Skip to main content

tv   Key Capitol Hill Hearings  CSPAN  April 1, 2014 2:00pm-4:01pm EDT

2:00 pm
legislative work. among the seven bills they are considering today, a bill authorizing $150 million in aid to ukraine and codifying and expanding sanctions against russia. live now to the house floor. the speaker: the prayer will be offered by our chaplain, father conroy. the chair: let us pray. -- the chaplain: let us pray. dear lord, we give you thanks for another day we use this moment to be reminded of your presence and to tap the resources needed by the men and women of this assembly to do their work as well as it can be done. may they be led by your spirit in the decisions they make. amidhey possess your power the pressures of persistent
2:01 pm
problems. the issues facing our nation this week are monumental to us but a part of the long history of the political and policy debate that have created a great arrative of parties pa tiff -- participative democracy. send your spirit of wisdom on the people's house that the members may work as one to move our nation forward to a brighter future. may all that is done this day be for your greater honor and glory, amen. the speaker: the chair has examined the journal of the last adair's proceedings and announces to the house his approval thereof. >> mr. speaker. the speaker: for what purpose does the gentleman from florida rise? >> pursuant to clause 1 of rule 1, i demand a vote on the speaker's aproufl of the journal. the speaker: the question is on the speaker's approval of the journal. those in favor say aye. those opposed, no. in the opinion of the chair the ayes have it. >> i request the nays and --
2:02 pm
yeas and nays. the speaker: the yeas and nays are requested those favoring a vote by the yeas and nays will rise. a sufficient number having risen, a recorded vote is ordered. . pursuant to clause 8 of rule 20 further proceedings on this uestion are postponed. >> i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation, under god, indivisible, with liberty and justice for all. the speaker: the chair will receive a message. the messenger: mr. speaker, a message if the president of the united states. the secretary: mr. speaker. the speaker: mr. secretary. the secretary: i'm directed by the president of the united states to deliver to the house of representatives a message in writing.
2:03 pm
2:04 pm
he said the -- the majority leader saying -- >> chris van hollen's comment, on the other hand, says --
2:05 pm
>> just want to let you know as well that budget released today, you'll be able to find that on our website. we've linked to it at at the white house a short while ago, house democratic leader nancy pelosi, she was meeting with the president and lunching with president obama and she spoke to reporters afterwards. >> good afternoon, everyone. just enjoyed a positive lunch with the president of the united states. in the course of our conversation, we of course were results sed with the
2:06 pm
of the a.c.a., seven million people are enrolled in the marketplace, plus three million young people on their parents' policy and millions more on the expansion of medicaid. it's really, really so heartwarming for those of us who work sod hard so that many more people in our country would have access to affordable quality health care. people want life, liberty, and the freedom to pursue their happiness, not job locked, having benefits that health care policies that are portable. they can be self-employed, be a
2:07 pm
photographer, they could start their own business, change obs. >> why hasn't your party come up with a technical corrections bill to fix things that are wrong in the a.c.a.? >> perhaps you missed the point that the republicans are in control of the congress of the united states and we haven't
2:08 pm
forward. i have not been here, perhaps you have, i have not been here when any perfect bill passed the house. there could be improvements or refinements and pursue it that way. enrollment closed last night. our members have suggested some changes, many of which have been put forth by the administration. already. so as we see it, nobody wants it to work better. than those of us who worked for it. >> how many of those who signed up were not -- >> the measure is two-fold. the message is how many people have access to health care -- quality, affordable, health care and insurance than who didn't but also the one -- the really important reason to do the affordable care act, if everyone loves his or her insurer and their health care, which was not the case. but even if they did, the real reason to do the affordable care act which could not be avoided was the cost of health care in our country was unsustainable. up sustainable to individuals, to small businesses, to corporate america, the competitive issue internationally and also to
2:09 pm
state and local and certainly the federal budget. so what this legislation has done is it will save a trillion dollars over the lifetime of the bill. and it will, it will reduce costs for people and even if they pay a little more in some cases, they're getting much better care. already it's increased, the cost of medicare and the rest, and this again is not just about who has it, who doesn't. it's a question of who has what
2:10 pm
and many more people now have affordable quality health care moved y have -- who have policies have better coverage. no pre-existing condition barrier. no lifetime caps. no annual caps. no longer being a woman is considered a medical condition. many were discriminated against in the marketplace, paying 40 -- paying 40% more. that's what i think this measure -- >> can you talk a little bit about how this is going to affect the november elections. there are a lot of nervous house democrats and senate democrats. what is this number getting to seven million mean for you and your caucus as you sort of have toward november. >> if you forgive me if i just use this day to be more concerned about what it means to the families who are affected by it.
