that his salary is not being subsidized. >> that is correct. they are incorrect. >> i have one final small question. would you agree there is concern about the closeness of police and politicians to "news of the world" and news international? >> i think the public's concern overwhelmingly on the interception of voice-mail is the idea that anybody who intercepted the voicemail -- that overwhelming concern. >> there has been concerned over the closeness of police and politicians at news international. would you agree? >> i think "news of the world"

has been singled out for that closeness. if you are going to address it. you know this more than anyone on the committee as a journalist that it is unfair, the closeness of police and politicians with the media to single out "news of the world". >> this has been a criticism. and yet you on your watch as chief executive manage a triple whammy because you employed the former director of public prosecution to advised you on your approach to -- what was the the vp -- the criticism for rubber-stamp in the complacency to the inquiry. do you think that was an error of judgment given the

circumstances? >> to clarify the mcdonald issue, he was hired by news corp.. he has been rigorous in his separation of payments to police and illegal interception of voice-mail. he has not commented in anyway and the illegal interception of voice-mail. if that conversation has arisen he has withdrawn himself from the conversation. i hear what you say. >> you forgive people shaking their heads. >> i can forgive people shaking their heads if they believe the question you put to me was true that people understand he was hired by news corp. not news corp.. he was reporting directly to the board discussing payment to police, i don't think people

would shake their head. he has been rigorous in not involving himself in illegal interception of voice mail. >> unless you have anything else to add? >> just one thing really. you have heard apologies from rupert and james murdoch. i want to redirect my own. the most important thing that i feel about the investigation is the truth behind the allegations about milly dowler's families. i would like to say to the committee that when i frequent legal constraints that you invite me back so i can speak in a more forceful way. >> the committee would be happy. i thank you for coming and

answering our questions. >> revisit the civil war this weekend on american history tv on c-span3. sunday we are live at the manassas battlefield on the 150th anniversary of the battle of bull run with call in programs beginning at 11:00 a.m. eastern including dickinson college professor matthew cansurge. peter carmichael looks at the social, political and military factors that led to the onset of the war and a panel of civil war historians discuss the challenges facing the north and south as they prepared their forces for battle. get the complete weekend schedule and c-span.org/history. >> it takes behind the stack look that broadcasting and cable. the l 8 times call that required tv viewing and mysteries that nicolas cage can conjure.

c-span's original documentary the library of congress. behind-the-scenes of the world's largest library sunday night at 9:00 eastern on c-span. >> your watching c-span2 with politics and public affairs weekdays featuring live coverage of the u.s. senate. weeknights what key public policy events and every weekend the latest nonfiction authors and books on booktv. you can see past programs and get our schedules at our web site and join the conversation on social media sites. >> senate banking committee met monday to mark the 1 year anniversary of president obama citing the dodd-frank financial regulations act and to look at the impact of that measure. witnesses included one of the chief architect and namesakes of that law, house financial services chair barney frank. you will also hear from federal reserve chairman ben bernanke and the heads of several top

financial regulatory agencies. south dakota democrat tim johnson chairs this one hour and 55 minute hearing. >> good morning. i would like to call this hearing to order. today marks the first anniversary of the dodd-frank wall street reform and consumer protection act. the wall street reform act was a direct response to the worst financial crisis since the great depression. it created regulatory foundation to protect consumers and investors and prevent or mitigate future crisis. i am pleased to have one of the architects of the current legislation, representative barney frank, with us today. i would also welcome our panel of distinguished regulators to discuss steps they took to implement provisions of this

important law for oversight of the financial service industry. congress must also do its part. as chairman of this committee i am committed to rigorous oversight of the implementation process in restoring americans trust in a credible financial system. it appears meeting on wall street and some in washington have forgotten the cost of inadequate financial regulations. i have not. the means of americans who lost their jobs, homes and savings and still waiting for the recovery. unfortunately these reforms have been under constant attack since the bill was signed into law.

opponents of wall street reform continually repeat misleading claims that the new law was hastily conceived and burdensome and will harm the economy. the american public disagrees. a poll released this week by research partners show that americans support wall street reform. they support the legislation's goal of holding wall street accountable, making the financial system -- enhancing oversight of wall street firms that have shown they can put the entire economy at risk. even after hearing the arguments supporting and opposing this legislation democrats, republicans and independents support the wall street law. we cannot take that support for granted. since the bill passage this

committee has taken its oversight responsibilities seriously, insuring regulators are on the right track in these provisions. passing the wall street reform act is necessary to achieve and and the regulators have completed many will makings -- rulemakings, this will take time but we owe it to the american people to get it right. i thank our witnesses for being here today and look forward to your testimony. ranking member shall be, your opening statement. >> thank you. yesterday in the wall street journal op-ed piece by [speaking in native tongue] --tim geithner the lead of the foundation for innovation, economic growth and job creation. however for millions of americans the 1-year anniversary

of dodd-frank provides little comfort that they continue to deal with the harsh economic reality marked by little to no innovation, anemic economic growth and no job creation. the unemployment rate remains stubbornly above 9% with more than fourteen million americans out of work. than fourteen million americans out of work. the secretary also wrote that the obama administration expects quote backing from both sides of the aisle when the debate over financial reform, implying there wasn't any. the truth is there was a great deal of agreement on a number of issues until the white house decided the only issue that mattered was the creation of a massive new consumer bureaucracy. in fact we had agreed to create a consolidated banking regulator with the authority of the federal reserve, occ, and fdic

joined in a single entity. it even had a name, financial institution regulatory authoridate. there was strong agreement that current regulators had failed and radical reform was needed. also agreed to elevate consumer protection to equal status with regulation. i proposed at that time given the consumer protection division equal access to congress and the variety of dedicated funds. we agreed to permit non banks to be supervised subject to enforcement. by any measure the republicans were willing to meet our democratic colleagues and the administration more than half way on a number of issues including consumer protection. any hope for a bipartisan agreement evaporated when the word came down from the administration that it was going to be their way or the highway.

a similar dynamic was at work in the agricultural committee n senators javelins and lincoln had agreed on a bipartisan title until the former senator wirth told there was told there would be no compromise. secretary to indict her -- senate republicans were not able or unwilling to d find a core set of reforms they can support. the first thing the republican members of this committee did was draft a set of four principles to guide our consideration of regmic atory reform. i have a copy of that in my hand are would like to be made part of the record. these principles that i reference would address all the major issues including regulation, prudential regmic ation, consumer protecti and derivative regulatiombe also republicans filed hunommed

of amendments based on this course at of reform principles and prior to the bill's markup we were informed not a single amendment would receive any democratic support. once again it was fair way or the highway. secretary geithner also wrote quote that we have turned on the t.a.r.p. investment. as i said in the past legal claims on t. wr qte t's profitability are meager at best. many financial institutions have yet to repay their t.a.r.p. funds and the taxpayer will still lopyely take losses on t.a.r.p.'s housing and are no bailout programs. tso rote quotrneused taxpayer d for very risky investments. proper evaluation of terms on any investment appropriately adjust for this. such an evaf taxpayers were not adequately compensated for the laraga risk

