that is all tonight starting at eight eastern here on c-span2. .. a dominant force in american life. >> and on real america. >> [inaudible] >> the shuttle is on a heading towards an imaginary target in space. >> the documentary space shuttle

a remarkable flying machine on the space shuttle columbia. sunday at ten eastern on road to the white house. the 1968 campaign film for the republican presidential candidate richard nixon. ♪ i have decided i will test my inability to win and cope with the issues in the fires of the primary is not just the smoke-filled room in miami. >> chronicling civil rights from the 1930s to the 1970s. >> the coalition of labor unions, civil rights leaders and religious minorities came together to protest the exploitation of the federal program and in fact accelerated to the decision to terminate if the next year in 1964. and i think that this was a moment of blossoming for the

movement. >> for the scheduled to c-span.org. we are live on capitol hill where the house speaker paul ryan is set to address members of the press and capitol hill interns on the state of american politics. this is expected to start momentarily on c-span2 and a reminder ahead of time if you are not able to watch the entire thing we will have it again at eight eastern on c-span. an audible conversations

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[inaudible conversations] good morning. i thought this was going to be a live audience. thank you for coming. i am with the digital communications office and we are thrilled to have you. it's a big day and we are excited about you being here with us today. we cover a lot of heavy issues on capitol hill. but it doesn't have to be stiff and boring.

today we want you to be active participants, not just passive viewers of going to be happening. you can take photos and videos and snap chat. if you do i just ask that you would tag the speaker. you can also follow him on instead graham, facebook and twitter. you don't have to save your applause until the end. if he says something you like, clap. if you can't work in a death that's totally great. good. we are losing up. have a great time. it's going to be fun. time permitting, we will have time for some questions from the interns and if you have questions we will have a couple folks on the end of each side of the room with some handheld microphones so if you could gravitate we are not going to form a line or anything he will call on you individually but that's about it.

we will get started very soon. thank you very much. [applause] [inaudible conversations]

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the audience of mostly interns and members of the press assembled here in the house office building on capitol hill. speaker paul ryan about to address the audience on the speed state of american politics. here's speaker ryan. thanks for your patience. we are a bit late because of the vote. thank you everyone for being here today. it's great to see so many people in the audience. i am proud to represent the 21st district in congress. today it is an honor for me to introduce my friend, speaker

paul ryan. i first got to know him as paul in 2010 when he was selected to be the republican vice presidential nominee. my job was to help prepare a congressman ryan for his upcoming vice presidential debate. as you might imagine a national campaign takes you to the corners of the country to the first procession with paul and his team i prepared first draft materials and after he reviewed my work pieces we need to dig deeper on the policy. no surprises there. and over the course of many weeks i had the honor of watching how he would encourage his entire team to understand the power of ideas and to raise a brighter american future. i went back home to upstate new york discouraged about the direction of the country but i

thought about my time working with paul and at the age of 28 he decided to run for congress. it struck me that someone so young could make such an impact. i was 29 at the time and instead of complaining about the state of politics from the sideline i started the process of running for congress. and when the odds were stacked against me, he encouraged, stood by and supporting me. still the best piece of advice that i have received is from speaker paul ryan who told me you have two ears and one mouth, use than enough ratio. he was highlighting the power of listening in the communities. in my first year in congress i didn't anticipate he would become speaker. this was a job he didn't ask for but answered the call to serve. when i talked to my constituents about the qualities that personified a public servant i

came up with three characteristics. they have to be hard-working, have integrity and political courage to put forth innovative solutions. speaker ryan and bodies each of these qualities. he's a happy warrior that understands the power of the idea and the american dream so please join me in welcoming my friend and our speaker, paul ryan. [applause] don't forget to go vote. thank you for your indulgence and patients. we have votes on the floor right now. i want to thank her. she is inspiring.

i want to thank all of you for coming here today and my friend, the chairman of the ways and means committee for hosting us here today. i had the privilege of joining the committee in my second term. my seat was right behind these flags and it is a perfect setting for what i want to talk with you about because it is here in this committee that we debate some of the biggest consequential issues. we debate the tax code, health care, trade, entitlement reform. this is a big deal to be on the committee. people strive to get on the committee and understanding the privilege and responsibility that came along with it we took our jobs very seriously here on the committee and we always held ourselves to a higher standard of decorum. we treated each other with respect and disagreed often that

we disagreed without being disagreeable. i speak of this in the past tense only because i no longer serve here in the ways and means committee but it almost sounds like i am speaking of a direct time. it sounds like a scene unfamiliar to many in the generation. looking around at what is taking place in politics today it's so easy to get disheartened. how many of you find yourself shaking your head at what you see from both sides of the aisle these days? i see myself in each and every one of you. i came here as a curious college intern trying to get a sense of everything trying to figure out where to take my own life. i would always ask older more experienced people what do you know now that you wish you knew when you were my age? here's my answer to that

question. here's what i know now that i want you to know. that you maybe cannot see your self today and this isn't just a lesson for young minds but for all americans. our political discourse come up with the kind we see on tv and the kind that we experience among the each other, it didn't use to be this bad and it doesn't have to be this way. a little skepticism, that is healthy but when people distrust politics, they come to distrust institutions. they lose faith in government and in our future. we can acknowledge this. but we don't have to accept it and we can't enable it either. my dad used to say you are either part of the problem or

part of the solution, one or the other. so i made up my mission as speaker to aim for a brighter horizon instead of talking about the politics today i want to talk about what the politics can be and talk about what the country can be and what the founders envisioned it would be. america is the only nation founded on an idea not an identity. that idea is a beautiful idea the condition of your burden doesn't determine the outcome of your life. our rights are natural and god-given. they are not coming from the government. it was a beautiful idea and it has never been tried before. early on and our founders fought to establish a suitable order

and decided we wouldn't maintain this idea in the first federalist chapter and peter alexander hamilton wrote that in politics is the aim of making congress by fire or sword instead we would govern ourselves with the people of consent. again there was no manual for how to do this. that's why we call this whole thing the american experiment. it's still the american experiment so they need each other and be made of those who came after taking oath to uphold the constitution. every generation since has inherited this responsibility. leaders with different visions and ideas have come and gone and parties have risen and fallen. majorities and white house is won and lost. but the way that we govern through the debate, not

disorder. this is the one great thing about the country and one of the most important things about the country that makes it the greatest on earth. i didn't always find this idea and exciting when i was young. i came here here i'm sure i was going to do with my life that i ended up working with a guy named jack kemp he went on to represent the people from western new york that he was a quarterback for the buffalo bills, one of the great quarterbacks of his time than he represented the buffalo area in congress in the 1970s and 1980s and served under president h. w. bush and like me he was one of the party's nominees for vice president. i first met him exactly where you would expect from the tortilla coast. [laughter] i was waiting tables. i had a student loans, i was a waiter and i waited on jack kemp.

