the chairman is correct about that. but from my standpoint, it's folly in this limbo state that the cfpb is in, except we know that it's got a lot of our people doing nonbank work, and some of our best people. it's folly for us to try and duplicate their efforts today. and particularly in a time of austerity. it doesn't make any sense to me. >> i appreciate that. i mean, the whole thing's kind of frustrating and it's kind of like on other financial types of things, you've got the s.e.c. and cftc having to jointly do rule making which is hard enough among five commissioners let alone then when you have to do five commissioners within each agency, all of whom then have to agree which is why it's taking

so long to get other types of dodd-frank regs done. i appreciate what you all say. let me talk to you about these, just because i'm trying to find where could we easily save money. so we've got seven regional offices. you want to add, you know, a couple people in an inexpensive place in miami. so is there an atlanta office? >> yes. >> okay. so could the atlanta office close and become the miami office? >> that would not be i think my preference or the preference of most of the members of the commission, although i will talk to them about it. what i think we would probably do is we would post for -- we would post -- if we go forward with the miami office, we would probably start out with about six people and we would post for -- from within our existing agency. my guess is we would have a lot of interest in doing that, then

we might back-fill someone who was doing financial fraud with a vacancy and move it to -- refill it in miami. but you know, i want to think about it. >> where are the six other offices? new york? >> new york, chicago, san francisco, dallas-ft. worth, and cleveland and atlanta. so here's -- and seattle. seattle, of course. and seattle, which does both competition and consumer protection work. >> do you, with technology as it is today, do we really need to have all of those regional offices, because i would, you know, contend that having an office in miami that's particularly focused on spanish-speaking would make sense but i don't see why you need to have seven other offices. perhaps new york. i don't know. >> well, you might talk to chairman durbin about the

chicago office. when commissioner rosch -- >> it's time for us to, we don't earmark anymore. therefore, we all need to be cognizant. there are several usd offices closing in my district and the post office distribution center and it makes me sad and angry because the agencies aren't doing what they ought to be doing but i'm saying do we really need them in this technological era in which we live? >> to the chairman's credit, i championed closing the atlanta office. and he has suggested that he would be at least in some future incarnation amenable to that as well. but that is something that i do think we ought to consider. >> if i can just add, look, if we had to start from scratch and we were given -- by the way, when commissioner rosch was the head of our bureau of consumer

protection during the ford administration, how many offices did we have, 17 regional offices? >> that's why i say believe me, we will play havoc trying to close it. >> but i would say this. if we could start from scratch, first of all, i think there are some things regional offices can do including consumer education, including being a liaison with state attorneys general where they're located and near where they're located that it is a little harder to do from washington. and i would also say this. if we could start from scratch and the appropriations committee said to us we want you to have seven regional offices, you pick the cities, i can't imagine that miami wouldn't be a city. because it's a hub for latin american business activity, it's grown, you know, exponentially over the last, 57% in spanish language -- spanish-speaking households in the last ten years. so i can't imagine we wouldn't put it there. but at the same time, our regional offices have really

been engines of antifraud activity and a few of them do antitrust work as well. the new york office has done terrific antitrust work. i would hate to say we can't, i would hate to say we would close this office in order to open another office because they're really good people. i don't want to move them. i don't think the commission wants to move them around and force them to pick and choose, you can either stay there and lose your job or you can move to miami. but we would do it if you let us do it and again, it's up to you because we would need reprogramming. we would do it from existing resources. >> if you make the announcement about an opening an office, particularly in january or february, you make this announcement, you'll have a lot of people willing to go down. >> i know we will have the support of your very good attorney, too. >> i wasn't choosing atlanta because mr. graves is from georgia at all, but i was just trying to figure out, okay, if you need this, what can you do without. because the fact of the matter is that we just don't have any

money. >> well, i would say between commissioner rosch's testimony and what we heard from some of the members of your subcommittee, we might be able to figure out a way to do it from existing resources and to try to take under consideration some of the points we've heard today at this hearing. >> will you indulge me, i have one more really quick question. it has to do with all the lease space and we -- kind of bring us up to date on the new jersey avenue location. >> right. >> and i think originally you had asked for more space, more square footage than you all needed. but tell me what you're doing with this move, because i obviously am looking for another way to consolidate some space and save some money. give us an update. >> well, thanks to this subcommittee, we probably have enough money now or very close to it to do our move. i just had a discussion with our

