sometimes they're in smaller communities. the population they support is small and oftentimes difficult for them to support an icu. those are difficult decisions but we need to look at our facilities where they are and we need to assure that we're using them optimally. >> i guess my follow-up question would be what the ig warned us about which is who is looking at those numbers to figure out, for example in, fort wayne, those numbers for fee basis care are skyrocketing every year. once i found out there's no icu and there's using criteria who they can take and can't take, they may have to send somebody to cross the street for a risk basis procedure because there's no icu. who looks at those numbers? is that regional or statewide or that specific hospital looks at the skyrocketing numbers? who makes the assessment are we pay reggie for two facilities or are we paying for one. >> part of the challenge is based on the volume in some of our facilities, we cannot

support an icu, not because we can't afford it, because we don't have the patient volume to maintain competence. and so there's a balance. and oftentimes it's felt that because of the volume and because of the competence,ing it is better to send these patients into the private sector. i understand your concern and we do need to look at where our costs are going and how we're using our facilities. >> we do need to look at or is somebody actively looking at this now that all this information is coming to us from the inspector general? is somebody on going looking at that to see this cost benefit analysis of are we paying for two systems or look at it in the future? >> i don't know whether we have an active exercise in place. we do need to have one moving forward. >> i just got a note from a constituent that says there must be cnn program on tonight and that there's a new revelation, it says records of dead veterans

were changed or physically altered some even in recent weeks to hide how many people died while waiting for karat the phoenix hospital. a whistleblower he told cnn that point to a new cover-up the ongoing va scandal. deceased notes on files where is removed to make statistics look better so veterans would not have to be counted as having died while waiting for care and the quote is from pauline de winter. you've been to the phoenix facility four times. are you aware of this new revelation? >> i'm not aware of the revelation. i'm aware that the oig is looking at all of the deaths that occurred. i don't know of any attempts to hide deaths. >> i guess my follow-up question to this because i am guessing this will be big news in the morning or tonight when our constituents are watching late news, but again, it's so hard, i guess to echo the comments on this committee, it's so hard to take the information seriously that you give us tonight when there's on going investigations by new whistleblowers they're

taking stingers off of files, removing names still while we've been doing these hearings for a couple months and americans are wondering when is this going to stop. this looks like a new revelation tonight under all the scrutiny, all the lights, all the spirit of full disclosure, phoenix is still doing this kind of stuff? and you guys have had them under a microscope and you've been physically there four times and this is new? >> congress woman, i don't know the details of the accusation. >> could you provide that to us when we're probably going to get -- i think the details out. could you provide the answer to that in a timely manner? >> i will certainly try as i understand it. >> thank you. i yield back my time. >> mr. o'rourke, five minutes. >> thank you, mr. chairman. dr. lynch, you mentioned earlier that $312 million has been made available to be accelerate access to care for veteran who have been unable to receive it

thus far. where did that money come from? >> the money was recovered from funds that were not being used across va. i believe that there was some activation monies that was repurposed to cover the accelerated care initiative. >> what are activation moneys? >> sometimes monies that are used for new projects. i don't know the details but i would assume that it was felt that it the monies were not absolutely necessary at this time and could be repurposed to address the immediate concern, which was the provision of timely care to veterans. >> and will you or the va be coming back to congress to recover those monies after we get through this crisis? >> i don't think that's our intention, congressman. >> okay. >> i think our immediate attention is to provide timely access to care and at the moment, we're trying to use the funds that we have. >> what i'm trying to get at and

i agree with you that should be our focus and i appreciate dr. clancy saying that earlier that the number one priority is to connect veterans who need care to the providers who can give it to them, but i do want to get to the chairman's question and one my colleague miss custer brought up, which is what will you likely be asking for from congress? i think this is a time where the american people and their representatives here would be very open to a request from the va to say to get to the level of care that we have promised to our veterans,ing we need x. you know, you say that you have provided $312 million. is there more to be found among those funds from which you've taken so far? will there be more needed in the coming days? we're only weeks out from the revelations and as miss wolarski pointed out, myself included in our districts, we're still finding new gaps and short faus

that need to be met so i'm think and you may not have a number in mind. wouldn't you say that you're likely going to come back to congress to requests additional funds? >> i can't answer that question right now. i can tell you that we are beginning to look at the resources, particularly personnel resources that we need to increase our capacity and we'll be working with the congress to develop a proposal that would allow us to hire more personnel to provide that care. i know that we're looking carefully at the money we're spending on fee basis services. we have been able to find some central money to send those patients out. facilities and networks have also been able to identify monies, as well. it's anticipated that we will probably increase va funding on fee basis care from about $4.8 billion to about $5.4 billion

this year. >> and i'd also ask you to, and you essentially committed to this earlier in previous answers but pay special attention to the providers that we have within the va system today in retaining them there. when i met with providers in e pass so a couple of months ago, morale could not have been lower and a lot of it had to do with the amount that they were being paid seeing so many of their colleagues leave service within the va to work with dod which paid more, to work with in the private sector which paid more. in some cases they were single parents, nurses, nurse practitioners, providers of all kinds. i've just got to think that as you're repurposing these funds and perhaps asking more from congress, i think it's really important we ensure we are attracting the absolute best within the va system and then able to retain them. one primary health provider told of prescribing for mental health patients and seeing the mental

health caseload coming in there which he said he didn't feel good about at all. he said this is not right but i'm not going to let that person go untreated even though i wasn't trained to treat somebody for these too kind of problems. that raises a number of questions and issues in itself, but it gets back to the issue of resources for providers. i have a number of other questions specific to el paso, but we'll continue to reach out to you in between these hearings and at these hearings to follow up we we don't get an answer. i appreciate your responsiveness so far. i do ask dr. clancy and dr. lynch and the leadership as we get through the this immediate crisis, if we lose this opportunititon address the real systemic structural cultural problems within the va, you know, i think that we will be right back here again in another couple years, five years, ten years having this very same discussion. so while addressing care and connecting veterans to care is important, let's make sure we

don't stop there. we need to address the culture, the operations and the system. anyhow, i thank you for your answers and your work on this. i yield back. >> thank you very much, mr. jolly, recognized for five minutes. >> thank you, mr. chairman. dr. lynch, i want to give credit where it's due. i recently hosted in my kong griggs.district what i called a va intake day, invited the community to come in and talk about their care, their concerns at both bay pines and haily. we had about 300 people come in and i will tell you we had a lot of people come in simply to defend the va health care that they receive. the other thing i want to compliment you on is the secretary gibson said several weeks ago the department was in the process of contacting 90,000 people who were on a waiting list. i actually heard from people in my district contacted by phone. one of them was told your dermatology appointment is four months away, and if you'd like, we can move that up and fee you out. so i want to compliment the

department for that yourself, the secretary, as well. i'll also tell you just as a matter i've metric, we gave a questionnaire to folks. for those of the 200 that filled out surveys, of those who had sought to go outside the system for non-va care, fully 50% rated that experience in trying to get the va to fee them out as either poor or very poor, expressing a lot of the frustrations with the ability to get outside the system. it was a self-selected group. i recognize that. those were some quick metrics we got. mr. o'rourke mentioned mental health and behavioral health over memorial day. was a approached by a mom whose son committed suicide while he was waiting for mental health services. the fy 14 mill con va bill directed the department to competitively contract with nonva providers in certain communities where there was a need for additional mental and

behavioral health capacity as well as where there was also a nonva infrastructure that could absolutely provide that. are you aware of that direction and can you update us on whether or not that has been pursued or is in the process of being implementeded? >> i know that the va has been actively working with the community. they have been holding it almost on a yearly basis mental health care summits to inform the community of opportunities to participate in the care of veterans. so i think we are moving aggressively to involve the community where they are available in the care of veterans if it's necessary. >> i understand that reflects a spirit. but the department was directed by the congress, congress derps can the budget. congress makes directions when it comes to how that money is to be spent. and in the 14 bill, congress directed the department, did an they didn't ask, be directed the

department to have a demonstration project to competitively contract out in certain communities at the choosing of the va mental and behavioral health non-va care to do a demonstration project to relieve capacity in certain areas. i guess particularly given the position you have, are you aware of that in the '14 budget? >> yes, i am aware of that. >> and has anything been done to implement that? >> yes, it has. >> what has been done? >> we have developed demonstration projects i believe at five or six of our facilities to involve the community in veteran care. and we are evaluating the results. that is in process, yes. >> okay. i would very parochially tell you how wonderful the bay pines and haley system and the fact that stone claw system starts in october and we have the best beaches in the world. to the extent that tampa fits that profile, i would encourage you to look at it.

