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.