i didn't bother him that day that i told a friend one day i would love to have a chance to work for that band and as luck would have it such an opening came up. the thing is he was an optimist all the way. he refused to accept that any part of america where the american idea could ever be written off here was a conservative willing and eager to go to the weakest defeat -- bleakest communities. these are the areas that haven't seen a leader in years if ever. i had the chance to accompany him on some of the visit and i us all how people to to him and how he took lessons from each experience. he found a common cause on the ground and instead of the sense of drift at this time i began to feel a sense of purpose. he inspired me to develop my professional life to public

policy and became a vocation to me. his ideas promoted, put to the test that's what politics can be. that's what our country can be. it can be a confident america where we have a basic faith in politics and leaders. that sounds like a long distance away from where we are right now. it could be a place where we have earned a faith all of us as leaders. we can hold ourselves to the highest standards of integrity and decency. instead of playing up your anxieties, we could appeal to your aspirations and instead of playing politics at our base versus their base we unite people around ideas and principles and instead of being timid, we go bold. we don't just resort to scare you we dare to inspire you.

we don't just impose someone or something, we propose a clear alternative and we don't just when your support, we win the argument. we win your enthusiasm and hearts and minds, the mandate to do what needs to be done to protect the idea into confident america we also have a basic faith in one another. that's one of the most important lessons i would like to convert to you. we question each other's ideas vigorously that we but we don't question each other's motives. if someone has a bad idea we just think that they have a bad idea. people with different ideas are not traitors. they are our fellow citizens, sometimes they are our friends and sometimes our own flesh and blood. we all know someone who we love

who disagrees with us politically or votes differently but in a confident america we are not afraid to disagree with each other. we don't look ourselves into in a good chamber where we just tell us what we want to hear. we don't shut down on people or shut people down if someone has a bad idea why don't we told them i our idea is better backs we don't insult them into agreeing with us. we try to persuade them. we test their assumptions and while we are at it, we test our own assumptions, too. i'm not going to stand here and tell you i've always been the standard myself. there is a time that i would talk about the difference between makers and takers referring to people that accepted government benefits but as i spent more time listening

and really learning the root causes of poverty i realized something that i was wrong. it is and how to refer to a single mom stuck in a poverty trap trying to take care of her family most people don't want to be dependent and to label a whole group of americans in that way was wrong. i shouldn't castigate a whole group of americans just to make a point so i stopped talking about it in that way and i stopped thinking about it that way but i didn't come up and say this to be politically correct come it was because i was wrong and of course there are still going to be signs where i and you and we say things we wish we hadn't. there will still be times i followed the wrong impulse. governing ourselves was never meant to be easy. it's always been a tough business and when passions flare, ugliness is sometimes inevitable but we shouldn't accept this as the norm we

should demand better from ourselves. we should demand better from one another we should think about those that have the opportunity to live the american idea. we should honor their legacy and build that more confident america. this as much as anything is what makes me an optimist knowing ideas can inspire a country and help people long before i worked for him jack kemp had a has a tax plan he was incredibly passionate about. he wasn't on the ways and means committee here. republicans were deep in the minority decadence of the odds of it going anywhere seems remotely low, awfully low that he was like a dog dog a bone. he believed passionately in his ideas into even though they respect against him. he took a plan to any audience he could get in front of and

inspired the nominee for president ronald reagan to adopt it as his own and in 1981, the bill was signed into law lowering tax rates, spurring growth and putting millions of american families back to work is all it took, someone to put the policy on paper, someone willing to put the idea on paper and promote it passionately. this is a basic concept beyond the policy agenda that the house republicans are building a right now and as leaders we have an obligation to put our best ideas forward no matter the consequences with so much at stake the american people deserve a very clear picture of what we believe and what we would do. personalities come and go, but principles endure. ready to inspire generations yet to be born. that's the thing about politics. we think about politics in the vote or election but it can be

so much more than that. it can be a battle of ideas, not insults. it can be solutions come it can be about always striving to do better. that's what it can be and should be. this is the system our founders envisioned. it's messy and complicated. it's infuriating at times but it's a beautiful thing, too. thank you for being here today. i appreciate it. ' [applause] for the younger folks in the audience i would love to answer some of your questions. go ahead.

>> i can repeat it if you can't get it out. >> first of all thank you for having this. this is pretty cool. so anyway, you talked about introducing stability in politics. is the only institution for the candidates? >> the founders created this new idea it's unprecedented, never done before. guess what it is our job to preserve it sometimes we see eight politics going to the base of our emotions of what this unifies us so here's our job we need to raise our game and talk about ideas to unite us and not

prey on people's separations or identities. your job as a young person winding your way in life is not computing another person's vote is to listen and try to persuade they may have bad ideas but they are not bad people and that is what is occurring all too often in our society today. it is your job as citizens to respect other people's opinions, be passionate about the principles or ideas and go and advocate for them without impugning another person's motives to read our job during our job as leaders is to offer a clear and compelling agenda to talk about ideas and thoughts to trade insults.

my name is justin. i'm from congressman walden's office. thank you for taking the time to speak with us today. you talked about confidence and optimism. i'm not going to ask you to name names or speak in specifics about the presidential election but how can we be confident that after this presidential election that our generation can enter into an optimistic america politically? >> this is what inspired me as a ninja and i lost my dad when i was young so i grew up. jack kemp was one of my mentors and what inspired me along other people is the sense of passion and optimism for good ideas and making a difference in people's lives and having meaning. and that is what the politics should be and can be and has been and if we all work together and focus on it it can be again. and the point i'm trying to make

is that right now our sense of politics come into this isn't just the right or the left, this is happening all across the country. we are slipping into being a divisive country. we are speaking to each other in the eco- chambers we only talk to those that agree with us and we think that there is something wrong with the people that don't. the question and in punitive motives instead of testing theories and ideas area that is where it doesn't need to be and where it was sent and where it shouldn't be so the point i would make is if we are going to keep this beautiful american experiment going, we have to stay unified as a country and that doesn't mean we all agree on the same policies or candidates. it means we need to raise respect for one another. our public discourse so that we can get a better outcome at the end of the day. our founders were very clear

about this it only works if we participate the system with mutual respect for one another. anybody on this side? >> thank you for being with us. i currently in in turn and mine is one of leadership and with the most recent that you have assumed the personal maximum the role that you present is the speaker of the house i think the true market leadership is learning from failure and you speak of the willingness to be persuaded when you're idea is perhaps not the best idea or the ability to persuade someone when you're idea is a your idea is a better idea so my question is

when has there been a moment in your career in politics or otherwise that you have been persuaded that one of your ideas are one of the things that you have done perhaps wasn't the best idea? >> i will give you two examples. i mentioned one in the speech. i fell into the trap of makers and teachers and people struggling and for a moment to be dependent upon the government who don't want to be. so as we oversimplified, that is wrong and there is a lot of that happening in america today. i isaf made that mistake. one of the policy examples of the question is i spent communities in the inner cities learning about just how people are turning to struggle with poverty and one of the things i learned was there's a lot of people who've been in prison. once they have that on the

record and has been in prison, their future is really bleak. in the 1990s, i came here in the '90s. i think that we overcompensated on some of the criminal justice walls where we have so many mandatory minimums and three strikes you're out but we ended up putting people for longer prison terms which ends up ruining their life and hurting their communities where we could have had alternative means of incarceration, better means of actually dealing with the problem and basically destroying a person's life. so that's why become debate could become a convert to criminal justice reform. it's something i never thought about when i was younger. it's something i thought he tough on crime and that is something that we can overcompensate on in the 1990s and now that we see the path that has come from it i think we have to go back and fix that.