two last questions. one, for nonva care right now, those hose ask to go outside, i understand that folks who need a specialty care service that's not available from within the va are likely the most candidates. what about for the va patients who simply aren't satisfied with the quality of care and ask to see a different primary physician outside the system? is that ever accommodated through non-va care? >> i think the va would attempt to find the patient in over provider withinv a if he was unsatisfieded with his current provider. >> is there any -- and i understand there's some statutory guidance, any fees be the of going outside of the va? >> in rare instances if the patient is very unhappy and i'm speaking for personal experience, as chief of staff, i had authorized patients to receive care outside the va. >> and my last question, miss would he lore ski just shared the story that's breaking and i understand it's breaking.

you haven't had an opportunity to review it but i do have a very specific question because the ig talked about criminal investigations or investigating allegations that rose to criminal level. we've had several hearings thus far. were you, dr. lynch, personally aware that this was a matter being investigated that the word deceased or the label deceased had been or was being removed from files? did you have actually awareness that that was being investigated? >> this is the first i've heard of it. >> so you weren't aware it was being investigated? >> no, i was not. >> okay. thank you very much. i appreciate it. yield back. >> miss titus, you're recognized for five minutes. >> thank you, mr. chairman. i'd like to go back to a point that miss custer was making at the end of her comments. we're talking about evaluating the capacity of the va to care for veteran patients. i want to look specifically at the va's capacity to serve our fee may veterans.

they're often referred to as the hidden veterans or the silent veterans because they're less likely to seek service because it's not very accommodating and the sticks that have just come out in an a.p. story certainly show that. with regard to capacity last year, the va served 390,000 female vets and yet, a quarter of the va hospitals do not have the a fulltime gynecologist on staff. a quarter. with regard to quality, half of the women veterans received medication through the va health care system that could cause birth defects. despite the fact that many are of child bearing age and the majority were not on contraception. this is much higher than would occur in the private practice. with regarded to care coordination, the vaoig said that 60% of female veterans at community clinics didn't receive the results of their normal breast cancer exam within the

required two weeks which is your own policy and even more disturbingly, 45% of those results never made it into the electronic health records data system. i mean, i find this these statistics are as bad if not worse than some of the others that we've been talking about just generally speaking. and they indicate that the issues of access to quality care and proper coordination of care may be even worse for our female veterans than they are for the general population. now, i understand you have some plan to ensure that there's a designated female provider, women's provider in each facility. so idaho like to ask you, what's your time line for achieving that goal? when are you going to start doing some training of va providers on health care concerns like drugs that can cause birth defects and just what is your plan for looking at the female population because that's a group of veterans that is going to increase in number.

>> you're absolutely right, congress woman. and i thank you for your questions. we were concerned by some of the findings reported in the story, as well. about 80% of our facilities do have a designated women's health provider. and in some of the other facilities there's been a challenge identifying someone to do that. so we are looking into training some existing staff, for example, some of the current primary care clinicians to be able to meet that role. i should point out, this is not something that we just came up with on the spur of the moment for women. i mean, this is an area where we've had other similar sorts of training of experience training people with specialized expertise, for example, when there's a particular problem that's much more common in one facility. we figured out how to bring specialist expertise to the primary care facility. we're going to be trying to do the same thing so that we can get up to 100% as soon as

possible. the issue on mammograms as i understand it in terms of the timely follow-up particularly for abnormal findings has been the focus of some substantial improvement efforts and we can get you more details on that. the other thing i would just point out in terms of women's health is that obviously, women have issues that relate to their unique needs and issues as women as well as all the other stuff that human human beings get whether that's heart disease is, lung disease and so forth. vh oo is the only system in this country that actually routinely reports publicly and transparently about how we do for women and men. that is not true for any other payers in this country. in fact, the disparities are minimal to nonexistent between the care provider to women and men. i'm talking pain stream heart disease and so forth. the issue of gynecological care

is one that has improved quite substantially but learly we have more room to go. >> i think that's accurate. i'm glad it's been improving but a recent opinion by the american college of ob-gyns says there's an urgent need to continue training providers in this area and you mentioned that you've done some work with the reporting back, especially of abnormal results. and it says that they are typically informed within three days and typically is in quotation marks said that you don't really show how widely the improvements have been adopted or what specific progress has been made in this area. it's kind of hit or miss like so many of the things that we've been hearing about. so i am concerned that you are just going to train primary caregivers to be experts on

women's health, maybe that's an interim measure, but it's certainly not the same as having somebody who is qualified in that field. and again, i go back to these clinics that exist say in rural nevada where it's very hard to find somebody who's an expert or even in our urban centers like las vegas where we lack providers. and this is something that we need to address even if you send them out into the community and then you don't track their results out in the private sector or if you send them out and there are no providers in the private sector, we really have just kind of traded the devil for the witch. we haven't solved the problem. >> i very much appreciate that, congress woman. i want to be clear about one thing. i wasn't suggesting we would send primary care providers to camp for three weeks and then they would be oggyns by any stretch of the imagination. this was more to be in the coordinating role and to be able to provide some basic services but also to make shoo your that

people got the services that they needed in a timely fashion and i would just say that our top consultants in women's health of urgent sit would be her middle name, but i will be happy to get back to you about the mammography issue specifically. >> thank you. i yield backing >> wrxt rope, you're recognized for five minutes. >> i thank the chairman. i'm glad it's not three weeks, it took me 30 years of experience to get to the ob-gyn camp. i'm glad to hear you can't do it in three weeks. we want to as a group here and i think you hear from both sides of the aisle, to be able to go from good to great. to be able to do that though, we have to have information that's accurate and timely. and i looked at the memo today we were sent on the rdus. i know this is not a big thing. i think it's a symptom of what goes on in the va. if you look at a law that was passed in 19, in, 2002 it

appears to me when you look at the '68iation the ig did with these five medical centers in boston, houston, indianapolis, philadelphia, that and looked at the staffing levels we're talking about for specialty care services, it's taken 12 years and we still don't know what they are. i mean, this is law was passed in 2002. and it's 2014 and we're still talking about we don't know what our staffing feeds are. well, that's not complicated. having spent 30 years doing what i did, it's not hard to figure out what your staffing feeds are. if you can't get somebody in to see a cardiologist, you need a cardiologist. you don't need another study or anything to figure that out. i don't understand again did the accountability when this didn't happen for 12 years, and then last week, last friday, we found out that the 80% of the people in senior levels at the va got rewarded for doing a great job.

and yet, we completely ignored this metric. it doesn't appear there's any penalty whatsoever for not following the law. am i wrong? why wasn't this done? >> congress man, i can't speak to what happened before i got here. i can speak to the fact that following the ig report, that was taken, the recommendations were taken seriously. we are a year ahead of time. meeting those recommendations. by the end of had year, we will have productivity standards for all specialties in va. and we will be able to use those moving forward to make decisions about where we need to supplement support for physicians or to provide additional physicians. >> let me just ask the question again. is there any accountability at all? i mean because this is 12 years went by, this information should have been able to you all where you could use it to help prevent what just happened. anyway, i want to also go on to a couple of other things. mr. o'rourke brought up.

i totally agree with this. is that really, there are two issues at stake. the backlog is not going to be a big deal. we can fix that one very quickly i think. and today, be i got a call from memphis, tennessee, a physician down there put together in three days with a university of tennessee system with the methodist hospital, they'll see any veteran, primary care or specialty care including oncology in 72 hours. they can do that. our group can do that. it can be done across the country. so the backlog is very simple to solve. a much more difficult decision is the culture of the va where we go 12 years, we don't follow what the law is, where we reward people at senior levels for doing i don't know what. maybe some of them did a really good job but others clearly did not because we see the failings right now. let me just give you a brief example. i went to my eye doctor today right here in the washington. i had a little retina problem. the doctor said he had been

trying to get to the va here the ret nat specialist to the help out. he had a patient that was supposed to see a doctor in january this year with a retina problem. it snowed that day. so they made the next appointment in june, that's this month. well, when the guy finally saw when the doctor saw him at the va, they rushed him over to the ret nat specialist because the guy had a detached retina for five months he didn't get treated. another call today, this physician i talked to in memphis had a fellow to took eight months to get to an oncologist outside of the va. recommended a biopsy, that took four months. the man has cancer. they probably can't treat it now. that's not -- we cannot have a system ta treats our veterans this way. and we have a system out there, a private physicians who want to help. they want their veterans like me and dr. win strup and others like this young man here, i should show you when we get

through today. i want you to see this because they want to help. i think they're there to help. i think their intentions are right. i think your intentions are right. you want to make things better for veterans but we have the second one. the first one, the backlog we can take care of that. i have no doubt in less six months we can get fixed. that second one, the culture in the va is going to take a lot of work and honesty and transparency from the va senior people so we can help you go from good to great. i yield back, mr. chairman. >> mpg that you very much, doctor. >> >> thank you. >> when you figure the cost as far as putting out services from the va, do yous are consider the savings ie we heard from chris datay in charge confident arts program, actually we're able to save the va about $600,000 during that pilot program for mile and. so do you consider the cost

