Transcripts For CSPAN Washington This Week 20140622

Great establishment of scientists, every major Scientific Organization in the country, perhaps dr. Bodkin is right and they are all wrong, but i am not sure that would be the prudent course for our country. Thank you all very much. We are turned. Adjourned. E [captions Copyright National cable satellite corp. 2014] [captioning performed by national captioning institute] next, remarks by securities and Exchange Mission chair Mary Jo White. After that Martin Omalley talking to democrats in iowa. 7 00 a. M. , your calls and comments on washington journal. , debbieakers Wasserman Schultz of florida. She talks politics in the middle of the primary season. She also talks about the new Republican House leader and looks ahead to the fall elections and campaign 2016. Here are some of her remarks. Host is there a democrat other than Hillary Clinton who could he and national standardbearer for the democrats at this point . Guest of course there is. Guest no one else can even get started. Guest well, that is not entirely true. We have a Vice President of the United States certainly who could be a standardbearer. Im the chair of the dnc so i have to credibly manage our prospects. Of we have a deep bench potential candidates, whether it is secretary clinton, Vice President biden or any one of a number of candidates. Martin omalley, the governor of maryland. Or andrew cuomo from new york. Or mark warner from virginia. The list goes on. Guest you were one of the earlier supporters. You endorsed her in 2007. Toyou think theres a need coalesce around her as a party or as a contested democratic primary in 2016 good for the party . Guest honestly, i think we are going to have a robust president ial campaign, like we always do in this country. Will paraphrase my counterpart again at the rnc who himself said that they are going to have be hardpressed to win another National Election unless they get themselves right with the groups that they have alienated at are the swing votes and the keys to winning a National Election. So what we need to do is continue to make sure that we focus on the priorities of the american people, which are policy, newthat tax Economic Policy, through education and environmental policy, health care policy, that sure people can have more opportunities to create a better way of life for themselves. Democratic National Committee chair representative debbie Wasserman Schultz of florida on at 10 00rs today a. M. And 6 00 p. M. On cspan. On fridays securities and Exchange Commission chair Mary Jo White outlined new stock market rules in an event hosted by the Economic Club. The proposed changes include oversight of highspeed traders and improving the transparency of private trading venues. This is about 45 minutes. If people could please get seated. Thank you. Please get seated. You are making me feel like a party pooper here. Dudley, vice chair of the Economic Club of new york and also president of the Federal Reserve bank of new york. I want welcome everybody to the 438th meeting of the club in our 107th year. The economic love is the nations foring Nonpartisan Forum Economic Policy speeches. 1000 speakers have appeared before the club, and this has established a very strong tradition of excellence. I would like to recognize the 214 members of the Centennial Society that have contributed to ensure a sound future for the club. I would like to welcome the students here today from Brooklyn College of law, Columbia University business, nyu, fordham, their attendance is made possible by our members. We are honored today to hear from Mary Jo White, chair of the securities and Exchange Commission. I for one am very happy to see she is at the sec performing so ably in leading the institution. Arrived in april last year with decades of experience as a federal prosecutor. As a u. S. Attorney for the Southern District from 1993 to 2002, she specializes in prosecuting complex securities and Financial Institution fraud cases and International Terrorism cases. Chair white then became the chair of the Litigation Department in new york. She earned her undergraduate degree Phi Beta Kappa from william and mary. Her masters degree in psychology from the new school for social research. She earned her law degree at columbia law school. Chair white, the floor is yours. [applause] i would like to acknowledge the presence of two of my esteemed former colleagues. The former chairman of the sec. Quite resist saying that whoever arranged for the yankees to sweep the Toronto Blue Jays for my arrival, i will be grateful. I am really happy to be here on this particular day. I may not be able to say that the next time. What i want to speak to you about is the current state of our Securities Markets. An issue that i know is on a lot of peoples minds and one that i think is well suited as a topic for the Financial Capital of the world where we are. The Securities Markets are the largest and most robust in the world. And they are fundamental to the global economy. They transform the savings of investors into capital for thousands of companies, add to nest eggs, Center Children to college, turn American Ingenuity tomorrows innovation. Finance Public Infrastructure and help transfer unwanted financial risks. The state and quality of our equity markets in particular have received a great deal of attention lately with the discussion that actually has expanded well beyond those who regularly think and write about these markets to include everyday investors concerned about investments they make and the savings they depend on. I have been closely focused on these issues since i joined the sec a year ago, and i welcome the broader dialogue. Two weeks ago, a few blocks from here, i spoke about the secs plan to strengthen our current equity Market Structure. In addition to outlining a review of our own rules and targeted initiatives, i emphasized our commitment at the sec to comprehensively review and address core Market Structure policy issues, such as the overall fairness of trading in highspeed markets, changes in the number and nature of trading venues and conflicts of interest that brokerdealers. Do iswhat i would like to continue and actually brought in that discussion about the fundamental issues, focusing on actually the changing nature of one of the most basic of Securities Markets options. Intermediation. And at its simplest, intermediation means the Services Offered by market professionals to execute the buy and sell orders of investors. Services offered by brokers, dealers, and exchanges. Just as in other segments of the economy, forces of technology can transform east services and they have done so. A central challenge for us at the sec is to adopt regulatory approaches that inshore intermediaries harness the forces of technology and serve then to better needs of investors in each of the markets we oversee, not just in equities but also in fixed income and derivatives. To understand this challenge, i want to talk first about why competition and technology are so important to how we address Market Structure issues generally and the role of intermediation in particular. I will then turn to contrasting markets to illustrate the complexity of our task as regulators. The equity in fixed income markets have been affected are not affected by competition and technology. U. S. Macroeconomy, all Securities Markets operate within the structure of rules, technology, market practices, and other constraints that establish the boundaries for interactions between buyers and sellers. It is