Transcripts For CSPAN Washington This Week 20130218 : vimars

Continuing work weve got to do in afghanistan as well. Same number of of things added together. Also, there is a persistent bad from elements like al qaeda and al qaeda in the Arabian Peninsula that has the ability to generate a threat to the homeland. So that is very, very important. Are we going to be able to meet those with the troops that are projected to be there . Are we going to accomplish anation . Weve had so many families in this country sacrifice. Is it going to be worth it to that . I know you do this every day. How do you look at family is and say to time, we are going to pull out, maybe at levels they think might be dangerously low as i am geing information on this. How are you able to do that . When do we reach a hollow force, with the men in women we send in harms way are no longer protect it . We are going to do everything that the leadership will continue to do within our power to make sure that our troops are introduced into a dangerous situation or in combat that they are ready. And so whatever we have to do to prioritize resources make sure we support the folks that are doing the hard work of the country, we are going to continue to do that. Services have been clear about the fact they will support o troops that are in combat. As we look at, you know, shrinking topline budget stayer, the shnking topline of the budget is going to make it moree forces that are ready to address emerging contingencies. And so, thats my concern going into the future. I would ask both of you gentlemen for your commitment to this committee and to me that he will always be honest and let us know that. You have my commitment. Thank you so much. Again, thank you for your dedication and service to us. Thank you. Thank you, welcome. I echo the comments made by my colleagues of appreciations for your service and stellar credentials. And given confidence by the fact you work so closely in the past because i think the centcom, africom challenges have enough a lot of overlap and that should give us confidence as well. I think ill stay with General Rodriguez a few questions. Africom has an unusual mission. Your Deputy Commander is the state Department Official and it is a heavily focused on partnerships with other agencies and the training and that other governments. Id like to talk about that unusual nature and your own background as if they seek to alter the environment. As you said, is to find a bit differently than combatant commands and has more Agency People assigned to head orders may think all of that is a great benet to the organization who stretches and reaches across the agency in an effort that is required to be done that way in that interagency effort. In the building partner capacity piece, as all of our operations there really is a one to general austin is talking about is helping to build the capacity of the nation to protect itself and provides stability for itself. So we worked hard over the years and we both had significant experience trying to build Iraqi Security forces as well as active dirty forces to do it themselves and also to work also to work with the multinational partners to also ensure they are part of the solution, both in our nato allies and allies throughout the world as well as the host nation countries. I look forward to continue that to help africans compare themselves to take care of themselves. Some of the most challenging attacks on our history, then to two hearings now on the benghazi attack, one a Foreign Relations hearing and what this committee and still have some confusion about security provided to a diplomatic personnel around the world. And the benghazi situation we were dealing with the terry security through the merging secuty guards and state department personnel, but also to local militias, one unarmed, one apparently uncensored a strike or slow down wages and benefits. I just like to hear you talk about the Embassy Security recognized in the state takes the comment that the Embassy Security challenges and africom and how that approach them as a commander. Thanks, senator. The challenges he discussed her about the timing distance factors, so if confirmed, i will look closely at the department of state to understand and have the best situational understanding we can have so we have thrived and morning so we understand the warnings that are most so they can respond appropriately. We also have to prioritize access for the things we dont know to ensure it is a joint agency as well as the multinational process to get the best situational understanding that we cant. The second thing is of course in collaboratn with the state department to make sure the state department understands our response and what we can do to make the best decisions i recommend haitians to the leadership. Lastly i see no responseforces have increased in the aftermath of the benghazi attack and the lessons were learned. So theres now a new commanders and extremist voters and we have more forces as well as a special tab set is also in djibouti right now and in another month would be a force in the army who is allocated to hope that these challenges. General osten, to return to a puppy to about briefly, in your advance policy questions, you state maintaining a credible naval force that combat powers is essential to demonstrating a commitment to regional partners. Weve had discussion just this week about the aftermath to defer deployment to the uss truman. Focusing on that and sequester, from your perspective, what is the impact of the reduced naval presence that will complicate their ability to carry out her mission . I think it well. Certainly without those forces have been outlined is what he needs to accomplish the goals and object data sydney played out. That has been supported by the joint chiefs and resourced by the office of the secretary of defense. This is gone three pretty deliberate process to allocate those resources and forces. When he doesnt have this available when the commander doesnt have them available, again it began to take away flexibility to address emerging situation. Wants to reduce the presence in thregion, yocould very worlds oil the wrong things to adversaries and again, well want the commander and i certainly want to have come if confirmed, two of his many options available as possible to address the Current Issue nation and any emerging situations. Or crises. Me ask you this. Sending the wrong message to allies are adversaries, what about the message from your own experience inside the organization as you deal with your officers and enlisted, you know, what is the best as they continually watch congress run up against one kind of fiscal crisis after the next pic is no certainty to the military about its resource capacity . A concert might be disheartening if we have things that we trying to accomplish. We know we need resources and its difficult to get those resources. Having said that, it is the spirit of our military to try to find a way to be successful. You have to make enough up all possible with the things they need to be successful. Thank you very much to both of you. Thank you, mr. Chairman. I understand we are going to have to balance. If you let me know when seven minutes is up, have a few more questions. We will move right into the second round. This is one of the most important hearings weve had in probably a very long time and that is saying a lot given the hearings weve had in recent time. I know you well, appreciate our families and general osten, here is my dilemma. Im not so sure, and i maybe wrong but she cannot tell us what she recommended about troop levels. I have to think about that. I dont know if you have the right to do that quite frankly. I note he told me. You told me on the tarmac in baghdad that we neededsomewhere between 18 and 20,000. I said that may be more than the market can bear. He said that the numbers and i note your recommendations were somewhere in the mid15,000, 16,000. I think the bottom line for most people was 10 and ive got an exchange between me and general dempsey about how the numbers im from 19,000 on th way down to five and eventually zero. So id like to put in the record the exchange i ha with chairman dempsey abouthe everchanging numbers in iraq and the point, mr. Chairman, was the iraqis were not sed 18 is too many, 15 with too many. That wasnt the exchange. Did Prime Minister maliki ever tell you that 18,000 were too many quick no, sir. This is a secretary excuse me, chairman dempsey said. Not because the commanders are saying overshot. Political people were saying thats too many new kept coming down and attend smu said thats the lowest i can go. The cascading effects are not the iraqi saying we cant handle that many troops. It is that i wrote white house and white house and they have agreed to do this, by the way, was saying we just dont agree with the commanders recommendation. Do you remember that exchange between me and Prime Minister maliki in 92011 . He turned to me and said boras to go to iraq, myself, senator lieberman and senator mccain to see if they could push iraqis to get Legal Protections for our troops. I wouldnt have without a Status Force Agreement that he was right to insist on that. When he said how many are you going to recommend, i turn to you and ambassador jeffrey sani said they believe we are still working on that. She recalled a conversation . Idea. I was a bit astonished because its not the general osten didn know what he needed. She said nobody would tell them what they were going to approve. I just want to be clear that general osten had a firm view that we needed 18 to 20 city first said. He said he may be marked in the political market can bear because im not insensitive back home. You cant paint en to paper and i know you were making the best recommendations u. K. You put the numbers to paper and at the end of the day, we have not. I want to put into the record a load of articles about iraq, blood for oil, iraqs return to bloodshed, why kurds versus arabs could be iraqs next civil war. Be warned, americans withdraw from iraq heralds a world instability. At that permission toput all these articles into the record. Thank you, mr. Chairman. I just want everye to know, general osten thought long and hard about a residual force. Do you remember when youre first getting the job, we had an Exchange Rates had in football terms, how would she put us other situation in june of 2010. He said i did think were on the 10yard line and the next 18 months will rate term in whether he could work if the iraqis the opportunity to get to go around beyond 2011. Were having a new quarterback. He said sir, i will take the ball. You agreed with me that we are inside the 10, that we needed a residual force. You talked about the arab kurd conflict you showed me in no Uncertain Terms one of the points in iraq to secure cook, do you remember that . Do you remember the lines brigade concept where you had Iraqi Security forces . Unit the brigade and you had u. S. Forces working as a team. I think id have been your idea. It was working so well. Basically Paramilitary Forces that are kurd and now you see a shooting war about to iraq and the traditional Iraqi Security forces. He told me between 5000 people between the article and 40 boundary line, but to keep tensions. Dear member telling me we were blind inciter insult away from these guys shooting each other and reach of a file at first keep low . Is my cessna commissary. What you see now is the blood for all us a story last week about how close they come to firing at each other over the oil problems. So now, i want to introduce into the record the exchange i had the general dempsey and general osten in 2010 and 11 about what happened in iraq. Without objection. Now lets move to afghanistan. Thats not my intent, but i think its only fair to the committee that you talk to general allen. Pick up the phone, i know he families. You reach one of the finest officers to the other served with. You all have been out this for very long time, all of you and i just cant thank you enough in attendance about to expire, so well do a second round. You can give this to me in writing. I want you to talk to general allen about his recommendations via i know exactly the bottom line. I know snator ayotte mrs. Bottom line of what to find out because they really do believe we have a right to know that they recommend as much as the commanderinchief because we fund wars. This idea you can te us something i want to explore and would she please go to general allen and get briefed on his recommendations, bottom line, topline in re to me as to whether or not you think their sound before we go. This could be done relatively quick. Thank you. I just want to point out that the questions that would assist the answered at the beginning, indicated they would provide answers unless they had a good recent consultation not to provide them. Some of general osten dancers have been along that scheme. To fund the construction and he will come back to the committee. I think we have a ght to get this, but i dont want to put the gentleman in a bad spot. Either will get the answer a goodfaith description for for whatou believe certain conversation. Over 32ndround. Ill go to senator ayotte. Thank you, mr. Chairman. I share senator grahams request unobvious they would like to understand if you can provide that information like that is because that is something important for the committee to take up because we had to make conditions on resources that are we have an oversight function but i very much respect commanderinchief because this is a very important issue. We were on the same trip to afghanistan and having seen conditions on the ground and into a recent deployment ceremony, i want to make sure when our guys are there that wevgot enough people to protect the guys and gals on the ground. So i appreciate that very much. I have a question for General Rodriguez. Can you help me understand whats happening in Eastern Libya right now with the gadhafi arms cachet that was not considered after the nato activity and libya and what is happening, where are they going to what efforts are we making to secure the signs . Yes, maam. We had significant arms cachet throughout the libya and many of them which is the most on both stable part in the intelligence communi has assessed those continued to move. Many have moved southwest towards the northern mali issue has increased the islamic mcgrath. The United States and allies have received several issues to try to stand up for. Most of them are in training and equipping efforts for both the libyan army as well as libyan Border Control people who are benefits of some of the training we are doing. And the notes to build relationships and the court nation were doing are all focused to get this under control and limit the ability of that to continue to migrate away from libya and into the hands of terrorists. Just so we understand, we also went to each other. The arms are going into syria. There also going into other places where theyre getting in the wrong hands and tat continues as we said here today. Yes, maam. Its not only towards africa, man. We have those notes will relation semitone have a condition where the Libyan Government is actually stopping the transfer is right now to the people. Eastern libya is the most destabilize place. Theres no state control of any militias and thats the challenge the government is done with right now. Would need to get much tougher. This ia dangerous situation and there have been reports of some of these may include campouts. Is that correct . Yes, that is correct. Certainly we need to take greater action on this because these arms are very dangerous. Theyre gettg into the hands of terrorists and so i look forward to supporting you and the administration to take whatever steps need to be taken to make sure that happens. I would also point that i believe this is one of the reasons where, when they think about the concept of a light footprint and we are engaged in an area, but the science shouldve been secured following our baldness so we worked in a situation where we are chasing them around, tried to get them from dangerous individuals who were then using it to atck us and our allies. Yes, maam. General trend to come the General Rodriguez, agree with me the number of troops in any theater is not an end, but it needs to accomplish a defined mission . Yes, sir. If youre each confirming positions, do you agree you will at any time come if you think the number of troops assigned are the number of troops are dealing with is not sufficient to accomplish the end you were charged with the competition, that youll share that concern under appropriate channels with your colleagues and superiors . I will. I will. Senator graham. If we told both of you which of the soldiers in afghanistan can he would fight to the end, with new . At the resort to be done, sir which you also tell us, we have a high opinion of ourselves, for the chance of success would be pretty low. Thats correct. Do you agree the last card to play in afghanistan in terms of presence of closing the deal. This is an important decision to make. Es, i would. I appreciate that very much. You are absolutely right. General san, as iran watching what were doing in the region . Do agree with that, General Rodriguez . So if syria is deteriorating and we seem to be beating from behind, if iraq is deteriorating and we pick a number in afghanistan that makes it a high failure with sand the wrong signals to the ukrainians if what i say is true . I would agree with that. If you had a recommendation of 8000 troops in 2014, the 2017th, we would be bound to 1000, dont you think the enemy would focus on the 1000, and not the 8000 . They would. The road focus on the phone number, not the high number. I do want to say this to the administration. I know the war is unpopular. I think we can be successful in afghanistan. The key Security Forces, but we have to have capabilities to keep them moving forward and i note the number general allen tait. Data will not stay if we have a dozen troops. You agree with that . Donation would get too irate. That is my assessment. Ill wrap this up by saying i want to make some other questions in writing. They think we are at a Arabian Peninsula<\/a> that has the ability to generate a threat to the homeland. So that is very, very important. Are we going to be able to meet those with the troops that are projected to be there . Are we going to accomplish anation . Weve had so many families in this country sacrifice. Is it going to be worth it to that . I know you do this every day. How do you look at family is and say to time, we are going to pull out, maybe at levels they think might be dangerously low as i am geing information on this. How are you able to do that . When do we reach a hollow force, with the men in women we send in harms way are no longer protect it . We are going to do everything that the leadership will continue to do within our power to make sure that our troops are introduced into a dangerous situation or in combat that they are ready. And so whatever we have to do to prioritize resources make sure we support the folks that are doing the hard work of the country, we are going to continue to do that. Services have been clear about the fact they will support o troops that are in combat. As we look at, you know, shrinking topline budget stayer, the shnking topline of the budget is going to make it moree forces that are ready to address emerging contingencies. And so, thats my concern going into the future. I would ask both of you gentlemen for your commitment to this committee and to me that he will always be honest and let us know that. You have my commitment. Thank you so much. Again, thank you for your dedication and service to us. Thank you. Thank you, welcome. I echo the comments made by my colleagues of appreciations for your service and stellar credentials. And given confidence by the fact you work so closely in the past because i think the centcom, africom challenges have enough a lot of overlap and that should give us confidence as well. I think ill stay with General Rodriguez<\/a> a few questions. Africom has an unusual