savings, as well or just the cost comparedtively? >> i think when we look at how we manage excess -- excess demand, we need to determine whether we can provide that will service more economically within the va or whether it's better for us to buy that in the community. i think that's an important decision. we do know the community costs. we can calculate. beat do have the information to determine what it would cost us to hire those physicians and to provide care a. i think if we can do it more economically and at less cost in the community, then that would be an appropriate thing to do. >> but you can considering all the factors, it might cost x for within the va for a certain specialty care, it might seem cost more outside for that same specialty care but when you look at the savings, are with

reimbursement, it's more cost efficient to do it outside versus inside. so do you look at the whole cost? >> yes, sir, i think beat do and we will. >> okay. my second question is, of the three key elements of capacity, supply for clinical providers, amount of services providers can deliver, are modern i.t. infrastructure, out of these three, which one poses the greatest challenges to the va? >> i would say based on our aging infrastructure, our greatest challenges are providing the physicians adequate space to epatients and giving them the support they need to see patients efficiently. it's hard to separate i think i.t. is a challenge, as well. but i think we do have an electronic medical record. it's not a perfect record. it's in the process of evolution and improve. but i think our greatest chals are in support for our physicians and in the space for them to provide care in an efficient fashion. >> and my last question is, when

you look at the wait list, i know some facilities have automated system where they call in, it's automated depending on how long it takes them to get through the menu, they might hang up. say the heck with it, they're not going to bother. are they counted into that wait list and if so, how do you -- how can you track them? >> people call in to the va for a number of reasons. so it's going to be difficult to know what they're calling in for. we do measure, are however, abandonment rates and we do measure time to answer our telephone system. we're working to improve those so that that won't be a problem. >> thank you, mr. chairman. >> dr. win strop? >> mr. chicano. yes, sir. >> so i'm a little confused by interoperability of records. can you help me explain about

there is no inner operability? >> well, this is a case where you're both right. the second stage of the so-called meaningful use, this is the series of stepped incentives, right,ing that cms has put in place incentivizing is private sector providers to adopt electronic health records and the like not just to buy the stuff but to the actually use it in such a way as to improve quality of care. that second stage of meaningful use actually requires the providers be able to share some information with other providers. so you're right that meaningful use is actually a path to getting us to a place where we can share all the information. i think it's fair to say that many providers are finding this challenging. so dr. ban i check is also correct when he says give me a break because if you're thinking about actually just uploading all information from one to another, that's actually much, much steeper and likely a bit

far off. i think your original an sherrion that in fact the incentives put in place by the hi-tech act are setting us in the right direction. i wanted to make the point vha is complying with all of those. >> my understanding having spoken to some physicians who do work at va hospitals that they do appreciate the vista medical record. quote and i'm quoting him, the information is all there. and it seems common sense to me that if the records are integrated, nthat that enhances the integrated care within the system. so within the system doctors can pass this information around. so the concern that was raised in many hearings was the lack of interop ratability with dod and their medical record systems and the billions of dollars that we've not been able to spend in a way that we have interoperability. if you listen to situations and

cases where service members and veterans their health care was greatly compromised. and so i've been listening in these hearings and understanding that the challenge with being able to move into opening greater opportunities for our veterans to use access nonva care is this interoperability challenge, but so that's why i was raising the question. so the it would seem to me that if he woo want to move more in this direction that we're going to have to encourage private physicians and care groups to be able to communicate with the va's record system. >> yes, and so i think your other question or statement was that if this were written into the p c3 contracts, that providers who had met the

meaningful use requirements and so forth would get preference or to the extent that they could contract with such providers that would be a good thing. in terms of coordinating care is a very fabulous idea. so we'll take that back, as well. >> thank you. i yield back. >> mr. brown lee. miss titus. mr. jolly? >> sure. >> mr. chairman, just have a very quick follow-up. dr. lynch, i want to go back to the fy 149 appropriations question i asked you for a point of clarity. i understand you mentioned the va is in the process process of working with outside providers. is that just a general statement or are you suggesting that the demonstration project kong depressionally directed in the fy '149 budget is currently being implemented? >> it is being implemented, congressman. can i get you information on the sites where that is being provided at this time? >> yeah, you certainly could. there are about six or seven of us that wrote a letter to the secretary on may 7th asking for

an update on the implementation. i know you've got a lot of letters coming your way right now. but it is a matter of concern because it was done with such specificity. even the criteria were put in the congressional report as to how the centers were to be evaluated. so i just want to make sure we're talking apples and apples here that this is the fy 14. >> let me work with our was office of mental health operations. >> that would be great. >> get you the information that you need and make sure that we are talking ands and apples. >> sure. i'll leave a copy of the letter. it was may 7th. seven of us signed it. i'll put it in your hand when we leave tonight. appreciate a response. thank you very much. >> miss kirk patrick, five minutes. >> thank you. dr. lynch i just have the two questions. is there a complaint system within the vha something like a hot line that a veteran can call and someone get back to them about their complaint? >> dr. clancy, do you want to take that? >> yes, every facility has a

patient advocate. and in fact, they get complaints. they get all kinds of calls, and that is actually tracked in terms of time to resolution and so forth. that -- that all of the patient advocates now come under an office of patient centered care and cultural transformation. so we have begun working with them a bit from the quality and safety side to try to figure out how could we learn more from what they're hearing because we're noticing that i an number of private sector organizations are taking to heart just how important and useful it can be to learn from the patients themselves. so. >> so is that information looked at at nationally nationwide not just, it doesn't just stay at the local facility? >> yes, there is a national database. >> okay. then my second question is, are you consulting with the vsos on how to engage innovation in the system when it comes to

scheduling these appointments? >> we have not been communicating directly with the vsos. i think we certainly have been looking at ways that the vsos can be help us understand how the veterans are perceiving our care and the timeliness of that care. i think there's a huge opportunity there. >> i agree. and you know, chairman miller, i think it might be good to have a hearing where we hear from the vsos about their suggestions about how to fix this problem. i yield back. thank you so much. >> thank you very much, miss kirk patrick. we do have one hearing that will be coming up in several weeks. it will be specifically geared towards the vsos. and it's at that particular hearing we will invite the secretary to be here to hear their recommendations, as well. " mr. reese. empty custer, mr. o'rourking? mr. waltz. i'm sorry. you're recognized for five minutes. >> again, thank you both for

being here and listening to the testimony. i appreciate it. i've sat here almost in this exact same seat for seven and a half years and just like you with the vsos and the va as partners and advocates to get this right for veterans. but i'm going to come back to -- and i oftentimes in those years said i'm staunchest supporter but i'll be your harshest critic when it needs to be. dr. clancy, i brought it up with several others, you said this is the time to think fundamental change. this is the time to think big. and i found it interesting that you focused, dr. clancy, on thetoriage, which, of course needs to be done with these veterans right now and called what we were talking about a second order question. i would argue had you addressed thattyer, we would have never had phoenix. we would have never had those things. are both of you clinically credentialed? >> i'm not currently, well, not clinically credentialed at this time. i certainly have been for the last. >> can you see patients. >> i cannot see patients, no.

>> dr. clancy? >> i haven't. i haven't for a number of years. i've actually looked into what would be required. >> but you're both doctors? >> yes. >> we don't have the enough doctors. so i'm going to say what vietnam veterans of america made this suggestion to you and you said in the question was asked, you haven't contracted with them. this is what they said you need to do. all vhs staff with clinical credentials and training who are not currently direct service providers need to see patients four days a week. get out of the administrative office and guess see patients. i would think you would be turning over every stone to find a physician who is already in the system. it may not seem like a fair question. but the ability to call fundamental cultural change a second order question and we'll get to it when we get this done, you can be multitask. get that done. that is, of course, a priority. but the not addressing this we're going to come back here again. and that is more of a statement. and believe me, it pains me that

we're at this point. it pains me of all the good work we do gets erased about by this it, but it once again confirms to me, this is cultural. it's leadership. it's structural. and it runs deep. i yield back. >> thank you very much, mr. waltz. following up with your line of questioning, be how many physicians are there in the system who don't see patients? that are in administrative roles? >> i don't know, mr. chairman. >> would you find that out for us? >> yes, sir. >> thank you very much. in your testimony you mentioned that or in answer to a question that somebody had about how much money was being spent to help solve the backlog problem, i think the number that you used was about $312 million being made available for your access initiative. you mentioned the funds were essentially located. can you give me an idea where the funds were supposed to be spent? >> i will get that information for you.

