country that are ready and eager to move this country forward. so i'm going to keep on fighting alongside all of you to make sure that we're doing everything we can to rebuild america -- not just rebuild one bridge, but i want us to rebuild every bridge. i don't want us to just rebuild one school, i want us to rebuild every school that needs help. [applause] i want us to most of all, most importantly, rebuild an economy where hard work is valued and responsibility is respected and rewarded, and where opportunity is available not just to some, but to every single hardworking american. that's what i'm fighting for, and i know that's what you care about. thank you very much, everybody. good job, workers. i look forward to seeing this bridge. thank you very much. god bless you. god bless america. thank you. [applause]

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>> on the next "washington journal" michelle diggles looks at hispanic voters and understanding their priorities and how to attract them to their side. then former u.s. ambassador to nigeria john campbell on the recent abduction of nigerian girls and then gina raft of the christian science monitor. plus your phone calls, facebook comments and tweets. "washington journal" is live at 7:00 a.m. eastern on c-span. >> you can now take c-span with you wherever you go with our free c-span radio app for your smart phone or tablet. listen to all three c-span tv channels or c-span radio any time.

there is a schedule of each of our networks so you can tune in whenever you want. take c-span with you wherever you go. download your free app online or your android, iphone or blackberry. there are head of the commodities trading commission were on capitol hill yesterday to talk about how their agencies police the financial markets. they requested funding of $1.7 billion in its 2015 budget. the cftc is asking for $28 million. this is an hour and a half. udal ro om waiting for the hearing to get started. we may be waiting for the s.e.c. chairman to come to the hearing room. this is live coverage. >> good afternoon. subcommittee will come to order. i'm pleased to convene this hearing of the financial

services and general government subcommittee to consider the fiscal year 2015 funding requests of two key federal regulatory agencies. the securities and exchange commission, and the commodity futures trading commission. i welcome my distinguished ranking member, senator mike johans and some of my other colleagues i think will join us here throughout the day. joining us today are also the honorable mary jo white, chairman of the securities and exchange commission, and the honorable mark wejin. they will discuss the critical work of their agencies, their use of resources provided over the past couple of years and their budget needs for fiscal year 2015. the workload for these agencies has grown dramatically in recent

years. s.e.c. and the cftc both play critical roles in stimulating and sustaining economic growth and prosperity in our country and protecting the marketplace from fraud and manipulation, and in carrying out dodd-frank reforms. my constituents have made clear they support these reforms to prevent the reckless and abusive practices that led to the financial crisis. fortunately, some sectors of our country are recovering, but, sadly,le families have not recovered an they continue to struggle. i believe it is my responsibility to the hard working and honest people of new mexico and to all americans who suffered as a result of this crisis, to ensure that we work to fully implement dodd-frank. we need a financial system that is safe and sound because what happens on wall street touches every american family. whether they are saving to buy their first home, helping to put their children through college,

or planning for retirement, they put their faith in the financial markets being sound. we cannot let them down. and they are not alone. market users, financial investors and the u.s. economy all depend on vigilant oversight by these two agencies, especially in today's rapid-paced, evolving, and often-volatile global marketplace. in the past few years, both chairman and their fellow commissioners and their respe respective staffs i think that worked very hard to create a more reliable regulatory structure, to ensure the integrity and future of the security markets. but there's still, i think everyone will admit, a lot of work to be done. we depend on your leadership to implement the reforms designed to strengthen our regulatory framework, to do so promptly, prudently and transparently, and

help guard against another financial meltdown. as the investors' advocate, the s.e.c. has an important role in maintaining fair, orderly and efficient stock and security markets. the s.e.c. conducts day to day oversight of the major market participants, monitors corporate disclosure of information to the investing public, and investigates and pursues enforcement action against securities laws violations. dodd-frank dramatically expanded the s.e.c.'s responsibilities. the s.e.c. was thrust into the driver's seat for issuing nearly 100 new rules, creating five new offices, issuing more than 20 studies and reports, overseeing the overcounterderivatives market and hedge fund advisors, registering municipal advisors and security had-based swap market participants, and setting up a new whistle-blower program.

the jump-start our business start-ups act of 2012 added more to s.e.c.'s plate for further rules and studies on capital formation, disclosure, and registration requirements. turning to the cftc now. the cftc carries out market surveillance, compliance and enforcement programs in the futures and swaps arena. it detects, deters and punishes abusive trading activity and manipulation of commodity prices helping to prevent negative impacts both on consumers an on the economy. four years ago the cftc's mission was substantially expanded to include new oversight of the swaps marketplace. the vast once-in-the-shadows world of over-the-counter derivatives, it is a highly transformed and versatile marketplace, one that's globalized, electronic and

around the clock. enactment of wall street reform in 2010 also added to the job of the cftc. cftc now has oversight of the once unregulated $400 trillion over-the-counter u.s. derivatives market to protect and benefit end users and the broader american public. this complex swaps market has a notional value of nearly eight times of that of the futures market. now the forecast for 2015 looking ahead for fiscal year 2015 for the s.e.c., the president seeks funding of $1.7 billion, in increase of $350 million, 26% above the fiscal year 2014 base enacted level of $1.35 billion. it is $236 million above the s.e.c.'s $1.464 billion currently operating level. the $1.7 billion requested for

fiscal year 2015 will support 5,143 permanent positions, an increase of 639 positions over the current 4,504 permanent positions for a 14% growth in staff. and for the cftc, the president he's budget requests $280 million, increase of $65 million above the fiscal year 2014 enacted level of $215 million. this is a 30% increase in funding above the current level. the proposed fiscal year 2015 level will support 920 staff, or 253 more when compared to the current staffing level of 667, a 37% increase. congress probably exercises its most effective oversight of agencies and programs through the appropriations process.