mission. Your Deputy Commander<\/a> is the state Department Official<\/a> and it is a heavily focused on partnerships with other agencies and the training and that other governments. Id like to talk about that unusual nature and your own background as if they seek to alter the environment. As you said, is to find a bit differently than combatant commands and has more Agency People<\/a> assigned to head orders may think all of that is a great benet to the organization who stretches and reaches across the agency in an effort that is required to be done that way in that interagency effort. In the building partner capacity piece, as all of our operations there really is a one to general austin is talking about is helping to build the capacity of the nation to protect itself and provides stability for itself. So we worked hard over the years and we both had significant experience trying to build Iraqi Security<\/a> forces as well as active dirty forces to do it themselves and also to work also to work with the multinational partners to also ensure they are part of the solution, both in our nato allies and allies throughout the world as well as the host nation countries. I look forward to continue that to help africans compare themselves to take care of themselves. Some of the most challenging attacks on our history, then to two hearings now on the benghazi attack, one a Foreign Relations<\/a> hearing and what this committee and still have some confusion about security provided to a diplomatic personnel around the world. And the benghazi situation we were dealing with the terry security through the merging secuty guards and state department personnel, but also to local militias, one unarmed, one apparently uncensored a strike or slow down wages and benefits. I just like to hear you talk about the Embassy Security<\/a> recognized in the state takes the comment that the Embassy Security<\/a> challenges and africom and how that approach them as a commander. Thanks, senator. The challenges he discussed her about the timing distance factors, so if confirmed, i will look closely at the department of state to understand and have the best situational understanding we can have so we have thrived and morning so we understand the warnings that are most so they can respond appropriately. We also have to prioritize access for the things we dont know to ensure it is a joint agency as well as the multinational process to get the best situational understanding that we cant. The second thing is of course in collaboratn with the state department to make sure the state department understands our response and what we can do to make the best decisions i recommend haitians to the leadership. Lastly i see no responseforces have increased in the aftermath of the benghazi attack and the lessons were learned. So theres now a new commanders and extremist voters and we have more forces as well as a special tab set is also in djibouti right now and in another month would be a force in the army who is allocated to hope that these challenges. General osten, to return to a puppy to about briefly, in your advance policy questions, you state maintaining a credible naval force that combat powers is essential to demonstrating a commitment to regional partners. Weve had discussion just this week about the aftermath to defer deployment to the uss truman. Focusing on that and sequester, from your perspective, what is the impact of the reduced naval presence that will complicate their ability to carry out her mission . I think it well. Certainly without those forces have been outlined is what he needs to accomplish the goals and object data sydney played out. That has been supported by the joint chiefs and resourced by the office of the secretary of defense. This is gone three pretty deliberate process to allocate those resources and forces. When he doesnt have this available when the commander doesnt have them available, again it began to take away flexibility to address emerging situation. Wants to reduce the presence in thregion, yocould very worlds oil the wrong things to adversaries and again, well want the commander and i certainly want to have come if confirmed, two of his many options available as possible to address the Current Issue<\/a> nation and any emerging situations. Or crises. Me ask you this. Sending the wrong message to allies are adversaries, what about the message from your own experience inside the organization as you deal with your officers and enlisted, you know, what is the best as they continually watch congress run up against one kind of fiscal crisis after the next pic is no certainty to the military about its resource capacity . A concert might be disheartening if we have things that we trying to accomplish. We know we need resources and its difficult to get those resources. Having said that, it is the spirit of our military to try to find a way to be successful. You have to make enough up all possible with the things they need to be successful. Thank you very much to both of you. Thank you, mr. Chairman. I understand we are going to have to balance. If you let me know when seven minutes is up, have a few more questions. We will move right into the second round. This is one of the most important hearings weve had in probably a very long time and that is saying a lot given the hearings weve had in recent time. I know you well, appreciate our families and general osten, here is my dilemma. Im not so sure, and i maybe wrong but she cannot tell us what she recommended about troop levels. I have to think about that. I dont know if you have the right to do that quite frankly. I note he told me. You told me on the tarmac in baghdad that we neededsomewhere between 18 and 20,000. I said that may be more than the market can bear. He said that the numbers and i note your recommendations were somewhere in the mid15,000, 16,000. I think the bottom line for most people was 10 and ive got an exchange between me and general dempsey about how the numbers im from 19,000 on th way down to five and eventually zero. So id like to put in the record the exchange i ha with chairman dempsey abouthe everchanging numbers in iraq and the point, mr. Chairman, was the iraqis were not sed 18 is too many, 15 with too many. That wasnt the exchange. Did Prime Minister<\/a> maliki ever tell you that 18,000 were too many quick no, sir. This is a secretary excuse me, chairman dempsey said. Not because the commanders are saying overshot. Political people were saying thats too many new kept coming down and attend smu said thats the lowest i can go. The cascading effects are not the iraqi saying we cant handle that many troops. It is that i wrote white house and white house and they have agreed to do this, by the way, was saying we just dont agree with the commanders recommendation. Do you remember that exchange between me and Prime Minister<\/a> maliki in 92011 . He turned to me and said boras to go to iraq, myself, senator lieberman and senator mccain to see if they could push iraqis to get Legal Protections<\/a> for our troops. I wouldnt have without a Status Force Agreement<\/a> that he was right to insist on that. When he said how many are you going to recommend, i turn to you and ambassador jeffrey sani said they believe we are still working on that. She recalled a conversation . Idea. I was a bit astonished because its not the general osten didn know what he needed. She said nobody would tell them what they were going to approve. I just want to be clear that general osten had a firm view that we needed 18 to 20 city first said. He said he may be marked in the political market can bear because im not insensitive back home. You cant paint en to paper and i know you were making the best recommendations u. K. You put the numbers to paper and at the end of the day, we have not. I want to put into the record a load of articles about iraq, blood for oil, iraqs return to bloodshed, why kurds versus arabs could be iraqs next civil war. Be warned, americans withdraw from iraq heralds a world instability. At that permission toput all these articles into the record. Thank you, mr. Chairman. I just want everye to know, general osten thought long and hard about a residual force. Do you remember when youre first getting the job, we had an Exchange Rates<\/a> had in football terms, how would she put us other situation in june of 2010. He said i did think were on the 10yard line and the next 18 months will rate term in whether he could work if the iraqis the opportunity to get to go around beyond 2011. Were having a new quarterback. He said sir, i will take the ball. You agreed with me that we are inside the 10, that we needed a residual force. You talked about the arab kurd conflict you showed me in no Uncertain Terms<\/a> one of the points in iraq to secure cook, do you remember that . Do you remember the lines brigade concept where you had Iraqi Security<\/a> forces . Unit the brigade and you had u. S. Forces working as a team. I think id have been your idea. It was working so well. Basically Paramilitary Forces<\/a> that are kurd and now you see a shooting war about to iraq and the traditional Iraqi Security<\/a> forces. He told me between 5000 people between the article and 40 boundary line, but to keep tensions. Dear member telling me we were blind inciter insult away from these guys shooting each other and reach of a file at first keep low . Is my cessna commissary. What you see now is the blood for all us a story last week about how close they come to firing at each other over the oil problems. So now, i want to introduce into the record the exchange i had the general dempsey and general osten in 2010 and 11 about what happened in iraq. Without objection. Now lets move to afghanistan. Thats not my intent, but i think its only fair to the committee that you talk to general allen. Pick up the phone, i know he families. You reach one of the finest officers to the other served with. You all have been out this for very long time, all of you and i just cant thank you enough in attendance about to expire, so well do a second round. You can give this to me in writing. I want you to talk to general allen about his recommendations via i know exactly the bottom line. I know snator ayotte mrs. Bottom line of what to find out because they really do believe we have a right to know that they recommend as much as the commanderinchief because we fund wars. This idea you can te us something i want to explore and would she please go to general allen and get briefed on his recommendations, bottom line, topline in re to me as to whether or not you think their sound before we go. This could be done relatively quick. Thank you. I just want to point out that the questions that would assist the answered at the beginning, indicated they would provide answers unless they had a good recent consultation not to provide them. Some of general osten dancers have been along that scheme. To fund the construction and he will come back to the committee. I think we have a ght to get this, but i dont want to put the gentleman in a bad spot. Either will get the answer a goodfaith description for for whatou believe certain conversation. Over 32ndround. Ill go to senator ayotte. Thank you, mr. Chairman. I share senator grahams request unobvious they would like to understand if you can provide that information like that is because that is something important for the committee to take up because we had to make conditions on resources that are we have an oversight function but i very much respect commanderinchief because this is a very important issue. We were on the same trip to afghanistan and having seen conditions on the ground and into a recent deployment ceremony, i want to make sure when our guys are there that wevgot enough people to protect the guys and gals on the ground. So i appreciate that very much. I have a question for General Rodriguez<\/a>. Can you help me understand whats happening in Eastern Libya<\/a> right now with the gadhafi arms cachet that was not considered after the nato activity and libya and what is happening, where are they going to what efforts are we making to secure the signs . Yes, maam. We had significant arms cachet throughout the libya and many of them which is the most on both stable part in the intelligence communi has assessed those continued to move. Many have moved southwest towards the northern mali issue has increased the islamic mcgrath. The United States<\/a> and allies have received several issues to try to stand up for. Most of them are in training and equipping efforts for both the libyan army as well as libyan Border Control<\/a> people who are benefits of some of the training we are doing. And the notes to build relationships and the court nation were doing are all focused to get this under control and limit the ability of that to continue to migrate away from libya and into the hands of terrorists. Just so we understand, we also went to each other. The arms are going into syria. There also going into other places where theyre getting in the wrong hands and tat continues as we said here today. Yes, maam. Its not only towards africa, man. We have those notes will relation semitone have a condition where the Libyan Government<\/a> is actually stopping the transfer is right now to the people. Eastern libya is the most destabilize place. Theres no state control of any militias and thats the challenge the government is done with right now. Would need to get much tougher. This ia dangerous situation and there have been reports of some of these may include campouts. Is that correct . Yes, that is correct. Certainly we need to take greater action on this because these arms are very dangerous. Theyre gettg into the hands of terrorists and so i look forward to supporting you and the administration to take whatever steps need to be taken to make sure that happens. I would also point that i believe this is one of the reasons where, when they think about the concept of a light footprint and we are engaged in an area, but the science shouldve been secured following our baldness so we worked in a situation where we are chasing them around, tried to get them from dangerous individuals who were then using it to atck us and our allies. Yes, maam. General trend to come the General Rodriguez<\/a>, agree with me the number of troops in any theater is not an end, but it needs to accomplish a defined mission . Yes, sir. If youre each confirming positions, do you agree you will at any time come if you think the number of troops assigned are the number of troops are dealing with is not sufficient to accomplish the end you were charged with the competition, that youll share that concern under appropriate channels with your colleagues and superiors . I will. I will. Senator graham. If we told both of you which of the soldiers in afghanistan can he would fight to the end, with new . At the resort to be done, sir which you also tell us, we have a high opinion of ourselves, for the chance of success would be pretty low. Thats correct. Do you agree the last card to play in afghanistan in terms of presence of closing the deal. This is an important decision to make. Es, i would. I appreciate that very much. You are absolutely right. General san, as iran watching what were doing in the region . Do agree with that, General Rodriguez<\/a> . So if syria is deteriorating and we seem to be beating from behind, if iraq is deteriorating and we pick a number in afghanistan that makes it a high failure with sand the wrong signals to the ukrainians if what i say is true . I would agree with that. If you had a recommendation of 8000 troops in 2014, the 2017th, we would be bound to 1000, dont you think the enemy would focus on the 1000, and not the 8000 . They would. The road focus on the phone number, not the high number. I do want to say this to the administration. I know the war is unpopular. I think we can be successful in afghanistan. The key Security Forces<\/a>, but we have to have capabilities to keep them moving forward and i note the number general allen tait. Data will not stay if we have a dozen troops. You agree with that . Donation would get too irate. That is my assessment. Ill wrap this up by saying i want to make some other questions in writing. They think we are at a Pivotal Moment<\/a> in the war in afghanistan that nato is not going to say unless we show a willingness to show beyond kabul itself and the enemy will look at the bottom number, not the top number. But if the president will follow recommendations andhes the president , not me. He has every right to pick the number. As a member of the Opposition Party<\/a> has seven new cares about this, i will stand with him a bunch my objections. If they leave aslow as nine or 10,000, i will stand with them and keep funding the afghan army, that i want this to turn out well. I have a know it wont be popular at home, but it the right thing to do. I want the administration to now they have every right to make this decision, but if they over brule for us itcannot be successful, i cannot go to continue and mr. Chairman, i cant think of a worse outcome for america than for us to lose in afghanistan aftehe dies in years of fighting, bleeding hundreds of billions of dollars to place were attacked from. If we dont get this residual force right to continue the momentum, afghanistan will fall apart quicker than iraq and all will break out. Thank you very much. Senator a. I. General rodriguez, which you consider boca harrumph a terrorist generation . Committed some macs associate terrorism. That is a policy that has to be made and i make my recommendations on whether it gets tough classified. Woodlake the attack against the United Nations<\/a> headquarters. I certainly appreciate hat. What happened in the tech center consulate in benghazi, from your assessment and hell be taking up that area of responsibility and you and i have talked about it. What are some of the essons learned from that . Maam, Lessons Learned<\/a> that those dod and department of state are taken onas the gaps they are an intelligence and then provide the sufficient indication for us to be able to respond properly. Security decisions that get made have to be wellinformed by the department of defense and the Response Force<\/a> is available to the Combatant Commanders<\/a> seem to be looked at inappropriate for the situations out there throughout the region. Write nice talked about four saves that we would have to previously have in place. How is that Response Time<\/a> when you think about it because were not going to be in djibouti gratiano and thinking about the air assets, but we have anything to respond, how would we respond to it . Iill put places and requirements on all have to make sound decisions based across a situation across the combatant commands area on where to put those. The best we can do is to make sure everybody understands to make decisions on where to keep people and were not to keep people. I look forward as he confirmed to work with you on that. That is a challenge we face in that area and particularly with the arm still flowing in that area that are very dangerous to a whole host of areas and other organizations. Yes, maam. To return to chairman levin. Thank you very much. Appreciate your taking over the gavel this morning. Just a few questions. I was trying to ask. General austen, are they on track to assume greater responsibility for spring . My judgment is based upon interaction with the commanders in the field. Just recently in afghanistan at thanksgiving holiday nsa went around the country, the commanders i talked to felt that the afghans have significant capability and werin the lead throughout the country. They were hopeful and very positive about where they were in very hopeful that things are continuing ithe right direction. Based upon that assessment, i think the afghans will be capable of taking the lead in the prescribed timeline. With senator jack reid and i traveled to afghanistan in january, we heard from military commanders said the Afghan National<\/a> Security Forces<\/a> are in the lead already in the vast majority in the very challenging regional command east that afghan Security Forces<\/a> were conduct in operations by themselves and 87 . Have you heard