despite what some have said and might say again today, i'll just give this perspective from the cftc commissioner. he said the perception mf global happened because of lack of regulation is mistaken. both our governing statute, the community exchange act, and our regulations require an intermediate area, require mf global to segregate future customer funds. there have also been called for coverage in swap mark. again, i think this will be a mistake. expanding the safety net to the vast market would be workable and compound moral hazard problem already present throughout much of our financial sector. it does appear, however, several steps can and should be taken. the focus must be on improving market discipline and ensure the most basic regulatory functions are met by these agencies. i thank you, chairman, for holding this hearing. >> i thank you. mr. graham recognized for one minute. >> thank you, chairman. i have a little bit of a different perspective on this. there's no question that customer funds being transferred, i think it speaks for itself. never should have happened, period.

where we have responsibility for determining at least initially the appropriation for the s.e.c., the cftc, treasury department, while you're not subject to our subcommittee's jurisdiction, i can't speak for mr. durbin, i would indicate to you a desire, a willingness to have conversations with you about the appropriations process through the federal reserve and your funding, if you're willing to visit with me. >> be glad to visit with you and have our staff come and speak to your staff and make sure you need to know everything about what we're doing. >> thank you. >> thank you. >>. >> the rule was completed in january but i just want to state my understanding is that when people seek to transfer money internationally, this rule says they need to be told up front how much money is going to actually arrive. in other words, no hidden fees. you see the full impact of the exchange rate that's being assigned to it. and in addition, if the money doesn't arrive, or if the money that arrives is different than what the person was told, there's a way to fix that. is that the essence of this rule? >>

recently, of course, the cftc finalized new rules to improve those protections. and the council, working with the s.e.c. and cftc, is going to undertake a broader review of what other changes may be necessary to strengthen those protections further. so you look across these areas, you can see we're making considerable progress in implementing the reform. we're taking the time necessary to get the substance right, providing extensive opportunity and time for public comment and input, and working closely with relevant agencies here and around the world to improve the prospects that we've put in place, a common set of actions and safeguards. the broad direction of these reforms is clear, and as we finalize the remaining elements, we'll be able to provide businesses and investors and consumers with more clarity and more certainty. i emphasize that, because it's important to know that those who are working to slow the pace of reform will only increase uncertainty, and they will damage our efforts to try to get the rest of the world to adopt a level playing field based

>> my understanding is, the cftc announced they traced 90% of the money, where it's gone. will they be able to call it back. did these people take it all in good faith, which i assume they did, and made other transactions with it. again, it went in many different days when it went out the door. >> it's extraordinary that it happened. >> really extraordinary. >> how does it happen? >> i have no idea. i testified three times in nine days right before christmas, and i gave very succinct testimony. we followed each and every compliance step perfectly. all of a sudden we're told there's a $900 million accounting error and they tap us on the shoulder at 2:00 in the morning on monday morning and said, we took the money from the customer segregated funds and moved it to broker/dealer. we've never seen it happen in the 75 years of segregated funds. first time. >> first time in 75 years. >> never happened before. so i feel for each and every client. and we are going to continually work to push the trustee to get the moneys back to the participants. there was a story that came out to

. >> did you assume that the cftc and the cme were filling their responsibilities to audit and verify the proper detection of those assets? >> that is correct. >> would you all have done the same? >> yes, sir. >> yes. did you confirm with mf auditors price waterhouse that they had verified that controls and systems were in place to prevent that fraud and unauthorized transfers? >> no sir we did not speak directly to the auditors but typically we would not expect an auditor would be able to share information with us as a third-party. they would have a confidential relationship with their client. >> we didn't speak directly. we did recognize that they had signed their opinion to the audit opinion. >> fair enough. >> again we have no contact with advisers auditors or bankers. see. >> i assume you relied on fcc filings to complete your work. are you aware that some of the 2011 filings may have been backdated and otherwise adulterated? >> we did rely in fcc filings. when you save backdated or adulterated, i'm not aware of. >> i said may have been. >> i have the same answer. >> and just fol

and the cftc was supposed to establish rules to set limits on folks who are taking positions, who are've been very slow to do so. so this huge issue of speculation has been unaddressed and here we are again. >> let me quickly sort of summarize this point. because i think this is an important one. oils futures markets are used by two kinds, let's say, broadly, two kinds of people, right? there are end users. i am american airlines and i cannot have the amount of price volatility that the markets have, so i go out and buy futures to smooth that volatility over time. i know whattime going to be paying in the future. i'm hedging or ensuring cost risk for myself because i'm using a lot of oils. oil's going to go up, it's going to go down. i make money on the change in price. senator and dan addidicker, i t what you're saying is if increase in the amount of people who are in the latter category, participating in the markets that you trade in, dan, is driving up the cost. how does that work? >> let's take an example that everybody can sort of understand. let's say you were looking to buy a h