important to recognize that this structure does not just mean regulation but also the much more complex interaction among regulation and other factors like competition and technology. Every incremental change in these interactions can produce significant, sometimes unintended economic consequences that may actually not become evident for years or decades. So this dynamic reality means that we should not be chasing Regulatory Solutions that fix the Market Structure for once and for all. Our markets are not broken or static. In that sense, our work on Market Structure is never finished. The speed with which technology and markets change makes that impossible. Instead, we must always be focused on what in our Market Structure can be improved for the benefit of investors and companies. Taking this approach requires us to expand our perspective, both in terms of time, considering developments well past the last few years, and in terms of markets, understanding the differences among markets rather than simply excusing them as an inevitable consequence of different products and structures. If we stand too close to the particular problems in a particular market at a particular time, we may well fail to fully understand the broader forces that are at work and the regulatory choices available. So consider the connection that some have asserted between the rise of highfrequency trading and the implementation of regulation in 2007. The commissions most recent set of rules designed to carry out our statutory mandate to establish a National Market system for equities. Tradeation includes a rade through provision. Some of argue that this facilitated the fragmentation of volume among many trading venues enabling highfrequency traders to flourish by exploiting the fastest connection among these venues. Given the current prevalence of highfrequency traders in our equities markets, some put the number at 50 of daily volume, one might reasonably ask whether regulation did in fact change the rules of the game in favor of speed . As a regulator assessing our markets, however, we cannot rely simply on the temporal juxtaposition of regulation and High Frequency trading. The forces at play are more complex. Be seen in the data from other markets both in the United States and around the world, many of which are also now characterized by high levelbusy trading but none of which have their own regulation. Rise oflight, the highfrequency trading emerges as a more complicated story than simply the unintended consequences of regulation. S p 500 example the futures contract which is one of the most actively traded products in the United States and which is not subject to regulation nms or sec oversight. Unlike trading in equity markets multiplespread among exchanges, all trading is centralized on the Single Market the chicago mercantile exchange. It does not use a pricing structure. Most u. S. Equities exchanges. In most respects, the Market Structure for the emini is nothing like the Market Structure for u. S. Equities. Yet studies indicate very much like the equities markets the highfrequency trading firms account for more than 50 of emini trading. Comparisons demonstrate a need for a wider lens in evaluating Market Structure issues and proposals for changes. That wider lens inevitably brings competition and technology into view. Perhaps nowhere has the impact of the forces of technology and competition been more profound than in how intermediaries have changed and intermediation has changed over the last 20 years in equities and listed options. Since 1934 when Congress First mandated regulation of trading in the u. S. Securities markets, intermediation has been defined by respective functions of exchanges, brokers, and dealers. Exchanges provide facilities that bring together purchasers and sellers of securities for a specified fee. Brokers or agents that engage in the business of effecting transactions in securities for the accounts of others, for an explicit commission. And dealers are principles. Sell securities for their own account. Some of these dealers are highfrequency traders. Now, to complicate things a bit further, the neat lines that Congress True in 1934 have not resulted in models of intermediation that are clearcut or uniform across Securities Markets. Most obviously the functions of broker and dealer have often been combined. There is a reason why we call them brokerdealers. The conflict between investors interests and the intermedia ries interest has been a source of concern for the sec. Another type of dual role in exchanges and dealers have acted collectively to control Competition Among dealers and setting prices. This occurred in the 1990s. Conflicts ofo interest, intermediation when unnecessary, inefficient, or un competitive can unnecessarily increase the cost to investors. The fees charged by exchanges and brokers may be excessive in the absence of effective competition. Serious concerns have been raised about intermediation by dealers excessive intermediation. Given the persistent concerns of conflicts of interest and investors costs we must rethink the way that we look at intermediation. In particular for a given market, we must ask whether intermediation has harnessed competition and technology in the service of the investors. Are the benefits being realized by investors . Are there unintended consequences adversely affecting investors . Is regulation appropriately tailored to the Competitive Dynamics and Technological Developments of the market . At theg back to look contrast between the equity and fixed income markets, may actually help us better understand these questions and the inherent complexities of the regulatory decisions of the sec. U. S. Equity markets, competition and technology have had a profound effect for over many years. Generating enormous benefits for investors and issuers. Equity markets today our host to a diverse set of e xchanges that match buyers and sellers. Dealer intermediation is substantial. But many orders are not intermediated on these matching venues. They are being executed by brokerdealers before they ever reach such a venue. Off Exchange Trading now represents more than 35 of equity volume. Compared to just 25 five years ago. And majority of this file reflects brokerdealers executing directly the orders of both retail and institutional traders. So today, even in the very lively debate about the various aspects of equity Market Structure, one would be hardpressed to find concerns being expressed about a lack of Competition Among equities in changes and other intermediaries had failed to take advantage of new technologies. At lease with respect to exchanges, this is a major change from the past where a primary concern was for years the potential for dominant markets to stand in the way of forces of technology and competition. This was certainly a concern in the forefront in 1975 when congress amended the exchange act to direct the commission to facilitate the creation of the National Market system. And it continued into the s withon of regulation nm fears that competition would be limited to the New York Stock Exchange and nasdaq. We are now living in a much different world where many are questioning whether the pendulum has swung too far and we have too many venues, creating unnecessary complexity and cost for investors. Years, the sec0 has worked hard to further the statutory objectives of the National Market system which include the efficient execution , pricesactions transparency, competition, best execution, and an opportunity for investors to meet directly. But