in 2010, countrywide, now bankamerica, resolved allegations over consumers in bankruptcy. we mailed out checks worth nearly $108 million to 450,000 homeowners. more than 50% of all mortgage holders in the united states. a few years ago, they agreed to return more funds to the same group of consumers. the ftc remains at the forefront of policy enforcement efforts over consumer privacy, especially children's privacy. we have brought more than 30 data security cases and there are more than 2 million numbers on the do not call registry, which was the most effective government programs since the elvis stamp. our enforcement action shows that if he promised to honor consumer privacy, you have to honor the commitment.

we settled our proposed argument with facebook over keeping information private while the information continued to be allowed more broadly. it will protect the privacy of 150 million facebook users in the united states and 800 users worldwide, following similar actions against google and twitter, allowing companies to move on and develop innovative products and services. health-care competition will remain high and the agenda. we have pushed back hard against health care costs, which are increasing faster than the rate of inflation, including challenging proposed hospital mergers, finding various restrictions on health care services. as you mentioned, an especially egregious practice is the pay for delay pharmaceutical agreement.

this delays entry of lower priced medicines and has cost americans deal -- nearly. fourth, we continue to market -- watch petroleum markets closely. we closely scrutinize energy mergers and have opened investigations into price anomalies amongst gas refineries last year which continue to this day. finally, we have long believed that while regulations can be important for consumers, they need to be regularly reviewed to make sure they are up to date, affective, and not overly burdensome on businesses. 65 rules and guides are under review. one example is the childrens' on-line protection seat -- childrens' on-line protection agency act, being reviewed ahead

of schedule to make sure that it keeps up with technology. we have revised the rules of government litigation within the agency to make sure that the cases move expeditiously. you can get an anti-trust trial within five to eight months at the ftc. i have said enough and will turn it over to commissioner rush. >> thank you. commissioner rush? >> thank you. let me introduce myself so that you will know where i am coming from.

i was born in council bluffs, iowa. we moved across the river to omaha when i was 10. cut i married -- i married carolyn james rushed in broken bone nebraska in 1961. we celebrated our 50th wedding anniversary last august. we have a daughter and son, and four granddaughters, three of whom are 17, which presents its own problems. i was an anti-trust lawyer for four years. i was appointed as teeth -- an ftc commissioner by president bush, appointed by the senate for a seven year term in 2005. i am currently the only republican ftc commissioner. i would describe myself as a fiscal conservative.

this is not my first stint at the ftc. i served as director of the bureau of consumer protection from 1973 to 1975. i have an abiding interest in the agency's welfare and reputation. that said, i have been free to disagree with my democratic colleagues. and i have disagreed with them, hopefully without being disagreeable, i number of matters over the last seven years. this includes the agency's 2013 budget submitted to this committee. the president's policy decisions are reflected in the budget. the areas of disagreement with my colleagues have included

[unintelligible] generics, which i know you have an abiding interest in as well, chairman, since you have pending legislation on the subject. financial services and enforcement needs in case selection, as we share jurisdiction with a new dvpd -- over my dead body, i might add. oil and gas prices, staff preliminary privacy reports. i will answer your questions about my views on these or any other topics. i want to emphasize that despite these areas of disagreement, collegiality means to me that i have never felt bullied by the chairman, or my colleagues, to support or not support a

position that i disagree with. and i considered the ftc to be the epitome of a collegial agency. thank you. >> thank you, mr. rush. i appreciate your comments and, in spite of what the national news media would lead you to believe, the congress also has much more collegiality and the public thinks. i think that we enjoy the disagreement, but we can be friends on the side and respect one another. i am pleased to hear that that is the way it happens at the ftc as well. i am going to ask my first question about the financial protection bureau and the men met -- memo of understanding that they have. obviously since i know it was a rear dead body, some of the functions of the ftc would be

b.rged with the cfc b if you want, afterwards we can get into a substantive discussion. i read the mou, but explain your interpretation of what part of that jurisdiction is transferred to cfpb and how you all are working together. and i also want to know that because of that, the fact that you all are working together and some of your jurisdiction was transferred, it seems to me the would not need as many resources as you have requested. >> a very fair question. i think that is part of commissioner rosh's concern about that as well. as you know, we have a

memorandum of understanding. we do that because we want to make sure that we are efficient in going after malefactors. as you know, the complaints that we get and the cases that we brought, 90 cases involve debt consolidation, bogus credit repair, and a variety of other cases like that. it is a target-rich environment. from my perspective, as long as we are not double teaming companies and we are letting people know which investigations we are doing, that is probably a good thing for consumers. we have also set up six working groups with the cfpb and the week -- we meet with them regularly to make sure that we are not tripping on each other's toes. >> the fine regularly.

>> i would say that we are talking to them every week at least once on the staff level. i talk to richard or e-mail him probably every couple of weeks. on the resource issue, i would say this. over time, it might make sense to -- i do not want to say cede some authority, because obviously jurisdiction to go after predatory financial behavior, but it might make sense to defer to the cfpb more. remember, it is a new agency that has not brought a single case yet. they have jurisdiction over banks. i think that they have their hands full. as we know, there is a fair amount of uncertainty over the agency itself, and over the recess appointment. while i think that over time it

may be that we do not need the resources to bring these types of cases, i think, but for now and this year will we are trying to do is shut down stammers who are targeting the most vulnerable consumers. >> mr. rush? >> madam chairman, frankly, this feeds into one of my principal concerns about the budget that has been submitted to you. first, in addition to 38 economists, which we had this last year, we lost no fewer new cfpb.e's to the be 59e supposed to vacancies at the commission. second, however, each and every

one of those agencies left item to be filled or they will be filled under the 2013 budget. third, those slot will be augmented by another 10 fte's under the budget request you are considering. so, the result, assuming the 59 slots had remained unfilled, is an addition of 69 fte's. willh, many of those fte's be used to combat the so-called financial fraud cases, despite the fact that we now share jurisdiction with the new cftc -- cfpb.

fifth, insofar as the testimony suggests, indicates, or implies, that there are other substantial savings that will be made, i would suggest to you most respectfully that this is penny wise and pound foolish. that is the statement that i am going to make, for the following reasons. first of all, i think that the big ticket items are threefold. the first is the 69 fte's. additional fte's. the second is the creation of the new miami office. that would stand in stark contrast to the anti-trust division proposal to close in number, i think it is four, of its offices at the present time.

beyond that, it would require taxpayer funds, not only now, but in the future, indefinitely. because, i can guarantee you, based on our experience from 7375, that we will play havoc trying to close those offices down the line, or that office the malign. third is the unprecedented proposal to give away. the chairman has mentioned this. to give away our headquarters building, which is federal government property built exclusively for us, to the largely privately endowed national gallery of art. that would cost the taxpayers from $80 million to $300 million, depending on where we move and whether it is a new

building, like the sec's. you know, madam chairman, for a fiscal conservative like myself, i think that this congress, or a large majority of the house, was enacted on the promise of frugality. to my way of thinking, it is time to walk the walk as well as talk the talk. i say that most respectfully. >> thank you very much, mr. rush, and i do not disagree with you. let me say, briefly, then i will leave it -- leavitt, regarding the headquarters building, that is this -- that is up to the authorizes and we do not have the authority to make that kind of decision. in offering this up in another round of questions that i would like to pursue with you, the filling of 59, then adding 10

fte's, having sent 21 over to cfpb, i want to discuss with you all so many satellite offices. he exchange commission and with technology after this, i believe that we can be much more efficient as opposed to having bodies placed in other places, with some exceptions. i do appreciate that, both of your comments, very much. i am curious, though, particularly with you, mr. rush, do you think, knowing the you are not crazy about the notion of cfpb, but it is here, did you think that your jurisdiction should have been translated over to the cfpb? >> good lord, no. >> chairman leibowitz?