last week alone, crude oil was up over 11%, gold, 10% in the cftc commitments data. there was a little bit too much of a rush into the markets. par of it relates to, we're out of that negative money flow period from mf global and the fund redemptions. >> scott, it seems to indicate, as bill is pointing out, that commodities are back in vogue as a legitimate asset class as we were several years ago. but how do you feel about the performance near term? what would you do in this market? >> well, i think i'd be cautious. with the ten-year yielding 1.9%, 1% today and the equity market is dodgey at best, we could see a little bit of a pullback. however, with something with a real true story about it and you want to throw q.e. or low interest rates at it, that's going to give us more fuel to the upside. the grains in chicago, for instance, we have a situation where we have short and long-term trends all pointing higher. we will need something like a wet spring or some real hot summer to take us from where we are right now. this is a good launching point. but we would probab

back in october, according to the cftc. traders were 181,000 contracts long. now they're 281,000. everybody is taking about the saber rattling for the strait of hormuz. that's what's driving energy prices right now. we have a lot of supply, but there's worries about a supply shortage. isn't that the case? nothing would change that in the short run, michael. that's -- we're just stuck with this iranian problem until our government does something about iran. >> that's why drilling won't make an impact on gas prices. it won't make an impact for this week, this month, or even this year, or the next couple of years. we operate on a global market. like it or not, we cannot drill our way out of this gas crisis. we can't drill our way out of the next gas crisis. the only way to avoid this situation from repeating itself again and again in the future is to have a more aggressive prudent plausible plan to reduce our dependence on oil. >> bruce vincent, i'll give you the last word. if we built the keystone pipeline, if we had drill, drill, drill every before, if we got rid of the epa nuisance

the only thing you can do is say this can't happen again and this is how the cftc is going to put regulations in place to keep it from happening again. >> you're a busy lady between facebook and mf global. >> who needs sleep? >> right. straight ahead, now the hard part for facebook, how do they grow their business? and is that a good thing that mark zuckerberg controls more than 50% of the voting shares? we'll talk to a top vc and head of interactive group about that. >> and speaking of the iac, the stock is up more than 60% in the last year. match.com is just one of their hot properties. their ceo will talk earnings and online commerce as "power lunch" continues. [ mujahid ] there was a little bit of trepidation, not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ i'm here to unleash c'mmy inner cowboy

we're going to find out the exact statistics in a couple hours from the cftc. e to say we have seen record long positions across the board in the petroleum complex and that is likely to have continued in this week. when you look at the type of geopolitical risk that is in this market and you go into a weekend, traders do not want to be short of course in this marketplace. in fact, we expect this trend to continue with about two and a half hours left in the electronic session for trading crude. >> sharon, thank you very much. all right. let's move onto a company that might be impacted by higher oil and gas prices, jc penney. courtney reagan is with us now to break it down. >> thanks, brian. so in its first earnings release since announcing plans for complete transformation, jcp posted a gain of 74 cents a share, beating the street. but the key, sales fell again down nearly 5% year over year. internet sales fell too. 3%. that's a weak point as it competes with macy's whose fourth quarter online sales grew 40%. in a pre-recorded earnings web cast ceo ron johnson sa

>> look, one of the things i him recognize, this is important thing about the cftc that is missed. before the siepi be their were eight different federal agencies to including had that had authority over the home buying process and the mortgage process. by consolidating those, and specifically both had and fed have control over those forms. there were conflicting rules far more complicated than they should be. cfpb is simplifying and making more understandable this process barley by consolidating the authority of agencies. and this is one of those things, is good for homeowners, but it's also good for lenders, and it's one of those things that brings together her a broad spectrum right and left for things that we would simplify and improve te workplace. >> my last point, october. fannie and freddie mortgages since october. >> in total, and the program is called harp, says it was first introduced in 2009, homeowners refinance. the changes that the president called for more then implemented later. there were specific details released later. those changes began to go into effect just i

we'll get the latest data from the cftc in a couple hours. you can bet there are money managers continuing to pile in as oil prices are boiling here. add to that the fact we're seeing more fervor in the u.s. market after goldman sachs this week told investors to sell some wti and buy some brent crude -- rather buy some wti and sell some brent crude. therefore we've seen the wti catching up as a result. you mentioned earlier, brian, about consumer confidence and the fact we are looking at oil prices up 11% so far this year. gasoline prices up about 40 cents. so why is consumer confidence at the highest level we've seen in a year? well, keep in mind it's a lagging indicator. and that is a big factor. citi saying there's about a six-month lee time here for the consumer confidence to catch up to what gas prices are. and with gas prices expected to be well over $4 in the summer months, look for consumer confidence to definitely fall. back to you, tyler. >> sharon, thank you very much. switch on the "power lunch" power surge and drill down on some o