that is why as the speaker i talked about bringing criminal justice reform out of the judiciary committee to the house floor and advance this because what we are learning and i learned, i didn't necessarily know this before, redemption is a beautiful thing. it's a great thing. it's what makes this place work. we need to honor redemption and make a redemption something that is valued in the culture in the society and in the law and that's why,, we'll justice justice reform, something i changed my position on from learning about the power of redemption and the fact is they've got this wrong and it's something that you can improve so when a young man comes out of prison and a person isn't a violent criminal who did something really needed addiction counseling or some other kind of mentoring to go

back to the productive numbers of society can be a good husband, father and reach his potential. that's something we want to see more and i think we learned a good lesson about that the last few years. >> if you are a michigan state fan, they are destroyed because of that. good grief. i'm with steve king and my question is you talked about poverty can you talk about helping people to rise up and i heard you say that before. how does your faith impact your role as the speaker and when you assumed that and i heard that you were in a bind, deer stand

actually, how did that come about was if your faith that said i should do this or how did you come to that? they had a part of this to be very clear. you can't in my mind separate your faith from your daily walk in life from your personal, private life. it's one in the same. so, i'm a christian who chooses as a practicing catholic and we have certain principles i think are important to apply very well to what we do in public life and that is the principles of solidarity, the poor, but it basically means is people, people are the solutions. it's one of the reasons i'm a conservative and one of the reasons i passionately bb did the concept of federalism.

it is in perfect keeping with the tenets of my faith, which is whether it is fighting poverty, i do i., local community groups, civic groups, poverty fighters are making sure that we do not have a big paternalistic condescending government taking power from our lives and our communities and displacing, it gives me a sense it is grounded in my face and also a sense of how i should conduct myself personally and publicly because they are inseparable and number two, you will always fail. and then you ask for forgiveness and try to pick up and improve yourself going forward. so to me it is an inseparable thing. first, i'm a husband and a father than a public servant and that is the way that i order these things in my mind and using these principles i think it gives me a sense of how to conduct myself i'm going to do a bad job all the time but i'm always here trying to improve

upon the mistakes that i've made >> what role do you think members of congress have in bringing the nation together as it seems so divided? >> i think how we conduct ourselves is very important and we set an example and lead by example but also you have to understand who we are especially in the house. we are the part of the government that is up for election every other year so we are closest to the people and we are the voice and what we have to remember is that the representatives of the people we are serving a constitutional republic and that means members of congress need to be part of the solution and not the problem and this is what we are laboring to do in the conference which is we see problems in america and think the country is headed in the wrong direction.

as members of congress we believe most people agree with us by virtue of being here. i think that they basically say about seven out of ten americans think that america is headed in the wrong direction. okay then as a member of congress is not our job simply to say we are just as angry as the rest of everybody else to put gas on the fire, it is our job to channel this concern, this fear and anxiety and anger into solutions and ideas on how to fix it this is what our job is if we don't like the direction the country is going into this policy or that trend but are we going to do to fix it, how will we be part of the solution and if the can't get that right how can we expect the people we represent to do it as well if we cannot raise the tone of the rhetoric and the tenor of the debate and offer concrete ideas and solutions to fix the country's problems, then how can we expect anybody else to do the

same? that is why through leadership and example they need to be part of the solution by putting an agenda out there that says america we have problems that we can fix and we need to do this together and we need to unify what bothers me the most politics these days is this notion of politics but we are going to win by dividing people. and then by talking to people in ways that divide them into separate them from other people rather than inspiring people on our common humanity and common idealism and things that should unify s.. it's what we do to get policies that achieve that? liberals and conservatives will disagree with one another on that.

that is one of the things we are trying to do. what other institutional changes can we make to help legalize the legislative gridlock? it's not have the leadership he determined the outcome of everything you were not sure the outcome of something. we lost the majority and the then democratic majority looked critical director sitting here in this committee commended in

with my fellow democrats about how the committee was losing its power to shape the legislation. when we retook the majority i don't think that we used the power enough. about cultural change i believe is going to help get a better result at the end of the day. most people who become speaker work their way up the ladder which is a fine path to take in congress i saw myself as a policymaker hoping to be the chairman of the committee.

to be an effective policymaker and to make this a good locations of any to focus and specialized. you have an amendment on the floor but if the leadership consolidates the power. i feel like this institution is sort of short-circuited and doesn't function at its full potential. it is easy to change but i think we've made a great deal of

progress. the most comprehensive k-12 law in 25 years. we have a tax policies we worked on for over ten years that we made permanent. so we made the fixes. there's a big problem that was 17 times that we kept hatching this medicare problem one year at year out of time and amount of time and time and we permanently fixed it. we have no idea what the bill could have been. it was partisan for a while but we had over 300 votes. we have the centralizing cover and the subsidiaries so to speak letting people do their jobs to get a better outcome and have more participants.

enjoy your time here. i hope you learned good lessons. appreciate it. [applause] [inaudible conversations]

this event on the state of american politics with the house speaker will air again tonight at eight eastern on our companion network c-span and you can watch it online as well after c-span.org. turning to the road to the white house coverage, the back of the presidential frontrunner hillary clinton is in california today giving a speech on counterterrorism at stanford university. she is expected to address yesterday's attacks in brussels. we will have her remarks at 2 p.m. eastern on c-span. programs include author bruce helman who discusses the book

the man who stalked einstein how scientists changed the course of history. then saturday at seven, patricia scott, professor of women's studies at the university of georgia on her book the firebrand and first lady portrait of a friendship, eleanor roosevelt and the struggle for social justice. the book explores the relationship between civil rights activist the cofounder of the national organization of women and first lady eleanor roosevelt. patricia bell scott speaks with no irvin painter at a roosevelt house in new york city and sunday beginning at 1 p.m. eastern or from the virginia festival of the book including george carlin's daughter that talks about her life growing up with the comedian in her book the home companion then sunday at nine "after words" with nancy cohen author of breakthrough the making of america's first woman president. she looks at political leaders

and the advances they are making in the political arena. the cornell law school center for women and the justice. >> for a woman to be at the head of the most powerful country in the world when one of our key allies wouldn't allow women to drive and you know, our most significant enemy at this time, isis, is literally executing women and girls simply for being women and girls i think that sends a powerful message from the bully pulpit about what america stands for. go to booktv.org for the complete weekend schedule. securities and exchange commission chair appeared before the house appropriations subcommittee to discuss her agency's 2017 budget request. some of the topics included combating security fraud, cyber security cybersecurity efforts, employee diversification into

the agencies dispute with the labor department over the plan to dissuade potential conflicts of interest among brokers. congressman andrew crenshaw chairs the appropriations committee on the financial services and general government. >> the hearing will come to order. the ranking member said the meeting will start at 11 promptly and i know people are anxiously reading at this point so we will start. this is the final hearing of our subcommittee, so i want to welcome our witness to the securities and exchange commission chair thank you for being here today. we always enjoy having you before the subcommittee. i know the subcommittee members look forward to having a good exchange with you.