that figure and if not, would that not be a fact . It is reassuring. I talked to brigade commanders and all so the Division Commander<\/a> and they were positive about the performance of security force. That is the subject, which ive gotten into very, very repeatedly and senator graham and i have worked together to make the same point that has to do to future size size of afghan Security Forces<\/a>. The Security Forces<\/a> by 2014 from 252,000 down to approximately 230,000. I believe it sends the wrong signal to the afghans to do that. Theyre looking for reassurance that the United States<\/a> and allies are committed to in during relationship with afanistan. We wrote the president began last year, senator graham, senator mccain, senator lieberman and myself to convey that point. At a time when we are trying down our troops, it is the wrong message to be drawing down for suggesting that draw down of Afghan Forces<\/a> from their current level to a significantly lower. Im wondering whether you feel we should keep the afghan Security Forces<\/a> at the 352,000 beyond 2014 keeping the larger size force but certainly as you point out, reassure the afghans. But also reassured her had no allies we remain committed. A larger force, afghan force would help to hedge against any future taliban mischief and we expect y could reasonably expect that an enemy thats been that determined, that agile, will very soon after retranslation try to test the afghan Security Forces<\/a>. Further, that provides the process is to mature a bit, so i think because of that, it seems to me the larger force is a benefit. Generalrodriguez, this has to do in Extremis Force<\/a> that is desirable another contingency Response Force<\/a> is would be useful to put the african commander and a position to contingencies such as we saw it in benghazi. If youve not been asked that question, tell us what they would look for ways to find greater capability to provide forces beyond what they currently are and where in the case of the benghazi matter. Yes, senator senator i would end if confirmed, that will be one of the Top Priorities<\/a> i have and will report to the committee and dave made significant improvements that we have to continue to do that. Thank you, both. I want to thank senator king. Its very much appreciated. Thank you, sir. [inaudible conversations] [inaudible conversations] next, the annual state of the Indian Nation<\/a> speech. Then, a Senate Hearing<\/a> on financial regulations. Ter that, q a [captioning performed by national captioning institute] [captions Copyright National<\/a> cable satellite corp. 2013] on thursday, the National Congress<\/a> of American Indians<\/a> gave his annual state of in the nation address. This is an hour and 15 minutes. Good morning. I am jacqueline pata, the executive director of the National Congress<\/a> of American Indians<\/a>, the oldest and largest native american Advocacy Organization<\/a> representing Indian Country<\/a> and alaska natives and their broad interests of tribal governments and their communities. I am also pleased to welcome our distinguished guests here in washington d. C. And those listening around the country to the 2013 state of the Indian Nation<\/a>s. Across the country, students, teachers, and tribal citizens and leaders, businesses have gathered to watch this event together. Among the many events, were please to be joined by students from the laguna middle school, the mandaree high school, the boys and girls club of the greater scottsdale, and tribes like the Sisseton Wahpeton<\/a> oyate, muskogee creek nation, the confederated tribes of Umatilla Reservation<\/a> and hosting viewing tribal parties and employees of trouble officers in many areas of the country, and were pleased to be joined by the college of the menominee nation, the four Bands Community<\/a> fund, the American Indian<\/a> college fund. This is a small selection of events happening today, and we want to thank them and all of you for joining us. We have an incredible turnout here in washington, and i would like to acknowledged some guests in the studio this morning. From the administration, we have individuals from the white house, from i. H. S. , lillian sparks from the administration for native americans, and we also have representatives from key federal agencies, including agriculture, commerce, homeland security, interior, justice, labor, and epa. Were delighted to be joined by congresswoman Betty Mccullum<\/a> and others. Were honored to be joined today by the head councilman joe garcia, who is also on our board, as well as larry townsend. And a Vice President<\/a> from the round valley tribe, others, byron dorgan from the center of native american youth, clara pratt, kiki carroll, chris mcneil, and chairman of the party Ernie Stevens<\/a> who has never missed a state of the Indian Nation<\/a>s, and others. We are joined today by two Indigenous Leaders<\/a> from australia, including nigel brown, and we would like to thank them for joining with us. Today we also have ncai partners from outside Indian Country<\/a>, including Ralph Everett<\/a> from the joint center of political and economic studies. As you can tell from all the red in the audience, today is valentines day, and i am sure that after this event today you will love tribal sovereignty more than you ever have before, and even when you first met. It has already been a great week in washington for our tribal nations. On tuesday, the Senate Passed<\/a> the violence against women act, approving the bill that included key provisions for native women. Our victory is not just resonating in the United States<\/a>. To many around the world, today is v day. Activists from around the world will be hosting events as part of the 1 billion rising, a movement to end violence against women and girls. Finally, i want to thank native voice 1 and the many tribal and public radio stations across the country for carrying todays address, bringing the state of Indian Nation<\/a>s to hundreds and thousands of people in Indian Country<\/a> and beyond. And now it is my pleasure to introduce the president of the National Congress<\/a> of American Indians<\/a>, jefferson keel. He is currently the Lieutenant Governor<\/a> for the chickasaw nation of oklahoma. He has over 20 years of active duty service and has translated that into a sense of duty into serving Indian Country<\/a> and protecting our sovereignty. Over his two terms at asai, he has been a true statesman for Indian Country<\/a>. He has met with president obama, engaged with key members of the president s cabinet, and traveled overseas to educate leaders about our unique nation tonation of relationship. He has championed Tribal Health<\/a> care, worked hard with the promise of the tribal law and order act, and led the charge for the most successful native Vote Campaign<\/a> ever. Ladies and gentlemen, please help me welcome the president of the National Congress<\/a> of the American Indian<\/a> president jefferson keel. [applause] thank you. Thank you. Good morning. Members of the National Congress<\/a> of American Indians<\/a>, members of the administration, members of congress, tribal leaders, fellow citizens, my fellow americans. As president of the National Congress<\/a> of American Indians<\/a>, as one of more than five million American Indians<\/a> and alaska natives of the recognized tribal nations and state recognized governments of the Indian Country<\/a>, its an honor to speak to you today. Native americans are as diverse as america itself, an array of cultures, each with its Rich Heritage<\/a> and proud history. In all of our vibrant threads, stories and traditions, triumphs, are woven into the fabric of america. Every day were reminded of how far weve come and the journey we have ahead of us and though weve walked dark roads and overcome challenges and tragedies, our future holds great promise. Today, Indian Country<\/a> is strong [applause] i could not always stand here and tell you that. When i was a young boy growing up in southern oklahoma, there werent many opportunities in my chickasaw community. My family, like many others, were poor, just barely scraping by. As soon as we were old enough, we started working, harvesting cotton, peanut, corn crops, piling hay on to trucks, hauling them to the barns. I saw neighbors working hard to build better lives for their families, parents and grandparents maintaining our culture from traditional food, name giving ceremonies to celebrations of life and death, passing on the timeless values of our tribe. Even when the federal government told us we had no right to exist, we stayed true to ourselves. Still, times were tough. Our people sometimes wondered if our best days were behind us. But through it all we carried it, forging new bonds with each other to strengthen our nations. Ncai was critical to this effort. In fact, thats why it was started in 1944, when tribal citizens and tribal leader stood together to speak as one voice for americas tribal nations, to protect our sovereignty, to affirm our rightful, constitutional place in the American Family<\/a> of governments. Their work to unify and mobilize tribes rippled through Indian Country<\/a>. My own community started to organize and advocate for our rights and we committed ourselves to carrying on the vision of our fathers and mothers who signed the original treaties protecting tribal sovereignty. That vision guided us through a new era in tribal governance, selfdetermination, where tribal governments were able to run their own governments without interference. This new era was transformational. When i came home from vietnam, i witnessed the optimism of leaders shaping their own community, the energy of people making their own decisions, the pride of a tribal nation unleashing its own potential. In many ways, my own experience and my tribes experience reflect not just Indian Country<\/a>s advances but our aspirations, that our communities might thrive in a modern, Global Economy<\/a> that, our children might achieve their dreams, and today, more than ever, those aspirations are within our reach. Thanks to a Greater Trust<\/a> between tribal nations and the United States<\/a>, were in a moment of real possibility. In president obama and his administration, we have a partner committed to strengthening tribal sovereignty, who believes in our right to determine our own course, who understands what weve always known to be true, that Indian Nation<\/a>s are best governed by indian people. [applause] this partisanship and Partnership Extends<\/a> throughout the federal government, on both sides of the aisle, because indian issues are not partisan issues. The results has had a meaningful, measurable impact on indian peoples lives. Today, more tribes are managing resources instead of managing poverty programs. Residents of rural oklahoma drive to our Health Facilities<\/a> first because they offer the best services around. Other governments seek our traditional knowledge of natural resources. Nonnative people come to us for jobs and Educational Opportunities<\/a> and Companies Partner<\/a> with us to set up new businesses on reservations. Its no wonder that more highly skilled and educated native young people are coming back to serve in our communities as doctors, lawyers, teachers, engineers, entrepreneurs and as were revitalizing our own economies, tribes are becoming key players in americas economic recovery. My tribe, the chickasaw nation, the chickasaw nation contributes 2. 5 billion to our regional economy every year and employs over 12,000 people. At the same time, were taking a proactive approach to budgeting and stewardship so that we are more resilient. The nationtonation relationship we enjoy as tribal nations has never been confined to the borders of the United States<\/a> and thanks more International Trade<\/a> agreements developed by tribal leaders, our businesses and many of those other tribes reach all around the globe. At the same time, our peoples dedication to america has never been stronger. Last year, i stood that the podium and called for native americans to get out the vote and Indian Country<\/a> responded like never before. Ncais Civic Engagement<\/a> campaign, native vote, was the biggest, most successful in our 70year history, a massive Grassroots Campaign<\/a> deployed huge numbers of volunteers, young and old. They knocked on doors, registered voters, drove people to the polls, and helped turn out the highest number of native voters ever. [applause] they did this even though our people still had unequal access to the polls. Too many native voters traveled long distances to exercise their right only to be turned away. So even as we applaud the efforts of the 2012 native vote movement, we know this is just the beginning and we have much more to do to ensure that every native vote is cast and counted. Our commitment to democracy stretches beyond the ballot box to Distant Shores<\/a> where every day thousands of native men and women fight proudly under the american flag, to the more than 22,000 active duty native warriors and to my more than 156,000 fellow native veterans, i salute you america salutes you were grateful for your service. Every day, in ways big and small, were strengthening the unique nationtonation relationship tribes enjoy with the United States<\/a>, a relationship of mutual respect, mutual obligation, and mutual trust. Weve come a long way, but theres much more work to do and im convinced now more than ever that we must protect and strengthen tribal sovereignty. That is how we will meet our three shared goals to secure our communities, secure our nations, and secure our future. First, securing our communities. Theres nothing more important to tribal leader than the safety and wellbeing of tribal citizens, but today, one in three native women will be raped in her lifetime, almost four in 10 will be beaten and abused by a domestic partner. The death rate of native women on some reservations is 10 time the national average. The numbers are so high to be almost numbing. But heres the thing. Violence against women is not a cultural practice, its a criminal practice. Thats why we dont tolerate it. Tribes can and do pursue justice against native men who commit these acts but thats not enough. We know that assaults against native women tend to take place at private residences, that many native women live tribal lands, that almost 60 of native women are married to nonnative men. We know all this yet we also know the tragic reality. Today, tribes do not have the authority to prosecute non natives to beat, rape or even kill women on tribal lands. State and federal authorities are often hundreds of miles away without the local resources to investigate crimes. And in recent times, u. S. Attorneys have declined to prosecute a majority of Violent Crimes<\/a> in Indian Country<\/a>, most of which are related to sexual abuse. No other government would stand for this violation of sovereignty or continued injustice, no other government should, and no other government has to. The solution is simple, Congress Must<\/a> reauthorize the landmark violence against women act and ensure that tribal governments have the authority to prosecute nonnative men accused of violence against women on tribal lands. In other words, Congress Must<\/a> allow tribes, like all other governments, to protect their own people and surrounding communities from brutality. So if we believe that a native womans life is worth the same as every other womans, if we believe that justice should not stop at the border of a reservation, if we believe that tribes are truly sovereign, its time for the house of representatives to step up, put partisan politics aside and reauthorize the violence against womens act with expanded protections for all victims of violence. Then we will join the people around the world in dancing in support of this movement. Congress has demonstrated that it understands the importance of tribal sovereignty. Thats why in the 1970s they passed the indian Child Welfare<\/a> act to ensure tribal families have the ability to protect their children. Its why conditioning recently authorized tribal leaders to directly seek a president ial disaster declaration, a critical tool for our governments to secure our communities. Its why the United States<\/a> has joined more than 140 members of the United Nations<\/a> in acknowledging that Indigenous Peoples<\/a> are entitled to free, prior, and informed consent on decisions that affect our nations. This respect for our nationto nation relationship must extend to other issues that impact Indian Country<\/a>, including immigration. What Many Americans<\/a> may not realize is that almost 40 or 40 tribal governments are located on or near the borders of mexico and canada, which means tribes have jurisdiction over some of the areas most affected by immigration policy. These issues directly impact the lives of our citizens and tribal nations must be at the table as the federal government considers commonsense immigration reform. Tribes have faced new immigration for over 500 years and we know it has its challenges. But to us, this isnt just a policy issue, its a moral one. We firmly believe that the arc of justice must stretch from the First Americans<\/a> to the newest americans. [applause] as we continue to secure our communities, we also secure our nations. Our nations range from more than 200 remote alaskan native villages where tribal citizens make up 20 of the population to the Navajo Nation<\/a> in the southwest with a land base of 17 million acres, from alaska, california to connecticut, tribal lands cover over 100 million acres which would make Indian Country<\/a> americas fourth largest state. This land is held in trust by the federal government. It was supposed to protect indian land from both infringement and isolation. Unfortunately, that trust, our trust, was broken too many times. The funds used to maintain the trust were grossly mismanaged, not just once or twice, but over and over for decades and decades. It was a fraud that added up to billions and billions of dollars and opportunity lost for generations of native people. Last year, the federal government finally implemented the settlement to resolve the issue. While it doesnt erase the past or repair the damage, it does close a painful chapter in our history and it turns a new page on our trust relationship. That relationship continues to grow. After 200 years of disputes, recent settlements are securing tribal rights to water which are critical to Economic Development<\/a> for our communities, our livelihoods and peoples health. Much more must be done to restore the trust relationship. The Supreme Court<\/a> decision overturned a longstanding precedent and threatened Economic Future<\/a> by limiting federal authority to the acquire land in trust for any tribes. This cannot stand. Congress must pass a clean karchari fix right now. Our nations have enormous potential. Tribal lands boast almost 25 of americas onshore oil and Gas Resources<\/a> and one third of the wests low sulfur coal, yet they represent less than 5 of Current National<\/a> energy production. Why . Because of leasing restrictions. Fortunately, new federal policies are addressing this barrier, enabling tribes to develop their own sources of energy. The goal is to transform tribal lands and boost Economic Growth<\/a> while contributing to Americas Energy<\/a> independence. For instance, the Los Angeles City<\/a> council recently approved a 25year, 1. 