 as a share of our economy. a 96% realtime reduction. so we believe that a new marshal plan for at-risk regions like the middle east or portions of russia or china's periphery can get us the stability and win us
the allies that were produced by a large nonmilitary investment in the 1940s, 1950s and 1960s. now, we don't need to spent 3% of gdp on foreign aid on this but you can't justify spending 15 times more money on military and military aid than we do on us aid and peacekeeping combined. secondly we believe in working multilaterally to increase you r effectiveness, working through international bodies like the u.n. and nato make us stronger, not weaker. just as importantly, multi lateral support can be a check on american hub russ. if no other ally is willing to join us in a military endeavor why shouldn't it cause us to question the wisdom of that intervention in the first place? yes, there are instances where
america is under immediate threat and we can't wait for partners to sign up. but as a rule with limited exceptions, our actions are more effective within coalition. third, we believe in a far more thoughtful and restrained approach to military intervention. significant military action has got to have clear goals, exit strategies, a plan to pay for it and it's got to be authorized by congress as the framers of our constitution intended. if you measure calls to dramatically increase troop levels in iraq to fight isis i'd argue that none of these tests can be met. fourth, we believe that military action is only worthwhile when there is a political strategy to clean up the mess once the fighting ends. this is our caution. the u.s. military is the most powerful in the world but even it has limits. if there isn't a political answer on the ground to remove the impetus for terrorist organizations, then military gains are only going to be
temporary and rarely worth the price in lives and treasure. fifth, we believe that covert actions like mass surveillance and large scale cia lethal operations have to be constrained. the dramatic expansion of our intelligence operations after 9/11 needs greater oversight and restraint. the usa freedom act is a step in the right direction but more has to be done, like taking large scale military operations like drones away from the cia for good. sixth, we believe that strength at home leads to strength abroad. americans simply won't support more foreign aid spending if we aren't rebuilding our own roads and schools. if we aren't addressing their own economic limitations. that makes sense in part because america leads by example. countries follow our lead because they look up to our track record, to our standard of living. as it slips, so does our ability to lead. seventh, we need to watch the gulf between what we say on human rights and what we do about it. how can we tell other countries to get serious about how they treat people if we are mealy-mouthed on torture. if we hold people at guantanamo bay with no hope of trial.
if we listen in on our allies and own citizens. our ability to affect international change on human rights is dependent on our ability to walk the walk at home. finally, we believe that climate change has to be at the center of every international relationship we have. future generations are going to judge us by whether we elevated this discussion in every forum possible given the catastrophe that will be wrought if we don't act. plus the effects of climate change like increased drought in syria and mali are already here. now, i think it's important to say that i'm not suggesting that there's anything earth shattering or ground breaking in these principles, but at least they would stand in contrast to the enviably simple world view of our neoconservative competition. they argue for ending sequester only for the defense budget. we'd say that the other elements of the national security budget are just if not more important than military funding. they believe that participating in international -- that participating in international organizations demonstrates weakness. we think it's the key to strength in this new multi polar world.