the sec plays a critical role protecting investors encouraging capital formation and maintaining fair and efficient markets just as they expect them to be fair and efficient, the regulators that oversee them is expected to be fair and efficient as well. the sec is expecting 1.871 or $1.781 billion which is $176 billion with 11% increase over fiscal year 26 teams. while the sec is a fee funded agency, congressional oversight over the commission, he's essential in holding the sec accountable and fulfilling its mission making sure it's responsive to the markets and the investor as well as congressional concerns and i look forward to discussing the request sent by the commission believes that it needs these additional revenues. the past three years the committee set aside resources in the overall funding amount to fully fund the division of economic and risk analysis, the

so-called dera that have given the ability to grow by almost 50 positions including 16 phd economists. and i had to happened to be the cost-benefit analysis to the sbc rulemaking is informative and i support the work dera does to educate the commission about the macro as well as the micro economic effects of the sec rulemaking so i want to express my support for the other functions such as developing risk-based models for the commission's inspections and enforcement divisions. in addition to your duties as the chair of the sec you're also a member of the financial stability oversight council, the so-called fsoc and i know we discussed this last year for the designation process for the systemically important financial institutions sifis still is a concern for me. also since the measures since we last spoke i not sure they go far enough in addition i still

believe the current designation process is not flexible enough. entities should be given the opportunity to address the systemic risk before being designated. fsoc's successor should be measured by how it mitigates the systemic risk and not by the number of institutions that it designates. another issue we discussed last year is liquidity in the markets especially the fixed income markets. as i'm sure you know the fiscal year 2016 on the best required dera to report back within one year of enactment or the combined impact of the rule and other regulations that impact what we have on access to capital for consumers and investors and market liquidity. i continue to have concerns that the cumulative effect of the regulations have adversely impacted overall market conditions and market liquidity so i look forward to reading the report and discussing what the

sec is doing to address this issue. the omnibus included a provision that prohibits the sec from finalizing, issuing or implementing any rule regarding the disclosure of political contributions in the filings. congress has been clear on this issue however there are some who believe they are still able to work on a potential rule that finalizing it. let me caution you against this to petition the commission has a lot of work to do including congressionally mandated work is more important than advancing policy congress has never actually required in fact has plainly rejected in statute. on a bipartisan note last month the house passed hr 3734 and called it the sec small business act. mr. quigley and i sponsored the bill and hope the senate takes up the legislation soon as small

businesses are on the forefront of the technology innovation. the sec small advocate act establishes an office of the advocate for small business capital formation and small-business capital formation advisory committee. to assist small businesses in the investors with any problems that they may have been the commission. identify difficulties small businesses have been securing access to capital including unique challenges in the minority owned businesses on analyzing the potential impact of the sec regulations on small businesses and propose changes to the regulations that would better promote the interest in the needs of small businesses and their investors. i'm interested to hear from you on how the sec is making the priority and any thoughts that you might have on this bipartisan legislation. the sec should be one of the leaders in helping to grow the economy while at the same time

keeping the markets fair and orderly. as an important responsibility, i know you take it seriously and we thank you for the work that you do it the work they do and we look forward to the testimony today and first of all, i'm going to turn to the ranking member for any comments that he might make. back before the subcommittee is a pleasure to see you once again as you come to testify by the fiscal year 2017 budget request the securities and exchange commission and your budget your budget request for this fiscal year is quite reasonable in my opinion given the large and growing oversight rule that you are expected to undertake. with so many new responsibilities not just from dodd frank the jobs act you can argue you should be requesting even more funding than you are. the total budget request

afforded by most big banks, it investments, so despite the recent increase recent increase is coming q. are always fighting an uphill battle with fewer resources that are needed to do the job. last year, we succeeded in increasing the budget level to 1.6 billion, which has allowed you to at least not lose ground. your fiscal year request asks for a further increase of more than 100 million for the total of 1.781 billion. this would help increase your enforcement capacity and ability to conduct oversight and examinations of the regulated entities and ability to protect consumers. although the financial meltdown of 2007 and 088 in the memory of some people that remain foremost in my mind, at that time we had regulatory agencies that were negligent in their duties to protect consumers and cut back

on abusive passages and we all pay dearly for that. people lost their income and savings and the american people were forced to bail out actors that have taken unnecessary harmful risks that undermined the economic system. that is why a strong individual and sec is vital to protect not just those that are in the financial markets that the american people as a whole. as we found out several years ago, guaranteeing that you have the resources to ensure fair and open financial markets is key to every american's economic security. dodd frank gave you significant tools for the oversight ability and it is up to the subcommittee tunic sure you are able to carry out the intent of the law. i also do want to mention another part of the equation that threatens to undermine the system of safeguards and

protections for the sec and other financial regulators. as in previous years, last year's house and senate appropriation bills contained numerous writers that oppose unnecessary and procedurally fraud. the piece right who's opened up loopholes in dodd frank and undermined the ability of the sec to do its job. before i close just want to thank you for your dedication to the agency and to the nation. you have a tough job to do and hopefully the subcommittee makes it easier rather than more difficult. i know you are a fellow yankees fan and a sense baseball season was the other way i am sure i will see you in the bronx zoo -- bronx soon. >> if you can keep it within a five minute range, the floor is

yours. we do not want this progress to stall because we fall short in funding necessary to maintain positive trajectory in fulfilling our mission was on rulemaking and policy front we finished our mandates in 2015 with the adoption of regulation a plus and crowdfunding and are nearing completion of the

dodd-frank mandates. and there are key rules and comprehensive initiatives in mission-critical areas. beyond specific rulemaking, the sec continued its review of fixed income market structures, advanced disclosure effectiveness to improve public company disclosure for investors and companies and undertaking modernization and enhancement of the regulatory regime. the commission continued in the 15 to hold violators accountable with record recovering orders and a number of cutting-edge, first of their kind and enhancement in the sec national examination program including industry experts, to make argumentation of analytics and enhanced training have led to a more effective and efficient program. throughout the agency we are harnessing technology to identify risks, sift through

large volumes of data, inform policymaking and streamline operations. these achievements evidence stronger and more efficient agency, significant work and challenges remain if we are to be successful in exercising responsibilities. the sec is charged with overseeing 20,000 market participants as well as 18 national security exchanges, and therapy in addition the sec is responsible for reviewing disclosures and financial statement of 9100 reporting companies. since 2001 the markets oversee grown exponentially in slides and complexity with trading volume and equity markets tripling $70 trillion and assets under management of register advisers tripling from $2100 to

