tv Key Capitol Hill Hearings CSPAN May 14, 2014 8:00pm-10:01pm EDT
mother from georgia my father from southern virginia and washington. it's where they met, married and had me so without the great migration i wouldn't be here. i don't know who you would be talking to. so i've lived with all my life. i grew up with people from north carolina south carolina georgia all around me in the neighborhood where he grew up and i was surrounded by the language the food, to the music the ambitions of the people who had migrated from the south and competition about whose child will go to catholic school, school across the park so it's been with me all this time.
to enforce regulations under the dodd-frank financial law. the sec is requesting $1.7 billion for nick steers budget and the cftc is asking for $280 million. this is an hour and a half. >> good afternoon. the subcommittee will come to order. i am pleased to convene this hearing of the financial services general government subcommittee to consider the fiscal year 2015 funding request of two key federal regulatory agencies, the securities and exchange commission and the commodity futures trading commission. i welcome my distinguished ranking member senator mike johanns and some of our other colleagues that will join us here throughout the day. joining us today are also the honorable mary jo white chairman of the securities and exchange
commission and the honorable mark wetjen acting chairman of the commodities future trading commission. they will discuss the critical work of their agencies can't, their use of resources provided over the past couple of years and their budget needs for fiscal year 2015. the work load for these agencies has grown dramatically in recent years. the sec and the cftc both play critical roles in stimulating and sustaining economic growth and prosperity in our country and protecting the marketplace from fraud and manipulation and carrying out dodd-frank reforms. my constituents have made clear they support these reforms to prevent the reckless and abusive practices that led to the financial crisis. fortunately some sectors of our country are recovering but sadly many families have not recovered and they continue to struggle.
i believe it is my responsibility to the hard-working and honest people of new mexico and to all americans who suffered as a result of this crisis to ensure that we work to fully implement dodd-frank. we need a financial system that is safe and sound echoes what happens on wall street have touches every american family. whether they are saving to buy their first home hoping to put their children through college are planning for retirement. they put their faith in the financial markets being sound. we cannot let them down. and they are not alone. market users financial investors in the u.s. economy all depends on vigilant oversight by these two agencies. especially in today's rapid paced evolving and often volatile global marketplace. in the past few years both chairman dwight and acting chairman wetjen and their fellow
commissioners and respective staffs i think it worked very hard to create a more reliable regulatory structure to ensure the stability and integrity of the features of the securities market that they are still everyone will admit a lot of work to be done. we depend on your leadership to implement the reforms designed to strengthen our regulatory framework, go to do so promptly, prudently and transparently and help guard against another financial meltdown. as the investors and the sec have an important role in maintaining fair orderly and efficient stock and security markets. the sec conducts day-to-day oversight in major markets participant monitors disclosure of information and investigates and pursues enforcement action in securities laws violations. dodd-frank dramatically expanded
the sec's responsibilities. the sec was thrust into the drivers seat for issuing nearly 100 new rules creating five new offices issuing more than 20 studies and reports overseeing the over counter derivatives market and hedge fund advisers registering municipal advisers and security based swap market participants and setting up a new whistleblower program. to jumpstart our business startups after 2012 adding more to the sec's rules and studies on capital formation disclosure and registration requirements. turning to the cftc now the cftc carry stock market surveillance compliance and enforcement programs and the futures and swaps arena. it detects deters and punishes abusive trading activity and manipulation of commodity prices
to prevent negative impacts both on consumers and on the economy. four years ago the cftc's mission was substantially expanded to include new oversight of the swaps marketplace. the fast once in a shadows world of over-the-counter derivatives. it is a significantly transformed economy diversified marketplace one that has globalized electronic around-the-clock. the enactment of wall street reform in 2010 also added the job of the cftc. cftc now has oversight of the once unregulated 400 trillion-dollar over-the-counter u.s. drifted his market to protect and benefit and users and the broader american public. this complex swaps market has notional value of nearly eight times the size of that of the futures market. now the forecast for 2015 looking ahead for fiscal year 2015 for the sbc president seeks
funding of 1.7 billion, an increase of three and $50 million, 26% above the fiscal year 2014 base enacted level of $1.35 billion. it is 236 million above the sec $1.464 billion currently operating level. the $1.7 billion requested for fiscal year 2015 will support 5143 permanent positions an increase of 639 positions over the current 4504 permanent positions or a 14% growth in staff and for the cftc the president's budget request $280 million an increase of $65 million above the fiscal year 2014 enacted level of $215 million.
this is a 30% increase in funding above the current level. the proposed fiscal year 2015 level will support 920 staff or 253 more when compared to the current staffing level of 667, a 37% increase. congress probably exercises its most effective oversight of agencies and programs through the appropriations process remitting an annual check-up and review of operations and activities and spending. today's hearing provides a valuable opportunity that asks some important questions. are the sec and the cftc keeping pace with the developments in the markets particularly with more complex financial products which are emerging? to these agencies have the right mix of talent and specialized expertise to be vigilant watchdogs?
do they have the state-of-the-art information technology to augment and support their human capital? what are the top priorities for use of the resources proposed for 2015 and what are the light we consequences of continued budget shortfalls and reduced resources? i know senator johanns and i welcome the opportunity to conduct critical oversight of these agencies and i now turn to my distinguished ranking member's senator mike johanns for his opening remarks. >> mr. chairman let me just start out and say thank you to the witnesses for being here with us today and thank you mr. chairman for holding yet another important hearing as we work our way through the various budget requests under our subcommittee's jurisdiction. i do look forward to hearing from the witnesses today regarding the details of your important requests as well there plans to carry out core missions
and implement dodd-frank in a responsible manner. there are three areas that i would like to highlight looking forward to your testimony in my questions. first, the fcc's implementation of the jobs act. where is that on schedule? i'm concerned that it is not on schedule and i want to learn more about that. i do encourage the sec and your team to move with all appropriate speed and finalizing regulations a in the crowdfunding rules. second combat would like to get both of your thoughts on technological advancement in the marketplace and what you're agencies are doing on the technology front with that. and finally i would ask you be persistent in trying to work together to coordinate with your fellow regulators. and a complex between sec and cftc and cross-border swaps and lack of coordination between sec
and the department of labor over fiduciary standards continues to cause uncertainty and confusion. derivatives markets and effective oversight of those markets matter a lot. from farmers to homeowners and to small businesses. we all benefit from a system that promotes fair and orderly markets so i'm concerned that certain agency rules seem to fragment the market, a and push businesses overseas. in some instances the cftc has moved quickly and others the commission has simply chosen to issue guidance and what looks like an effort to avoid cost-benefit analysis. in many cases the commission has opted to act alone instead of properly coordinating the sec as well as the other domestic and international regulators. in order to be an effective regulator transparency is
critical. this need for transparency and coordination is evidence in the cf tc's approach to cross-border implementations swaps regulation. cftc's guidance, the delays and the lack of coordination with other regulators have led to confusion and concern for market participants or government financed ministers and investors here and abroad. no doubt that both the cftc and the sec have an important job of protecting investments. we look to the markets to help secure their retirements pay for their homes, cosan kids to college. you're agencies have an n. to protect consumers hopefully from the next made off mf global or stanford. as we look at both of your budget requests two things come to mind. first technological solutions
are important to keep up with next generation trading platforms that operate at lightning speeds. two staffing levels have to be carefully considered and they also have to make sure that they are sustainable. all agencies have to make strategic decisions on how best to allocate resources.arkets an economic growth. chairman udall again, i look forward to working with you as we consider the fiscal 2015
budget requests of the s.e.c. and cftc and i look forward to the testimony and the opportunity to ask questions. thank you, mr. chairman. >> thank you, very much, senator johanns. at this point i invite chairman white to present testimony on behalf on behalf of the cftc you each will have five minutes. i know you have very thorough statements which will be put into the record and you can use your five minutes as you choose. please proceed chairman white. >> thank you chairman you don't make a member johanns for allowing me to testify in support of the presence fiscal year 2015 budget for the securities and exchange commission. now more than ever investors enter markets with a strong vigilant inadequate resource as you say. to put the fcc's extensive responsibilities and it's 2015 budget request into context from fiscal 2001 to fiscal 2014
printing volume in the equity markets more than doubled to a projected $71 trillion complexities of financial products and the speed with which they are. increased at eventually. as such under management of mutual funds grew by 131% to $14.8 trillion and assets under management of investment advisers jumped almost 200% to $55 trillion. there are today over 25,000 sec will register on its including broker-dealers clearing agents transfer agents credit-rating agencies exchanges and others. during this time of unprecedented growth and change in our markets the sec also has been given significant new responsibilities for over-the-counter derivatives private funds advisers municipal advisers crowdfunding portals and more. the presence $1.7 billion budget request would enable the sec to address critical core priorities including enhancing examination
coverage for investment advisers and other key entities that deal with retail and institutional investors. protecting investors by expanding our enforcement program's investigative capabilities and strengthening our ability to litigate against wrongdoers. applying in leveraging cutting-edge technology to better keep pace with those we regulate make our operations more efficient and improve our ability to identify a friday of market risks including emerging frauds. ps -- sec funding is deficit-neutral which means the amount congress appropriates is offset by transaction fees and thus does not impact the deficit the funding available for other agencies or caps in the congressional budget framework. nonetheless i fully recognize my duty to be an effective and prudent steward of the funds are appropriated. i believe our accomplishments in
the past year should give congress and the public confidence that we will fulfill this responsibility. while certainly much more remains to be done since my arrival in april 2013 the commission has adopted or proposed morgans 20 significasignifica nt rulemaking is including many mandated by the dodd-frank and jobs ask across the rigged revelatory spectrum of our jurisdiction. on page three of my testimony details these. we are aggressively enforcing securities laws requiring for the first time emissions to hold certain wrongdoers more publicly accountable and in fiscal 2013 we obtained orders for penalties and discouragements of $3.4 billion the highest in years since its history. we have intensified our data-driven approach to analyzing appropriately addressing complex market structure issues such as high frequency trading and dark pools implementing a powerful new analytical tool called midas.