>> i agree with commissioner rush. in the next round, i agree, if we are not transferring our jurisdiction, we should stay active in the field. >> i believe that duplication of efforts is a waste of taxpayer dollars. we will look into that in time, but mr. serrano? >> first of all, i would like to congratulate you and your request for putting together a budget that is $20 million last than 2012. that is probably the last time you want to hear me say congratulations on a cut. we are having to do more with less and i appreciate the have taken that to heart. when you describe the steps the ftc has taken to increase -- which you describe the steps you have taken? >> we try to do a lot of things,

because we all understand that we are looking at an era of austerity. for example, one thing we are trying to do is use i.t. or computers to do the kinds of things like doctor -- document reviews that have always been done in part by manual labor. as commissioner rush mentioned, the buyouts we have done for our part time eligible employees, one way in which you would save money, we have people with institutional memories that have been offered buyouts by younger attorneys, who are at a lower pay level. and then, i think, probably, as much as everything else, in a lawyer-driven agency, where 65% of the budget is staff salaries, it is a culture of savings and ways in which we could save money for the entire staff of

the ftc. we had 150 responses. some of them we have institutionalized. putting restrictions on travel and meetings, as we should, and we got rid of our saddam that we had in the agency. we both came out with minivans -- sedan that we had in the agency. we both came out with minivans. >> the only thing that i would say is that in a reformed sinner in this regard. understand that in the past, i have supported an increase in the budget for the ftc, as well as the fte's. but i would suggest that now is not the time to do some of these things. for three reasons.

first, we are now in the midst of an austere time. the fed says that it will be until at least 2014. prosperity is not around the corner. secondly, we need every last dime that we can get ahold of in order to get us out of the building at 601 new jersey, when the lease runs out, which we were going to do with the end of the year, no matter what. third, we now share jurisdiction, as was indicated to madam chairman, with a new f pb. that is a fact of the matter. no additional spending by this agency is justified in these hard times and under these hard circumstances. >> if i could just respond? as you pointed out, our request

is actually less for this year in 2013 than we were using in 2012. but we have a slightly decrease operating budget. in that amount, the smallest portion is for fte's. the rest of the majority is for technology upgrades the are very much needed. again, you determine our appropriation and we all understand that wherever we end up, we will do our best. we are a pretty efficient agency in terms of getting the taxpayer bang for their buck. i think that if we end up under sequestration or in reduction, but you will -- we will not be able to do the things that you want us to do, like bringing cases or documents in businesses. doing a merger, it is the

businesses that can put us on the clock. we have to review tremendous numbers of documents in the sector request, where we are closely scrutinizing a deal where most mergers do not go to secondary requests. on average, we have 1.5 million documents. when i first came to the commission in 2005, the average was three and a thousand. we will work within the budget given to us, but we are a pretty productive agency and i would just hope -- so, i understand commissioner rush and i have a better respect for him. he is an absolutely brilliant one in here. but i think a bipartisan consensus is effective and it would be tough to do that with a smaller budget. >> it is clear on both sides of

the aisle that while there are cuts in place, we want it to be effective. we want to take on new areas. with that in mind, the next credit -- next question in the budget is one that this committee knows that i care a lot about. equal treatment, or the lack thereof, by a lot of folks who sell their goods in the territories. foreign trip -- for instance, in puerto rico recently, before affairs commissioner sued the amazon -- sued amazon because they would not give the special shipping rates to the territory, in this case puerto rico and the virgin islands, that they do to the 50 states. my brief argument, if you forget it, if you live under the american flag, you should be

treated equally. what can you do? what can happen now that everyone seems to be aware that this is happening more and more? there was a journalist who found out that she had a problem with her car and she needed a part. she went online to buy the part. she was told that it could not be delivered to puerto rico and their suggestion was -- do you have a relative in one of the 50 states? we can ship it to them and they can ship it to you. that is not an answer for people that live under the american flag. whenever i asked these questions, i look at the congressman, because i know that , and whenong career ho it comes to veterans, we treat them all equally, but when they come back home it is different

in the territories than in the states. what can be done about these problems? >> i know that we can do a little bit about it. we can go after companies that go after unfair deception. in fact, we have brought -- >> it might add even be the census. >> as in the stand the practice of amazon, you can get free shipping in the 48 states. maybe not hawaii, alaska, or produce -- or puerto rico. the third question is -- is it unfair? i do not want to pre-judge, but on fairness might be determined and done antitrust investigations in pr.

it is sometimes done sometimes out of our new york office, and i believe we have had a couple of health care matters where there were sort of entrenched companies with very high market shares try to prevent competitors from coming into the marketplace. i will get back to you on both of those things 3 >> ok, thank you. and thank you, madam chair. >> thank you, mr. serrano. for those of you who were not here, we said we would take people in order, but where that does not apply, we will take them on a first-come, first- served basis. i am afraid you will be last. >> if i promise to not go over five minutes i can make a statement and the question? >> >> sure. >> mr. chairman, in your opening

comments, you said you continue to hit above what is hitting below the waist, and they are the ones that have to stand up for. as you have heard, there is much concern among the community pharmacists a and seniors about the effects of the possible merger of two of the nation's largest entities, the confirmed -- the effects it would have on patients' access to the pharmacies of their choice. as a member representing a very rural district, i share these concerns, so, commissioner, i know you cannot comment perhaps at this time on this, but we certainly hope that they are being adequately considered as you move forward with this

process. and the question is, we are hearing some reports that the ftc will recommend in its forthcoming privacy report a government-imposed regime for data collection that could effectively stall carnations information economy on the information that it needs. it appears that such a proposal would have an enormous impact on the economy. have you done any sort of economic analysis before making such a dramatic recommendation? >> let me take the second question first, which is we have not finished up our final privacy report, and so i do not want to comment on what we are going to do, but it is circulating around. but it is largely about best practices. in other words, and more privacy by design, more choice for

consumers, and more transparency. nobody reads, very few people read privacy notices on line, particularly in the mobile space. about regulation. we see ourselves largely as an enforcement agency in the privacy area, and i know all of you have concerns about privacy. there are the cases we have brought with spyware, some involving social networks, over the last year. i hear the concerns, but we are not going to, and i do not want to say exactly what we are going to do, but we certainly will not be regulating. we are not a regulatory agency. i cannot say more that we are looking at this. we are asking questions. we are collecting information, but we are very aware of this sort of world independent -- rural pharmacists. i have pharmacists in my family,

and i have met with a number of groups on both sides of the issue. >> i cannot say anything more about it than that except to reiterate or states that my grandfather was a pharmacist, as well, so there. >> ok. on the privacy issue, do you never evidence to show or to demonstrate that the public is being harmed now if we do not do anything could >> you know, certainly in the cases we have brought, like when someone puts spyware on your computer or spam on your computer, that is a harm to the public, even though it is very hard to quantify that harm. other cases involving facebook or global, where, boiled down, they said they would protect people's information and keep it private, and then they sort of made it by default public. it is hard to quantify that

there are real harms. a privacy report, or the policy, we have had a policy function going back to when the agency was created almost 100 years ago in 1914. if it is about best practices. a lot of companies want to be engaged in best practices, and we work with all of the stakeholders, 4, example, one was walmart. because they believe it is very important to have good privacy practices. it encourages more trust in the internet and more commerce. but i hear your point. we do not want to be a regulatory agency here. >> i am comforted to hear the chairman say that, and perhaps that does away with my concern about the staff privacy report that was issued back in december of 2010, because as i read the report, and it was a draft at that point, it appeared that the

emphasis was on unfairness. and we said back in 1980 and reiterated back in 1982 that we were going to rain in on it -- and fairness -- we were going to rein in unfairness, and protect consumers. that is what i believe we ought to do. beyond that, we have championed, as i have done in the report, i think we championed a do not track recommendation, and i think we were in no position to advise anybody, let alone congress, about what we ought to do about do not track. i mean, after all, the solutions that have been offered through

both the browser solutions and the self regulatory submissions were not ready for prime time in my judgment, and for that reason, i disagreed with the privacy report as it was written at that time. >> if i could just take 30 seconds. i am supportive of the notion of do not track. if the consumer wants to opt out of tracking, not advertisers, behavioral marketing, he or she i believe ought to be able to do that. when i first started, and when tom first got the agency, we had a republican head, and they said it is your computer, people should not put things on it. this not track option has been supported by microsoft and a number of companies.

there is something called the digital advertising alliance which is coming up with its own approach which we are very supportive of, and there are major marketers that are trying to come up with, that have, in fact, come up with that you can click out of opt out advertising. it is beginning to work. but having said that, it is not a regulatory idea. it is an idea, again, that is about best practices. >> mr. womack? >> kind of a follow-up to the questioning of mr. alexander, what are some of the differences between the cvs caremark deliberations and the concerns around the pending merger? can you identify them for the subcommittee? >> sure.

cvs caremark, well, we approved the cvs caremark merger may be in 28 06. -- 2006, somewhere around there. that was one pharmacy and one pbm medco and the other, two. then we went back after we had some complaints about whether std's was violating some of the terms of the consent, we went back and looked at their practices and did an investigation and found that they were in violation. they put some consumers into the doughnut hole by miscalculating the amounts that they owed. some seniors, earlier than they should, so we got complete redress for the consumers who were affected. so going back to your question,

one was a merger of a retailer essentially and a pbm, and this is a proposed merger of two pbm's, retail. >> i have a military background, and this is important to me. if the ftc should approve the merger, do you believe that the control over 30% of the retail drug market and a huge percentage of the mail order market, would detract from the ability of the program to provide affordable prescription access to american military families could >> so i do not want to prejudge an answer here or where we are going with this investigation, but i will say this. our staff is working very assiduously on it, and on the military aspects, i honestly

have not thought about this until now. but why do we not get back to you consistent with what we can say at this time in the investigation i would say, the only thing i would say is that under the statute, the clayton act, if an agreement may substantially lessen competition in a line of commerce, we have to challenge it, and that is the standard we apply, so if it does, we will challenge it, and if after review we find it does not, then we will not, but we will get back to you on what we can tell you about that. commissioner, any thoughts? >> well, the any thought i have, congressman, is the last thing we want to do is to mandate, require an open network, because that would be, again, the federal government is intruding into an area where it really