they think that terrorism exists in a military vacuum. we believe that it exists in a political and economic vacuum and that our policies should respond accordingly. they think that there's a choice between protecting civil liberties and national security. we believe that they're co-dependent. and these differences play out in realtime as applied to current crises. a progressive foreign policy applied to the fight against isis would start with an honest assessment of our goals. for instance, it sounds really good to say that the american objective is to defeat isis. but should it be? frankly our policy should be to eliminate the ability of isis to attack the united states. and whether isis is going to be wiped from the face of the middle east is really a question for our partners in the region. and if our goal is to end the threat of isis in the united states, then ground troops makes no sense. but it would argue for the massive plus up of assistance. it would argue for a robust military partnership with our regional partners so long as
that partnership is broad and deep. it wouldn't ever rule out going after high value targets that present a threat to the united states and it would call for us to learn from the successes of those bags of cash that we handed out in anbar province in 2007. it was the wrong tactic, but a bigger, smarter assistance budget administered in coordination with the embodied government could move mountains. on the night of our delegation's visit to parmacan we were briefed by admiral mccraven at special operations command. as we walked in the briefing room, he showed us a pyramid of pictures of the most wanted terrorists in the region. at the top of that pyramid was the photo of osama bin laden. what we didn't know was that before and after our briefing mcraven was putting the finishing touches on the bin laden raid. the night after we left, blackhawk helicopters set off to take him down. despite what we saw, the bin laden raid was a reminder of the seemingly infinite capacitmed forces, our men and women in uniform. when you watch them work, it is easy to understand why our
influence in the world has been viewed through the prism of the u.s. military for so long. they are damn good at what they do. but today as president obama has warned us, we can't view every problem as a nail simply because we have the most effective hammer in the world. the tactic of terrorism is impossible to fight an army. disease epidemics can't be cowed by an air force. today we are reading reports of attacks on the parliament building in kabul. it's crushing to hear. after over a decade of american intervention in afghanistan. but last week a report noticed almost by no one noted that the taliban in fierce fighting had taken back four villages in harat province, afghanistan, in the district right next to parmacan. the new threats that we face don't look like the old ones. that's why we need new rules for engagement and new allies in this endeavor. thank you to the wilson center for having me and i look forward
to the discussion. [applause] >> senator, let me again welcome you to the wilson center. i didn't know about the connecticut connection but it's an important one. wilson was our only ph.d. president and our only one buried in washington, d.c. let me thank you also for a thoughtful and thought-provoking discussion. there's a lot to unpack here. i have a few questions for you and then we'll go to audience questions, but i want to make several points. not necessarily directed at your presentation, although there are some relationships. it's more a personal cree de cour. first i think the challenge for this republic is not to identify progressive or conservative foreign policy, the challenge essentially is to try to find a policy that obviously is
designed to protect the national interests but also a policy that in essence should work. the dividing line for that policy, and i worked for republicans and democrats and i voted for republicans and democrats shouldn't be between left and right, liberal or conservative or republican and democrat. it should be between policies that are smart on one hand or alternatively policies that are dumb on the other. and if you want america to be on the smart side, it seems to me we need to focus on substance and effectiveness, not politics. on reality. that is the world the way it actually is before we get around to conceptualize and conceive how we want it to be rather than ideology. on tactics for sure but also on sound strategies. and understand that while american leadership is critical, it also has limitations too. second, from my own personal experience, doctrines and
principles can be extremely effective, particularly in articulating clearly and with a measure of honesty a general approach so that congress understands our policy and more important so the american people understand our policy. the problem with doctrines and principles, of course, is that they're limited in how they apply to a blueprint to navigate in what has become an anomalous hypocritical, cruel and unforgiving world. think about it just for a minute. we participated in military action in libya but not in syria. we supported an arab spring in egypt but not in saudi arabia. we claim to stand for democracy and human rights, particularly in the wake of the arab spring and yet our most stable partners right now aren't democrats, they're authoritarians in the gulf and in egypt, and we're negotiating even now as we speak
a punitive nuclear deal with iran and yet at the same time for whatever the reasons, we can't, won't or are unable to take a tougher view on iranian repression at home or their efforts to advance their interests in the region. so the question is how do you reconcile these anomalies and in fact do you need principles, but do you also have to recognize that a principleless foreign policy for a great power may well be more suited to the complicated world in which we live in. finally, if you ask me what the greatest challenge was for our foreign policy, it would be finding a better balance between the risk readiness of previous administrations, perhaps one in particular, and the risk aversion perhaps of the current administration. that is to say we've abandoned
the middle ground. we insist on looking at the world as all in or not in. and the question is, is there a more effective balance between risk readiness and risk aversion, perhaps borrowing on some of your principles, that might in fact serve and suit our interests. one final point, we have an extraordinary advantage over the rest of the world. it's basically our location. we have nonpredatory neighbors to our north and south and fish to our east and west. but one historian called brilliantly our liquid assets. these oceans literally create the framework within which we see the world. our privileged security position explains our naivete. we somehow believe we have abandoned the notion of what it's like to be a small power. it explains our pragmatism.
we believe every problem in the world can somehow be fixed. it explains our arrogance, because we don't have to listen. great powers have tremendous margin for absorbing mistakes and even very costly errors. we need to take account of that and understand that our view of the world is not necessarily the one that will be held by those whose security positions aren't as fortuitous as ours. so with that in mind, let me ask you a question or two and then we'll go -- we have plenty of time, we'll go to audience questions. i'll start with something you didn't refer to, which is congress' role in foreign policy. the founders in their infinite wisdom created an open invitation to struggle, a system in which powers are shared and separated. if i asked you whether or not you thought congress' role in foreign policy was an effective and credible one, how would you respond?