have begun a conferencconferenc e of review of the sec public company disclosure rules to make disclosures more meaningful to investors while at the same time making them more cost-effective for companies. i want to make clear that the significant progress i'm talking about was due to the incredible commitment talent and expertise of the sec staff. the fiscal 2015 budget request will permit the sec to increase examination coverage of investment advisers to everyday investors are increasingly turning to for investment assistance for retirement and family needs. while the sec has made the most of its limited resources we nevertheless are only able to examine 9% of registered investment advisers in fiscal 2013. in 2004, 10 years ago the sec had 19 examiners for a trillion dollars in investment adviser assets. today in 2014 we have only eight. more coverage is plainly needed in the industry itself is the
knowledge that. very importantly this berger request would also allow us to better leverage technology across the agency to support a number of key initiatives. this budget request also allows us to continue augmenting our division of economic and risk analysis by adding financial economists and other experts to assist with economic analysis and rulemaking risk-based selection for investigations and examinations and structured data initiatives. i firmly believe the funding you seek is fully justified by her important and growing responsibilities to investors companies in the markets. your continued support will allow us to better fulfill our mission and to build on the significant progress the agency has achieved which i'm committed to continuing and advancing and i'd be pleased to answer any questions. >> thank you very much and chairman wetjen please proceed. >> good afternoon. >> good afternoon chairman udo ranking member johanns and numbers of the 70 thank you for inviting me today to the hearing
on the presence fiscal year 2015 funding requests for the commission. in my remarks in response to detail the commission has used its resources in the previous fiscal years. my goal this afternoon is to provide the subcommittee with context to the important will role commission place in the financial system and the economy as a whole as well as the important role this committee plays in helping our agency achieve its mission. as you know the commission was tracked by congress to police the derivatives market which includes futures options and swaps. the cftc is continuous effort to implement the revelatory framework for the swaps market required in dodd-frank. the operation integrity through this market are critical to the efficient functioning of google financial system and the economies that supports. without them apprised risk crop of small business business cannot lock in an interest-rate that would otherwise fluctuate perhaps raising its costs and
global manufacturer cannot walk in a currency value make it hard to plan. any vendor cannot assess its balance sheet to ensure -- packagers market that enable enterprises to do it they do best create jobs and grow the economy. when not overseen properly firms or other markets can severely negatively impact the economy and cause losses for individual participants. this is why a properly funding the commission is so important. measured in percentage terms the commission's funding level today is substantially larger than it was through much of the last decade. previous funding increases were necessary and appreciated. nonetheless the growth of the commission's responsibilities including under dodd-frank have significantly outpace the growth in the agency's budget. consequently today the commission is underfunded. the markets the commission oversees and the agencies related responsibilities have
grown by a friday of different measures. for instance the notional value of derivatives centrally cleared by clearinghouses was estimated to be 124 chilean dollars in 2010 and is now approximately $223 trillion. that's nearly 100% increase. now more than ever in clearinghouses failure to follow the commission's regulations designed to ensure proper risk management could have significant consequences to the economy. the amount of customer funds managed by clearinghouses and futures commission merchants was $177 million in 2010 and is now over $218 million in nearly 40% increase. the commission's rules are designed to ensure customer funds are safely kept by these firms and are vied appropriate oversight increases the chances of risky practices placing customer funds at risk. by one measure the total number of registrants overseen directly by the commission has increased by at least 40% in the last four
years. this includes 100 to swap dealers to majors while participaparticipa nts of more than three dozen registered entities which include clearinghouses and trading venues. the cftc also receives more than 4000 advisers and operators of managed funds some of which have significant exposures across financial markets. additionally the commission directly or indirectly supervises the approximately another 64,000 registrants. the agencies current staff at 648 employees. the rushers and it is the commission oversees will by and large perform important services for their customers. nevertheless those relying upon them as well as the american public deserve assurance that the risks the firms impose are being mitigated by an agency capable of meaningful oversight. this year's budget request is a significant step towards the longer-term funding level that is necessary to fully and
responsibly fulfill the agency's mission. he recognizes the immediate need for appropriation of $289 approximately 920 all-time equivalence weighted towards examination surveillance and technology functions. the request balances the need for technological tools to modern markets tech fraud and abuse and identify risk compliance issues with the need for expert staff to make use of data. without additional funding the commission will be forced to perform less thorough examinations including those deemed systemically important or the stewart customer funds and be less able to develop analytical systems to perform this -- it will be deterred to collect transparency and less able to time investigate and prosecute enforcement cases for threats to customer harm or integrity. thank you for inviting me today and i would be happy to a answer any questions. >> thank you both for your
testimony and we will now proceed on the seven minute rounds of questions. chairman wetjen the cftc's budget justifications emitted to the committee suggest that the fiscal 2015 request and i quote from the budget justification. quote a significant step towards a the longer-term funding level that is necessary to fully and responsibly fulfill the agency's core mission". what do you consider to be the optimum funding level necessary for the cftc to fully and responsibly perform its work? what functions with the cftc not be able to adequately address at the funding level inactive for 2015 is less than the full $280 million request? >> thank you chairman for the question. this request is especially focused on three key areas for the agency with regard to the
agency's mission. the key mission activities are enforcement surveillance and examinations. as such is said in my opening statement we are not going to be able to do as much as we should i believe in each of those three key areas so we are not going to be able to do as many examinations of some of these critical entities in the marketplace and there's a tremendously enormous amount of risk being housed at clearinghouses. that is increased substantially in recent years. we have 15 clearinghouses under jurisdiction and we are able to manually examine two of them which have been deemed systemically important. we have with current staffing been able to get around some of the other clearinghouses as well but we are not in a position with current staffing to examine all 15 of those veteran or basis
of the staff has been forced to make adjustments about which clearinghouse might be a little more risqué than others and intentionally focus on that way in the clearinghouses examinations of all of them on an equal basis. see how about the optimum level? have you thought on that? >> $280 million request i think gets us very close to optimal based on my judgment. the request this year is slightly below what was asked for last year and primarily that was because we want to be respectful of the direction the congress gave us in passing a budget resolution which called for a very modest increase in overall discretionary spending so in light of that it seemed appropriate to adjust the request this year accordingly. >> thank you. chair white the sec is seeking $1.7 billion for fiscal year 2015. this would be a 26% increase in resources compared to the level
enacted for the current year. what are the top priorities to which these additional resources will be devoted and what consequences can be expected if the funding level approved for the sec is less than the amount requested by the president? >> the priorities or to fund our exam program our enforcement program and really our core areas including our division of economic and risk analysis. not that we can overstate the importance of sufficient funding and what rare custom in this budget request for technology. we are at a critical juncture at the sec with a number of our systems enhancements and a number of our risk-based tools that allow us to be smarter and more efficient than detecting problems in the marketplace including emerging fraud. the one area that is an illustration i alluded to this in my oral testimony as well as
