our kids are operating as efficiently as possible at hedging to reduce risk. i think the criteria that are laid out are actually pretty good in terms of helping us keep the focus on hedging as truly hedging. mitigating more risk either in name individual positions are other positions. monitoring hedges and adjusting, if they morph into something also overtime. but they're not the compensation programs, and we have been working hard in the disclosure area with respect to compensation that really incentivize outside risk taking that threatens the franchise by encouraging people to take

bigger risks than they should. i think the criteria are there. i think it is incumbent upon the regulators to figure out how to write our rolfe that allows legitimate hasn't to go forward as it needs to, but it must be mitigating risk hedging, and not anything people want to do called hedging. >> there is another variation that you up to deal with, and you could also be very aggressive if you're hedging. we saw the example with enron. it collapsed because very aggressive use of derivatives. is there anything you are contemplating would anticipate this type of problem. >> i think congress anticipated

it. i think congress said if you are non-financial, you get to choose whether you are involved in the clearing, treating, and we are suggesting that you get to choose on that, too. but if you are so big it that your major swap participants and you could be systematic, then you would be brought into this. i think that chairman shapiro said it very well. one thing i would add is the concept of portfolio hedging can mean different things to different people. this has to be tied to specific risk or aggregate position. this reminds us we have to be sure. it is really tied to specific aggregate positions. it is not like we think revenues will go up or we like their

european debt market these days. feasting sometimes you take into something else, particularly when they're set up as a separate business use. -- might experience sometimes you take these and they go into something else. the position is going up. the position makes money, the heads loses money. when you set it up as a really separate unit somewhere else, maybe in a different country, different leadership, it is prone to more foph. when the entity that is designed to be the risk manager in chances -- and has is everyone for taking too much

risk that may be a major profit center and that is maybe a sign that their roles are emerging in an unpredictable way. you pointed out that the international interconnections year, which suggest very strongly that our regulations have to be not on the strong and internationally applicable, but we need to have people on the ground looking at these institutions. if an institution is going to locate their activities overseas, the regulators should have not only been there, but in there with force with adequate personnel to look what was happening in be the first line of defense. >> i cannot speak to them, but i think the system at the cftc does far contemplate that.

than west 10% larger were in the 1990's. we rely it foremost on along and people complying with the rules and the salt-regulatory organizations. that is just the reality of our funding and decisions that have been made in a bipartisan way. >> just a point, when did you know -- could you have the anticipated that they do not have people on the ground day today in the dust? by then, a lot of damage could be done. >> agreed. the other tremendous benefit will be when we are full reporting of the transaction and when there is full reporting to regulators. >> thank you for being here.

i would like to follow up on discussions that german chairman ginsler has been touched upon. you just use the expression about portfolio hedging that is tied to specific positions. i am wondering if you could clarify that. if you tie hedges to individual specific positions, that is obviously the opposite of hedging and aggregate portfolio that has a cumulative debt rest. but question is, is it your view that it is and will continue to be permissible, as well as cost- effective to manage interest- rate and aggregate the portfolios, rather than limiting it to an individual basis? >> i think congress addressed this and said it had to be tied

to the specific risk of either individual or aggregate positions but tied to the rest of aggregate position is shors. >> so you could measure that and quantify that, and then heads that? ge that? with the role describe the tools used permissible? >> has written now it talks to -- it right now it is written to reasonably correlated to the risk. >> who decides that?

>> the institution does, but then there is a compliance program. >> the whole point of the rule is for you to say this is permitted, and this is not. that is the purpose. >> it is as written. i would consider it more principled-based that the firm has to have policies and procedures to ensure the hedges are reasonably correlated to the specific risk. >> the ultimate question in hedging is a question of who gets to decide. there is an inherent risk in hedging. there is always some residual risk, and there is so is a subjective judgment call. there are a lot of choices available to someone who wants to hedge any given portfolio. my concern, and these folks are

doing their job of trying to implement it, but i think it is they are given an impossible task, and the task is to micromanage these institutions. they say we will limit risk by controlling everything you do in minute detail. chairman shapiro alluded earlier to the challenges of the market-micki extension. my understanding is among the many specific roles we will impose, we will establish much tricks that will quantify how much income can be learned from the day one offer spread verses what can be earned from subsequent market spreads? we will have roles that will describe how much business the market user much do within business and within the interdealer community. we will have to decide and have rules that will dig down into whether we will quantify these things of the level of the individual trader or several traders or aggregate the entire

trading floor. how will we do this? you have a corporate bond portfolio that has credit risk. can you shore of the s&p 500 against that? can you use credit defaults what? my point is this as a huge cost, not just the direct cost of compliance. it also has the cost of less liquidity. it will lead to less innovation, into knows what kinds of unintended consequences -- and it will have who knows what kind of unintended consequences when people want to avoid the incredible micromanagement and go someplace else. the better solution is require more capital so we can let people do what they want to do.

