internally, we may not be the best individuals to do and we do need to bring in outside people to take a look at our organization. as i said before, we aren't looking to be the best. i do believe that they too not only want to make us better, but the best. i do appreciate your support. i look forward to continuing to work with you on this. i value this relationship. i value the opportunity to talk about this. i will tell you that this is a great organization with great people. >> thank you. do you want to add anything? >> i want to give you my

commitment that we're going to do a comprehensive review. we will report back to you on the findings and recommendations as soon as possible. earlier, i did not give you the right website for our hot line. we also have an 800 number. it is 800-323-6033. we will respond accordingly. thank you sir. >> thank you. the record of this hearing will remain open for 15 days with additional questions or statements. the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> it came to light recently. we recently heard the director. there were parallels separate. >> it was not the situation with the secret service? >> there were multiple sources. it was not just an isolated incident. it makes you believe that this group has been doing it a lot

within the context of this story. requiring a response that director sullivan gave. he is interviewing keep of view of this afternoon. we have been the greatest beneficiary of that. >> can you address the apparent disconnect? >> the director is a fine individual who is very proud of his own career. therefore, i think he has a difficult time coming to grips

with the broader problems than just this one incident. >> what about the disconnect? >> i have seen no evidence to suggest he is not pursuing every allocation that comes to his attention. i am going to be pressuring him to take a look at this from a broader perspective. the only answer of his that disturbs me today that he does think of this is an isolated incident. >> i agree. i know that that is what he believes, but for the good of the secret service as he decides how to change the rules of procedure, he is got to assume

that what happened there was not an isolated incident. we will stay on it. again, the inspector general said that there was a review of the secret service investigation with over 200 interviews. that is a big change. >> it is significant. when i asked, i was concerned over the investigation done by the director. clearly, that is not adequate.

they were telling me offline that it was an independent investigation and not just the ratification of what the director found. >> thank you. >> i do not know. priority personnel, it is interesting to me, as i asked before if he was going to interview any of the 13 agents. this morning he said that he was. today it became very public. they all had an interest, as much as anyone in the world, of

berkeley -- cleaning this out. more so than an independent investigation by the inspector general. by the agency, the secret service. x [inaudible] >> we are going to continue to vote on any information we have to disclose to the inspector general's investigation. >> you can learn more about the members in the senate homeland community in the 2012 congressional directory, the complete guide to the 112 congress. including contact information, district math, and committee assignments.

you can order one online, plus shipping and handling, at [unintelligible] /shop. -- at c-span.org/shop. on "newsmakers," debbie wasserman schultz talks about money and politics in 2012. today, 6:00 p.m., c-span. >> a better understanding of who she was and what she was like. there have been a lot of books written. people that talk to friends of friends of friends. i knew her. >> from late 1960 to 1954, clint hill served on the detective detail of jacqueline kennedy.

>> it is just what happened and what you like, what you like to do. how intelligent she was at times. put me through the test many times. >> more on q&a. >> now, a hearing on the jpmorgan estimated trading losses. gary counselor and mary schapiro testified last tuesday. they told the senate banking committee that they found out about the losses through radio reports. they're all conducting investigations into the trading losses. shapiro added that she was focused on the disclosure be

more accurate. this is about two hours. >> i will call this hearing to order. today we will review the progress being made to reduce

systemic risk and improve oversight in the derivatives market. before we get to the main subject, i want to make a few comments about the recent news made by jpmorgan chase. the massive trading losses is a reminder of the financial crisis of 2008. since the conference call, our staff and members have held briefings with the company itself. following this briefing, i announced that i intend to call jpmorgan's ceo to testify before the committee. all in for him to testify, i expect him to inform the committee of the details on what was purported to be a very complex trade.

our june 6 supervision a hearing, said there on their way to having a more complete understanding of the jpmorgan matter that will help us better oversee the implementation of wall street reform. this has been a wake-up call for many in the needed to fully funded the agencies for overseeing the trade that appeared to be at the core of the strategy. it is my hope that all of my colleagues to express such alarm about this matter will now join democrats in full funding to address this very issue that

seems so -- they seem so concerned about. this loss has called many to renew their interest in wall street reform. as chairman, i have never taken my eye off the ball. that is why we are here today continuing our oversight responsibilities. much of the reaction to recent events are focused on other provisions of wall street reform. what has gotten the most attention is the impact reform that will reduce the likelihood that banks would want to engage

in swap transactions. higher margins increased obligations and anti- manipulation authorities included in the wall street reform while improving the integrity of the swap trading between large financial firms. chairman schapiro and gensler, i applaud you and your staff for implementing these reforms and i look forward to hearing from you today. i urge your agencies to take a single unified approach in cross border transactions and to integrate this approach into all of your swap rules. difference between your two sets of rules should approved

compliance costs. it will be more challenging if we connected these efforts by our agencies here at home. lastly, i would like to apologize in advance to my colleagues. i will need to excuse myself for a markup in the appropriations committee. the senator has agreed to chair this in my absence. the reserved time for questions and opening statements will be

limited to the chair and the ranking member. i would like to remind my colleagues that the market will be open for the next seven days for other comments. i now turn to senator shelby for his opening remarks. >> since the passage of the dodd/frank act, it's proponents have claimed they will but if it from the new law. we now know that both of the claims are false. since last year, gary gensler oversaw the largest consumer failure in the history. customers had $1.6 billion of funds improperly taken from their accounts. the first and most basic responsibility is to ensure that customer funds are not misappropriated. despite all the new authorities conferred a on thecgfg, the sftc was unable to fulfil this

primary responsibility. the sftc's failures are troubling because the funds went missing at a time that it was well known that they were under severe stress and the rest of misappropriation was very high. even more embarrassing is the facts is that there were numerous -- fact that there numerous employees when it went missing. although i am pleased to see they are making process, he owes the public a full accounting of how they failed to protect as customer assets in the first place.

chairman gensler refuses to excuse himself from ms the global -- mf global. the public deserves more from their financial regulators. we need regulators willing to explain their actions. if there were failures, it irresponsible parties the to be held accountable for their actions -- the responsible parties need to be held accountable for their actions. they had impeded congress's ability to examine every facet of the figure. i hope he will be more forthcoming about his involvement so that progress can begin to understand what role he played and how congress should respond. they have jointly created widespread uncertainty about the regulation of derivatives.