2:11 pm
and that is the reason we passed the bill. just imagine the comfort level for families who have signed up, who have ignored the barrage of negativeness and misrepresentation that has been flung at them and that had signed up and hopefully today, today still people are signing up because they tried yesterday. so the number speaks to a healthy america, not just the good health care. so that's what we're happy about today. as i said to you before, we're not running on health care, e're not running away from it. anecdotely, you can always find somebody who may have concerns but i want you to know, overwhelminglying our members are out there on the offensive on this issue because what we did and we're proud of it and we're proud of what it means in the lives of the american
2:12 pm
people. the poll teches are very secondary to us. >> about the mid-term elections, yesterday, mr. clyburn said on tv he wanted more help from the white house. >> i'm sorry i missed that but i did -- i'm very pleased with the conversation i had with the president about the issues and the issue at hand now, today, two things. people have the date, are still signing up but -- participation in a.c.a. that we're very proud of. but today also the republicans put forth their budget. it's a budget that is not about growth, it's not about job creation and it's a budget that voucherizes medicare. taking away that opportunity weakening -- weakening that opportunity for america's itizens.
2:13 pm
as we talk about the affordable care act, we are proud of it, the question now, the president's budget which is about growth and education and the future of our children and the investment for the future and science and technology and the rest, versus a budget that takes us backward. it has a poverty of ideas that is really stunning. so that's the debate that the election will be about. jobs and the budget which is the blueprint to the future, a statement of our values, that is the legitimate political debate in our country. that's what we talked about. >> in the darkest days, the problems with the website, there's fear that the affordable care act could collapse entirely. did you share those anxieties? >> never. >> and did you put some pressure on the caucus to hold
2:14 pm
the line on behalf of this all when it looked like it was not getting off to the start you thought it would? >> some of us had come together in the course of the passage of the bill when people didn't think that was possible. never for instant occurred to me that the affordable care act would collapse. yes, the website didn't perform. we were very disappointed. it was an embarrassment. but it was an episode and it's over. nd at that time, well, our caucus acts in consensus and the consensus in our caucus was, we're going to ride this out and you can't be afraid of one thing or another. can't predict many things that will happen and the -- while the website didn't work, the principles of the legislation were very, very important and we are wedded to them as we go
2:15 pm
forward. certainly the implementation, i wanted single payer, i wanted public option. that's where i wanted to go. that wasn't the con sense -- consensus of the house and the senate so that didn't pass. anything that brings us closer to, again, more quality, lower cost, simplification of implementation, we would all be for. but that's the first i've even heard. i don't know that that was the mood in the white house, that's news to me. but certainly it was not the attitude, it was just get it fixed. of course i come from northern california where you have a technological problem, task for it, get it done, move on from there. never show that -- >> leader pelosi -- >> it's over seven million i think. >> wasn't hitting this number, getting over seven million signups, is this a vindication for you and the president and
2:16 pm
do you think that we will see the tide turn politically on the affordable care act? >> let me just say, those of white house fought for this knew what we believed in and don't think we needed any vindication. we just had to protect it from those ideological, anti-government people who didn't want to see it succeed for ideological or political or whatever their reasons are. but the fact is, for what it means to people, that's why we're here, to get something done for people, so taking the heat on something like that, that's what we do. that is all in a day's work. we'll see. i think the fight for the election, elections are always about jobs, so i think that while, as say i -- as they say, we're proud of the affordable care act, we now pivot to job creation, which is, you know, the bill creates -- will create four million jobs. this is a jobs bill. it never advertised that.