the ar their money. in addition what matters most is tso rote quot los long-term neg impact on the economy which womic d dwarf any so-called profits. t.a.r.p.'s record has not been good for american families. since t.a.r.p. was enacted the unemployment reached an state at record levels. lending is stagnant and millions of americans face foreclosure. geithner took credit for baking regulators and forcing the largest financial institutions to increase capital basis, quotine as the most important step towards diminishing the risk of future crisis. nkinor years i have been aok cu with the the republicans here how capital standaruti have bee inadequate. some bank regulators such as former fdic chairman sheila bear sought to increase capital standards. others remain on the sidelines right here. one of the regulators who did

nothing to iricrove bank capita standards before the last crisis was the president of the federal reserve bank of new york. the new york fed supervisor responsibilities incf laok cest financial institution that received the largest t. wr qte t bailout. who was the new york fed president who failed to oversee our laragast banks and presides over the t.a.r.p. bailout? none other than our current treasury secretary, geithner wrote that regulators outlined major elements of reform to bring oversight transparency and greater stability to the $600 trillion derivatives market. republicans offered a derivative substitute amendment that accomplished all these goals n ability to hedge their business risks. loain street business had nothig to do with the financial crisis.

edevertheless do. thes-fralic will iricose huge costs at a time thy least afford it. the secretary failed to mention that. he also said the obama admial bstration has started a process of, quote, winding down fannie mae and fre. thesme t mac. can you belme tve it? fannie and freddie's market shares increasing. they count for 70% of mortgage-backed securities. with other government pr.'rams inen uding the federal governmet now controls 97% of the market. housing reform has not begun. success will, quote, the panda and making sure we can write sensible rmic es to promote the health of the broader economy. nsible rules that will promote the broader economy. political connected unions and groups were among the biggest winners under dodd-frank. at contains an assortment of

compensation requirements that harms shareholders by empowering special interests and encouraging short-term thinking by managers. 50 years ago president eisenhower admonish us all the president eisenhower admonish us all quote that guard against the acquisition of unwarranted influence by the defense industry in the pentagon. i am surprised that his words have gone unheeded in this context and the only thing dodd-frank has accomplished is creation of a financial regulatory analogue to the military-industrial complex. dodd-frank was created -- and industry for wall street lawyers and special interests. it has turned financial regulatory landscape into a nightmare. geithner claims republicans are blocking nominations of reform.

senate republicans have been clear the structure of the bureau needs to be properly reformed before we consider any nominees. we urged president obama to adopt three specific reforms. establish a board of directors to oversee the bureau. diversify the leadership of this and tested fledgling bureaucracy would ensure the consideration in the bureau's decisionmaking process. secondly subject the bureau to the appropriations process to ensure the bureau has effective oversight and does not engage in less wasteful inappropriate spending. establish a safety and soundness check for the prudential regulators. one of the best consumer protections is a safe and sound bank. i believe the most disturbing claim by the secretary is republicans form, quote, forces of opposition to reform.

this statement reflects the view that anyone who doesn't support their idea of reform must be against any reform. that is nonsense. as i have explained and reiterated many times there are numerous areas where republicans and democrats could have easily reached an agreement. unfortunately the administration decided early on there would be no compromise. the result was the bill that sits here. i don't believe the american people are in the mood to celebrate yet. thank you. >> representative frank. i welcome you to the senate banking committee. as one of the architects of the wall street reform bill i want to thank you for your hard work on this legislation through congress. i know you have to get back to manage a bill on the house floor so please begin. >> thank you. i am glad to be here in the

spirit of bipartisanship. i was struck by the bipartisan tone of the ranking member's statement. he was critical of the bush administration. i might not have anticipated that. i say that because members will remember it was in the fall of 2008 that we were summoned by secretary paulson and ben bernanke, two bush appointees and asked to do t.a.r.p.. it was a bipartisan response to that. the gentleman from alabama was critical of t.a.r.p.. he is unfair to the bush administration in that regard but i do appreciate the bipartisan nature of his criticism. the secretary gave preference to the automobiles and foreclosures. he very carefully said it was from the banks. we have not recovered the money

from automobiles. what we have is the american automobile industry, would not have happened if we hadn't intervened. ford which was not seeking any funds actively supported that for feared general motors and chrysler were not bankrupt or assisted in the supply chain would have disappeared. at a time we talk about enhancing manufacturing america that was the biggest thing we did. i would have to say the governor of alabama's description of the process doesn't cover what went on at the house. i wasn't privy to them but certainly was not a case when the administration told us to go forward. on the consumer bureau high was one of the ones who said no. the solution he talked about namely elevating the status bureaucratically of a consumer

protection function within an entity that is primarily a bank regulator wouldn't work. there is a qualitative difference between an independent consumer regulator and having it as one of the things bank regulators do because history between bank regulators who didn't do it and the largest single chunk of authority to protect consumers that existed before this was past was that the federal reserve. when we questioned the federal reserve they had little to do with it. i would note again i was struck when the senator from alabama talked about it, he felt geit e geithner was more important than the bush administration. he was president of the federal reserve. he served under ben bernanke who was the appointee of president bush has council of economic advisers and worked with exit -- secretary paulson. affairs criticism it goes to all of them but to return to the

consumer bureau i think it is important that it be independent. that it not be a second thought from bake regulators whether it was one bank regulator or individual bank regulators and i believe that makes a great deal of sense to give the consumer -- give equal -- the only way to do that is make them an equal entity. not subject to others. as to the bill itself it had a common theme. one criticism was it was too big. i am sorry about the attention span of some members of congress but they could wait for the movie. maybe it will be coming forward. we are dealing with an interconnected system. there was a central theme. by sources of liquidity outside the banking system and increased

information technology people in the financial industry have figured out a way to engage in lending while appearing to escape the burden of risk. they appeared to -- this didn't go away. accumulated elsewhere in the system and exploded on all of us. what we have done is basically make people be responsible for the risk and one important issue that are dealt with with some friends on the liberal side is a question of risk retention. i would urge people to look at michael lewis's book the big short. when people make loans and have no responsibility whether or not they are repaid they will not be as prudent. that is a market incentive. the alternative is oh no, the regulators will tell you what is good and what isn't. we are on the market side here. i don't want to depend on regulators to look at all of these loans. there are still going to be

loans that are made properly or not. the choice is to rely on the discretion of the regulators to supervise those loans or build a market incentive with risk retention. i am told we won't have the loans made. if that is the case i have a question. for securitization i went back to testimony before this great committee, talks about securitization in 1986. if securitization without risk retention which will not rival taxation without representation but securitization without risk protection, is that necessary for the housing market, what where people living in before 1986? were there no loans made before 1986? this notion people have to avoid risk is a great mistake. i am for an exception for those loans that are very solid. the notion that risk retention

is an impediment, the insurance industry is where we borrowed the concept. the insurance industry follows it. you cannot get that without some risk retention and some of my friends are falling into that trap once again. as to derivatives the law does not mandate any requirement that affects people who are the users of the commodity in question. it gives full discretion to the regulators to make differences and focus on the kind of transactions that a ip engages in with other institutions. i would add to this and there may be a debate on this, if you want me to answer questions i can do that. one of the things we have done is to empower the cftc and get the funding to do this to deal with speculation. there is a legitimate argument

