the west coast. thanks for being with us on this wednesday. i hope you enjoy the rest of your evening. . >> in a few moments, securities and exchange commission chairman mary schapiro testifies about her agencies bunt request. more about the president's budget request in a hearing about secretary of state hillary clinton. and then federal reserve chairman ben bernanke on the economic outlook. on washington journal tomorrow morning, we'll discuss the president's housing relief program with senior democratic whip jackie speier from california. the executive editor of "the weekly standard" fred barnes will take your question about the 2012 campaign. and we'll joined by michael riley to look at the recent arrests of hackers with the group anonymous. and what risks hackers may pose to a national security. washington journal is live on c-span every day at 7:00 a.m.

eastern. well, it is that time of year again where we announce our student cam winners for 2012. for the past few months, students from across the country have been working on their documentaries for this year's contest. 75 winning videos have been chosen. here's a clip of our grand prize winner's documentary. >> the war relocation and relished the idea of taking men, women and children from their homes, their shops and their farms. so the li yagss determined to do the job as a democracy should, with real consideration for the people involved. >> you know, they didn't call us citizens. because it's illegal to imprison citizens without due process. >> what they did in prison, u.s. citizens without due process. over 110,000 of them who happened to be of japanese

ancestry. >> these american citizens were uprooted from their homes, taken away from their businesses and sent to places like this. one of these citizens was my great uncle john cimakowa. uncle john was a dental student in california at the beginning of world war ii. >> c-span's education program specialist called our grand prize winner on monday. here is matthew receiving the news. >> all the judges here, we're very impressed with your documentary. your vintage videos and photographs helped put your story in context. your interview added perspective. and the way you related your topic to the story of one of your family members was really compelling. the overall quality of your documentary was excellent. so it's for all these reasons you've been selected to be one of our winners this year. you would like to know where you

placed? >> sure. sure. >> you've been selected to be c-span's student cam 2012 grand prize winner. >> wow! thank you very much. >> you're welcome. so can you share with us one thing you learned while you went through this process? >> well, i really learned a lot about the process that the japanese-americans went through and the struggle for social equality and justice. >> what was your favorite part of making the documentary? >> my favorite part was going to japan itself and seeing the conditions they lived in as well as editing and putting the whole movie together. >> you would like to know what you won? >> sure. >> you won $5,000. >> wow! thank you very much. >> you're welcome. and your teacher has earned your school $1,000 to use towards video equipment.

>> cool. >> pam is joining us now to tell us a little bit more about this year's student cam competition and its winners. so, pam, what was the theme and how many entries were there? >> hi, greta. this year's theme was the constitution and you. we asked students to select any provision of the constitution and create a video illustrating why it was important to them. we received a record number of entries this year, over 1,200 from 43 states, washington, d.c., and puerto rico. all those videos were judged in two different categories, middle school and high school. we awarded 75 student prizes and 11 teacher prices. and matthew, our grand prize winner will be receiving $5,000 for his entry. >> let's talk about the first prize winners in high school and middle school. >> our first prize high school winner is carl coalglazer. he is a ninth grade home schooled student from carrie,

north carolina. he discusses intellectual property as it relates to article one section eight of the constitution. he talks about patents and copy writes and whether or not our current system supports innovation. carl asked the question can congress change the system? he infectively got c-span footage throughout the documentary. and he interviews the director of the u.s. patent and trade mark office to get information on his topic. carl did an excellent job of explaining a timely and complex topic. and in our middle school division, our first prize winner is leo pfeifer. leo is an eighth grade student at salmon bay middle school in seattle, washington. and in his documentary, "who owns free speech"? he discusses the first amendment and he focussed on the freedom of the press. leo interviews a variety of people to get multiple perspectives on the media. and he investigates the role of

the media in our country and how the public gets its information and how we make decisions. he has a very effective use of a variety of c-span programs. and leo did a thorough job of researching thinks topic and presenting it very well. >> so, pam, where can people watch the documentaries and learn more about student cam if they want to get involved? >> go to our website, studentcam.org where can you find all kinds of information about the competition. we posted our 75 winning videos. so they're up there ready for you to view. in addition to that, each morning from april 1st through april 27th, at 6:auto a.m., we'll be airing one of the top 27 winning documentaries. along with that, at 9:15 a.m. oorn time, you'll see interviews with students that created the documentaries. so be sure to tune in to see those as well.