according to a recent report, regulators have met only 1/3 of the rulemaking deadlines. while there is no question that the rule writing process makes it difficult to meet some of the deadlines, the regulators share cup ability. although the sftc and sec have proposed new rules, if they have not proposed rules that clarify the definition of a swap. the are giving them joint jurisdiction. they have still not agreed on the definition of a swap. somehow they finalize roles based on swap activities. they do not know which of their activities will fall under the

swap definition. how can they be expected to know whether the activities will be subjected to record keeping in trading rules. if market participants do not know if their activities will cause them to be classified as a swap dealer, how can they be expected to know when to submit comments? this is one example i am bringing out of how dodd/frank and its implementation have created unnecessary uncertainty in our markets. as the american economy continues to struggle with high unemployment and sluggish growth, the last thing we need are self-inflicted wounds. this includes those inflicted by congress and poorly

conceived hedging activities. today's hearing presented opportunity to discuss all of these and how they can be avoided in the future. i thank you for calling this hearing. >> thank you. i would like to introduce our witnesses, known of whom are strangers. mary schapiro is the head of the u.s. securities and exchange commission. chairman gary gensler is head of the futures trading commission. we appreciate both of you who have taken time out of your schedules to be with us today. please begin the testimony. >> i appreciate the opportunity to testify regarding the security and exchange

committees implementation of the dodd/frank act. it creates a new regulatory regime for over the counter derivatives and the sftc to write a number of rules. title 7 is one of the many areas ranging from credit rating agencies to municipally adviser registration with the sec is charged with trading rules. the sec has adopted rules for over 3/4 of the more than nine provisions in the dodd/frank act. the commission has proposed almost all of the rules required by title 7. we are working diligently to coordinate implementation with the sftc and other domestic regulators. under the dodd/frank act, regulatory authority is divided between the sftc and the commission. the sftc has regulatory authority over the bulk of more the derivatives market. our role makings are designed to improve transparency, reduce

asymmetries and facilitate the clearing of swaps. they are designed to enhance investor protections by increasing disclosure regarding security based swap transactions and mitigating conflicts of interest. by promoting transparency and stability, this is intended to foster a more competitive markets. in implementing title 7, sec staff is in regular contact with the sftc and other regulators. the accord needed extensively with sftc in the roles including joint rules further defining key product terms.

although the sequencing may vary, there are the subject of extensive interagency discussions and the objective of comparable requirements and will continue to guide our efforts. the dodd/frank act requires that the regulators consult and coordinate with regulatory authorities on the establishment of international standards. they're actively working with regulators to address the regulation of derivatives, encouraging regulators complementary to our own. the commission expects to complete the last of the core elements in the near term. the silk trade workable timeline for the implementation of the rules. certain rules will need to go into effect before others can be implemented. they will need a reasonable but not excessive. a time in which to complete. the statement will let them know the expectations regarding the ordering of a compliance

date. relevant international implementation issues also be addressed. although the commission does not discuss this publicly, i can say that in circumstances of this nature where the activity does not appear to have occurred in one of our entities, the sec would be primarily interested in on the financial reporting and other public disclosures. in conclusion, as it implements title 7, we afford to working closely with congress and members of the public.

thank you for the opportunity to share our progress on the implementation. i will be happy to answer any questions. >> thank you. chairman gensler, please begin your testimony. >> good morning. i am pleased to testify. i'm going to speak to the three topics of your invitation

letter. where is the sftc onslaught market reform? -- on the swap market reform? international progress on swaps reform and related issues across border application. i welcome the questions and look forward to chatting about that as i would in private with any of the members. this is a market eight times larger. given the new responsibilities, we are significantly underfunded. overside relies on participants complying with the law and related role. what do they do? they bring transparency.

they lower risks through central clearing of standardized swaps and lower rest by comprehensively regulating the dealers. we are on track to finish their reforms this year but it is very much standing up. we are giving the market time to phase in implementation to lower the costs and burdens. to increase market transparency, we have completed a key reforms including real- time reporting to the public and regulators. we have finalized risk- management and wilson seek public comment -- will soon seek public comment. to promote integrity, we have great is strong anti-fraud

roles and we're looking to finalize the end user exemption. all of this is still pending. it has to finalize the further definition of the term "swap." it is essential that the commission's move forward to finalize this rule. i'm glad to say that they both have a draft of this that has been worked out in we will be able to finalize this in the near term. we have made significant process working with regulators to bring a consistent approach to swap market reform.

europe, japan, in canada have made real progress legislatively to bring similar reform. we are working on a consistent approach for uncleared swaps. the cftc proposed a rule that did not make users propose this. the commission is working on a balanced approach to cross border application and swap reform. congress was guided by the experience of a.i.g. lehman brothers, bear stearns, and long term capital management have a direct and significant effect on u.s. commerce and activity. that is a reminder we got the last two weeks when jpmorgan's trading losses were overseas

from trade that lost a multibillion-dollar is in the credit default swaps. the division of enforcement -- even though i am unable to provide specific information, i will touch upon the commission's role in overseeing these markets. the cftc has clear oversight regarding the trading of credit default swaps. we also oversee the clearing houses. later this yet, we envision the dealers themselves began to register and that trading will

commence on swap execution facilities. we are in the midst of implementation that will still take time. we have made great progress putting common sense reforms regarding transparency, it but it is critical that we complete these for the protection of the public. >> i will ask the court typify minutes on the clock. chairman gensler, what role do agencies have been monitoring this swap trade issue in the jpmorgan match your? were any concerns raised about these trades at either of your agency's? what changes will these reforms bring to the regulations of these types of trade? of what are the implications? >> as i mentioned, we are in the middle of standing up a

regime that will take more time. the credit default swap indices are already under our anti- manipulation raising. the clearing houses, three of them, cleared credit default swap indices voluntarily. later we anticipate seeking public comment on having a clearing mandate so that more of these trades will come into the clearing house. currently it is just dealers to dealers. later we will have a regime that i think dealers will start to register. this bank was not yet registered. we do not yet have complete rules to make that a true thing. later this year, maybe end of 2013, you will start to see the commencement of the market. we're not trying to do this

against the clock. we're trying to get a balance. i know congress gave us one year and we're pushing onto years. we need to get the job done to better protect the public. you asked when it came to our attention. with matters like this, i do not want to get into specifics, as press reports have shown, these are indices under our jurisdiction. the clearing house that we monitor on a daily basis for the soundness of the clearing houses. >> chairman schapiro? >> none of the transactions were executed in the u.s. brokerage dealers. the activity took place in the london branch. the sec did not have any direct