$66.8 trillion. at the same time the ranking member alluded to the annual budgets for it alone for our largest registers are reported to be $10 billion, more than five time the sec's budget. the sec responsibilities have dramatically increased in recent years with new duties or expanded jurisdiction over security derivatives, hedge and private fund advisors and clearing agencies. in addition to the responsibility to implement and oversee an entirely new crowdfunding regime? the sec appreciate the confidence congress and the subcommittee placed in us in recent appropriation cycles and we are seeking that support this year. requested level for fiscal year 2017 which is carefully targeted will permit the agency to hire an additional 250 staff in critical core areas and improve information technology. specifically the sec budget

seeks to increase examination coverage of investment advisors for current funding enables the agency to examine only 10% of the approximately 8000 registered investment advisors. further leverage cutting-edge technology, protecting investors by expanding enforcement programs investigative capacities including a new complex area and strengthen our ability to successfully litigate against wrongdoers and further bolster the economic and risk analysis functions and higher market and other experts to enable the sec to fulfill its expanded rulemaking and oversight responsibilities. the funding we are seeking is imperative to protect investors and meeting challenges of today's market and the sec expanded responsibilities. as the chairman alluded to the sec funding is deficit neutral so any amount appropriate to the agency will be offset by modest transaction fees and will not impact the deficit or funding

available for other agencies. this does not count against the fiscal 2016 or fiscal year 2017 caps. i hope we have chosen ourselves to be good stewards of the funds we have been appropriated and we will continue to be. i look forward to providing the sec with resources it needs to fulfill its critical mission and thank you for the support you have chosen the agency. >> we start questioning now and try to observe the 5 minute rule that members come and go and other hearings going on at this moment, some hard down the hall and across the hall. let me ask about your budget this year, 1 $76 million request, 11% increase over last year. last year you receive numb $105 million of an increase which is

2 $81 million over two years. but from 15 to 16 there was a $51 million carryover and i wonder how that happened and how that $51 million, you also have access to a reserve fund set up under dodd-frank. talk about funding the last two years at $51 million. how does that occur and what do you plan to do with it? >> referring to carryover balances, we spoke about this last year. the sec unlike other federal agencies have no year funds so that we are allowed to carry over if we have not spent during particular appropriation cycle. it allows better financial planning and smarter hiring, you don't want to hire the wrong experts or the wrong contracts or artificial deadline. we have in the last several

years carryover balances can come down. some balances are attributable to obligating funds on completed contracts so that is good financial management. we take into account carryover balances for the subsequent year. you cannot estimate precisely what you will have in a given year. it depends when we get our appropriation. if we get it late in the year that puts more pressure to spend by the end of the year but fortunately we were able to spend smartly, wisely and what congress appropriates for us. >> you received an increase, less than you requested, 1 $17 million less than that. when you don't get what you ask for, how do you prioritize, i

know you have done a lot of work investigations, when you don't have what you requested, tell us how priorities work with money you did receive. >> what we try to do makes a difference what our most pressing needs are in given appropriation cycle. for example last year and this year one of our priorities is to increase the number of examiners we have to examine the investment advisor space we are talking about in our last two or three hearings, strengthen enforcement, and a line what we sought the funding for and make separate judgments based on reduced amount we received. we allocated a thorough process those positions to meet the priority so a number of them

went to investment advisor examiners. a number went to enforcement and division of economic risk analysis. i wish it was a bigger number but the number went to hiring more and market experts as we outline as well as to the extent the money was available to continue the technology projects that are so critical to us. you mention the reserve fund, by dodd-frank as you indicated really for the long-term mission-critical projects that are so essential to us. we had $25 million and that rescinded last year, a deal with less money than we needed but we try to do smart budgeting after we get the appropriation as well as before when we make the request. >> i mentioned in my opening statement we carved out money, we think that is important in

understanding cost-benefit analysis and how has that worked out? has that been helpful across the board? >> i have said before this is one of the great success stories, very much appreciate the support through the appropriations process and the fastest growing in the division and in addition to cost-benefit analysis they also do what i call substantive original research on rulemaking, not only have we gotten more positions, more economists but really built the infrastructure for them to do their work. earlier in rulemaking, you will see often now their own studies, their own original research put into the public for people to comment on and that has come a long way. you can't overstate the

importance, the quality of rulemaking. they are now in the last couple years a little longer than that, increasingly integrated the entire agency. they are the ones who manage our big data, structured and unstructured not only for themselves and their research but the other divisions to help them do their job much better, designed and conceived of and work with other divisions on data analytics we talked about throughout the budget request in prior hearing so enforcement and exam staff is better able to identify high-risk areas. where do we go to examine? where is the suspicious activity we look at more deeply? they are doing fantastic work at the agency. >> glad to hear that. one of the things we asked in the omnibus bill was for them to do a study, to report back to us. there is some concern that there

is an awful lot of regulation, lots of regulations and there is some concern that that has impacted the liquidity of the market so we ask a report to see what they have to say. do you think those regulations, if there is lack of liquidity, is that an unintended consequence or was that part of the plan in cooling down the economy or heating up based on your view of what happened in 2008? >> unintended consequences all the regulators must be focused on at all times with respect to the enormous amount of rulemaking since the crisis, that applies and all the rulemakings i looked at through that lens.

two things about this. liquidity is infamously important to the functioning of the markets, our economy could grow. it is enormously important set of issues that all the regulators are focused on, determining whether the reduction in liquidity to what extent and what the causes are, any economist will tell you whether they are near or deer and extraordinarily difficult. we have for example with our fellow banking regulators, the cftc reported quarterly to the national services committee on whether we can determine whether the vocal rule -- vocal rule has had a negative impact, and we cannot say it had an impact. enormously important to study, to try to ferret out what you are dealing with, looking for unintended consequences.

i'm glad to see a fairly recent study presented or is to be presented at one of our conferences, british columbia study that looked at the question of combined regulation but more specifically the impact on liquidity. that particular study determines it did not have negative impact on liquidity and you see liquidity deteriorating after the crisis, but you don't see after regulations are put into place, there will be more studies as there should be. it is enormously important. >> it is a concern and it sounds like you have looked at that from time to time and this study will give us more information. do you ever talk about the appropriate -- you can't pin that down, but something you all talk about is you look at fair market. >> no question about it. you have other objectives you

are balancing from time to time with regulations with liquidity but enormously important all the time to look at that. >> okay. let's turn to mister serrano. >> the president's budget request of 1 $.7 billion, increasing 6% over fiscal year 16 will support 15 year positions, you're requesting 52 positions in enforcement, 127 in compliance, corporate finance and 7 each in markets and investment management. please explain what function these will serve and why they are needed and also as a follow-up for what happens if you didn't get these positions. >> you requested 127, number