weather speculation does affect pricing. it is probably the case that 30 years ago it may not have done so so much. what happened in the interim is greatly increase the amount of liquidity and great sophistication in information technology. if you look at the charts individual commodities, different directions. it tends to be more uniform but move in the same direction. it is more individualized. there's a consensus for goldman sachs, and investor for people in the home heating oil business from gasoline distributors that speculation does add something to the price of oil. one of the big issues is will the commodity futures trading commission exercised the power we have given it to put limits on people who are not end users? if you are somebody who never goes before a barrel of oil, you

have somebody else to pump your gas. your chauffeur may be. if you are in that category we want to limit the amount you can buy. billions of dollars will be lost if they can't trade in the financial area. where does it come from? doesn't come from the sky. it is added to the price. those are two areas. whether we deal with speculation and risk retention where i intend to keep pressing. the further point is this. has to do with funding. i talked to some business people. leading people in business in my office last week. i understand people who think we have too much regulation but the analog is to the pharmaceutical industry where major pharmaceutical companies might not like what the fda had but they provide enough money to carry it out. you might think wes regulation would be better but the worst of all worlds is regulatory

authority that is not able to deal -- can't hire the right people or have the right information technology. the nickel and diming does great harm than is a catch-22 to complained they are not moving appropriately but the ninth of funding to do it. for people who are prepared to have america stay in iraq for a couple years. my colleagues in alabama talked about the military-industrial complex. let's talk about cutting them down too. people say they want to stay in iraq over the bush administration sending it out and billions and billions but we can't find $150 million for the cftc. that is an area where there is no taxpayer money. i want to talk about fannie mae and freddie mac. i am impressed with the on-again off-again nature of this with my

colleagues in the house. my republican colleagues talked tough about fannie mae and freddie mac when they were in the minority but when they are in the majority something happens. they are affected by estranged plurality with responsibility. i say that because last year when we dealt with this in conference the republicans in the house offered the bill -- total abolition of fannie mae and freddie mac with no attention to its success. they said it wasn't germane. almost seven months into this session with republicans in the majority, a member of the majority and subcommittee chairmen haven't offered -- we had a discussion of smaller bills in the wall street journal. said. what mr. bauchus we would like a comprehensive bill. can we get a comprehensive bill?

i do not think so. republicans in power in the house are much less certain. where are we? i will say i am somewhat embarrassed by this failure of memory, once he became a member of the majority. the gentleman from alabama blamed the obama administration. i feel like humphrey bogart, when it comes to fannie mae and freddie mac, republicans cannot proceed without obama. why have we not seen that? because of obama will not let them do it. a recent entertainment and elegy was wilson, in which the republicans of the house are geraldine annika obama is the devil. the chairman said that he was

asked by the obama administration to wait. i have checked with the administration. he misunderstood them. no one in the obama toinistration has passeasked hm wait. i have a role that i try to fall myself. no matter how tight the quarter you are in, avoid saying something no one will believe. the notion that they are not acting on fannie and freddie -- esther garrett said it was not a simple problem. the republicans in the house have a bill opposed by everybody who is dealing with the housing market. that collection of radicals, all

disagree with the plan, all think you have to have a more comprehensive approach. the republicans have this problem, their ideology and reality are having a heck of a fight. ideologically, mr. bachus says he cannot do anything until the obama administration lets him. the only time since 1992 that the congress has acted on fannie mae and freddie mac was in 2007, 2008, when i was the chairman, and we got together a bill at the request of the secretary paulson, which president bush signed, which gave the secretary the authority to put them in a conservatorship. i agree with mr. shelby had too much of the market, but at

least it is not that cost on us that it was before. they are behaving in a much more responsible fashion today. mr. chairman, i appreciate this opportunity. >> thank you for coming over here today. the need to get back to the house. senator shelby has a couple -- >> i feel at home here today. i count nine of my former colleagues here. >> a few observations. congressman frank and i have sparred over issues over a number of years. i agree with him that there is a difference between managed risk and speculation. i think we agree on that. speculation will cause people to get into trouble.

managed risk will help people. as far as fannie mae and freddie mac, the congressman knows when we were in control here and i was the chairman, which pushed hard for a reform of fannie and freddie. we got it out of committee. we pushed hard, we will continue to do that. i do not know what is going on in the house. i can tell you, we -- sooner or later, we hope to do something substantive with fannie or freddie. we recognize they are the only game in town as far as -- >> i remember that in 2005 and 2006. as i remember, your poinopponent

was mr. oxley. >> he had a weaker bill. he must have helped him. >> people said i was in the minority. if tom delay was susceptible, we would not have gone to the war in a rock and he would not have gone to the dance show. that was when the republicans were in power, and we work together in 2008. we had cooperation. i think we stopped the hemorrhaging. if you look at the people that president bush put in power, they will tell you the problem we are facing is losses incurred before it went into conservatorship. since then it has been functioning in a much more

conservative fashion. >> i will now call our second panel today. [laughter] we will keep the introductions brief. second panel, please come forward. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] i will keep the introductions brief. mr. wolin is the assistant

secretary department of the treasury. ben bernanke is the chairman of the federal reserve system. gary gansler is the chairman of the commodity futures trading commission. marty gruenberg the acting chairman of the fdic. i also welcome you back the senate committee room. mr. john walsh is acting comptroller of the currency of the office of the comptroller of the currency. i thank all of you again for being here today. i would like to ask the witness is to please keep your marks to 5 minutes. your full written statements

will be included in the record. secretary wolin, may begin your testimony. >> i appreciate the opportunity to appear before the committee. one year ago the president signed into law a comprehensive set of reforms for the financial system. were enacted in the wake of the most devastating crisis since the depression. in the depths of the crisis, the economy lost 800,000 jobs per month. credit was frozen. markets were barely functioning. the administration and its predecessors put together a strategy to further pare the system. as a result, the u.s. financial system today is stronger, or stable, and better able to fuel growth.