executive director today, who's sitting behind me, about how we are going to in new space, this is part of our belt tightening, reduce the space per employee and per attorney to some extent. >> let me ask you. >> yes. >> do each of your attorneys have to have private offices? >> it is preferred because of the confidentiality and some of the things we do, but it's not essential. and we have doubled up at times in the past. and we might have some doubling going up now and in the future. people want to work at the ftc. there's no doubt about it. it's a really good agency. if we say you have to sit with somebody else like in a house or senate office, we'll make that work. >> our staff -- >> i'm sorry. what? >> our staff's sitting in like a big old pit. >> like a bull pen. going back to the baseball analogy you started the hearing with. at this point there's a little uncertainty because a certain member who would like to -- a

certain member who chairs another committee i believe is holding up some prospectuses. so we're hoping to get that through a committee on the house side soon. otherwise, we'll have to stay in our space and we'll have to pay a lot more for it and come back to you and -- >> all right. i will follow up on that. >> okay. >> and i appreciate that. but we need to start moving on this because it's ridiculous and i want to try to save money. joe. >> thank you. >> well, i think we've established that miami is in pretty good shape for getting an office. and then -- >> if certain things happen -- which means another office that would have to close. >> exactly. and mr. diaz-balart will have a problem because he believes in cuts. will he attend the ribbon cutting. that's a different issue all together, right? it is good. it is good. you know, we have made some comments here about duplicating

services and so on. but i think what we need just to remember every so often as we talk about this new agency is it didn't happen in a vacuum. homeland security was not created in a vacuum. that whole conglomeration was created as a reaction to something. well, something went terribly wrong in this country in the financial markets and so on, which a lot of people agree something had to happen. and i'm not sure that everyone was willing to say the ftc, with your limited resources and so on, should handle all that was going on. and i think that's what we tend to forget. am i correct? >> that's right. >> the shortest answer you've given all day. i understand. let me ask you a question. i assume the ftc gets a large number of tips and complaints every day. are you able to follow up on all of them or just a fraction of them? and how do you choose which complaints to go after?

>> that's a great question, and i know that you spent some time as chairman of the consumer protection subcommittee in the new york state assembly. >> you remember that far back? >> we just read up on our appropriators. we get something like, and my staff will correct me if i'm wrong, something like two million complaints a year. we put it in a database and it becomes a critically important way in which we determine which scams to go after. now, we also make this database -- we allow state attorneys general, because i think it's really critical that, you know, we all work together, to access that data base and to give us data into it. and so we can all work together on figuring out where -- which scams we should be trying to stop, you know, which ones will give the greatest benefit to the greatest number of people, and our complaint database is one way we do it. we also talk to consumer groups and honest businesses, because

they don't want to be competed against. one of the interesting things is when we did our foreclosure or mortgage modification rule, we actually ended up having one of the trade associations for the companies that do this supporting our rule making in the end, because one is we listen to them, they had some suggestions, and two is they felt like they were at a competitive disadvantage. it's a hard thing to do. we try to do our best to really figure out where we can do the most good. and we work with our state ags and other folks and with -- and with hud and the department of justice and treasury when we can. >> no comment. that sounds fine to me. that's an even shorter than than the one he made. i must be doing a good job here. you mention a lot the working relationship with the state ags. do you ask them for information or do they always come to you with an issue that they want you

to cover? >> it's a combination. sometimes on mergers and issues we generally take the lead. and on antitrust investigations but sometimes they join us and occasionally they will do and maybe we should ask them to do more, some of the depositions we're doing in investigations and some of the document reviews. we have a lot of cross pollination with them. i did a youth privacy panel with eric schneiderman two weeks ago in new york and that was great because we hadn't met each other, although i worked with some of his predecessors. so tomorrow, the national association of attorneys general is in town, and i'm going over to talk to them, and then they're coming back over to our agency and we're doing a workshop for them. so there's a lot of ways we cross pollinate, and we need to do more than that because obviously, you know, when we leverage our resources we all do better for the consumers we try to represent. >> yeah. let me ask you a quick question on online shopping. the last couple years around the

holidays, christmastime, we hear about how much more people are buying online. so just by that percentage growth you would think there are more problems online. is it more percentage growth, more buying, more problems, or is it that that medium lends itself more to schemes and bad information? >> you know, that's a great question. i don't know the answer to that. i do think when you don't have a person, there is a failure -- and there's no -- there's no one that you're necessarily speaking with, it probably makes it easier in some ways to start a phishing site. and, you know, one of the issues where we have had -- we have been very bipartisan is the internet corporation for assigned names & numbers recently developed a plan to have all these new top level domain names. we just thought it would be a

hotbed for fraud, because you have all these new domain names. think about the ways you can misspell, like, marriott, right? now instead of 20 top-level domains -- and we're always chasing the bad guys. sometimes they're operating out of orange county, california, but they registered the domain name in berlin. we were worried. we sent a 15-page letter from the commission urging them to go much slower to try to put in requirements where we know -- to know who's registering and to make sure the registration information is accurate. i would say i don't have an answer for you. it's a really good question. i will -- i'll follow up with our staff and see if they have -- if they can try to quantify some of this. but i would say this. the internet gives all consumers great gifts in enormous ways. and online commerce is a terrific thing. but it also has led to a variety of fraud, and of course that's what we're supposed to be watching in our agency. >> it also has killed that great jack benny routine of shopping at christmas at the counter