one question is how did the cftc fail in this task.t some have said and might say again today, i will just give this perspective from the cftc commission. the perception that mf global happen because of lack of regulation is mistaken. both are governing statute and our regulations require mf global to segregate customer funds. they have also called for specific like coverage for the swap markets. i think this would be a mistake. expanding the state yet to this large market would compound the problem that is already present throughout our financial sector. there are several steps that can and should be taken. the focus must be on improving market discipline and ensuring the most basic regulatory functions are met by these agencies. i thank you, chairman, for holding this hearing. >> i think you, gentleman. >> i have a little bit of a different perspective on this. there is no question that customer funds being transferred -- i think it speaks for itself pick it never should have happened. the law is clear. but on top of that, it is furt

did you miss them that the cftc and the software works with either response to ability to audit those assets? that's correct. >> which often the same? >> yes, sir. >> did you confirm with ms auditors trace waterhouse coopers that they had verified that controls were in place to prevent unauthorized transfers? >> no, sir, we did not speak to auditors but typically we wouldn't expect an auditor would be up to share information across as a third party. they have a confidential relationship with their client. >> we didn't speak directly. we did recognize they had signed their opinion that we did review. >> fair enough. again, no contact with auditors are bankrupt or his grifters. >> i assume you reside on sec filings to complete your work. we were there about dated and otherwise adulterated? >> we did rely on sec filings. many say backdated and unadulterated, i'm not aware. >> i said may have been. >> at the same answer. >> i have no awareness. >> okay. >> just following up on mr. capuano's,, and moody's letter to congress, it stated they did not learn about and that's large rtm trade unt

despite what some have said or may say again today, i will just give this perspective from the cftc commissionerho said the perception that mf global happen because of lack of regulation is mistaken with the community exchange act and regulations require mf global to segregate futures customer funds. also there were calls for coverage for the futures and swaps market. this would be a mistake to expand the safety net to the vast market would be unworkable and compounding the moral hazard problem is hitting the sector but it does appear there should be several steps to be taken the focus is on improving market discipline and the basic regulatory functions are met by the agency's. thank you for holding this hearing hearing. >> thank you chairman. i have a little bit of a different perspective on this. there is no question that customer funds being transferred, speaks for itself and never should have happened. period. the law is clear but on top of that it is further compounded by one of the biggest travesties in market history. who made a decision to allow the bankruptcy not under the commodity ban

while we can discuss the issues of, cftc and the politics of the panamax in reality the biggest issue that to the presidency is the nlrb case. if the president has some power to ignore the advice and consent of the senate, and if he can in one day drop in a name and before the hearings aren't unscheduled over some weakened in the future where it has been a opined already over the lunch break cannot declare another to indication in the senate they are in place in january and ignore the advice and consent effort in two years and cancel all vacancies why can't a future president some january over a weekend fill every single court? all of them? and say this is my recess responsibility. the president has been set over here to read the was ignored by the senate. the courts have upheld it. what would slow down the president from doing that. anyone is welcome to answer that. i may take some different opinions. >> let me say nothing would prevent this from happening. in fact i mentioned my remarks i would fundamentally recast, not just the constitutional balance, but it would enable the presid

. >> did you assume that the cftc and cme were filling their responsibility to audit and verify the proper protection of those assets? >> that's correct be back would you all have done the same? >> yes, sir. >> yes. >> did you confirm with mf auditors pricewaterhousecoopers that they verified that controls and systems were in place to prevent theft fraud and unauthorized transfers? >> no, sir, we did not speak directly to the auditors but typically we would expect an audit, an auditor would be up to share information with those of a third party. they would have a confidential relationship with their client. >> we did recognize that they had signed the audit opinion so we did review. >> are enough to. >> again, we have no contact with advisers, auditors or bankers be that i assume you relied on sec funds to complete your work. are you aware that some of the 2011 findings may have been backdated and otherwise adulterated? >> we did rely on sec filings. when you see backdated, i'm not aware do i said may have been. >> i had the same answer. no awareness. >> okay. and just following up on mr.