permitting an annual check-up and review of operations, of activities, and spending. today's hearing provides a valuable opportunity to ask some important questions. are the s.e.c. and the cftc keeping pace with the developments in the markets, particularly with more complex financial products which are emerge hadding. do these agencies have the right mix of talent and specialized expertise to be vigilant watch dogs? do they have the state of the art information technology to augment and support their human capital. what are the top priorities for use of the resources proposed for 2015 and what are the likely consequences of continued budget shortfalls and reduced resources. i know senator johad h acjohans forward to working with these

two agencies. i now look to senator mike johanns for his opening remarks. >> mr. chairman, let me start out and say thank you to the witnesses for being with us here today. thank you, mr. chairman, for holding yet another important hearing as we work our way through the various budget requests under our subcommittee he's jurisdiction. i do look forward to hearing from the witnesses today regarding the details of your requests, as well as your plans to carry out core missions and implement dodd-frank in a responsible manner. there are three areas that i would like to highlight looking forward to your testimony and my questions. first, the s.e.c.'s implementation of the jobs act where is that on schedule. i'm concerned that it is not on schedule and i want to learn more about that. i do encourage the s.e.c. and your team to move with all appropriate speed and finalizing

regulation a and the crowd second, i'd like to get both of your thoughts on technological advancement in the marketplace and what your agencies are doing on the technology front to adapt. finally, i ask you to be persistent in working together and coordinate with your fellow regulators. any conflicts between s.e.c. and cftc on cross-border swaps and lack of coordination between s.e.c. and department of labor over fiduciary standards continues to cause uncertainty and confusion. derivatives markets and effective oversight of those markets matter a lot. to farmers, to homeowners an to small businesses. we all benefit from a system that promotes fair and orderly markets, so i am concerned when certain agency rules seem to

fragment the market and push businesses overseas. in some instances, the cftc has moved too quickly. to others the commission has chose ton simply issue guysance in what looks like an effort to avoid cost/ben fet analysis. in many cases the commission has opted to act alone and stood properly kid naturing with the s.e.c. as well as other domestic and international regulators. in order to be an effective regulator, transparency is critical. this transparency is evident in the cftc's approach to cross-border implementation swaps regulation. cftc's delays and lax of coordination with other oathers have led it to confusion and concern for market participants, foreign government finance ministers an investors here and

abroad. no doubt that both the krflt f tc -- cftc and s.e.c. have an important job to protecting investors who look to the market to pay for their retimts, send kids to college. your agencies have an obligation to protect consumers. hopefully from the next madoff, mf global or stanford. as we look at both of your budget requests, two things come to mind. first, technological solutions are important to keep up with next-generation trading platforms that operate at lightning speeds. two, staffing levels have to be carefully consider aredconsider. we also have to make sure they are sustainable. all agencies have to make strategic decisions on how best to allocate rehe sources. as we all know, simple increasing funding doesn't

necessarily ensure that the agency will successful achieve its mission. so to the chairs, you both have difficult tasks before you. we ask a lot. we ask that you improve transparency in our securities markets and cover fraud and deception without overregulating our markets and hindering economic growth. chairman udall again, i look forward to working with you as we consider the fiscal 2015 budget requests of the s.e.c. and cftc and i look forward to the testimony and the opportunity to ask questions. thank you, mr. chairman. >> thank you, very much, senator johanns. at this point i invite chairman white to present testimony on behalf the s.e.c., followed by the acting chairman of the cftc. you will each have five machines. i know have you very thorough statements which will be put in the record. you can use your five minutes as

you choose. please proceed, chairman white. >> thank you. chairman udall, ranking member johanns. thank you for inviting me to testify. now more than ever investors in our markets need a strong, vigilant and adequately resourced seshresourc resourced s.e.c. to put the s.e.c.'s responsibilities and its 2015 budget request into context, from fiscal 2001 to fiscal 2014, trading volume in the equity markets more than doubled to a projected $71 trillion. the complexities of financial products and the speed with which they are traded increased exponentially. assets under management of mutual funds grew by 131% to $14.8 trillion. assets under management of investment advisors jumped almost 200% to $55 trillion.

there are today over 25,000 s.e.c. registrants, including broker dealers, clearing agents, transfer agents, credit rating agencies, exchanges and others. during this time of unprecedented growth and change in our markets, the s.e.c. also has been given significant new responsibilities for over the counter derivatives, private fund advisors, municipal advisors, crowd funding portals, and more. the president's $1.7 billion budget request would enable the s.e.c. to address critical core priorities, including enhancing examination coverage for investment advisors, and other key entities who deal with retail and institutional investors. protecting investors by expanding our enforce the programs' investigative. capabilities and strengthening our ability to litigate against wrong doers. deploying and leveraging cutting-edge technology to better keep pace with those we regulate, make our operations more efficient, and improve our

ability to identify a variety of market risks, including emerging frauds. the s.e.c.'s funding, as you know, is deficit-neutral, which means that the amount congress appropriates is offset by transaction fees, and had thus, does not impact the deficit, the funding available for other agencies, or count against the caps in the congressional budget framework. nonetheless, i fully recognize my duty to be an effective and prudent steward of the funds we are appropriated. i believe our accomplishments in the past year should give congress and the public confidence that we will fulfill this responsibility. while certainly much more remains to be done, since my arrival on april, 2013, the commission has adopted or proposed more than 20 significant rule makings, including. many mandated by the jobs frank and dodd acts. page three of my written testimony details these. we are also now more aggressively enforcing the

securities laws requiring for the first time admissions to hold certain wrong doers more publicly accountable. in fiscal 2013 we obtained orders for penalties of $3.4 billion, the highest in the agency' history. we have intensified our data-driven disciplined a approach to analyzing and appropriately addressing complex market structure issues such as high-frequency trading and dark pools, implementing a powerful new analytical tool called midas, we have begun a comprehensive review of the s.e.c.'s public company disclosure rules to make disclosures more meaningful to investors, while at the same time making them more cost effective for companies. i want to make clear that this significant progress i'm talking about was due to the incredible commitment, talent and expertise of the s.e.c. staff. the fiscal 2015 budget requests would permit the s.e.c. to increase its examination coverage of investment advisors

who every-day investors are increasingly turning to for investment assistance and retirement an family needs. while the s.e.c. has made the most of its limited resources, we nevertheless are only able to examine 9% of registered investment advisors in fiscal 2013. in 2004, ten years ago, the s.e.c. had had 19 examiners per $1 trillion in investment advisor assets under management. today, in 2014, we have only eight. more coverage is plainly needed and the industry itself has acknowledged that. very importantly, this budget request would also allow us to better leverage technology across the agency to support a number of key initiatives. this budget request also allows us to continue augmenting our division of economic and risk analysis by adding financial economists and other experts to assisting with economic analysis in rule making, risk-based selection for investigations and examinations, and structured data initiatives. i firmly believe that the

funding we seek is fully justified by our important and growing responsibilities to investors, companies and the markets. your continued support will allow us to better fulfill our mission and to build on the significant progress the agency has achieved which i am committed to continuing and enhancing. i'm pleased to answer any of your questions. >> thank you very much. acting chairman, please proceed. >> thank you for inviting me today to the hearing on the president's fiscal year 2015 fund requesting for the commission. in my written remarks i respond to the subcommittee's request to detail how the commission has used its resources in the previous two fiscal years. my goal had this afternoon is to provide this subcommittee with context to the important role the commission plays in the financial system and the economy as a whole, as well as the important role this committee plays in helping our agency achieve its mission.