should have no purchase at all in terms of what it does with respect to prices or terms of sale of these products. that is the only thing i would add to what the chairman has said. >> and my final question is, there is not a person up here on the panel is not getting questions at home about what can be done about the ever increasing price of gasoline, and transportation fuel, and i was reading. testimony that said in november 2009 that the market manipulation rule became final. what thoughts do you have, or what direction are you taking regarding it anti-competitive or manipulative practices going on in that trade? because back at home, people say to me all of the time, and it is

very believable and i think consistent with the opinion that there is manipulation going on, so where are we? >> look. we are obviously aware of how the increasing price of gas hurts middle class, particularly. it means that people have less money to buy necessities, and we actually have an open investigation. we found some anomaly is among refineries. there utilization rates were going down, and their profits were going up, so we opened an investigation, broader than that, into whether there is any manipulation going on or antitrust violation. having said that, time and time again when we have looked at this, we know that the largest factor in the price of gasoline is opec or the prices that we pay for wholesale. opec would be a price-fixing

violations perhaps if it was done by companies rather than by nations, so we have brought cases to block oil company mergers. we brought actually one where we insisted on divestiture when exxon was selling some refineries in maine and just last year to irving petroleum. but it is a very difficult problem. i know you hear about it when you go back home. i'd hear about it from my neighbors and every time i go fill up at the pump, so we are working on it and will do what we can, and if we find violations, of course, we will go after it. >> i do have a view about this, and i disagree with the chairman about this particular matter. our bureau of economics has opined, as he said, that it is a

worldwide market and that there are very few things that we can do about it as the ftc with respect to supply and demand. that said, the question is for me whether the president can do something about it aside simply appoint a task force, which the ftc is a member, to investigate price manipulators, and i would say yes. for three reasons. first of all, i think that if forces of supply and demand to control this market, and it is a worldwide market, then anything that can be done with respect to domestic exploration, including the president's determination that there should be more of it will immediately be reflected in the behavior of price traders throughout the world.

second, i think that the idea of postponing a decision on the keystone pipeline, which would import canadian oil and gas from canada is not justified on any other grounds x political, and i say that as somebody who has a small farm along with my wife in an aquifer in nebraska. third, this task force that the president has appointed so far as i know has done nothing except sit on its hands. it has been nothing except a charade designed to let the public know or at least thing that we are doing something about it. i do not think we are doing anything about it. at least as a member of the

commission. i must say, i have no information that we have done anything. >> so let me just make a couple of points. one is that obviously the pipeline, the commissioner has a right to have his opinion. obviously, the pipeline is somewhat out of our jurisdiction at the ftc, and of course there are other factors going into it. i do agree with you generally that when you have more supply, you tend to reduce prices. i would also say this about the task force. i think what the commissioner is referring to is the task force set up by the attorney general that has a number of agencies on it. we are actually doing an investigation into refineries. that is a different matter. that was the clarification i wanted to make. >> thank you, madam chairman. that includes the questions that i have. >> thank you, and we will submit your questions for the record.

sir? >> it is a pleasure to be with you again. pleased to have you here. three questions on two separate issues, and i do not know if we will have an opportunity for a second round >> absolutely, if you would like 1. >> ok. how the economy is hurting small and midsize businesses, and in the state that i represent, obviously do we not have the usual pressures, but like other parts of the country, we have mortgage scams, and center, which is making a tough situation worse. if i could use an example, if you have a chinese manufacturer that steals software or some other company that has i.t. technology and gives them an unfair advantage price wise, because the other companies had to buy at a real prize, and another company buys and at a

less prize, and it obviously puts an american company at a disadvantage. i guess the was the national association of attorneys general. they sent a letter to the commission urging the ftc to take action, and among those 39 attorneys general, there was one from the state of florida, so here are two questions. what can the fcc due to fight these unfair practices? number one. and number two, are you willing to work with the attorneys general, including in the state of florida on that issue if you are planning to do anything on it? that is one issue, if i may, and in the interest of brevity, let me get to the next one. we have an amendment that grants states the right to regulate their own out of practices,

including how it is distributed to consumers. does the ftc plans to use its resources to weigh in on state laws regarding alcohol sales and distribution, and if so, in what capacity would you be doing that? so those are the two separate issues. >> again. let me take a first one first, and i will take the second one after that, and if you would like to add something, tom, you are welcome to. we had over 20 attorneys general, including i believe the attorney general of puerto rico, and there is a very serious problem which you just documented, which is what happens when there is all sorts of pirated software out there that gives foreign competitors an unfair advantage over american competitors, american companies, because they pay for licensing. they buy computers, and it is a really interesting one. and it is a complicated one, too, because when the congress

created our agency, they gave us limited remedies. we do not put people in jail or put fines on malefactors. the commissioner has been a leader in using this broader jurisdiction. so there is a number around the antitrust laws. because this is an important issue, and also because, quite frankly, there have been some in the business community who have pushed back very vigorously about our use of this. we listened to all stakeholders. we have taken some time to finish up a response. we should have it out very, very soon, and i think what we are going to say, and, in fact, the attorneys general, they are meeting in washington. one of the leaders was pam bondi. >> we have lots of scams in

florida. >> we can talk about that in the context of our possible miami office later, and another is the h.g. of washington, and i am hoping to talk to them in the next couple of days, and we shouldn't response their lease in. >> i do not have anything to add. >> on the second question of alcohol practices in states, occasionally a lawmaker has weighed in, going back to the chairman under president bush 43, and writing a report on the competition in online sales. we have been involved -- competition in wine sales. i will try to give you a sense of what we are thinking. we would like to see more competition. of course, we recognize that states are the ones that regulate alcohol from a health and safety perspective.

>> great. thank you. thank you, madam chairman. >> mr. yoder? >> we appreciate your being here today. we have a difficult -- a difficult task ahead of us. finding a way to balance the federal budget, find a way to cut spending, get our federal spending back in line with our resources. i was really intrigued with the conversation we were having towards the early part of the hearing regarding the 59 additional, the miami office, the selling of the building, and i guess as we are looking for additional savings, one of the standards that we sort of have to use when we look at this relates to would we, could we justify borrowing from our grandchildren to fund the expense of the agency, and is the expense or the increase, i

know your budget is going down, which mr. serrano pointed out, which is notable, but as we try to find more from agencies, what are the types of changes we could find at the ftc to make those reductions? i can tell you when i am at home, there are a lot of people that say we need to boost the ftc budget and cut money from other areas. you can have someone come to me. truly, when we look at places to cut, there are places that are heartbreaking to cut, and then there are regulatory agencies in washington, d.c., who do not have a lot of champions and the cuts of american citizens, so as we are making cuts, how would we justify not making further cuts in the ftc, and where can we make additional reductions? so there are a lot of good questions. >> there are a lot of good

questions in the longer a question. not all agencies are the same. there are a number of members here who are new to congress and to the appropriations committee, and i think that is important to recognize as you go through looking at different agencies. in our case, in fiscal year 2011, we had an operating budget of about $276 million. and we were turned over $200 million to consumers, to the government, in redress and fees, so i think the taxpayers did a tremendous return on investment with the ftc. some other issues, one is the miami office. so we will not do this, and we could do it without a reprogramming from the subcommittee, and we will not do it with additional resources, but as was pointed out, there are a number of, actually, the

miami area, south florida among metropolitan statistical areas has the highest area of identity theft of any msa in the country. it has also gone. south florida has quadrupled in size in the past 50 years. one commissioner disagrees with me. if we put a small office, again, from current resources, into south florida, we can really help the people of south florida, and there are terrific spanish attorneys there, and it would be dealing with our spanish worker, not exclusively. and i can understand why it is confusing. it is not 59 additional. it is 10. we are a tiny agency. we like to think that we are a small but my the agency. the number authorized is about

1175, and we are operating at 1150. we are only asking for 10. i would hate to see it happen. technology is critically important to us. it is how we keep up with the bad guys and how we do our reviews and our antitrust work, so i think it is either 49 or 59, backfill, and then the request ads additionally attend fte's. i think we are operating at about 100 -- 1155, 1100 the basics right now. >> i think that probably each of these projects is worthwhile, but not now. that is the problem. the problem is one of austerity. we are operating in a period of real austerity at the present time.

that said, can we hand some of this stuff off to the states? the chairman has, for example, talked about identity theft being in a real problem in south florida, and i agree with that, but that is a quintessential fact. it is best handled by state and local authorities. with, to be sure, a very large consumer education component from oz, but we are not in a position to handle this. what we are in a position to do is to handle security breaches which feeds identity theft, and we do that. there is no question about that. it is here. it is here. i lost that fight, and so, it is here, but we shared jurisdiction with another group.