as previous commissions have noted, these objectives are not entirely aligned. In particular, the goal of Competition Among trading venues can lead to what we generally all call fragmentation where orders may be spread among competing venues. Maymuch fragmentation detract from efficient execution and opportunity for investor orders to meet directly by creating opportunities for excessive intermediation. The sec has soft paths to balance these objectives in advancing the interests of investors. Thate could credibly claim this path is an easy one. For example, one challenge arose in the 1990s and the Market Structure for nasdaq. Certain dealers on nasdaq had taken action to discourage topetition on quotes and maintain wider spreads which helps preserve compensation for the dealers as integrating aries providingiaries liquidity. Institutional investors responded to the increasing toding costs, finding ways negotiate better prices with different dealers and take advantage of an alternative trading venue known as an electronic communication network. While Institutional Investors and dealers traded on the ecn, Retail Investors had no access to the more favorable prices on the ecn. But brokers that handle retail orders directly benefited from the artificially widespread created by the scheme because they with their customers directly as dealers or sold their order flow for a fee to other dealers. The sec ultimately addressed these issues in 1996 by requiring the nasdaq system be opened up to prices of all participants, not just dealers, and by emphasizing that brokers who handle retail order flow were required to consider opportunities for price improvement on the display prices. These steps serves to empower unleashing Competitive Forces that led to a major shift in Trading Volume from nasa cns. Rs to the es by 2004, they shared about 70 of volume. Cn transmitted data to the market as well as the public. Ecns also used the pricing structure used today by most. They proved attractive to proprietary firms that engage in highvolume algorithmic strategies. Before long, these game known as highfrequency traders. If these key features of the equity Market Structure in 2004 that i have just been talking about sound familiar to you, they should. Though it originated well before inulation was implemented 2007, that structure is very similar to what we have today, and it was created through intense competition and tremendous technological changes, not just sec actions. But we are addressing a number of fundamental issues in our comprehensive review of equity Market Structure. As we examine those issues through our wider lenses, this thumbnail history suggest i think at least two current lessons for our approach. First, even if it were a desired impact of the technology and competition on intermediation in our market modern equity Market Structure could not be undone by minor regulatory surgery. It is the, nation of over a quartercentury of evolution, much of which has benefited investors. Thend, given the pace of technological change and intensity of competition in the equities markets, we must always focus on ensuring that our rules are keeping pace. If they do not, as they did not with the advent of electronic trading, our obligation to ensure that our markets continue to serve investors and companies will be compromised. So with our expanded regulatory length that i have been talking about, let me now just turn to thebriefly fixed income markets, where there is no equivalent of regulation and the nature of intermediation has changed relatively little over the years. It is important to remember that while almost 7000 issuers currently have 27 point 8 trillion of Securities Trading exchanges, there are also more than 40,000 Corporate Bond issues outstanding, totaling approximately 11. 3 trillion and more than one million and municipal issues outstanding, representing about 3. 7 trillion in principal amount. Trading in these massive fixed income markets, however, has a highly toned centralize, occurring primarily through dealers, but costs of intermediation are much more difficult to measure than other more transparent venues. While transaction prices for both corporate and Municipal Bonds are now available to investors shortly after the trade occurs, the amount of pricing Information Available limited,trade is very and is certainly not widely available to the investing public. To the equityast markets, where the concern is perhaps Weather Technology and competition have taken us too of, one might instead ask the fixedincome markets whether the transformative powers of these forces have been allowed to operate to the extent it should to benefit investors. It is striking that the dramatic Technology Advances that have transformed the equity markets really over the past decade have had only a modest impact on the trading of fixed income securities. While today there are a number of Electronic Systems that facilitate trading in fixedincome securities, they tend to be inventorybased, providing information primarily on the bonds that participating dealers would like to sell. In addition, information about the Trading Interest reflected on these systems often is restricted to participate in dealers and select customers. So although new technologies are gradually being incorporated into the trading of fixedincome securities, producing efficiencies and some preach rate pricing information, it appears that they are primarily being used to support the traditional dealer model, so i am therefore concerned that in the fixed income markets, technology is being leveraged simply to make the old am i to centralize method of training more efficient for inner market intermediaries, and its potential to receive more widespread benefits for investors, including the broad availability of free trade pricing information, especially for Retail Investors, its not being realized. That tho partially address these concerns and to assure the best prices reasonably available, i have asked to prioritize the constructive, ongoing work on my opinionnt but in relatively achievable initiatives to improve the quality and transparency of the prices received by investors. First, to ensure that brokers are subject to meaningful obligations to achieve the best execution for investors in both corporate and Municipal Bond transactions, we will be working closely with the ms rb in the coming months as they finalize a robust best extrusion role, and msrb onfinra and the how brokers may best achieve best execution. Of a best execution role is vital for the protection of investors and enhancing price competition. Second, to help investors better understand the cost of their fixed income transactions, we will work with venrock anffinrae markups ining the riskless transactions for both corporate and Municipal Bonds. These transactions occur when dealers buy and sell a fixed income security at the same price and time to fill two customer orders. Mark ups, the delias compensation for these transactions, can be regularly identified because theyre based on different prices on the two can temper any as transactions, which already must be reported probably to finra and the msrb. This information should help customers understand the reasonable in this the reasonableness. Market disclosure is reasonably important at transactions become more common in the fixedincome markets, and the importance of market disclosure is especially pronounced in the current low yield environment where the amount of intermediary compensation can have a measurable impact on the yield