[inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] the meeting will come to order without objection. The chair is authorized to declare recess at any time. This hearing is entitled examining the sec agenda operations in fy 2018 budget request. I now recognize myself or three minutes to give an opening statement. I warn everybody i will take a lot longer because there is unanticipated news. First, before proceeding to the purpose of this hearing, i do want to know for all my colleagues that as we begin this hearing today, in 318, b3 18 of this very building, the rayburn building, our friend, our colleague, the Great American hero and patriot sam johnson is being honored by having that very room b3 18 named after him. I think we all know he is a decorated war hero who served his nation with great courage, great valor in korea and vietnam and spent seven years and experiencing torture there. We know him to be one of the kindest, most gentle souls in this institution and he has many distinguished a accomplishments for his district and his position on the ways in these committees. I personally look forward to visiting the sam johnson room soon and i hope all my colleagues look forward to that as well. [applause] this morning we welcomed securities and Exchange CommissionMary Jo White and i will take a little longer due to news that we received last evening that the chair intends to step down at the end of the obama administration. I do wish to acknowledge, on behalf of all, that chair white has now completed over two decades of distinguished Public Service as a u. S. Attorney, as chair of the securities and Exchange Commission. She has brought an incredible amount of professionalism to her position. She is known for her independent judgment which is greatly admired and respected. I also want to personally thank her for being one of the witnesses, one of the few witnesses from the administration that has never requested an artificial time limit on her time at a hearing. She has always made herself available to this committee and always made herself available to all subcommittees. She has indeed, epitomized what it means to be an accountable agency to article one of the constitution and she is to be commended for that. Also, she is always submitted her testimony on the timely basis. If there are cash and valuable prizes we could award you madam chair for such an accomplishment i am sure we would but im sure we would reach ethical considerations by doing so. She has always made her division in provisions available, and again, the accountability and transparency that she has brought to this office is greatly greatly admired. Just in case you have a false sense of security, madam chair, we still have some concerns and we still have some disagreements it has been almost a year since your last appearance here and there are many things we are eager to discuss. The ongoing failure to develop a formation agenda and minor rule changes to Capital Formation since the jobs act in 2012. The failure by the sec stems in part by the refusal to act on recommendations made by the Small Business capital for him. I encourage the sec to review these and act on those. That will Small Businesses to access the Capital Markets so they can improve, grow and provide Economic Opportunities for all american workers. Also languishing at the sec is a directive task by congress requiring the sec to simplify its disclosure regime. It became law nearly a year ago and requires the sec to eliminate or reduce burdensome, duplicative or burdensome disclosures. I also know you are under pressure from those intent on criticizing the regime but you have a navigation to follow the law and not appease extremists whose ideological objectives have nothing to do with the sec core mission. In addition, the failure to require the electronic delivery of mutual Fund Documents is disappointing. How can they force Public Companies to engage in social, environmental or sustainability exposures well simultaneously promoting wasteful use of paper, the cost of which is ultimately borne by investors. Its time for them to move in the 21st century and allow the e delivery of mutual Fund Documents. We need to also discuss the budget request. We are looking at the debt clock before me and to my side i see no need for the sec to receive a prefunded escrow account of more than 290 million for potential move of headquarters. They will have to increase the fees which is nothing last that a tax on Capital Formation. They claim that its underfunded or not supported as the budget has increased by a budget of 325 since the year 2000, an increase that the American People do not enjoy. Whatever the budget does not account for which is over 1 billion plus plus another 25 million that carryover from the fiscal year. Finally, chair white, this is most important, whenever there is a transfer of a transfer of power from one administration to another, there is a temp tatian for federal agencies to rush in rule makings and completion as a way of submitting the priorities of the outgoing administration. This type of midnight rule making neither conducive to policy or principles. There are currently two vacancies up commission giving your current reputation and legacy, i would strongly urge you to respect the results of last weeks election and resist the temptation to finalize any regulations including. Frank before taking office in january. I now yield five minutes to the Ranking Member. Thank you very much chairman and thank you chair right for being here today. Im disheartened to know