i do not understand why we do not have a reduction in our staff as a result of the 21 away from us as it now stands. there are fees and fines which exceeded the budget request. >> yes. >> the budget submission of since a and the offsetting -- assumes offsetting collections from the filing fees and do not call fees. but i am concerned the agency will never be able to collect those fees. the fact of the matter is that

the actual collection of fees over the years has varied widely. the ftc has only met its estimate of fees once during the last five years. i question the utility of providing an estimate of offsetting fees. -- fees to this committee. >> if i could just respond? let me make a couple of points. first of all, i think that rich is a terrific first head of the cfpb. down the road and in a few years, i could agree with commissioner rush wholeheartedly. i disagree entirely with him now. this is an untested agency. the actions being taken, while there are concerns raised about it, and people that would like

to undo it, it should not be used as a justification for us to see the the field. again, we have brought 90 cases involving debt consolidation and work scams. we do really good work. from time to time, we have had to send fee for down to south florida and have them deputized as assistant u.s. attorneys to prosecute cases, at an expense to the agency. i think that over time, you may want to, and we may want to, because of predatory or financial threat, but at this point, as you have pointed out, people are still suffering and it is not precisely the time to do that. having said that, again, we understand the need for austerity and four agencies to tighten their belts. we also understand that it is

this committee that will determine their budget. if you end of giving us not all of our request -- by the way, the commissioner was a part of this. when we started in late 2004, a little more than one year later, in a time that was not, where the economy was growing, we were both for growing our agency, which is considerably smaller than the population of the united states was. i have a great respect for his principled position. i also think that given our effectiveness as an agency, given the number of obligations that congress has placed on us, especially if we undergo sequestration, the quality of the work will be greatly

strained by the demands and we will not be able to do all those things for the consumers of try to. >> madam chair, a quick follow- up? we have to prioritize things. has the agency gone through and prioritized this regulatory front and the are of a critical nature against those that may be more of a want as opposed to a need. on the regulation -- regulation of advertising between cereal, a peanut butter -- i do not know to which extend the ftc is engaged in that endeavor, they may not be of the critical nature of some of the of the things you are discussing, but has the agency gone through and said that some of these things that they would go through in a moment of less resources, for

telling us to find the lowest 10%, can you tell us what they are? >> without having to talk about this too much, that food marketing, interagency working group, of course, was mandated by sam brown bought -- sam brownback and tom harkin. obviously, we are keenly aware of the new language that the appropriations committee has given us. from the perspective of the commission, it is probably time to move on to other areas that would not be a priority. food marketing to kids is a priority. childhood obesity is a priority. but in that initiative it is probably time to move on. now, under the chairman before me, and served as commissioner

with commissioner russia and myself, he started the initiative called ftc at 100, where real went to stakeholders looking at the priorities in the coming five years. it is a really good study and i go back and look at it from time to time. we talked about what our priorities should be depending on different types of growth and levels. now i think we will have little to no growth and possibly a decline in the work force going forward. i do not want to throw another agency under a bus, but someone asked me that question at another panel. someone in the audience asked me the question -- do you ever

look at where you need to go in five to 10 years? the other commissioners said to me -- i wish we would do that. i think that we are pretty good at that. we are not perfect. self examination outside stakeholders, consumer groups and others to follow the agency, that is a good thing to do. >> i do not think so. this is an area where i disagree with the chairman. he has mentioned to you that he has had close to 1800 fte's, back in the 1970's. today we have 1200. frankly i think that every law firm in the united states would have seen a similar contraction

of support staff. the answer can be summed up in one word -- computers. that is exactly what has happened. and yet we have not attracted -- contract accordingly. there is more belt-tightening that we can do in terms of support staff because of computers. >> clearly, computerization is a reason for why government has downsized. going from 800 -- 1800 fte's in 1979 to 900 in 1989, and by the way, congress has been good, and see how you can do it, at being entirely about computerization. >> certainly, the agency has

large scope over the determination of what will be on its plate. coming from congress and other directions, it might be helpful for myself, at least, seeing where you would choose to prioritize. sometimes agencies choose to prioritize those things that would get the most attention. causing us the most strained. what you actually see as the lowest priority against the highest priority, if we had to do only one thing or two things, that might be useful. >> that is a fair point. i think that as our agency, generally we try to come up with a bipartisan consensus about what to do and we try to look at the things that are the greatest good for the greatest number of

people because we have finite resources. >> thank you for being patient. >> first of all let me say how important today is because we are marking consumer protection week. the ftc, this is so important in terms of consumer protection. i want to ask a couple of questions in terms of deception and unfair practices, as we see it in the predatory lending and discrimination in lending as deceptive. i know that you do not have jurisdiction over banks and the press, but you do have jurisdiction over non-banking

finance companies. this factor of the industry, which has had some of the worst actors in the subprime mortgage crisis, many of them were guilty of discrimination and the legal scanning of minority borrowers, predatory subprime loans. most of those fly by night companies have collapsed, thank goodness, but they were quickly replaced by companies that offered to rescue homeowners from the predatory fraudulent mortgages that brought down the economy. communities, like in my district in east oakland, they were targeted, entire communities, by misleading advertising, unfair and predatory loans, and discriminatory lending. these were targeted based on race and ethnicity. now, unfortunately, they are falling prey to scams that promise to save their homes and

lower their mortgage payments. your agency, i know it is as busy as ever, but you mentioned, and we all recognize, that it would take a couple of years for the consumer financial protection bureau to be fully operational. so, in the meantime, finding out what you all are doing on these mortgage risks and scams, do you have your material, the your bilingual material that can effectively be the hardest hit minority community? i would like to know more about your outreach campaigns into these neighborhoods and what your doing. given the lack of consumer protection on these scams, i think we need more resources, because consumers -- the middle class is falling into the ranks of the poor and in large part

these subprime mortgages have forced them out of their homes and really, you know, put them out on the streets. we need to get it together really quick and your agency is critical in this. if u.s. meat, you need more resources. >> appreciate that. so, most of our -- all of our materials are in spanish now. some are in other languages. we have some in korean, some in chinese, some in vietnamese. we see a particular scams targeting a particular demographic, we will spend the time and cost to make sure that we have translations into the populations that represent the community best. we have a terrific linked in the community, with millions of hits

on our web site every year. in terms of the cases we are bringing, we have probably brought more than 40 over the last three years. the state agents, it is probably over 200 in those categories alone. mostly people who were in arrears on mortgages -- asked willie sutton why he robbed banks, it is because that is where the money is. the foreclosure risky business, you use to hear ads on tv saying that you should give us $3,000 and we will take care of your problem. 90% -- 99% of the company was in sales and only 1% worked for the consumers. on behalf of congress, because congress gave us the authority of a bipartisan mortgage rule that was unanimous on the

commission, in a modification telemarketing sales rule, you see far fewer, i do not want to say none, but far fewer of those scams with finance fees right now. in the particular discriminatory context, we have brought at least a handful of cases -- there was a case involving a spanish-language bar were in california who was being charged on average one-quarter more for mortgages -- one-quarter point more for mortgages. we have had other cases in that area. we reach out to legal services, community groups, because you do not want to be at a competitive disadvantage from the crooked ones to come up with more cases in the area.

>> two things. three things, first of all, congresswoman. first of all, i happened to live in your district for a long time, so i know the problems you're facing. that said, several things. first of all, i think it is probably -- and you know this -- we are not doing minorities any favors by getting them out of their houses into houses that they cannot afford. we discovered that in the compucare case whenever we brought that, which was partially owned by the naacp, as a matter of fact. we were aware of that at the time. we told them that if people were moving because of fraud, we were going to clamp down on that, and we did.

we returned a lot of money to consumers as a result of the fraud. that said, i think that probably the biggest problem that we have at the commission today is probably cheaper consent. what do i mean by that? first of all, i do not think that anything is in the public interest if it is a consent agreement settlement that does not return any money to consumers. these are brought in to me all the time. people spend their money as soon as they make it. so, a lot of these scanners, who are terrible people, are consenting out and it is cheap. it is cheap for them to settle out. second, we have the same problem that the sec has, except in

spades, because we do not, by and large, require people to admit liability. we just took a consent, for example, in which we did not agree -- or, we agreed to let these people deny liability and i do not think that that is a good use of public funds at all. >> why is it that we do not require the admission of liability? >> i do not know. >> is that a legal position? does the law prohibits that? >> a judge in new york has just brought -- he is just questioned the fcc as to whether or not they are -- as to whether they can legally have consent that neither admits nor denies

liability. we have been taking those four years, so i do not really have problems with those. but, i do have problem with consent that simply denies that there is any liability of all. to me, that is a cheap consent and i will not go along with it. i have told people that i will i go along with it. >> let me say that i absolutely agree with commissioner rush, we need more cases in which we get less restitution from victims, but i would also say this, as i understand it, we are a little different from the sec. i think that in 2011 we brought something like a little over 100 cases that were primarily enforcement agency policy issues. in 2012 we currently had

something like -- in 2011 we currently had something like half the numbers of litigations. so, we litigate a lot of cases. commissioner rushed -- usually more often when we have settlements it is about companies saying they do not want to admit liability. they do not want to deny it, or admit it. i will look at a particular case where they deny liability, which is unusual. it is important to shut down ongoing fraud. hindsight been 2020, you can get better relief -- hindsight being 20: 20, you can get better relief by taking consent and moving on to the next male factor. -- malefactor.