as you know, the commission was directed by congress to police the derivatives markets which includes futures, options and swaps. the cftc has continued its effort to implement the new regulatory framework for the swaps market required under dodd-frank. operation and integrity of the derivatives market are critical to the efficient functioning of the global financial system and the economies it supports. without them, a farmer cannot lock in a price for his crop, a small business cannot lock in an interest rate that would otherwise fluctuate, perhaps raising its costs. a global manufacturers cannot lock in a currency value making it harder to plan and grow its global business. and a lender cannot manage its assets and balance sheet to ensure it can continue lending. the derivatives markets better enable these enterprises to do what they do best -- kree heacr and grow the economy. when not overseen properly failures of firms or other irregul

irregulararites. funding the commission is so important. measured in percentage terms, the commission's funding level today is substantially larger than it was through much of the last decade. previous funding increases were necessary and appreciated. nonetheless, the growth of the commission's responsibilities including under dodd-frank, have significantly outpaced the growth in the agency he's budget. consequently, today the commission is underfunded. the markets the commission oversees and the agency' related responsibilities have grown by a variety of different measures. for instance, the notional value of derivatives centrally cleared by clearinghouses was estimated to be $14 trillion in 2010, and is now approximately $223 trillion. that's nearly a 100% increase. now more than are ever, a clearinghouse's failure to follow the commission's regulations designed to ensure proper risk management could have significant consequences to

the economy. the amount of customer funds managed by clearinghouses and futures commission merchants was $177 billion in 2010. and it is now over $218 billion. a nearly 40% increase. the commission's rules are designed to ensure customer funds are safely kept by these firms. a failure to provide appropriate oversight increases the chance of risky practices placing customer funds at risk. by one measure the total number of registrants and registered entities overseen directly by the commission has increased by at least 40% in the last four years, including 102 swap dealers, two major swap participants, and more than three dozen registered entities, which include clearinghouses, and trading venues. the cftc also oversees more than 4,000 advisors and operators of managed funds. some of which have significant outward exposures across financial markets. additionally the commission directly or indirectly supervises approximately another

64,000 registrants. at the agency he's current on-board staff is just 648 employees. the registered entities the commission oversees are by and large well run firms that perform important services for their customers. nevertheless, those relying upon them, as well as the american public, deserve assurance that the risk the firms pose are being mitigated by an agency capable of meaningful oversight. this year's budget request is a significant step towards a longer term funding level that's necessary to fully and responsibly fulfill the agency a's mission. it recognizes the immediate need for an appropriation of $280 million and approximately 920 full-time ekwiv lefbts heavily weighted towards examinations, surveillance and technology functions. the request balances the need for more technological tools to monitor markets, tech fraud abuse and identify risk and compliance issues for staff to analyze and make use of the day a that. without additional funding the consequences are plain.

commission will be forced to perform fewer and less thorough examinations of ledgestered entities, including those deemed systemically important or that steward customer funds. they'll be less able to develop analytical system to effectively per form surveillance of markets beinging increasingly automated. it will be deterred in its mandate to analyze and collect swaps data to enhance market trance a parncy and will be less able to timely investigate, prosecute and to address customer harm or threats to market integrity. thank you for inviting me today. i'd be happy to answer any questions. >> thank you both for your testimony and we'll now proceed on the seven-minute rounds of questions. chairman wetjen, the cftc's budget justification committed to the committee the 2015 request, and i quote from a that budget justification, "a significant step towards the longer term funding level that is necessary to fully and responsibly fulfill the agency's

core mission." what do you consider to be the optimum funding level necessary for the cfkc to fully and responsibly perform its work? what functions would the cftc not be able to adequately address if the funding level enacted for 2015 is less than the full $280 million requested? >> thank you, chairman, for the question. this request is especially focused on three key areas for the agency with regard to the agency's mission. the key mission activities are enforcement, surveillance and examinations. and as i just said in my opening statement, we're not going to be able to do as much as we should, i believe, in each of those key areas. we're not going to be able to do as many examinations of some of these critical entities and intermediaries in our marketplace. i mentioned clearinghouses.

there is a tremendous and enormous amount of risk that's now being housed at clearinghouses. that's increased quite substantially in recent years. we have 15 clearinghouses under jurisdiction and we're able to annually examine two of them which have been deemed systemically important. we have with current staffing been able to get around to some of the other clearinghouses as well. but we're not in a position with the current staffing to examine all 15 of those on a regular basis. so the staff has been forced to make judgments about which clearinghouse might be a little more risky than others an focus our attention in that way. i think ideally just focusing on a category of clearinghouses, you'd have examinations of all of them on an annual basis. >> how about the optimum level? you have a thought on that? >> well, the $280 million request i think gets us very, very close to optimal based on

my judgment. the request this year is slightly below what was asked for last year. primarily that was because we wanted to be respectful of the direction the congress gave us in passing the budget resolution which called for a very modest increase in overall discretionary spending. so in light of that, it seemed appropriate to adjust the requests this year accordingly. >> the s.e.c. is seeking $1.7 billion for fisial year 2015. this would be a 26% increase in resources compared to the level enbeing aed for the current year. what are the top priorities to which these additional resources will be devoted, what consequences can be expected if the funding level approved for the s.e.c. is less than the amount requested by the president? >> the priorities are to fund our exam program, our

enforcement program are really our core areas, including our division of economic risk and analysis. i don't think we can overstate t importance of specific funding. for technology, we are at a critical juncture at the s.e.c. with a number of our risk had-based tools that allow us to be smarter a and more efficient in detecting problems in the marketplace, including emerging frauds. the one area that just as an illustration, i alluded to this in my oral testimony as well, there are 11,000 registered investment advisors now under the s.e.c.'s jurisdiction. under current levels we were only able to cover 9% of those last year and that's using very smart targeted risk had-based tools to go to the areas where we think the highest risk is. but there are 40% of those investment advisors who have not been examined so that's a very, very high priority for us, as it

was in the 2014 request. but we did not actually receive funding for that. strong enforcement of our federal security laws is always at the top of our highest priority list, along with others. and this budget request does seek 126 additional enforcement staff, including market experts which i think is enormously important to do our job better and more efficiently. so if we were not to receive funding at that level, clearly all of our functions really across the boards would suffer. i've tried to illustrate the areas of greatest need and certainly our request is intended to be quite targeted and surgical to those core needs. we obviously have the new responsibilities that you alluded to in your opening remarks to implement the reforms and the over-the-counter securities had-based swap markets. we have new advisors we are responsible for.