oversight our knowledge on the transaction. i would reiterate that if the dodd/frank rules have been in place, of these positions likely would have all been cleared. not all were cleared. they will likely have been treated. they would have been reported to a repository. there would have been detailed transparency to regulators and the public. under the sec's rule, we would have known the trading desk and trader as well the but the positions on. the dealer would have been registered for conduct standards. they would also operate under the new rules for supervision. a number of pieces would be in place once all the proposals are completed. >> can you commit to us that the sec will issue the last of your proposed rules in the coming months and that you will

prioritize within the sec the importance of enacting the final rules in a timely matter? >> absolutely. we have the last piece of rules and the financial responsibility roles for major market dealers. i will testimony the implementation plan that will lay out our views on how the rules should be sequenced and implemented, what the time lines would look like. we will see comments on that. a cross border relief that will talk about the application of each of our rules to cross border activity or cross border operating entities.

we want to propose that cross border relief before we adopt rules be on the original rules. -- beyond the regional rules. >> some are saying that the sec and cftc were in the darkened that you did not know what was going on at jpmorgan. -- dark and that you did not know what was going on at j.p. morgan. we do not know that yet. did you know? >> i would say that the trades that came to many of our attention with press reports, but our staff was aware of trades that are in the clearing houses. they monitor the clearing houses daily and that the

clearing house is collecting margins to protect the rest of the clearing houses. we do not regulate jpmorgan chase as a swap dealer yet. we do regulate the clearing house and anti-manipulation. >> did the cftc really know what was going on on such a large position? were you in the dark? you said you learned appeared >> it is in transition -- learned. you said you were in transition. >> it has 27 members. and the risks that are in that clearing house and the margins collected there. that is not the full jpmorgan picture. the have a lot of swaps are not

there. that would have been our principal regulatory. >> so, you did not really know what was going on or the problems with the trade? >> that is what i have said. >> chairman shapiro, did they know what was going on? >> we became aware of the activity back in april when the trading was first reported on, just to remind everyone this activity did not take place in a broker-dealer and we did not have oversight responsibility in the broad based products that were the subject of much of the trading.

>> what was your responsibility in trying to find out what happened? >> clearly, our focus right now is on whether the company's public disclosure and financial reporting is accurate in light of what they knew and when they knew it. >> absolutely. >> if they knew something one month earlier that was going wrong, should they not have disclosed that to the cftc? is that what they're trying to find out now? >> that is what we are investigating right now. their earnings release statements on the financial reports and their accuracy. >> you are in the investigation of that now? whether they knew it, what was inside. is that correct? >> yes.

>> the congress gave the cftc similar. they did not have anti- manipulation authority. there is current oversight of the clearing house. it is best not to compromise the investigation. >> as chairman in a derivative position like this, were you basically telling us they did not know there was a problem there? >> i think that is accurate. we do not have a new regulatory oversight from the national association of the bank. we will, at some point, later

this year, but they are not currently registered as a swap dealer. >> it is a no man's land. nothing. things that have not crystallize in a regulatory fashion yet? >> the bank is overseen by bank regulators. we will stand up and overseas swap dealing activity in a bank or an affiliate of a bank with those activities. your right, currently the public is not protected in that way. >> were any of those trades in the jpmorgan future commission? >> not that i am aware of. today the knowledge is no. >> thank you, mr. chairman. in the last year, i asked the

trustees who at the company were responsible for the wrongdoing there. the investigation was just beginning to do that. can you shed any light at this point? >> not at this point, no. >> i think that the agencies, collectively, were working hard to untangle exactly what happened. >> with reference to what happened at jpmorgan, have you determined who was responsible for that at this point? >> as i said, our focus was very much on not regulating the london branch of jpmorgan burke -- jpmorgan.

our focus is on the quality of their risk disclosure and specific disclosures as a public company. we talked about the potential risks that they face with potential losses under their bond model. we're very focused on the accuracy and timeliness of that disclosure. >> i would say that we are aware that it is primarily in the bag, much disseminated from london side of the bank. the report suggested credit derivatives products. >> are these criminal? >> civil, not criminal. >> are you working with entities conducting a criminal investigation?

>> i believe that the fbi has announced publicly that they have opened a criminal investigation and we will all work closely together. >> which of the two? >> with respect to both. >> in essence, the agencies that are conducting several reviews, i assume, to the extent that they are often more reviews being conducted, they have to be conducted by law enforcement, correct? >> that is right. i would not attempt to tell the senate banking committee what to do. >> let me ask you this. do you interpret, or hope to interpret, the vote for rule in a way where jpmorgan may not have found it possible or have had it taken place for the real

consequence? >> we have obviously been thinking a lot about this. the vote rule is foremost in everyone's mind. also because of this activity. it is clear that in order to rely on the exemption, there has to be some pretty strong criteria, whether or not jpmorgan comes out of the cio or needs those things or not, it has to be correlated and cannot give rise to the significant view exposures. they have to be subject to continuous monitoring and management and mitigate risks on individual positions and aggregated positions. the compensation for doing trading cannot contribute to the outside or unnecessary

risks. it demands a risk mitigating purpose of trade that is different from the position being done. what we need to do is take what happened to jpmorgan and view it through the lens of those criteria and see how that helps to inform rulemaking going forward. >> if jpmorgan lost $2 billion in these trades, what is to stop them from losing $10 billion the next time, or even worse, a less capitalized bank taking a loss so large it could bring itself down. that is the effort we tried to move in the senate, to have the type of reform that does not

create systemic risk the places everyone in america at risk. i hope that regulators said the end of the day understand the that was the mission of all of us who supported wall street reform. >> senator? >> thank you both for your testimony. when an event like the one that has just occurred happens in the middle of a rulemaking process, that affects things. if you have a real-life example with this issue on the radar as far as earnings, it does impact the ways the rules are promulgated, would you agree? aig, lehman brothers, things like that. >> the american people wonder

why we are having these hearings and the point is that there is a lot happening at the regulator level. rules wind up being created in an event like this. i think that much of what we did was a punt for you guys. the fact that it took two years is pretty incredible. doing the work to understand what a swap is, the thing that i fear is that the rush to make it look like the dog frank legislation address these kinds of issues, we just sort of layered a lot on top.

the ceo itself realized that he did not know what was happening in his london operation. i fear that you are under the pressure of a lot of calls being made for the ministration and its concern that the american people would wake up and look at the last three years as a bad dream. the health care bill as unconstitutional, bob franken not addressing real time issues. it will cause the vote rule to be something it was never intended to be. i want you to respond to that. in the process, possibly making these highly complex organizations more risky than they are the are. >> i think the job the delegated or asked us to do -- >> i was trying to be more

respectful to congress. >> you do not need to be. i appreciate that. i think it was to ensure that the american public has benefited of transparency from lower risk. the critical thing is that they have the freedom to fail and the american public stands behind them. the one industry that does this around the globe and why i am so familiar, personally, with getting this done, is that this circumstance is just a reminder in one area, if i can say that respectfully. whether it is lehman brothers, aig, long-term capital management, the hedge fund in connecticut set up in the caymans. this is a reminder to make sure that we get that part right so that it does not come back to hurt the good folks.