>> is the $312 million part of the plan, $450 million carryover that the department had already budgeted for 2015? >> i can't answer that, mr. chairman. i will get the information for you. >> i can answer it. >> it is. >> it is. and i guess the big question is, almost half a billion dollars sitting there in the bank and why do we have a backlog the size of the one we've got? how did we get here? i mean, i don't think anybody even to this day knows how the culture became so corrupt that people would falsify record and in some cases i believe criminally, that we would cause veterans to wait months and years, that we would -- look, that's $500 million for carry over this year. we've had a couple of years just

recently that about been a billion dollars carried over. and i don't think the public understands, the people are running around saying more money, more people, be more money, more people. $500 million sitting there that the could have solved this and nobody within the central office or the department was blowing the whistle saying we needed to spend that. it's almost as if they were trying to keep it for a nest egg. for next year. because if you carry it over, then it goes into the base budget. and we've got to fund it again. and that's how the bureaucracy grows. so with that, thank you so much for being here. we appreciate both of you. members, thank you for attending. this hearing is adjourned.

because if you carry it over, this hearing is adjourned.

the u.s. office of special counsel sent a letter to president obama today about disclosures from whistleblowers at va medical centers that politico writes details dirty medical equipment and illegal narcotic prescriptions. part of the letter read to frequently the va has failed to use information from whistleblowers to identify and address systemic concerns that impact patient care. there were questions about the letter but the white house briefing today. here are a couple minutes of that. >> you know, as the acting secretary sloan gibson has said we respect and welcome the let

areaen the insights from the office of special counsel. that we're concerned both about the substance of the allegations that were raised but also concerned that the -- that there was a failure at the va to be responsive to the whistleblowers' concerns. that is an endy indication that there are some, are there are as we have said some significant changes that and reforms that need to be made at the veterans administration. so you know, what i can tell you is that we've accepted the letter. the acting secretary has indicated his support for the recommendations that were made by the office of special counsel and is working to implement them. as for permanent leadership at the veterans administration, this continues to be a priority. the deputy chief of staff at the white house rob neighbors is still hard at work at the va and there is an ongoing process to bring new leadership to the va to implement some of these

refors and try to move forward in a way that makes us all feel confident that we're living up to the commitment that's been made to our nation's veterans. >> house and senate conferrees are meeting tomorrow to start the negotiations between different versions of legislation that would try to address problems with patient karat va medical centers. we'll hear opening statements from members of the conference committee starting at 2:00 p.m. eastern here on c-span3. coming up on c-span3, securities & exchange commission chair mary jo white and in 50 minutes, the latest on the situation in iraq. and a look at some of the options that the obama administration is considering in response to the escalating violence there. sec chair mary jo white recently outlined new stock market rules at the economic club of new york. the proposed changes include

oversight of high speed traders and improvements to the transparency of private trading venues. her remarks and q & a are 50 minutes. >> if people could please get seated. thank you. please get seated. you make me feel like a party pooper here. i'm bill dudley. i'm vice chair of the economic club of new york and mrs. president of the federal reserve bank of new york. i want to welcome everybody to the 438th meeting of the club in our 107th year. the economic club of new york is the nation's leading nonpartisan

forum for economic policy speeches. more than 1,000 speakers have appeared before club. and has established a very strong tradition of excellence. i'd like to recognize the 214 members of the entenial society who the have contributed to ensure a sound future for the club. and i'd like to welcome the students here today from brooklyn college and law school. columbia university business school, nyu law school, fordham and the new school. their attendance is made possible by our members. we're honored today to hear from mary jo white, chair of the securities and exchange commission. i for one am very happy to see that she's at the sec performing so ably and leading that institution. chair chit arrived at the sec in april last year with decades of experience as a federal prosecutor and a securities lawyer. as a u.s. attorney for the southern district, from 1993 to

the 2002, she specialized in prosecuting complex securities and financial institution fraud cases and international terrorism cases. after leaving her u.s. attorney post, chair white then became the chair of the litigation department at the debo voice and plimpton in new york and earned her undergraduate degree from william and mary, her masser teres in psychology from the new school for social research and her law drgz at columbia law school. chair white, the chair is yours. [ applause ] >> thank you, bill, very much for that very kind introduction. it truly is my honor to speak before economic club of new york. i also want to acknowledge the presence of two of my esteemed i guess former colleagues or at least the agency's former colleagues, harvey pitt the former chairman of the sec and

former commissioner annette nazareth. great to have you here today. i also can't quite resist saying that whoever arced for the yankees to sweep the toronto blue jays for my arrival i'll be eternally grateful. i'm really happy to be here on this particular day. i may not be able to say that the next time i'm here. what i want to speak to you about is the current state of our securities markets, an issue that i know is on a lot of people's minds, and one that i think is well suited as a topic for the financial capital of the world where we are now. the u.s. securities markets are the largest and most robust in the world and they are fundamental to the global economy. they transform the savings of investors into capital for thousands of companies, add to nest eggs, send our children to college, turn american inaga

ingenuuty, finance public infrastructure. the state and quality of our equity markets in particular have received a great deal of attention lately with a discussion that actually has expanded well beyond those who regularly think and write about these markets to include every day investors concerned about the investments they make and the savings that they depend on. i have been closely focused on these issues since i joined the sec about a year ago and i welcome the broader dialogue. two weeks ago actually just a few blocks from here i spoke about the sec's plan to strengthen our current equity market structure and make it more transparent. in addition to outlining a focused review of our own rules and targeted initiatives, i emphasized our commitment at the sec to comprehensively review and address core market structure policy issues. such as the overall fairness of

trading in high-speed markets. changes in the number and nature of trading venues and conflicts of interest at broker dealers. today what i would like to do is continue and actually broaden that discussion about these fundamental issues focusing on actually the changing nature of one of the most basic of securities market functions. intermediatation and at its simplest it means the services offered by market professionals not to execute the buy and sell orders of investors, services offered by brokers, dealers and exchanges. just as in other segments of the economy powerful forces of competition and technology can transform these services and they have done so. a central challenge for us at the sec is to adopt regulatory approaches that ensure intermediarieies harness that.

not just in equities but in fixed income and derivatives. to understand this challenge i want to talk a first for a bit why competition and technology is so important to how we address market structure issues generally and the role of intermediatation in particular. then i'll turn to contrasting markets to illustrate the complexity of our task as regulators when we grapple with these force, namely how the equity and fixed income markets have been affected or have not been affected by competition and technology. just like the u.s. macro economy all of the securities markets operate within a structure of rules, technology, market practices and other constraints that establish the boundaries for interactions between buyers and sellers. it's important to recognize that this structure does not just mean regulation.

but also the much more complex interaction among regulation and other factors like competition and technology. every incremental change in these interactions can produce significant sometimes unintended economic consequences that may actually not become evident for a period of years or even decades. so this dynamic reality means we should not be chasing regulatory solutions that fix the market structure for once and for all. our markets are not broken. and they are not static. in that sense our work on market structure is never finished. the speed which technology and markets change makes that impossible. instead we must always be focused on what in our market structure can be improved for the benefit of investors and companies. taking this approach actually requires to us expand our perspective both in terms of

time, considering developments well past the last few years and in terms of markets. understanding the differences among markets rather than simply excusing them as an inevitable consequence of different products and structures. if we stand actually too close to the particular problems in a particular market at a particular time we may well fail to fully understand the broader forces that are at work and the regulatory choices that are available. so consider the connection that some have asserted between the rise of high frequency trading and the implementation of regulation and a mess in 2007. regulation is the commission's most recent comprehensive set of rules designed to carry out our statutory mandate to establish a national market system for equities. regulation mms includes a trade through provision that generally prohibits trades at prices

inferior to the best quoted prices. some have argued this provision facilitated the fragmentation of volume among many new trading venues enabling high frequency traders to flourish by exploiting the fastest connection among these venues. given the current prevalence of high frequency traders in our equities markets, some put the number by the way at about 50% of daily volume, one might reasonably ask indeed whether regulation mms did change the rules of the game in favor of speed. as a regulator assessing our markets, however, we cannot rely simply on the temporal juxtaposition of regulation and high frequency trading. the issues and forces at play are more complex. this can be seen actually in the data from other markets, both in the united states and around the world. many of which are also now characterized by high levels of high frequency trading, but none

of which have their own regulation mms. in this light the rise of high frequency trading emerges as a more complicated story than simply the uninsended consequences of regulation. take for example the s&p 500 futures contract which is one of the most actively traded products in the united states and which is not subject to regulation or sec oversight. unlike trading in the equity markets which is spread among multiple exchanges, all trading in the e many is centralized on a single market, the chicago mercantile exchange. i want doesn't use the pricing structure used by most u.s. equities exchanges. in most respects the market structure for the e minney is nothing like the market structure for u.s. equities. yet empirical studies indicate that high frequency trading firms account for more than 50%

of e minney trading. now comparisons like i think this basic one demonstrate the need for a wider lens in evaluating market structure issues and proposals for changes. that wider lens immediately and inevitably brings competition and technology into view. perhaps nowhere has the impact of the fors of technology and competition been more profound then how intermediaries have changed and intermediatation having changed over the last 20 years in equities and listed options. at least since 1934 when congress first mandated regulation of trading in the u.s. securities markets, intermediatation has been defined by respective functions of exchanges, brokers and dealers. exchanges provide facilities that bring together purchasers and sellers of securities generally for a specified fee. agents are engaged in the