that you will be stepping down, chair white considering there is so much at stake and so much to fight for. I am encouraged by because of all the kind words he had to say about you when he started his testimony today. That is the nicest i have heard him be to you and any of the others in our Oversight Agency since we have worked together here. With the gentle lady yelled. Yes i will yield. If anybody on your side of the aisle wishes to depart, i will say very kind words about them. [laughter] im sure since you have said such kind words about chair white youll be asking her to stay, please dont go. Also im appalled that the reaction on wall street to tuesdays reaction to bank stocks as they have rallies on a massive destabilizing lawless agenda. Its not the same as real hard earned Economic Growth the demise of regulations that wall street is cheering are the very regulations that have made our consumers and investors in economy safer and more resilient. In fact, just yesterday, wells fargos stock closed at the highest price this year on the expectation that a Trump Administration and Republican Congress will relate erase its culpability. We face uncertain time and at the insurgency is the president elect who does not have a coherent or consistent stance on anything. We dont know if hes building a wall or fence. We dont know if hes repealing obamacare or cherry picking some provisions he excepts. We dont know who he is, what he stands for our what kind of president he will be. We cannot rely on anything he says because it changes from one day to the next when mr. Trump talks about Financial Services reform and dismantling. Frank, what does he mean . Does he mean letting the wall street banks he is so indebted to write their own rules . Does it mean repealing the fair housing laws that the department of justice sued him over decades ago . Does it want to repeal protections and make it harder for the sec to collect from bad actors . Does he want to got the Consumer Protection bureau despite the agency being the strongest champion of everyday consumers . Or does he mean breaking up the bank by reinstating glass steagall. If so we can find common ground. Does he want to ensure that private equity funds and Hedge Fund Managers pay the same tactics is that Everyday Americans pay . Will he pay the same taxes that Everyday Americans pay . I am curious to see how republicans in congress react to his wide ranging, sometimes Progressive Agenda pretty is not is not holding to wall street and other special interest yet here he is with apartments of wall street insiders and their friends in congress to run his administration. Mr. Trump also said he wants urban renewal and to ensure that African Americans have access to loans to start Small Businesses. Yet, the leader of the White National movement is his chief strategist in the white house and he himself has made racist, misogynist and im agog,s. Chair white, even though you are about to leave, i hope you will share with this committee and the Income Administration the Important Role the sec place in our Financial System and i hope you will explain the importance of a wellfunded and strong Investor Protections for the sec has been the victim of woefully inadequate budgets as a result of republican obstructionism for years. Despite the crucial role that the sec place policing our everexpanding Financial Market spirit we are now at a crossroads and they look to profit off american seamers and invest it. If we enact the special wish list or if they weaken the rules at the expense of the greater good, our economy economy will go back to the darkest days of the financial crisis. I hope that common sense will prevail. With that, i yield back the balance of my time and chair white, i apologize for not spending more time on sec and a lot of time on mr. Trump. But thats what im going to be doing for a long time to come. I yield back the balance of my time. The chair yields two minutes to the chair of our Capital Markets subcommittee, the gentleman from new jersey, mr. Garrett. Thank you, mr. Chairman, and welcome once again for the last time, chair white, to our committee. Before i begin, let me just a quote engine echo many of the positive sentiments expressed by the chair regarding your tenure at the sec. Every sec chair receives criticism when they sit here from both the left and the right about certain policy positions that they take, but recently you have had to endure an unprecedented level of attacks from certain groups and from individuals as well who have called out your integrity and called out your professionalism and put them into question. Theyve even gone so far as to call to break the law or be fired for your refusal to follow their direction. Chair white, its clear from these many hearings that we have had that you and i disagree on certain policy issues. I can say this here, i have never ever questioned your professionalism, i have never ever question your integrity and your devotion to doing the good in your work. It is a difficult job that you have and you have handled it very well. You have done so for all the right reasons. I just want to take this moment to say thank you for your service and for your thoughtful approach for which you have tackled a number of issues, in particular the area that i spent a lot of time on, the equity markets which continues to be an important for this department had i have mentioned that we disagree with policy issues on certain times. Let me highlight a couple of those before we move on. Despite the sec having an Important Mission