5 billion project to buy solar power produced at the moapa band Indian Nation<\/a> in the Southern Nevada<\/a> desert. When it goes on line in 2016, it will be the largest solar power plant on tribal lands, capturing desert rays to power over 118,000 los angeles homes. In addition, to the plant g com futures trading commission. Senator tim johnson of south dakota chairs the twohour hearing. This committee is called to order. Before we begin, id like to extend a warm welcome to senator crepeo as Ranking Member<\/a> and to senator manchant, senator warren, senator heitkemp, senator carlburn and senator heller who are joining this congress. Id also like to welcome back my friend senator kirk. Earlier this week i released my agenda for this congress and i look forward to this committees continued productivity. Im optimistic that we can Work Together<\/a> on a bipartisan basis. To that end, Ranking Member<\/a> crepo and i sent an order yesterday to the banking regulators on the importance of implementing basal 3 and i look forward to hearing from each of you in working with the Ranking Member<\/a> on this issue. Today this committee continues a top priority, oversight of wall street perform implementation. Wall street reform was effected to make the Financial System<\/a> more resilient, minimize risk of another financial crisis, protect consumers from harmful purchases and ensure american taxpayers will never again be called upon to bail out a failing financial firm. This morning well hear from the regulators on how their agencies are carrying out these mandates of wall street reform. Many of the laws are rule makers and require careful consideration of complex issues as well as inner agency and international coordination. I appreciate your efforts to finalize these rules. To date, the regulators have proposed or finalized over 3 4 of the rules required by wall street. These include rules that have recently gone wide in the market such as the data reporting rules with new oversight of previously unregulated markets. But there is still more work to do. That is why i have asked each of our witnesses to provide a report to the committee both on rule makings your agency has completed and those you have yet to finalize. I ask that you craft these rules in a manner that is effective for smaller firms Like Community<\/a> banks so they can continue to meet the needs of our customers and communities. The work does not end when the final rules go out the door. Regulators must enforce the rules and ask that each agency inform us of how they intend to better supervise the Financial System<\/a>. While concerns have been raised about whether a few firms remain too big to fail, wall street reform provides regulators with new tools to address the issue head on. This is one of the many reasons why fully implementing the law remains important not just for constituents but for future generations. As we approach the fiveyear anniversary of the failure of bear stearns we must not lose sight of why we pass wall street reform. Congress enacted the law into the wake of the more severe financial crisis in the lifetime of most americans. I asked the gao to study the question of how costly it was to better understand the impact the crisis had on the nation. In a roort releaeport released which i enter in the record the gao concluded while the precise cost of the crisis is difficult to calculate the total damage to the economy may be as high as 13 trillion. I say again 13 trillion. With a t dollars. As they urge you to consider the benefits of continuing to implement wall street reform. I would like to make one final comme comment. Since he was appointed as head of the cfpb last year director cadre and the cfpb have worked tirelessly to finalize many rules and policies to protect consumers in areas such as mortgages, student lending, Service Member<\/a> rights, and credit cards. He has done good work and i urge my colleagues to confirm him to a full term without delay and allow the cfpb to continue its important work protecting consumers. I now turn to our Ranking Member<\/a>. Thank you very much, mr. Chairman. You and i have a very good personal friendship and have had a good working relationship over the years and i look forward to building on that and working with you as the Ranking Member<\/a> of the committee this year in this congress. One of my objectives and hopes would be to Work Together<\/a> on the kind of Common Sense Bipartisan Solutions<\/a> that we can achieve before this committee in a number of areas that i think various members of the committee have already identified and discussed among ourselves. We, you and i as you indicated, have already sent a joint letter to inform the regulators of our concerns about the impact of the proposed basel three requirements on Community Banks<\/a>, insurance companies, and the Mortgage Market<\/a>. So were off to a good start. I look forward to building on that. I also want to join with you in welcoming the new members of our committee, on our side senators coburn and heller and on your side also senators manchant, warren, and heitkamp. We welcome you to the committee. Today well hear about the ongoing implementation of dodd frank. Academic researchers estimate when dodd frank is fully estimate there had will be more than 13,000 new regulatory restrictions in the code of federal regulations. Over 10,000 pages have already been proposed, requiring as is estimated over 24 million compliance hours each year. Thats just the tip of the iceberg. Thats some 400 rules required by dodd frank, roughly onethird of it finalized. About onethird have been proposed but not finalized and roughly onethird have not even yet been proposed. Together the hundreds of dodd frank proposed rules are far too complex, offering confusing and often contradictory standards and regulatory requirements. Im concerned that the regulators do not understand and are not focusing aggressively enough on the cumulative effect of the hundreds of proposed rules and that there as lack of coordination among the agencies, both domestically and internationally. Thats why its important for the regulators to perform meaningful cost benefit analysis so that we can understand how these rules will affect the economy as a whole, interact with one another, and impact our global competitiveness. An enormous number of new rules are slated to be finalized this year as a result of dodd frank, basel 3 and other regulatory initiatives and at this important juncture we need answers to critical questions. First, what are the anticipated cumulative effects of these new rules to credit, liquidity, borrowing costs, and the overall economy . Ultimately we need rules that are Strong Enough<\/a> to make our Financial System<\/a> safer and sounder but that can adapt to a changing market condition and promote Credit Availability<\/a> and spur job growth for millions of americans. Second, what have the agencies done to assess how the complicated rules will interact with each other and the existing Regulatory Framework<\/a> . Im hearing a lot of concern about how the interaction of some rules will reduce mortgage credit through the qualified mortgage rule, the proposed qualified Residential Mortgage<\/a> rule, and the proposed International Basel<\/a> 3 risk weights for mortgages as an example. And third, what steps are being taken to fix the lack of coordination and harmonization of rules among the United States<\/a> and International Regulators<\/a> on cross boarder issues . For example, the cftc has issued a number of socalled guidance letters and related orders on cross border issues. The cftcs initial proposal received widespread criticism from foreign regulators that the guidance is confusing, expansive, and harmful. Meanwhile, the s. E. C. Has not yet issued its cross border proposal. There is bipartisan concern that some of the dodd frank rules go too far and need to be fixed. A good starting point would be to fulfill congressional intent by providing an explicit exemption from the margin requirements from nonfinancial end users that qualify for the clearing exemption. Similar language to this passed the house last year by a vote of 37024. The Federal Reserve<\/a> chairman bernanke has confirmed that regardless of congressional intent, the banking regulators view the plain language of the statute as requiring them to impose some kind of margin requirement on nonfinancial end users unless Congress Changes<\/a> the statute. Unless Congress Acts<\/a> new regulations will make it more expensive for farmers, manufacturers, energy producers, and many Small Business<\/a> owners across the country to manage their unique Business Risks<\/a> associated with their daytoday operations. An end user fix is just one example of the kind of bipartisan actions that we can take to improve the safety and soundness of our Financial System<\/a> without unnecessarily inhibiting Economic Growth<\/a>. Its my hope that todays hearing is going to provide us a starting point to address these Critical Issues<\/a> and identify the needed reforms that we must undertake. Thank you, mr. Chairman, again, for holding this hearing. Thank you. This morning Opening Statements<\/a> will be limited to the chairman and Ranking Member<\/a> to allow more time for questions from the committee members. I want to remind my colleagues that the record will be open for the next seven days for Opening Statements<\/a> and any other materials youd like to submit. Now i would like to introduce our witnesses. The undersecretary for domestic finance of the u. S. Depth of the treasury is with us. We also have a member of the board of governors of the Federal Reserve<\/a> system. We have the chairman of the federal Deposit Insurance Corporation<\/a> and tom curry the comptroller of the currency. Richard cadre is the director of the Consumer Financial<\/a> Protection Bureau<\/a>. Alyse walder is a chairman of the securities and Exchange Commission<\/a>. Gary kensler is a chairman of the commodity creating commission. I thank all of you again for being here today. I would like to ask the witnesses to please keep your remarks to five minutes. Your full written statements will be included in the hearing record. Under secretary miller, you may begin your testimony. Chairman johnson, Ranking Member<\/a> crepo and members of the committee thank you so much for the opportunity to be here today. The dodd frank wall street reform and Consumer Protection<\/a> act represents the most comprehensive set of reforms to the Financial System<\/a> since the great depression. Americans are already beginning to see benefits from these reforms reflected in a safer and stronger Financial System<\/a>. Although the Financial Markets<\/a> have recovered more vigorously than the overall economy, the economic recovery is also gaining traction. The financial regulators represented here today have been making significant progress implementing dodd frank act reforms. Treasury specific responsibilities under the dodd frank act include standing up new organizations to strengthen coordination of financial regulation, both domestically and internationally. Improve information sharing and better address potential risks to the Financial System<\/a>. Over the past 30 months, we have focused considerable effort on creating the Financial Stability<\/a> Oversight Council<\/a>, the office of Financial Research<\/a>, and the federal insurance office. The Financial Stability<\/a> Oversight Council<\/a> known as fsoc has become a valuable forum for collaboration among financial regulators. Through frank discussion and early identification of areas of common interest, the financial Regulatory Community<\/a> is now better able to identify issues that would benefit from enhanced coordination. Although fsoc members are required to meet only quarterly the fsoc met 12 times last year to conduct its regular business and respond to specific market developments. Much additional work takes place at the staff level with regular and substantive engagement to inform fsoc leaders. While treasury is not a rule writing agency the treasury secretary has a statutory coordination rule for the volcker rule and Risk Retention<\/a> rule by virtue of his chairmanship of the fsoc. We take that role very seriously and will continue to work with the respective rule making agencies as they finalize these rules. In addition to the fsocs coordination rule, it has Certain Authority<\/a> to make recommendati recommendations to the responsible regulatory agencies where a Financial Stability<\/a> concern calls for further action. An example along these lines is a concern about risks in the shortterm funding markets. The fsocs focus on this ultimately led the council to issue a proposed recommendations on Money Market Fund<\/a> reforms for public comment. The fsoc has also taken significant steps to designate and increase oversight of Financial Companies<\/a> whose failure or distress could negatively impact Financial Markets<\/a> or the Financial Stability<\/a> of the United States<\/a>. Treasury has made significant progress in establishing the office of Financial Research<\/a> and the federal insurance office. The ofr provides important data and analytical support for the fsoc and is developing new Financial Stability<\/a> metrics and indicators. It also plays a leadership role in the International Initiative<\/a> to establish a legal entity identifier. A code that uniquely identifies parties to financial transactions. The planned launch of the l. E. I. Next month will provide Financial Companies<\/a> and regulators worldwide a better view of companies exposures and counterparty risks. With the establishment of the federal insurance office, the United States<\/a> has gained a federal voice on insurance issues domestically and internationally. For example, in 2012, fio was elected to serve on the executive committee of the International Association<\/a> of insurance supervisors and is now providing important leadership in developing International Insurance<\/a> policy. We are also working internationally to support efforts to make financial regulations more consistent worldwide. By moving early with the passage and implementation of the dodd frank act we are leading from a position of strength in setting the International Reform<\/a> agenda. This comprehensive agenda spans Global Bank Capital<\/a> and liquidity requirements, resolution plans for large, Multi National<\/a> Financial Institutions<\/a>, and Derivatives Market<\/a>s. We will continue to work with our partners around the world to achieve global regulatory convergence. As we move forward it is critical to strike the appropriate balance of measures to protect the strength and stability of the u. S. Financial system while preserving liquid and efficient markets that promote access to capital and Economic Growth<\/a>. Completion of these reforms provides the best path to continuing Economic Growth<\/a> and prosperity grounded in Financial Stability<\/a>. Thank you for the opportunity to testify today. I welcome any questions the committee may have. Thank you. Governor, please proceed. Thank you, mr. Chairman. Its a pleasure to be with all of you here on this valentines day. I just want to make two points in these oral remarks. First, i hope 2013 will be the beginning of the end of the major rule makings implementing dodd frank and strengthening capital rules. The rule making process has been very time consuming, in some cases running beyond the deadline set by Congress Though<\/a> there have been some good reasons for that. Joint rule making just takes a lot of time. And for many of the rules, that process involves three to five independent agencies representing between 12 and 22 individuals who have votes at those agencies. Also, some of the rules involve subjects that are complicated, controversial, or both. I think there was wide agreement that it was incumbent on the regulators to take the time to understand the issues. And to give full consideration to the many thousands of comments that were submitted on some of the proposals. But its also important to get to the point where we can provide clarity to Financial Firms<\/a> as to what Regulatory Environment<\/a> they can expect in some of these important areas so that they can get on with planning their businesses accordingly. So its my hope and my expectation that with respect to the volcker rule, the capital rule, section 716 and many of the special prudential requirements for systemically important firms we will publish final rules this year. On volcker and the standardized capital rules in particular i think the agencies have learned a good deal from the formal comments and public commentaries addressed to these proposals. Both required a difficult balance between the aimed comprehensiveness on one hand and ability to strait at firms and regulators on the other. Inc. It is clear that both proposals lean too far in the direction of complexity. I would expect a good bit of change in the final rule makings on these subjects. Indeed, these examples prove the wisdom of those who drafted the administrative procedure act many years ago whereby they set up a process that agencies issued proposals for notice and comment, received comments, considered the comments, modified the regulations, and then finally put those regulations into place. We should also get out proposals this year to implement two arrangements agreed internationally. The capital surcharge for systemically important banks and the liquidity coverage ratio. One exception where we will be slowing down a little and here we as the Federal Reserve<\/a> not my fellow agencies is the section 165 requirement for counterparty credit risk limits. Based on the comments received and ongoing internal staff analysis we concluded that a quantitative impact study was needed to help us assess better the optimal structure of a rule that is breaking new ground in an area for which there is a lot of hard but previously uncollected data. Well need more time on this one. The second point i want to make is that the feature of the Financial System<\/a> that is in most need of further attention and regulatory action is that of nondeposit shortterm financing. My greatest concern is with those parts of the socalled shadow Banking System<\/a> that are susceptible to destabilizing funding runs, something that is more likely where the recipients of the shortterm funding are highly leveraged, engaged in substantial maturity transformation, or both. It was just these kinds of runs that precipitated the most acute phase of the financial crisis that the chairman referred to a few moments ago. We need to continue to assess the vulnerabilities posed by this kind of funding while recognizing that many forms of shortterm funding play Important Role<\/a>s in credit intermediation and productive Capital Market<\/a> activities. But we should not wait for the emergence of the consensus on comprehensive measures to address these kinds of funding channels. Thats why i suggest in my written testimony more immediate action in three areas, transparency of securities financing, money market mutual funds, and Tri Party Repo<\/a> markets. Thank you for your attention. Thank you. Chairman, please proceed. Thank you, mr. Chairman. Chairman johnson, Ranking Member<\/a> crepo and members of the committee thank you for the opportunity to testify today on the fdics efforts to implement the dodd frank wall street reform and Consumer Protection<\/a> act. While my prepared testimony addresses a range of issues, i will focus my oral remarks on three areas of responsibility, specific to the fdic. Deposit insurance, systemic resolution, and Community Banks<\/a>. With regard to the deposit insurance program, the dodd frank act raised the minimum reserve ratio for the Deposit Insurance Fund<\/a> to 1. 35 and required that the reserve ratio reach this level by september 30th, 2020. The fdic is currently operating under a restoration plan that is designed to meet this deadline and the dif reserve ratio is recovering at a pace that remains ontrack to achieve the plan. As of september 30th, 2012, the reserve ratio stood at 0. 35 of estimated insured deposits. Thats up from 0. 12 a year earlier. The fund balance has now grown for 11 consecutive quarters, increasing to 25. 