>> is there a structure to define what has occurred here in such a way such as in make a piece of legislation look good but in the process call in and highly processed institution where it is a physician and appropriately hedges the activity to make it more risky. is that the type of thing we are talking about half the time? >> public actors, as you are in this great body, the senate, we are influenced by 3000 comment letters and 1600 meetings with folks in the market. this will be part of the dialogue, absolutely. this is will we had to do to get it balanced and right, tipping too far one way or the other.

coming back here, we can have the u.s. taxpayer getting behind it. >> by time is going to run out and if i agreed with history, i would be cut off immediately. i want to ask, when you make rules you are making, is that a process of cost benefit analysis regulation? courts are now challenging those rules and regulations. secondly, to make sure that we do not create another systemic risk by shipping off to clearing houses the systemic risk that otherwise was held in other places. otherwise, thank you for when you do and i look forward to next year, where we have banking regulators who are supposed to receive as that -- these activities. thank you. >> thank you, senator. thank you all for your testimony. i wanted to start referring to

the basic premise of the vote rule -- poker -- voker rule. one of the issues the -- was that when banks were holding funds between homes, how were they able to utilize them so that they have the liquidity that was relatively safe notthan the world of hedge fund investing, if you will. the basic statute provided for the notion of investing in government bonds, that is a safe place to put your money, but allowed regulators additional flexibility. the drafting of the liquidity management proposal -- it is not really clear in the and what would be allowed here.

if we look at j.p. morgan, they have $381 billion in funds. they were awaiting, if you will, lending out. put into government bonds, they took half of that and put it into corporate bonds. that started this sequence of billion or break your lost. we need to -- or more loss. they said, we have these corporate bonds. we had better protect against losing value. insurance to credit the revenues to pay for that. pretty soon we will have to sell they were in the position to do what aig did it, -- it begins with this liquidity issue. that has not been focused on. what is the appropriate place to put your funds in between making loans so that you are clearly in the deposits and

making loans business and not in the hedge fund business? question. quiddity management exclusion that was included in the rules was to make sure that big entities would have sufficient readily marketable assets to meet their short-term liquidity needs. i think we can all agree that is essential to a banking entity. there are requirements around that that would need to be documented and the criteria and so on. but i think the question that you raised it really requires us to go back and look and see if we had carried that to its logical extreme. could we have anticipated what happened to j.p. morgan? and maybe we need to tighten this up, it would be wrong for

us not to take this example. it is a real-life example of the volcker rule itself. to use this example and to see what this impact would be of all the things that we have proposed to do. >> if you take the situation that you have funds that are awaiting and making new loans if essentially it is a gateway to being involved in trading, it has -- impacts. two. there are funds that would be out the door, for businesses and families, and the second is a lot of risk and complexity. chairman? >> as a derivatives and swaps regulator, we will be focused on the implementation of the volcker rule. with commission merchants.

i do not have as many views as management -- chairwoman shapiro in liquidity management. if i can take up a set and that was maybe implied in there, all of us received a letter, the regulators, in february, specifically saying that we needed to widen out the hedging exemption. we are entrusted by congress to figure how to inhibit trading so it has to be tied to specific or aggregate positions. i think congress was pretty clear on that. there was a 65-page letter, and in that, they said you have to loosen up this portfolio hedging, and so i think this has

to be looked at in context of the february letter, as well. >> i am out of time. we will return to the next senator. >> thank you, mr. chairman. i want to understand this regulate the london branch. that it was something on the other side. -- the occ side. i am trying to maybe take the next up with my question. could this risk management that is being done by j.p. morgan had been done in such a way that it would be under your id --

under your jurisdiction? or are you saying that this does not fall within the purview of the powers given to me? >> if debt trades were done in an sec regulation or broker- dealer, then it would clearly beexcuse me. are the sec. -- of the sec. >> that raises another question. if i were running j.p. morgan, could i set this up in a way to avoid you? >> that is an important issue in the cross border release and how we will apply our roles and -- our rules and activities that may not take place or may take place overseas at an affiliate's or are in a branch overseas? those of the issues that we will lay out in our cross border police. -- release. the fourth filly of the u.s.

entity -- foreign entity and the farm customer will likely be -- that is registered with us, doing business with a foreign customer, would likely be subject to our rules, branch operating in a different country. those that have the title seven rules applying. we want to leave this out in detail for commenters. >> in this area of dodd-frank, as you know, it has been one of my concerns that the more that you crank it down, the more regulations become more and more onerous, the greater the temptation is for smart people to hire smart lawyers and

accountants. at the end of the day, avoid you. >> that is right. that is why international efforts are engaged. they are painstakingly time consuming. we have done this on a bilateral and multi lateral basis with the regulators in the markets and have gone the issues like pre-trade transparency and post-trade transparency and the margins and a clear mandate. the exchange trading mandate. we work through each and every one of these issues to try to get the regulatory regime -- as other is not an opportunity for -- so there is not an opportunity for them to disappear in arbitrage. if it has the potential to impact the u.s. financial system, we have to very seriously consider making that part of our mandate. >> mr. chairman, i want your comments on this. working hard in the international arena and you want everyone to be as

harmonized as they can be -- i look at that international arena and i look at it the position like yours, we would work days, months, years with the f wto process with 150 countries and tried to trade. at the end of the day, they have their own agenda. they have their own interests. and some slot and economic benefit to something very different than what we were proposing to do, and before i take more time, go ahead. i can go on and on. >> i think you are right on both points. we will obviously have differences. we are working well together, butthere are different cultures, political systems, and agendas. there will be differences.