and ordered to protect our economy and create conditions for prosperity, we needed to put in place comprehensive reform of the financial system. that is why we proposed, congress passed, the president signed into law a sweeping set of reforms. the thought-franc wall street for a consumer protection act make changes to the structure of the u.s. financial system to strengthen safeguards for consumers and investors and to provide better tools for limiting risk in the major financial institutions and financial markets. the core elements of all were designed to build a stronger, more resilience financial system, less vulnerable to a crisis, more efficient in allocating resources. these reforms responsive to the we this is that together brought our financial system to collapse. they include tougher constraints on excess of risk taking and

leverage, stronger consumer protection, comprehensive oversight of derivatives, and they knew orderly liquidation of darby to wind it down a failing financial firm in a manner that protects taxpayers and the broader economy. this that you created three new institutions. the financial stability oversight council to identify, monitor, and respond to threats across the financial system. the office of financial research, to enhance the analysis of financial data to policymakers and the public. the consumer of financial protection bureau, the help consumers make informed decisions and protect them from abuses in the marketplace. we are far along in standing up these institutions, and they had each begun to play their roles. as we move forward, we must continue to move quickly but carefully, taking the time we need to get things right. we must make sure our efforts

are coordinated. we must make sure to take care to regulate firms in matters of her free to the risk posed to the system. we must be sure to work to improve the defect in this of regulation as we write a new set of rules. we must work with partners creigh level playing field with the high set of standards. we must make sure regulators have the funding they need to do their job. a year ago, dodd-frank was enacted. these reforms were an obligation, not a choice. without them we could not build a system we need. a financial system with the stability and resilience necessary to support our economy and to protect it in times of stress. thank you, mr. chairman. >> thank you. >> thank you for this

opportunity to testify. on the anniversary, it is worth reminding ourselves of what congress passed the reforms. the financial crisis was unprecedented in its scope. some of the world's largest firms collapsed or nearly did so, sending shock waves to the financial system. critical markets came under enormous stress. asset prices fell sharply. the crisis in turn wreaked havoc on the economy's causing sharp declines in production and trade. extraordinary actions by authorities around the world helped stabilize the situation, but three years later the recovery from the crisis in the united states and other countries remains far from complete. in response to the crisis we have seen a rethinking of

financial regulation in the united states and around the world. among the core objectives of the effort are enhancing regulators' ability to monitor threats to stability, strengthening both oversight and resolve ability of important institutions, and improving the capacity of financial markets and observed shots. first-come the bett that is an approach that supplement traditional supervision and regulation of individual firms or markets with considation ofeats to th or markets with explicit consideraf threats to stability at the hole.ial meso system ase. th you know, they trained to act created a count ofe regulators

and the so-called f-stop and arrange of institutions and andet markets. the council's monitoring efforts are well under way, and this is created a cost of atmosphere of coordination among agencies. the council is moving forward with responsibilities including rules where it will be able to designate utilities for additional supervisory oversight. for its part the fed has made organizational changes to promote a macro approach. among these changes is the establishment of working groups to oversee the supervision of a large banking firms and utilities. this has a strong focus on the development that has

implications for stability. we have created an office policy and research to help coordinate our efforts to identify risks to the broader system and to serve as liaison with the council. the second objective of the reform is the madigan threats to stability imposed by the too big to fail problem. here in the act takes a two- pronged approach. this includes enhanced risk based requirement, credit limits, stress testing, and remediation regime and activities restrictions. the fed and other agencies face the challenge of aligning regulation with international agreements. these efforts are going well. the federal reserve and expects to issue rules over site of

cfis this summer and we are on schedule to implement basel 3. and being too big to fail requires allowing a cfi to fail. the second part of the act empowers the fed and the fdic to reduce the affect on the system in the event of a failure to tools such as liquidation of authority and approve a resolution planning. the federal reserve is working with the fdic to thecfis prepare for resolution by adopting living wills. the joint rule is expected this summer. reducing the likelihood of a severe crisis requires strengthening the resilience of markets an infrastructure. toward that end, provisions to

improve the transparency and stability of the derivatives market and strength since he th -- strengthens the parts of the infrastructure. we and other agencies are moving this work for in consultation with the corporate foreign regulators. u.s. agencies are working to address structural weaknesses in areas not as easily addressed by the at, such as taconic repo -- such as the repo market. the fed is committed to the promulgation of rules that are sensible, protect smaller community institutions, and promote the sound extension of credit in the service of economic growth and development. the full transition to the new system will require more work by the public and private sectors, and we will learn lessons along

the way. as we work together to implement reforms, we must not lose sight of the reason why we began this process, which is insuring access events like those of 2008 and 2009 are not repeated. thank you. >> thank you, chairman bernanke. german schapiro. >> thank you for inviting me to test a lot -- to testify. following the worst crisis since the depression, congress passed legislation that is reshaping regulatory landscapes, reducing risk, and helping to restore confidence in the system. the ftc was given new responsibilities, and in past years we have made significant

cross -- progress. we have proposed or adopted rules for about 70 of the mandatory provisions that were assigned to us. in my prior testimony, i outlined efforts to establish a process to help us get the rules done right. among our efforts we created internal working groups to coordinate the process and facilitate actions. we increase transparency and sought input from the public. we forged collaborative relationships with other federal and state regulators. we engaged in substantial outreach efforts and group ipated in c meetings, including investors, academics, industry

participants, and reviewed thousands of public comments. all these efforts are helping uswrite rules that protect the financial system without imposing undue burdens on participants. while some feel we are moving too quickly, i believe we are proceeding at pace that ensures we will get the rules right. i written statement illustrates the breadth of the activities that have engaged the sec the last year. other priorities include completing the specialized disclosure rules called for in the act, continuing to establish a new regime for the over-the- counter derivatives market, strengthening oversight agencies, increasing oversight in important utilities, putting

in place new oversight for municipal advisers, in commenting governance an executive compensation requirements, and gauging our foreign counterparts in discussions aimed at limiting potential for arbitrage, and making use of the enforcement powers to address wrongdoing. while the sec made progress, the provisions of the expand the responsibilities and will require significant additional resources to fully implement the law. sec as president of first state of the limitations without additional funding, taking staff from other responsibilities and working without investments in areas such as information technology. while it is incumbent upon us to use resources efficiently, the new responsibilities assigned are so significant that they cannot be achieved solely by wringing efficiencies out of the

existing budget. if he sec not receive additional sources, circumstances that contributed to the crisis will not be addressed. the sec not be able to hire the expertise to please these new areas. i would requires the sec let transaction fees to offset the annual appropriation of the agency, and regardless of the amount upgraded, because it will be offset by fees we collect, it will have no impact on the budget deficit. sec efforts to implement the act had been extensive. we know our work continues. thank you for inviting me to share our progress, and i look forward to answering your questions. >> thank you. chairman gensler.

>> i thank you for inviting me here to testify today, and i am pleased to testify on behalf of the commodities futures trading commission. it is a poor to remember why the law's reform is unnecessary. when aig and lehman brothers failed, we paid the price. all of your constituents pay the price. the effects of the crisis continued to be very real with significant uncertainty in the economy and millions of americans out of work. although the crisis had many causes, it is clear the derivatives marketplace played a central role. they contributed to the product called credit default swaps to a bubble and the housing market, and helped accelerate as we went into the crisis. they contributed to a system where large financial institutions were all the

sudden two interconnected the to be allowed to fail. swaps, which are still important for nt users, also in that moment of crisis concentrated and heightened risk in the financial system. what did the act do to address this? the act for the scope of the oversight of the cftc and for the first time will cover swaps. act promotes market transparency, something that has worked in the markets since the 1930's, and as for real-time reporting of transactions, and bring those transactions to a central place. economists found that transparency reduces costs to users of markets. the act lowered risk to the public and the economy by

regulating the dealers and moving that which we can to a central clearing. the act provides important new cityrcement authorities an agencies can better regulate for abuses. if finalized a rule on manipulation which is similar to what the sec has had for decades. i note the ranking member and , about speculation. congress mandated cftc set position limits for commodities, expanding the scope for swaps. the cftc is working with regulators right rules implement these provisions of the act. this spring we completed the proposed phase.