that an investor receives. More broadly, we must take steps to ensure that the benefits of technological advances are realized by all investors in the fixedincome markets. Accordingly, ive asked the staff to focus on a Regulatory Initiative to enhance the public availability of pretrade pricing information in the fixedincome markets, particularly with respect to smaller retail size orders. This initiative, by the way, reference and the commission for the 2012 report on the municipal Securities Market would require the public dissemination of the best prices generated by alternative Trading Systems and other electronic Dealer Networks municipalporate and bond markets. This potentially transformative change would broaden the access to pricing information that today is only available to select parties. Im acutely aware of the need to calibrate to best achieve our regulatory unintendedinimize o consequences. Careful staff analysis of the pricing data already available to assess how best to achieve our regulatory objectives, but properly implemented, rules providing for better pretrade pricing transparency have the potential to transform the fixedincome markets by promoting price competition and improving margins efficiency and facilitating best execution, so the overall goal is to fully understand the role of technology in competition in todays markets, and to help these powerful forces work for investors in every Securities Market, including in the fixed income markets. I think only with this broader perspective when guided by the daily experience of investors will we ensure that our securities Market Structure continues to support a strong growing global economy, and at the sec, we are fully and committed to that objective. Thank you very much for listening. [applause] you very much, chair white, for those very relevant, clear, and insightful comments. As is our custom, two members have been selected to question the chair. Fromefloyd noris is the new york times, and the rlake. Is from silve questions to econ club. Org. Floyd, your the first questioner. Please. Thank you, chair white, for the interesting speech. The Commission Imposed rules on Money Market Funds, but the president and Federal Reserve bank argue our two weak. At the same time, the Money Market Fund industry would rather you do nothing. What are your views on what needs to be done, and are these things the commission can get a bow to do anything yo . Can i say they both lose, and yes . We are currently at the commission quite actively engaged in finalizing the Money Market Fund rules, and i expect in the near term that that adoption will occur. Clearly in the process of doing that, we have taken very seriously all of the comments we have received, including the concerns expressed by among others, some members of the Federal Reserve banks maybe all of the Federal Reserve banks, the feesrms of whether and gates aspect of our alternative proposals in the proposal might run a risk of preemptive runs, and so we have economists have analyzed the back, and there quite focused on those have analyzed that, and they are quite focused on those. I have a good confidence level that we will be proceeding with a very nearterm with an adoption of a very robust rule. German white, thank you. German white, thank you. Youve talked about an ambitious agenda, talking about looking into highfrequency and today you also brought up the fixed income. Forhave a reputation not talk, despite your great speech today, but for action. Right. Market participants here are wondering how you will prioritize the items on your agenda. Over what time frame in what sequence can expect for you to take action . There are, as you know, many competing rortys, very important ones, that the commission has before, including the completion of the mandated rulemakings, the sec received Dodd Frank Frank act. I will say this about the Market Structure initiatives. This is really across the markets a set of issues that i focus on actually before i came to the sec, and one of my immediate priorities for us to come thoroughly to grips with way, buta datadriven i think we have maybe rarely but i think all five of our commissioners who spoken publicly about how high a priority the range of work in structure issues, that include some things we did not talk about today, too. For example, we have a proposed rule that deals with requiring enhanced safeguards over a technological systems of exchanges and the large alternative Trading Systems to really ensure that the technology that connects are very interconnected market is as robust as it can become a redundant where he needs to be, so that is a very high priority for us as well. It is no question you cannot do everything at once. I hope you are right in your assessment of me from my past. Being ableocused on to accomplish everything we have spoken of today and the things i have added to the list within the next and certainly the next year or two. Be muche of them will sooner than others, obviously, because you have to proceed in a sequence. Chair, the branch often wavers Brokerage Firms that run afoul your rules of criminal laws. To free the banks from provisions of the laws i would otherwise deny them privileges or perhaps remove them from certain parts of their business, could you assess your general views on such waivers, and whether you think the commission should announce whatever wavers there granting at the same time they disclose a settlement with a banker . There. Main questions the first is either by statute or regulation where certain automatic disqualifications would occur. Not just be banks, but whomever. There is also provision for waivers and standard set forth with respect to those waivers. They are not enforce the remedies, but they tend to arise in connection with Enforcement Actions either by us or some other agency, and then the focus is really on, per the standards of the statute or the regulation, should the fact of alsoenforcement action mean that a waiver should not be granted if it is asked for to permit the particular company to engage in some other aspects of its business . I think it is very important. I think we do regard the waiver process when a waiver is requested we need to be very robust in our review of those. Very faithful to those standards. And i think we are. It is a very casebycase to some degree, although we have policy statements to guide. And those who might apply for those waivers and make those decisions per those standards. I think we do do that. In terms of the timing and the transparency, floyd, i know you have raised that in one of your columns as well. First, if a waiver is granted, it is posted as soon as it is granted on our website. Because of the nature, again, i enforcementnot remedies, cu will often have our division of Investment Management at least as the Group Commission does some of this itself, for some of it by delegated authority. He timing its not always the same, see me have an enforcement action that is resolved. Associated with our enforcement action. If it is some other enforcement action, it is not want to attach it to at a same time. One of the things i have done is to try to make sure as one can that that information is available at the same time when we do have an enforcement action pending. A number of us in this room are directors for public companies, and we have observed over the years held the role of proxy advisors has grown. At the same time, the standardsetting for all of us opaque, and accessible, and a reminder of the issues that your predecessors had to deal