105, or numb 107 would go to that investor advisor space which we talked about before where we have resources only to examine 10% a year which creates very significant investor protection issue. that is what primarily we would use and the examiners in other spaces as well, where oversight responsibilities over the exchanges, sros and broker deals, you can't overstate strong enforcement particularly in these markets as they get more complex, we need market experts, people who know how to use data analytics, and charging more individuals in enforcement program which is important to stronger deterrence. this would be my theory why we have more trials recently. a dozen of those positions and enforcement could be bolstering

litigation unit, our trial unit in the office and they spread over corporation finance trading and market and market oversight and that covers responsibilities are diverse, they would be used in order to cover those responsibilities the best we can. if we were not to get these positions you would see deterioration in every one of those priorities we outlined in the budget request, we would be examining less, subjecting investors too much more risk, we would not be enforcing as we should be. try the cases we need to try and prevail in in order to set a strong deterrent message. we have new responsibility is under dodd-frank and the jobs act in which we oversee the new crowdfunding. we have examiners devoted to the

vollker rule. it is among the priorities and responsibilities we have and if we were not to get it, we would be compromising our mission and the market and compromising investor protection. >> glad to hear you use the word enforcement. i keep telling this story but it can't be told enough. some years ago this agency, you weren't there, came to the subcommittee and said we don't need any more money. we later found out why they were not enforcing anything. we know what role they played in the fiasco. let me take you to puerto rico. puerto rico is in the midst of an economic crisis so bad it is becoming a humanitarian one. your investment management division is urging funds, especially those who monitor, continue to be updated on the

risk associated with investments. talk a little about that and any other role the sec may have? >> the guidance update you are referring to is to make sure investors are looking out for risks they may face, losses they may face with market events and what is going on in puerto rico creates those in some situations. it is a prudent set of guidance for investors. and holdings and funds which the guidance goes to. we don't have -- with secretary lou and other members, it is very focused on the core of the

crisis and coordinate financial regulators in terms of impact and possible impact not only on investors but direct investors in the broader markets. >> thank you. >> i will turn to mister quigley, we have been joined by the ranking member of the full committee, miss lowey, and she will be asking a question or two along the way. mister graves. >> i know many of the members of the subcommittee have raised concerns related to the dol and fiduciary rulemaking. this was brought up with director donovan a few weeks ago and there was an area we feel has been ignored too much in its implications of the rule, we feel impact hard-working constituents we all represent

including hard-working georgians that i do. chairman johnson produced a report with the department's rule published february 24th and i would like that submitted for the record for the committee, and a 40 page report, there is one area i want to focus on and i want to quote the report. despite public assurance, the labor department has collaborated with sec, emails between labor department employees, labor department employee and sec expert revealed discord between the agencies about the rulemaking and the report goes on with a senior sec official stating concerns about reduced pricing functions, rising costs and limited access to retirement advice, particularly for retail investors and our constituency. 26 some odd items of concern were raised by your career staff related to substantive content of the rule with labor failing

to resolve all of these issues and as we all know, many of your staff being career staff are considered experts in what they do. we hope the appointees know the issues as well. folks the dedicated their careers are those we hope we can trust to take just the facts, does it concern you as much as it concerns me and others on this panel that labor seemingly ignores concerns of your career professional staff that they raised and have not addressed them of your staff or this committee who raised similar concerns also. >> i can't comment on specific reports back and forth, i can say what i said before which is staff of the sec did provide substantial technical assistance to the department of labor including bringing the staff's

perspective and expertise on the broker model including at least their views about possible impacts, various permutations of a will. the department of labor in their notice and comment period asked about those issues. we have not seen the final yet but what i said about my own view for doing fiduciary duty in the sec space is it is not an easy task and if we end up at the end of the day providing particularly retail investors reliable reasonably priced advice i would consider us to have failed in our purpose. at the end of the day we are independent agencies. the department of labor has responsibility for the important space. the particular exchange you are referring to, in 2012, cannot

add to what that did in the prior proposal. >> thank you for providing expert advice and i think it is in our interest to make sure all our constituents have the most options to invest wisely and affordably and not options removed and our concern is this rule will remove many options, if not remove them, make them more expensive or put barriers in place in which people will not seek those options and we believe it is wide stewardship to be investing in the future and the retirement and we will make sure all those options are available. and can be made with individuals in their communities that we trust, might just be downtown main street. thank you, chair. >> on that, dodd-frank

specifically said your agency was to propose will. you got any idea why the administration supported dol moving ahead of you? >>.frank mandated a study which the staff did, and gave the sec to proceed with the uniform fiduciary duty for broker-dealers under section 913 of that act. the initial department of labor proposal was in 2010. they do have responsibility and as we sit here today our broker-dealers are subject to some department of labor regulations so there has been overlap. >> is the sec going into look into developing their own rule? >> without question. i said some time ago my own view after extensive study, the agency has been studying this for a lot of years.

my conclusion is the sec should proceed under 913 to do uniform fiduciary duty for investment advisors. >> who will harden out the two rules? >> you try to make them compatible, the coordination with fellow regulators where we have overlapping jurisdictions is enormously important. the title vii over-the-counter revenue space with the cftc but for an regulators. i want to be clear, i think this is hard and not quick to do this well. >> mister quigley. >> welcome, chairman. >> to reference the small business advocate act, i am sure you are aware that the house passed it on a bipartisan basis, the senate will take it up. can you tell us your stance on moving forward and designating a small business advocate at the

sec? >> we have a ticket position on the particular bill. may have provided some technical assistance. no question and this is certainly true at the sec, how important small businesss are, and different needs and different models attended very closely. and reinstituted after he got to the commission. and an office of small business policy and advise on all our rulemaking with the lens on small business and comment on that and responded to 1700 separate inquiries for small businesses last year. we are focused on that with a lot of expertise, in terms of small business advocate, the

thing i would worry about with that is we all agree we want to do everything we can for small business but not to fragment the efforts that are carried out on behalf of small business, certainly that is true at the sec and we have that concentrated in a way where there is a lot of expertise and a lot of work that goes on. however that might develop i would not want to lose that. >> a recent study conducted by research at the university of chicago and minnesota, 7% active advisors have been disciplined for misconduct or fraud. and 38% are repeat offenders. you are aware of concerns about these things. are you aware of these studies? what is the sec currently doing

to prevent financial fraud like this for repeat offenders? >> i am aware of the study, i read it quickly, the care that i will for the next week or two. this is an area that is enormously important. whether it is a brokered deal or investment advisor, if they are not serving their clients honestly, fairly and in the best interest of client that is a big problem and one of the things we have done at the sec is we have a broker dealer task force and in the exam area priority to look for these repeat offenders and also look closely at the firms where they tend to end up again. one of the things the study referenced was you have problems in the past with some of these advisors, and studies on brokers and they show up again, they

show up at another firm. our focus has been to deal with the registered representative individually, not always but certainly to a great degree, we were focused on the firms where they seem to be residing. one particular initiative looking at churning by brokers throughout various firms to crack down on that. enormously important area. >> how much of this is resources? >> some of it is resources. you can't get away from that. in the broker-dealer space we were talking about investment advisor space but in the broker-dealer space, about 80% of the examination of broker-dealers really firms and individual broker but that doesn't take into account their various offices, branch offices that are not examined with that frequency. they do 50% a year better than