business of effecting transactions. generally for and explicit commission. dealers are principals. they engaging the business of buy and selling securities and generally are compensated through trading profits and some of these dealers are high frequency traders. to complicate things a bit further the neat lines that congress drew in 1934 have not resulted in models of intermediatation that are clear cut or uniform across securities markets. most obviously the functions of broker and dealer have often been combined. there's a reason why we call them broker dealers. the conflict between investors interest and the intermediaries interest that can be created by this dual role has been a source frankly of serious concern since the sec was created. another type of dual role and conflict has arisen when exchanges in dealers have acted collectively to control

competition. among dealers in setting their prices as occurred in the 1990s. in addition to conflicts of interest, intermediatation when it is unnecessary, inefficient or uncompetitive can also unnecessarily increase the cost to investors. the explicit fees charged by exchanges and brokers, for example, may be excessive in the absence of effective competition. serious concerns have also been raised about excessive intermediatation by dealers. so given the importance of intermediatation in our markets and the related persistent concerns of conflicts of interest and investors' costs we must rethink the way we look at intermediatation, in flar for a given market we must ask whether intermediatation has appropriately harnessed competition and technology in the service of investors. are the benefits being realized by investors. are there unintended

consequences that are adversely affecting investors. is regulation appropriately tailored to the competitive dynamics and technological developments of the market. stepping back to look at the contrast between actually the equity in fixed income markets may help us better understand these questions and the inherent complexities of the regulatory decisions of the sec. in the u.s. equity markets competition and technology have had a profound effect for over many years, generating enormous benefits for investors and issuers. equity markets today are host to a diverse set of exchanges and trading systems that match buyers and sellers. dealer intermediatation is substantial in both types of matching venues. but many orders are not intermediatated on these matching venues they are being executed by dealers.

trading represents 35% of equity volcome paired to just 25% five years ago. and the majority of this volume actually reflects broker dealers executing directly the orders of both retail and institutional traders. so today even in the very lively debate about the various aspects of equity market structure one would be quite hard pressed actually to find concerns being expressed about a lack of competition among equities, exchanges and other intermediaries or that they have failed to take advantage of new technologies. at least with respect to exchanges this is actually a major change from the past. where a primary concern was for years the potential for dominant markets to stand in the way of forces of technology and competition. this was certainly a concern in the forefront in 1975 when congress amended the exchange act to direct the commission to facilitate the creation of a

national market system. and it continued into the adoption of regulation with fears that competition sparked by the new rules would be limited to the new york stock exchange and nasdaq. we're now living in a much different world where many are questioning whether the pendulum has swung too far and we have too many venues creating unnecessary complexity and costs for investors. over the last 40 years the sec has worked hard to further the statutory objectives of the national market system which include the efficient execution of transactions, price transparency, competition, best execution, and an opportunity for investors to meet directly. but as previous commissions have noted these objectives are not entirely aligned. in particular the goal of competition among trading venues can lead to what we call fragmentation where orders may be spread among competing

venues. too much fragmentation may detract from opportunity for investor orders to meet directly by creating opportunities for excessive sequester mediation. the sec has sought paths to balance this. no one however could credibly claim that this task is an easy one. for example, one serious challenge arose in the 1990ed in the market structure for nasdaq listed stocks. certain dealers on nasdaq had taken action to discourage competition on quotes and to maintain wider spread. which helped preserve compensation for the dealers as intermediatearies providing liquidity. institutional investors respond ed finding ways to better negotiate better prices and take advantage of an alternative trading venue, electronic communication network.

both institutional investors and traders traded retail investors had no access to the more favorable prices quoted on the ecn. brokers that handled retail ordering benefitted from the artificially wide spread created by the scheme because they trade with their customers directly as dealers or sold their order flow for a fee to other dealers. now the sec ultimately addressed these issues actually in 1996 by requiring the nasdaq quoting system be opened up to prices of all participants not just dealers and by emphasizing that brokers that handle order flow consider price improvement on the displayed prices. these steps served to elm power the ecns unleashing competitive forces that toledo a major shift in trading volume from nasdaq dealers to the ecns. by 2004 multiple competing ecns and nasdaq matching systems

shared approximately 70% of volume. trading on these matching systems was highly automated. ecns disseminated this to their clients. finally the speed and electronic nature of the ecns proved attractive fr ivive proprietary. now if these key features of the equity markets structure in 2004 that i've just been talking about sound familiar to you they should. though it originated well before regulation and mms was implemented in 2007 that structure is very similar to what we have today and it was created through intense competition and tremendous technological changes not just sec actions. now we are addressing a number of fundamental issues in our comprehensive review of equity

market structure but as we examine those issues through our wider lenses, this thumb nail history suggests two current lessons for our approach. first, even if it were a desired objective the impact of technology and competition on intermediatation in our modern equity market structure cannot be undone by and through minor regulatory surgery, it's the culmination of over a quarter of century of evolution, much of which has benefitted investors. second, given the pace of technological change and intensity of competition in equity markets we must focus on ensuring our rules are keeping pace. if they do not, as they did not with the advent of electronic trading our obligation to ensure that our markets continue to serve investors and companies will be compromised. so with our expanded regulatory

lens that i've been talking about let me turn very briefly to consider the fixed income markets where there is no equivalent of regulation mms and the nature of intermediatation has changed actually relatively little over the years. it's important to remember that while almost 7,000 issuers currently have 27.8 trillion dollars there's 40,000 corporate bond outstanding totalling $11.3 trillion and more than 1 million in million approximately bond issues outstanding representing about $3.7 trillion in principle amount. trading in these massive fixed income markets, however, has really remained highly decentralized, occurring primarily through dealers for costs of intermediatation are much more difficult to measure than more transparent venues and while transaction prices for both corporate and million approximately bonds are

available to investors shortly after the trade occurs the amount of pricing information available before a trade bids and offers is very limited and certainly not widely available to the investing public. here in contrast to the equity markets the concern is whether perhaps technology and competition have taken us too far, one might instead ask for fixed income markets whether the transformative powers of these forces that's been allowed to operate to the extent it should to benefit investors. you know it's striking that the dramatic technological advances that have transformed the equity markets really over the past decade have had only a modest impact on the trading of fixed income securities. while today there are a number of electronic systems that facilitate trading and fixed income securities they tend to be inventory based providing information primarily on the bonds that participating dealers would like to sell. in addition information about

the trading interests reflected on these systems often is restricted to participating dealers and select customers. so although new technologies are gradually being orporated to trading of fixed income securities producing efficiencies and pre-trade pricing information it appears that they are primarily being used to support the tradition dealer model. i'm therefore concerned that in the fixed income markets technology is being leveraged to make the old decentralized method of trading more efficient for market intermediaries and potential to achieve more widespread opportunities for investors including pre-trade pricing information, lower search costs and greater price competition especially for retail investors is not being realized. now to partially address these concerns and to help assure that investors receive the best prices reasonably available

identify asked to prioritize their constructive ongoing work on two important but in my opinion relatively achievable initiatives to improve the quality and transparency of the prices received by investors. first, to ensure brokers are subject to meaningful obligations to achieve the best executions for investors in both corporate and municipal bond transactions we'll be working closely with the mrsb in the coming months as they finalize a robust best execution rule for the municipal securities market and with the mrsp and fenra has they provide practical guidance how brokers will best achieve best execution. the development of a workable best execution rule for both the corporate and municipal pond markets vital for the protection of investors and enhancing price competition. second, to help investors better understand the cost of their fixed income transactions, we will work with fenr a&m rsb to

develop rules by the end of the year regarding disclosure of mark ups in principle transaction for both corporate and municipal bonds. these transactions occur when dealers buy and sell a fixed income security at substantially the same prays and time to fill two customer order, mark ups the dealers compensation for these transactions can be readily identified because they are based on different prices on the two contemple -- transactions. the need for mark up disclosure is increasingly important as riskless principle transactions become more common in the fixed income markets. and the importance of mark up disclosure is especially pronounced in the current low yield environment where the

amount of an intermediary's compensation can have a measurable impact on a yield that the investor receives. more broadly we must take steps to ensure the benefits of technological advances are realized by all investors in the fixed income markets. accordingly identify asked the staff to if cuss on regulatory initiative to enhance public avail jacket of pre-trade pricing information in the fixed income markets particularly with respect to smaller retail size orders. this initiative by the way referenced in the commission's 2012 report on the municipal securities market requires the public dissimination. this potentially transformative change would broaden the access to pricing information that today is only available to select parties. i'm acutely aware as we go about this of the need to carefully

calibrate any proposal in this area to best achieve our goals and minimize unintended consequences. we'll engaging thorough discussions with market participants as well as careful staff analysis of the pricing data on how best to achieve our objectives but properly implemented rules providing for better pre-trade pricing transparency have the potential to transform the fixed income markets by promoting price competition, improving market efficiency and facilitating best execution. so the overall goal is to fully tuned role of technology and competition in today's markets and to help these powerful forces work for investors in every securities market including in the fixed income markets. and i think only with this broader perspective one guided by the daily experience of investors, will we ensure that our securities markets structure continues to support a strong,

growing global economy and that the sec is fully and continuously committed to that objective. thank you very much for listening. [ applause ] >> thank you very much, chair white for those very relevant clear and insightful comments. as is our custom two members have been selected to question the chair. floyd norris and glenn hutchins. also if you have a question you can e-mail it to questions @econclub.org and our president will select it and read it.

