noted, the arab league, turkey, the eu, as well as the united states to continue to generate the -- you know, the choice of the business class there to withdraw from the regime and to leave syria, to leave syria with their money. your second question was about other financial sectors other than lebanon. what i would say is that our view that no financial sector should provide a safe haven for the syrian regime applies across the board. and i think i'll just leave it at that. >> doctor? >> thank you, mr.

undersecretary. one of the major reprisals of the arab uprising is where assets ended up in international institutions, financial and otherwise. and now you are working on retrieving that money. is there any policy in place to prevent this thing from happening in the future? >> look, the kleptocracy issue has gone on for years. it goes back to my tenure where we were working on issues of kleptocracy. the effort to enhance the overall standards in the

financial community so that financial institutions know who they're dealing with. they know the sources of funds. they know where the money is coming from so that financial institutions can take the appropriate precautions to avoid becoming repositories for the stol stolen patrimony of various countries. that depends on the various institutions' willingness to do that, where leaders are stealing money from their own people can put their funds. and that's -- that is an issue that that is frankly a difficult diplomatic issue to deal with, to get to generate the agreement that this should not be allowed to take place. there are u.n. conventions in place that address this issue.

and we are -- we pursue the return of assets, as you noted, when we are asked to do so, and when we have the information available to us to try and assist on that. so it remains something that we are focused on. i am sometimes too candid in acknowledging it's a hard problem. it's a hard problem because it depends on the willingness of both financial institutions and the financial sectors in which they reside to say that they don't want to deal with knees assets. >> good news as well. the world bank has a stolen asset recovery effort, the star initiative. so there is attention to it. but you're right. this is a work in progress. >> yes, sir?

up here in front. sorry. >> thank you. robert shredder, i believe investor. you probably have heard of jason sharmon who has just published a study where he tried to very quickly do a database of several thousand -- opening several thousand corporate accounts around the world. he discovered, his conclusion that the united states is one of the easiest places to open shell companies, pointed to states like delaware and wyoming where 2,000 shell companies existed in one house alone. 10 my question for you is we love to point the finger at a lot of nations around the world. what can we do about tightening some of the standards that make it more difficult for people to not only set up these companies, but move funds in and out of them here? >> so no disrespect to mr. sharmon. i'm not familiar with his study.

but your point is well taken. and the u.s. has been in our identification of having a weakness, the benefit of mutual ownership in the confirmation process. we are supportive of legislative initiatives that are moving through congress. senator levin has a bill, for instance, that would require the identification of beneficial ownership during the company formation process. we're also working, we've issued a vance notice of rule making where we have sort of asked the question in the regulatory sphere of whether financial institutions ought to collect

beneficial ownership information during the account formation process, the account opening process. this is an issue that we're spending a lot of time focused on. i think we recognize it as a weakness in our current anti-moneylaundering, anti-counterterrorism financing regulatory structure. it impedes law enforcement investigations because, you know, they go to try and find out who is the owner of a particular company and you can't penetrate behind. so, yes, it's an issue, and it's an issue that we're trying to address. >> i just want to commend david, his office for the work that they have done. they have really led on this. a mutual friend of ours, chip ponce has really spearheaded a lot of this work over the years. so i want to commend david and chip for that work. ma'am, right here in the third row, please. i think we'll have time for just one or two more.

>> hi there. teresa brown. sentinel group. you mentioned at the beginning when dhs was formed and other changes off 9/11, you lost law enforcement capacity at the treasury department. you obviously have now substantial intelligence capability. how do you coordinate with the law enforcement agencies for intelligent-driven activities? what is the coordination mechanism and show that working? >> so we did lose the agencies themselves are no long area part of treasury. but one of the things that changed in the period that i was away was the coordination and collaboration among the law enforcement community on both the intelligence and investigative side. and so juan noted the lebanese/canadian bank example where it was a treasury action where we worked extraordinarily

closely with the dea in developing the case. on both the -- particularly on the intelligence side, but also in sort of developing the legal case that we pursued. so we have our coordination, whether it's with dea, fbi, secret service is very good. we have liaisons from many of the agencies who are residents at the treasury department. and there is i think a very healthy and robust exchange of both law enforcement information and as appropriate intelligence information. >> and just a fair point, the treasury did keep its criminal investigators from the irs, who by the way led the effort to hunt saddam hussein's assets in '04-'04. in part because they were the sole remaining that we could