then let them live with the consequences without having the taxpayer risk because we have required a sufficient buffer that a firm could lose 1% of their capital and not have everyone sweating bullets about it. frankly, firms should be able to make decisions and live with the consequences. i do not think you achieve that by managing every part of the business. i think the alternative of a cut for capital regime achieves the goal of systemic risk without putting us in the impossible position of trying to run these institutions. >> thank you. thank you for your comments today in commitments. in the discussion you mentioned david collection. well -- when will the sec start

collecting the data, and where does the implementation stand? >> the security-based swot reporting data collection will begin when the rules are finalized, which they are not yet for regulation. it is hard for me to protect -- predict when we what final adopting rules. hopefully sometime later this year. we have one set of rules that to propose, and that we have done one final and will do another final in another month or so, and then a steady stream after that. i am a big believer in transparency in the marketplace. we have seen it work extremely well in other markets. we think it is critical for the public to have access to this information. it is a discipline that

ultimately translates to management as well to note regulators and the public can see the information. when we do have them in place, we will have a great -- quite critical information right down to the trader in trading desk from which a particular tree section emanated. >> i think transparency is so critical, so i am hoping i can convince you that in addition transparency, they will be later this summer, probably as soon as august. then in that the commodity, oil and gas and the others, three months after that because we are ready completed their roles. >> speaking of transparency, you

and i have talked at length about that. we have all agreed it is important for assessing risk. this index of credit defaults what contract is a relatively transparent product. it is treatable, standardized, and priced daily. i would like to hear your thoughts on a transparency of an index, and how that can reduce risk in the financial system, and how could we see such large losses in this tradeable product, and what lessons do you think financial institutions will take from this? >> i think you are correct that it is a rather standardized product. right now the dealers are in a clearing house, but as we

complete the roles, the non- touch fund positions will come into the clearing house. regulators will see more transparency. the public right now, there is not mandatory post-trade transparency, and i think is that comes into being in the next several months, there will be of benefit of the public will see the trading. i think the public will greatly benefit from such transparency. in addition to the regulators. >> i wanted to ask about the value at risk reporting method that most of the institutions include in their 10k filing

said. can you discuss this and what other rules regarding disclosure? take their shirt. -- >> sure. it gives you a potential decline in the volume of a position or portfolio under normal market conditions, and that raises one of the weaknesses is that it does not measure the maximum possible losses in a portfolio that could occur, particularly during very stressed-market conditions. it has the limitations. nonetheless, public companies are required to discuss their risk, and they are given an option of three ways to go forward in item 305 disclosure when they have to give quantitative information about market risk.

. they can do a sensitivity analysis or bar disclosure. most financial institutions choose to do that. they also have to disclose at the same time in the material limitations on the model, what it is not telling about risk exposures, and when there are changes to the bar model, as newspapers have reported was done at j.p. morgan, those changes have to be disclosed to the changes of the model characteristics. >> have you followed that in some of the other losses that have taken place in the past? >> if they have large losses, we

actually make them back test and provide us with full information about why their estimates of losses were so far off. >> thank you. >> my first question relates a little bit to funding. we have heard a lot of people being critical. obviously that takes staff. you have been given a huge amount of responsibility, but without the resources to fulfil the responsibilities. that is one of the reasons things are taking longer then they should and you are not everywhere. i think one of my regrets and a dog-franc bill is we had a proposal that would have allowed all of the levy on

transactions that supposed to fund the fcc to actually but the sec. the appropriations committee insisted on not doing that. they have increased funding, but not to the extent it would have been under dodd-frank. you talk about the funding issue and how vital it is, especially in relationship to the oversight you are being asked to do. >> i would be happy to start. we have been asked to take on very significant new responsibilities. advisers, which will add many new registrars. the whistleblower program. a lot of new responsibilities. in fiscal year 2012, we asked for 116 new positions for dog- franc implementation.