there are 11,000 registered investment analyzers now under the f. highest priority list, along with others. and this budget request does seek 126 additional enforcement staff, including market experts which i think is enormously important to do our job better and more efficiently. so if we were not to receive funding at that level, clearly
all of our functions really across the boards would suffer. i've tried to illustrate the areas of greatest need and certainly our reqst is our request is intended to be quite targeted and surgical do those core needs. we obviously have the new responsibilities you alluded to in your opening remarks to implement the reforms in the over-the-counter securities-based swap markets. we have new advisers where responsible for. all of that needs to be implemented as well as the rules put in place. >> thank you. in a couple of months we will marked the fourth anniversary of the enactment of the comprehensive wall street reforms aimed at strengthening the oversight in the wake of the financial crisis of 2008. recent analysis by outside monitoring entities reflect that of the 398 total rulemaking is required under dodd-frank 95,
20% are under the jurisdiction of the sec and 15% under the jurisdiction of the cftc. there was a report by davis polk analyst issued last month indicating of the 95 rules under the sec 44% have been finalized and 11% have not yet been proposed. of the 60 cftc rules 50 to 80% have been finalized and three, 5%, have not yet been proposed. both of you i'm interested in hearing how the independent press reports square with your agency's own internal tracking of your implementation timetable. i think the best thing for me to do is come back to that question like senator johanns i had an additional questions on that and if you could keep that in mind. senator johanns i'm going to go
to you for questioning at this point creates. >> thank you mr. chairman. chairman wetjen let me get started with you. if you look at the budget control act and the ryan murray agreement that was reached last fall after as you know some very difficult negotiations total discretionary spending is due to increase this year by about $1.4 billion or in the next budget year i should say. that's less than 1% increase over last year. so i think the bipartisan message sent to everybody is that this is going to be very tight, very challenging and very difficult. however in the budget request we get from cftc you are asking for a 30% increase. now i think by anybody's
definition that is significant but it's especially high when you recognize what everybody else is faced with across the federal government. so i would ask a couple of questions. one is how do you justify it recognizing important missions like yours are also going to be held to this agreement and then secondly what if it doesn't happen? do you have contingency plans as to how you will deal with that and how you will get your budget in line with what the ryan murray agreement calls for? >> thank you senator for the question. the request was based on a number of different factors but first and foremost what are we responsible for doing under the law and again i go back to the
three key areas of our agencies mission enforcement surveillance and examinations. those are the key mission activities but meanwhile the number of entities we oversee has increased by a friday of different measures and just recently went through in percentage terms higher than the increase we sought with their budget request this year. and so i think our first responsibility and my first responsibility in my capacity at the moment is trying to get my best judgment and best case for the kind of funding we need to make sure we are complying with the law. that form the basis of th that e
to make sure they're managing risk in an appropriate way, and, unfortunately, we've seen over the past number of years the sorts of outcomes that can happen when they fail to do that. or when they fail to follow our rules. so that's the basis for the request. your second -- remind me again, second part of your question. >> second part of the question is, what if you don't get there? how are you going to -- describe for us how you're going to deal with that if your argument isn't adopted and your request isn't granted. >> well, i see i think we will have to continue be forced to continue
doing what we have been doing and that is using our best judgment about which entities to examine which ones we will have to take a pass on any particular year make judgments about which matters to pursue by way of investigations once some incident comes to light whether by referral from another division within the agency or through some other way outside of the agency. judgments will have to be made there. as far as those cases that are already and her development the enforcement cases under development judgments will have to be made about how to allocate resources. do we devote more to some cases based on certain risks of success or risks of not succeeding and in light of the litigation risk in that way? these sorts of judgments you prefer not to have to make given the responsibilities under the
law. >> in this general vein let me ask a question about the technology piece of your budget. cftc technology spending has grown less than 7% since fy2011. the overall budget is up to 12% during that same period of time. my concern is that the cftc is operating with selectric typewriters while the industry is operating with the latest technology. i just worry that you are getting behind. it seems to me that what we are trying to achieve with your agency is a faster more technological advanced agency than we have today that can keep up with what's going on in the marketplace not necessarily a bigger agency.
bigger doesn't necessarily solve the problems that you are dealing with albert. so tell us why the commission has it seems to me downplay technology investment while spending in other areas of the budget. it seems to me technology would be critical for you to keep up. >> senator you're absolutely right. it is critical and by no means should this year's request be viewed as downplaying the importance of technology. it's critically important but what we have had to do again if given the fact there are finite resources and trying to be responsible in our request and in light of other responsibilities of the agency we just had to make a judgment about how much is appropriate to allocate to spending right now and how much is appropriate to spend on these other important activities and as important as technology as we still need
so $50 million is a slight increase, as you said, above where we've been spending currently. i would like to spend much more than that. but in the context of an overall budget request that has limitations, that was my best judgment about where we should be in the short term. >> mr. chairman, i yield back to you. i anticipate another round. s. yes. of >> thank you senator johanns. i outlined a little bit the animals and the numbers there and then going back to that question. how the independent progress report square with your agency's internal tracking of your implementation timetable? >> essentially the particulars match up precisely but essentially they do i think. the sec as you mentioned in your opening remarks visited 100 rule-making spy dodd-frank and
additionaadditiona l ones under the jobs act. i did from the beginning of my tenure and continue to prioritize the completion of those rule-making center dodd-frank and the jobs act. i'm pleased with the progress that we have proposed are adopted over 80% but we really have a ways to go. those adopted or proposed since i've been at the agency for about a year now 20 significasignifica nt months. among those adopted obviously one of the bad actor role which is important to investors and certain offerings should not be examined associated with bad actors. we have proposed all of the title vii jurisdictions. it is a very high priority for 2014 for us to complete those. we have adopted the municipal advisers role and that number of others have been adopted. again we have completed nearly all of the studies signs to us
under dodd-frank. it's a very important that these rule makings are done promptly and certainly that is one of my commitments and one of the commitments i made at my confirmation but also to be done well and to be done after careful and appropriate economic analysis. so we are all very closely focused as one of our highest priorities in completing those mandated rule roman kings under the dodd-frank accton under the jobs act. >> do you feel you have the necessary expertise on staff to adequately issue and enforce the rules required by dodd-frank? >> i think we have the necessary expertise on staff read on some of our rule makings are also done jointly or in consultation with their fellow regulators both domestically and internationally. you make an excellent point which is we are talking about
not just adopting those robust strong rules but also then implementing them following their adoption. that is one of my significant resource concerns that we actually do have the resources to adequately implement and enforce those rules once they are adopted. >> and do you have staffing plans with more expertise in areas that can shoot it to the financial crisis? >> again at very high priority of mine since i began was to bring on more economists and you will see that prioritize in our budget this year as it was last year with expertise. certainly in areas that were involved in the financial crisis and also modern-day issues with respect to her equity market structure and we have done that in the enforcement space as well. so there's full understanding of the rules we are enforcing with the requisite expertise and that is one of the important things we are seeking the funding for this budget request.