all of that needs to be implemented as well as obviously the rules put in place. >> thank you. in a couple of months, we'll mark the fourth anniversary of the enactment of comprehensive wall street reform, aimed at strengthening the oversight in the wake of the financial crisis in 2008. recent analysis by outside monitoring entities reflect that of the 398 total rule makings required under dodd-frank, 95, 24%, are under the jurisdiction of the s.e.c., and 60, 15%, are under the jurisdiction of the cftc. a report by davis polk analysts issued last month indicates that of the 95 rules under the s.e.c., 42 -- that's 44% -- have been finalized, and 10, 11%, have not yet been proposed. of the 60 cftc rules, 50, 83%,

have been finalized. and three, 5%, have not yet been proposed. both of you, im'm interested in hearing how independent progress reports square with your agency's own internal tracking of your implementation timetable. i think the best thing for me to do is come back to that question. let senator johad h ach-- johan for questioning. >> thank you, mr. chairman.nns questioning. >> thank you, mr. chairman. chairman wetjen, let me get started with you. if you look at the budget control act, a and then the ryan murray agreement that was reached last fall after, as you know, some very, very difficult negotiations, total discretionary spending is due to increase this this year by about

$1.4 billion, or in the next budget year, i should say. that's less than 1% increase than last year. i think the partisan message sent to everybody is that this is going to be a very tight, very challenging, very difficult. however, in the budget requests we get from cftc, you are asking for a 30% increase. i think by anybody's definition, that's significant. but it is especially high when you recognize what everybody else is faced with across the federal government. so i'd ask you a couple questions. one is, how do you justify it, recognizing that colleagues a across the federal government with very important missions, like yours, are also going to be held to this agreement. and then secondly, what if it

doesn't happen? do you have contingency plans a as to how you will deal with that and how you will get your budget in line with what the ryan had-murray agreement calls for?-murray agreement calls for? >> thank you, senator, for the question. the request was based on a number of different factors, but first an foremost, what are we responsible for doing under the law? and again, i go back to the three key areas of our agency's mission. enforcement, surveillance, and examinations. those are the key mission activities. but meanwhile, the number of entities we oversee has increased by a variety of different measures that i just went through in percentage terms that are even higher than the percentage increase we've sought with our budget request this year. and so i think our first

responsibility -- or my first responsibility in my capacity at the moment is trying to make my best judgment and best case for the kind of funding we need to make sure we are compliant with the law. so that formed the basis of this. as i said before, we recognize the passage of the budget agreement last year and so we tried to be more modest this year in the request but we have to make sure that we're executing on these key mission activities. otherwise, i worry ha that we're not fulfilling our responsibilities to the american public. there is quite a bit at stake, as i tried to lay out in my testimony. there's enormous amounts of risk being managed by the firms we oversee. that's why we have rule sets they are required to comply with. it is primarily for that purpose to make sure they're managing risk in an appropriate way, and, unfortunately, we've seen over

the past number of years the sorts of outcomes that can happen when they fail to do that. or when they fail to follow our rules. so that's the basis for the request. your second -- remind me again, second part of your question. >> second part of the question is, what if you don't get there? how are you going to -- describe for us how you're going to deal with that if your argument isn't adopted and your request isn't granted. >> well, i think we'll have to continue doing -- be forced to continue doing what we've been doing, and that is using our best judgment about which entities to examine, which ones we're going to have to take a pass on in a particular year. make judgments about which matters to pursue by way of investigations once some incident comes to light, whether by referral from another division within the agency or through some other way outside of the agency.

judgments have to be made there. and as far as those cases that are already under development, enforcement cases under development, again, judgments will have to be made about how to allocate resources. do we devote more to some cases based on certain risks of success -- or risks of not succeeding a and so it might involve an a assessment of litigation risk in that way. so these are the sort of judgments you prefer not to have to make given the responsibilities we've been given under the law. >> in this general vein, let me ask you a question about your -- the technology piece of your budget. cftc technology spending has grown less than 7% since fy 2011. the overall budget is up by 12% over that same period of time.

my concern is that the cftc is operating with selectric typewriters while the industry is operating with the latest technology. i just worried that you're getting behind. it seems to me that what we are trying to achieve with your agency is a faster, more technological advanced agency that we have today that can keep up with what's going on in the marketplace. not necessarily a bigger agency. bigger doesn't necessarily solve the problems that you're dealing with out there. so tell us why the commission has, it seems to me, down played technology investment, while spending in other areas of the budget -- it would seem to me technology would be critical for you to keep up. >> senator, are you absolutely right. it is critical and by no means should this year's request be

viewed as down playing the importance of technology. it is critically important. but what we've had to do again is given the fact there are finite resources and trying to be responsible in our request, and in light of other responsibilities of the agency, we just had to make a judgment about how much is appropriate to allocate to technology spending right now, and how much is appropriate to spend on these other important mission activities. and as important as technology is, we still need human capital to use it and deploy it. and as important as technology is, we need to be doing our level best on these key functions such as examinations. i hate to beat this drum continually, but these entities that we oversee are critically important and the amount of risk that they house is very, very significant. and some of these intermediate

areas also manage billions and billions of dollars of customer money. and we've seen instances of fcms, they're called, fail in the last number of years. in the case of mf global, we had more than $1.5 million tied up in a bankruptcy proceeding. there is a variety of reasons why mf global failed, but the point is oversight is important and rules we have designed to prevent that sort of incident from taking place. so $50 million is a slight increase, as you said, above where we've been spending currently. i would like to spend much more than that. but in the context of an overall budget request that has limitations, that was my best judgment about where we should be in the short term. >> mr. chairman, i yield back to you. i anticipate another round. >> yes. yes. of course. thank you, senator johanns. iout lined a little bit on that

davis-polk thing, analysts and numbers there and going back to that question. how -- the independent progress report squares with your own agency a agency's tracking of your own internal timetable. >> yes. essentially, i don't know the particulars match up precisely, but essentially they do, i think. the s.e.c., as you mentioned in your opening remarks, was given nearly 100 rule makings by dodd-frank, and then some additional ones under mandated ones and some additional ones under the jobs act. i continue to prioritize the completion of those rule makings under both dodd-frank and the jobs act. ima's pleased with the progress. we've proposed or adopted over 80% but we clearly have a ways to go. among those have we have adopted or proposed since i've been at the agency for about a year now, i think there are 20 quite

significant ones. among those adopted, the volcker rule is obviously one of them. the bad actor rule which is very important to investors that certain offerings should not be zermt exempt. we have proposed all of the title 7 rule makings under our jurisdiction, some adopted. it is a very high priority for 2014 for us to complete those. we've adopted the municipal advisors rule. a number of others have been adopted. again we've completed nearly all of the mandated studies that were assigned to us under dodd-frank. it is very important that these rule makings are done obviously promptly. that's certainly one of my commitments and one of the commitments i made at my confirmation, but also to be done well and to be done after careful and appropriate economic analysis. and so we are all very closely focused, as one of our highest priorities in completing those mandated rule makings under the