>> i hope that in some way this entire effort is a call to action for congress. it's underlaid by my belief that we have largely been out to lunch, and what i would agree is that our constitutional obligation to set in some degree of measure with the president foreign policy moving forward. now, the constitution gives us very specific powers to decide how much money gets spent on a variety of activities. it's not lost on me that we haven't passed a state department authorization bill through the united states congress in over a decade. it tells us that we are the only branch of the federal government that declare war and we simply have chosen not to do that when it comes to the current conflict, unless you believe that the 9/11 amf gives you the authorization to take on isis. so i think senators menendez
carter and corker have done a tremendous job of putting the foreign relations committee in the senate back as a relevant element of the debate. the willingness to take hard votes on intervention in syria or on a process for evaluating an iran agreement. that's important, but it's insufficient i would argue, so these other pieces are left undone. let me -- i really love your comments, but let me take the opportunity to just maybe give a little bit of flavor as to how the guy who gave that speech might respond to a couple of things that you said. i completely understand the caution on doctrine and principles. i think it's important that we have tried not to presuppose outcomes in foreign countries as an element of these principles. what i mean by that is nowhere in here does it say that the united states should always pursue democracy, right?
or nowhere does it say that the united states should only pursue our immediate security interests by supporting people that we might idea logically intervene with. what it does say is that you have to have some political plan of what happens in the aftermath. as to this question of risk, i think that's a wonderful challenge as well but i think it's important to talk about what kind of risks we're debating. we normally think about that in terms of military risk. that's the parair paradigm in -- paradigm in which we exist. the president has not been willing to exercise the degree of military risk that others would want him to. but there are other kinds of risks we aren't even talking about because there isn't even the conversation space with which to debate it. for instance, in eastern europe, it would be risky but incredibly important to make a mayor -- major u.s.
investment in energy independence in our allies. to put u.s. dollars, planning resources on the table to try to change the way in which gas moves in and around that region. but we can't have that conversation because there's nowhere in the budget where that's allowable. but we can have a conversation about a military risk, increased intervention in syria because there's just a common acceptance that once the president wants to do that, we will fund it one way or another. but if the president takes a nonkinetic risk, there may not be anybody there to back him up. so i love the conversation about increasing risk, but i want to frame the discussion that allows for it to happen in military terms and nonmilitary terms. >> with respect to risk, you do transition into the issue of an
authorization to use force memorandum. you've got the two longest wars in american history, which is a stunning fact, fought by 0.5% in a volunteer military which gives the president tremendous discretion to use military power and force without controls without constraints in response to the perception that america is under threat. that would imply a greater role on the part of congress in an effort to create some sort of sound basis as to when and under what circumstances force can be applied. now maybe congress is simply too -- i suspect this is the answer, too divided on these questions to create a consensus that would be meaningful, but it does really come -- if you want to change the nature of the discussion, there is a piece of this which does imply a much greater level of congressional involvement and, frankly, unity in response to safeguarding and protecting the american -- this is a very risk averse
administration. can you imagine a risk ready administration under these circumstances. you implied it in some of your comments. so congress' role would be even more important. iran. now, you don't know what's in this deal, neither do i. but based on what you're sensing, do you think you'd be in a position to support the administration's case for a comprehensive agreement on the nuclear issue with iran? >> absolutely. i agree with you, that we don't know what the details look like and there is evidence that there wasn't as much agreement in the framework as we might have all suspected or maybe there's just evidence that a political conversation has to play out in a certain way in and around tehran and we have to accept the reality of that before we get a signature. but to me this speaks to the principles that we're talking about here, which is finding