with. How do you deal with this issue and what do you think the role of the sec is in connection to it . We had a roundtable in december that i thought was constructeive. There. , investors were a good discussion of a number of those issues. Since then under my direction the staff has been focused on what next steps the sec should take in this space. Before that roundtable and afterwards, as you know, a lot of dialogue between the companies, the investors, and the proxy Advisory Firms about how the process might be improved by those discussions and those issues brought to bear. Proxy Advisory Firms are a norm is the important but there have also been issues that have been raised that need attention. I am currently reviewing the output from the staff on that. Madam chairman, some advocates International Accounting standards hope you are going to come through for it allowsi believe some American Companies to use u. S. Capitol standards. Can you talk about your attitudes on that . Yes, i can. I think you did a column on that as well. Passing that, what i have said about that, floyd, and i will repeat it here again, the Commission Last spoke on that. Ssue as a commission in 2010 as most of you, probably all of you know, the foreign private and do can now use ifrs not have to reconcile to u. S. Cap, so youd be United States is a great user an investor and in that of ifrs context. The remaining copies the big issue is whether and if so how, might bextent ifrs extended to domestic issuers. That its really the issue that is there. What ive said is it is a high priority for me, and it is, to get the commission in a position to speak further on this issue and the very near term. I cannot tell you what that statement will be at this point in time, but i think it is a very high priority for the commission to make a statement and provide a clear exit patient as to where the commission is. Secs mosthe important and of course confidential jobs is to police the markets through enforcement. Twoact, the sec is one of federal agencies with independent litigating authority. At least one federal judge has questioned the path that the sec has used that authority. You bring more highlevel did you want to keep that last part . [laughter] the Second Circuit has recently disagreed. [laughter] you bring a lot of highlevel enforcement experience to your job. Can you share with us the principles and priorities you intend to apply to your enforcement role . I guess i was a generally first that i think it is enormously important for the sec, all Law Enforcement agencies, but the sec to be a very strong, credible and enforcer of the federal security laws. These always come back to hot you a little bit, but i think that my confirmation, the old and unrelenting in terms of enforcement, and i mean that. It should be done fairly and based on evidence. I think it is important to not only punish the wrongdoers that are before you as a result of an investigation of and oarsmen action but to send a very strong of deterrence. One of the reasons that i changed the settlement protocol from a pretty much universal and less there was a parallel criminal action, no admit, no deny to requiring admissions in certain cases where i thought that or we think that there is a particular need for public accountability. We have set forth some parameters. It is clearly an evolving protocol. We have done i think about 10 significant cases. There clearly are going to be more because i think that public accountability is important to the strength of the message of deterrence and for the credibility of a strong Law Enforcement agency. The other thing that we have tried to do also is to look kind regulationse many we have, and they are very important one, and if there is a situation where there is really no noncompliance, a pattern of noncompliance, even if it is not the biggest draw, which we will never ignore. They are always prioritized. That we really bring awareness and enforcement attention to send the message that these regulations are therefore a inson, to protect investors the markets command to conform with those. We cannot be everywhere, we have limited resources, obviously, but i came into a very strong Enforcement Program. Some people always want more, but if you look at the secs record and the financial crisis cases, very impressive. Very impressive. In civiln basically penalties order to be returned to harmed investors, i think approximately 170 indices, individuals charge including about 70 ceos and other senior executive. That is a very strong record. Obviously there are more complaints there always will be. I think bottom line, kind of full stop, it is enormously important, and i try to add value to it that the sec Enforcement Program be as strong as possible. Madam chair, you spoke of putting new rules in the bond market to increase disclosure on trading. I expect the wall street firms ,ill be worried about that removing a substantial parts of their profits. I was wondering do you think to try tos at all assure that these firms have a chance to be profitable . [laughter] what a question , and weur rulemaking have a familiar mission to protect investors, to protect the fair and orderly, especially in our markets to facilitate capital formation, and if we do any rulemaking usually by law but certainly by policy. Are trying tot we accomplish for the benefit of ,nvestors with market impacts so we do very careful legal Economic Analysis on all of our roles. We take into account all of those factors, all of those arguments that get made and try to fulfill our regulatory objectives, as i have outlined in the speech, but also take accountability in the most costeffective way that we can, but clearly regulation has costs associated with it, and that is a necessary part of it. I have a question from the floor about argentina. [laughter] what is your view on the potential impact for foreign issuers in the u. S. Market in light of this decision on argentinian debt . Im allowed one punt, right . I actually have a meeting on that on monday, so i do not want to give an opinion here today. I have studied it. I think you have a column on this as well, which i have also read. [laughter] withgood issues raised respect to that, but i will stay tuned, i guess. Quite so i will ask another one. Ok. [laughter] i do that was too easy. The sec has successfully casesd a number of related to wrong doing and in some cases created to the related to the financial crisis. Can you share with us what steps the sec is taking to get new parties . Ds to the this is receiving my personal attention because it takes longer than anybody wants to in most of these situations to get money is returned, so we are doing a number of what i would call enhancements to try to speed up that process. It is a very for example, last year, we received orders to return 3. 4 billion because of our fair fund mechanism. Returnable if collected to harmed investors. We have collected about 2 billion of that. And those who get the money if we can, any family can up front, and return it as promptly as we can. Thate way, compared to reported 4 billion in orders of returns our budget is 1. 