>> chairs wetjen how are you coming out on the rules that you are promulgating the ones that are in the pipeline. this is square pretty much with the independent analysts or do you take issue with their numbers? >> i believe it does. the primary rule makings the come to mind when i think about those that we are required to do under dodd-frank but not yet finalized is the rule-making for larger requirements for credit swaps capital were garments for those firms and the third one would be a final rule on position limits another rule-making required under dodd-frank so i believe the davis polk study might've mentioned one more but those are the three that i think of in terms of unfinished business. position limits we propose to rule their last fall. staff is working on the common
file created in response to that proposal. the other two staff is working on every proposal. those were rule makings that were proposed a couple of years ago but in light of significant international work done through the offices of a number of key international organizations the decision was made to reimpose those two rules so we have to have something in circulation soon under those two. >> how would you characterize the efforts to harmonize the rules among multiple regulators? why don't you take a stab at back? >> thank you sir. it's difficult. everyone has their own responsibilities to their own country and their own legislative bodies but there has been considerable effort through
some of these same international organizations. there's another group that was formed specifically related to trip but his reforms. the odr g. group it's called so those groups made on a regular basis all in an effort to try to get countries to adopt reforms that are sufficiently comparable and comprehensive in nature. >> chair white. >> i hype priority both domestically and nationally as rule makings that are not required required to the joint. there is close consultation and coordination to try to make those as robust and consistent or at least compatible as possible. when you talk about the title vii ruled makings and the jirgas market is obviously a uniquely global market so we need to get that right. i think we are all working very hard to try to do that. i think the fact that the agencies charged with
implementing the volcker rule actually worked together and came up with a joint rule including cftc and the sec was enormously important both to the strength of the rule and the consistency and certainty for the marketplace. >> thank you. senator moran? >> mr. mr. mr. chairman think you very much. senator johanns may be based upon the relationship i have had with other cftc chairman telling me the presumptions is that if you are creighton grad you could do no wrong. chairman wetjen thank you very much for joining us today. i appreciate the conversation we had in my office yesterday. you have indicated to me and i've seen evidence of it, the desire to work hard to develop good solid relationships with congress and i'm very grateful for that and i look forward to accomplishing that is well with you. let me just ask a question that in part we discussed yesterday.
implications of rule makings mandated by dodd-frank. what are you able to do to mitigate what is always described as unintended consequences? you and i have been touched with regard to real-time reporting rule which may unintentionally identify swap urges append transactions and you indicated this is something you are looking into. would you bring me up to date and may be put on the record the conversation that we had yesterday on where you are headed? >> thank you senator. we did pass a rulemaking that puts in place a real-time reporting obligation of swaps activity and depending on the entity or the counterparty bears a timeline by which the party has to report their trade to the
public. and that matter you and i discussed as you know relates to certain instruments that are not terribly liquid and there is not a trading activity in sony's products. because of that fact it becomes easier to identify the identity of one of the counterparties. so this is a problem and a challenge for the agency because the statute does say one of the considerations that has to be made is that in this reporting obligation the identity of the party not be revealed. on the other hand there is tremendous public benefit in having informatiinformati on about a trade available as quickly as possible. it's very useful in terms of price discovery which is one of the key functions of our marketplace. that is where the tension is so i have directed staff at the cftc to examine this problem and
to look into it. to see whether or not we can confirm that this is in fact a problem. the other analysis here is a think we need to review what the statute says and look carefully at that and determine what was meant when we were cautioned not to have reporting obligation that could reveal someone's identity. it's not like anyone would say hey at so-and-so but people trading in a particular instrument the marker placed since to figure out relatively easily who those parties are. so staff is looking at this. i actually had a conversation after you and i spoke yesterday a full conversation with the staff. they are duping -- doing a type of analysis so they're looking at another way to see if they can confirm some of what has been reported in this illiquid swap so we will keep working at it and keep you up-to-date.
>> thank you very much. let me turn to the sec chairwoman white. thank you for your presence today. pleased to see you here as i do sometimes in the banking committee as well. to asset managers for recently graduated to stage ii of fsoc review process for systemic important financial institutions and i'm concerned that asset managers who simply administer customer accounts may be proceeding down a path of additional regulation that in my view may be inappropriate for that industry. can you give me a better sense of how this designation process are for asset managers is progressing at fsoc and given the understanding that the assets in question are not owned by the companies in question? and then i have a couple of follow-ups depending on what you say. >> i think although there've been reports to the effect of
your question i don't think there is then a public announcement of the precise status with respect to specific asset managers which is the protocol at the fsoc with respect to any company that might be considered. >> that's encouraging because what i would ask you because i understand there's a roundtable discussion to occur in the next couple of weeks apart of my concern is why are we making designations now when there is more work yet to be done? >> again i think some of the treasury officials and the secretary of treasury and the chair of the fsoc there's a process of learning about and gathering data on the asset manager industry. again what i can say publicly about the process otherwise i think it's a good development and there is the asset manager conference on monday and it's a public forum so with that
representatives of the ascot and staff of the member agencies will hear from the industry and other interested parties and knowledgeable parties. i do think it's important and again the fsoc is given the power in general if it finds the responsibility to decide whether there are systemically important institutions that aren't are banks and insurance companies etc. and one of the powers congress gave to fsoc was to designate. that doesn't say what that process should be or what the data should debo for one does that. those are very important questions and i think it's also very important and the zero f. our study which came out in september about the asset management industry and not specific parties pointed out the very fact that you mentioned which is the asset manager businesses and agency business so when you're considering what if any systemic risk it may or may not pose you are not talking
about a balance sheet of positions. you are talking about an agency model and it's important that be understood by all who are considering this in the right expertise be brought to bear on that analysis. >> in your analysis what is the significance of that agency relationship? how do you personally or how do you at the sec for see this issue within your world of fsoc? >> again as the chair i'm a member of fsoc as you know. i think it's extremely important factor and essentially if you are looking to what kinds of entities and why it may create systemic risk of these assets are not yours and not on a balance sheet that's a very different situation before you to assess in terms of whether such an entity if it were to fail, fails in any sense similar to a bank who does kerry positions on the balance sheet
obviously. so i think it's a critical fact. not the only fact a look at but a critical distinction between asset managers and some of the other$1.35 billion in 2014. very, very significant growth by think definition. but despite this tremendous growth in resources, the s.e.c. -- and i acknowledge, this was prior to your time -- but it failed to detect ponzi schemes like madoff, stanford,
didn't sound the warning on the collapse of the u.s. financial system, or near llapse. that describes for me a very serious problem within the sec. you may disagree with that and you may agree with that but i would like for you to spend this time since this is a great opportunity for oversight to talk to us on the committee about your view of what needs to be done to avoid a future made off a futures ponzi scheme. what are you doing that changes the culture and the dynamic of how people look at their role and responsibility in terms of dealing with charactercharacter s like that and in terms of dealing with the financial system of the united states? >> i think several points there. one is the agency has acknowledged this.