i agree with commissioner rush, i agree that it is important that we give more restitution. >> have you looked at civil- rights statutes on spanish- speaking homeowners? to meet, looking at other areas -- to me, looking at other areas, those to be civil-rights statute violations. >> we can sometimes use those as well within our bill. >> thank you. >> mr. chairman, commissioner, thank you for being here. it is nice to go down there, because you hear the questions and there is a dialogue. it really gets to the heart of the dialogue where we sit on this piano and look at the requests put before us, we realize where we are from a

fiscal perspective. i have to say that it troubles me a bit, what is put before us is not in favor of our nation in any way. to me it appears to be a deterrent to other agencies, departments, and areas that must take responsibility for fatality in all agencies and departments. and how or where that departure occurs or where that goes, and i know that i discussed that a little bit when i was coming in, but talk about the timeline, how it tracks, and where it is picked up in your requests. i was appreciative of the commissioner's comments about some things going back to the states. if there was ever an opportunity for this congress to divulge -- dissolve some sought -- some parts of this back to the

states, where they belong, this is a good opportunity. with the deficit as high as it is, every date -- every agency asking for more money -- we just heard that you could be doing better if you had more, but there is no more. we have reached that point. what would be some ideas that could go back to the states? that was sort of my second question. third, the gao produced another report about these programs. are any of those, which you can see, which have identified with your commission, or another report later that might come out, which you could help us with later, to say that this is being workup -- this is being covered somewhere else? >> let me try. ok?

the situation, as madame chairman is well aware, has been documented. it was elizabeth warren's idea, initially, with the white house boss blessing, i might add. frankly, i listened to a list of warren in new york, once upon a time. i said -- what did you think of what i said to her? i said -- never crossed that woman's path. that was it, as far as i was concerned. i did write a letter to your counterparts in the financial- services committee. i would not say that i got the

cold shoulder. which is that we are laboring another unnecessary layer of bureaucracy on top of ftc, which is doing the job quite nicely now, thank you. i lost that round. the question now is what do we do about it? the question is -- -- the answer is, we cut back. how do we cut back after sharing jurisdiction with cfpb? that is another matter. i happen to disagree and think we should be doing as much as we ever did. i think that there are two agencies involved in doing that same thing. the second thing, what do we do

about the states? as far as i am concerned, my view is that identity theft is quintessential fact -- by state authorities. we are doing quite a bit in that regard. that said, let me identify another area, where i think that we can hand it off to the states. there is no question that we are getting second request discoveries that are more voluminous than we used to get. it happened in private practice to me as well, particularly when online discovery went unchecked.

my summary judgment is that we should hand some of the soft to the states. the have state attorneys general who you will see and you have seen are perfectly able to take care of this task for the time being. i do not agree, forever. i read with congresswoman lee in that regard. but now is not the time. >> if i could add a little bit, a little follow-up? you used the term later when referring to cfpb. you are saying to us that it is not carving out a segment of your appropriations, calling it a new name. it is ftc remaining hole, with a new layer -- whole, with a new

layer proposed in the future. i guess this is what i am getting at. back in the 1970's, we were facing 1800. we only have 1200 today. over time, did they take portions a way to create new agency? this one kept the same amount, funding for the other one, then multiplying over time? >> that is a good question. i think that when the agency started to shrink, there was not a creation of a new agency to draw them away. as has been alluded to, they are on a hill where they pay considerably more. in overtime, they will certainly be doing the same thing we are doing.

they are out from under appropriations, which i know from this committee is the way forward. again, and i do not disagree with commissioner rushed, we could always stand for some belt-tightening. let's say you are someone who is one of the 450,000 consumers who got a check in the mail from the federal trade commission because of violations by countrywide and bank of america. it is hard to say to them that we are going to reduce the funding of the federal trade commission and, as a result, you know, it is going to take longer -- take longer to do that investigation. you know, you might not effectuate the return of money for what we think was a pretty clear -- pretty clear rip-off

for the billing of a one, putting it on someone's servicing bill, adding late fees and a variety of other things. hard to tell that to stammers, we cannot help you as soon as we would -- stammers, we cannot help u.s. soon as we would -- scammers, we cannot help you as soon as we would. i think that that is a real debate to have. i start to agree with commissioner rush, we should move these resources around, but i do not think we should leave a gap. the ftc has a good head of agency, but their future -- i think we all understand that it is someone -- somewhat uncertain for the next year or two. and i will just say one more thing, i do not envy you. you have tough choices to make.

whenever choices you make, congressman, we will work within those parameters. i see that commissioner russia agrees with me. we are a really could agency. i respect his position. and certainly there are some very important tasks that you take care of. but i left north georgia earlier today, three children, kissed them all this morning, they went off to elementary school, middle school, unaware of you sitting before us today. what would you say to them? they're the ones that are going to have to pay for this. your children or grandchildren

are going to have to a pay for this. so you say the decisions are difficult for us. they are really not. they are not that difficult. they just get delayed because we don't get assistance that we're asking for. so i'll leave it with that because i think we as a congress have got to come to grips with this and i think each of us have to do it together. we hear the call for bipartisanship. this is the opportunity for us all to do it together but going on a fifth year of trillion dollar deficits is not the path that we need to be on. >> thank you so much mr. graves. so we're -- i have a couple more questions and it has really less to do with the cfpb and more to do with you all but i am curious about this whole process because i don't like duplication at all and it is i think a waist of resources -- a waste of resources. so let me ask this.

number one the 21 folks that went over to cfpb, what did they do? what were their jobs at the ftc? >> they were economists. they were attorneys. some but not all of them did financial fraud issues. for nonbank. >> nonbank financial. >> where we have jurisdiction. and they were on hold as is typical of our agency very good competent attorneys and economists. >> so they were, were they asked specifically by the cfpb folks or did you say to them if you want to go over and keep working on these issues you can go? how did that whole thing transpire? >> so i think we sent over a couple of detailees early on just to make sure folks knew what they were doing in areas that they didn't inherit.

because remember, they took the consumer protection functions from the banking agencies and put them together in a different way. but they hadn't done a lot of what we had done. so we sent over a few detailees. for the most part they've been hired away. >> so i'm still confused why that function technically the function is leaving you all because i don't understand what sit that they are going to do that's different from what you all are currently doing? and i realize there's a little bit of bitterness. >> i wouldn't say bitterness. >> but if you're doing something well, why in the world -- but healthy competition to me is just using , is spreading your resources thinner when you all have expertise in this area. it's just silly. >> i would say -- it's a really fair question to ask and i think one that i've been thinking about more since commissioner rush and i started preparing for this hearing together. i guess i would say this.

if over time -- i mean, we have back-filled most of those positions and we have i would say if you include our regional offices probably 100 people working on sort of financial fraud issues right now and we have back-filled most if not all of those positions already. but having said that, i think over time they might be, you know, very competent and better agency in the financial fraud area. but in the -- but two things. in the next coupleyears i think you want to make sure that we're stopping financial fraud and we do have an mou so we don't trip over each other. >> i still can't figure out what you're doing versus what they're doing. >> what we're doing. there was at some -- right. what it does is basically at its bottom, at its most basic level it says let's let each other know who we are investigating. it doesn't say you take the dayday lenders and we'll take

the -- payday lenders. >> so you're basically duplicating. >> no. >> why aren't we just leaving that to the ftc period? >> because i mean, again, none of us has a magic wand and if we did we might do things differently. but i like to think that they are -- in fact i know because i look at our zphraint data bases, that this is a very target rich environment. there are more people who are doing bad things to consumers that we can go after. but the other question is why don't we leave it to the federal trade commission? congress made a determination that -- and it wasn't a unanimous determination but that they would create this new agency and so we work with it. i just don't -- i hear what you're saying, i understand your concerns. you know, there was obviously some debate as you know early on about whether to just make those functions a part of the federal trade commission.