>> securities and exchange commission mary schapiro testifies next about the president's 2013 budget request. that request for the sec is 1$15 billion, a slight increase from last year. this is an hour and a half. >> the hearing is going to come to ordinary. thank you all for being here. i'd like to welcome our witness, sec chairman schapiro. thanks so much for being here today. thanks to my colleagues for being here as well. joe and i decided not to talk baseball today since both of our teams lost yesterday. so we're sad. but, it is only the beginning. so hopefully it will turn out well at the end. we'll be playing each other in the world series, right?

we maintain fair, orderly and sufficient markets and capital formation while at the same time not overregulating our markets and hindering economic recovery. the committee must be vigilant in own oversight of regulatory agencies like the sec that play an influential role in our economy and have the power to help and hinder american consumers and businesses. since 201, sec's budget increased over 200%. despite this tremendous growth and resources over the past decade, the sec failed to detect ponzy schemes such as madoff and stanford, the u.s. financial system nearly chanced and judges continue to question sec settlements and regulations. the sec also had several embarrassing management lapses such as purchasing unneeded

space, destroying investigative documents and repeating material weaknesses in the sec's own financial statements to name a few. i believe many of these problems are symptoms of fundamental problems within the sec's organization and structure. the fiscal year 2013 request proposes another substantial funneleding increase of 18.5% over fiscal 2012. i think this body is reticent to throw more money at the sec until y'all have proven that you've addressed the structural problems from within in a comprehensive way. we want to have confidence that the sec is one issuing regulations based on sound data and analysis that can stand up in court to taking strong enforcement actions against individuals committing fraud, three, helping to facilitate access to capital for america businesses and effectively managing the resources provided to run your operations.

just because the sec is funded through freeze doesn't absolve y'all from rigorously mlging the funding entrusted to the sec and zont ab sol of this subcommittee from providing extensive oversight. you're faced right now with many challenges including implementing dodd/frank, modernizing your technology and reforming your organization. i encourage you not to rush or throw money at any of these challenges. deliberate changes is what is essential to make this agency work better on behalf of the american public. chairman schapiro, we recognize you have an incredibly difficult job. i know that you and your staff are very -- are working very, very hard to meet today's challenges. we do appreciate your efforts. i look forward to your testimony. but for now, i'd like to recognize my friend ranking member sorano. >> thank you. and it's okay to mention

baseball as we always do. september th except that it's early. in october we'll be talking to each other again. then november we won't be ta talking to each other. i want to join you and welcoming the chairman of the security and exchange commission. i think all of us here agree with the vitally important mission that the sec plays and protecting consumers and investors. the financial crisis highlighted the need to have a robust cup on the beat to make sure that the american people are protected. dodd/frank gave the commission important new responsibilities in this regard and implementing and enforcing the numerous changes of the law is a vital part of making sure the sec can better address abuses of the securities markets and protect investors. i know that you have implemented about 75% of the regulations

mandated under the new act. but that some of the most crucial changes are upcoming. so there is still much to be done to insure that past problems are not repeated. towards that end, your budget request asks for a significant new resources and in particular, ways hardened to see the continued focus on some of the sec's core enforcement and compliance activities. these areas in particular are crucial to the tearing back bad behavior in the securities markets. it is clear that the sec takes this mission seriously. and new resources will help in this regard. i'd also like to commend the progress on your i.t. upgrades and note that most recent i.t. order foupd no material weaknesses. i look forward to hearing more about the current and future challenges the sec faces as well as how your requests of budget increases will be used to address those challenges.

we welcome you and just a reminder, you know, so many of us in congress and throughout the country speak about not having what happened before happen again. and there are many people who will be responsible for making sure it doesn't happen again. but i think no one is more responsible than the sec and it confuses me at times that some people would attack it without mercy. without your oversight, things can not change. one lafrt point, i've been in congress 22 years and in the state assembly 16. years past this was the only commission that ever came before congress and said we don't need any more money. and that's because obviously they didn't want to enforce what they had to enforce. and so i hope that that has changed. i think it has changed and

you're responsible for making sure that what happened in the past doesn't happen again. i thank you. >> and now recognize you, chairman schapiro, for an opening statement. if you'd keep your comments to five minutes, more or less, that will give us more time for questions. thank you so much for being here. >> thank you very much. ranking member sorano and members of the subcommittee, thank you for the opportunity to testify and support of the president's fiscal year 2013 budget request of $1.566 billion for the sec and about how the sec would make effective use of the funds. over the past three years with this subcommittee support, the sec significantly improved the core operations, revitalized and restructured our enforcement and examination functions, taking critical steps to improve collaboration within the agency and improved our risk assessment capacity. these efforts are paying off n