2:17 pm
it's a deficit reducer, job creator and again, it is affordable quality care. in terms of suggestions, it's as easy as abc, make it in america, stop giving tax breaks to companies who send jobs overseas and focus on those who make it in america to build the infrastructure of america. that's always been a nonpartisan, a bipartisan approach, only recently that they have objected to some of the president's build america bonds and other initiatives to do that. and see the community. listening to the communities in terms of how they educate children, how we protect our environment and our neighborhoods and the rest, the
2:18 pm
security of our neighborhoods and the rest and that is a public policy investment. and it's an investment for the future. and by the way, investments in investments in education bring more money to the treasury than any investments you can make. nothing brings more money to the treasury than education. higher ed, post grad, lifetime learning, training for our workers. so they have rejected any initiatives in that regard and that's the debate we have to have, and our investments in science and technology, their rejection of science. how do you reject science? as i say all the time, if i had to describe three words to describe our legislative ageneral ta, it would be science, science, science, and science.
2:19 pm
science for our innovation, science for our environment, science for our health and science for the protection of our country. so again, we have a debate about what is the role of government, we don't want any more than we should have, that's a traditional debate, a legitimate one in our country. big debates about values and the republican budget, the ryan budget taking us backward. and that is what i think will be the debate in the election. that is the question that will be pulled. >> what could the president's your al team do to help aucus turn out voters? >> i have no complaints about what the president is doing.
2:20 pm
i do think, not asking, this -- i think they have initiated this. we're all in sync, put it that way. is that energizing debate is really important and what energizes our base, energizes their base to the contrary and that's a legitimate fight and that is the base is energizes by seing the contrast -- energized by seing the contrast of policy statements, a blueprint for the future, which is the budget a budget should be a statement of our national budget, a federal budget should be a statement of our national values, what's important to us as a nation should be how we allocate our resources. and to do so in a way that reates growth, first and foremost creates growth and the jobs that go with that. we have to invest in education to keep america number one, innovations from the classroom and all of the wonderful,my solutions that
2:21 pm
spring from scientific research, for example at the national institutes of health and the rest. it's about keeping america number one to lift everybody in our country. the president's commitment to the middle class is something that's been a hallmark of his presidency. it is certainly a view that is shared by the house democrats and the senate congressional democrats because the middle class is the back bone of our democracy. i thank you very much, i have to go to work, nice to see you all. [captioning performed by national captioning institute] [captions copyright national able satellite corp. 2014] >> leader pelosi mentioned that
2:22 pm
more than seven million people have signed up for health care , ough the exchanges president obama will have something to say about that. house is in recess, they'll come back at 4:00 p.m. eastern with several bills on the agenda, including two dealing with ukraine and sanctions against russia. also funding for voice of america and radio free europe to increase their broadcasting to southern ukraine and crimea. votes later this evening beginning at 6:30. we'll have live coverage on c-span. updates and coming up at 3:00, we'll take you live to a portion of the hearing on the s.e.c.'s 2015 hearing. up until then, conversation from this morning's washington journal on immigration and employment. and the executive director of compete america. good morning. for those who don't know, what is compete america? that has a coalition been in existence for two teches. it is made up of
2:23 pm
companies primarily. a lot of companies that you have heard of. google, microsoft, hp, intel. companies that do a lot of highly skilled it is not exclusively about immigration, but emigration has been a squeaky wheel for a long time. we also do work in the workforce development area and we spend a lot of time trying to think about retraining and how to get people who have some of the skills we are looking for in the u.s. and get them any place as u.s. citizens to be able to find jobs in what is a growing and blooming technology. host: you say immigration is a squeaky wheel. what do you mean? guest: if you think about what we need to continue to do the work we have done to make america a global leader in innovation, there's lots of pieces that fit into it. we want the best talent no matter where they are born. we also have a lot of people here who are very talented. we are a wealthy country and we spend a lot money on education. it seems we're losing some of the interest of students who have choices.
2:24 pm
when they are leaving high school or going into college, some of the jobs we're talking about in the technology space -- there was a mythology that you have to be some guy in a lab coat or have crazy hair like albert einstein. in truth, a lot of those jobs could be done by people who are choosing to become lawyers or choosing to become mbas. why are we attracting more of those american students into those fields? the one thas that we are attracting complain that they are having a hard time competing in the classroom with foreign students. something is happening. we think it's probably around seventh grade. something is happening to our students here that is not their ability to pursue this as a career path. not in huge numbers, but large enough numbers that we could do a better job than we are doing. training folks to enter this workforce. host: specifically, the jobs that you are requiring require something called an h1
2:25 pm
visa. guest: we require several kinds of visas. the h one b is in the middle of that. before we even get there, we use the s student visas and jb says in order to bring more talent ixes with make homegrown talent. people graduating with computer science degrees that are masters degree level are foreign. the improvement levels start of the college level. once they finish with that student visa, then we move them because we need to recruit them in a short period of time. that isr piece of this bigger in terms of permanent workforce is the green card.