-- dodd-frank station. implementation. i will say we have been able to attract tremendous talent to the sec and very different skill sets that we traditionally have. >> what about investment in technology? >> we have made technology investment a significant focus of our additional resources and have been able to make dramatic improvements in the core technology. that said, we're still way outgunned by the firms we regulate in terms of technology, but we're making steady progress in that regard. 2013 when many of the rules will start to be it affect of the clear responsibilities for oversight and monitoring, we

have asked for an additional 273 positions. it is a lot. >> what is the bible on the appropriations committee? >> they do not show their cards. -- what is the vibe on the appropriations committee? >> i think this is a good investment for the american nation. imagine if there were eight times the teams but no more referees. what would happen? there would be made him on the field. sometimes made him in the by niche markets and new way, but hopefully with seven there are less of it. the fans lose confidence. ultimately in these derivatives

markets you need the corporate- end users to have confidence that when they enter the market, they can do it free of fraud and manipulation. they feel the market is fair and accurate reflection. we're way underfunded. >> i agree with your comments in reference to senator tumi, that even if you think capital requirements are the major protection, that transparency, that does not gain the need for transparency, so i would like to follow up with my good colleague from north carolina's questions. we note from media reports that the j.p. morgan losses involved large positions in broadbased indexes comprise the credit of all swaps on over 100 companies. as i understand, the vast

majority of trades are recorded in the information warehouse. that would mean regulators have access to some information about overall activities in the market but they not have information about who was buying and selling. is that correct? >> that is correct, although as the rules go into effect of the next several months, we will have that information more specifically, and we already have it in the clearing house .ere yen to g >> additional information? >> it will add additional information. >> on the index critical swaps, we finalized rules last year that go into effect two months

after we finish the joint product rule. the legal identifiers to which the senator refers, we are actually going to announce in a week or two weeks, a service. it looks very close that we will pick someone. >> would it be possible to set up an early-warning system that would warn us if a single company accumulates a large position in any single product? any warning system that regulators could develop that would identify risky positions? >> on the first part, yes. the second is a little harder. early warning is what we do now in the futures world. we hope to plan the to do that in the swaps products. hard to do his >> they are more

complicated. -- >> hard to do this because they are more complicated? if you think surveillance will get better? >> it will get better. something is going to give it. it could give in the wheat market, but something will give it. >> any comments on that? >> i think the clearing house is also obviously to the extent the instruments are mandatory all. we will have clear insight into early warning levels hit be in a position to adjust the margin requirements to account for that. >> i might just add the clearing house are the two main clearing houses in the u.s. and has a concentration where positions get large, they add additional

margin on top, and without getting into details, you can imagine what happened here. >> we're going to have an additional five minute rounds. i would like to go back to m of global. this committee due diligence had's to reveal to us that you play an active role during the week leading up to the failure. -- i would like to go back to mf global. were there any discussions about possible shortfalls in customer accounts? >> i think you for the question. i had no individual questions with john core resigned. i did participate on that sunday

on a group called the chairman shapiro and our staff and her staff and the london regulators were on as well with presentations coming over a conference call with 40-60 people on it, which i believe once or twice he spoke up and gave information. if i could answer your further question about what was my role that weekend? >> you are chairman of the cftc. >> my role as chairman is as that week developed and the chairman look to be in for real- estate, to insure for the movement of customer money over the weekend we were informed by other regulators that there was negotiations going on to move

the positions, so we wanted to ensure those customer positions were removed. we were ushered from their first line regulators, that all of the moneys were there. it was only 2:30 in the morning that was when i learned of the shortfall at 2:30 in the morning. the sunday was really about moving the customers, and we did not care beans about encore's sign, but the thousands of customers who needed the money. >> how many people did you roughly have on site? >> less than a handful. starting thursday, we sent folks in on thursday. friday the full commission sought a meeting.

the first briefing was in segregation compliance. over the weekend we kept asking questions for more details. you wanted to see the details. it was not fully forthcoming, but by sunday we were all in the joint calls together. then we actually asked to talk to the fire late sunday night. an interactive broker at the time, to see they were guaranteeing that they would insure all of the moneys as well. >> thought were -- those with the steps you took to protect the customer assets after you learned there were missing? >> throughout the weekend we were assured by the company in the front line regulators they were in compliance. the law is 24 hours a day, every minute of every day one is to be

in compliance and report if you are not. it is really very forward. >> you are supposed to protect your customer funds. >> absolutely. people here, i agree with you sir, were hurt, because that did not happen. i am not involved in the specific investigation, and even though the general counselor and chief ethics officer said i could be, once i turned -- once it turned into an investigation, i thought it made sense to step aside. >> at what date and time did the staff first learned there was a possible shortfall in the customer segregated accounts? >> i can only speak to what i remember.