now the staff and commissioners have turned toward final rules, approving 8 so far. we anticipate taking up rules having to do with her because of these -- having to do with repositories. as we finalize the rules reached out broadly to market participants. this includes of round tables and public comments to consider how best to implement this. we're looking closely at invitation which helps lower costs and rescue it i would like to make note that the cftc taking on an expanded scope, a market that is seven times the size of what we currently oversee. the commission must be

adequately resources to police this market and protect the public. without sufficient funds, there will be fewer cops on the beach, but also when we will not have enough staff to answer the basic questions for market participants and the public. in conclusion, we are working to get these rules right based on public input, but it is more important to get it right then work against the clock, and that is not what we are doing. we're going to get this right and move forward. until the role writing process is done and it lets the rules, the public remains unprotected. i think you and i look forward to your questions. >> thank you, chairman gensler. >> thank you. members of the committee, thank you for the opportunity to testify today on the anniversary

of the passage of the act. chairman johnson, i thank you for your kind words at the outset. it occurs to me that it used to be more comfortable for me to sit behind you than where i am right now. i am privileged to have the opportunity. the act for fighting the fdic with important new authorities in the area of deposit insurance and resolution that we believe will enhance stability and in which we have made progress toward implementation. the act grants the fdic new authorities to manage deposit insurance fund in a way that will make it more resilience in a future crisis. the fdic has implemented provisions of the act that make permanent the increase in the deposit insurance coverage limits to $250,000 and provides insurance coverage on the entire balance of non-interest-bearing

transaction accounts to the end of 2012. we have implemented changes in the assessment based mandate of the act which shifts the overall assessment burden from community banks to the largest institutions which rely less on domestic deposits for funding. the change in the base from deposits that assets will result in an aggregate increase of 30% in deposit insurance assessments for insured institutions with assets under $10 billion. in addition the act provided the fdic with the flexibility in setting the target size of the deposit insurance fund. we have used the new authority to adopt a long-term fund management plan which should maintain a positive deposit insurance fund balance even during a banking crisis this preserves steady and predictable rates to credit

cycles. this will avoid us to avoid -- during a night, downturn. the act provides for a new resolution framework to be used in those instances when we must act to mitigate systemic risk posed by the resolution of a financial company in bankruptcy. the framework includes a liquidation of party and a requirement for resolution plans that will be regulated this -- that will give regulators much better tools. if the act -- if the fdic is appointed as a server eyes as receiver under the authority, we're in are required to carry out an orderly liquidation in a manner that ensures that creditors and shareholders of perpetrate their losses while maximizing the value of the mineralizingets,

hazard. critical to the exercise of this authority is a clear and transparent process. the fdic board approved a final rule lamenting the orderly liquidation of starting on july 6. fiscal rule frame work uses many of the same powers we have used to manage failed bank receiverships. the federal reserve board is working to issue regulations implementing new plan requirements. the comment. -- the comment period ended on june 10. in order to carry out these responsibilities, the fdic has established a new office of complex financial institutions which will have three key functions. monitor the condition of

systemically important financial companies from the standpoint of resolve ability, to oversee jointly with the federal reserve, the root development of resolution plans by this companies, and engage was revised as of foreign operations of these companies in regard to resolution planning. finally, the act contains provisions that will complement the ongoing basel forms that will make capital requirements more uniformly strong. . 171 @ states that capital requirements for the largest banks and holding companies should not be less of the requirements that are applicable for insured institutions. the fdic and the comptroller of the currency finalized a role implementing this provision. we have made progress, but still have work at a bus. throughout this process we have sought input from the public and

continue to report back the progress -- the congress on this progress. we have sought to make this progress as transparent as possible. fe, and i look forward to answering your questions. >> thank you. acting comptroller walsh. >> fayed you. i appreciate the opportunity to discuss the progress toocc other agencies have made in implementing the act in the year since the law was passed. although we have weathered the worst crisis, it will be years before we put all its defects behind us. the act took steps to guard against future crises, and all of us are determined to implement those safeguards as

quickly as possible. occ is involved in 85 projects stemming from the act, including a number of rulemakings will have an impact on the system. our biggest task has been to integrate the functions of the office of thrift supervision, but we have devoted effort to the transfer of supervisory responsibilities to the new cf consumer financial protection bureau. i am pleased to report that on monday said 74 employees of the office of thrift supervision reported for g-i-s at the occ. have worked to ensure a smooth transition and we have succeeded in moving to a single regulator

for national banks. we will need every bit of the talent and experience of former staff to fulfil our mission and the men and women joining us had been fully integrated into policy and field units where their talents can be utilized. we recognize the importance of communication to the industry so that thrift executives know what to expect from the combined agency, and we had 17 outreach meetings and had more than a thousand a sale as join us. we have engaged in rule making this. today we posted a final rule that publishes those regulations that the occ is the authority to administer for. we're continuing to review regulations for those as well as our own. we

we are exploring areas for a continuity of -- after july 21st. that rule making published in today's federal register also addressed the areas where dodd- frank made changes. the rulemaking scales back our current rules and a number of areas. the amendments eliminate the instruct or compare conditions from our instructions. it enhances the authorities for the attorney generals. this also includes consuation over theover past we have provided considerable support.

ave wor year, we have assisted in developing the agency's procurement and personnel management prophesies to ensure the agency has the information it needs about the banks it will be supervising. we executed a memorandum of understanding that allowed us to share reports of examination, information on enforcement matters and other confidential information. we have agreed to provide transitional support, including consumer complaints. we will operate our consumer assistance groups to handle complaints. the bureau builds their own capacity in this area. as we discussed in our last appearance, we participated in the interagency effort to create

an oversight council. the council will be an important venue for averting and addressing future market disruptions. finally it calls for a number of rule making. clearly, we have a great deal of work ahead in implementing many provisions but i'm confident we will get it done in a way that strengthens the financial system and protected against the kind of things that led to the last crisis. >> thank you for your testimony. we will now begin the questioning of our witnesses. will the clerk please put five minutes on the clock? >> i think it is important to

keep in mind the damage inflicted by the crisis and what the wall street reform act will do to prevent or mitigate another crisis. could you highlight in your opinion the crisis and the most important benefits of the new regulatory framework. >> thank you for that question. the cost which i tried to enumerate are extraordinary. the financial system came to the brink of failure, the credit markets froze up. in the end, our economy was affected. there is lost jobs, lost homes and so forth. a reason for all of that is that we had a framework for our financial system which was manifestly inadequate.

we had no alternative but to do that. this does exactly that, it makes sure that our financial system rests on a more stable foundation requiring firms, especially those that are more risky to hold capital and to have greater liquidity standards and leverage complaints. this brought the darkness out of -- this strengthened consumer protection because we know that consumers did not have adequate information and not in a position to make fundamental choices about the kinds of things they undertook. that led to enormous amounts of credit being extended in ways that they could not bear.