direct. >> let me reinforce that so i don't get in trouble when i get back to the office. the irs ci, the criminal investigative side of irs, we work with all the time. and there is a new head of irs ci who just started two weeks ago or so. and one of the first things that he did was come over to the treasury department, meet with me, meet with my team, and we spent an hour talking about different ways that we can coordinate our activities. so it's a -- it's still a very close relationship, even though there are -- the irs ci is still in treasury and the other law enforcement agencies are not. >> the gentleman in the far back who has been very patient and enthusiastic. >> my name is terry murphy. i'm with associated with the csi. but my day job is an i'm an export control and sanctions lawyer. i would just like to follow up

on arnaud's immediate question, and give you, if i may, a very brief quote from a notice about your regulations that came out yesterday. and here is what it says. headline. new u.s. sanctions against iran and syria have dramatic extraterrestrial implications. that's from a law firm, not mine, and it's signed by a former undersecretary of commerce for industry and securities. so that's not an overstatement. i'd like to just mention and then stop the british who used to resist extraterrestrial actions with great intensity now have a new law on corrupt practices that is probably much more extraterrestrial than ours, except for this one. so i wonder if you would take that as an opportunity to opine on the breadth of these sanctions, interventions,

extraterrestrial actions, not just of our government, but of folks like the brits, the canadians, the europeans. >> so i haven't seen that notice. i assume it's referring to the new foreign sanction evaders executive order. >> it's signed by mario mancuso. >> all right. what we are doing i think as a -- my old job i was a lawyer. so i always have to sort of correct the record when people say it's -- what we're doing extra territorial. it's not. we regulate u.s. businesses and define with whom they are able to do business. we don't have any jurisdiction to tell any foreign company or any foreign bank what it can or cannot do. we tell our own banks, our own

businesses whom they can deal with. so i think as a technical matter, there is no extraterritoriality in any of the authorities we are developing, including the new executive order. that being said, there is no question what we're trying to do is to influence the conduct of entities operating overseas. and look, i make no apology for that. if you look at the legislation adopted in july 2010 that essentially says to foreign banks, if you're doing business with banks in iran that we have designated for being proliferators or for supporting iran's support for international terrorism, then you can't do business with u.s. financial institutions.

we are embarked on an effort to put financial pressure on iran by encouraging foreign financial institutions not to transact with these designated proliferators, designated terror supporters in iran. and we can do that, we have the capacity to do that by essentially saying if you want access to the u.s. market, you need to conduct yourselves in a way that we think is consistent with isolating these entities. unit, there is a very, very important objective here. it's one that is shared broadly around the world, which is to address the concerns with iran's nuclear program. that's what the legislation was

about. the foreign sanctions executive order is specifically focused on iran and syria, two problems that have widespread international agreement in terms of the need to get -- to have them addressed. and, you know, we are -- on the one hand we are often praised for being innovative and creative in how we are using our authorities. you know, it has this impact internationally because it's designed to have that. and i think it's, you know, the ultimate test is whether we're going to be successful in helping to achieve our national security and foreign policy objectives through the use of these tools. and, you know, i think the early returns are that we're having a good impact.

>> david, with that, let me thank you. the scope of our discussions today, including things we didn't even get to that we could have, new technologies, overuse of treasury authorities, other things, demonstrate clearly not only the treasury is at the center of these debates, but that you are. and i'm thankful for that. thankful for your time. i would ask you all to join me in thinking david for his time today. >> thank you. [ applause ] >> thank you very much. hope you enjoyed the program. hope to see you again soon. you know, i had my ambition to walk where john smith and

pocahantas walked. i got to pocahantas. there is a post right there. there is one right here. this makes a rectangular space that would be the chancel. pocahantas marries john rolf in this church in 1614. so i guarantee you i'm standing exactly a little deeper than she was, but this is where pocahantas stood when she got married. >> this saturday on american history tv, tour the jamestown colony dig with project director william kelso. since its 1994 rediscovery, the colony has yielded 1.5 million unique artifacts. take the tour. visit the rediscovery lab at 2:00 with the senior curator, and then join in the conversation with william kelso answering your questions. live saturday at 2:30 p.m. eastern. part of american history tv this weekend on c-span 3. these men go through things and have scars that no one can