i remember being woken up at 2:30 in the morning the 31st of october. >> ok, and after you learned of the missing customer assets, what specific steps did you take to ensure customer funds, funds that were not been properly treated suffered before the firm failed? >> i put on my back road and went to a conference call and joined with other regulators. i think it was four-six hours later that it was put into a proceeding. to go on october 30, 2011, a cftc employee gave employees a disk containing documents to support the october 26, 2011 at

segregated fund a statement, which initially showed norrish -- no shortfall. when did this sea of ct -- cftc received this this? >> i am not familiar with the disk. as i understand it, they did receive the this, and the cftc began reviewing the documents of the disk, and i would like to know when. i will ask you for the record. what was the result of the review of the documents, and did it show any shortfall? >> if the general counsel could follow up and make sure you get the information that you ask for for the record. >> in may, about a year ago, 2011, it had been determined that mf global capital

deficiency. the sec upheld the determination, and imf global publicly reported the deficiency in august 2011. when did the cftc first learned that they had a capital deficiency? >> again, if i could have the general counsel follow up in the specifics, but as i recall in my own memory over the course of this summer, but they could follow up with specifics if there was a state that staff learned it. >> i would be interested in an answer of the coordination of regulation. if the sec did something they should not have, and the cftc

did not know that, then there is a problem, but if you did know and did not do anything about it, that is a problem. to go my memory is that there was coordination, but the specific dates and times, that i do not recall. think you. i apologize for being out so long. i do not have a specific question, but there are quick questions i would like to ask and get on the record. one is, some of the items that senator shelby was mentioning was the issue of coordination is between your agencies on approach to rules and implementation. one of the things i have been concerned for some time on is we created the financial

stability oversight council to try to have this form for what i thought would be resolution of areas where there might be this rubbing off. i was particularly interested in one area. senator shelby did not agree with me on this one, but on of in effect independent repository of data and information so that they could have ability to adjudicate if need be between different interpretations on rule par immigration. we're very concerned that the administration was slow on getting the nominee. they now have one together to get one past. i would like you to weigh in on the ability to be that

adjudicating body where issues rise up, and hasn't been affected or not? >> i have a follow-up as well. they actually think it has turned out to be a very good forum for the agencies to share concerns and ideas and differences as they arise and have a discussion and hear the views of other people from their unique perspective regulating different types of institutions that are all connected. we're working on the next annual report that we will try to lay out the systemic risk issues we see facing the economy. every agency contributes to that. those particular issues become very lively discussions for how to approach particular problems. i think ofr is starting to get

going in a meaningful way. i think it is working pretty well, and i think one of the benefits has been this has enabled us to develop much stronger relationships as well. having witnessed the predecessor >> in the 1990's in this administration, i think it's a real enhancement. it is more formal, and sometimes there is not as much flexibility, but i think it is a big enhancement. it has not been tested in two ways yet. that has yet to happen. i think it will serve better than the old working group. a has not truly been tested when agencies have a knock-down, drag-out investigation.

i think it has been positive in that way. take my hope would be that the data analysis, because my concern is you will get data from different agencies that may be completely counter to each other. you have to have a trusted independent entity. i know my time is about up here to let me ask one last question. not directly related to the j.p. morgan issue, but one of the challenges we got on the international implementation is when we have a large american entity that has a foreign counterparty, if you have been a foreign counter party to that american foreign-based subsidiary, and how we deal with the extra territorial application of u.s. laws.