to facilitate Capital Formation, the sec is still not organically, within itself, develop the formation agenda and has relied on exclusively our committee in congress if you will, when it comes to trying to change some of that and modernize some of those areas of security laws for the benefit of the small and mediumsized enterprises. These are things that we have talked about. This, despite despite the fact that the chairman was just mentioning that the sec budget not only continues to grow but the agency has again requested a substantial increase without detailing how it will expand on these missions. Finally, i also remain concerned that the sec has not done an adequate job to habits jurisdiction when others try to trample on your turf. So, with that said, i hope to test many today, as you wrap things up that you will address both of these issues and others to ensure that congress is prepared to carry out its threefold mission before congress decides whether the agency deserves that increase in budget. With that, i yield back. The gentleman yields back. We welcome the testimony of the hon. Mary jo white, chair white has previously testified before this committee on many occasions so i believe she needs no further introduction and has received her deserved accolades. Without objection, your written statement will be made part of the record and you are now recognized for five minutes to give an oral presentation of your testimony. Thank you very much members of the committee, Ranking Members and thank you for your kind remarks. I appreciate it very much. It is my honor to serve and again, thank you for inviting me to testify today on the current work and initiatives of the sec as well as on our fiscal year 2018 preliminary authorization request. As this committee knows well, the sec is a critical, independent Agency Agency that is charged with protecting millions of investors and overseeing the strongest and safest markets in the world. Im very proud of the commissions hard work and many accomplishments as i became chair in april 2013. Weve achieved record numbers of examinations each year. Weve completed dozens of transformative rulemakings, including fundamental reforms to Money Market Funds, Credit Rating agencies, and the securitization markets. Weve built important new Regulatory Regimes for Capital Raising and critical Market Infrastructure and minutes of poll advisors. We put in place and during framework for work in areas that are central to our mission. Asset management, Market Structure and disclosure effectiveness. Our latest results in enforcement examinations exemplify the agencys high level of performance during this time. In fiscal year 2016 alone, the commission brought over 850 enforcement actions, an unprecedented number and turned over 4 billion in orders directing the payment of penalties and disgorgement and a formed 2400 exams, a sevenyear high a sevenyear high that reflects a smarter more efficient program. The strength of our four step can also be seen in the kinds, complexity and importance of our cases that span the markets and the securities industry. As this past year also showed, the commission was only three members, they were able to continue to pursue a consequential set of policy measures designed to protect investors, strengthen the markets and open new avenues for Capital Raising. Since i last testified, testified, the agency has, for example, advance major rules addressing equity structure issues including the transparency of ats and order handling practices while moving forward with the comprehensive assessment of other fundamental structure questions. This afternoon, the commission is scheduled to consider in an open meeting, approving a final plan for the critical consolidated audit trail. Over the past year we have also continued implementation of a series of proposal to address the increasingly complex portfolios and operations of mutual funds and Exchange Traded funds. We adopted final rules to modernize the data reported by both funds and their advisors, completed rules for enhanced liquidity Management Funds and adopted a proposal for new controls on the use of derivatives. We also adopted new rules to better enable businesses to raise capital through local and regional offerings and enhance our review of our effectiveness of our disclosure regime through several detailed proposals. Along with several other roles, we finalize critical components of the regime for securitybased swaps and establish new standards for the clearing agencies to stand at the center of our Financial System. In addition to our many discretionary initiatives, the commission has also adopted rules for nearly 80 of the mandatory rulemaking provisions of the dodd frank act. Was also made significant progress under the fastback. Our rulemaking workers perhaps the most prominent example of our achievements. Our mission is also carried forward by our exceptional and the beast staff every day from reviewing thousands of filings each year to complex. [inaudible] as reported today, the commission has, for the for the second year in a row, received from gao, an an unmodified report with no material weaknesses or deficiencies on the sec Financial Statements. The commission today is, i believe, a stronger and more effective agency. I am honored to have let it during this time of progress. Significant challenges remain if we are to adequately address the growing size and complexity of the Securities Market and the ever more sophisticated Financial Services industry. It is critical that the sec has a resou