2 billion dollars at the end of the Third Quarter<\/a> of 2012. The fdic has also made significant progress on the rule making and planning for the resolution of systemically important Financial Institutions<\/a>, socalled sifis. The fdic and Federal Reserve<\/a> board have jointly issued the basic rule making regarding resolution plans that sifis are required to prepare. These are the socalled living wills. The rule requires Bank Holding Companies<\/a> with total consolidated assets of 50 billion or more to develop, maintain, and periodically submit resolution plans that are credible and would enable these entities to be resolved under the bankruptcy code. Beginning on july 1st of 2012, the first group of living will filings by the nine largest institutions with nonbank assets over 250 billion was received. The second group will follow on july 1st of this year and the rest by december 31st. The Federal Reserve<\/a> and fdic are currently in the process of reviewing the first group of planned submissions. The fdic has also largely completed rule making necessary to carry out its system ik resolution responsibilities under title 2 of the dodd frank act. The final rule approved by the fdic board addressed among other things the priority of claims and the treatment of similarly situated creditors. Section 210 of the dodd frank act expressly requires the fdic to coordinate to the maximum extent possible with appropriate foreign regulatory authorities in the event of the resolution of a systemic Financial Company<\/a> with cross bored oder operation. In this regard the fdic and bank of england in conjunction with prudential regulators in our jurisdictions have been working to develop contingency plans for the failure of sifis at operations in both the u. S. And uk. In december the fdic and the bank of england released a joint paper providing an overview of the work we have been doing together. In addition the fdic and the European Commission<\/a> have agreed to establish a joint working group to discuss resolution and deposit insurance issues common to our respective jurisdictions. The first meeting of the working group will take place here in washington next week. Finally, in light of concerns raised about the future of Community Banking<\/a> and the aftermath of the financial crisis, as well as the Financial Impact<\/a> of the various rule makings under the dodd frank act, the fdic engaged in a series of initiatives during 2012 focusing on the challenges and opportunities facing Community Banks<\/a> in the United States<\/a>. In december of last year the fdic released the fdic Community Banking<\/a> study, a comprehensive review of the u. S. Community Banking Sector<\/a> covering the past 27 years of data. Our Research Confirms<\/a> the Important Role<\/a> the Community Banks<\/a> play in the u. S. Financial system. Although these institutions account for just 14 of the banking assets in the United States<\/a>, they hold 46 of all the small loans to businesses and farms made by fdic insured institutions. The study found that for over 20 of the counties in the United States<\/a> Community Banks<\/a> are the only fdic insured institutions with an actual physical presence. Importantly, the study also finds that the Community Banks<\/a> have stayed with their basic Business Model<\/a> of careful relationship lending, funded by stable core deposits, exhibited relatively strong and stable performance over this period and during the recent financial crisis and should remain an important part of the u. S. Financial system going forward. Mr. Chairman, that concludes my remarks. Id be glad to respond to your questions. Thank you. Comptroller curry, please proceed. Chairman johnson, Ranking Member<\/a>, and members of the committee, it is a pleasure to appear before you today for this panels first hearing of the new congress. I want to thank chairman johnson for his leadership in holding this hearing and id also like to congratulate senator crepo on his new role as Ranking Member<\/a> of this committee. I look forward to working with both of you on many issues facing the Banking System<\/a>. There are also a number of new members on the committee and i look forward to getting to know each of you better this session. It has been nearly three years since the dodd frank act was enacted and both the Financial Condition<\/a> of the Banking Industry<\/a> and the federal Regulatory Framework<\/a> have changed significantly. The occ supervises more than 1800 National Banks<\/a> and federal savings associations, which together hold more than 69 of all commercial bank and thrift assets. They range in size from very small Community Banks<\/a> with less than 100 million in assets to the nations largest Financial Institutions<\/a> with assets exceeding 1 trillion. More than 1600 of the banks and tlifts thrifts we supervise are small institutions with less than 1 billion in assets and they play a vital role in meeting the financial needs of communities across the nation. I am pleased to report the federal banks and thrifts have made significant strides since the financial crisis in repairing their Balance Sheets<\/a> through stronger capital, improved liquidity, and timely recognition and resolution of problem loans. While these are encouraging developments, banks and thrifts continue to face significant challenges. Our examiners continue to stress the need for these institutions to remain vigilant in monitoring the risks they take on in this environment. We are also mindful that we cannot let the progress that has been made in repairing the economy and strengthening the Banking System<\/a> lessen our sense of urgency in addressing the weaknesses and flaws that were revealed by the financial crisis. The dodd frank act addresses major gaps in the regulatory landscape, tackles systemic issues that contributed to and amplified the effects of the financial crisis, and lays the groundwork for a stronger Financial System<\/a>. Like my colleagues at the table, we at the occ are currently engaged in numerous rule makings from appraisals to volcker and from Risk Retention<\/a> to swats. My written statement provides details on each of these efforts and provides a flavor of some of the Public Comments<\/a> that have been submitted. The occ is committed to implementing fully those provisions where we have sole rule writing authority as quickly as possible. We are equally committed to working cooperatively with our colleagues on those rules that require coordinated or joint action. I remain very hopeful well soon have in place several regulations to provide clarity in industry needs. Throughout this process i have been keenly aware of the Critical Role<\/a> Community Banks<\/a> play in providing communities across the nation with essential Financial Services<\/a> and access to credit. As the occ undertakes every one of these critical rule makings we are very focused on ensuring we put standards in place that promote safety and soundness without adding unnecessary burden to Community Banks<\/a>. Id like to highlight one of the most significant milestones of the dodd frank act for the occ, which is the successful integration of the mission and most of the employees from the office of thrift supervision into the occ. The integration was accomplished smoothly and professionally, reflecting the merger of experience with a strong vision for the future. The final stage of this process is under way with the integration of rules applicable to federal thrifts with those that apply to National Banks<\/a>, consistent with the statutory differences between the two charter types. An integrated set of rules will benefit both banks and thrifts. In the vast majority of the rule making activities, the occ is one of several participants. The success of those rule makings depend on interagency cooperation and i want to acknowledge the work of my colleagues at this table and their staff for approaching these efforts thoughtfully and productively, giving careful consideration to all issues. Working together i believe we will be able to develop rules that will be good for the Financial System<\/a>, the entities we regulate, and the communities they serve going forward. Thank you for your attention and i look forward to answering any questions you may have. Thank you. Director cadre, please proceed. Thank you, chairman johnson. Ranking member crepo and members of the committee for inviting me back today. My colleagues and i at the Consumer Financial<\/a> Protection Bureau<\/a> are always happy to testify before the congress, something weve done now 30 times. Today were here to talk about the implementation of the dodd frank, wall street reform and Consumer Protection<\/a> act. The signature legislation that created this new Consumer Agency<\/a>. Since the bureau opened for business in 2011 our team has been hard at work. Were examining both banks and nonbank Financial Institutions<\/a> for compliance with the law and weve addressed and resolved many issues through these efforts today. In addition, for consumers who have been mistreated by credit card companies, we are in coordinated Enforcement Actions<\/a> with our fellow regulators returning roughly 425 million to their pockets. For those consumers who need information or want help in understanding Financial Products<\/a> and services weve developed ask cfpb a data base of hundreds of answers to questions frequently asked of us by consumers. And our Consumer Response Center<\/a> has helped more than 100,000 consumers with individual problems related to their credit cards, mortgages, student loans, and bank accounts. In addition weve been working hard to understand, address, and resolve some of the special Consumer Financial<\/a> issues affecting specific populations students, Service Member<\/a>s, Older Americans<\/a>, and those who are unbanked or under banked. Were planning a strong push in the future for broader and more effective Financial Literacy<\/a> in this country. We need to change the fact that we send many thousands of our young people out into the world every year to manage their own affairs with little or no grounding in personal finance education. We want to work with each of you on these issues on behalf of your constituents. Weve also faithfully carried out the law that congress enacted by writing rules designed to help consumers throughout their mortgage experience from signing up for a loan to paying it back. Weve written rules dealing with loan originator compensation, giving consumers better access to their appraisal reports and addressing escrow and appraisal requirements for higher priced mortgage loans. Just last month we released our ability to repay rule which protects consumers shopping for a loan by requiring lenders to make a good faith, reasonable determination that consumers can actually afford to pay back their mortgages. The rule outlaws socalled and very irresponsible ninja loans even with no income, no job, no assets you could still get a loan. They were all too common in the lead up to the financial crisis. Our rule also strikes a careful balance on access to credit issues that are so prevalent in the market today by enabling safer lending and providing greater certainty to the Mortgage Market<\/a>. Finally, the bureau also recently adopted Mortgage Servicing<\/a> rules to protect borrowers from practices that plagued the industry like failing to answer phone calls, routinely losing paperwork, and mishandling accounts. Im sure that each of you has heard from constituents in your states who have these kinds of stories to tell. We know the new protections afforded by the dodd frank act and our rules will no doubt bring great changes to the Mortgage Market<\/a>. Were committed to doing what we can to achieve effective, efficient, complete implementation by engaging with all stakeholders especially inland in the coming year. We know that it is in the best interests of the consumer for the industry to understand these rules because if they cannot understand they cannot properly implement. To this end weve announced an implementation plan. We will publish plain english summaries, readiness guides to give industry a broad checklist of things to do to prepare for the rules taking effect next january like updating the policies and procedures and providing training for staff. Were working with our fellow regulators to ensure consistency and examinations of mortgage lenders under the new rules and to clarify issues as needed. We also are working to finalize further proposals in these rules to recognize that as my colleagues have said the traditional lending practice of smaller Community Banks<\/a> and Credit Unions<\/a> are worthy of respect and protection. So thank you again for the opportunity to appear before you today and speak about the progress were making at the Consumer Protection<\/a> bureau. We always welcome your thoughts about our work and i look forward to your questions. Thank you. Thank you. Chairman walder, please proceed. Chairman johnson, Ranking Member<\/a> crepo, and members of the committee. Thank you for inviting me to testify on behalf of the securities and Exchange Commission<\/a> regarding our ongoing implementation of the dodd frank act. As you know, the act required the s. E. C. To undertake the largest and most complex rule making agenda in the history of the agency. We have made substantial progress writing a huge volume of new rules mandated by the act. We have proposed or adopted over 80 of the more than 90 required rules and we have finalized almost all of the studies and reports congress directed us to write. Since the laws enactment our staff has worked closely with other regulatory agencies and has carefully reviewed the thousands of comments we received to ensure that we not only get the rules done but that we get them done right. And i am committed to doing both. Indeed, as long as i serve as chairman i will continue to push the Agency Forward<\/a> to implement dodd frank. While my written testimony describes in greater detail what we have achieved i wanted to touch briefly on just a few of the items. Today as a result of new rules jointly adopted with the cftc, Systemic Risk<\/a> information is now being periodically reported by registered Investment Advisers<\/a> who manage at least 150 million in private fund assets. This information is providing fsoc and the commission with a broader view of the industry than we had in the past. Additionally, because of our registration rules, we now have a much more comprehensive view of the hedge fund and private fund industry. We also adopted rules creating a new Whistle Blower Program<\/a> and last year our program produced its first reward. We expect future payments to further increase the visibility of the program and lead to even more valuable tips. The program is pulling in the type of high quality information that reduces the length of investigations and saves resources. With respect to the new oversight regime, dodd frank mandated for overthecounter derivatives we have proposed substantially all of the core rules to regulate securities based. Last year in particular we finalized rules regarding product and party definitions, adopted rules regarding clearing and reporting and issued a road map outlining how we plan to implement the new regime. Soon, we plan to propose how this regime will be applied in the cross border context. The commission has chosen to address cross border issues in a single proposing release rather than through individual rule makings. We believe this approach will provide all interested parties with the opportunity to consider as an integrated whole the commissions proposed approach to cross Border Security<\/a> based swap oversight. Last year the commission working with the cftc and the fed adopted rules requiring registered clearing agencies to maintain certain Risk Management<\/a> standards and also establish Record Keeping<\/a> and Financial Disclosure<\/a> requirements. These rules will strengthen oversight of securities clearing agencies and help to ensure that Clearing Agency<\/a> regulation reduces Systemic Risk<\/a> in the Financial Markets<\/a>. Although tremendous progress has been made, work remains in areas such as Credit Rating<\/a> agencies, asset backed securities, executive compensation, and the volcker rule. With respect to the volcker rule the issues raised are complex and the nearly 19,000 comment letters received in response to the proposal speak to the mult tud of view points that exist. We are actively working with the federal banking agencies, cftc, and treasury in an effort to quickly finalize this important rule. With respect to all of our rules Economic Analysis<\/a> is critical. While certain costs or benefits may be difficult to quantify or value with precision, we continue to be committed to meeting these challenges and to ensuring that the commission engages in sound, robust Economic Analysis<\/a> in its rule making. It also has been clear to me from the outset that the acts significant expansion of the s. E. C. s responsibilities cannot be handled appropriately with the agencys Current Resource<\/a> levels. With congresss support, the fecs fy2012 appropriation permitted us to begin hiring some of the new positions needed to fulfill these responsibilities. Despite this, the s. E. C. Does not yet have all the resources necessary to fully implement the law. Enactment of the president s fy2013 budget would help us to fill the remaining gaps by hiring needed employees for front line positions and also would permit us importantly to continue investing in Technology Initiatives<\/a> that substantially and cost effectively allow us to improve our ability to police the markets. As you know, regardless of the amount appropriated our budget will be fully offset by fees we collect and will not impact the nations budget deficit. As the commission strives to complete our remaining tasks, we look forward to working with this committee and others to adopt rules that will fill our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. Thank you again for inviting me to share with you our progress to date and our plans going forward. I look forward to answering your questions. Thank you. Thank you, chairman johnson and members of the committee. I want to first just associate myself with governor turillos comments about wishing you well on this valentines day but also his comments about the administrative procedures act. I think weve all benefited at the cftc by the 39,000 comments that weve gotten on our various rules. This hearing is occurring at a very historic time in the markets because with your direction, the cftc now oversees the Derivatives Market<\/a> place not only the futures market place that we had overseen for decades but also this thing called the swaps market place. Our agency has actually completed 80 not just proposed but completed 80 of the rules youve asked us to do. The market place is increasingly shifting to implementation of these comments and refusal the road. What do what does it mean . Three key things. For the first time the public is benefiting from seeing the price and volume of each swap transaction. This is free on a website like a modern day ticker tape. Secondly for the first time the public will benefit from greater access to the market that comes from centralized clearing and the Risk Reduction<\/a> that comes from that centralized clearing. This will be phased throughout 2013 but were not needed to do any new rules. Its all in place. Thirdly for the third time the public is benefiting from the oversight of swap dealers. We have 71 that registered. For sales practice and business conduct to help lower risks to the overall economy. Now, these swaps market reforms ultimately benefit end users. The end users in our economy, nonfinancial side, employs 94 of private sector jobs. And these benefit those end users through Greater Transparency<\/a>, Greater Transparency<\/a> starts to shift some information advantage from wall street to main street but also lowering risk. And weve completed our rules ensuring as congress directed that the nonfinancial end users arent required to participate in Central Clearing<\/a>. At the cftc weve proposed margin rules that provide end users will not have to post margin for those uncleared swaps. To smooth the markets transition to the reform the commissions consistently been committed to phasing in compliance based upon the input from the Market Participants<\/a>. Id like to highlight two areas in 2013 that we still need to finish up the rules. One is completing the pretrade transparency reforms. This is so buyers and sellers meet, compete in the market place, just as in the securities and futures market place. Weve yet to complete those rules on the swap execution facilities and block rules. Secondly, ensuring that cross border application of swap