what is your state -- what is your sense of whole international implementation question, particularly in terms of counterparties? >> i think we've made real progress, but there will be differences between europe, canada, and other jurisdictions. thing of the question of cross- border transactions. we are a believer in substituted compliance. we also are a believer in learning from experience, and in 2008, in the three or four biggest circumstances, aig, city group, they all had offshore accounts. we have to learn from that and not being naive that wall street will structure around some of these things. some of these have thousands of legal entities. so we have to be thoughtful and

cover a lot of the transactions and not just leave it to say my guaranteed affiliates will me yours in london. the jobs will move overseas that is about place to be. on the second thing, i think we can, even if it is are guaranteed a filly it being your guaranteed affiliate in london, that will substitute compliance where we can. >> i would add rather than deal with issues rule by role, we will lay out a comprehensive approach and propose before we start to adopt final rules, other than definitional rules so they can inform the reach of each and every role as we go ahead and adopt them. in i think that will give everyone an opportunity to see the entire picture a proposed rules and how we expect them to

apply and, it to us on that. we know for regulators have a deep interest in this, and it is a very intense part of the discussion that half with foreign counterparts. >> if the overseas affiliate, but not a branch, but if an overseas affiliate is dealing with an insurance company in germany, we want to make sure they have a competitive field they can compete just like a barclays bank or breach of bank might do as well. it is trying to get the balance as well. >> thank you. you mentioned twice the list of factors that were the way to define the risk mitigation. and related issues that were addressing a specific risk, that it is correlated and does not give rise to significant exposure to begin with.

if you think about, for example, a company that has a liquidity role and chooses to do some corporate bonds, than the first easiest thing, if you get worried about the quality of the bonds that have been described as extraordinarily high-quality bonds, you can reduce exposure by selling bonds. that is the first strategy. strategy to, take insurance against the bonds. and then you can kind of imagine the spectrum of positions that are further up field where you choose to do an index. then you choose to do a particular drawn match in the waterfall, and then you decide you need to raise income to pay for insurance, so you so

insurance against something else. at that point it seems to clearly crossed the line. and you are in a whole different world of risk. part of the challenge of the regulators is to define the role. when you cross the line from risk -- risk mitigation from having an excuse to do hedge fund trading. where do you see that line being drawn? i agree with you. it is a continuum. in love they mate or less be perfect edges, and along the lines of a continuum. i think we recognize all hedges

will not be perfect, and finding that point will be difficult. that is what the metrics are designed to help us do. we propose lots of metrics, and i do not think there is an expectation that all of them will make it into the final rule, but the goal is to see as how behavioral changes, how they change overtime. and the way to see whether things that are hedging are moving into a different realm. and that is clearly the difficult piece of this, to find where something is no longer ahead, and how we can define that. >> would you say it would be a red flag is the hedges only use -- loosely correlated weather is a tightly-related instrument

available? would it be a red flag if you are buying insurance to ensure a larger quality -- quantity did you are holding, and would it be a red flag if you are suddenly in the business of selling insurance? >> it might well be because you have a hedge fund transaction that is giving rise to significant exposures that rather at inception because of overhead joshed the position. you have to be able to identify the positions that are being hedged and demonstrate the hedge is risk-reducing. i keep going back to risk mitigation is an important piece of how we are describing the hedging. if you take all of those factors together, you can build a pretty strong wall across this. >> one of the things but we have said on the floor in a colloquy if you really need to identify

the specific assets, and you need to identify specific risk you are hedging, so that gives regulators a sense of what was the trade all about? if you cannot identify the risk you are hedging, is very hard to get your hands around whether it was appropriate or not. >> that does not mean that has to be positioned. it would be extremely expensive to hedge by position, but there is something by position for position in complete speculation. montego i think this is one of the more challenging tasks that regulators have been given -- >> i think this is one of the more challenging task that regulators have been given. i think hedging really does have to lower risk.

they, and they do overlap. it is not a perfect circumstance. the challenge to regulators is it is hedging a specific risk, individual or aggregate positions, but it should be reasonably correlated. i think it can start to morse and mutate when you have a separate test and separate profit loss and motivated to take on positions or even swing for the fences. for a little bit of the extra potential for the best to have profit. my own experience on wall street is long ago, but i will say when i saw these desks, they

sometimes work for 36 months, and then it took a big loss and may be shut down, and several years later they would come up again. i might be old fashioned, but i like it would you could -- when you could tie the heads some more reasonably to the positions. >> award recently was put in the statute, because the word corelate would suggest that something could be barely correlated and meet the task. it did place them as recently. it certainly was something in all of the conversation meant to identify the specific risk and have something as it directly related to ensuring against that risk or hedging the risk.