second, i think you are correct. arden finance institutions will -- there are financial institutions that will larger look to see if they confine the up lowest tax regime-- accounting regime that favors them. knowing these two things, i did it once. i was at a large firm. long-term capital management was in the cannes islands. werecitibank ci'v -- civ's set up elsewhere. aig financial products that we thought were in connecticut, they went to france. they put a branch in london. the gentleman that was running it ran in and out of london.

all of that came back here. we have to be very careful. there are costs on financial overseas. the bigger costs is -- having americans be at risk. we are trying to cast is appropriately in. we want to make sure transactions are in. wall street is rationally advocating something different. if i was on the other side, i would advocate something different than i am right now. we will not be as good as we hope to be. they will get something by us. in probably three to at 6 to 10 years, some of it will probably stay that they have figured something out. in a few years, someone will say that you missed something. >> mr. chairman, thank you. >> senator reid. you have said you do not have jurisdiction over this entity,

but you are trying to define hedges in a way that covers the legitimate operations of the financial institutions minimizing their risk without allowing speculation. there is this tension it seems -- the tension between a risk management. i know that you suggested criteria. to this dilemma of defining a protecting clients and protecting investments and banks speculation? >> i think that is the hard challenge the congress has given us. i would say that it is true with the market making extension as well. we believe deeply that businesses have to be able to engage in both activities such

as marketing to make sure our efficiently as possible at hedging to reduce risk. laid out are actually pretty good in terms of helping us keep hedging. mitigating more risk either in name individual positions are other positions. that is a themself have given -- monitoring hedges and adjusting, they march into something else over time. programs. we have been working hard in the disclosure area that really incentivizes outside risk taking in a way that threatens the franchise by encouraging people to take bigger risk than they should.

i think the criteria is there. it is really incumbent upon the legitimate having to go forward as it needs to. it hedging. >> there is something else you have to deal with. in dodd-frank, is there any other exemptions? you could be doing hedging, but you could also be very aggressive in your hedging. we saw the example of enron?

>> what we are suggesting that you have to choose on that, too. but if you are so big that you are a major swap participants, and you could be systemic, you could be brought into this. could i answer one thing? i think that chairman shapiro said it very well. one thing i would say is, one thing i would add is this concept of portfolio hedging can mean different things to it has to be tied to specific aggregate experiences. it is not that we like the european debt markets these days, and one thing from my experience, sometimes these things morph or mutate into something else, particularly

when they are set up as a separate unit and have separate compensation, because hedges generally lose money just about as many days as they make money, because the position is going up. when you set up as a separate unit in a different country, different leadership, you start -- it is prone to morph. >> an initial reaction is that when the entity designed to be the risk manager and chastise everybody in the institution for being too aggressive or not responsive to risk is a major profit center. unproductive way.

a final point, you have pointed suggest that our regulations have to be not only strong, internationally applicable, but we have people on the ground going to locate their activities overseas, the regulators should not only have been there, but happening and be the first line of defense. if you will. >> i cannot speak to them, but the system we have at the cftc fortunately or unfortunately does not contemplate that. we have been kept reasonably small, 10% larger than we were in the 1990's, and we rely for

most on the regulations. we examine the organizations, but we do not have people on- site at a merchant, at the clearing houses. that is the reality of our funding and the decisions that had been made over the decades in a bipartisan way. >> did you know when -- could you have anticipated recognizing they do not have people on the ground, you will not know until a reporter breaks the news and then a lot of damage can be>> agreed. the transparency to regulators will make a big difference. >> senator? >> thank you both for being here. discussion that chairman

gensler spent touching on, your views of purpose and ability of hedging. i used the expression about portfolio hedging that is tied to specific positions. i am wondering if you could clarify that, because if you tie the opposite of hedging that has some kind of cumulative net risk. my question is, is it your view that it is and will continue be permissible as well as cost rate and credit risk in the aggregate in these portfolios rather than limiting it to a one-off individual basis? >> congress addressed this and risk of either individual or

aggregate positions, tied to the specific risk of some aggregate positions. it has got to be tied -- >> it could be the aggregate portfolio -- it. >> you could measure that and codify that and measure that. would the rule prescribe the kind of instruments permissible portfolio? >> as written now, it speaks to correlated with the risk. it is all in that word "reasonably." >> who decides that? what is reasonably correlated to that risk? the regulators? >> the first quarter, the institution does, the firm does, but then there is a compliance program and regulators would -- >> the point of the rule would be to say this is permitted and

this is not. that is the purpose of the rule. >> although as written, i would consider it more principles based, that the firm has that policies and procedures to reasonably correlated to the>> again, the ultimate question in hedging is a question of who gets to decide. there is an inherent risk in hedging. that is why it is called a hedge. it is not a complete offset. there is always some residual judgment call. there are a lot of truths available if somebody wants to hedge a portfolio. mr. chairman, my concern goes to the heart of what dodd-frank is about, but given an impossible task. the task is, that is to micromanage the activities of

these institutions. that is what dodd-frank attempts to do. we will limit systemic risk by controlling everything you can do increase detail. let me give you an example. chairman mary schapiro gave the challenges of the market-making company rules that we will barred from the day-one offer from office moves. -- subsequent market moves. we will have rules for market that will take out the two. whether we can quantify these things at the level of the individual trader or will we have several traders or the entire trading floor. how will we do this? we will have rules that will establish which kinds of classes other assets -- of

assets are permitted to hedge which kinds of risk. can you short the s&p 500 onthis has a huge cost, not just the cost of compliance, but it has the cost of less liquidity because traders have fewer because people will be prescribed narrowly. when people decide it is better to avoid this incredible micromanagement and go somewhere else. this is why i think we have gone down the wrong road here. people do what they want to become, let the people in the marketplace make the decisions, and let them live with consequences without having a

taxpayer at risk because we require a sufficient buffer that a firm could lose 1% of their capital and not have everybody sweating bullets. frankly, firms should make consequences and taxpayers should not be at risk. you do not have to control every aspect of their business, which is what these folks have to do. i thinkthe alternative of tougher capital regimes achieves the goal of reducing systemic risk without putting us in the impossible position of trying to run these institutions. senator? -- >> senator? >> thank you, mr. chairman, and thank you for your comments today and your commitments. in senator reed's discussion, you mentioned data collection,