10% a year. we can't do enough. techniques are better, data analytics are better, identifying those patterns, the last two or three years we have been very focused on the sec to identify where those brokers are going and getting out of the agency. >> thank you, mister chairman. >> madam chair, to the extent the chairman is going to manage my time, don't be offended if i endeavor to manage yours. i will try to -- with that in mind, i know you folks have been working on an update which provides guidance for mining companies to report the mineral resources, the present stuff is 34 years old inconsistent with international reporting requirements. can i have a point of contact to get an update on where that

stands? >> i would call keith higgins who is director of the corporation of finance. >> thank you very much. back to the department of labor stuff, we will call this under the heading of intramurals. you will tell from my question that i think your jurisdiction is unquestioned. there is an issue with that stuff but i am concerned about unintended consequences and i hear you when you say it is hard, not quick but ultimately under dodd-frank the section you mentioned in earlier testimony, there is mandatory language under the standard of conduct that is under other matters but the standard of conduct section says the commission shall promulgate rules prohibiting or restricting certain practices, conflict of interest and supreme court case that is not specific to the sec but generally says

when congress acts later in time and specifically that takes precedence over earlier acts in terms of regulating that stuff. i am concerned about unintended consequences. clearly the 800 pound gorilla issue in the room is there going to be one rule or another? can you give any comfort on what you think your jurisdiction is. when you get through this process and how that is going to work if it is in conjunction with dol? >> no question. at least section 913 of dodd-frank was passed that the sec has the authority, not the mandate but the authority to impose uniform fiduciary duty and broker-dealers and investment advisors. it provides certain parameters if the commission decides to go forward. as i am urged to do, one member of the commission even though

the chairman, this is a commission decision but i believe the sec should exercise that authority to go forward. that is not a quick and easy process and it is not up to me alone. and what the parameters of that rulemaking would be. we do go forward in terms of your question on consistency assuming the department of labor rule that preceded hours that overlapped, to talk about coordination and making rules and the regime is as compatible as possible, but they are always landing identically and that is something that we try to make the land identically if you can but they are separate agencies, separate statutory mandates. >> timeframe? >> i can't say. >> you have some decisions? >> i can't give you a timeframe other than to say what i said before that it is complicated.

where it stands right now, staff parameters of recommendation are being discussed with my fellow commissioners. >> final question is dol comes out with standard before you get through your process, to enforce their standard. >> they have some enforcement authority on their own. are enforcement authority under the securities law, we don't enforce the labor department rules per se. the conduct can overlap with the jurisdiction, it is not an easy situation as the initial response would imply, but we enforce federal security laws in our rules. >> you talking to the committee saying it is not as easy as you

might think, who is interpreting what is even less easy. i would rather be the regulator than the person who finds out i thought i was in good shape with the sec but i got the dol sweeping in on me. >> we tried to overlap, not just the department of labor, to be as consistent as we can. i will say again we had parallel rules and they are not totally consistent and we do our best to give guidance and clarity but they are not identical and they do overlap. >> we will have time for another round of questions. let me turn to a statement or question or both? >> thank you very much, appreciate your leadership and i want to say how fortunate we are to have a chair who was so experienced, your years and

years of experience has contributed to your outstanding management and we thank you very much. when i look at the numbers you are policing have a lot of new registrants, more than 2300 privately fund advisors registered with the sec since the effective date of dodd-frank and 800 municipal advisers are expected to be registered in 2017. in the next two years new registrants are expected to be subject to examination including swap execution facilities, security base swamp data, repository swap dealers, crowdfunding portals, how do you prioritize examinations given how large your existing portfolio is, how much larger it will be with new registrants, how many of those do you anticipate being able to examine, how can investors have

confidence that everything is being done to prevent another meltdown when so few of these entities are being examined and will your budget request help build that confidence? >> the budget request will help, no question the sec is significantly under resource agency despite the increases which we are very appreciative of the we have gotten in the last two years to do the job we have been given to do and i would say that unequivocally even before you were given additional responsibility is under dodd-frank and the jobs act and your reference to private fund advisors including municipal advisers, swap dealers will come online, those are all add ons to our responsibilities so in our request this year, request for limited positions for those who come online. there will be a gap there.

we will make smarter use of resources i try to be as eloquent as i can for more resources to do the job so we try to do more risk-based identification of where to go, we do desk reviews of data when we got private fund advisors and present examines which were more limited and had our arms around and a boot or two on the ground but in order to carry out investor protection mission we need significantly more resources in all those spaces. >> it is important for my colleagues to note the 2015, the work of your division enforcement resulted in record amounts of sanctions $4.2 billion. 507 standalone actions were filed for an additional 300 follow-on proceedings into liquid filing cases. share with us what trends you have noticed?

are they getting smarter? how will your budget request take action against those who perpetrated? >> yes. the markets we have to police are getting smarter, more complex, bigger and faster all the time. one of the ways we try to meet that challenge is through smarter use of data analytics we have been talking about. we have a software tool called artemis developed in-house that basically allows us to identify insider-trading, suspicious patterns among traders. look behind that and see who traded. it is also a budget fact. i am proud of the record of enforcement, not just the numbers which are impressive but the kinds of cases and how complex they are. and thinking about how much to fund an agency, enforcement

alone obtained orders for returning $4.2 billion, our request is 1 $.7 billion and think of all the other value add the sec provides. what do we see beyond more complex, the complex financial instruments area is one that requires market experts. we seek those with more data analytics to analyze and identify the peer amid schemes, national reporting fraud, a place for market experts and more data analytics and you will see the budget request, you will see that among who we asked for. >> lastly in fy 15 this committee asked for an update on the sec effort to modernize corporate disclosure

requirements including cybersecurity informing us that in march 2014 the commission held a roundtable to discuss cybersecurity in furtherance of commission experts to better inform itself in the marketplace and the private sector. i would be interested to know what lessons you learned from that. should companies that file with the sec be required to disclose cyberattacks, to engage with the private sector on cybersecurity and i want to say i remember a couple years ago when ray kelly was police commissioner they were behind the 8 ball because corporations were afraid stock prices would go down if they admitted they lost $7 billion in cyberattacks. >> i don't think there is any greater risk to the financial sector or beyond the financial sector facing cyberrisks, the government in other places as well. in terms of disclosure by public

companies, the sec did do guidance to companies some time ago really alerting them to the range of issues that require disclosure if there is an attack, or risk to their business if that is material they must disclose it. we look at the disclosures every year in the annual reviews but we are also focused with fellow agencies and the private sector on much deeper broader risk than the jurisdiction reaches to. we are register -- our examiners have gone out ahead of the curve and good for them in looking for cyber preparedness, investment advisors and broker-dealers, publishing not name and chapter but publicizing the population

what to look for, how to enhance what your system is, what are the best practices out there? we continue to have that as an exam priority, and trading and markets division and investment management division meet with our registers and talk to them all the time about preparedness for the cyberattacks and how to report but a lot of this has to go on broader than where the sec can function. has to be department of homeland security, treasury department and we are active in those areas as well. >> thank you, mister chair. we sit on many of the same commissions but cybersecurity is such a huge threat and my discussions with public companies and large private companies, they all have their systems in place. how we can learn what happened

so many issues involved here, and we are right in the middle of it and i thank you, mister chair. >> thank you. mister yoder and mister bishop. >> good to see you again. thanks for your service. there is a pending before the commission that would increase the number of firms that have to register at finra. it is drafted, well-intentioned, overly broad, requires some firms to register with little regulatory benefit that could be achieved otherwise. you are studying that. this committee is responsible for oversight of your budget which is why we are here today. who is responsible for oversight? the rulemaking will increase the budget, how can this committee make sure they are using their resources effectively, efficiently and not creating a new burden.