market reform appropriately covers the risk of u. S. Affiliates operating offshore. Weve been coordinating greatly with our International Colleagues<\/a> and the s. E. C. And the regulators at this table but i think in enacting finance Reform Congress<\/a> recognized a basic lesson of modern finance and the crisis. That basic lesson is during a crisis risk knows no border. If a run starts at one Financial Institution<\/a> whether here or offshore it comes back to hurt us. That was true in aig which ran most of its swaps business out of mayfair, a part of london, but it was also true at lehman brothers, citigroup, bear stearns, longterm capital management. I think failing to incorporate this basic lesson of modern finance into our oversight of swaps market would not only fall short of your direction to the cftc and dodd frank but i also think it would leave the public at risk. I believe dodd frank reform does apply and we have to complete the rules to apply to transactions entered into branches of u. S. Institutions offshore off if theyre guaranteed affiliates offshore transacting with each other or even if it is a hedge fund that happens to be incorporated hedg incorporated in an island ar off shore but really operated here. Id like just to turn with the remaining minute to these cases the cftc brought on live war because its so much of our 2013 agenda. The u. S. Treasury collected 2 billion from the Justice Department<\/a> in cftc fines. But thats not the key part of this. Whats really important is ensuring Financial Market<\/a> integrity. When a reference rate such as libor central to borrowing, lending, hedging in our economy has so pervasively been rigged, i think the public is just shortchanged. I dont know any way to put it. We must ensure that reference rates are honest reflections of observable transactions in real markets and they cant be so vulnerable to misconduct. Ill close by mentioning as the same way chairman walter did the need for resources, i would say the cftc has been asked to take on a market thats vast in size and much larger than the futures market we once oversaw. And without sufficient funding i think the nation cannot be assured that we can effectively oversee these markets. I thank you and look forward to your questions. Thank you. And thank you all for your testimony. As we begin questions, i will ask the clerk to put five minutes on the clock for each member. Mr. Miller, what steps has the u. S. Taken both at home and abroad to complete reforms in a way that makes the Financial System<\/a> safer, banks too big to fail, bailouts, and for most stable Economic Growth<\/a>. And what are the challenges to accomplish this . I think the most important thing that we can do is to restore confidence in our Financial Markets<\/a> and our Financial System<\/a>. And i think the work that has gone on postthe doddfrank reforms has been incredibly important making sure they are better capitalized, that they are more likd, and that they have a good plan for failure should they not succeed. I dont think our reforms are intended to prevent failure but they are making us much better prepared and to make sure our Financial Institutions<\/a> and the activities they engage in are much safer and sounder. So we have been working very hard, i think, in the u. S. And abroad with our International Counterparts<\/a> to make sure that we put in place the necessary rules of the road to make sure these things can happen. So its happening at many levels in the u. S. You heard all the activities these regulators are engaged in. But its also happening in international forums. Were working with counterparts to make sure we have a level playing field. As far as the challenges, this is a very comprehensive law. It is one that addresses many parts of our Financial System<\/a>. I think the number of rulemaking activities, definitions, studies, and work that were laid out by doddfrank is quite a big workload. When i work with these regulators here i see the same people working on a wide range of roles. Theyre working hard but they have a pretty big agenda to accomplish. But i think that the spirit of cooperation is good. I think entities like the Financial Stability<\/a> Oversight Council<\/a> provide a good forum for working on these things. Mr. Cordray, congratulations on issuing a final rule that was well received by both consumer advocates and the industry. What approach to take to define a rule to strike the right balance . [ inaudible ] and i appreciate those observations. I think we tried to do three things. The first is we were very accessible to all parties with all range of viewpoints on the issues. The issues were difficult. Its not easy to write rules for the Mortgage Market<\/a> right now because were in a tight period. And the data a few years before that was in a loose period. We had some significant issues unresolved in terms of public policy. But i think that we listened very carefully and attentively to what people had to say to us. And a great deal of comments that we received. I think secondly we did go back and try to develop Additional Data<\/a> so that we could work through the numbers on our own and understand what different approaches would have. And i think third and this was quite meaningful is we consulted with fellow agencies. They have a lot of expertise and a lot of insight on the problems we were addressing. And we will ultimately be examining these institutions in parallel to one another. And the rules need to work for everyone. Well continue to work with the other agencies on implementation. And i do think that helped us tremendously. I can point to any number of the provisions in the rules that were made better by that process. This question is for mr. Cordray and mr. Tur ru low. I want to thank for all the hard work on qrm. Is there anything in the law that would prohibit qrm from being the same as qm . And now that the qm rule is finalized as mr. Cordray just described . Lets berg, lets begin with you. Thank you, mr. Chairman. I dont believe theres anything regarding qrm with qm. We actually delayed consideration of the rule making on qrm pending the completion of the qm rule. And i think well now have the ability to consider the final rule making on qrm in light of the qm rule making. Mr. Tarullo and mr. Cordray, do you agree . Certainly, mr. Chairman. I agree with mr. Gruenberg. Id just say further that as you know, two provisions had somewhat different motivations. The qm rule motivated towards protecting the individual who buys the house. And the qrm rule motivated towards the Risk Retention<\/a> associated with that mortgage and thus presumably trying to protect the investment for the intermediary. Having said that, i think given the state of the Mortgage Market<\/a> right now, both you and senator crapo has eluded to it. I think we want to be careful here about the incremental rule making that were doing not beginning to constrict credit to middle and lower middle class people who might be priced out of the housing market. If theres too much in the way of duplicate or multiple kinds of requirements at the less than highly credit worthy end. So i think its definitely the case that on the table should be consideration of making qrm more or less congruent with qm. Mr. Cordray . I share the views of both governor tarullo and chairman gruenberg with respect to the definition. I also would concur with governor tarullo its important to look at the cumulative effect of the issue that senator crapo mentioned. When were talking about the Mortgage Market<\/a> on issues of competition and the ability to have the widest number of Financial Institutions<\/a> regardless of size participating in it is something that were very concerned about and paying close attention to. Senator crapo . Thank you. Senator corker has a need to get to another meeting and im going to yield to him. Thank you very much. I wont ill do this rarely and ill be very brief. Just three questions. Mr. Gruenberg, we talked extensively about orderly liquidation. Im sure many thought that meant these institutions would be out of business and gone. I think as youve gotten into it you decided youre only going to eliminate the Holding Company<\/a> level. And what that means is that creditors candidly could issue debt to all the subsidiaries and know theyll never be at a los. Have you figured out a way to solve that . Because obviously that was not what was intended. I agree with you, senator. And as you know, the approach weve been looking at would impose losses actually wiping out shareholders imposing losses on creditors and replacing culpable management in regard to creditors it would be important to have a sufficient amount of unsecure debt at the Holding Company<\/a> level. In order to make this approach work, we have been working closely with the Federal Reserve<\/a> on this issue. Actually governor tarullo and his testimony makes reference to it. And im hopeful we can achieve an outcome that will allow us to impose that kind of accountability on creditors. It seems like youd want all of your longterm debt at the Holding Company<\/a> level. So i just hope that yall will work something out thats different than the way it is right now. Because creditors could easily be held harmless at the sub level. And thats not what anybody intended. Secondly mr. Tarullo, i know youre to identify and respond to threats in the Financial System<\/a> any systemic threat. Is there any institution in America Today<\/a> that if it failed would pose a Systemic Risk<\/a> . Any institution . I think we learned from the financial crisis that the failure of a Large Institution<\/a> can create some Systemic Risk<\/a>. But yall are to eliminate that. So im just wondering if any institution in america failed, would that create Systemic Risk<\/a> because your job is to ensure thats not the case. I believe that all the work weve done and continue to do is designed to prevent that effect. And to make sure that we have in place rules and regulations that keep firms from engaging in activities or building their Business Model<\/a>s in ways that are going to transmit that type of financial distress. Mr. Tarullo . I think, senator, that its a journey and not a single point where you can say weve addressed the too big to fail sho issue. I think a lot of progress has been made but resolvability without a disorderly major disruption to the Financial System<\/a> on the one hand. And on the other the failure of a firm that entails substantial negative externalitieexternalit. Its about bringing the whole system to crisis on the one hand, not doing so on the other but still imposing lots of costs. And i do think that theres complimentarity between the rules, the fdic resolution process, and the other rules in trying to make sure were dealing both with resolvability and negative externality. I hear what youre both saying. I would assume, though, that a big part of your role is to ensure that theres no institution. I know that you guys have regulatory regimes that try to keep them healthy. And i assume and if im wrong that you want to ensure that theres no institution in america thats operating that operates that can fail and create Systemic Risk<\/a>. I assume thats part of your role. And if not, id like a followup after the meeting and maybe well ask that again in written testimony. I know my time is short. Let me just close with this. I know the three rules are really complicated as it relates to capital. Some people have come out and said wed be much better off with a much stronger capital ratio. Some people have said 8 and do away with all the complexities that exist. Because many of the schemes, if you will, that lay out risk really dont work so well. Im just wondering if that wouldnt be a better solution. And that is have much better ratios, much stronger ratios, and much less complexity with all of these rules everybody is having difficulty understanding. Well, senator, i guess i would say and i know youre not making the observation im about to respond to, but its been heard as well that the idea that if you somehow dont completely like basel three shouldnt be for it. It is an e normal advancement in improving the quantity and the quality of capital. And those pieces of it are actually not all that complicated. You know, making sure that the equity thats held is real equity that could be loss absorbing. And getting it up to a 7 level effectively rather than as low as 2 . Which that level was precrisis. So i think those are pretty straightforward. Whether more should be done you know, whether as chairman gruenberg would say for some of the largest institutions we need some complimentary measures. I agree. But i think its straightforward. And id also say in the u. S. At least with the collins amendment, we are now in a position to have a standardized floor. With standardized risk rates which applies to everybody. And my hope would be that other countries actually see the substantial in this. Instead of having a substantial floor and above that for the biggest institutions, thats where you have the model driven supplemental capital requirement. Not displacing the simple one. Just supplemental. Thank you. Thank you very much. Senator reed. Thank you very much, mr. Chairman. Chairman gensler, i understand that you recently had a round table on the future of swaps. And one of the participants indicated that because of the rule making process has not been fully completed, many people are moving away to avoid uncertainty into the futures markets. Can you tell us what risks might be posed by that and also how youre going to respond to finalizing these rules . I know you indicated your budget issue is probably a critical factor on that. You might even comment on that again. Thank you, senator. I think what were seeing in the derivative market place is somewhat natural. The futures market place has been regulated for seven or eight decades for transparency and Risk Reduction<\/a> through clearing. Swaps market place developed about 30 years ago. And in fact is between 80 and 90 of the market share in a sense of the outstanding derivatives. So as congress dictated, we bring transparency and Central Clearing<\/a> to the unregulated market. Theres been some relabeling, some reshifting as you say. Some people call this futurization. The good news is whether its a future or a swap, we have transparency after the traction and in futures before the traction occurs. We have Central Clearing<\/a> to ensure access. We do need to finish the roles in the swaps market place around these things called swap executions. We also in the futures world have to ensure that we dont lose something that what was once swaps moves over, calls itself futures and somehow the exchanges lower the transparency. We wouldnt want to see that happen. Whether its called a future or a swap, were in better shape than we were in 2008. I thank you for asking about resources. We desperately need more resources. Its a hard ask when congress is grappling with the budget deficits, i know. Commissioner walter, this is a related question. Its an International Market<\/a> and both you and chairman gensler are working on the issue of cross border swaps. And in order to coordinate with International Regulators<\/a> so that there is a consistent rule. Sort of harps back to what governor tarullo said if there was a collins rule across the board. Uniformity helps sometimes. Can you comment upon what you and both chairman gensler are doing with respect to the coordination efforts with respect to the cross border swaps . Absolutely. Thank you, senator reed. It is a tremendously important issue. Perhaps more important in this market than any other. Because this market is truly a Global Market<\/a> place unlike other markets that we regulate that only have a certain cross border aspects. The majority of what goes on in this market place does Cross National<\/a> lines. We have worked very closely not only with the standard multinational bodies such as the International Organization<\/a> of securities commissions, but we are working very actively both the cftc and the s. E. C. With the regulators around the globe who are in the process of writing the same rules. Theyre at somewhat different stages than we are. Some are just entering the rule writing stage. But we all acknowledge the importance of making sure that the business can take place aCross National<\/a> boundaries. And that we remove unnecessary barricades. First of all we want no incompatibility or conflict. But then we want to look at ways we can make our rules more constant. And we are both looking at techniques such as what we call substituted compliance where you can have an entity that is registered in the United States<\/a> but complies by complying with the home country laws. We think this will really ease the burdens and were looking at it carefully. Chairman gensler, any comments . I think were in far better shape than two years ago or one year ago. So four very significant jurisdictions between which we probably have 85 or 90 of this worldwide swaps market place. Were ahead of them in the rule writing stage, but with some developments last week even europe now got their rules through a very important process through the european parliament. So i think that were starting to align better. Let me just make a final comment because my time is expiring. One of the doddfrank initiatives was to take bilateral derivative trades and make them put them on clearing platforms so that theyre multilateral. That helps but it also engenders the possibility of Systemic Risk<\/a> from the concentration. That means the collateral rules, all the rules have to be i just want to leave that thought with you that you have you know, thats something that should be of concern to both cftc and s. E. C. That these Central Clearing<\/a> platforms are so grounded with capital, collateral, however you want to describe it. Lack of leverage. That they do not pose a Systemic Risk<\/a>. I suppose you understand that. We do. We take that very seriously. Thank you very much. Senator crapo. Thank you mr. Chairman. I first want to get into the issue of Economic Analysis<\/a>. As i know youre all aware, the president has issued two executive orders requiring the agencies to conduct Economic Analysis<\/a> and the opposite of management and budget has issued guidance on how to implement that. But ironically agencies such as yours are not subject to those executive orders. And i know that each of your agencies has said youre going to follow the spirit of those orders, but in december of 2011 the g. A. O. Found the agencies were not following the guidances put out by omb. And in its december report of this year, it found that the occ and the s. E. C. Were getting there but the remaining agencies still a year later were not following the key guidances in the omb that the omb has put out for Economic Analysis<\/a>. The gao i think was quite critical about that as well as the fact that it found some coordination among the agencies but that the coordination was informal in nature and almost none of the coordination looks at the cumulative burden of all the new rules, regulations, and requirements. So my first question to really ask is of all of you. Can i have your commitment that each of your agencies will act on gaos recommendation to incorporate ombs guidance on cost benefit analysis into your proposed and final rules as well as your interpretive guidance . I guess i would not necessarily ask each of you for an answer, but if there is any agency here who will not commit to comply with the g. A. O. s recommend, could you speak up . Im sorry i will confess not being familiar with the december 2012 recommendations. Certainly we do Economic Analysis<\/a> both on a rule by rule basis and more generally. I and to that we are committed. I dont know that were committed to everything that might be in there. I wouldnt want to leave you with that impression. Id prefer to get back to you after the hearing. Well, ive got the report here. Im sure you can get a copy of it. What the g. A. O. Is saying is its the omb guidances with the executive orders on this issue. And each of the agencies tells the g. A. O. Theyll doing what you just said to me. That youre doing Economic Analysis<\/a>. The g. A. O. Says youre not doing Economic Analysis<\/a> the way that the omb has directed that it be done according to the guidance. So the request is that you commit that you will follow the g. A. O. Recommendation. That you simply comply with the omb guidances. All right. Im going to take that as an agreement that youll do that. Could i just as i didnt want to leave it. I guess maybe not. No, i just want to make sure just as governor tarullo that we didnt leave you with anything but the best impressions. Weve issued our General Council<\/a> and our chief economist issued guidance to the staff on all our rule makings to ensure that our final rules do what youre saying. I think the g. A. O. Report also is looking at some proposals that came before so we had to sort of, you know, address what the recommendations were and there were proposals before that. Were also in a circumstance where our statute has explicit language about cost benefit considerations. And that language we have is a little different than other agencies. So we look to section 15a i think of the Commodity Exchange<\/a> act for our guidance on cost benefit. But i believe and i understand our guidance to the staff is consistent with the omb. But recognizing we have to comply with the statute we have. I dont think that the statute you have, though, stops you from honoring and meeting the omb guidances. G. A. O. As i understand it looked at 66 rule making altogether that happen among the agencies last year. And thats a pretty significant amount of the rule makings that were there. Let me get at this in another way. Can each of you commit that you will provide the committee with a description of the specific steps your agency is taking to understand and quantify the anticipated cumulative effect of the doddfrank rules . Any problem with that one . Were using data thats available and where the quantify kags possibilities exist, absolutely. All right. I see my time is up. Ive got other issues to get into with you but i appreciate this. I want to conclude by a statement. I think g. A. O. s report was very clear that the kind of Economic Analysis<\/a> that we need is not happening. And thats why im raising this. And so although you can explain that you have other regimes or statutory mandates, the issue here is getting at proper Economic Analysis<\/a> as we implement these rules. I think g. A. O. s report is pretty damning in the results of the found on the 66 rules they identified. Senator menendez. Thank you, mr. Chairman. Thank you to all for your testimony. Mr. Curry, i want to discuss the botched foreclosure procedure. They held on the housing subcommittee. In fairness let me start off by saying you were not the controller when the Foreclosure Review Program<\/a> was designed. But as to follow on to that period of time, you were nevertheless tasked with cleaning up what i consider to be a mess. And basically what was done here is that we replaced the process with an 8. 