and when will this data be collected? >> the security based swap finalized, which they are not yet. the commission -- when we will have final adopting rules. hopefully sometime later this year. we have one set of rules left to propose and then we have done one final, we would do another final in the next month or so, and then a steady stream after that. it is important -- i am a big believer in transparency in the marketplace, and we have seen it work extremely well in other markets. we think it is critical for the public have access to this information and critical for regulators to have access to this information, that

regulators and the public can when we have the rules in place, we will have a granular information right down to the trader and the trading desk, from which a particular transaction emanated. senator toomey's comments, in addition to capital transparency coming out in the credit default swaps industry area and in interest rates and so forth, they will be later this summer, probably possibly as soon as august. then in the commodity, oil and gas and the others, three months after that. because we have already completed the rules. both for the public to see the trades, which is very big, and for the regulators as well. >> you and i have talked at

length about that, especially in the swaps market, and we agree transparency is critical to reducing the risk. the market north american investment grade you mentioned in your testimony only has received attention recently for transparent product. i would like the hear your thoughts on the transparency of a product such as the cvx index and how that can reduce risk in the system, and how could we see such large losses in this tradeable product and what lessons do you think a financial institution will take from this incident? >> i think you are correct it is a standardized product right now. the dealers are into a clearing house, but as we complete the rules, the nondealer, the hedge fund positions, will also cut into the clearing house. regulators will have more transparency in the data repository.

not only in the clearinghouse. from the public right now there is not mandatory post-trade transparency and as that comes months there will be a benefit the public. we will see the pricing. we masked the sizes. if somebody did a large size trade, it gets a plus at the end, whether it is at a hundred million dollars size or more. i think the public will greatly benefit from such transparency, in addition to the regulators. value at risk. a metric that listed the financial institutions include in their filings -- can you discuss the value at risk and how it is used by the financial institutions and what are the work rules regarding its disclosure?

>> sure. the v.a.r. estimates, the value/risk estimates give you a confidence lever, potential of the client in a valuable possession or a portfolio under normal market conditions, and i would say that raises one -- that it does not measure for you the maximum possible losses in a portfolio. these could be incurred during very stressed market conditions. public companies are required to an option of three ways to go forward in their item 305 disclosure. when they have to give quantitative information, they can use a tabular presentation analysis or a bar disclosure. -- var disclosure.

to do that. they also have to discuss at the same time any material limitations on the model, what it is not telling about risk exposures, and when there are changes to the bar model as -- the var model as newspapers have reported, at jpmorgan, they changed their bar -- var model. changes have to be disclosed. they also have to be publicly disclosed. >> have you followed that with the recent losses, how it impacted from the sec valuations? -- evaluations? >> our staff would look at cuts in the capital context. we allow certain firms, a small number, the use the bar to -- var to complete the market risk detection from the capital.

provide us with full information about why that their estimates of losses were so far off. >> thank you. >> senator schumer? funding. we have heard people being critical -- why did you not know more about this -- and that takes staff. you have been given huge amounts of responsibilities, but without in my judgment the concomitant resources to fulfill those responsibilities. that is one of the reasons you are taking long grip that they should. that is one of the reasons you're not everywhere. one of the greatest regrets in the bill is we have a proposal that did not affect the cftc, but it affected the sec that would have allowed all the levies on transactions to fund the sec, and we had a fight in the appropriations committee

that insisted on not doing that. they have increased your proposal i had in dodd-frank. asked to do by everyone on both sides of the aisle? >> we asked and asked to take on new responsibilities, but hedge funds that are not registered and overseen by the sec -- corporate disclosure, a whistleblower program, quite a lot of new responsibilities. in fiscal year 2012, we asked implementation. we got a good budget for 2012, not as good if we would have been self-funded. we were very grateful to get an

increase at a time when many agencies did not. been able to attract tremendous talent to the sec in a different skill sets. then we have traditionally had. >> what about investments in technology? >> we have made technology investments the significant focus of our additional resources, and have been able to make dramatic improvements in the agency's technology. outgunned by the firms we regulate in terms of technology, but we are making steady progress in that regard. will have the clear responsibility for oversight and monitoring of the security-based additional 272 positions. >> that is a lot. >> what are the vibes on the

appropriations committee? >> they do not show their cards. >> well, we hope they do sen. the chairman? >> i think this is a good investment for the american public. cftc is funded at $205 million. imagine in football, there were eight times the number of teams, but no more referees, and instead of having seven refs on the field, there was only one. there would be mayhem in the field. the fans would lose confidence -- in this case, market

participants -- and ultimately we need the corporate end users to have confidence that when they enter the market they can do it free of fraud andthey can enter the market with speculators, but they feel that accurate reflection of the reference to senator toomey, that even if you think capital requirements are the major protections here, because you cannot regulate every trade, that does not gainsay the need -- i would like to follow up on my good colleague from north carolina's questions on that. we know from media reports that the jpmorgan losses involved large positions in a broad-based indexes comprised of the credit default swaps on over 100 companies. the vast majority of trades in

this index of record in the trade information warehouse, so that would mean regulators have about exactly who was buying and who was selling. is that correct? >> that is correct, although i think as our rules go into effect, we will have that clearing houses. this transaction, dealer to dealer, are in the clearing paths. >> as i take it, the coding system is what you're talking about, or will that add to>> that will add additional information. >> what is the promise of that coming into effect? >> we finalized rules last year.

the legal identifiers to which the senator refers, we are going to announce in a week or two weeks a service -- put it out to a service, for partisan gain and similar to procurement and itwould it be possible to set up an early-warning system that would warn us when a company accumulates unusually large regulators could develop so regulators can identify risky positions? we do now in the futures world in corn, wheat, and interest- rate products. we plan to do that in the swaps.

market. get better? >> yes, but underfunded it is stretched thin and something could be giving. will give. >> the clearing house also to the extent these instruments are mandatory will have a clear insight into the early levels requirements to account for that. >> i might add that the two main clearing houses have a concentration where when additional margin on the top. without adding details, you can imagine what happened here.