3 billion, so we need a bigger budget, too. We are focused on trying to streamline that as well. You obviously have to be claims that it for being bona fide claims, but anything we can do to speed that up at both ends we are trying to do. Thank you. Thank you. [applause] [captions Copyright National cable satellite corp. 2014] [captioning performed by national captioning institute] askedhink we could say and answered. Thank you, floyd and glenn, chair white. The next meeting at the club will be next tuesday, june 24 for a breakfast at the hyatt with one of our members and my charles plosser, ceo of the Federal Reserve bank of philadelphia. Thank you all for coming, and enjoy your lunch. [applause] next Maryland Governor Martin Omalley speaking to democrats in iowa. Then live at 7 00 a. M. , your calls and comments on washington journal. These ceo of General Motors, mary barra, testified before congress this week about the auto companys recall of a defective ignition switch. She and the company hired by gm to conduct an investigation testified before the House Oversight and investigations subcommittee. We will show you it today at 10 30 a. M. Eastern. Another one was gruesome, but it was an international sensation. It was called the trunk of murder. It was in 1885, and there were two englishmen who came to america, they were traveling salesman, they meet on the books, they decide to go across america, and they wind up together at a nice hotel here in st. Louis. One of them was richer than the poorer guythe suddenly has a lot of money iran, and he tells everybody that his buddy went outoftown, and the hotel room starts smelling, and the chambermaids go in and it winds up that his buddy is in the trunk dead for several days. He islice chased him, but taken the ship from San Francisco already. As the company Big International case because you have two guys from england, you have st. Louis, you have a manhunt to the , and the of the world new Zealand Police stopped him, two officers from st. Louis actually went to get him. It took 10 weeks for the roundtrip, and when they come back to the train station downtown, half of st. Louis is there to see this guy, and interviews galore, and he winds up being hanged. We used to have a gallows at the Police Headquarters like a lot of towns did. We look at the history and literary life of st. Louis, missouri today at 2 00 p. M. Eastern on American History tv on cspan3. Maryland governor Martin Omalley has been considered a potential president ial candidate in 2016. He was the keynote speaker at this years Iowa Democratic convention in des moines. The state traditionally holds the nations first president ial caucuses. His speech is just under 30 minutes. Please join me in welcoming the governor of the great state of maryland, Martin Omalley. Thank you thank you. [applause] thank you, iowa. Thank you very, very much. I want to begin by thanking you for your indulgence and watching that little introductory video and my apologies to those who thought were you settling in for the next episode of the wire. [laughter] its wonderful to be here in des moines, to be with so many great friends in iowa. Turn to your neighbor and tell them iowa is moving forward. Go ahead. Do it. Turn to your other neighbor and tell them we need a fresh start. You guys have one of the most outstanding democratic parties in the United States of america. And thank you, scott brennan, for your great work. [applause] scott does an outstanding job as your chair. And scott, i want to thank you for your leadership. I think that you understand better than most that in order for any of us as Public Servants to govern well, we need the Democratic Party getting stronger every day. And thats what youre doing in iowa. [applause] to create jobs, to strengthen our middle class, to give our children a Better Future. With scotts leadership and the hard work of all of you in this room, we are going to give iowa a fresh start by electing jack hatch the next governor of iowa. [applause] jack, im looking forward to campaigning with you today. You represent that sort of problem solving. You and monica. That sort of problem solving leadership that every state needs. We need a governor whos on the side of the middle class families of iowa. Their needs and their aspirations. I think the people of iowa have had enough of the branstad administrations. Dont you . [applause] my goodness. Five terms is enough, dont we think . Its time for a fresh start. And its time to turn the page on cronyism. And elect a governor whos going to put the needs of iowas middle class Families First every single day he goes to work. [applause] and jack hatch is that leader. Jack hatch and Monica Vernon are going to move your state forward. But theyre going to need partners. So lets make sure that mark smith is the next speaker of the house of iowa. Lets help senators gronstal and yokum keep the senate with democratic leadership moving forward. And were going to reelect dave lobsect to congress, arent we . [applause] and we are going to send the congress patrick murphy, arent we . And whoever the republicans figure out they want to put up, we are going to elect stacy apple to congress, arent we . And break that Glass Ceiling . And were going to beat steve king and elect fighting jim mauer the next congressman from iowas fourth. Now im sure also on your mind, especially given the Outstanding Service that came to our country from your United States senator tom harkin that you have an important u. S. Senate race here, dont you, this year . Yes, indeed you do. And there couldnt be a bigger contrast than the choices of the people of iowa are going to be presented. In bruce braley and joni ernst. Bruce braleys cause is the cause of a stronger middle class in iowa. Greater opportunity. An iowa where everyones included. And where everyone is needed and where we help each other in order to move forward. Now, joni ernst wants to privatize social security. She wants to turn the medicare into a voucher system. She wants to repeal the federal minimum wage. Now, how is any of that going to help strengthen middle class opportunity and middle class families in iowa . She even wants to roll back the clean water act and eliminate the department of education. How much less schooling do you think would be good for our kids, joni . [laughter] can you imagine someone with those sorts of extreme views holding the seat that tom harkin so ably filled on your behalf all of these years . Look, from education to agriculture, to his unflagging commitment to the sick, to the poor, to the voiceless, senator harkins success can be measured by the millions of american lives that he has touched and that he has made better. And iowa and indeed the entire country will be forever blessed because of tom harkins great service. [applause] and i know tom and ruth would join me when i say you want to know what sort of lasting tribute you can give to tom harkin . You want to know what sort of tribute you can give to him and to ruth after the thank you parties and the thank you dinners are done . The best tribute you can give to tom harkins work is to elect bruce braley your next United States senator. [cheers and applause] its all about the beliefs we share, isnt it . About our belief in the dignity of every individual. About our own responsibility to advance the common good. And thats what i want to talk with you about today. I want to talk with you about the story of us. The ongoing story of us. The story of baltimore and iowa, the story of maryland, and america. When i was elected mayor of baltimore in 1999, my city had become by that year the most violent, addicted and abandoned city in america. And there was a big difference in those days between the baltimore that we carried in our hearts and the baltimore that we saw on our streets and the baltimore that we saw on our headlines. And our biggest enemy wasnt drug dealers or crack cocaine. It was in essence a lack of belief. A culture of