because there's no mel blanc or frank johnson to exchange with. just gave away my age. >> i was just going to say, i thought you were younger than that. >> not that funny to buy online. you can't make it. all right. i have just one more question, madam chair, and it's a question that has to be asked, which is how would the ftc handle a 9.5% cut in 2013 if sequestration was to occur? >> well, and again -- this is speaking for myself, i hope we don't ceci -- see sequestration because -- i'll give the short answer -- we would have to make a lot of tough choices and it would involve personnel and i.t. where we're desperately trying to catch up with the marketplace, so it would be

very, very difficult for us to do the things you want us to do. i think it would mean fewer cases and i think it would mean slower development of cases. again, having said that, you know, wherever we end up we'll do the best we can. wherever we end up with our appropriation. >> well, from my standpoint, we do away with cheap consents. that's the number one thing. number two, i think we would probably hand off more to the cfpb, which, after all, is expected to handle these matters. number three, i think we would probably hand off more to the states. i don't think, frankly, sequestration would be that bad a thing for us under these circumstances given the austerity that we're living in right now. having said that, probably because of my background as a trial lawyer, an antitrust trial

lawyer, i don't think that the supreme court -- that matters are ever over until the supreme court has said they're really over. and so for that reason probably i am more eager than my colleagues to follow on in administrative proceedings and with supreme court review. but having said that, in the whole foods case, i was able to persuade my colleagues that we ought to soldier on. but generally speaking, i've not been able to do that. and i would be remiss if i didn't say and emphasize that in all cases, however, i think i got a full and fair hearing from my colleagues and from the chairman. as i've said, for me, that's the kind of collegiality that really counts.

>> one more thing, which is the chairman and i have talked about this a little bit. last year, the fees which companies pay when they're seeking a merger haven't been adjusted for inflation since 1999 or maybe 2000. so if you are looking -- and the senate appropriations proposed this i think last year and there was blue slip by the ways and means committee because it originated in the house, if you modestly update or adjust the fees for inflation and then put a tier in of over $1 billion, you could probably raise something like $800 million to $1 billion over ten years. that would be divided between the antitrust division and the federal trade commission, but it might be a fairly painless way to have to -- that you might want to think about for raising a little more money. >> let me just weigh in here for a second. it's energy and commerce and judiciary committee --

>> right. >> -- authorizers issue which -- >> we would be happy if you decide to sort of help you out with -- to talk to our authorizers. >> well, it's never a bad idea to talk to authorizers. >> but i want to emphasize that we have been off target with respect to our fee estimates throughout. so i'm not sure that we ought to be making any promises that an increase in fees is the end of the game. >> well, i have no further questions. i want to thank you, and i want to thank you especially for repeating and reminding us that you work hard at getting along and doing things in a joint way. and your comments that when people don't agree they still accept your comments fairly, that's very refreshing to us because we get different kinds of situations when we get folks from different parties or in

adversarial positions in front of us. it can get a little heated at times. so we thank you and thank you for your service. >> thanks so much. to us on territories online shopping and the jack benny program. >> absolutely. >> we may be doing a lot of online shopping around the holidays. the year, i have a sneaking suspicious. >> very brief, because i did get answers to my questions about the, i guess you're preparing a letter to the attorneys general and that will deal with that first question and the second one, you will get back to me if there is anything on there on the alcohol issue. >> absolutely. >> domain names. what resource, do people have if they are, if they suspect that a domain name has been taken, either fraudulently or just frankly maliciously? can i get a domain name and

start putting stuff on there that he wouldn't like? not that i would ever do that, joe, but just saying, could things like that happen? what resources are there? and what ability do you have to deal with that? how limited are you to things like that? >> it's funny you raise that. i was testifying a kulp of years ago, before the senate commerce committee and apparently someone had, someone had, from who had been associated with ted stev stevens, his campaign, had used it to -- to set up a humor use site involved maria cantwell, both members of the commerce committee. and this was not humorous to maria or to ted, by the way. i would say there's probably some resource, let me get back to you on that. but the biggest problem is that most of the people who do th this -- they either can't be reached, because, you know, they