>> we will have an additional this committee's due diligence has revealed that you played an active role in the oversight of to its failure. we would like to know how many conversations did you have with jon corzine during the final weeks, and during these conversations, were there discussions about possible shortfalls in customer accounts? this is central to what we're looking at. >> i thank you for the question. i had no individuali participated on that sunday on schapiro.

conference call, which i believe once or twice jon corzine spoke up and gave information. to answer your question, i think about what was my role that weekend. would that be helpful? your role is chairman. >> as that week developed and the firm looked to develop and be in a frail shape, to ensure customer movement of money, and we were informed in that we can, by other regulators -- and i compliment them for that -- there were the big movement of positions, so we wanted to be sure those customer moneys, positions were removed.

we were assured from the company and from the first-line regulators that all the moneys were there. it was only 2:30 in the morning that i was awakened on monday the 31st of october that we learned of the shortfall, at 2:30 in the morning. sunday it was about moving the customers and the key focus -- corzine. we cared about the thousands of moneys. we were sure all the moneys were there. >> how many people did you have on site at mf global? >> i am not aware, whether it was less than a handful, but in

on thursday. our meeting got a briefing that friday morning. the first reading was that they segregation compliance, but over the weekend, we kept asking questions for more details, because you wanted to see the details. it was not fully forthcoming, joint calls together, sec at others, and then we asked to talk sunday night, the interactive broker at that time, to see they were guaranteeing that they would insure the moneys as well. >> that was relating to the steps you were taking to protect customer assets after learning that assets were missing? were assured by the company and the front-line regulators. the law is 24 hours a day, that is, to be in compliance, and one must report that you are or not. >> either you are in compliance or not?

and you're supposed to protect>> absolutely. people here, i agree with you, not happen. i am not in the specific investigation and i chose the ethics officer, so i said i thought that once it turned to an investigation that was about possibly jon corzine, i thought that made>> on what date and at what time did the cftc staff learn there was a shortfall in customer accounts? morning on monday, 31st of october. >> after you learned on monday,

or sunday night, of the missing customer assets, what specific step did you take to ensure that customer funds were not improperly transferred over the weekend, if the firm failed? i put on my bathrobe and got ini think it was up to six hours later that it was put into a proceeding. >> on october 30, a cftc employee gave two cme employees documents to support the october 26 mf global segregated funds statement which initially showed no shortfall. when did the cftc receive this

disk from mf global? >> i am not familiar with the disk. >> it is our understanding that the cftc did receive the disk and that it began reviewing the documents of the disk, and we would like to know when, and i will ask for the record, what these documents, and did it show any shortfall? >> if the general counsel could follow up and make sure you get >> ok. year ago, finra determined mf global had a capital deficiency. the sec upheld the determination and mf global reported deep deficits in august, 2011. when it did the cftc learn that

mf global had a capital deficiency? did you learn and then, or did you never learn it? >> if i could have the general counsel follow up on the specifics, but as i recall, my own memory was over the course of that summer. they can follow up on the specifics, the date the staff learned it. >> that goes to the heart -- and i will be interested in the answer of the sec and the cftc's coordination of the regulation. if the sec did something they should not have, and if cftc did not know that, there is a

problem, but if you did know it and did not do anything about it, that is a problem. >> my memory is there was coordination, but as to the not recall. >> senator warner? >> thank you. i apologize for being out for so long. question on mf global, but there are questions i would like ask. one of the items that senator shelby mentioned is this issue of coordination between your two agencies on approach to rule implementation. one of the things that i have been concerned about for some time on is that in dodd-frank, very active in title 1 and title 2, we created the oversight panel forum i thought would at least be the resolution

of areas where there might be this rubbing. and senator shelby did not agree with me -- ofr, which would be in effect the independent repository of data and information that could have the ability to adjudicate if need be between different interpretations or conflicts on rule promulgation. we are concerned that the administration is slow on getting the ofr nominee. they have one to get passed, but i would like you to weigh in on the ability -- to be that adjudicating body where issues rise up, and has that beeneither one.

>> i think fsoc has been a good forum to share concerns and ideas and differences as they of rise and have a discussion and hear the views of other people regulating different types of institutions, all connected with financial markets. we are working on our next annual report that we will try to lay out the systemic risk economy. every agency contributes to that, and those issues become a very lively discussion on how to approach particular problems. i think ofr is hopefully starting to get going in a more meaningful way, and it can be an important adjunct to the work of the individual agencies with respect to data collection and

analysis. i think it is working pretty well, and one of the side benefits of fsoc has enabled us to form relationships. >> thank you. chairman? >> i would say having witnessed what was its predecessor, the president's working group in the 1990's -- being honored to serve -- it is a real enhancement. it is more formal, and with formality there is not as much flexibility, but it is a big enhancement. ways, not for any real crisis. that is yet to happen. i think it will serve better working group, and it has not been tested when two agencies have a knockdown dragout disagreement. it has been helpful to smooth through smaller differences, and it has been positive in that way. >> my hope would be that the ofrmy concern is you are going

to different agencies that might be have to have a trusted entity when sorting through that. let me ask one last question. not directly related to the jpmorgan issue, but one of the challenges we got on the when we have a large american entity that has a foreign setup and you have a foreign counterparty to that american we deal with the extra-territorial application of u.s. laws. international implementation question, particularly in terms of counterparties?

foreign counterparties? >> we have made progress, but there are differences between the u.s., canada, japan, and other jurisdictions. you get to the question of cross-border transactions. we believe in relying on compliance from overseas, but we are a believer in learning from experience. in 2008, the three or four biggest banks, they all had offshore entities, we have to learn from those experiences and not be naive that wall street will structure around these things. some of these large institutions have thousands of legal entities. we have to be thoughtful and

cover a lot of those transactions and not just leave it to say my guaranteed affiliate will meet your guaranteed affiliate in london, because that is the worstthe risk will flow back here, but the jobs will move overseas, and that is a bad place to be. on the second thing, we can, if it is our affiliates meeting in london, that might be a way we could substitute plans. >> we will lay out a comprehensive approach to cross-border publication. we will do that before we send out the final rules so it can inform the reach of every rule as we adopt them. i think that will give everybody an opportunity to see the entire picture of proposed rules and how we expect them to

be applied and comment. we know four regulators had a deep interest and this and it is discussion that we have with our foreign counterparts. >> i would also add, if the overseas affiliate, a branch, is dealing with an insurance company in germany, we want to make sure they have a competitive field that they can compete in, like a barclays bank, deutsche bank. as they might do, as well. as well. >> thank you, senator warner. chairman, you mentioned twice the list of factors that were