understand except each other. >> the first thing that startled us was the relationship between harry truman and herbert hoover, who were too such personally and politically different men, and who ended up forming this alliance that neither of them would have anticipated, and ended up being enormously productive and formed the foundation of what become a very deep friendship. the letters between them later in their lives about how important they had become to one another are really extraordinary. >> it may be the most exclusive club in the world. co-authors michael duffy and nancy gibbs on the private and public relationships of the american presidents. from truman and hoover to george h.w. bush and bill clinton. sunday at 8:00 on c-span's q&a. over the past year, c-span's local content vehicles cities tour has taken book tv and american history tv on the road, from tampa to savannah, charleston to knoxville, birmingham and baton rouge. and last month in oklahoma city.

the crews have visited the places that define a city's heritage and literary life. june 2nd and 3rd, watch for our special programming from wichita, kansas, on book tv and american history tv on c-span 2 and 3. a senate hearing recently examined the defense department budget and u.s. military readiness. members heard testimony from the vice chiefs of staff of the army, navy, and air force, along with the marine corps system commandant. they testified about the consequences of the sequester which would automatically cut $5 billion from the budget next year. the house placed a bill to replace the cuts, but the matter is not expected to be taken up in the senate and the white house has said it would veto the bill. this hearing is about 1:45.

the subcommittee of the senate armed services committee will come to order. and i will have brief opening remarks. welcome to our important witnesses today. thank you all four of you for taking time from what i know are heavy demands on your time to spend some time visiting with us this morning about the overall holistic readiness of our military. and we look forward to your testimony. we are pleased to be joined by general lloyd austin, vice chief of staff for the army.

admiral mark ferguson, general philip breedlove, vice chief of staff of the air force, and general joseph dunford, associate commandant of the marine corps. gentlemen, i sincerely appreciate each of you adjusting your schedules at the last minute after we could not hold this hearing on the original date because we were voting. turning to the issue at hand, after more than a decade of combat operations in iraq and afghanistan, reported readiness levels of our armed forces have steadily declined. even as defense spending has grown dramatically. our nondeployed forces have experienced serious readiness shortfalls in terms of personnel, equipment, and training. even our deploying units have struggled with not enough time to train for full spectrum missions. now we're entering an era of declining budgets, forced structure and new strategies. as a result, our military services face a new set of challenges as they seek to balance the draw-down of forces, vital reset of equipment and personnel, and continuing combat

operations in afghanistan. i'm interested in hearing from the witnesses the extent of current readiness funding backlogs and the risks posed by these backlogs. we have been told in the past that the reset of our forces will require a few years of additional funding after the end of combat operations. i would like the witnesses to provide us with their latest estimates, timelines, and amounts in that regard. i'm pleased that the navy budget would fully fund the ship depot maintenance requirement for the first time in many years. it is my hope that this increased level of fund willing lead to a decrease in the number of unsatisfactory inspection rules from nserv. at the same time i'm disappointed that the navy has failed to meet the 6% capital investment objective established by congress. the only military service that has done so. i would like to hear from the navy what their long-term plans are for making up this gap in investment. i'm also pleased that the army

and marine corps -- i'm also pleased that the army and marine corps has funded facilities sustainment, restoration and modernization at the 90% level, which is the dod's stated goal. unfortunately, the air force and navy funded this same fsrm at 82 and 80% respectively. i'd like to hear from the air force and the navy what level of risk they are taking on as a result of these lower funding levels, and what steps they plan to take to avoid large bills down the road. finally, we have learned the department of defense will face at least a $1.3 billion bill as a result of the rise in fuel prices. this price increase has been exacerbated by the continued closure of the pakistan border, forcing supply convoys for our force in afghanistan to use the northern distribution network at an increased expense of about 38 million per month. given all of these challenges we face, we must strive to protect our readiness accounts, but we can also do a better job in

managing funds like operation and maintenance. we can improve the execution rates and unobligated balances in these accounts in addition to our operational readiness models. as the services continue to identify efficiencies in overhead, support, and other less mission essential areas, i challenge the services to a better balance, a better -- to better balance the difference between cost savings and cost avoidance, as we owe to it the american people to be much better stewards of their tax dollars. gentlemen, i can't thank you all enough for your dedicated service and the sacrifices you made on behalf of our country, and the sacrifices your families have made. i thank you all for having the time to make this critical discussion. i know each of you have prepared statements which will be included in the record. so we can have the full opportunity for an in-depth discussion, i would ask you to please try to summarize so we'll have plenty of time for questions. senator ayotte, do you have a statement you would like to make at this time?