the act makes important strides to put the -- to allow the economy to grow which is the critical need we have. >> i have a question directed at chairman bernanke, the acting chairman -- and the acting comptroller walsh. we are concerned about the unnecessary regulatory burdens for the financial institutions that did not cause the crisis. can each of you describe what your agencies are doing to ensure that we have an appropriate set of rules. >> thank you.

we agree that the banks are critical to our financial system. they had the ability to make loans and a local community that large banks do not have. it is very important to minimize the burden on those banks. first of all, blocked itself emphasized that it is very focused on the largest firms and the most complex activities. they made clear to the smaller banks that they are exempt. we are trying in our rules to provide more guidance to the banks about what applies to them and what does not apply to them. i think that the small banks will benefit that the tougher

rules will create a more level playing field. finally i would mention that the fed has made a very strong effort to reach out for smaller institutions. we have created a community bank council that meets three times a year. >> this is a matter of significant parties.

we take very seriously one of the challenges that the community banks have told us about is the number of regulations that are required by god frank. -- dodd frank. we provide a box that specifically symbolizes the availability. we have a quick shorthand place to go to identify the relevance of the regulation. in addition, we have an ongoing policy and a review of the regulations that requires regular periodic reviews.

that is something we are undertaking. finally, i mentioned that we have a advisory committee that has been extremely helpful. this would require are regulated institutions to fill out. in response to that review, we had created a new place which has consolidated everything and this is a single place where they can go. this is a matter of ongoing attention. >> could you elaborate a bit? >> i have certainly joined my colleagues in expressing the same concerns and in fact the approach we're taking about 2000 of our 2100 institutions.

we have substantial out reach. we have an internet-based system that allows them to come and look get updates on regulation and to remain apprised of things that are happening. certainly, they share the concern. they are not sure what affects them and what does not. we continue to work with them to understand those things. >> a thank you. >> thank you. >> it seems to me that after most crises, we're told that if regulators only had more resources, they could have prevented whatever crisis was. as a result, the standard result is to grow the bureaucracies. dodd-frank fits this pattern.

regulators have seen their power is grow. this also will add over 4000 new government jobs, many of them very well paid. the employees at the sec and other agencies can earn up to $230,000 a year. in the meantime, private-sector job growth has been falling. do we have enough government bureaucrats to protect the financial system? >> let me go back to the premise of your question which is -- i believe there is widespread agreement that the regulatory structure before the crisis was inadequate. there was large gaps in our coverage. there was no one responsible for looking at the system as a whole. there was significant weaknesses in the structure of our financial system.

i congratulate you and some of your attention early on to the capital standards and so on. i think that this is a pointless response. i believe that the dodd-frank covers the main basis. you need more people to carry out more regulations and write more regulations. what we want is quality more than quantity. we want to make sure that there is clarity in terms of the rules.

we want to understand the rules of the game so that we achieved these results that releases costs to the financial system. the fed does do regular cost benefit analysis of all of the rules and it is always our intention to try to meet the goals of the statute in the least costly way we can. >> did the inspector general recently called that into question, the cost-benefit? there is methodology that they are using which the claim was antiquated. >> i believe that is correct. there have been several studies won by a group of -- i believe.

minder standing is that the fed took a positive view of the consistent application of cost- benefit principles to the rules we right. >> it is my understanding that the inspector general recently revealed that the fed's internal policy for rulemaking procedures is more than 30 years out of state and therefore does not adequately reflect current statutory requirements to reform cost-benefit analysis. the fed needs to step up to the plate, assuming it is right. >> if that is right, that is a statement about written policies. we are very attentive to the cost and benefits. >> i have asked you twice in

restatements how they would exercise their authority under title 8 with respect to the financial institutions engaged in activities designated under that title. and both instances, you responded with a discussion of the regulation of the financial market utilities which does not answer the question. let me ask you again, what are the plans with respect to financial institutions. what are the plans with respect to the financial institutions. these are engage by the council. >> i thank you for clarifying. i don't think i fully understand the question. title a has addressed itself to

financial markets utilities. i think through the council there will be some that are designated. we currently oversee 16 clearinghouses and some of them will be that. now what is right the council will designate any activities. right now, i would suspect that unless the council somehow does that on activities, we will focus on one, two, three clearing houses. >> they approve rules that laid the groundwork. will the -- provide clarity on whether or not they will allow clearing houses more time before a day except or reject the rates? >> i think that for most is up

to the clearing house and the risk committee. this will have a mandate and it is important that they do it. >> will they let them do it? >> they get to decide and the mandate only happens if we also seek public comment. >> do you think that the ability of the systemically important clearing houses to access the discount window makes it more or less likely that the greenhouses will accept risks or will you try to make sure that they don't? >> i think that it is our responsibility to make sure that taxpayers don't stand behind any financial institution. >> like we stood behind it before. >> i agree. i think the preferred outcome of the crisis is that we will do more that. i think we should do everything

to ensure that the public not stand behind the clearing house. >> thank you, mr. chairman. on tuesday, the chamber of commerce released a report that criticized the federal agencies for not keeping up with markets and technology. chairman shapiro, the house appropriations committee is proposing significant cuts. this is diametrically opposed that this request that you keep up with the markets through technology. >> under the house appropriation, we would probably cost about $10 million of our information technology budget and the end result would be the

postponed investment in technology. i've talked with this committee. it took the two agencies many months to diagnose what happened because of lack of technology if. we're asking me to delay the modernization of the edgar system. we would like to give our staff to hillary to analyze disclosure and also too much of the information that we will be gathering at dodd-frank. also the ability to bring in data as a result of dodd-frank. another area, the consolidated

audit trail. these are moving forward. this requires that we have the capacity to invest in technology and we have not had that and under the house bill, we would not have that. >> technology is very important so that we can be inefficient -- and provide the public protections. we spent this year about $37 million in technology which is now less than most of the financial institutions spend a week. we think it would be helpful to about double that and we have only asked for about 30% more people. technology is a way to be efficient on the people side and to oversee markets which are about seven times this size.