>> commission imposed rules on money market funds. does the president of the federal reserve bank argue too weak and could worsen the situation if there were another financial crisis. at the same time money market fund industry would rather the commission do nothing. what are your views on what needs to be done and do you think the commission will be able to get a majority vote to do anything? >> can i say they both lose and, yes. the answer is we are currently as a commission quite actively engaged in finalizing the money market fund rules and i expect in the near term that that adoption will occur. clearly in the process of doing that we have taken very seriously all the comments we've received, including the concerns expressed, i think by among others some members of the federal reserve banks, all of the federal reserve banks but in

terms of whether the fees aspect of our alternative proposals, in the proposal might run a risk of preemptive runs and so we certainly have taken it in, our economists have analyzed that and we're quite focused on those issues and other issues raised by the comment period. but do i have a good confidence level we'll be proceeding in the very near term with an adoption of a very robust rule. >> thank you. you have talked about comprehensive review of equity markets structure. you talked in the past of looking into pools -- today you brought up fixed income markets. you have a reputation not for talk but for action. and markets participants here are wondering how you will

prioritize the items on your agenda, over what time frame can they expect to see you take action. >> there are many competing items including the mandating rulemakings that the sec received under the dodd freeze warning act and jobs act and they are proceeding. money market fund rulemaking i mentioned is not a mandated rule make but very high priority. i'll say this about the market structure initiatives. this is really across the markets set of issues i focused on before i came to the sec and made one of my immediate priorities for us to come thoroughly to grips with those in a data-driven disciplined way but nevertheless intensively.

we have all five of our commissioners who have spoken publicly about how high a priority. that includes some things we didn't talk about today too. we have a proposed rule sci that deals with requiring enhanced safeguards over technological systems of the exchanges and large alternative trading systems to ensure the technology that connects our interconnected market is as robust as it can be, redundant where it needs. so that's a very high priority for us as well. there's no question you can't do everything at once, but i think, i hope you're right in your assessment of me in my past. i'm very focused on being able to accomplish everything we've spoken of today and things i've added to the list, you know, within the next, certainly the next year or two. now some of them will be much sooner than others, obviously, because you have to proceed in a

sequence. money market funds is a very near term expectation of moving forward. >> madam chair, the sec often grants waivers to banks and brokerage firms that run afoul of your rules or criminal laws. to free the banks of provisions of the law that would otherwise either deny them privileges or remove them from certain parts of their business. could you discuss your general views on such waivers and whether you think the commission should announce whatever waivers they are granting at the same time as they disclose a settlement with a bank or brokerage firm. >> two main questions. the first is either by statute or regulation where there are certain automatic disqualifications would occur doesn't apply just to banks but to whom ever there's a provision for waivers and standards set

forth with respect to those waivers. they tend to arise. they are not enforcement remedies but toeend to arise. the focus is on per the standards of the statute or regulation should the fact of that enforcement action also mean that a waiver should not be granted if it's asked for to permit the particular company to engaging some other aspects of its business. i think it's very important. i think we do regard the waiver process, when a waiver is requested we need be very robust in our review of those, very faithful to those standards and i think we are. it's a very case by case to some degree although we do have policy statements to guide both the public and those who might apply for those waivers and make those decisions per those standards. and i think we do do that.

in terms of the timing and transparency, i know floyd you raised that in one of your columns as well. first if a waiver is granted, it's posted as soon as it's granted on our website. now because of the nature, again, i say the unenforcement remedy so you'll have our division of investment management as the line group of staff that's analyzing this, the commission does some of it themselves, some of it is delegated authority. the timing isn't always the same. so you may have an enforcement action that's resolved, request for waiver may come in later even if it's associated with our enforcement action. if it's some other agency's enforcements action there's not an enforcement action to attach it to at the same time. one of the thing i've done is try to make sure that it's, to the extent one can, that that information is available at the same time when we do have an enforcement action pending. >> so a number of us in this room are directors of public

companies. and we have observed over the years how the role of proxy advisers have grown. at the same time standard setting for all of us is opaque, it's inaccessible, seems to have a fair amount of complexity associated with it and remind us of issues that your predecessor had to deal with first accounting firms and later rating agencies. how do you view this issue and what do you think the role of the sec is in connection with it. >> the issues raised with respect to proxy adviser, we had a round table in december. i thought it was a very constructive roundtable. issuers were there, investors were there and good discussion of a number of those issues. since then, under my direction the staff has been focused on what next steps the sec should take in this space. there's also sort of going on but before that roundtable and afterwards as you know, a lot of

dialogue between the companies, the investors and the proxy ad advisory firms about how the process might be improved by those discussion and having those issues brought to bear. proxy advisory firms are important but there's issue that have been raised that need attention. i'm reviewing the output sfraf on that. >> the madam chairman, some advocates international accounting standards hope that you're going to come through for them and at least allow some american companies to use international standards rather than u.s. can you talk about your attitudes on that. >> yeah. yes, i can. there's been a number of activity in that space recently too. i think did you a column on that too. but in terms of passing that, what i've said about that,

floyd, i'll repeat it here again. the commission last spoke on that issue as a commission in 2010 as to whether -- as most of you, probably all of you know, the foreign private issuers can use rfis and don't have to reconcile to gap so united states is a great user, investor in natural context. the remaining big issue is whether and if so how and to what extent ifrs is to be, might be extended to domestic issues. that's the issue that's there. what i have said is it's a high priority for me and it is to get the commission in a position to speak further on this issue in the very near term. i can't tell you what that statement will be at this point in time but i think it's a very high priority for the commission to give, to make a statement and

provide a clearer, a clear explanation as to exactly where the commission is. >> one of the sec's most important and of course confidential jobs is to police markets and enforce security laws through enforcement. in fact, sec is one of the few federal agencies with independent litigating authority. one federal judge has questioned the path that the sec has used the authority. you bring more high level -- >> dew point to repeat that last part? >> the second circuit has recently disagreed. you bring a lot of high level enforcement to your job. can you share with us the principles and priorities you intend to apply to your enforcement role? >> i guess i would say generally first that i think it's enormously important for the sec

all law enforcement agencies but the sec to be a very strong credible enforcer of the federal securities laws. i think it comes back to haunt you a little bit but at my confirmation bold and unrelenting in terms of enforce midwestern. i mean that. but it really is important to not only punish the wrong doers that are before you as a result of an investigation and enforcement action but to send a very strong message of deterrence. one of the reasons that i changed actually the settlement protocol from a pretty much universal unless there was a parallel criminal action, no admit, no deny to requiring admissions in certain cases where i thought that or we think that there's a particular need for public accountability, set forth some parameters.

we've done about ten very significant cases in protocol. there will admonish. that public accountability is both for the strength of the message of deterrence and for the credibility of a strong law enforcement agency. the other thing that we've tried to do also is to look kind of across the many regulations that we have and there are very important one and if there's a situation where there really is noncomply jarngs like a pattern of noncompliance even if it's not the biggest fraud, they are always prioritized we really bring where necessary and appropriate enforcement attention on those to send that message these regulations are there for a reason, protect investors and markets and you should conform with those. so we're trying to be -- can't be every where. we have limited resources. i came into a very strong enforcement program at the sec. everybody wants more. some people want more. if you look at the sec's record and the financial crisis cases,

very impressive. very impressive. $3 billion basically in discouragement and civil penalties ordered to be returned to harmed investors. 170 or. 170 entities and individuals. it's a strong record. obviously there are complaints about why isn't there more. there always will be. so i think bottom line kind of full stop, it's enormously important and i've tried to add value to it that the sec's enforcement program be as strong as possible. >> putting in new rules on the bond market to increase disclosure on trading, i suspect the wall street firms will be worried about that and removing a substantial part of their profits. i'm just wondering, do you think

that the commission's job is at all to try to assure that these firms have a chance to be profitable? >> what a question. all of our rulemaking -- we have a familiar mission to protect investors to ensure fair and orderly functioning of our markets and ensure capital formation. when we could rulemaking usually by law but certainly by policy we balance what we're trying to accomplish for the benefit of investors with market impacts. we do very careful legal and economic analysis on all of our rules. we take into account, you know, all those factors those arguments that get made and try to fulfill our regulatory objectives as i outline in the speech but also take into account of doing it in the most cost effective way we can. clearly regulation has costs