dodd-frank act and under the jobs act. >> do you feel you have the necessary expertise on staff to issue and enforce the rules by dodd-frank? >> i think we have necessary expertise on staff. some of our rule makings are also done jointly or in consultation with our fellow regulators both domestically and internationally. but you make an excellent point which is we're talking about not just adopting those robust strong rules, but also then implementing them following their adoption. that's one of my significant resource concerns that we actually do have the resources to adequately and robustly implement and enforce those rules once they are adopted. >> and do you have staffing plans adapted to bring on more expertise in areas that contributed to the financial

crisis? >> again, a very high priority of mine since you i began was to bring on more economists. you'll see that prioritized in our budget again this year as it was last year with expertises, certainly in areas that were involved in the financial crisis, also modern day issues with respect to our equity market structure and we've done that in the enforcement space as well. there's full understanding of the rules we are enforcing with the requisite expertise. that's one of the very important things we are seeking the funding for in this budget request. >> chair wetjen, how are you coming out on the rules that you're promulgating, the ones that are in the pipeline. does it square pretty much with independent analysts or do you take issue with their numbers? >> no, i believe it does. the primary rule makings that come to mind when i think about those that we were required to do under dodd-frank but have not yet finalized, it is the rule

making for margin of requirements for uncleared swaps, capital requirements for those firms entering into uncleared swaps, and then the third one would be a final rule on position limits, another rule making required under dodd-frank. i believe that davis-polk study had the same -- they might have mentioned one more. but those are the three i thing of in terms of unfinished business. on position limits, we proposed a rule there last fall. staff is working on the common file creating a response to that proposal. on the other two, staff is working on a reproposal. those were rule makings that were actually proposed a cull of years ago. but in light of significant international work done through t the auspices of other key

organizations, we hope to have something in circulation for the commission very, very soon on those. >> how would you characterize the efforts to harmonize rules among multiple regulators? why don't you take a stab at that? >> thank you, sir. it is difficult. everyone has their own responsibilities and obligations to their own country and to their own legislative bodies. but there has been considerable effort through some of these same international organizations. i mentioned. there is a group that was formed specifically related to derivatives reforms. the odrg group, it is called. so those groups meet on a regular basis. all in effort to try and get countries to adopt reforms that are sufficiently comparable and comprehensive in nature. >> chair white? >> yes.

i think, again, a high priority we have both domestically and international is to try, even on rule makings that are not required to be joint, that is very close consultation and coordination to try to make them as robust but as consistent or at least combatable as possible around the globe. xu talk about the over the counter derivatives market, that's a uniquely global market. so we need to get that right. i think we are all working very hard to try to do that. i think the fact that the agencies charged with implementing the volcker rule actually worked together and came out with a joint roul, including the cftc and s.e.c., was enormously important both to the strength of the rule and consistency and certainty for the marketplace. >> thank you. senator moran? >> mr. chairman, thank you very much. senator johanns, this may be based upon the relationship i've had with other cftc chairmaen,

telling me that if you're a creighton grad, you can do no wrong. chairman, thank you for joining us today. i appreciate the conversation we had had in my office yesterday. you have indicated to me and i have seen evidence of it the desire to work hard to develop good solid relationships with congress. i'm very grateful for that. i look forward to accomplishing that as well with you. let me just ask a question that, in part, we discussed yesterday. implications of rule makings mandated by dodd-frank. what are you able to do to mitigate what is always described as unintended consequences? you and i have been in touch in regard to realtime reporting rule which may unintentionally identify swap participants in transactions. you indicated this is something

you are looking into. would you bring me up to date and maybe can put on the record the nature of the of conversation we had yesterday and where you are headed. >> thank you, senator. we did pass a rule making that puts in place a ruletime reporting obligation of swaps activity. and depending on the entity or the counterparty in the trade, there is a timeline by which the party has to report their trade to the public. and the matter you and i discussed, as you know, relates to certain instruments that are not terribly liquid, meaning there is not a lot of trading activity in some of these products. and because of that fact, it becomes easier to identify the identity of one of the counterparties. and so this is a problem and a challenge for the agency because

the statute does say -- one of the considerations that has to be made is that in this reporting obligation, the identity of the party not be revealed. on the other hand, there's tremendous public benefit in having information about a trade available as quickly as possible. it's very useful in terms of price discovery which is one of the key functions of our marketplace. so that's where the tension is. so i've directed the staff at the cftc to examine this problem, to look into it, and to see whether or not we can confirm that this is in fact a problem. the other analysis here is, again, i think we need to review what the statute says and look carefully at that and determine what was meant when we were cautioned not to have a reporting obligation that could reveal someone's identity. it is not like anyone's saying, hey, it's so and so.

it is again, so many people are trading in a particular instrument, the marketplace tends to figure out relatively easily who those parties are. so staff is looking at this. i actually had a conversation after you and i spoke yesterday, a follow-up conversation with the staff. they are doing a new type new t analysis that i wasn't aware of when you and i spoke. so there's looking at another way to see if they can confirm what has been reported by the parties, and particularly these illiquid swaps. we'll keep looking at it and keep you up to date. >> thank you very much. let me turn to the s.e.c. chairman white. thank you for your presence today. pleased to see you here. as i sometimes do in the banking committee as well. two asset managers were recently graduated to stage 2 of fcoc's review process for just systemically important financial institutions. and i'm concerned that asset managers who simply administer

customer accounts may be proceeding down a path of additional regulation that in my view may be inappropriate for that industry. can you give me a better sense of how this designation process for asset managers is progressing? at the fcoc, and given the understanding that the assets in question are not owned by the companies in question. and then i have a couple of follow-ups based on what you say. >> i think although there have been media reports, i think to the effect of the -- of your question, i don't think there's been a public announcement of the precise status, if any, with respect to specific asset managers. which he is the protocol of the fcoc with respect to any company that might be considered. >> that's encouraging, because what i would ask you, because i understand there's a roundtable discussion to occur in the next couple weeks. part of my concern is, why are we making designations now when

there's more work yet to be done? >> well, again, i think that some of the treasury officials, the secretary of treasury, obviously the chair of the fcoc, there's a process of learning about and gathering data on the asset manager industry. again, what i can say about the process otherwise, i think there is a good development that there is the asset manager conference on monday. and it's a public forum. so that representatives of the fsoc, the member agencies will hear from the industry and other interested parties and knowledgeable parties. i do think it's important -- again, the fsoc is given the power in general, if it finds -- well, a responsibility to decide whether there are systemically important institutions that aren't banks, insurance companies, et cetera, and if so, if they threaten systemic risk to the financial system. one of the powers congress gave