are in romania or in southeast ease ya and registering a goe main name for $3 or if they are in america, registering with inaccurate information, you are going to be harold-pressed to track them down. or, they registered it before a more legitimate person and then they just want some money for it. so, it is -- if we could -- i wasn't involved in this when they started the domain name, the internet corporation for names and numbers, i worked on the senate side then. if i had been a little -- if i -- in retrospect, there are things we should have done differently. and we're hoping that we can, one of the areas where we have been involved, just because we saw so many problems, is trying to encourage reforms within the process. but i'll get back to you on your specific question. >> thank you. >> thanks. no more, mr. graves? >> just a followup on the -- i

guess it was the privacy bill of rights, that's been floated out there. i know you spoke a little bit earlier about a component of it, maybe. is that just to help our committee understand, is that something you see moving forward as a regulation or something coming out of the commission or is that something you mentioned earlier, industry regulated or is that how you see it intended? >> so -- it's a good question. it's not straight black and white answer. the privacy bill of rights and the privacy proposal surrounding that have been -- have been driven by or initiated by the department of commerce. and what they want to have is codes of conduct, this is actually, we're very supportive of this certainly in theory, codes of conduct for strips they would agree to about protecting privacy and the ftc would do the enforcement. that's much of what we do. we have supported, though not

unanimously, the notion of do not track option, so, consumers can opt out of being tracked if they don't want to be tracked. the commerce department's initiative has legislation around it, i think we all understand this is not going to be a major legislative year. our initiative for do not track is purely voluntary, it voininvs industry stepping up to the plate and trying to give consumers an option and it involves standard setting organizations that want to set up standards. we're not regulating. >> so, if someone chooses not to participate in the standard, what would be the resource and then if somebody does choose to participate but they don't abide by the conduct that you have just described -- >> that's the heart of exactly what we're doing. if someone says, i don't want to participate in the standard, i don't want to give consumers the option not to track, i'm going -- when they comes on, i'm going to say, if you come on my

site, you're going to track you, they're allowed to do that. we don't think it encourages -- i don't think it encourages trust in the internet or more internet commerce. but that's what they -- but we're not saying it's an enforcement violation in any way, shape or form. and i think this is what makes the industry-driven do not track proposal so powerful, if a company says, i a am not going to track consumers if they opt out and they engage in tracking, one, because there's an enforcement mechanism set up by the better business bureau, that it can be enforced there, right? and they can be penalized. and two is, if you make a commitment, i will honor your privacy, any company does and then they don't do that, it is enforcement by the federal trade commission. and, again, you know, look, i myself probably wouldn't opt out of tracking because i sort of like getting targeted ads.

and no one wants to, in any way, undermine the sort of free content and services on the internet that we get from advertising. but i just think, from my perspective, consumers ought to have a choice and what's really heartening to me is that most companies want to give them a choice. >> so, is it common practice for a private group of businesses to come together and come up with their own rules of the road or codes of conduct and then ftc regulate and enforce that? >> we wouldn't regulate it, we would enforcement. and we don't do -- >> it would be odd -- >> only when they want to. we might encourage them to do it. but we have -- commissioner rush and i were, during dodd-frank, were big advocates for getting out from under the magnus and moss act, a medieval form of rule making which makes it difficult. and congress didn't give us that easier rule-making authority.

but so, again, it's up to industry but i think there are a lot of reasons why industry wants to do this. they don't think a lot of people would be opting out of tracking. and they recognize the more trust you give consumers, the more internet activity, including commerce there might be. and it's the right thing to do. everybody is, you know, even executives in technology companies are aware of tracking and they wonder, sort of, where is my information going sometimes? >> can i follow up on that? one more? is there another example of where industry has come together and developed rules of engagement and the ftc has enforced those rules that were developed outside of the regulatory? >> let me get back to you on that. in the early on in the days of the commission in the 1950s and '60s, lots of codes of conduct. i think we got away from them, in part, because for the most part, with a few exceptions, in part because we thought our

unfair practice authority works and we weren't in the business of regulating for the most part. here, we don't feel like we're in the business of regulating but we are encouraged by what companies want to do. >> this is a unique model that i haven't heard before. >> that's because, frankly, congressman, that's because it is a -- if it's truly voluntary, then it's not enforceable at the federal level by the ftc or by a a, an act of congress. on the other hand, if there's a federal legislation that makes it enforcement, it's not truly voluntary. now, why are these people interested in doing it? the chairman has offered you one explanation. i will offer you two other ones. number one, the carnegie mellon

study that i referenced earlier that says you cannot -- most consumers cannot even access these do not track mechanisms. so, that's one reason. and the second reason is, because these big entrenched companies, i'm concerned about, in terms of self-regulation, that they will use self-regulation, privacy, as a tool, as a weapon, if you will, to preserve their positions. and, against entry by smaller rivals. i'm concerned about that. >> commissioner, thank you. and i share similar concerns, that whenever we allow the strong force of government to enforce, was the term that was used here, that has not been ratified nor approved by members of this