associated with it. and that's a necessary part of it. >> i have a question from the floor about argentina. what is your view on the potential impact for foreign issuers in the u.s. market in light of the supreme court decision on argentinian debt? >> i'm allowed one punt. i actually have a meeting on that on monday. so i don't want to give an opinion here today. i have studied it. floyd you're prolific, you have a column on this as well which i also read. and very good, very good issues raised with respect to that. stay tuned, i guess. >> i'll ask another one. >> okay. i knew that was too easy. >> the sec has successfully settled a number of cases relating to wrongdoing that precede and in some cases contributed to the financial crisis. can you please share with us what steps the sec is taking to get those funds to the parties

that suffered economic harm as a result of the actions that led to the settlement? >> this is actually receiving quite a bit of my personal attention because it takes longer than anybody wants to in most of these situations to get monies returned so we're doing a number of what i would call enhan enhancemens to speed up that process. it's a very -- for example, last year question received orders to return $3.4 billion because of our fair fund mechanism that's all returnable if collected to harmed investors. we've so far collected about $2 billion of that. so we have both the collection in sometimes, sometimes we get the money if we can upfront and then return it as promptly as we can. by the way compared to that $3.4 billion, our budget is $1.3 billion. we need a bigger budget too but

we are focusing on trying to stream line that process as much as we can. both in collection and return end. have the claims vetted for being bona fide claims. [ applause ] >> asked and answered. thank you floyd and glenn and chair white. the next meeting of the club will be next tuesday june 24th for breakfast at the hyatt. thank you all for coming and enjoy your lunch. [ applause ] the white house monday hosted a working family summit that focused on issues important

to working families. president obama and the first lady both took part in the event. we also heard from vice president biden who spoke about his experience balancing family and work while serving in the u.s. senate. i did one ad. i looked into the camera and i said, look, it's true. i missed whatever it was. 13%, 15% of the votes. and if you elect me again, i will do it again. no, i'm serious. and i said, because i never -- i will never miss a vote to make a difference. but if i have a choice between a procedural vote and my child's parent/teacher's meeting, i'm going to the meeting. [ applause ] no, no. but here's the point. it's not about me. look at the luxury i had. how many of you would like to be able to do that? [ cheers and applause ] i'm no different than any one of you. for real. i'm not trying to say, oh, joe biden, he did the good -- no.

i had the ability to do it. you all want to do it. and i could make a choice. and i was confident the people in my state would understand, because i was confident -- the reason i tell you this story, is i think that's how almost every american thinks. they think if they only could. if they only could, they would. so, folks, look. the fact of the matter is, there are too many people where it comes down to making a choice between doing that parent/teacher's meeting or going to that championship game or showing up at that debate or being there just when your child is sick having to choose between doing that and their job. not one time. but like many of you, my family has been an incredible consumer of health care costs. my sons were critically injured. my daughter had a sublux of her vertebrae, in traction for a long time.

both jill and i teaching. but we had the option. we could choose who could stay home. i could operate from my home, assuming there weren't a critical vote. but the point is, those kind of choices, most times it comes down to not losing your job or not. it comes down to subtle things. it's about if i don't stay and help finish the project and not go to my daughter's parents' night, they're going to think i don't really want to work hard. they're going to think i don't care about my job. damn it. no. your employer's not demanding you do it. but if i don't stay. look, i've had -- i have some really incredible people work with me over the years. i forget, one time we counted. i've had something like 25 rhodes scholars, more marshall scholars. i had a law firm of 65 people as chairman of the judiciary committee. almost every one graduated in

the top 5% of their class. really, really smart, smart people. ambitious people. i remember during the really difficult hearing, a hearing having to do with -- that i was conducting on the supreme court. and a very controversial hearing. judge bork. and the young man who -- and i'm not going to mention his name. one of the young men who had done most of the research and the background on judge bork. and he was having difficulty at home. he was having difficulty because he was spending so little time at home for the previous six months in preparation. he was having difficulty in his marriage. and the day the hearing started, fortunately, i have a guy named ron klein who was a chief of my staff. he was a wonderful guy. came to me and said, so and so has a problem. i said, tell him if he comes into work, he's fired. [ laughter ] not a joke. not a joke. i wasn't being noble. i wasn't being noble. it was the right thing to do, but beyond that, it was

important. he could do it from home. he could be on the phone. he could let us know. and he had to be assured, though, that it would not affect his advancement. that's all employers have to do sometimes. just let you know that these subtle choices, they don't have to have some massive policy. particularly if they're smaller. >> you can see more in our video library at c-span.org. now you can keep in touch with current events from the nation's capital using any phone any time with c-span radio on audio now. every weekday listen to a recap of the day's events at 5:00 p.m. on washington today. you can hear audio of the five

networks sunday public affairs programs beginning sunday at noon eastern. c-span radio on you a do now. call 202-626-8888. now the latest on the situation in iraq and a closer look at some of the options that the obama administration is considering in response to escalating violence there. from washington journal this is 45 minutes. >> joining us now, steve clemens from the atlantic to talk about the latest in iraq. >> good morning. >> "usa today" through the associated press had a story taking a look and the headline -- i want to read you the headline. "when it comes to president obama, try to avoid mission creep in iraq." do you think that's going to happen? >> i hope it doesn't. there have been various times when we've seen any kind of military deployment through the deployment of military advisors where you see a slippery slope to a much larger engagement. the president showed in libya

that that was not the case. it was a case where some of us were worried at the time when we began to impose a no-fly zone that that would lead to a much larger military engagement. the president demonstrated an incredible discipline in that case so this may be like that. but our general tradition of military deployment and engagement and something of this scale is that's the beginning not the end. >> you said this may be like that. what changes -- what keeps it from going further than. >> well, what happens if isis and its allies -- because it's a mistake just to talk about isis at this point -- there are four or five other leading sunni brigades that have joined up the white house has said we will take other actions if there's an assault on baghdad. we don't know that's a lot of bombing, a lot of drones, or whether they have something else

in mind. there's been no specificity at all about that. but an assault on baghdad looks as if it's something unique and special. we're not acquiescing right now but ramping up the kind of deal with the spread of isis we've seen overnight, the border between syria and iraq evaporate. rumors there's a border crossing into jordan which is an interesting new dimension which would directly involve the jordanians in this and we have a special relationship with jordan that would be brought to bear in that case. so in that front we're not yet showing the kind of force or deployments that we might if baghdad were attacked. >> is it reasonable to think if there are air strikes involved that some type of human intelligence would be needed on the ground to coordinate that? >> typically, yes. i think that's what those 300 advisors are out there to do, set up intelligence points and essentially to systems integrate

if you will to feeding points that would come in to make this worthwhile. but the obvious problem is isis has moved so quickly it's far outstripping at this point any capacity that we could bring on in the next coming days. >> secretary of state john kerry overseas talked to several groups about iraq. what's the pitch he has to make to these groups and who does he have to -- >> well, it's interesting. the state department has just said he's already met prime minister maliki, and now he's meeting various top-tear shiite clerics in iraq. and i think pitch is you guys need to very rapidly make a new social contract across iraq with the kurds and with disaffected sunnis who have been angry for some time. from my perspective, it's been about two and a half years since prime minister maliki ran out his sunni vice president tariq hashemi, he's living in ankara, turkey right now. the kurds protected hashemi and

ever since then we've had a government out of sync with the contours of the country. so the kinds of admonitions that john kerry -- that vice president joe biden has been giving needed to happen much more intensely a year, a year and a half ago not just now when you see the military moving. this is a market response in part to the anger in the sunni population. there's no way isis can be achieving the success it has been only if the military were collapsing, the iraqi military. it's achieving that because you have sunnis that are supporting this action. >> at this stage how do you satisfy sunnis? how do you satisfy kurds? >> the kurds are an important piece of this. barzani and his clan have said to maliki you have a chance with us to prove democracy can work.

should you not prove that we're going to go on our own way. there's a fervent desire in kurdistan and among kurds to also populate -- there are three million kurds in syria, lots of kurds in turkey, of course, to develop their own autonomous state. they already have a semiautonomous region but to sort of go further with that and so i think the kurdish population is going to be very hard to bring back and trust the middle. one of the obvious questions -- i was trying to look online. is there someone that stands out? a sunni leader whom the shi'a trust? a shi'a leader whom the sunni trust? a kurdish leader. it's -- no one pops out. and so that's the problem is if you have a kind of winner takes all formula in the political equation inside iraq you're going to have two-thirds of the country that essentially always disaffected, despite the sunnis having the greatest plurality, if you will, inside iraq. so it's going to be tough but i think that the fear -- you know, it's always when you stare into the abyss and look at how

horrible a real civil war can be, how many people could be killed, at that point you could raise responsible sunni leadership with responsible shi'a leadership and the kurds and possibly do something that joe biden and les gelb tried to cobble before biden came into office with president obama. that's let's have three autonomous regions loosely federated, a sunni region, a kurdish region and a shi'a region. that may be the best we can get out of this and at that time when they proposed that everyone pill lori it had plan. >> john kerry said it would be supported by the united states. what does that say? >> it says there's been no love lost between this white house and maliki for a long time. as i said joe biden was the point person talking to maliki. i discovered which was somewhat surprising that despite a november, 2013, white house

meeting between president obama and prime minister maliki, president obama has not spoken to maliki since april of 2012 on the phone. there's been no communication. it's all happened with other people. so to a certain degree, what you see in this is a distancing that's been happening for a long time. american frustration with maliki while maliki positions iraq closer and closer to iran. obviously the questions about iran, and iran's play in this. we've got the saudis saying why did you topple saddam hussein and give iraq to the iranians? there are a lot of dimensions here so people come in and say, you know, don't roll in with your troops and your drones and your air defense for one side of the equation and basically essentially loosely ally with iran in protecting maliki while you then frustrate the united arab emirates and saudi arabia.