and how so many changes from dodd/frank are coming through the cftc, and how they're going to have new. knew of things like the european position, but didn't say anything when it wasn't in disclosure for the 300 million last bond issuance that mf had in august, or the fact of the matter whether it was drexel or many or dark blemishes potential in the past, where long best court days we see things like rico being thrown around, where is that? where is the outrage? how can we realistically look at viewers or have listeners listening talking about dodd/frank when something like mf, which is so much has to do with the regulatory issues, what a failure it's been. a failure. >> rick, you and i total he agree. with el speak to professional investors, and they simply can't believe how this has become such a back story in the sense the money is gone, there has to be a trail to this money and no one has been held accountable. you mentioned at the top of the show apple. i want to give a shoutout. there was a semi-viral video, was it on "fast money" about you had somebody talk about apple with a t

i think that does not -- i think that includes the money paid to the cftc. i will double check that for you the treasury has gone up so much prior to the recent years we rarely remitted more than the $25 billion in the year, so the reason it's gone up so much as its part of our monetary policy we have gaziano purchased treasury securities, longer-term treasury securities and mortgage-backed securities, agency mortgage-backed securities. the return on the securities comes to the fed and we take it and pass it back to the treasury, so that is where the profit is coming from in addition the programs we undertook in the crisis have also turned out to be profitable and take the money back to the treasury as well. >> thank you. switching again. how effective do you think the japanese efforts are to stimulate the economy during the 1990's? i don't think there's have recovered and placed an emphasis on europe but i think japan has real consideration. >> japan has had a difficult two decades certainly. i think that the there are important differences between japan and

why did the cftc just disappear from the room and let the sec dictate policy, the type of bankruptcy,g of what was going on. >> then where are these transactions that everybody seems to know except for the people that are owed $1.2 billion? >> well, if we knew all of the transactions, then we would probably be trying to prosecute people. >> i heard through great sources they have all the transactions. >> well, maybe your great sources should become regulate oars then, because we are the people charged with trying to get these people to finding the money trails and building the case. and if other people have ideas, good for them. we're the ones that are the investigators, rick. we're the ones that have to make the case in court. and ensure that when we go to court that we make the best case and get prosecutions. >> so four days, four days from basically the 26th until the 30th and 31st of october, those four days' transactions we still can't get a glimmer of transparency and it's now february 9. but here's my next question. >> hey, rick, what am i supposed to do, give you all the evide

the sec is working with the cftc to write rules that strengthen the stability of our financial systemasing centralized clearing of swaps and insuring that margin and capital requirements reflect the true risks of these products. improving transparency to regulators and to the public by shedding light on a opaque exposures and assisting in developing more robust price discovery mechanisms. and increasing investor protection by enhancing security-based swap transaction disclosure mitigating conflicts of interest and improving our ability to police these markets. it is my hope that in the near term we'll complete the last remaining proposals regarding capital margin segregation and record-keeping requirements. but we are already beginning to transition to the adoption phase. as a first step, i expect the commission soon to finalize rules that define who will be covered by the new regulatory regime and next, what will constitute a security-based swap. finalizing these definitions will be a foundational step. defining the scope of the new regulatory regime and letting market participants k

foundation of the cft customary regime so that one question is to see it fail in its most basic task. despite what some have said i might say again today, i'll just give this did friends cftccommissioner. he said the perception that mf global have been because lack of regulation is mistaken. and our regulations required mf global to segregate future customer funds. or about seven calls for coverage for the future's response markers. again, i think this would be a mistake on expanding the safety net this past market would be unworkable and compound that has a problem party present throughout much of our financial chair. it does appear there are several steps that can be taken to focus on it are the market discipline and ensuring business basic regulatory function of these agencies. i thank the chairman for holding this hearing. >> i think chairman. mr. graham is recognized. >> thank you, mr. chairman. i have a bit of a different abundance. there is no question that customer funds be transferred. i think it speaks for itself. never should have happened. the law is clear. but on top of that, it is compounded by one of the biggest traveling visa market history. who made a deci

and the cftc are imord empowered to prosecute cases involving trading of classified information. we are entrusted with a profound responsibility to the american people, to look out for their best interests, not to do what's in our financial interest. let's show the people who have sent us here that we as a body can come together and do the right thing. today we are take the steps forward to show them that we are worthy of their trust. i encourage all of my colleagues to take this step with us today. madam president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: quorum call: quorum call: the presiding officer: the senator from connecticut. mr. lieberman: i ask unanimous consent that further proceedings under the quorum call be dispensed with. the presiding officer: without objection. mr. lieberman: i thank the chair. in six or seven minutes, the senate will begin a series of votes on the matter before us. the stock act. i wanted to take just a few moments to restate the underlying main purpose of the legislation, which is to re