>> so then the opposite question then is then why don't we just send that whole piece of what that ftc does there and you all will focus on all the other thing that is you do well? >> there i would say -- and again i think that the commissioner -- i don't want to speak for commissioner rush. i think people believe over time that might happen. but there we had a very bipartisan view. it was joe barton, henry waxman, barney frank who was your college classmate and congressman baucus. everyone agreed that we should keep our jurisdiction because we did a really good job and because the uncertainty there was uncertainty particularly very early on. >> you were very diplomat and i understand where you're coming from. and i have very little to add to what the chairman has said except the following. first of all, with respect to the people who have gone over there, who brought our

principal pre-2008 case that yielded consumers millions and millions of dollars went over to head up the cfpbs knew financial protection program. second, i would point out that the cfpb has exclusive jurisdiction over rule making, over fair debt collection practices. and it may make a rule which is broader than the one that we enforce under the fair debt collection practices act. we don't know. at the present time. the chairman is correct about that. but from my standpoint, it's

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

have said. let me talk to you about these just because i'm trying to find where could we easily save money? so we've got seven regional offices. you want to add a couple people in inexpensive place in miami. is there an atlanta office? >> yes. >> could the atlanta office close and become the miami office? >> that would not be i think my preference or the preference of the -- of most of the members of the commission although i will talk to them about it. what i think we would probably do is we would post for -- we would post -- if we go forward with the miami office we would probably start it with about six people and we would post from within our existing agencies. my guess is we would have a lot of interest in doing that and then we might back fill someone who was doing financial fraud with the vacancy we have in financial fraud and move it to and refill it in miami.

but you know, i would want to think about it. >> where is this other office? >> new york, chicago, san francisco, dallas fort worth and cleveland and atlanta. >> so here's -- and seattle of course. which does both competition and consumer protection work. >> with technology as it is today, do we really need to have all of those regional offices? because i would have contend that having an office in miami that's particularly focused on spanish speaking would make sense. but i don't see why you need to have seven other offices. perhaps new york. i don't know. >> well, and you might talk to chairman durbin about the chicago office. look, commissioner, when commissioner rush -- it's time for us -- we don't earmark any more. therefore we all need to be

cognizant. several usd offices closing in my district and the post office distribution center and it makes me sad and it makes me angry because the agencies aren't doing what they ought to be doing. but do we really need them in this technological area? >> to the chairman's credit, i championed closing the atlanta office. and he has suggested that he would be at least in some future incarnation amenable to that as well. but that is something that i do think we ought to consider. >> if i could just add. look, if we had to start from scratch and we were given -- by the way, when commissioner rush was the head of our agency, how many offices do we have? >> that's why i say.

>> so but i would say this. if we could start from scratch -- first of all, i think there are some things that regional offices can do including consumer education, including being a liaison with state attorneys general where they are located and near where they are located that it is a little hard to do from washington. and i would also say this. if we could start from scratch and the appropriations committee said we want you to have seven regional offices, you pick the cities, i couldn't imagine that miami wouldn't be a city because it is a hub for black american business activity, it has grown exponentially over the last -- 57% in spanish speaking households in the last ten years. so i couldn't imagine we wouldn't put it there. but at the same time our regional offices have been really just engines of anti-fraud activity and a few do anti-trust work as well. so i would hate to say we can't

-- i would hate to say we would close this office in order to open another office because they're really good people. i don't think the commission wants to move them around and force them to pick and choose, you can either stay there and lose your job or you can move to miami. but we would do it if you let us do it. we would do it. it's up to you. we would do it from existing resources. >> if you make the announcement about an opening office particularly in is like january, february, you will have a lot of people wanting to go down. >> and i know we will have the support of your very good attorney general. >> and i wasn't choosing atlanta because mr. graves is from georgia at all. but i was just, i'm trying to figure out, ok, if you need this, what can you do without? because the fact of the matter is that we just don't have any money. >> well, i would say between commissioner rush's testimony and what we heard from some of the members of your subcommittee, we might be able

to figure out a way to do it from existing resources and to try to take under conversation some of the points we've heard today at this hearing. >> will you indulge me, i have one more really quick question. it has to do with all the lease space and we kind of bring us up to date on the new jersey avenue location. and i think originally you had asked for more space, more square footage than you all needed. but tell me what you're doing with this move. because i obviously am looking for another way to consolidate some space and save some money. give us an update. >> thanks to this subcommittee, we probably have enough money now, or very close to it, to do our move. i just had a discussion with our executive director today who is sitting behind me about how we are going to a new space as part of our belt tightening,

reduce the space per employee and per attorney to some extent. >> let me ask you. do each of your attorneys have to have private offices? >> it is preferred because of the confidentiality and some of the things we do but it is not essential and we have doubled up at times in the past and we might have some dubbling up going ofpblet people want to work at the ftc. it's a really good agency. if you say to a young attorney you've got to sit with somebody else just like they do in a house office or a senate office, we will make that work. >> well, our staff -- >> at the risk of getting too -- what? >> our staff sit in like a big old pit. >> a bull pen. going back to the baseball analogyings. i would say at this point there's a little uncertainty because a certain member who would like to -- a certain member who chairs another committee i believe is holding up some prospect tusses. so we're hoping to get that

through a committee on the house side soon. otherwise, we'll have to stay in our space and we will have to pay a lot more for it. we'll have to come back to you. >> all right. i will follow up on that. >> ok. >> and i appreciate it. but we need to start moving on this because it's ridiculous and i want to try to save money. >> thank you. what i think we've established that miami is in pretty good shape for getting an office. and then -- >> if certain things happen. which means the other office would have to close. >> then mr. deezeblart would have a problem because he believes in cuts would he attend the ribbon cutting? it is good. you know, we have made some comments here about duplicating services and so on. baw i think what we need just to remember every so often as we talk about this new agency

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

new york state assembly. >> you remember that far back? >> we just read up on our appropriators. we get something like -- my staff will correct me if i'm wrong -- something like 2 million complaints a year. and of course -- and what we do is put it in a data base and it becomes a really critical important way in which we determine which scams to go after. now, we also make this data base -- we allow state attorneys general, because i think it's really critical that we all work together, to access that data base and to give us data into it. so we can all work together on figuring out which scams we should be trying to stop, which ones will give the greatest benefit to the greatest number of people and our complaint data base is one way we do it. we also talk to consumer groups and we also talk to honest businesses because they don't want to be competed against. one of the interesting things is when we did our foreclosure

-- mortgage modification rule we actually ended up having one of the trade associations for the companies that do this supporting our rule making in the end because one as we listened to them they had some suggestions. and two, they felt they were at a competitive disadvantage. so it's a hard thing to do. we try to do our best to really figure out where the -- where we can do the most good. and we work with our state ag's and other folks and with h.u.d. and with the department of justice and treasury when we can. >> no comment. that sounds fine to me. >> that's even a shorter comment than the one that he made. so i must be doing a good job here. you mentioned a lot your working relationship with the states ags. do you ask them for information or do they always come to you with an issue they want you to cover? >> it's a combination. sometimes on mergers and issues we generally take the lead.

but we -- and on anti-trust investigations but sometimes they join us and occasionally they will do and maybe we should ask them to do more some of the depositions when we're doing b an investigation and some of the document reviews. we have a lot of cross poll nation with them. i did a youth privacy panel with eric niderman last week, two weeks ago many new york. and that was great. and so tomorrow the national association of attorneys general is in town and i'm going over to talk to them and then they're coming back over to our agency and we're doing a workshop for them. so there's a lot of ways we cross poll nathe and we need to do more because when we leverage our resources we all do better for the consumers we try to represent. >> let me ask you a quick question on online shopping. the last couple of years around the holidays christmastime, we hear about how much more people are buying on line. now, so obviously just by that

mere percentage growth you would say that there's more problems on line. is it that it is just a mere percentage growth, more buying,, more shopping that way therefore more problems? or is it that that medium lends itself more to schemes and bad information? >> you know, that's a great question and i don't know the answer to that. i do think when you don't have a person there is a -- and there's no one that you're necessarily speaking with, it probably makes it easier in some ways to start a fishing site. and one of the issues where we have had been very bipartisan is the internet corporation for assigned names and numbers. recently developed a plan to have these top level dome maine names and we thought it would be a hot bed for fraud because you have all these new nains. think of the way you could misspel mare yt. and now instead of having top

level do mains and sometimes they're operating out of orange county california but they've registered their name in berlin. we were worried and we sent them a 15-page letter urging them to go much slower and to try to put in requirements where we know to know who is registering and to make sure that the registration information is accurate. so i would say i don't have an answer for you. it's a really good question. i will follow up with our staff and see if they have, if they can try to quantify some of this. but i would say this. the spret gives all consumers great gifts in enormous ways and online commerce is a terrific thing. but it also has led to a variety of fraud. and of course that's what we're supposed to be watching at our agency. >> it also has killed that great jack benny routine because there's no mel bank or frank nelson to exchange with and i just gave away my age. >> i thought you were younger

than that. >> anyway. >> it's not that funny to buy on line. all right. i have just one more question. and it is a question that has to be asked. which is, how would the ftc handle a 9 p 5% cut if sec stration was to occur? >> well, again, if we -- and we're hoping i think -- speak for myself. i'm hoping we don't seek sec stration because again -- i will give you a short answer we would have to make a lot of tough choices and it would involve personnel and it where we're trying to catch up with the marketplace. and so it would be very, very difficult for us to do the things you want us to do. i think it would mean fewer cases and i think it would mean slower development of cases

again having said that wherever we end up we'll do the best we can. >> well, from my standpoint we do away with cheap consents. that's the number one thing. number two, i think we would probably hand off more to the cfpb. which after all was expected to handle these matters. number three, i think we would probably hand off more to the states. i don't think frankly sec stration would be that bad a thing for us under these circumstances given the austerity that we are living in right now. having said that, probably because of my background as a trial lawyer and anti-trust trial lawyer, i don't think that the supreme court, that matters are ever over until the

supreme court has said they're really over. and so for that reason probably i am more eager than my colleagues to follow on in administrative proceedings and with supreme court review. but having said that, in the whole foods case, i was able to persuade my colleagues that we ought to soldier on. but generally speaking i have not been able to do that. and i would be remiss if i didn't say and emphasize that in all cases however i think i got a full and fair hearing from my colleagues and from the chairman. as i have said, for me, that's the kind of collegiality that really counts. >> can i just say one more thought which is, and chairman emerson and i have talked about this a little bit. last year, the companies pay

when they're seeking a merger haven't been adjust ford inflation since 1999 or maybe 2000. so if you are looking and the senate appropriations proposed this i think last year and it was blue slipped by the ways and means committee because it didn't originate in the house. if you modestly update or adjust the harts scott fees for inflation, and then put a tier in of over $1 billion, you could probably raise something like $800 to $1 billion over 10 years. that would be divided by the commissions but it might be a fairly painless way that you might want to think about for raising a little more money. >> let me just weigh in here for a second. energy and commerce and judiciary committee authorizors issue, which -- >> weld be happy if you decide