5 billion settlement that wont really determine which borrowers were wronged or not. And despite keeping their legal rights to sue the banks, most borrowers dont have the financial means to litigate their cases if they feel that the compensation was inadequate. So considering this point, isnt it unfair to not review the files of those turning in packages if they still want a review . And would you consider mailing each borrower a check but giving them the option to return that check in favor of a full review of their file . And as part of the answer i will give you the third part of it. How is it fair to tell a borrower who had, for example, 10,000 in improper fees charged to them that theyre going to get 1,000 because thats the amount all borrowers in the improper fee category will get. Ive been at this for over a year and i am concerned about how we are coming to the conclusion here. So give me some insight. Thank you, senator menendez. I share your concerns about the entire process and its ability to meet its original stated objectives. What happened here is that the complexity of the review process was much larger than was anticipated in the beginning. It consumered a considerable amount of time with little results. And our concern was that the having over almost 2 billion being spent as of november this year without being able to issue the first checks that the process was flawed and that the best equitable result was to estimate an appropriate amount of settlement and make as equitable distribution as possible taking into account the level of harm and the borrower characteristics. And the settlement isnt perfect, but we believe its the best possible outcome under the circumstances. On the specific questions that i asked you, though, is it possible for those who want a review of their files to get a review if theyre willing to forego or at least the check. That is not an element of the settlement that weve reached. So the bottom line is they will be foreclosed from a review . No. Part of the settlement is and this was the impetus for having the 5. 7 billion worth of assistance for foreclosure relief as part of the settlement. Weve made it clear that the those funds should be prioritized and that they should be directed towards the inscope population and towards those individuals with the greatest risk of foreclosure. We want people to stay in their homes. We want people to stay in their homes too. The question is what recourse do they have here other than pursuing their own litigation. They have none through your process, thats what i want to get to. The way the settlement is structured, we will try to allocate the payments to the most grievous situations. But you wont know that without a review of their files. We have done an analysis preliminary analysis of the level of harm in the total inscope population. We think we have a fair estimate of overall who would be harmed. But we do recognize as youve stated that certain individuals may not get fully compensated for financial harm. Well, we look forward to reviewing that with you furthermo furthermore. Lastly secretary miller, the president called for both senator boxer and i have promoted and offered the responsible homeowners refinancing act. I said its past time to do it. Could you tell the committee the value to individuals as well as to the economy of permitting refinancing at this time . Thank you for that question. The population of homeowners who today are under water on their mortgages, we know thats about 20 of all homeowners who have not been able to refinance in a low Interest Rate<\/a> environment is a missed opportunity, we think, to reach homeowners who should be able to benefit from the spread of a high Interest Rate<\/a> loan that they may hold versus where rates are today. So we would very much support any assistance that you can provide to help reach that population. We do have a program that is reaching homeowners whose mortgages happen to be held or guaranteed by the gses. Its called harp. Weve seen good takeup in the assistance were providing to under water loan holders in that population. But it is the other group of homeowners who do not have a mortgage held at the gses that have not been able to take advantage of this. So we think it is a priority. Would be good for the homeowners. Would be good for the Mortgage Market<\/a>. Would be good for the economy. Thank you. Senator coburn. Mr. Chairman, thank you. Im glad to be on this committee. I just have one question i will submit the rest of my questions for the record. But this is to mr. Cordray. You mentioned in your testimony Financial Literacy<\/a>. And how that needs to be approved. I wonder if youre aware of how many Financial Literacy<\/a> programs that congress has running right now. I couldnt tell you exactly but i can tell you by law im the chairman of the Financial Literacy<\/a> commission. And we are coordinating with other agencies. There are, you know, 15 or 20 other agencies and it does feel to me that one of the issues has been a sort of piecemeal approach to this problem. And we have been given substantial responsibilities as a new Consumer Agency<\/a> in this area. And id like to work both with the congress and with our fellow agencies as were doing through the fleck. And when i was a county treasurer and state treasurer in ohio, we were able to get the legislature to change the law so every student in ohio now has to have Financial Education<\/a> before they can graduation. Thats something we used to do during Home Economics<\/a> and through the like. Ive seen textbooks from the teens and 20s where a lot of the questions asked were put in the household budgeting and Financial Issues<\/a> that were around communities. I think thats something weve lost. Its something that has weakened our society and its something we need to focus on. I would agree with you, theres a very sort of scattered and desperate approach right now. I think its not been optimal. Its ironic the federal government is giving education on the Financial Literacy<\/a> given our economic situation. There are 56 programs. So what i would hope you would do in your position is really analyze this and make a recommendation with congress after looking at the g. A. O. Report on this and tell us to get rid of them or get one. But not 56 sets of administrators, officers, rules, and complications and requirements that have to be fulfilled by people to actually implement Financial Literacy<\/a>. I appreciate the comment. Id be glad to follow up with you and work and think about this. As we coordinate with one another, that helps minimize some of the problems. Weve worked with the fdic particularly on their money smart curriculum. We dont need to be reinventing the wheel. Were working with them on creating a module for Older Americans<\/a> with certain issues. Id be happy to work with you on that. And i agree with the thrust of your question. My only point is with 56, if we start another one or another two or three and dont change throw, were throwing money out the door. I would agree with that. Thank you. Senator brown. Thank you, chairman johnson. Governor tarullo, id like to talk to you. In 2009 you said i quote, limiting the size or interconnectedness of Financial Institutions<\/a> was more a provocative idea than a proposal. And you said that in the context that there wasnt there werent particularly developed ideas out there. Since we talked i introduced to limit the liabilities of any Single Institution<\/a> relative to domestic gdp. Ive worked with senator vitter on that proposal. And we are considering to see i think more bipartisan support. Tell me how you have your thinking has evolved. Your more recent statement seems it has. And why that is. Youre absolutely right, senator brown. My observation back in 2009, i think, was that people would Say Something<\/a> like break up the banks. But there wasnt a plan behind it that allowed people to make a judgment as to whether it would address the kind of problems and too big to fail and others in the crisis. And what costs associated with it would be. As you say, since then a lot of people have generated a lot of plans. And i think they probably fall into three categories. The first category is really kind of a variant on things we already do. Strengthen the barriers between depository institutions and other parts of Bank Holding Companies<\/a>. Make sure that some activities are not taking place in the banks. Make sure that theres enough capital in the rest of the Holding Company<\/a> even if they get into trouble independently. Dont think just in terms of protecting itself. Interestingly those are a big part of some of the european proposals. As i say to a considerable extent, the u. S. Has already gone down that road and indeed doddfrank strengthened some of those provisions. The second set of proposals is what id characterize as a functional split. So saying there are certain kinds of functions that cannot be done within a bank Holding Company<\/a>, obviously glass steigel was that approach. And heres where there are some proposals out like this now. They sort of vary. Some of them would allow underwriting, but not market making. Others might say, you know, nothing at all other than commercial banking. I think there the issues are kind of on both sides. On the one hand, we have to ask ourselves if we did that, would it actually address the problem that led to the crisis . As senator johnson was indicating in his introductory remarks. It was the failure of bear stear stearns. That precipitated the acute crisis. And the second is what would be lost. Are there valuable roles played when, for example, an underwriter also makes market insecurities which it underwrites. Most people would conclude that there are. The third kind of example is embodied in your legislation and i think some other proposals. Which focuses on the point that i tried to make at the close of my introductory oral remarks. That what i think of as the unaddressed set of issues. The unaddressed set of issues of large amounts of shortterm, nondeposit, runable funding. And i think here and speaking personally now, my view is thats the problem we need to address. Your legislation takes one approach to addressing it which is to try to cap the amount that any individual firm can have. And thereby try to contain the risk of amplification of a run. There are other complimentary ideas such as restricting the amounts based on different kinds of Duration Risk<\/a> or having higher requirements if you have more than a certain amount. There are even broader ideas such as placing uniform margins on any kind of securities lending no matter who participates in them. I think from my point of view, the importance of what youve done is to draw attention to that issue of shortterm, n nondeposit, runable funding. Thats the one i think we should be debating in the context of too big to fail and in the context of our Financial System<\/a> more generally. Thank you. Mr. Chairman, if i could just a couple of quick comments. One is that weve seen since and thank you for that evolution in your thinking and the way you explained it. When senator kauffman eni first introduced that amendment on the floor in 2010, it had bipartisan support but it obviously fell short. We have seen from columnists like george wilin at wall street journal and a number of others across the political spectrum including colleagues that are way more conservative than i am on this and in this body come around to looking at this pretty favorably. Weve seen a lot of momentum. And i appreciate your thinking. Second, i wanted to bring up really quickly, mr. Chairman, and i will not end with a question. But last week, governor, i received the feds response letter regarding basel three. With 22 of our colleagues last year. Senators johnson and crapo sent a letter yesterday to the fed on the insurance issue. And you and other fed officials have stated several times you believe the proposed rule adequately accommodates insurance. I respectfully disagree. I wont ask for response now but we will work with you on that. Senator heller and welcome to the committee. Thank you very much, mr. Chairman. It will be a pleasure to serve with you. Thanks for making me part of this team. I want to thank those who have testified today. A lot to learn. I guess theres two messages. This takes a team to solve these problems we have today. And two, i do have a lot to learn. I do want to concentrate my comments today more on consolidation. Weve had massive consolidation in the Banking Industry<\/a> in nevada. I come from a state with the highest unemployment, highest foreclosures, highest bankruptcies and i think the health of the Banking Industry<\/a> reflects the health of the state. In its current position. From about a 30,000 feet level looking down at this, we only have 14 Community Banks<\/a> left in nevada. We only have 23 Credit Unions<\/a> left in nevada. 85 of all deposits are now concentrated in large banks. 31 of nevadans are unbanked or underbanked. Which is the highest percentage in the country. Our housing as mentioned, underwater mortgages is about 60 in nevada. Were in a tough situation here. And im concerned about consolidation. My question and i see a lot of you writing notes and i appreciate that, but what does this consolidation do . How does it help nevadans get these loans . If the small banks one of you testified that 50 of the small loans to businesses, to home mortgages, to car loans come from these Community Banks<\/a>. With the loss of Community Banks<\/a> and let me make one more point before i raise the question. And that is that the Banking Association<\/a> feels in nevada that if you have deposits of less than 1 billion that youre probably going away. Less than 1 billion. Do you agree with that statement . And two, how does it help nevada . How does it help nevada to have this lack of financial opportunities and to consolidate in this manner . Mr. Gruenberg. Thank you, senator. Just on the final point you made in terms of needing a certain level of deposits or assets to be viable in the Banking System<\/a>. This is actually one of the issues we did look at in the study we did. Looking at the experience of Community Banks<\/a> over the past 25 years. And we tried to look closely at that particular issue. Because theres a lot of talk about that sort of thing. And for what its worth based on the data that we analyzed, we did not we could not find a lot of economies of scale once you get over 300 million in assets. So the notion that a Community Bank<\/a> has to be at least 1 billion in assets, for example, in order to be viable in the banking market, at least wasnt proved out by the analysis we did. And you raise new important points in regard to nevadas particular situation. You know, nationally nevada had rapid expansion in commercial real estate. Thats what i think drove a lot of developments there. Hopefully youve worked through the worst of that. That was not typical of the rest of the country. So i think thats fair to say nevada was particularly impacted there. I think for the surviving banks, one, its a tribute to the work they did to manage their way through this. And i think its fair to say theyre deserving of particular attention and support going forward. Because there is a particular role that Community Banks<\/a> play in terms of Credit Availability<\/a>. That was the point i made earlier. Thats important because the particular niche for small banks, as you know, is Small Business<\/a> lending. Which tends to be labor intensive and highly customized. Its the sort of lending that the Large Institution<\/a>s were interested in standardized products that they can offer in volume are necessarily interested in providing. So the Community Banks<\/a> really have a Critical Role<\/a> in filling that niche in the Financial System<\/a>. Looks like you have a comment, mr. Curry. Yes. Ive been a Community Bank<\/a> supervisor at the state and federal level for 25 years over 25 years. And i saw first hand in new england the importance of Community Banks<\/a> and their ability to help dig out of a severe recession. So i share your concerns and also your commitment to Community Banks<\/a>. I think as supervisors we can play a role in whether its rule making or in the manner in which we actually supervise and examine these banks to eliminate unnecessary burden. Its something were committed to doing at the occ where we have over 1600 institutions. And the supervisory process for Smaller Banks<\/a> is examiners talk to cos and lending officers, theres an ability to share best practices and help improve the performance at Community Banks<\/a>. Thank you. And mr. Chairman, thank you very much. Senator warden. Thank you very much, mr. Chairman. Thank you, Ranking Member<\/a>. Its good to be here. And thank you all for appearing. I sat where you sat. Its harder than it looks, so i appreciate your being here. I want to ask a question about supervising big banks when they break the law. Including the mortgage foreclosures but others as well. You know, we all understand why settlements are important, that trials are expensive and we cant dedicate huge resources to them. But we also understand