failure. Countless excuses about how nothing would work. And why none of us should even bother to try. And so we set out to make our city work again. We saw trash in our streets and alleys. So we picked it up. Every day. We saw open air drug markets, and we began to relentlessly close them down. We saw neighbors suffering from addiction so we expanded drug treatment, and we got more of our neighbors into recovery. And after a year [applause] and after a year of hardearned, life saving, steady progress we turned a bright light on the heart of the despair that had gripped our city for too long. And we launched a campaign on television that we called simply believe. The first ad was a fourminute commercial, which the local news affiliates agreed to air simultaneously. And as a viewer you walk through a day in the life of a 10yearold africanamerican boy. It starts out with him warming his hands at a corner fire with a homeless man on an abandoned corner. Dodging drug dealers and their suburban buyers, stepping around hypodermic needles and prostitutes. Ultimately seeking out his little sister in the night who had gone to the store to buy candy. And he finds her in the center of a crowd of griefstricken neighbors, paramedics and police, another young victim of drug dealer crossfire. Killed in a driveby shooting. Her tightly braided hair, her lifeless eyes, wide open, lying in a pool of blood. The narrators voice says the people of baltimore are in a fight. Its a fight for their future. Its a fight that weve been losing one life at a time. He continues. There are some who say its over. Give up. Weve lost. But for the strong, for the brave, this fight is not over. What will it take to make us stand together and say enough . And then come the stark white on black words, believe. Believe in us. Believe in yourself. Baltimore, believe. Now, for three very uncomfortable and painful weeks, we ran those ads. And we had to be honest about our present in order to change our future. We then ran ads calling upon our people to take real individual actions. To step up, mentor a child and an hour, a week can save a live. Call 1800believe. Join the police department. Believe in yourself. Believe in us. Call 1800believe. Get someone you love into drug treatment. It works and theres more of it. Call 1800believe. And you know what . It did work. The people of baltimore rallied. And of course it wasnt about the bumper stickers or the signs, was it . It was about something deeper. The belief that there is no such thing as a spare american. Over the next 10 years, baltimore went on to achieve the biggest reduction in part one crime of any major city in america. Now, why do i share that story with you today . Because we must acknowledge where we are together in order to move forward together. Because belief is important. Belief drives action. And today, like baltimore in 1999, we as americans are going through a cynical time of disbelief, arent we . A time with more excuses than action. More ideology than cooperation. More fear and anger oftentimes than progress. We seem to have lost, havent we, that shared conviction we once had that we actually have the ability to make things better together. And there is today in our country a big difference between the america that we carry in our hearts and the america that were seeing in our headlines. The america in our hearts is that land where those who work hard, who play by the rules, who get up early in the morning, can make a Better Future for their kids and their family. And the america in our headline s is too often a place where wall street profits are higher than ever, the rich are richer than ever, but the paychecks of hardworking families are becoming smaller and smaller. The america in our hearts [applause] the america in our hearts remains that nation that created the greatest middle class in the history of the world. But the america in our headlines is the nation where too many kids cant afford to go to college and too many College Graduates cant find a job. And all of this, my friends, reminds me of the story of the prize fighter who has been in the ring and hes beaten against the ropes. Hes getting the worst of it. Pounded down by his opponent time and time again. And finally his trainer gets a chance to sit him down in the corner. And he says to him as he looks him in the eye, the problem isnt with the other guy doing to you, the problem is what youre not doing for yourself. Whether we think we can or we think we cant, we are probably right. And i dont know about you. But ive had enough of the cynicism, and ive had enough of the apathy, ive had enough of us giving into selfpity, small solutions, and low expectations of one another. [applause] so lets remember who we are, shall we . For 235 years, we have been the country that thrilled the world. That led the world. Over and over again in large part by making ourselves stronger at home. Dont you think its time we do it again . [applause] the patriots who made america great, they didnt pray for their president to fail. They prayed for their president to succeed. [applause] and our founders didnt belittle science. They didnt belittle learning. They aspired to it. They didnt appeal to americas fears. They inspired american courage. And they would never, ever abandon the war on poverty in order to declare a war on women, a war on workers, a war on immigrants, a war on the sick, or a war on hungry children. [applause] what was true for our parents and grandparents remains true today. America is the greatest job generating, opportunityexpanding nation ever created in the history of the free world. But america cannot serve our childrens needs, cannot serve our childrens future well if our republican brothers and sisters in Congress Keep shutting us down and selling our country short. As democrats, as americans, we have an urgent responsibility today. Its about jobs, its about a stronger middle class, and its about giving our children a Better Future now. The truth is after hoover, america needed roosevelt. After eisenhower we needed kennedy. After reagan we needed clinton. And after eight miserable years of george w. Bush, america needed barack obama. [applause] no president , no president since f. D. R. Inherited a worse economy, bigger jobs losses, as many wars or as large of deficit as president obama did. Thanks to his leadership, thanks to the leadership of tom harkin and congressional democrats, americas moving forward again. Get this. This month, was our 51st month in case anybody still keeping count of positive monthly job creation in the United States of america. [applause] in fact, it was the fourth month in a row, i think, that we actually had more than 200,000 jobs created. There were 217,000 jobs created last month. But urgent work remains to be done. And the cynical few who have hacked our democracy are digging in. Yes, these Tea Party Republicans funded by their wealthy economic royalist friends like the koch brothers, they see america as a small, small place, dont they . They see us as a business in decline. They look at america as a place of limited potential. And limited capacity. A place that can a place that can only afford to serve the interests of the privileged few. And weve seen this view before, havent we . Hoover called it supply side economics. Reagan called it trickle down economics. George w. Bush called it focusing on my base. [applause] now, whatever they call it, it will not give our children a Better Future. A more prosperous future with more jobs and more opportunity for all. To those who would