>> we have each had our second time. >> i was interested in the line that was being pursued, because i do think it is where the rubber hits the road. in a certain sense, we work for german incident like this, it could be a blessing that it was helping with the strongest financial institution we have in the country and thank goodness we already have in place higher capital requirements. so there is not respected institution, at least at this point. i do want to get to the point of liquidation and how it relates

to derivatives. one of the things i think we all worked very hard together. well you -- made it one of your agency's do have taxpayer support, and either one of your agencies are going to be directly involved in that liquidation process, clearly the question of how nuclear and handle the derivatives, that may be involved in the institution

of swaps. i would be curious or how you're doing on thinking through that portion of liquidation process. >> i think central clearing does help that, and the credit defaults wops industries, there is dealing dealer to dealer. i think that will help a lot. we have spent a lot of time with the fdic are entitled to to give them advice and thoughts on it. i think the most challenging piece is on the swaps that are not clear. they still leave this tangled web of interconnected in this. that is why it is critical to get the margin rules right. particularly that there is margin being collected, not against the commercial end users, but between the financial institutions, and particularly

between the dealers. >> are you working with the fdic and the fed on this? >> yes. we have had some tabletops where we take a hypothetical, not a real company but we think it through. there is a challenge and one provision in title to with this drops -- in the swaps. and you may remember work doing that. what uncertainty would be in the market. it seems the weekends is everything challenging to get it done before australia or japan opens sunday at 5:00, but then there might be this 24 hour stay in the uncleared swaps. that is an interesting set of challenges. i agree with what >> he said.

to com >> i agree with what he said. >> do you both agree you cannot take risk out of the market? >> absolutely. they help the society manage that. >> you cannot take it out, and we should not try. and >> if you micromanage, it must be j.p. morgan. if they have capital, and there it -- if there is no risk to the taxpayer, and i do not know of any bank or financial institution that has been well

capitalized first. secondly, well-managed and well- regulated that has got in trouble. if you have one, tell us about it. capital i believe is number-one. to make sure the banks are adequately capitalized. it is up to you to determine the difference between speculation and investment. it it might be hard at times. i probably could recognize it if i saw it, but maybe not. someone may be speculating the investment. i do not know how you get around that. i do believe you cannot take risks out of the marketplace, and i hope you will not try to do that. >> i agree with that, but i think the more transparent markets are, that it is harder

to misunderstand their risk that you have. this is priced in the marketplace, and it might not be if you are well- managed and say that is being priced differently than i thought, i will just have to eat my beans and mark the position differently. without the transparency, a lot of times things start to get a poorly understood and managed. >> you should not let institutions to regulate operate in a dark hole somewhere. cannot do it. thank you. >> i think we are on the point of wrapping up here yet to g. >> i agree you cannot take risks out, but we can also have such high capital that we put the banks are risks, too.

i think having this view that looks beyond the institution, because many of these institutions have literally thousands of sums. that is why having the ability to raise up these issues to a higher level i think is important. i cannot agree with you more, you cannot take risk out of the marketplace. >> i would add that if you think about hedge funds, aggregation of capital will go whatever, the question is not whether it is risky, the question is will it be subsidized by taxpayer insured deposits? the second question is, when those risks go bad is it simply going to blow up or meltdown the investments were investors or whether it will reverberate in a way that affects the broader access to capital. that goes back to uphold the theory of the fire wall between

the additional deposit taking or hedge funds. i think it is compatible, the notion you cannot take out the rest. i think you all very much for your testimony in the dialogue and members. oversight remains an important issue for this committee. the agency looks forward to working with your agency to make sure this improves protections for the american people and the financial system. thank you. the committee is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

rarer to go right now i want you to take a look around you and think not about where everyone has been, but where they are going. the guy in front of you could win an academy award sunday. the girl behind you could be the future president of the united states, or even better than that, mayor of new york city. the guys sitting to your right could be a future of the nobel laureate. >> memorial day weekend, what commitments -- watch commencement speeches. saturday through tuesday at noon

at 10:00 -- noon and 10:00 eastern. >> here is a look at some of what we are covering this morning. the head of the secret service will testify about the firing of agents following contact with prostitutes at a hotel in colombia. live coverage at 10:30 eastern. the senate will continue debate on food and drug administration user fees. the gavel in at 9:30 eastern on c-span 2. c-span3, secretary of state hillary clinton and leon panetta will testify about a u.n. treaty that would establish rules for military, transportation, and mineral extraction purposes. the so-called lot of the sea treaty. live coverage from the senate foreign relations committee starts at 10:00 eastern. starts at 10:00 eastern.