mitigation with regard to the full court-ruled statute and related issues, and there were you are addressing specific risk, and it does not give rise to risk and exposure. if you think about a company bonds, some of those will be allowed, then the first easiest the quality of those bonds which extraordinarily high quality bonds, you can reduce your exposure by selling bonds. insurance directly against those bonds. that is insurance on a specific position you have. then you start getting further afield. you can imagine the spectrum of positions of field where you choose to do and index instead of insuring specific bonds. then you do a tranche and then

raise your insurance. at that point you have crossed the line in which you have introduced by selling insurance to others. you are in a whole different world of risk introduction. you have these two components. word. when have you crossed the line, do you have an excuse to do hedge funds without trading? where do you see those lines being drawn in this? to be remotely correlated? >> i agree, it is a continuum, and those may be perfect hedges, and there is a continuing to portfolio hedging, to being in the world of prop trading or speculating. we recognize all that just will not be perfect and this is a continuum, and finding that point will be difficult. that is what the metrics are

proposed metrics. i don't think there is an expectation all those will make it into the final bill. the goal is to see how behavior changes in time over in a firm, as a way to see if things hedged are moving into a different realm. that is the difficult piece, to find where something is no longer a hedge and how we can to find that, and not in a way that we just opened the door to a lot>> would you say it is a red flag -- i will give you examples -- if the hedge is only loosely correlated -- would it

be a red to ensure a larger quantity than are in the business of selling insurance? >> it might well be because then you have a hedge transaction not there at inception because you have overhedged theyou have to be able to identify keep going back -- a risk mitigation is an important piece of how we are describing the hedging here, and if you take all those factors together, you can build a pretty strong wall around this contact. the floor in our colloquy was you need to identify the specific assets and you need to identify the specific risk that you are hedging, so that gives

regulators a sense of what was it all about? if you cannot identify the risk you're hedging, then it is hard to get your hands around whether it was appropriate or not. >> that does not mean it has to it is expensive to hedge and counterproductive to hedge by position. there's something between position by position and complete speculation. >> chairman? >> i said earlier i think this is one of the more challenging task, permit market making, to permit hedging. a question about hedging, hedging has a lower risk. that is what congress wanted in this provision. and the7 -- they come, and they do overlap. it is not a perfect

circumstance. it is our challenge amongst regulators to say if it is hedging, a big risk, but we put in a rule that is reasonably correlated. maybe "reasonably" needs more definition. they can mutate when you have a separate desk and they have a separate profit and loss and are motivated to take on positions and swing for the fences. for a little my experience on wall street is long ago, but i will say when i saw these desks, they sometimes work for 18, 24, 36 months, and then they would be shut down and

several years later, they would come up again. i like it when you could tie the hedge somewhere reasonably to the positions. >> that word or reasonably is in the statute and the reason it was put there is because it was correlated by itself, which would suggest something to be barely coordinated and meet the test. it did place the challenge to be defined at reasonably, but it was in all of the conversations meant to identify this specific risk and have something directly related to ensuring against that risk or hedging against that risk if possible. do you want to take additional

time? >> i was interested in the line senator buckley was pursuing. i think it is where the rubber hits the road. what is reasonable? if we were going to have that incident like this, it could be a blessing that we were having a stronger institution and think it is we are ready have in place higher capital requirements. there is not systemic risk or risk to the institution at this point. i do want to get to the point of liquidation and how it relates to derivatives a little bit.

i think the case senator buckley was talking about is it did not result in an institution going down, but senator shelby, we got 85 votes on that and the approach was to make sure any institution that goes into liquidation, while we maintain the system departs, the institution is liquidated. neither one of your agencies are going to be directly involved in that liquidation prospect. -- liquidation process. how you clear and handle the derivatives, that might be involved as well and i'm curious as to how you are doing thinking

through that portion of the liquidation process. >> central clearing does it help that. it is primarily dealer to dealer. the dealers facing a hedge fund are not yet in and i think that will help a lot. onve spent a lot of time title to just to give advice and i think the most challenging piece is the swaps that are not cleared because they still lead -- they still leave this tangled web of the interconnectedness. the dealer to dealer, particularly the margin being collected, not against the commercial end users, i always have to say that, but against the financial institutions and the dealers.

>> are you dealing with both the traders and the fed on this? >> yes. i will call them colloquially table tops. some real company but we think it through. there is a challenge in one provision of title to with the uncleared swaps. you may remember doing work on that. what uncertainty would be in the markets -- it seems everything is challenging to get it done before japan or australia open switches sunday around 5:00. but then there might be a 24- hour stay. >> i agree. >> i have a few observations.

did you both agree you cannot take risk out of the marketplace? >> absolutely. risk is part of the marketplace. these institutions help our society manage that. >> we cannot take it out and we shouldn't try. >> if you micromanage what the entities are doing, for example, j.p. morgan. j.p. morgan is a huge bank and it would be hard to micromanage and to begin with. but if they have capital and i's no risk to the taxpayer, don't know any bank or financial institution that has been well- capitalized and well regulated

that has gotten in trouble. if you have got one, tell us about it. capital, i believe, as number one, to make sure the banks are adequately capitalized. i guess it is up to you to determine the difference between speculation and investment. i could probably recognize it if i saw it, but probably not. someone might be speculating and calling it an investment, but i believe you cannot take risk of the marketplace. i hope u.s. regulators will not try to do that. >> if i could just one more time say that a more transparent the markets are, it is harder to misunderstand the risks that you have. the risk its priced into the

marketplace. might be quite painful at times but if you are well managed and say that risk is being priced differently than i thought, i'm going have to eat my beans here and mark the position differently. without the transparency, things start to get poorly understood and manage. >> i agree that you should not let institutions you regulate operate in the dark somewhere. thank you. >> could i just add -- i agree that you can't take risk out and -- there is some point where we can have such high capital standards that we make the banks noncompetitive. i think so leverage ratios, looking beyond the single institution, they literally have

thousands of subs. having that ability is important, but i couldn't agree more that you can't take risk of the marketplace. >> i would add to that. the question isn't whether it is risky. it is risky. the question is, is this going to be subsidized? occasionally, when those investments go bad, is it going to blow up or meltdown the investments of the investors. that is back to the whole theory of the firewall between traditional deposit taking and hedge funds. i think it is compatible with that notion that you cannot take

out the risk. thank you very much for your testimony and the oversight of the derivatives market. committee members look forward to working with you and your agencies to make sure the implementation of derivatives reform improves for the american people and our financial system. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> the committee is adjourned. [laughter]

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