there were weaknesses and issues before my arrival the agency had made specific progress on addressing. that did happen. for example in terms of a ponzi scheme today one of the items in our budget request that we are seeking to enhance even further is the tips complaints and referral system whereby we give out 15,000 complaints at the sec every year. 3000 plus come into our whistleblower office by 15,000 in toto so to speak so those are now all centralized automated assessed electronically quickly and sent out to where they need to be sent out. one of the enhancements that we weren't able to do last year because of the funding was to actually automate the triaging of those complaints. there is no question that feature which did figure into those incidents you are mentioning is now quite
different at the sec. a number of changes were made both in the exam program enhancements improvements in the enforcement division as well. one of the things that i think is enormously strengthening the enforcement program for example is a specialty units where you now have expertise residing in different markets strata that the sec is responsible for and again i think nothing more important at the sec then we have a strong compliance function, a very strong enforcement function. .. been helped by our economists as part of that effort. which is basically thousand we have technological tools that allow us to analyze, assess, access massive amounts of data, much more quickly. for example, one of our newer
tools in the examination program is called national exam analytics tool. basically it allows our examiners when they go into an , look at all of their trading basically. we had one instant recently where i think 7 million transactions were accessed and analyzed in 36 hours. the sec of yesterday could not have come close to that. obviously what do we do would we get that data analyzed? we look for panels of insider -- patterns of insider trading, ponzi scheme, front running. it's a much stronger sec in those respects, i think. you can't -- no one can responsibly sit here and say that any law enforcement agency will never miss a scheme going to forward, but it is an extraordinarily strong enforcement and example auction today. >> would you be confident in cut -- testifying to the committee today that under the current atmosphere of the current approach is that madoff could
not repeat what he did some years ago? >> from what i know of what occurred, you know, it was not here, but i have studied what occurred, i think the systems we were just talking about, among others certainly at the sec, believe that would have been detected and proceeded upon. again, you can never guarantee you will catch every ponzi scheme, every for rochester, every criminal, but i do think it has been built to prevent that from happening again. >> the budget request you are making admittedly is sizable. i appreciate your circumstance for having said that. it's our job to provide oversight where the dollar comes from. given recent past experience, history would probably tell us that we might be facing a continuing resolution and that
you would not receive your full request for some time in to the budget year. we have not done a lot of budgets around here, unfortunately. consequently, what would then happen is, your browser request may be met in january, february, march of next year. under those circumstances would you, in that limited amounts of time between when you receive that and the end of the fiscal year, the end of september of 2015, would you be able to responsibly deal with that hire up, the people you want to hirable, do the things you want to do with in an abbreviated amount of time? >> i think there is no question, and we have done this in prior years, take into account the likelihood of the cr, continuing resolution, how long it may last and that clearly it leads to a prudent, deferred spending. we do have no year funds.
we're able to more flexibly deal with getting our money's somewhat later in the year. there's no question, one place where it is a particular challenge is in our long-term mission critical i t projects. those of necessity, you need to know you have the money. there's a relatively lengthy procurement carper to process. they do present challenges, but think of financial management folks that i have talked at length to about those issues as well are geared up to be able to use, whenever we would get the funding, if we would get the funding, as much of it as is possible and then carry over and be able to use in the following year by having projected use for it in this year. >> thank-you very much. thank you for those answers. i wanted to shift over to the blogger rule, which you all know very, very important one.
one of, i believe -- let's see here. chair mark wetjen, chairman mary jo white, december 10th, 2013, 5 federal financial regulatory agencies issued a uniform final regulations implementing the volker rule. how -- first question, al is the low being enforced and what is the relevant rule of each of your agency's in overseeing compliance. >> i think the rule itself actually became effective april 1st of this year. the compliance time is still in the 2015 and beyond. a somewhat scaled compliance both in terms of the extent and also the timing. one of the things -- and again, a few moments ago critical to the agency's enacting a joint rule.
a better rule, strong rule. necessary to do that. one of the commitments we need to be focus from this day forward on continuing that coordination ms. wiggins of the compliance and enforcement. there is an interagency booking through a very active senior member for focused on the interpretation, questions of compliance, questions of enforcement. we will try to stay as consistent and then sank as we can. we are obviously independent agencies at the end of the day. with respect to entities who are covered by the rule, for example, broker-dealers, the sec is the primary regulator there. we will have the voice as to whether those are in compliance are not. we will still coordinate with each other on questions of interpretation that affect compliance and enforcement.
>> chair mark wetjen, do you have thoughts on that? >> i would like to echo what chair white said. there is a continued commitment coordinated among the agencies. another good example, we actually issued a final rule late january related to a special investment vehicle issue that materialized and get the attention of the agencies and the congress. and so all five agencies adopted the final rule very, very rapidly. again, i just think that is another example that there is a continued commitment to solve these problems jointly to mike and, in an effort to avoid any kind of answer did not doing so could create for the marketplace i expect that to continue. >> the shifting now serve money market mutual funds. chair white, as you know,
senator joe hansen die and several other senators wrote to you at the sec in 2012 highlighting the concerns race by our local governments on changes to money market mutual funds. and i keep hearing from folks by , about this issue. a little over two weeks ago i have a conference call with constituents representing local governments and businesses in new mexico. they continued to express concern about possible changes. as you know, local governments rely on these money market mutual funds as a cash management tool and it is an important source of low-cost, short-term financing. can you give us an update on where the sec is on the rule and how you plan to address these concerns of local government and others? >> yes. the sec commissioner events staff are actively involved --
quite actively involved in finalizing those rules and those reforms the money market funds. i expect and the relative near firm, proceed. as you know, when we propose the rules we propose some alternatives. the approach, government funds are actually exempted, but municipalities are not. that is the issue that is being raised. a lot of comments on precisely that point. the staff is met with a number of representatives. there is in the proposal should we go in that direction of offloading nav, an exemption for retail funds which would cover some of the municipal funds, but not all. we are very carefully focused on all the comments, but quite
focused on the concerns expressed by the municipality. >> thank you very much. senator. >> welcome. good to have you here. >> if i might first, the courier from the request as an investment and technology and staff. your fyi 2015 calls were a $15 million increase and i defunding. could you comment on the risks and the markets? what role it plays in taking on an expanded role? >> thank you, sir. we have a plan developed by our office of data and technology and have the use of $50 million which would include some enhancements to current assistance we have in place which are necessary for
surveillance purposes. the one system would point out is one that tracks positions taken on by market participants. it's a critical tool that we have now, but it still needs to be enhanced if it is going to be as effective as possible. going forward the agency should continue investing in new initiatives, technological initiatives so that we can get a better understanding of not only constant , to blame trend activity but order messaging. sending orders that don't always match with another counterparty. some firms might an appropriately use a number of different order messages sent into a marketplace as a way to engage in some part -- some kind
of a manipulative scheme. going forward, if we are able to get additional funding friday that is the next key initiative we might want to invest in. >> a budget of roughly 200 million last year. north of over 1 billion. that is about an eight fold return on taxpayer investment. so i just wondered if you wanted to take a moment to explain how an entity that literally pays for itself, what enforcement actions you pursued last year and how the more fully funded cftc would benefit taxpayers as well as benefit the marketplace. >> thank you put that question. i think we initiated and completed around 150, won her 60 enforcement actions last year in fiscal year 13. as you mentioned, and resulted in over one-half billion dollars in five collections. it is in that sense a good
return on a bus when you consider the level of funding for the agency. right now we are on pace to properly have fewer enforcement actions consummated and completed based on numbers midway through the year, midway through the fiscal year. there's a variety of reasons for that. one of which is that we have lost some staff in the division of enforcement. that does give you some indication about the impact of reduced staffing. again, there could be other reasons for that as well. it could just be the nature of instance brought to the attention of the agency this year different than years past, but it is one thing you might want to take a look at. so i have come to -- some concerns about that which is one of the reasons we have asked for additional attorneys for the division of enforcement at the agency. our request would bring us roughly 50 additional fd.