in 011, the commission filed more enforcement actions than it has ever before filed, obtained orders for more than $2.8 d billion in penalties by filing actions against an additional 16 ceos, cfos and other officers. we benefitted from a more sophisticated use of risk an lit ikz to identify and act on suspicion actions earlier. we implement the an examinations program and completed over 1600 oversight exams. this resulted in improved guidance to the financial industry regarding risky practices and actionable information for sec enforcement investigations. we implemented a new whistle-blower program that is already providing high quality information regarding difficult to detect wrongdoing and permitting investigatesors to focus resource mores efficiently. we improved our internal

financial controls which resulted in a gao audit opinion for fy-2011 with no material weaknesses. sec staff with the assistance of targeted contracted expertise implemented a number of internal reforms designed to improve the agency's structure, strengthen capabilities, improve internal controls, and enhance workforce competencieses. finally, we used external hiring opportunities to fill strategic vacancy an czys and obtain specialized industry expertise in the areas as diverse as quantitative analysis, computer training and structured products. we have worked to implement the significant new responsibilities assigned to the agency under the dod frank act. the sec already has proposed or adopted rules for over three fourth of the more than 90 proifz that require sec rulemaking. additionally, the sec finalized 13 of the required 20 studies and reports. while the agency's budget has

grown in recent years, so have our responsibilities and size and complexity of the markets we oversee. during the past decade, trading volume and the equity markets has more than doubled as have assets under management by investment advisors with these trends likely to continue for the foreseeable future. at the same time, we recognize that it is incumbent upon us to maximize our efficiencies and continue our organizational modernization efforts. as we protect investors, we have an obligation to be good stewards of the resources provided to us and carefully review our activities to identify efficiencies and cost savings wherever possible. our request for 2013 would permit us to add approximately 676 positions to improve core operations and implement our new responsibilities. and it would be fully off set by the matching collections of fees and securities transactions. the resources would allow us to achieve four high priority initiatives in fy-13.

first, the funding level would allow the commission to enhance the investor pro tction activities by bolstering staff resources in our enforcement and examination programs and continuing to develop and implement robust analytical mod thalz identify regulated entities with high risk profiles. the resource was support staffing levels to speed capital formation by eliminating regulatory bottle necks, improving economic analysis, and more quickly providing authorizations to firms to engage in new lines of business. third, these funds would allow us to strengthen market stability efforts. the sec has fewer than 25 staff to monitor the eight agency that's clear and settle and average of $6.6 trillion in transactions every day much we believe a greater president sense needed. increased funding would enable us to address important issues such as market structure improvements, high frequency trading, exchange traded funds

and enhanced efforts against cyber security threats. finally, the budget request would support needed i.t. investments in data management, disclosure review, internal accounting and financial reporting and electronic discovery. in particular, it would fund much needed modernization of the edgar corporate filing base which is such an port portal and is one of the federal government's most visited web sites with 450 million hits per month. the support increase for increased funding of the sec allowed us to fashion a better equipped, more expert and inf t effective agency. i look forward to working on this progress and, of course, i'm happy to answer any questions you may have. >> thank you so much. i'm going to start with some plain old budget questions. and i appreciate so much your

testimony. so you outlined in your testimony what you would spend the added -- the ask for increase of several hundred million dollars. let's just say $245 million over last year's enacted level. and then last year the enacted level was, of course, $200 million increase over the previous year. and i realize, of course, that you do have a lot of added responsibilities as a result of dod frank. but most agencies haven't received increases like y'all. nowhere close. and so in spite of the fact that the agency's budget is funded by fees, we do take our oversight role seriously. and it just worried me that in spite of how much money we threw into the sec that we still, you

all still missed madoff and stanford. we had so many issues. can you tell me how investors have benefited from such large sec funding increases? >> i'd be happy to. i want to start saying that we're grateful for the fund increase wez have received. and we recognize that we have been not quite unique but close to unique among federal agencies. i do believe the agency was underfunded for many years. the task of regulating these he nornlously diverse and important and complex markets far outstrip the agency's capabilities. we're responsible for about 35,000 regulated entities. some of which engage in some of the most complex financial transactions anywhere on the earth and it was really incumbent upon us to do a number of things to keep up with the markets and to remedy the flaws that were exposed by things like the failure to catch madoff or the failure of the consolidated supervise entity program.