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

>> thanks so much. >> and you'll get back to us on territories, online shopping and the jack benny part. >> absolutely. >> we may be doing a lot of online shopping around the holidays this year i have a sneaking suspicion. mr. deezeblart. >> very brief because i did get answers to my questions about the i guess you're preparing a letter to the attorneys general and that will deal with that first question. and the second one you will get back the me if there is any thing on the alcohol issue. what recourse do people have if they are, if they suspect that a dome main name has been taken either fraudulently or maliciously? can i get adom main name of jose serrano.com and start putting things on there that he wouldn't like? not saying that i would do

that. what recourses are there and what ability do you have to deal with that? how limitred you? >> so it's funny you raise that because i was testifying a couple years ago when i was a nonchair commissioner before the senate commerce committee and apparently someone had -- someone who had been associated with ted stevens had used it to set up a humerous site involving maria can't well another at that time both members of the commerce committee. and this was not humerous to maria can't well or to ted stevens by the way. i would say there's probably some recourse. let me get back to you on that. but the biggest problem is that most of the people who do this, they either can't be reached because after they're in romania or in southeast asia and they're registering a dome main name for $3 areven if

they're in america if they're registering with inaccurate information. or they've registered it before a more legitimate person and then they just want some money for it. so it is -- if we could -- i wasn't involved in this when they started the dome main name, the internet corporation for assigned names and numbers. i think -- i worked on the senate side then. if i had been a little -- in retro spekt there are things we should have done differently and we're hoping that we can one of the areas where we have been involved just baw we saw so many problems is trying to encourage reforms within the process. but i'll get back to you on your specific question. >> thanks. no more. mr. graves. >> followup on the i guess it was the privacy bill of rights that's been floated out there. i know you spoke a little

earlier about a component. is that just to help our committee understand. is that something you see moving forward as a regulation or something coming out of the commission? or is that something you mentioned earlier industry regulated or -- is that how you see it intended? >> so it's a good question. it's not a black and white answer. the privacy bill of rights and the privacy proposals surrounding that have been -- has been driven by or initiated by the department of commerce. and what they want to have is codes of conduct. this is actually we're very supportive of this. codes of conduct for industries that they would agree to about protecting privacy and then the ftc would do the enforcement rule. that's much of what we do. we have supported the notion of do not track options so consumers can opt out of being tracked if they don't want to

be tracked. the commerce department's initiative has legislation around it. i think we all understand this is not going to be a major legislative year. our initiative for do not track is purely volume teary. it involves industry stepping up to the plate and giving consumers an option and then it involves standards setting organizations. we're not regulating to get to your bottom line question. >> so if someone chooses not to participate in the standard what would be the recourse? and then if somebody does choose to participate and they don't abide by the conduct, what would you do? >> that goes to the heart of exactly what we're doing. if someone says i don't want to participate in the standard, i don't want to give consumers an option not to track, when they come on i'm going to say if you come on my site we're going to track you they're allowed to do that. we don't think it's the best practice. i don't think ith encourages trust in the internet or more

internet commerce. but that's what they -- but we're not saying it's an enforcement violation. if on the other hand -- and i think this is what makes the industry driven do not track proposal so powerful. if a company says i am not going to track consumers if they opt out, and then they engage in tracking, one, because there's a, an enforcement mechanism set up by the better business bureau, it can be enforced there and they can be penalized. it's an enforcement mechanism with teeth. and two if you make a commitment i will honor your privacy. any company does. and then they don't do that then it's enforcible. and again, look, i myself probably wouldn't opt out of tracking because i sort of like getting targeted ads and no one wants to in any way undermine the sort of free conat the present time and services on the internet that we get from

advertising. but i just think from my perspective consumers ought to have a choice and what's really heartening to me is that most companies want to give them a choice. >> so is it common practice for a private group of businesses to come together and come up with their own rules of the road or codes of conduct? and then ftc regulate that and enforce that? >> we wouldn't regulate it. we would enforce it. and we don't do -- >> there would be -- only when they want to. again we might encourage them to do it but we have -- commissioner rush and i during dodd frank were both very big advocates for getting out from under the magnusen law act which is the medeival law making, which makes it difficult to do rule makings and congress didn't give us that easier rule making authority. but so again it's up to industry. but i think there are a lot of reasons industry wants to do

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

in the business of regulating but we're encombrirged what companies want to do. >> this is a unique model that i have not heard of before where you have a private sector do that. >> frankly, congressman, that's because it is a tottology. if it's truly voluntary, then it's not enforcible at the federal level by the fmp tc or by an act of congress. on the other hand, if there's a federal legislation that makes it enforcible, it is not truly voluntary. now, why are these people interested in doing it? the chairman has offered you one explanation. i will offer you another one. the carnegie melon study that i referenced earlier has determined that you cannot -- most consumers cannot even access these do not track

mechanisms so that's one reason. and the second reason is because these big entrenched companies i'm concerned about in terms of self-regulation, that they will use self-regulation privacy as a tool, as a weapon if you will to preserve their positions. and against entry by smaller rivals. i'm concerned about that. >> thank you. and i share similar concerns that whenever we allow the strong force of government to enforce as was the term that was used here that has not been ratified nor approved by members of this body but only rules of engagement by a private sector i think we should all be cautious of that. >> thanks mr. graves given the

fact that most of the time voluntary turns into mandated at some point down the road it does make me nervous at the same time. one question that i would like to ask -- it's not a question. one thing i would like to ask you all to do. we all have question force the record. we would like to have those answered sooner rather than later sometimes it's six months but if you could do it in the next 30 days that would be great. and secondly on the c structure, i am concerned about what commissioner rush has said, i would like to have -- and i know what you have budgetted for fees just for the last five years if you could give me a list of how much in fees you have in fact received. >> i can give you that right now actually for the last ten years. >> you're just going to hand me a piece of pape center >> perfect. that's great. >> and with that, thank you all so much for being here. it was fun having you too commissioner rush and i like having opposites because

opposite parties commissioners because i actually think that it's important to show that while perhaps you don't agree on everything you do work together. i don't know that's true across the board in all agencies but i'm thrilled that it is with you all and we want to thank you so much for being here and for the help that i know you're going to give us in trying to save money because we all need to do that.

>> gas prices continue to creep up. aaa says it is now an average of thrrs 3. 0 for a gallon of regular gas. this morning "washington journal" talked with former shell oil president about rising gas prices. he's written a book about why americans hate oil companies. this is about a half an hour. thanks for being was. >> thank you. >> right now the average price

is about $4.25. higher in some areas, lower in others. many predicting that we're looking at $5 and beyond. the obvious question. why? >> well, in december 2010, at a conference in new york city, i said if we stay on the path that we are on, we are headed for $5 gasoline by sometime in 2012. certainly in the second or third quarter. and here we are. and here comes the $5 gasoline. the problem is that we have had no plan in this country to take care of ourselves. we have been living off imports for most of the last 30, 40 years. and while we are in a nation that has more oil than saudi arabia, that has more oil than we will ever need, we have a government policy, republican and democratic government alike, that have prohibited oil companies from accessing

natural resources in this country. we have exported the risk by importing from other countries. we have tens of thousands of jobs have not been created in this country. and the reality is american consumers are now paying at the pump because we haven't had a plan to produce our own domestic energy. we've imported it for too long. what's really changed and why it's so dramatic today is that government has ignored the fact that china has gone from 5 million barrels a day consumption in 2005 to over 9 million barrels today on its way to 15 million barrels a day by 2015. that is taking huge amounts of global production away from what we were used to importing, raising the price worldwide. people blame speculators, the oil companies, whoever they can blame. the reality is we have the energy in this country but the

country is not allowed to produce it. >> i want to take a step back. it was 35 years ago that jimmy carter in one of his first major addresses was in the white house library and i'm paraphrasing but he said that the energy crisis was the moral equivalent of war. now, republicans have criticized that speech. was he right 35 years ago? >> yes, he was right. and jimmy carter to his credit launched a major effort to develop the oil shale resources of the basen of colorado. which never did get developed to this day has not been developed. jimmy carter also invested in alternative energy. but jimmy carter opened up the prospect of domestic resource production with alternative energy but we never followed through. and that's been the problem of every administration since nixon. we have never followed through with a plan. we put politics ahead of energy. and energy is at the basis of

our society. when we think about equality in our society, we're becoming a nation of energies have and have nots. that's grossly unfair to the american people when we're surrounded by more energy than we'll ever need and it is politicians in my opinion because i've been in the halls of congress, i've been in the offices of cabinet officials in the executive branch, and it is more important to have a political agenda and see it through than it is to actually get some work done on energy future for this country. >> the president discussing this in his weekly address over the weekend and here is part of what president obama had to say about the price of a gallon of gasoline and what we are importing and exporting. >> as usual, politicians have been rolling out their three point plans for $2. drill, drill, and drill some more. well, my response is we have been drilling. under my administration oil production in america is at an