we can aggregate that data and bring it in and use the computers to do that. the house appropriation bill cost us 15%. we cannot do any of that with a cut of 15%. >> this is almost sort of setting you up for not only falling behind these markets we're trying to give but we have a failing and we're not getting any transparency. >> i think that is right. we will complete the writing process. it will be thoughtful. it will be longer than congress laid out. i feel that we won't have the people to answer the questions or have the transparency or to aggregate the market and put it on our website. public transparency needs the resources. >> we have said that we will not

be able to -- of the dodd-frank .. rules. the other area where we will fall behind is that we receive about 2000 request a year in the reform of the world violence come requests for exemption, no action letters and our capacity to keep up with that kind of volume on a declining budget will be severely impacted. those are the things that the industry really wants. they need that guidance and that relief from time to time. i think that everyone has a stake in these agencies being in a position to do their jobs. >> it seems that this is possibly the worst of two worlds. regulations on the books which were required to. the ineffective resources to respond to the interpretations

of business and to respond promptly to requests. i would think that the business community would be worse off in this situation. again, the liabilities are on the books. they cannot get any traction or response. >> i think that is right. to follow what chairman bernanke said but it is in the interest of the industry to have expert people within the regulatory agencies to can do examinations and provide guidance and provide information. they're people who regularly toidlowing ang w they won't get discovered of resources that

scrupulous and i think that wilt be laboring to do what they can and getting no help or guidance >> thank you, mr. chairman. thanks to the witnesses for being back once again. my first question, i would like to direct this to shapiro. you know better than anyone, last year, the fcc developed a whole new set of rules and regulations regarding money- market funds and tighten standards for credit quality and it has liquidity, shortened portfolio. this would reduce the risk that any run it would likely to occur. we hear discussions that there is also an interest in moving to a floating -- and what concerns

me about the net asset value is the complexity of keeping up with the paperwork and even tax implications that could be very complex and onerous to what is a very large and important part of our financial system. my question is, is imposing the net asset value rule, is that still under consideration or is that off the table? >> the -- has taken a lot of interest in the money-market fund issues. as you point out, we did do a complete overhaul of the money market funds. i think that they have been fairly universally apprised of being very very positive and very helpful to the resilience of the money market funds. we also have the shadow into cheese so investors can become -- to the idea that money does

fluctuate. we have discussed these issues several times and we held a round table at the fcc with all our members in attendance and members of the industry and academia to talk about how we prevent runs on money-market funds. i would say that we are actively discussing floating any of these and the ideas that were raised in the president's working group. the industry came forward with the idea of a liquidity exchange bank. there are a number of areas where we're having discussions. i would say nothing has been decided but we continue to seek public input and our regulators and put on what we can do to ensure that we don't have a situation as we did when the reserve fund broke the -- and caused a run on money-market funds.

>> there is an absence that a floating nav would solve the problem. i have a second question. this has to do with the proposed rules for swaps under title 7. my understanding is that these rules would require the subsidiaries of american banks operating overseas and doing business with counterparts that they would nevertheless be required to hold margins on behalf of these counterparts. it is my understanding that the europeans and asians have not imposed a comparable requirement and therefore i am concerned that that would put our firms at a competitive disadvantage with respect to transactions that don't occur on u.s. soil, upload have an

american counterpart. are you concerned that we are heading towards putting ourselves at a competitive disadvantage in this area? >> i thank you for the question. i think not just in the marching area but even more broadly, we have been working with international regulators because capital and risk knows no geographic border. it will move somewhere else on margin. we are trying with treasury which has been part of this. also the federal reserve and the sec to have an international approach to the marketing regimes. i will defer to chairman bernanke because we are only setting margin for the non banks. there is a jurisdiction issue. >> you are absolutely correct. those margin rules for foreign operations are maintained and europeans and others do not

match it, that would be a significant competitive disadvantage. i think the best solution, which we are pursuing with some deciduous this cost that we're pursuing is that we get an agreement on the rules. -- i think the best solution which we are pursuing is that we're pursuing an agreement on the rules. we're working on that. if that does not happen, we would need to think again about how to meet the dodd-frank requirements for improved safety which is what margins are intended to achieve, without causing our banks to have a disadvantage.

>> it seems to me that if we do have a global uniformity, that obviates the need for extraterritoriality in our regulations in the first place. secondly, with respect to margin requirements of end-users, as we all know, that can be disruptive to the end user to hedge risks, and therefore problematic. at the end of the day, it is a credit decision the banks are qualified to make. "at least in what we proposed, the non-bank dealers would not be required to collect or received margin from the non- financial and users -- in users, the non-commercial companies. >> news reports came out this week from the associated press and reuters that alleged that

despite regulators' assurances that rowboats signing was being fixed, the practice -- robo- signing was being fixed, the practice is still widespread both for foreclosed homes and homes that are not in a foreclosure, which amounts to forging documents and in some cases rumpling foreclosure and on people. that is why my colleagues and several members of this committee and a dozen house members as well have written to the occ, the federal reserve, and the fdic, urging that you make the foreclosure reviews and other foreclosure-related documents fully transparent, and that you released the results of those reviews on a bank by bank basis, so the public can evaluate the performance of each bank. there is a tremendous interest

in the public seeing these problems properly resolved. some want to ask those three agencies, the fed, the fdic, and the s.e.c. -- will you release the foreclosure reviews on a bank by bank basis? will you released the access plans that response to problems in the consent orders? what about the engagement letters for the supposedly independent consultants hired by the banks to perform for closure reviews of the banks? >> we are as concerned about these issues as you are. we have issued cease and desist letters. we have told the banks they have to engage independent consultants. we have been making sure that they are independent, providing supplementary diagnosis over

what we have done as well as action plans for the banks. we will be both reviewing those action plans and the conformity of the banks to those plans. our current plan is to provide a report. we will share with you, obviously, the report. that will explain what the findings were and what the proposals were and what the reactions were, and the performance of the banks. >> i am sorry to interrupt you, but i have less than five minutes. i have a specific question. are you going to release those three entities i have asked? >> may i confer with my legal and supervisory teams and get back to you? >> certainly. >> we will certainly be, as chairman bernanke indicates, releasing more information.

i hate to interrupt you, but i have a very specific question. are you going to release the mortgage services action plans, responses and consent orders? are you going to release a foreclosure reviews on a bank by bank basis, and are you going to reduce the letters from the supposedly independent consultants? yes or no? >> we will have to evaluate the individual documents and see if there is anything that would be of a confidential supervisory nature. surely, we will be releasing some indication. >> the fdic is not the regulator of any of the services. it is not within our authority to make that decision. >> let me just say i hope you understand it is incredibly difficult to create public

trust that the companies hired by the banks to perform for closure reviews and already doing business with these banks and future business -- i hope you have a little understanding of that public trust as regulators when you are assuring us the problem of the banks illegally forging documents to foreclose on homes more easily has been fixed, when news reports alleged the problem has not been fixed and is still widespread. i am going to share the congressional research service analysis' i asked for to see if you have the wherewithal to do this. the answer is to synthesize -- that our requests -- regulators have the discretion to release the results on a bank by bank basis, if they feel it is in the public interest. they can surely come to some middle ground when the release a report with bank by bank

results, while still redacting loan-level information that would be confidential to banks. rarely around here do we get 10 measures of the senate -- members of the senate to focus on a specific request for information. a dozen members or so of the house of representatives. i think we need a little transparency in this process. it is about editing. it is about taking and creating transparency, an era of transparency and openness. i am going to be like a dog on a bone on this. i hope we get good answers because otherwise i am going to use every -- every means possible, with my colleagues, to get to the bottom of this. it is not acceptable to violate the law. it is not acceptable to do robo-signing. it is clear why the law dictates

a procedure before you take over someone's cherished -- the biggest asset in their life. that is not being pursued correctly. the agencies responsible for that give us assurances it is, yet public reports constantly suggested is not. i look forward to your response. >> once again, congratulations on your 97-2 win yesterday on the va bill. i want to focus on systemic risk, the central concept behind the legislation, because i am worried throughout much of the crisis that it was triggered by fannie mae and freddie mac because it was loaded with politically connected lawyers and lobbyists, and congress did not reform it. the institution is pretty much the same cast of rogues, still

running, even though it was triggered and you guys were not allowed to touch them. i am worried that so often the government is slow, dead, and innovative, as opposed to the private sector. also, you guys are publicly controlled by us, by the white house, not allowed to look at new risks. one of the risks i am worried about is the government accounting standards board recently proposed that government entities be required to fully disclose unfunded liabilities they face, particularly with regard to pension allocation. in 2009, the pew center published a trillion dollar gap report outlining 21 states that had pension obligations funded at less than the 80% actuarial requirement recommended.