it's a rubik's cube. what's important is you need to have a leadership in iraq that can transcend these things i what the president needs to do and hasn't done yet is how he assembles layers of responsible leadership higher than iraq. borders don't matter right now. what matters is a sunni/shi'a contest and that means you have to bring in the saudis, the iranians and you probably should bring in the turks to discuss what sort of regional deal might look like to get their support. >> steve clemens from the "atlantic." joining us for a discussion on next steps in iraq. the number is 202-585-3881 for republicans. 202-585-3880 for democrats.

and 202-585-3882 for independents. twitter and e-mail available to us as well. mike rodgers on "face the nation" talking about concerns of what happens in the state overall if things continue as they are. >> this is what happened in afghanistan. they train, recruit, plan operations that led to 9/11 the killing of 3,000 americans. they have already expressed -- this is what got them in trouble with the leader of al qaeda and replacement for osama bin laden. they were talking about taking people with western passports and sending them back home for terrorist operations from western syria. they weren't taking direction very well. not that their goals were any different. here you have a group, a billion dollars in cash and buillon. well armed. well financed. they have intentions to send people who have shown up with western passports back to the

united states and back to europe. that is as dangerous as it gets. it six months, three months or a year we're not sure but i wouldn't wait. >> his thoughts. what are yours. >> i don't think mike is embellishing what could happen. when we first invade iraq that saddam hussein had weapons of mass destruction one of the interesting tension points in foreign policy do you save the world and try to deliver justice to people who are, you know, living in inyou had minute conditions under tyrants like saddam hussein or remove saddam hussein and at the same time you open up a pandora's box for other nightmares. that's a story we're seeing repeating itself.

that said we've also spent a couple of trillion dollars on the iraq war at a time when the united states economy is flat on its back. imagine what a trillion dollars could do back. or changing the american health care system. those costs have had a tremendous effect on what the united states had -- so these are real debates but it doesn't diminish at all the kind of threat mike rogers said is there. it's why in my view maliki's duty in representing the people -- i disagree that leaving congressman rogers that leaving residual troops would have made a difference in this case. we have a very naïve sense that if we send troops in, that somehow the u.s. still plays parent that all of the other pactors in these complex regions with complex neighborhoods and neighbors that like to medal

inside the countries, won't happen. that's simply not the case. we may need to i don't know how to put it but play with a little bit of humility in these cases and realize that what we need is to try to contain situations. try to figure out how to get isis limits because i think what he's talking about reaching out to players inside english speaking countries like the united states and uk and elsewhere and try to activate terrorism inside other countries. this is a real threat. the terror within can be a real problem. it may not have the sophistication of al qaeda that we saw but it's a real risk. i think there are ways to contain the regional ambitions of some of these countries it doesn't mean you can inject yourself to become the arbiter of all of these currents. >> steve clemens with us. the first call is boston massachusetts. independent line. >> hi, i'd like to think you for your guest. he doesn't sound like a pr propaganda pusher. i that theory about this whole thing about the cia's policy

about divide and conquer. i believe the reason ebalma doesn't want to bomb is because we're funding both sides of the aisle here. it's a perfect thing. this is the policy you have everybody fighting and that makes us safer at home. i'd like a comment on that. >> well, thank you to the caller. i try not to push propaganda and appreciate that comment. i think that the truth of the matter is that in the best of all worlds rather than playing divide and conquer in this particular realm president obama would be thrilled if everybody could get along and we could get to what he really wants to focus on which is asia. defense secretary hagel, joe biden, john kerry always talk about the asia pivot. the middle east doesn't want to be left alone. problems keep emerginemerging.

when you go back to what may have unfolded which may have upfolded despite the iraq war and interventions. perhaps the goal of obama bin laden was to open these global rifts so nations become less significant and you have a regional rivalry where you got players like sawed yudi aabia a iran having a proxy conflict across other countries where horrible things are happening. when you look at syria and the refugee camps throughout the region. we know have more displaysed people than we did after world war ii. >> it may be a bit tongue in cheek but off the twitter he says that since isis is

spreading from syria to ik iraq is assad holding his line against them. >> assad has been a resilient leader. as mike rogers laid out, isis has become perhaps and probably the richest terrorist organizations in the world today by infusions of cash from like minded sunni extreme arabist shakes and picking up terror. they are getting quite a bit of wealth, money, cash, guns and oth weapon weaponry. i don't think it meeps that assad is safer but the chemical weapons deployments that assad used were a turning point that punctuated to a certain degree a confidence of assad that he was

beating isis, and also the free syrian army. the fsa. so to some degree, i think the caller is in the right drift but they are not correlated. >> the new york times says estimated isis fighters equal 10,000. it's been able to cease stores of military equipment, plan small offensive missions. >> absolutely. so they are picking up more and more. one of the problems that's really an interesting dedebate,t sort of raises this question. it's not tough to be on john mccain and lindsey graham who have been calling on obama or criticizing the white house for not having adequately armed the opposition in syria. the qatarys sent a lot of time arm aing various components of the syrian rebel forces but

perhaps tilting toward the more extremist elements of that. what we saw with a lot of money and arms that were going to the fsa was that the soldiers were selling them to nustra, and selling them to ice. you see basically a lot of resources that were being channeled through a lot of different channels to those that were the most effective fighting force. there were not the warm and fuzzy moderates but the real extremists that we were concerned about. we had the white house really worried about arming rebels if we were going to see that. john mccain and others said let's do it. now we're paying a price for what prince bandar and the saudi's helped build up. to a certain degree, his patr patronage of isis and his direction to isis is now what we're paying a price for today. >> jerry is up from road island. democrats line. >> good morning. i have a question for steve.

i don't completely understand isis. but i can't help but have a gut feeling also that we're fighting the wrong type of warment we're fighting more of a conventional war over there. i think that we have to be as under handed as they are and we get the terrorists too much information. if we can use the shiites against them and that works, that's fine. my other thought is let them take over and after they take over then annihilates them. this is turning into a real -- bad situation with these people. we have to be hard on them. to me, in a real war, we're giving them too much information. they have taken our ammunition, everything that we've built up over there from our explosives that they have taken. some of our technology that we left over there. we've just fighting the war

wrong. the united states has to wake up and we have to fight a more under handed war and be just as, you know, be like they are. be like these people are and think the same way because that's the only way we're going to win it. that's my comment. >> well i appreciate the perspective. he wouldn't frame it as conventional because u.s. forcing aren't fighting this war. what happened and started in syria was that you had the russians and iranians helping assad's regime and you had the uae, qatar, united states, france, turkey trying to help the syrian rebel forces. it has been an utter mess. so you don't have the direct involvement of all of these countries. you have money. you have intelligence, you have battle plan ideas. you have various degrees of weaponry that are provided but none of the outside powers are directly on the line with the extension of perhaps iran who

did send some revolutionary guard into syria to haep saweel. it's not conventional in that sense. the question of it being under handed. if you look at gorilla tactics, very frequently what we see with isis is a worrysome organization but it's not classic -- there are chechen. some of people have been outrageously brutal and vicious frustrated chechen militants who became tired of the fight inside russia and have come here. so you've got a kind of roving band if you will that extends far beyond the middle east north africa region but up into asia and others of people who have been trained over the last 15 years fundamentally and even before that when you go back to the afghanistan war that the soviets were involved with, is you've got a roving class of people that are out there to

fight a war. the saudis are very worried about it. the government for instance has outlawed participating in a number of these terror groups because they are worried that eventually these saudis will come home and work at trying to topple their own government. it's not conventional in that sense. i think when it comes to u.s. involvement, one of the debates here is you have some people like ann maria slaughter who have been looking at a higher degree of interventionalism to try to save people. you've had 170,000 people killed inside syria. you're going to see a lot of bloodshed. allegedly 1,700 iraqi troops executed. you see horrors that you haven't seen in generations occurring in real time. maybe they occurred in africa and we took no action. people say we must take action now versus others who are saying