that if a party is unwilling to go to trial either because theyre too timid or because they lack resources that the consequence is they have a lot less leverage in all the settlements that occur. Now, i know thereve been some landmark settlements, but we face big issues request Financial Institutions<\/a>. If they can break the law and drag in billions in profits and then turn around and settle paying out of those profits not much incentive to follow the law. Its also the case every time theres a settlement and not a trial, it means we didnt have those days and days and days of testimony about what those Financial Institutions<\/a> had been up to. So the question i really want to ask is about how tough you are. About how much leverage you really have in these settlements and what id like to know is tell me a little bit about the last few times youve taken the biggest Financial Institutions<\/a> on wall street all the way to a trial. Anybody . Chairman curry . Id offer my perspective as bank supervisor. We primarily view the tools that we have as mechanisms for correcting deficiencies. So the primary motive for our Enforcement Actions<\/a> is to identify the problem and then demand a solution to it. Thats right. And then you set a price for that. Sorry to interrupt, i just want to move this long. Its effectively a settlement. What im asking is when did you last take and i know you havent been there forever. Im really asking about the occ. A Large Institution<\/a>, a wall street bank to trial. The institutions i supervise National Banks<\/a>, weve actually had a fair number of consent orders. We do not have to bring people to a trial or i appreciate that you say you dont have to bring them to trial. My question is when did you bring them to trial. We have not had to do it as a practical matter to achieve our supervisory goals. Ms. Walter . Thank you, senator. As you know, among our remedies are penalties but the penalties we can get are limited and we have asked for Additional Authority<\/a> to raise penalties. When we look at these issues and we truly believe that we have a very vigorous enforcement program, we look at the distinction between what we could get if we go to trial and what we could get if we dont. I appreciate that. Thats what everybody does. So the question im really asking is can you identify when you last took the wall street banks to trial . I will have to get back to you with the specific information, but we do litigate. And we do have settlements that are either rejected by the commission or not put forward. Okay. Weve got multiple people here. Anyone else want to tell me about the last time you took a wall street bank to trial . You know, i just want to note on this. There are u. S. Attorneys and district attorneys who are out there every day squeezing ordinary citizens on sometimes very thin grounds. And taking them to trial in order to make an example as they put it. Im really concerned that too big to fail has become too big for trial. That just seems wrong to me. If i can, ill go quickly, mr. Chairman johnson. I have one more question id like to ask. And thats a question about why the large banks are trading at below book value. We all understand that book value, you know, its just what the assets are listed for, what the liabilities are. And that most big corporations trade well above book value. But many of the wall street banks right now are trading below book value. And i can only think of two reasons why that would be so. One would be because nobody believes that the banks books are honest, or the second would be that nobody believes that the banks are really manageable. That is, if they are too complex either for their own institutions to manage them or for the regulators to manage them. And so the question i have is what reassurance can you give that these large wall street banks that are trading for below book value, in fact, are adequately transparent and adequately managed . Governor tarullo or ms. Miller . So theres certainly another reason we might add to your list, senator warren, which is investor skepticism as to whether a firm is going to make a return on equity that ask in excess of what the investor regards as the value of the individual parts. And so i think what you would hear analysts say is that in the wake of the crisis there have been issues on just that point surrounding first what the Regulatory Environment<\/a> is going to be, how much capital is going to be required, what activities are going to be restricted, what arent going to be restricted. Two, for some time there have been questions about the franchise value of some of these institutions. You know, the crisis showed that some of the socalled synergies were not very synergistic at all and in fact there wasnt the potential at least on a sustainable basis to make a lot of money. I think what and part of it i think is probably just the economic the environment of economic uncertainty. I think that in some cases weve seen some effort to get rid of large amounts of assets at some of the Large Institution<\/a>s. It is indirectly in response to just this point. That some of them i think have concluded that they are not in a position to have a viable, manageable, profitable franchise if theyve got all the entities they had before. And so a couple of them, as i say, have actually reduced or are in the process of reducing their Balance Sheets<\/a>. The other thing i would note is youre absolutely right about the difference there. The difference actually is the economy has been improving and some of the firms have built up their capital. Youve seen that difference actually narrowing in a number of cases as they seem to have a better position in the view of the market from which to proceed in a more feasible fashion. Well, i appreciate it. And i apologize for going over. Thank you. Senator hagan. Thank you. I appreciate your questions on qrm earlier. I do want to talk briefly about that issue. For the u. S. Housing market to continue on its path to recovery, consumers, lenders, and investors need clarity regarding the boundaries of mortgage lending. And the recent action by the cf. Rks b with rules implementing to repay provisions of doddfrank i think was an important step towards uncertainty and access. And now that the cfpb has finalized its work on the qualified mortgage definition, i urge you to work quickly to finalize the qrm definition in a way that ensures responsible borrowers have an ongoing access to prudent, sustainable mortgages that for decades have been the corner stone of a stable and strong u. S. Housing market. And earlier this week we saw data showing that home loans that would be exempt from the ability to repay requirements and the proposed standard even with the 10 down payment requirement made up less than half the market in 2010. And importantly it should be noted that these loans rarely went into default. Now that qm is finalized, can you ensure me that your agencies will work diligently to complete a qrm rule in a manner consistent with that legislative intent . And mr. Curry, gruenberg, tarullo, walter, miller, anything to add on that . Love your thoughts. Senator hagan, we view the qrm rule making process as an important one. With qm in place were looking forward to adopt an appropriate regulation as quickly as possible. Quickly as possible as defined as when . I think governor tarullo mentioned earlier we expect to wrap up most of the doddfrank rule making this year. I would hope on that one it would be sooner than the end of the year. The sooner the better. Because the qm coming out, senator, really now does allow us to go and just finish it. Most of the other issues you know, the way these processes work is at a staff level people go through all the various issues and they try to either work them through or present them to their commissioners or governors for resolution. Most of that process is already proceeded so there are a couple of things that have to bed at by our agencies but it was having qm final that lets us now go to completion. Secretary miller, at the request of the ofr studying the Asset Management<\/a> industry. And this studys intended to help the fsot to determine what risk if any this industry poses to the u. S. Financial system and which any risk is best addressed under Asset Managers<\/a> as nonbank systemically important Financial Institutions<\/a>. My question is can you talk about the transparency of the process and will the results of the analysis be made public and will interested parties be provided the opportunity to comment formally on the results . Thank you. As you are aware, the sok has some responsibilities to designate nonbank Financial Institutions<\/a>. In the course out of doing that in april 2011 we published some criteria for how that activity would proceed. At the time we said that Asset Managers<\/a> are large Financial Institutions<\/a> but they appear different than some of the other Financial Institutions<\/a> we were looking at. And we took that off the table to go do some additional work. So have been working with the Market Participants<\/a> as well as members to complete that. I suspect if there is a plan to go forward with designation on an asset managerer or activity of an asset manager there would be to be further publication of the criteria for doing that and the terms on which that would be considered. So we have been clear that we would be transparent in public about that. But when you said we took it off the table, what did you mean by that . We meant we set it aside from the criteria that we established at the time for nonbank Financial Institutions<\/a> to say that we wanted to to study the industry further. Will the public be provided with an opportunity to comment related to the potential designation of Asset Management<\/a> companies prior to the if you went to the point of designation of any such company . I cant speak for all the members but i think that would be a responsible course if we moved forward in that direction. Thank you, mr. Chairman. Thank you. First i want to say how excited i am about being a new member of the Senate Banking<\/a> committee and i look forward to working with you all. Id like to start by saying in West Virginia<\/a> we have a lot of Community Banks<\/a> that are really stable and done a good job. Theyre caught up in this whole banking changes and regulations. With that being said i know theres been some things that have helped by the doddfrank. I think most of the Community Banks<\/a> believe its been very honest. The one size fits all regulatory makes it difficult for Community Banks<\/a> and that hiring compliance experts can put an enormous burden on small banks. She also went onto say hiring one additional employee would reduce. 13 of the banks with assets less than 50 million, these are the banks that did not cause these problems that we got into in 2008. Theyve been lumped in with the bad actors. How are you all, if i look across this, you pretty much have every aspect of regulations. How are you dealing with that . Anybody can start. Congress gave us the authority to exempt what Congress Said<\/a> was small Financial Institutions<\/a>. Anything less than 20 billion in size. We went through rule making and we did just that. About 15,000 institutions. We dont oversee the banks. The only thing i could say is you could. Theyre saying to comply with the massive amount of paper work regulation and the people they would have to hire to do that. Theyre say thanksgiviing this board. We just exempted them with the one provision. Anybody else feel like it exempted them . Id be happy to mention so on the mortgage rules that we just completed, the qualified mortgage rule and our servicing rules are the most significant. We were convinced. They did not do the things that caused the crisis. We should take account of that and protect the lending model. We exempted smaller servicers and on the qualified mortgage rule weve done a reproposal that would allow Smaller Banks<\/a> to keep them in portfolios. I think thats quite important. Were looking to finalize that. Thank you. Since my time is short. Id like to ask this question. Glass stegall was put in place in 1933 to prevent what happened to us. It was in place for approximately 66 years until it was rebuilt. Up until the 70s, worked pretty well. We started seeing changes and chipping away with new rules. It took some powers away and then we finally rebuild in 199 and the collapse of 2008. How do you all the vocal role and i know it doesnt do what the glass stegall does, why wouldnt we have those protections . Why do you not believe its something we should return to . Let me take a shot at that. Youve put your finger on the time frame at which what had been a quite safe, pretty stable, Financial System<\/a> began to change. One of the big reasons it began to kmachange was commercial ban was facing increasing competition on assets and liability side of their balance sheet. You add on the one hand and this is Good Development<\/a> the growth of Capital Market<\/a>. Where was the competition coming from . Thats what i was about to say. Public markets allowing more and more corporations to issue public bonds. They didnt rely on Bank Borrowing<\/a> as they used to. On the other side you saw Money Market Fund<\/a>s which provided higher returns than an insured deposit at one of those institutions. The banks felt themselves squeezed on both sides. We changed the rules to get in risky ventures . In some cases it was risky. There was a deregulation movement in the mid70s for an extended period of time. If i had to identify a collective mistake by the country as a whole, it was not in trying to preserve a set of rules and structures that were just being eroded by everything going on in the unregulated sector. The mistake lay in not substituting a new more robust set of measures that could take accounting of conventional markets. That process of not putting in place new legislation, thats what left us vulnerable. Thank you. I look forward to working with you both on issues of consequence here. Im going to start out with some questions to chairman walter. The commission should exercise Rule Making Authority<\/a> to implement uniform standards. Its been two years since the study was released. First of all, do you anticipate the scc will move forward on this issue and when . I expect the request for comment on that will go out in the next month or two. With respect to the substance of the issue, speaking only for myself, i would love to move forward on this issue as soon as possible. Opinions at the commission vary a great deal in terms of the potential costs it imposes. My own personal view is that its the right thing to do and we should proceed. We should then go on or take a very hard look at there is more support for this at the commission at the different rules that are applicable to the two different professions to see where they should be harmonized and where the differences are justified. I appreciate your position on this issue. I would encourage the commissioners to make this a priority. I think theres absolute benefit to investors. If we find it as a priority maybe we can help push it. I think its very, very important. I appreciate that and i agree with you completely. Another question deals with the jobs act signed about ten months ago. A few of thoeds provisise provi effective immediately. The fcc is blown by the deadlines for rule making and have yet to be proposed. There hasnt been much talk about finalizing the rule or the rest of the rule making request by that act. Im troubled that implementation of the bill dubbed as a plus has not been regulated. We need the fcc to make progress. Can you outline the commissions time line for jobs act implementation, including when you anticipate the staff will present draft rules to the commissioners. Our rule making priorities start with the jobs act and we see what else we can accomplish at the same time. Were looking at how to breed the general solicitation provision of the law which received rather interesting comment, rather divided comment. We have to make a decision whether to proceed with lifting the ban in a stark way or whether to accompany it with a number of protections that were offered by various commenters including unanimously by our Investor Advisory Committee<\/a> with respect to suggestions. Thats actively at the top of our plate right now. Were working in the next few months of putting together a crowd funder. We have learned a lot by meeting with people from this country and abroad who have engaged actively in crowd funding and i think that will help to illumination our proposal and make it the best proposal it can be. The jobs act was said to be the most important jobs bill in a while as far as creating jobs. In my state of montana, which is rural, folks are hungry to get going. Were holding the process up. I know youre pushed in a lot of Different Directions<\/a> and youre very busy. I would certainly hope that we can get some things out very quickly because i dont think we get the full benefit. I assume since im the last questioner i can keep going . No. Just because i didnt ask you a question doesnt mean i dont love you. Thank you. Thank you for your testimony for being here today. I appreciate your hard work. Your calls and comments on washington journal. The women were interested in politics but had no vehicle to express that in their own lives. They were attracted attracted to men who would be politically active. Each of them i find intriguing. Half of them are there because they are so obscure. Half of these women publicly would be almost totally unrecognizable to most men and women on the street. Cspan for me is its new series first ladies. They will explore the lives of first ladies from Martha Washington<\/a> to michelle obama. Season one begins tonight at numeral 9 00 pm eastern. Watch the Program Early<\/a> on in the day like that 2 00 p. M. On cspan. Week on a q a, the author and historian timothy naftali. He was the director of the Richard Nixon<\/a> potential library and museum from 2007 until 2011. When you did the 149, peoplee who serve in the Nixon Administration<\/a>, how did you raise the money to do that . Andhey had buyers remorse a group of alumni of the Nixon Administration<\/a> who worked on the domestic side rallied and raise a lot of money for this program. I received contributions from donald rumsfeld. I believe dick cheney. I think paul oneill provided some funding. Member people. The fault of the domestic side of the head ministration hasnt received the b. J. Of the administration hasnt received the domestic side of the administration has not received that much attention. For the watergate interviews, i used the trust fund. I was very conservative about the way i used the money. The library received one head one half of all of the ticket money that came into the library card one half of the ticket money that came into the library. That money was our trust fund. I used the money for public programming because the Nixon Foundation<\/a> shut down all funding. Normally, these libraries, people dont know, but the utilities are paid by the federal government. The staff is fedele and their salaries are paid by the federal government. But public programming, there is no funding for that. Congress does not appropriate any money for that. We are mandated to do non partisan work, yet we dont have any nonpartisan money. I enlisted this problem when they heard me. I participated in the negotiations with the Nixon Foundation<\/a>. One of the things that the National Archives<\/a> wanted to do was to give 5 in perpetuity from every ticket. I realize that, years from now, 5 might be a quarter. So we negotiated 50 . I was able to fund our public programming, the World History<\/a> program, and i contributed from that trust fund 50 of the money that went into the watergate exhibit. There was no way to have the watergate exhibit otherwise. By the 34th year, we had 5 millionwe had half a Million Dollars<\/a> in that trust fund. Where is it located . It is in yorba linda, calif. , about half an hour south of l. A. It is a good distance from l. 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