again, i think we would continue to demonstrate with that enhanced team and ability to bring a good return for the taxpayer. >> a cute. thank you for what you do, chair. i sense that you are charged with overseeing more than 25,000 market participants roughly to engage in the trillions of of dollars in economic activity. what the sec does is critically important to a well functioning capital market that is secure and transparent as we continue to heal from the financial crisis. it is critical we take steps to ensure that does not happen again given the broad range and, i think, significant expansion in your responsibility and given that as was the case i just referred to, you don't cost anything to the taxpayers. i support funding the president's request, but i would be interested in your comments on the trends of securities
fraud we are seeing and current enforcement effort and what sort are risks retell the investors are exposed to. i would be interested in how you see progress in rulemaking to implement the job. >> in terms of the enforcement efforts, you know, again, i think there is nothing more important than of very strong enforcement presence by the sec to protect investors. retail as well as institutional, to protect the integrity of our markets, to protect the markets so that capital formation will be facilitated. we clearly -- the sec had done much of this before i arrived, but in terms of the financial crisis cases i think an extraordinarily strong record, they charged over 165, 1609 entities and individuals, 70 plus of those were actually senior executives. they -- ceos, cfo's, and actually got orders to return
over $3 billion in fines and disgorgement. so there is obviously not only value added, but it is returning money to investors. so, you know, we are just about through. we have some additional financial crisis case is that obviously we are focused on completing. one of the things we have done -- really to of the things we have done since i have been active and strengthen the enforcement function, one is to form two new task forces, the financial reporting and auditing taskforce, which i think is the core of investor protection, and that is something that is already yielding results. for the benefit of investors and the markets. we have also formed a micro cap fraud task force which affects that brand of securities fraud, retail investors. another very disturbing pattern, and i saw this when i was a prosecutor, and it has some of the most egregious fraud the ec
are called the affinity fraud. someone commits a ponzi scheme or other kind of investment scam and really gets their own community. we are seeing a growth in knows. we are very focused on dealing with those. and number of different cases. we have also intensify our enforcement efforts vis-a-vis the obligations of exchanges to make sure that they're following the various, i called on market structure rules of our equity markets, which i think is important to everyone. and then one final point i would make is just talking earlier about our need for resources to increase the number of examinations we do of investment advisers and, of course, they are the ones are really day today dealing with everyday investor. we are able to cover a very small percentage of those under current funding. when we go to those places and the broker-dealers we examined as well, we find a lot of issues. so it is -- you know, that makes us at least understand the critical importance of sufficient funding, to be able
to carry out those responsibilities for investors. actually, by just showing up on an exam since fiscal 2012, just showing up instead of pointing out, by the way, those fees should not have been charged to those investors of those funds. they should have been for your account. $28 million just by showing up. its shares you across the scanned the benefits to investors. >> one last question. one and other area that surprised me, training for non u.s. regulators. roughly 1700 in fy13. i think it's 1400 this fiscal year and next. what are the benefits of that program? out as a benefit us to provide training to nine u.s. regulators his markets may not be as robust or scalable or security. >> significant benefit. the securities market, securities fraud market are
quite global. they don't respect borders. i think the training that we provide is invaluable to the american investor who weighed -- may well be defrauded from any country you can name abroad. they have a strong enforcement function we are protecting the american investors. an awful lot of progress, much more to go, invaluable service to the american investors. it is also an invaluable service to a global market for the integrity of the. >> thank you. thank you. >> senator, thank you very much. please proceed. >> mr. chairman, let me ask you a question. let me also, if i might come away some ground or for this question so uniform, and from. i think all of us agree that the cf -- cftc must have smart, forward-leaning regulation.
the market changes so dramatically. and yet we still have to be sensitive to the potential to over regulate. we don't want to regulate everything moves, so trying said strike that balance, i think, is key. one example of regulatory overreach that i have been working on since dodd-frank past is margin requirements on end users win trading derivatives. i can state unequivocally that congress never intended for non-financial and users to be subject to margin calls -- costly margin requirements. yet here we are almost five years later still battling with this. so i have introduced legislation that exempts and users from margin requirements. this is not a republican versus democrat issue.
the measures gain strong bipartisan support. a companion bill has already passed the house with over 400 votes. this is one of those things that should be done. i don't know of the senator that opposes it. maybe there is one out there that i have not come across it. again, i think congress is nearly unanimous on this. i ask gary givens lawyer about it. and i always felt that he had a pretty aggressive view of regulating things. i think that is what he saw his job as. he was going to regulate. but he even agreed that non-financial end users don't pose a risk to the system. therefore they should not be burdened with what i would call i job killing margin requirement . i would like you -- i know this is an issue now.
i would like your thoughts firstly as the acting chair of the cftc on what i am trying to get done here. >> i agree with you that dodd-frank tried to, if i can use these words, hold harmless as much as possible the end user community as it related to title seven in particular. we have a number of rules that provide exemptions from clearing requirements for end users, taking a number of different other actions as well to build out that general principle. one specific area has to do with trades between companies that are not swap dealers. and so we have done a considerable amount of work there. i agree with you in principle, that was the message and intent behind dodd-frank, at least as
it relates to total seven. end users are supposed to largely be left out of the group, so to speak, of the new rule making a now familiar with the details. i don't recall where they are in the process. i agree in principle. >> good practical comments. >> chair, one of the key components of dodd-frank was a mandate that the sec adopt a number of new rules. a key role, credit rating agencies playing in the kind of
meltdown that we were in. conflict with interests of respect toward sales and marketing practices among various disclosure requirements and consistent application of rating symbols what is the status of the sec compliance related to credit rating agencies and what further developments can we expect from the sec on this? >> very important area, very high priority. the agency did, in january 2011, i adopt actually a new rule requiring in our s are opposed to disclose representation and more on how investors might enforce. in may 2011 the agency proposed, i think, the rules you're alluding to. a proposal that 11 be amended to
accomplish the objectives you do -- objectives you listed and five new ones. we are moving this forward quite actively, and there a priority to complete this year. >> do you believe there are additional reporting requirements or controls necessary to prevent another crisis? >> no question in my mind that the credit rating agency issues played a significant role in a financial crisis, and i think the issues you identified are ones that do need for the reforms. the objectives. >> i know of some of the critics have kind of comment this and said, we should start over again i assume that is not the position of the sec at this point. >> we are certainly listening to all comments. the comments -- the formal comment disclosed, but we are
listening very carefully to those it think that certain aspects should be read proposed or done differently and not require proposal. we are trying to come out with very robust rules and are continuing to listen to all critics and supporters and really all ideas on a. >> great. thank you very much senator. it looks like the senator has completed his questioning. let me thank both of you. we really appreciate having you here today. this practice session an exchange of ideas, we want to thank everyone who participated in preparing for this hearing. we very much appreciate the help today's discussion is provided helpful insight into these
operations and i think shows us what the challenges are that are have of us. this information will be instructive as we further consider the budget proposals and develop our fiscal year 2015 bill during the coming week. the hearing record will remain open until next wednesday, may 201st at 12 noon. the subcommittee hearing is hereby adjourned. [inaudible conversations]
>> national security adviser susan writes says she doesn't see any new information coming out of the house select committees probe of the attacks that killed four americans and benghazi, libya. you can see her remarks to the women's foreign policy group online at c-span.org. here's a little of what she said . >> says you brought up benghazi -- [laughter] you're too smart for that. come on. the republicans have, as you know, created a special committee in the house of representatives to look at what happened before and during the attack on the consulate when the ambassador and three others were killed. is there -- what more is there that the administration has done or said that we are not aware of right now?
>> staying if i know. [laughter] i mean, honestly. the administration has produced, i think, 25,000 pages of documents are 25,000 individual documents. supported, participated and contributed to the investigations of seven, i think, different committees. we have had an accountability review board by of very distinguished group of outsiders , you know, house and senate committees have pronounced on this repeatedly. so it is hard to imagine what further will come of yet another committee. what i think about and focus on as the national security adviser is what we can do and what we must do with congress to increase the security of our embassies and facilities from world. we have a budget request on the hill for over four and half
billion dollars that is necessary in the administration's judgement to make the kind of up to -- upgrades and provide the kind of security at our facilities need. what is lost in all of this discussion about sunday shows and talking points is that we lost four brave americans on that day. their families and those of us to work with them continue to grief. the last thing we need to do is to lose anymore. let's -- looking around the world in yemen, kenya, somalia, and any number of places where american diplomats and american servicemen and women are doing what we ask them to do, being on the front lines of our foreign policy. they deserve the support and protection that we can best provide. >> do you not think it's legitimate for the committee chairman? congressman goudies said to look
at, among other things, whether the administration should have done more to make that conflict safe, to make the ambassador said before this happened? >> absolutely, which is what we did have -- we have done which is why we have an accountability review board of what we're implementing the recommendations of the accountability review board and are seeking their resources we need, not only to do with what transpired at libya, but the risks that our personnel may face in various other parts of the world. the security and safety of american personnel is absolutely the top priority of the president, of the administration, and it ought to be of congress. to the extent we're focusing on and i think we all agree that is where the focus ought to be. >> in a few moments senate debate on immigration reform. yellow more than a half-hour, i hearing on heroin and prescription drug abuse. after that we will be aired a hearing on what federal regulators will need to enforce regulations under the dodd-frank financial law.