and the first thing, we have tried to restructure. we had not tried, to we successfully restructured the enforcement program to create specialized units that focus on particularly high risk 5:00 tifs, for example, the construction and sale of structured products. violations of the foreign corrupt practices act, inseeder trading, fraud in connection with municipal securities. we took a layer of management out of the enforcement division and put people back on the front lines of investigating. i think the results of that, we created an office of market intelligence i should also add to keep up with new issues and trends. and we developed technology to take all those many hundreds of thousands of tips and complaints that come into the agency and collect them and manage them in one coherent and cohesive way. so with respect to enforcement, i think the changes have been quite dramatic. i think the results are clearly demonstrating the wisdom of the choice that's we have made. we had a record year as i

mentioned in our enforcement program. the other area where i think really funneledmental change is taking place, or really lots of changes in the agency. but two others. one is the examination program. we are using a much more risk based approach to examinations so there are focusing our efforts and energy on those regulated institution that's create the highest level of risk for the public and then transforming our technology, as you mentioned in your remarks in dramatic ways to catch up to where our fellow regulators have been for a while but where the sec lagged for a long time. >> so all classify putting y'all on the right track. is there any areas within the sec that you think you could manage more efficiently or better? >> without a doubt. and i'm pretty humble about that. there are lots and lots of things to continue to work on within the agency. whether a rifd three years ago, there was a lot to fix.

and we have systematically gone through the organization and worked on enforcement, worked on examination. we bolster our capabilitied in the corporate finance division in our investment management division, aided very much by new leadership across the board and tremendous new talent coming in with very fresh and current understanding of the markets, of trading, of products and so forth. we're now working on reforms in a number of importantish r infrastructure areas that really support our ability to do our job. so human resources is going through a redesign. the office of financial management is going through a redesign. we are off loading as you well know our financial management system. we're outsourcing it to the department of transportation. we think that they have core skills in that area that we would rather not bull. we would rather rely on another agency to provide. so there are a nufb areas where we're very focused. we're analyzing our regional

structure of our organization to see if we have the right offices and the right places. there are lots of efforts on going to continue to improve the operations of the agency. >> i'll come back and ask you more specific things about those, some of the things you mentioned with regard to your regional office. do you find that you may be competing now with the consumer financial protection bureau for staff? i'm just curious. >> i don't think we have. we tend to hire pm with particular expertise in securities markets, options, derivative, so i don't think we had any head-to-head competitions that i know of at any point. >> tell us just -- i'm curious. this is a real process question. i would like to know -- how do you put your budget together? exactly how do you come up with it? are the other commissioners

involved? do they have any input? i'd be curious about that. and then i would like to know then how omb works with you all in pairing down or enhancing precisely how that woshgsz. >> sure. the way we put the budget together is ask all the senior leadership for what their expectations are for their needs for that particular fiscal year. what legislative changes were required. for example, dodd/frank influences the budget dramatically in 2012 and 2013 because of all required work we have to do. so we ask our senior management to give us their evaluation of what resources will be necessary. sorry. >> just driving little carts down the road. >> necessary to fulfill their obligations. what are the risks that if we don't have sufficient resources,

how will we prioritize responsibilities that behave? where can we make cuts? where can we delay certain activities particularly in the i.t. area if the funding isn't sufficient? the chairman under something called plan ten at the sec has responsibility for the budget. we do share with the commissioners the justification and they don't -- we don't vote at the sec on the full commission on the budget. and then i think we work with omb much the way other agencies do. we provide them with our budget under dodd/frank. we provided it at the same time that we provided to congress which is a change for us. the simultaneous submission of the budget to omb and to congress. >> does omb oversee the spending of your fees with the same rigor that it overseesguns? i'm you are just curious.

>> yeah. >> you do? i was just curious more than anything. so there are sometimes easy and sometimes difficult to work with on appropriations issues. so i wondered about the fee structure. i'm going to hold the rest of my questions whic many in nature and pass it along to you, joe. >> thank you. thank you. the president's budget request of $1.566 billion is an increase of $245 million over your current operating level. the budget request states that this level of funding the support 676 new positions. so i have a question if various parts. one, what would happen to what you want to accomplish if you were not to get these new positions? secondly, if you were to get them, how quickly you could hire? >> sure.

well, i think if we were to not get the new positionors that level of funding, a couple things would be implicated. our investments in information technology which are sorely needed to make us a more efficient and more agile and frankly more expert regulator would be severely implemented. and we have a number of major technology programs that are of deep interest not just to us and how we do our job but to the public to public corporations and to investors generally. the modernization of the edgar system which has 21 million corporate filings in it and is how investors, public companies file their information us with and how they search public company information and investors.gov, sec.gov which is our website and has extraordinary amount of public interaction with it. we would also reduce our enforcement coverage and our examination coverage. as you