to fsoc was to designate. that doesn't say what that process should be, what the data should be before one does that. i think those are very important questions. and i think it's also very important, and actually the ofr study, which came out in september about the asset management industry, not specific parties, pointed out the very fact that you mentioned, which is the asset manager business is an agency business. and so when you're considering what if any systemic risk it may or may not pose, you're not talking about a balance sheet of positions, you're talking about an agency model. i think it's very important that that be understood by all who are considering this. and that the right expertise be brought to bear on that analysis. >> in your analysis, what's the significance of that agency relationship? how do you personally at the s.e.c. chair see this issue, within your role at fsoc? >> again, as the chair, i'm a

member of fsoc, as you know. i think it is extremely important factor, essentially, if you're looking to what kinds of entities and why may create systemic risk, if these assets are not yours and not on your balance sheet, that's a very different situation before you to assess in terms of whether, you know, such an entity, if it were to fail, fails in any sense similarly to a bank. you know, i think it's a critical fact, not the only fact to look at, but a critical distinction between asset managers and some of the other entities that have been considered. >> thank you both. my time's expired. >> senator johans. >> chairman white, if i could turn to you. if you look at the history of the s.e.c. budget, even

predating the obama administration, going back to the year 2000, the budget has grown from $377 million to $1.35 billion in 2014. very, very significant growth by think definition. but despite this tremendous growth in resources, the s.e.c. -- and i acknowledge, this was prior to your time -- but it failed to detect ponzi schemes like madoff, stanford, didn't sound the warning on the collapse of the u.s. financial system, or near collapse. that describes for me a very serious problem within the s.e.c. you may disagree with that, you may agree with that. but i would like you to spend some time, since this is a great opportunity for oversight to talk to us on the committee about your view of what needs to

be done to avoid a future madoff, a future ponzi scheme, what are you doing at the s.e.c. that changes the culture of the dynamic of how people look at their role and responsibility in terms of dealing with characters like that. and in terms of dealing with financial system of the united states. >> i think several points there. i mean, one is that, and the agency acknowledged this, that there were weaknesses and issues that i think before my arrival, the agency had made significant progress on addressing. very important that that did happen. for example, in terms of a ponzi scheme, i mean, today, one of the items on our -- in our budget request that we're seeking to enhance even further is the tips, complaints and referral, you know, system, whereby we get about 15,000 complaints at the s.e.c. every

year. 3,000 plus of those come into our whistleblower office. but 15,000 in toto, so to speak. those are now all centralized, automated, assessed electronically, quickly and sent out to where they need to be sent out. one of the enhancements that we weren't able to do last year, because of the funding, was to actually automate the triageing. you know, of those complaints. no question that that feature, which did figure in those incidents you're mentioning, is now quite different in the s.e.c. a number of other changes were made, both in the exam program, enhancements improvements, and the enforcement division as well. i think one of the things that's enormously strengthened the enforcement program, for example, is the specialty units, where you now have expertise residing in different market strata that the s.e.c. is responsible for. and again, i think nothing more

important at the s.e.c. than that we have a very strong compliance function, very strong enforcement function. op the examination side, also enhancements improvements have been made. very significant ones. we've been helped by, you know, our technology there. we have been helped by our economists as part of that effort. which is basically thousand we have technological tools that allow us to analyze, assess, access massive amounts of data, much more quickly. for example, one of our newer tools in the examination program is called national exam analytics tool. basically it allows our examiners when they go into an adviser to examine, to look at all of their trading basically. so we have one instance recently where i think 17 million transactions were accessed and analyzed in 36 hours. the s.e.c. of yesterday couldn't have come close to that. and obviously the more -- and what do we do when we get that

data analyzed, we look for patterns of insider trading, we look for ponzi schemes, and other patterns that suggest wrongdoing. so it's a much stronger s.e.c. in those respects. i think you can't -- no one can responsibly sit here and say any law enforcement agency will never miss a scheme going forward, but it is an extraordinarily strong enforcement exam function today. >> would you be confident in testifying to the committee today that under the current atmosphere, the current approaches that madoff could not repeat what he did some years ago? >> from what i know of what occurred, again, i wasn't here, but i have studied what occurred, i think the systems we were just talking about, among others, certainly at the s.e.c., i believe that would have been detected, and proceeded upon. again, you can never guarantee that you will catch every ponzi

scheme, every fraudster, every criminal in any agency. but i do think it has been built to prevent that from happening again. >> the budget request you're making this year admittedly is sizeable. i appreciate your little bit different circumstance. having said that, it's our job to provide oversight wherever the dollar comes from. given recent past experience, history would probably tell us that we might be facing the continuing resolution. and that you would not receive your full request for some period of time into the budget year. we haven't done a lot of budgets around here, unfortunately. consequently, what would then happen is your budget request may be met in january, february, march of next year. under those circumstances, would

you in that limited period of time between when you receive that and the end of the fiscal year, the end of september of 2015, would you able to responsibly deal with that, hire up the people you want to hire up, do the things you want to do in an abbreviated period of time? >> we've done this in prior years as well, we sort of take into account the likelihood of a cr, and continuing resolution, and how long it may last. that clearly leads to prudent deferred spending. we do have no year funds, however, so we are able to i think more flexibly deal with getting our money somewhat later in the year. there's no question, one place where it's a particular challenge is in our long-term mission critical i.t. projects. i mean, those of necessity, you need to know you have the money. then there's a relatively lengthy procurement process. so they do present challenges.

so i think our financial -- our financial folks that i talked to at length about those issues as well, are geared up to be able to use whenever we would get the funding, if we would get the funding, as much as it is possible, and then carry over and be able to use in the following year by having projected the uses for it in this year. >> thank you very much for those answers. i wanted to shift over to the volcker rule, which you all know is a very important one. and both, i believe -- let's see here. chair white and chair wetjen, regulatory agencies issued implementations of the volcker rule. first question, how is the

volcker rule being enforced? and what is the relevant role of each of your agencies in overseeing compliance? >> i think the rule itself actually became effective, i think april 1st of this year. but the compliance period is still out into 2015 and beyond. somewhat scaled in compliance, both in terms of extent and also in terms of timing. one of the things -- and again, i think i alluded to this a few minutes allege. critical, the agency did enact a joist rule. it is a better rule, a stronger rule. plainly, i think for the marketplace it was necessary to do that. and one of the commitments, and i actually said this in my opening statement, when the s.e.c. adopted the rule, is that we need to be focused from this day forward on continuing that coordination as we get into the compliance and enforcement period. so there is an interagency working group that all five