>> as an sro, we exercise that authority including exam authority, membership organization basically. and in the comment period, we will be considering all those very carefully including costs as well. and all their rules, that is a safeguard too. >> in terms of those dollars do you feel the oversight you are in charge of, you can know their budget grows, understanding that is hailed appropriately. and -- >> the chairman of the sec, we

do need to enhance the oversight at the sec, and get greater coverage of these investment advisors i keep talking about in examinations is very soon to transition our brokered dealer resources to the investment advisor space because in part finra does 80% of those examinations. that means we have to up our oversight if that is the move we are going to make and in general we are looking to enhance our oversight as well. >> i appreciate your studying the rule and making sure you are finding the right balance, and caught folks that don't need to

be registered. and registering the 33 rule printing, sounds like the structure is getting complicated and i know you have been studying this for some time too. there are some concerns i hear from our participants that replacing a series of steps might make it more complicated and even supports the rule are concerned about that as well. where are you in the rulemaking process? does it make sense to step back and start over rather than pushing the rule in terms of complication? >> we are taking a lot of comments on this aspect of the rule and studying it carefully. we will proceed, we don't hesitate if it is called for. i am not suggesting we are at that gesture now but seriously studying the range of the issues

that are brought to our attention. >> the ranking member brought up the topic of cybersecurity. i want to talk about your internal control. one thing is external threat. i had a chance -- your counterpart was in the ad committee which i serve on as well. and talk about concerns i heard from market participants they might put their source code in the hands of cftc and nefarious actors within or without could release that and the secret sauce so to speak. in light of the potential harm of data being released internally, what are your internal controls that would help assure the committee that any sensitive data in the hands

of the sec would not be released or somehow would not be compromised? >> no more important an issue. we have to regulate but we also -- assurances can be given to wield the safeguard, that sensitive information. this particular budget request to bring it back to the budget, 4 $.7 million to enhance security situation. this is coming up in a number of cases including proposals in the asset management space asking for additional information and one of the issues we are enhancing the systems which we are focused on. how much can we say about how we are enhancing, and pretty detailed about that if you are giving a roadmap. that is one of the things and we

need to say more than we have in the past about that. >> appreciate your leadership. the sec and -- they cross paths a lot of sensitive information to compromise entities that they regulate. the importance you place on that is critical to maintaining that information. >> mister bishop and mister womack. >> thank you. according to 2013 gao report which was three years ago, minorities accounted for 19% of management in the industry, minority women accounted for 13.5%. tell me what steps have the sec taken to improve this disparity,

and current stats that are improved and what steps congress could take to give additional tools to increase minority participation. >> two spaces to talk about. one is within the industry and the private sector and together with a number of other financial regulators under section 342 of dodd-frank have focused on registrants focusing on the diversity of their staffing among other things. in terms of our own agency, we basically look in three areas, our own staffing that we have. this is a certain amount, not huge amounts but amounts of

contracting dollars. and minority and women owned businesses know how to in procurement process, and compete for those dollars and had a lot of success there. with respect to the number of minorities and women in senior positions, we are very focused on that in terms of taking specific measures. we are seeing improvement but we remained focused on that. is the ones to solve, i think we have to remain very focused and use all the tools at our disposal. >> anything we could do to help you in that regard? >> budget? i don't mean to make light of this because i don't, it is enormously important. we are right now, to the sec,

kind of midstream, how initiatives are working and outreach is working. >> i was going to ask about recruitment. >> that is one of the areas, i forget the number of outreach events this past year, it exceeds 150 or something. in the right places, the right people at them, how successful those initiatives are before suggesting what might be helpful from congress. >> following on the question of the budget request, registered investment advisors with a growing number of registered advisers, and 35% over the last decade, how do you plan to address the shortfall without

impacting the at risk advisors. >> what we had for the last two years is the never before examined initiative and it looks at registrants that registered in the past in order that we are covering that space and do something as simple as a bit of a variant of the present exam for private fund advisors to call up registrant and all the rules, here we are, and unless you are devoting the resources we think are wise to making sure covering that space one way or the other. >> to use funds from public investors and small business, crowd lending, innovative

financial for the jobs act of 2012, and regulation plans initially to offer small business owners as an alternative. allowing that is positive to them, opportunities for small business owners, they first utilize this. to encourage liquidity for small business. >> where we pass on issues like that in regulation h space is more traditional role of reviewing filings to make sure the right disclosures are given basically. with small business and small business liquidity, we are doing -- in october, the pilot you may have heard about, what the data shows about increasing secondary

liquidity for smaller businesses and look at venture exchanges as possibly -- we can prove venture exchanges before. to see whether we can increase liquidity for small businesses. the crowdfunding mechanism becomes effective in may is a way to raise money, you attend liquidity that needs to follow for investors but we are spending a lot of time on that issue. >> mister womack. >> always great to see you. last year i spoke to market structure when it came to errors or glitches like the flash crash which was addressed through working groups established by the depository trust and the new

york stock exchange. industry group suggestions may have been more comprehensive. i would like to follow up by saying if we could get the list i previously requested noting which of these recommended changes have been implemented, why or why not? >> it is possible if we have that information -- that has followed up to identify the space you were responding to. i had a sense there might be something else we were -- had not responded to. >> i appreciate that. focusing on structure. the national market system, planned governance, you may know there is a discussion put forward by my colleague from virginia. this legislation would install

broker-dealer representation on the operating committees of the national market system plans such as consolidated pilot and so on. what would be the downside of having broader industry participation in development of these critical market utilities? >> that is an issue, we have our advisory committee and four subcommittees including in ms subcommittee. issues the committee is looking at include governance. i can't get ahead of that. and getting fool input and that is an issue we are focused on. >> a parting comment. in your testimony you note volume and equity markets have changed over the years but so have other major aspects such as exchanges, moving not-for-profit, member owned for profit and publicly traded. this would emphasize need for

reform, but countering the exchange evolution, it is cited that indirect participation is available through advisory committee membership. with that said, advisory committee members are most often given little actual voice, citing among other things the fact that much meaningful business is done in executive sessions from which i know you are aware advisory members are excluded. the sec has the ability to positively affect the governance structure already separate from broad reforms. congress will continue to weigh in. .. we have time for another question or two. i will start. just wanted to -- you and i talked last year about