>> a couple of live events to tell you about. veterans affairs secretary erich sinn secchi will testify on veterans' health care and reports of delays in patient care and our hospital and arizona. veterans groups are calling for a secretary to resign. also at 10:00 the senate foreign relations subcommittee on africa will review u.s. policy regarding the nigerian government response to the kidnapping of more than two rules. >> i was looking at the real estate listing and saw at the top of the charts will be on their price range the most expensive house in connecticut was priced at $304 million but then marched down the 25, a
bargain. what a deal. it was a cozy charmer with 14,000 square feet and 52 acres on river. i was curious to own it. i thought it might be the chairman of general electric. i looked in the town website and saw little note in his own record. it said, this house has been unoccupied since this all robotic. 1951. that did not seem possible. i went over the next day to see it, and the caretaker asked me -- he said, you know, i have not seen any. this is mrs. carr's house i get paid every month. lawyer says the check. no one is ever lived here. this seems more like a bird sanctuary. when i was leaving he it said,
can i ask your question? you suppose she has been dead all these years. >> one of the office you can once this weekend. steve fogel on the critical months at the end of the war of 1812. at 1115, will helton and jon robin world war two missing soldiers in world war one eddie rickenbacker. throughout the daymark leibowitz on washington, damn ball on the 2012 election. live saturday on book tv. on line are books club election is it calls you back. join other readers to discuss the book at booktv.org. >> leaders in six west since his are urging members of congress to pass an immigration bill.
the coalition sent letters saying that immigration reform or bad one and half trillion dollars to the economy of the chin years. them on wednesday republican senator jeff sessions and chuck schumer of new york's book about the issue for a half-hour. issu- immigration. so i rise today to continue a conversation i started two weeks conversation i started two weeks >> i rise today to continue a conversation i started two weeks ago about the house is incomprehensible refusal to do anything to try and fix a broken immigration system. want to remind everyone that it has now been 320 days since the senate passed the strong bipartisan bill that would secure our border, hold employers accountable firing illegal workers, grow our economy, and provide a chance for people currently year illegally to get right with the law and our legal status. during all that time, the house has failed to do anything, anything to fix a broken immigration system. to be clear, the problem is not
that there is difference of opinion between the house bill and the citadel on immigration that cannot be reconciled. the problem is that house republicans have completely abdicated their responsibility to address the important issue of fixing a broken immigration system. again, the problem is not that the house has passed immigration law that the senate disagrees with. the problem is the mouse will put in the immigration bill's up for a vote no matter what is in those bills. two weeks ago i sit in on the floor, the reason that houses them nothing and immigration is because house republicans have handed the gavel of on immigration too far right extremists like congressman steve king. well, madam president, not only is this point not refuted by anyone in the republican party, it is actually confirmed in various news sources that have come out since the speech. for instance, just two days ago the speaker of the house was
quoted as saying, i do believe the vast majority of our members do want to deal with this. they're want to do with it openly, honestly, and fairly. by saying deal with this the speaker is making clear that these folks are part of a vote no, pray yes caucus. but he said immigration has not been scheduled for a vote because there are some members of our party you just don't want to deal with this. it is no secret. even by steve king is analysis, 20-25 members of the house republican side would vote for the senate immigration bill. that number is clearly an underestimation of support in the house for the senate bill, but it shows that even according to stephen king, if the senate bill were brought up for a vote it would pass. he added that about 100 to 120 republican members of the house could possibly vote yes on an immigration bill if it were presented for about.
given this broad support for immigration reform that supposedly exists in the house, i would say to the speaker and a republican house, what are you waiting for? if you want to pass immigration reform and you say the vast majority of their members want to pass immigration reform, schedule immigration reform for a vote. does not have to be -- i think that is a good bipartisan down the middle not too liberal, not to conservative approach. but don't to our bill, do another bill. come up with their own ideas. that's fine with us. all tell you the problem. the house republican leaders are still too afraid of what steve king cole's the 50 to 70 republicans who would fight until the last drop of blood against any immigration bill, in the immigration bill. it is time for house republicans -- the house and republican leaders to decide whether they stand with the majority of the american people and the suppose
a majority of their congress or if they're really going to let steve king continued to dictate the policy of the republican party and immigration. just to be clear, right now steve king is winning. just last week he said, if i had the power and authority to kill everything immigration why is it comes to me, if they actually handed me the keys to the kingdom and if i have the gavel that controls immigration, the immigration issue that would be nice. well, madam president, who among us can say that he has not been handed the gavel and immigration policy when nothing is being done and immigration, just what he said he would do if he were, indeed, handed the gavel. what has the house actually done on immigration these past few years? nothing. look it up. this is what steve king wants. he is winning, and america is losing. it is not just me who is frustrated with this
inexplicable inaction. just this week tom donohue, president of the u.s. chamber of commerce, said if republicans don't do it, they should not even bother to run a candidate in 2016. he added that failure to act is not an option and that we are absolutely crazy if we don't take advantage of having passed an immigration bill and the senate. now, madam president, as you know, i don't always agree with the president of the u.s. chamber of commerce, but he is right here. not only is this inaction damaging the republican party politically, it is also inflecting needless damage to our economy. our gdp could be growing by over 3%, 3% by passing this bill. more than any republican tax cut or democratic spending proposal. the steve king says no, and the speaker abandoned ship.
mario di s. blog, another republican working to pass immigration reform said republicans need a deadline in order to get moving on immigration reform and that if no action were taken by august recess the republican brand would be damaged with latino voters for years to come. has the speaker said, fine, we will schedule a vote before august recess? no. he has not. there is no sign that anything will ever be done on immigration reform. even for the very small, microscopic measure known as the endless tax that would let certain immigrant youth are legal status by joining the military, the house has refused to consider this so far as part of the defense authorization bill. republicans keep trying to place blame on the president saying he cannot be entrusted to enforce a loss. we believe that is a phony excuse, but if that is really their problem, let's pass the bill now and delay implementation until 2017.
i would support that. then you have no president obama enforcing any of this fall. let's call the bluff. is it obama? is he the problem? then pass a bill where he can't enforce any of these laws. we can come to a reluctant agreement on that. now, if republicans can't pass a bill that goes into effect after the president's term, then we know that this trust of the president is nothing but a straw man. so, let's be honest about what is happening right now. republicans are currently doing nothing and immigration reform because they don't want to rock the boat with primaries happening in georgia, pennsylvania, kentucky, virginia, and other key states that are between -- that occur between now and religion. madam president, we cannot keep having broken families living under a broken system forever without any idea of when
congress might act to finally provide badly needed reform. so today, i want to be clear what our window is for the house to pass immigration reform. it is the window between early june and the august recess. today i am saying, if the speaker, leader cantor, and other republican leaders refused to schedule a vote on immigration reform during this window between early june in the august recess, it will not pass until 2017 at your earliest. i believe it would then pass in 2017 after republicans take a shellacking in the presidential and congressional elections. but in the meantime, if immigration reform is not passed during this window, republicans will have to admit that steve king controls the republican party platform on immigration. if nothing happens during this window it is clear that this has occurred because steve king calls the shots, and he has won
the immigration debate in the house among the house republicans. whenever your suppose excuse for inaction, inaction is consent to steve king spot to view. where are the leaders in the house? the republican party with the courage to stand up to steve king in the far right and say enough is enough. we will not let our party be hijacked by extremists whose xenophobia causes them to prefer maintaining a broken system over achieving a tough, fair, and practical long-term solution. make no mistake about it, madam president, the immigration reform will pass, either this year with bipartisan support and a bipartisan imprint or will pass in the future year with only democratic support and democratic imprint because democrats will control congress and the white house simply because the public as a failed to pass a migration reform. in the meantime the president
would be more than justified in acting anytime after recess begins to take whenever changes he feels necessary to make our immigration system work better for those unfairly burdened. house republicans refused to act , it is incumbent sub look at all of the areas where we can act administratively to fix our broken system. i help immigration reform passes this year. my two colleagues from arizona who were so long and hard and courageously and while the bill further away from what many democrats might want, but they knew america and the state of arizona demanded a solution. let us rally to their side. let us rally to the side of all americans, a majority of democrats, independents, and republicans, all of whom want comprehensive immigration reform . i hope -- i hope immigration reform passes this year. our broken families, our
economy, and our country so badly needed. let's hope the house finally stops talking and starts acting. i yield the floor. >> today majority leader reid, leader of the democratic majority in the senate and senator chuck schumer came to the senate floor to demand that the house so representatives pass the immigration bill. they label republicans as extremists for not getting into their demands, and they are correct about one thing. the house is not giving in. at this point in time the house is refusing to yield to the pressure of special interest groups and political lobbyists and senate democrats to pass a bill that will be bad for america. it just will be bad for america. so i think, once again, the special interests will lose in regards to the american people.