agencies have very active senior members on, who are focused on questions of interpretation, questions of compliance, questions of enforcement. and we will try to stay as consistent and in sink sink ync can. with respect to entities covered by the rule, for example, the broker dealers, the s.e.c. is the primary regulator there, so we'll have the voice to proceed with enforcement. we'll still coordinate with each other on questions of interpretation that affect compliance and enforcement. >> chair wetjen, do you have thoughts on that? >> i'd like to echo what chair white said. i think there's a continued commitment to coordinating among the agencies. another good example, in addition to what chairwoman white said, we actually issued a rule -- i believe it was late january -- and it related to a special investment vehicle issue that had materialized and come

to the attention of the agencies, and to the cooperation. and so all five agencies adopted the interim final rule very, very rapidly. again, i think that's another exam billion that there's a continued commitment to solve these problems jointly. again, in an effort to avoid an uncertainty, that not doing so, could create for the marketplace. so i expect that to continue. >> the shifting now to money market mutual funds. chair white, as you know, senator johanns and i wrote to you at the s.e.c. in 2012 highlighting the concerns raised by our local governments on changes to money market and mutual funds. and i keep hearing from folks back home about this issue. in fact, a little over two weeks ago, i had a conference call with constituents representing

local governments and businesses in new mexico, and they continue to express concern about possible changes. as you know, local governments rely on these money market mutual funds as a cash management tool and important source of local-cost, short-term financing. can you give us an update on where the s.e.c. is on the rule and how do you plan to address these concerns of local government and others? >> yes. the s.e.c. commissioners and staff are actively involved, quite actively involved in finalizing those rules and those reforms of money market funds. i expect their priority for 2014, i expect in the relative near term, to proceed to finalizing those rules. as you know, when we proposed the rules, we proposed two alternatives. one is a floating nav for prime institutional funds and the other a fees and gates approach,

government funds are actually exempted from the floating nav. but i think that's the issue that is being raised. we've gotten a lot of comments on precisely that pointment the staff has met with a number of representatives of municipalities, expressing that concern. there is in the proposal, should we go in that direction, of a floating nav, there is an exemption for retail funds, which would cover some of the municipal funds. but i think not all. but we're very carefully focusing on all the comments. but quite focused on the concern that's been expressed by the municipalities. >> great. thank you very much. senator combs? >> welcome. good to have you here. >> thank you. appreciate the opportunity to join you. and thank you both for your service. and the opportunity to discuss with you your proposals. if i might first, s.e.c. chairman wetjen, according to your funding request is

investments in technology and its staff. and your fy 2015 request calls for increase in i.t. funding. can you comment on if the infrastructure isn't upgraded and your taking on an expanded role? >> thank you, senator kooms. we have a plan developed by our office of data and technology of how to use the $50 million. it would include some enhancements to current systems we have in place, which are necessary for surveillance purposes. and the one system i would point out is one that tries -- well, tracks positions taken on by market participants. so it's a critical tool that we have now. but it still needs to be enhanced. if it's going to be as effective as possible. going forward, i think what the

agency should consider doing is investing in new initiatives, technological initiatives, so we can get a better understanding of not only consummated trading activity, but order messaging, which is something that happens a lot in automated markets. you have firms, or entities sending in orders that don't always match with another counterparty. it's important, because some firms inappropriately might use a number of different order messages sent into a marketplace, as a way to engage in some kind of manipulative scheme. it's going forward, you know, if we're able to get additional funding for i.t., i think that's the next key initiative we might want to invest in. >> you had a budget of roughly $200 million last year, and collected north of $1.7 billion in fines. that's about an eight-fold return on taxpayer investment. i just wondered if you wanted to

take a moment and explain how as an entity that literally pays for itself, what enforcement actions you pursued last year, and how a more fully funded ftsc would fund the marketplace. >> thank you for that question, senator. i think we initiated and completed around 150, 160 enforcement actions last year, that in fiscal year '13, that resulted in over $1.5 billion in fine collections, as you mentioned. so it was in that accepts a good return on the investment when you consider the level of funding for the agency. right now, we're on pace to probably have fewer enforcement actions consummated and completed, based on numbers midway through the year, midway through the fiscal year. there's a variety of reasons for that. but one of which is that we've lost some staff in the division

of enforcement. so that does give you some indication about what the impact of reduced staffing can have. again, there could be other reasons for that as well. it could just be the nature of incidents that have been brought to the attention of the agency this year, different than in years past. but it's one thing you might want to take a look at. so i have some concerns about that. that's one of the reasons why we've asked for additional attorneys for the division of enforcement at the agency. our request would bring us roughly 50 additional ftes. and again, i think we would continue to demonstrate with that enhanced team an ability to bring a good return for the taxpayer. >> thank you. thank you for what you do, chair white, at the s.e.c. i have the sense that you're charged with overseeing more than 25,000 market participants roughly who engage in trillions of dollars of economic activity.

and i think what the s.e.c. does, it's critically important to a well functioning capital market that is secure and transparent. as we continue to heal from the financial crisis, i think it's critical to take steps to ensure that doesn't happen again, given the very broad range, and i think significant expansion in your responsibilities, and given that as is the case i just referred to, you don't cost anything to the taxpayers net-net. i support funding the president's request of $1.7 billion, but would be interested in your comments on the trends of security frauds that you're seeing in current enforcement efforts, and what sort of risks retail investors are exposed to. i would be interested in how you see progress in rule making to implement the jobs. >> in terms of the enforcement efforts, you know, again, i think there's nothing more important than a strong -- very strong enforcement presence by the s.e.c. to protect investors.

i mean, retail as well as institutional, to protect the integrity of our markets, to protect the markets, so that capital formation will be facilitat facilitated. clearly the s.e.c. had, and much of this before i arrived, but in terms of the financial crisis cases, they have an extraordinarily strong record, the agency charged over 165 -- i think it was 169 entities, individuals, and some were senior executives. and they -- ceo, cfos, and actually i got orders to return over $3 billion in fines, and discouragement. so there's obviously value -- not only value to add there, but it's also returning money to our investors. so we are just about through. we have some additional financial crisis cases that obviously we are focused on completing. one of the things that we've

done, really, two of the things we've done to strengthen the enforcement function, one is to form two new task forces. one is a financial reporting. and auditing task force. which i think is the core of investor protection. and that's something that's already yielding results. and i think for the benefit of the investors and the markets, we've also formed a microcap fraud task force, which pe actual yarly affects the investors. another disturbing pattern, and i saw this when i was a prosecutor, too, one of the most egregious frauds you see is what i call an infinity fraud. a ponzi scheme or investment scam, really, against their own communities, we're certainly seeing a growth in those. so we're very focused on dealing with those. we've brought a number of different cases. we've also intensified our enforcement efforts, vis-a-vis the obligations of exchanges to make sure they are following the various, what i call the market structure rules of our equity