this would be totally unacceptable for the public corporations you are allowed to torture. i am wondering, because systemic risk is now out there, underdog frank in the municipal investment advisers you have, with the s.e.c. now be recommending that municipal debt issuers conform to these requirements? >> if senator, i want to make sure i am on strong legal ground. with enforcement cases -- new jersey and illinois, you allege they were lying to their investors. >> there are a number of others that are still under investigation for failing to do adequate disclosure when they did bond issuances. we do not have the authority, although we are preparing a report for congress to discuss a

number of these issues, to mandate particular disclosure requirements for municipal issuers. we have held round tables around the country to gather the thoughts of municipalities, government finance officers, investors, and others to talk about how we might strengthen the municipal disclosure system, among other things. we are actually having a hearing in birmingham, alabama next week, the home of jefferson county. we continue to work on these issues. i think this was a very important step with respect to the disclosure of the liabilities of unfunded pension responsibilities. but as you pointed out, not everyone is required. >> i hope you would use your systemic risk authority, because i think that is to get out of jail free cards, to look at threats to the u.s. financial system. i am worried that states are so powerful and politically

connected you will hold back. >> i will not hold back. >> i am worried. the other essential concept behind dodd-frank is too big to fail. yet we have seen from 2008 to 2010 is that in 20008, the banks held 11% of all domestic banking issues. in 2010, the top share had grown to 53%. and there were fewer banks. so they are now even bigger and less capable of failing than they were before. chairman bernanke, what can we do about that? >> senator, you make an obviously important observation.

some of the increase in concentration in the last few years was a byproduct of events of the crisis. several medium-sized firms disagree -- disappeared. others were acquired. it is not necessarily a trend. there are other aspects that address too big to fill. -- to fail. there is a concentration rule. we will not approve a merger, for instance. the main concern is that we have much tighter oversight in prudential regulations. one thing we have noticed is that banks and other institutions and do not want to be -- they consider this additional burden is an oversight to constrain them. if it was truly a mark of too big to fail, they might prefer to be so designated. the other thing which i think is

crucial is progress -- in order to get rid of too big to fail, we have to have it fail. we have to have a way for the biggest firms to fail. we heard discussion about fed and fdic work on orderly liquidation authority. i think it will be a sign of success when we see, for example, large firms actually getting themselves smaller to try to get out of some of the oversight. if we see the cost of funding increasing because the backstop to the government is not there, we are not there yet, but i do note that some of the rating agencies have been talking about downgrading large banks based on the possible absence of government support in a crisis. we are not there yet. i think we absolutely must get there. there are many aspects of dodd- frank, and a lot of work

remains, which will help us get rid of too big to fail. >> thank you very much, mr. chairman. i want to add my welcome to the panel of regulators for our country. mr. chairman, i would like to ask the unanimous consent that my brief opening statement be added to the record after the opening statements of the chairman and the ranking member. thank you very much. chairman schapiro, good to see you again. dodd-frank creates the office of investor advocates. it reestablish his the investor advisory committee. i urge you to continue working to solve -- to get this committee up and running. my question to you is what will be done to ensure that the past

and perhaps of the first investor advisory committee will support the work of the investor advocates and the reestablished advisory committee? >> thank you, senator. we are working now to create the new investor advisory committee, having disbanded the prior one. i expect there will be some overlap of committee members, which will give us continuity. the new committee will be fully briefed on the activities of the park committee. the staff that supports the new committee will be largely the same as the staff support for the prior committee. i think we should not have any -- we should not miss a beat in terms of transitioning to our new advisory committee. will we will not have yet is the new investor advocate. we have sought reprogramming from our appropriators for that.

we received an appropriation within the last week. we are waiting for the house to authorize it. once they have done it, we can establish it formally and appoint a person to that position. in the interim, all of the activities are being carried on by other staff. we think of ourselves all as investor advocates. that work is ongoing. >> thank you very much. one important aspect of consumer protection that is sometimes overlooked is financial empowerment. through title 12 of the dog -- dodd-frank act, we ensure alternatives to high-cost products and services and that protections to oversight are strengthened. will you please update us on

treasury initiatives to improve access to mainstream financial institutions and services? >> thank you for that question and for your leadership on this critical issues. from our perspective, the financial access provisions are critical. these are issues we are spending a lot of time working on. we are busy continuing to develop infrastructure for our efforts to support community- based efforts at financial access. we have been working hard at putting together a program called bank usa, which allows us to work with communities to develop programs that will enable access in the communities tabled -- tailored to the particular circumstances in each of those places. our efforts on this will require some resources, which we have requested and hope we received. we think we have, on the basis

of title 12 and work we have been doing in response, an awful lot of things we can be doing. i think you will see in short order from us a further public expression of how we intend to organize and structure our office of financial education and financial access, the important office within the secretary of financial institutions. it will be focused on other efforts in the context of title 12 to continue our work on these critical issues. >> i have a related question for you. but first i would like to congratulate you on your nomination. the fdic has been a leader in working to improve financial

access among un-banked anad u -- and under-banked. do you believe financial inclusion is a function of consumer protection? what more can be done by the fdic in this area? >> the issue of financial inclusion has been a significant priority for the fdic, proposed under former chairman baird and myself. we established a number of years ago an advisory committee on financial inclusion of community leaders, financial institutions, and academics to focus on this issue. at the start, the fdic partnered with the census bureau on the first national survey ever undertaken by the census on who

does not have a bank in the united states, just to get a handle on the issue. the findings of the survey were revealing. it found that about 7% of u.s. households have no relationship with an insured financial institution. nearly another 18% have an account but utilize high-cost non-bank providers of financial services, payday lenders and check catchers. the survey found that about a quarter of u.s. households can be defined as un-banked or under-banked. it is a critical component. the consumer protection -- having an account at an insured institution is the starting point for economic citizenship, to be able to develop a credit record, bill savings, and become a -- build savings, and become a

participant in the economy. it has been a priority for us. we have undertaken initiatives including organizing local partnerships around the country with financial institutions, community organizations, and local government leaders to develop strategies for expanding access to insured financial institutions. we have developed model transaction and savings accounts to encourage financial institutions to provide low- cost services suited to the needs of those without banks. this has been a matter of ongoing attention. it is certain to be a priority going forward. >> thank you very much. >> thanks again to my colleagues and our panel for being here today. at these hearings we have called for the past two weeks, we have highgh