>> thank you, madam chair. i thank you for calling this assistant hearing on the current readiness of u.s. forces in review of the defense authorization request for fiscal year 2013 and future years defense program. i foremost want to thank the witnesses that are before us today as we confront challenges around the world. i know that each of you have been tremendous leaders. and all the soldiers that serve below you deserve our respect and admiration. and i thank you all for what you're doing in very difficult times, both fiscally and also with the national security challenges we face. so thank you. on march 23rd of 1983, president ronald reagan delivered an important speech in the oval office. and in his speech said he what seems to have been lost in all of this debate is the simple truth of how a defense budget is arrived at. it isn't done by deciding to spend a certain number of dollars. we start by considering what must be done to maintain peace

and review all the possible threats to our security. there is no logical way that you can say let's spend x billion dollars less. you can only say which part of our defense measures do we believe we can do without and still have security against all contingencies. anyone in the congress who advocates a percentage or specific dollar cut in defense spending should be made to say what part of our defenses he would eliminate, and he should be candid enough to acknowledge that his cuts mean cutting our commitments to our allies or inviting greater risk, or both. as i consider the national security threats facing our country, and as i review the president's proposed fiscal year 2013 defense budget, i worry that we are falling into the very trap that president reagan warned us to avoid. i worry that president obama's proposed defense budget is based more on, in my view, what is irresponsible and what we did in the budget control act, and what

the office of management and budget has hand you in terms of a number that treats all federal expenditures the same rather than a clear-eyed objective assessment of our u.s. national security interests and the kind of military that we need to protect those interests and the american people. as i consider this year's budget request, i have some serious concerns and a lot of questions that i look forward to discussing today. let me quickly highlight some of my leading concerns for each of the services. while we would certainly expect an army and strength drawdown after withdrawal from iraq and a phased drawdown from afghanistan, i would like to know what the reductions of 72,000 from our army and strengths do for our forces and our national security needs. at a time when much of the army has failed to achieve sufficient

dwell time between deployment, that is essential to allowing units to reset and retrain. i have serious questions about the 72,000 number. i'm also concerned about the army's plans to involuntarily separate thousands of mid career officers and noncommissioned officers in order to achieve this drawdown. we talk about not breaking faith with our troops, and i'm concerned about with this drawdown and with the position that we're taking in our plans to provide many of our mid career officers involuntary separations, what does this do in terms of the morale of our all-volunteer force, and also the strength of that force? at a time when there is consensus that our military needs to do more, frankly, the risks around the world, that we need to be more agile and responsive, i'm also concerned in not only looking at the 72,000 reduction in the army,

but i would also like to have the same questions answered with respect to the 20,000 reduction of the marine corps as well. as well as the marine corps's decision to eliminate one maritime prepositioning squadron, which we've talked about at length before. at a time when we are increasing focus on the maritime dominated asia and pacific region, when the navy has approximately 30 fewer ships and subs than it has said previously our national security requires, and when the navy is failing to meet 39% of our combatant commander requirements for attack submarines, i also remain concerned for our navy about postponing the procurement of the virginia class submarine. i'm also concerned about the mismatch between our stated strategy that features an increased emphasis on the asia-pacific and the navy's continued shortfall in ships and submarines. and i think these are important questions that we need to understand, and the american

people need to understand what risks we're incurring under this budget. at a time when the air force is working through the wear and tear of 20 consecutive years of combat operations with a fleet that is already 32% smaller and 43% older than in 1991, my concerns there are about our air force and strength by approximately reducing that end strength by 10,000 airmen and cutting 246 aircraft from the air force's inventory. to be clear, i am not one who opposes all cuts to the budget of the pentagon or our military. there is no question that there are reductions that need to be made. but as we seek to address our nation's fiscal crisis and reduce federal spending, there is no doubt that we need to understand what decisions are being made here in light of our constrained resources, what risks we are taking