markets, which i think is important to everyone. and then one final point i would make is talking earlier about our need for resources, to increase the number of examinations we do of investment advisers. of course, they are the ones that are really day to day dealing with your everyday investor. and we're only able to cover a small percentage of those under current funding. when we go to those places, and frankly, when we go to the broker dealers, we find a lot of issues. so that makes us, at least, understand the critical importance of sufficient funding to be able to carry out those responsibilities for investors. and actually, by just showing up, on an exam, i think since fiscal 2012, just showing up and pointing out, by the way, those fees should not have been charged to those investors or those funds, they should have been for your account, we returned, i think $28.8 million. just by showing up. it shows you sort of across the

span, i think the benefits to investors. >> one last question, mr. chairman. i didn't know you were engaged in training for nonu.s. regulators. >> yes. >> roughly 1,700, i think it's 1,400 this fiscal year and next. what are the benefits of that program? how does it benefit to provide training to non-u.s. regulators? >> i think significant benefit. and has for decades, frankly. but even more so now. the securities markets, certainly the securities frauds markets are quite global. they don't respect borders. i think the training we provide is invaluable to the american investor, who may well be defrauded from, you know, any country you could name abroad. if they've got a strong enforcement function, we're protecting the american investors there. we've seen an awful lot of progress, much more to go, but i think it's an invaluable service to the american investor.

i think it's also an invaluable service really to the global markets and the integrity of them. >> thank you. thank you, mr. chairman. >> senator kunz, thank you very much. senator johanns, please proceed. >> let me ask you a question. but let me also if i might lay some groundwork for this question, so you know where i'm coming from. i think all of us agree that the cftc must have smart forward-leaning regulation. the market changes so dramatically. and yet we still have to be sensitive to the potential to overregulate. we don't want to regulate everything that moves. so trying to be -- to strike that balance, i think is key. one example of regulatory overreach that i've been working

on since dodd/frank passed, is marginal requirements on end users, when trading derivatives. i can state unequivocally, congress never intended for non-financial end users to be subject to margin -- costly margin requirements, and yet here we are almost five years later still battling with this. so i've introduced legislation that exempts end users from margin requirements. this is not a republican versus democrat issue. the measure's gained strong bipartisan support. a companion bill has already passed the house with over 400 votes. this is one of those things that should be done. i don't know of a senator that opposes it. maybe there's one out there that i haven't come across yet. but again, i think congress is nearly unanimous on this.

i asked gary genzler about it one time, and i always felt that he had a pretty aggressive view of regulating things. i think that's what he saw his job as, and he was going to regulate stuff. but he even agreed that non-financial end users don't pose a risk to the system. and therefore, should not be burdened with what i would call a job-killing margin requirement. i would like you -- i know this is an issue now in the feds' hands, but i would like your thoughts personally as the acting chair of the cftc on what i'm trying to get done here. >> senator, i agree with you that dodd/frank tried to, if i can use these words, hold harmless as much as possible the

end user community, as it related to title 7 in particular. >> right. >> and we have a number of rules that provide exemptions from clearing requirements for end users, and we've taken a number of other different actions as well. to build out that general principle, and one specific area has to do with interfill yat trades between companies that are not swap dealers. and so we have done a considerable amount of work there. so i agree with you in principle, that that was the message of intent behind dodd/frank. at least as it relates to title 7. end users are supposed to be largely be left out of the grip, so to speak, of the new rule title 7. i'm not familiar with the details of the fed's proposal. and i don't recall exactly where they are in the process, but yeah, i agree in principle with

what you're saying in terms of the end user and title 7. >> the education kicks in and good practical comments and stuff comes up. thank you. i'll yield. >> senator kunz, did you have additional questions? okay. did chair white -- one of the key components of dodd/frank was a mandate that the s.e.c. adopt a number of new rules relating to credit rating agencies, and all of us remember what a key role credit rating agencies played in the kind of meltdown that we were in back in that time period. and of these new rules, including annual reports on internal controls, conflict of interest, with respect to sales and marketing practices, various disclosure requirements, and consistent application of rating symbols and definitions, what's the status of the s.e.c.'s

efforts to comply with the mandates under dodd/frank relating to credit rating agencies, and what further developments can we expect from the s.e.c. on this? >> very important area, very high priority for the agency. the agency did in january 2011 adopt actually a new rule requiring nrsros to disclose representations and warranties and how investors might enforce breaches of those. in may 2011, the agency proposed -- i think the rules you're alluding to. that 11 be amended to accomplish the objectives that you listed. and five new ones. we are moving those forward quite actively. and they're a priority to complete this year. >> do you believe there are additional reporting requirements or controls necessary to prevent another crisis? >> there's no question in my mind that the credit rating

agency issues -- played a significant role in the financial crisis. i think the issues you've identified are ones that do need further reforms. and that's the objective of these rule-makings. >> and i know that some of the critics have kind of come at this and said we should start over again. i assume that isn't the position of the s.e.c. at this point? >> well, we are certainly listening to all comments. obviously, the formal comment period is closed, but we are listening very carefully to those who think that certain aspects, perhaps should be reproposed, or done differently and perhaps not require reproposal. so we're trying to come out with very robust rules and we're continue to listen to all critics, and all supporters. and really, all ideas on it. >> right. thank you very much. senator johanns, do you -- do

you have -- and it looks like senator kunz has completed his questioning here. let me thank both of you. we really appreciate having you here today. we appreciate this frank discussion and exchange of ideas. we want to thank everyone who participated in preparing for this hearing. we -- you have excellent staff, and we do also, and we very much appreciate their help. today's discussion, i think, has provided helpful insights into these -- into your operations. and i think it shows us what the challenges are that are ahead of us. this information will be constructed as we further consider the budget proposals and develop our fiscal year 2015 bill during the coming weeks. the hearing record will remain open until next wednesday, may 21st, at 12:00 noon, for subcommittee members to submit

statements, and/or questions to be submitted to the witnesses for the record. the subcommittee hearing is hereby adjourned. >> today on c-span, "washington journal" is next withs your phone calls and tweet. secretary at as senate hearing on health care for veterans. and live coverage of the senate health committee hearing. and in about 45 minutes, shelled

diggless from the group third way on how political parties try to attract hispanic voters. former u.s. ambassador to nigeria john campbell on the international efforts to find school or -- schoolgirls captured by boko haram. christian science monitor host: veterans affair secretary will be questioned about reports of veterans waiting for long periods of time for care. you can watch that at 10:00 live. this comes as the white house has appointed deputy chief of staff rob neighbors to oversee a review of v.a. practices. the president and the first lady will be in new york for a dedication of the memorial and mow seem. you can see a live picture.