8-year high. we have quadrupled the number of oil rigs and opened up millions of acres for drilling but you and i both know that with only 2% of the world's oil reserves we can't just drill our way to lower gas prices. not when we consume 20% of the world's oil. we need an all of the above strategy that relies less on foreign oil and more on american-made energy, solar, wind, natural gas, buflse and more. >> he is talking about those alternative energies, has been for the last three years. >> he and his administration have done more harm to the future of domestic natural resource production than any administration since nixon for the following reasons. we are producing more oil than when he took office. because of decisions made in the three to five year period looking backward, not the last three years. it takes three to five years to

bring on production in oil fields. and his administration has thankfully stayed out of the way from private land developments. federal government has no role in developing oil resources or natural gas resources on private lands in places like north dakota, pennsylvania, ohio, arkansas, louisiana, and so forth. that's where the increased production has come from. remember, he shut down the gulf of mexico after the bp disaster. when all the rigs that were examined in the gulf of mexico after the bp disaster met every term of their permit, yet they were shut down for six months and the gulf has yet to return to its prior state of production and we're in decline in the gulf of mexico. he doesn't mention that. but we are producing about 200,000 barrels of oil equivalent per day less than we were before the bp disaster. the president talks about 2% of oil resources. he's conveniently selecting a

number based upon a narrow definition by the securities and exchange commission oven proven reserves. there are two other categories called probable reserves and possible reserves. he ignores them completely because as the oil industry knows we have more oil in this country than saudi arabia and that means we have a lot more than 2% because we're counting possible and probable. that won't all be produced. but let me be clear. it is not enough to just drill. the president is right. when it comes to saying it's not enough to just drill. we need a more comprehensive plan. but wind and solar do nothing for transportation fules. what we should be doing is considering our other options for transportation fuels which includes more ethanol. we're working on that but it comes very slowly. we could convert natural gas to meth nol. nascar drivers use meth nol. we could produce meth nol for cars if we had flex fuel

engines and that is a domestic natural resource which we have almost too much of in today's world. and in addition to that we could use compressed natural gas for trucks and overthe road hauling and we could use hydrogen fuel cells. the previous administration started a program for automobiles. this administration did everything they could to kill it until congress intervened. now, keep in mind so your viewers understand i'm a registered democrat. i'm not a bangup on obama. i'm banging up on every elected official that denies the american people, republican or democrat, an affordable price of fuel. and we don't have today an affordable price of fuel. and i resent politicians hiding behind certain words and language to pretend that they've done something. the obama administration does nothing for private land developments because it is not in their jurisdiction. but 85% of the outer continental shelf is off limits. that's a gove decision.

permitting on federal lands for drilling is down 50% in this administration from the prior administration. that's a government decision. there will be no more drilling off of the eastern gulf of mexico, east coast, west coast, and parts of alaska as long as this administration is in office. they've been clear on that. because their 5-year plan from 2012-2017 says don't open up any new resources that aren't already open. the millions of acres he is talking about is limited to the western gulf of mexico where we already drill. and it's already been part of five-year plans for the last 25 years. >> a couple of points from gary on our twitter page.

>> i think we respect to the first twitter. the saddest moment i had as president of shell is when someone sent me a letter and said i'm sitting at my kitchen table. i have to buy gas and i have to buy heart medicine. i'm now going to take half my heart medicine. i hope you don't lose a customer as a result. meaning he would die because he was choosing fuel over heart medicine. that's a sad day for americans with respect to the second commenter i agree. i agree that traders should take physical possession. but i also would suggest that the speculation is nowhere near what people think it is in terms of impact on oil price. because whenever there is a trade, there is a willing seller and a willing buyer. and if people are willing to buy at higher prices, it says that is the market rate today. it could change tomorrow but that is the market rate today. >> our guest is john hoff

myselfer. graduate of kansas state university, spent his career at general electric, nort el and allied signal. and then spent many years at shell oil including serving as president from 2005-2008. also out with a book released in 2010. why we hate the oil companies. straight talk from an energy insider. portland, oregon. good morning to you. caller: i think he's missing the heart of the situation because no matter how much oil we drill here in america and how great our oil resources are. if we're going to price it up and put it on the world market and let countries like china and russia bid on it, then we have to bid on our -- on the

price, on the inflated prices of our own oil and pay for the competition that russia and china brings to the table. what difference would it make as to how much oil you have and how you drill it? and also, he's not mentioning that most of this, these natural resources he's talking about i don't know whether the term is common property but the property that they're drilling on is property of we the people of the united states of america. host: we'll get a response. guest: well, it's a very interesting question that's being raised here. the reality in global oil production consumption we're producing about 86-88 million barrels a day and we're consuming at least 88. and the demand is for more. >> go through those numbers again. >> we produce in the world, including the u.s. but

worldwide but we produce about 86 million barrels a day. the demand is closer to 90. and the consequence is we're not producing the global demand at all. if the u.s. which used to produce 10 million barrels a day in the 1980s today produces less than 7 so we have dropped our production we could today if we were allowed to that would have an ameal yor rating effect on global prices. we do not sell crude oil other than a small amount from alaska outside the country we consume all the crude oifment plus we import between 11 and 13 million barrels a day from other parts of the world into this country. so the caller may not understand that we don't produce enough crude oil to ship it to other parts of the

world and we need another almost twice as much crude oil just to get through every day. the other point where the land is commonly held, actually that's only on federal land. as i said, federal land permits have been reduced dramatically in the last several years. private land mineral rights to private land are in many states the orpeship of the land owner. not the federal government. not the people but the land owner. and where those private rights exist, that's mainly where new production is taking place. >> so how do you respond to this one question. why isn't the oil that we drill here in america sold in america? something is not right. bp drills here and yet all we get are higher prices. >> well, primarily all the oil we drill here, the crude oil, is refined in american refineries. then the question becomes do we sell our refined product, our gasoline and our diesel or aviation fuel, do we sell that

here or do we sell it outside the country? we primarily sell it here because that's where the world's largest market is. the president has talked about exporting product. yes, some product is being exported now within a range of 1 to 2 million barrels a day because american demand since the recession has gone from 20 million barrels a day in this country down to 18 and a half. so there is an 8% drop in consumption in this country as the companies are not just going to let gasoline sit in storage tanks when the demand for -- by americans has been reduced. they're going to sell it outside the country which is what they're doing. >> as you know, the head of exxon mobile telling matt laur on the today show that he does not think we'll see $5 a gallon gasoline. he says iran and the rhetoric is what's driving up gas prices

temporarily. >> a lot of viewers out there -- and i've been articulating a $5 price, where he is perhaps more correct than i am is our u.s. economy will start to falter and could even go back into recession as we get to $5. i'm deliberately being an alarmist. i know that. because i am fearful that the american people are being so misserved by the political class in this country and as i said both republicans and drabts that something has got to be done. the american people have got to get a grip on the politicians who refuse to deal with the future needs for energy because if it's not $5 this summer, guess what, if we stay on the plan we're on which is no plan whatsoever, we'll be at $5 next summer or $5.50 the following summer or we'll be standing in gas lines wondering whatever happened to this country. we talked about decline earlier in your program. whatever happened to this

country that we're standing in gas lines because china is sucking up so much of the available oil in the world and guess what china is doing which is never reportd in this country. china is creating cash loans to state-owned oil companies all over the world so that they could they get guaranteed the first oil. it's over $120 billion to chinese loans to state owned oil companies just in the last three and a half years so they get the oil first from venezuela, from nigeria or brazil or wherever it is that they're creating these loans. the ile that goes to china pays back the loan. we have no such plan. and here we are arguing about whether we should or should not drill in our own country. we're not going to have enough oil to fill the tanks every day of consumers at whatever price it might be. so rex may be correct in the course of the next several months that the economy could falter because people don't have the money to both buy

clothes and books and food and medicine because they have to get to work every day and the higher price gasoline courtesy of the american government is causing people to choose to not buy things. that's what will take the country back to recession. that's what will cause higher unemployment. and the sooner we get a plan for energy, the better off every american will be. >> coming up here on c-span, >> coming up here on c-span, "newsmakers" with senate armed