prescribe this future of less for americas middle class, we must ask the very real question, how much less do you think would be good for our country . Think about it. How much less education will make our children smarter . How many fewer College Degrees will make our economy more competitive . How many hungry American Children can we no longer afford to feed . Think about your parents and grandparents for a second. Picture their faces. They understood the essential truth of our american dream. The stronger we make our country, the more she gives back to us. To our children. And to our grandchildren. We will not solve our problems by doing less. We must do more. In maryland, we have chosen to do more. We have answered our president s call to create new jobs and new industries. To build a modern economy. An economy with a human purpose. Weve done more rather than less to improve our childrens education. More rather than less to rebuild our infrastructure and create jobs. More to make College Opportunity more widely available to more families. You see like you, we believe that the foundation of any growing economy is a stronger middle class. Therefore, we increased the earned income tax credit. Not once but twice. We became the first state in the nation to pass a living wage. And just a few weeks ago, thank you, tom harkin, for your leadership, we increased the minimum wage in maryland to 10. 10 an hour. [applause] now why did we choose to do these things . Why did we choose to do these things . Because when workers earn more money, businesses have more customers, and our whole economy grows. This is called common sense economics. A thriving economy, a thriving economy, a growing economy is built from the middle out and the middle up. Prosperity doesnt trickle down. And it never has. A stronger middle class is not the consequence of economic growth. A stronger middle class is the cause of all economic growth. [applause] and the proof is in the results. The proof is in the results. Marylands creating jobs at the second fastest rate of any state in our region. About 9,000 over just the last two months. Not only do our people now earn the highest Median Income in the nation, but were also rated one of the top states for upward economic mobility. And just last week, the United States chamber of commerce hardly a mouthpiece for the maryland Democratic Party, for the third year in a row, named us the number one state in america for innovation and entrepreneurship. [applause] but progress is also about creating a more just and a more inclusive and a more secure future for power kids, isnt it . With the belief in the dignity of every individual, we expanded and protected collective bargaining rights in maryland. [applause] and we dont belittle our teachers. We support them. We partner with them. And with the belief in the dignity of every childs full potential, we passed the dream act in maryland. Oy passing it so much that when our republican brothers and sisters sent it to referendum, the people of our state passed it again, with 58 of the vote. And together, with the belief in the dignity of every individual, we passed Marriage Equality in the state of maryland. [applause] together, weve driven crime down to 30year lows in maryland. And we passed important gun safety legislation that focuses on school safety, mental health, and background checks for handgun purchases. [applause] and because Climate Change is real, we expanded Renewable Energy conservation, and reduced Greenhouse Gas emissions. Progress is a choice. We do not move forward by chance. Hope drives belief. Belief drives action. And action achieves results. Final story. Final story. I am joined here in your great state by my 16yearold son, william omalley. And when william was 9 years old, and my wife and i have four children, two boys, two girls, rich people couldnt do better [laughter] when william was 9 years old, when william was 9 years old, i was at home and together we were watching a History Channel special about rosa parks. Civil rights. And the montgomery bus boycott. And as william watched the story he turned to me and said hey, dad, back then, by which he meant sometime between the extinction of the dinosaur and the arrival of the eighttrack tape, he said, dad, back then, somebody actually told you that some of you had to ride in the front of the bus and some of you had to ride in the back of the bus . And you guys actually listened . [laughter] and i said, well, william, i know its hard to imagine, son. But thats just the way it had always been. And then he turned to me, with that clear wisdom of youth, and he said dad, didnt you guys realize that you were all going to the same place . [laughter applause] oh, yes. The truth is we are all going to the same place. We are all on the same bus. Iowa and maryland, california and mississippi, and we will move forward or we will slip back together. We will succeed or we will fail together. And we will rise or fall together. And this is not a matter my friends of wishing or hoping. Its a matter of belief. Its a matter of action. We are americans. And we make our own destiny. And we will not be the first generation to give our children a country of less. And it means that iowa must stand up. It means that maryland must stand up. It means that each of us must stand up. And it only takes one person, and then another, and then another, to stand up and say enough. Enough obstruction. Enough wasted time. Stop selling our country short. Let us achieve like americans again. Let us lead like americans again. And let us believe in americans again. In ourselves, in our nation, and in one another. Together we can, together we will, and together we must. Thank you, iowa. On to victory. On to november. On to a stronger country for our kids. Thanks a lot. [applause] next, your calls and comments live on washington journal, then newsmakers. After that, a house hearing on a General Motors ignition switch recall with ceo mary barra. An f on transparency and freedom of information, and i think my colleagues in journalism will give a similar grade, liberal or conservative. The freedom of press have become a joke. It was already well on its way prior to the obama administration, but this administration, the reductions, the excuses, and really it is shocking because i feel very strongly that the information that they withhold and protect many times belongs to the public. We own it, but there is no sense of that when you ask or it. Aey covet it as if they are private corporation, defending their trade secrets rather than understanding that that what they hold is information they have gathered on our behalf. Emmy awardwinning journalist Cheryl Atkinson Sharyl Attkisson tonight 8 00 on cspans q a. Coming up this morning on washington journal, Christian Science monitor respondent anna mulrine reviews u. S. Options in iraq. Offers aley telhami history of the sunnis, shia, and kurds. And later John Kingston discusses the impact the unrest in iraq can have on the global u. S. Supply and u. S. Gas prices. We will taking your comments and calls on facebook and twitter. Washington journal is next. Good morning. Secretary of state john kerry in egypt today as he embarks on a series of meetings if leaders in the middle east and europe. The topic is iraq. A new nbc news wall street journal poll gives the president Approval Rating since taking office in handling foreign policy. This is the subject of a white house summit tomorrow in washington. Congress is back in session this week. Some statewide races including oklahoma