a senator schumer said that republicans are xenophobes because they don't pass this plan. let's talk about what is extreme a new report just out reveals that this administration has released 36,000 criminal aliens from ice detention, that is our customs enforcement officers receive them usually from a state or federal penitentiary where they have been convicted of some criminal offense on related to immigration. usually convicted in state courts. they have been released into the general population, including those support found 193 homicide type convictions. 11,503 sexual offenders caught 330 kidnapping convictions and 1,075 and aggravated assault convictions. so these are serious crimes.
and criminals, if you recall, are the only group this administration said we are reporting. they don't even deny that they are not importing others to violate our immigration laws. they promised faithfully that they are removing people commit crimes unrelated to immigration. well, that is being proven not to be so. these dangerous offenders should be kept in custody. they should not be released into the general population. we have had a study of that. when you take a person who entered the country illegally, and they are released on bail, they don't show. if they're willing to enter the country illegally and be here illegally, if a judge has been set for trial and releases them on bail, we have an incredibly high number don't show for trial is called catch and release. it was roundly criticized, and so this is even being done now
with serious criminal charges and convictions. well, you know what else is extreme? extreme is trying to pass an immigration bill that would double the flow of guest workers in our country and triple the granting of permits and admissions to america for 50 million working age americans we have a very serious unemployment problem. is no one concerned about that? so it is not xenophobic, but it is compassionate to say that we should focus our attention on struggling, hurting american workers. it is not xenophobic, but our patriotic duty to defend the integrity of our borders and to enforce the long established laws of the united states. it is the oath we all took as senators to defend the constitution of the united states. it is the oath that the chief law-enforcement officer took,
president obama barre and we have a duty to defend our citizens and our people at a time when they're struggling financially. there is just no doubt about it. so there was one group of people not referenced when majority leader reid and senator schumer talked earlier this morning. do you know who it was? completely omitted was the american worker. that is who was not being discussed in this debate. we know that chamber of commerce duke. they like more workers creating flat labor markets and lower wages. we know that special interest groups want more. we want certain politicians -- certain politicians think this is going to be good, but a crash -- according to the congressional budget office, our own professional team selected in a non-partisan way that give us advice on ramifications of legislation we pass, that group has looked the reid schumer bill
that passed the senate. according to the cbo said democratic immigration bill supported by an number -- a small number of republicans but overwhelmingly the democratic bill would reduce increases in unemployment while reducing wages. it would increase unemployment basically while reducing wages of american workers for the next 12 years and reducing per person well off, per person per capita income in america for 17 years. now, you bring in 30 million people in the next ten years, tripling the number that would be normally given legal status of america, and it will bring down the per person was off, and
it will bring down wages. surely the chamber of commerce understands the free-market, do they not? surely senator reid understands that, does he not? we were on a conference call yesterday worrying about the american steel industry. a large amount of steel was being dumped into america. why? what is the impact of that? what is the concern? more steel, lower price for steel. bring in more common, lower price for cotton. bring in more labor, lower wages for american workers. that is what the cbo told us. there is no dispute. yes, we have senators on this floor who repeatedly say that this is going to increase wages. give me a break. you can't just say something and think it's going to make a reality. it is just the opposite of reality. so under current law we are
admitting more than 600,000 guest workers each year. guest workers come to america not to be citizens, but just to take jobs that someone contends we don't have enough workers for . and we have a million permanent immigrants that come to live here and become citizens ultimately. that is law right now. it is pretty serious, but it is established. but under the senate bill less senator reid maneuvered through this congress we would admit more than, doubling the number of guest workers and give permanent residency to 30 million immigrants over the next ten years tripling the normal rate. so research from harvard
professor, most preeminent students of labor, wages, and immigration at harvard says that the american workers lose more than $400 billion in wages each year due to competition from low-cost workers from abroad. 400 billion in wages each year, not million, billion. the research also showed that from 1980 until 2002 did an empirical study using the census data and department of labor data and other official data. he concluded that wages declined almost seven and a half% for lower skilled working americans. people go to work every day, not people with college degrees, the working people in this country saw their wages decline from 1980 until 2000 by almost seven
and a half percent. there was also this very large flow of legal and illegal immigration. so there is no doubt, colleagues, you have to understand this. the vote for the reid schumer immigration bill is of vote to lower the wages of american workers. not only that, making it harder for americans to get a job. so that people hurting worse by the democratic immigration policies are young americans, it appears. low income americans and minority workers. so our minority workers, according to the studies, are particularly damaged by the large flow, and this includes hispanics to come here lawfully and are trying to get started on
the way of and would like to have a pay raise but their wages have been pulled out also by an extraordinary, unjustified flow of labor that we cannot lows are no. we don't have jobs for them now. that is the problem. i don't dislike people who want to come here. i know most of them are good people that would like to advance themselves, but we have a responsibility as united states senators to the citizens of our country. we need to ask, is this good for america? can we absorb this number of people and maintain decent wages, or are we in a longer-term trend and just wants to allow middle and lower income workers to see their wages eroded. i think it is a big issue, and we need to be honest about it. i hope that we will do so. so young americans are also hurt low income americans.
senator schumer said we should do the bidding on the chamber of commerce. and he says, the hijacking out here, as seems that mr. schumer is party has been the one that hijacks special-interest. going to represent working americans. that is my charge. that's what i'm saying. the immigration, we need to make sure it is enforced directly and carried out lawfully. that is what the american people the best of us. they have demanded, really, for 40 years that they recreate a lawful system that we can be proud of, that treats people fairly. you make your application to come to america, lay out their value, and the best person, the person most deserving on an
objective basis of the ones that are omitted. what is wrong with that? that is what canada does. that is what the u.k. does. it is what australia does. there's nothing wrong with that. that is what we should be doing, and we should decide how many people the country can of sort and what wage categories before we had made huge numbers. and certainly before we double room -- double them. so a number of people have complained. and on the floor of the senate that tech industries cannot find qualified americans. you have heard that charge. i have heard that charge. i have sort of excepted it for awhile. but, in fact, the data is selling differently. it is rather surprising. in fact, we have twice as many
stem graduates each year as there are some jobs. science, technology, engineering, mathematics, stem. here is a recent paper by professor how at rutgers university. and he analyzes carefully, as a good professor would, data from the department of education and labor and so forth. and this is what he concludes. he said, first, we need to get accurate data to truly inform policy decisions. if we are going to make a policy decision about how large an immigration flow we have, not to end it, but how large should be, should we have good data it? this is what he said. the first area to consider is the broad notion of a supply crisis in which the united states does not produce enough stem graduates to meet industry
demand. in fact, the nation graduates more than two times as many stem students each year as jobs in stem fields. for the 180,000 or so annual openings university supply 500,000 graduates. they supply more than twice the number of graduates, and we have jobs for the now. so i am a little dubious about some of these big business types claiming that they cannot get enough people. and what about i t specifically. we hear some of our silicon valley guys promoting any kind of immigration as long as they get more workers. .. mr. saltzman says this -- "the only clear impact of the large i.t. guest worker inflows over
this decade can be seen in salary levels which have remained at their late 1990's level and which dampens incentives for domestic students to pursue stem degrees." did you know that? that actually i.t. graduates' salaries have stuck at 1990's lefts ls >>a9 the. >> in fact, and other fields to do better. if that is true, does that change of the use of this legislation gm does through the city is so proud of that the house passed? if that is true that i would be
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