2:26 pm
we don't have enough employment-based green cards to meet the demand we have from the b and student side. people want to be educated here and want to remain here and we don't have these as that will allow them to do so permanently. at least, none in the number that meets the yearly demand. we end up with these huge backlogs. these backlogs contribute greatly to dissatisfaction in the workforce here and keeping a hib.of people on an it is not meant for people to live on. host: how many of those visas are granted by the u.s. on a yearly basis? guest: 85,000. it's an artificial deadline. happening, there is such a huge demand that everybody files on april 1. about 2-3 days from now, we will find out that they ran out for
2:27 pm
the entire allotment for the year. months -- to give you an idea, processing speed will have doubled for a lot of different types of technologies before these companies will have a chance to higher someone again -- hire someone again. a series ofent gets visas and comes here. how long does it last? h1b can last forever. the problem with that is there are some people who we want here temporarily but we don't want here permanently. that is how that visa was designed to be used. a lot of the companies i represent use it simply to house their employees who should be getting a green card but can't because we have a backlog. h1bto give you idea -- an
2:28 pm
is given to someone for a very specific job. not only can they not start a new job, they can't even change jobs within the company for which they work. imagine that you have an up-and-coming person here at c-span and you start them at a lower position and they learn the business as they're going. if you were to hire them on and cardnd they needed a green , that individual would be stuck in the original job that you hired them for 10 years. not many people will put their .areer on hold for 10 years it is a growing sense of the satisfaction around the green card. not only are we running out of visas on day one in order to recruit these individuals, once we get the man, we don't have enough green cards to push them out the other side. we are sandwiching these individuals with our visa system. host: here to talk about the visa process and their high skilled worker needs.
2:29 pm
four lines for you this morning. .or republicans (202) 585-3880 for democrats (202) 585-3881. for independents (202) 585-3882. twitter and e-mail also available. north dakota on our independent line. caller: i just have one question. everybody talks about bringing people in on b says and this and that. it costs us money to bring these people into the country. why don't these big spends of companies spend more money on americans and educate them to do the jobs? is it because it will cost them more money to educate people and it's cheaper to bring immigrants in? what bigthat's
2:30 pm
business is doing. i think that is a good question. it's at the center of the debate about highly skilled emigration. -- highly skilled immigration. i just noted that in 18 months, any company that is working on processors will probably double the power of that processor. are dealing with a time sensitive industry. we are doing a lot of country for our employees. we are doing a lot of training as companies even before they enter our workforce. we need the people that know and have the skills today to do work that we need done today. it's not about avoiding american workers. the companies i represent, 80% of their workforce is american. -- these highly
2:31 pm
skilled foreign professionals are complementing and augmenting. they're not taking large numbers of jobs from americans in these companies. where we can find americans, we hired them. where we can't, we had to turn overseas. make on point i want to why foreign workers and how does it not hurt american workers -- we know that for every one of these foreign workers who comes here, they bring skills that combine with the u.s. workforce that we have and create jobs. if you go to compete and look on the website, you'll see a jobs calculator. since last april, 500,000 jobs .ere not created in the u.s. most of which would've gone to american workers because we did not have enough of visas available to bring these types of workers who do their s to create
2:32 pm
opportunities for other u.s. workers to have jobs here in america. host: republican line. good morning. caller: good morning. great program. i'm someone who wanted to comment on this because i've been doing software development as an independent for 25 years. work visas have been stagnant for a long time. i don't believe your representative is telling both sides of the story. a corporation needs developers -- what needs to be talked about is what the wages are for developers. as long as they can: foreign labor for i.t. workers from or any offrom asia it region at a lower rate -- costs about $1600 for an employer in america to sponsor a foreign worker and ring the men. $1600 per year. the point i'm making is that the hourly rates have been stagnant
2:33 pm
for about 15 years because they keep bringing in these visas and asking americans to compete. road,keep going down this and another 15 years, two things will happen. my axman of dollars will be cut amount of my x dollars will be cut in half and students will not join the industry because they don't want to compete with the wages. host: when there is a shortage of tech workers, wages inspire students. guest: there's a couple of answers on wages. cameron, he called it stagnant. they remain relatively flat when you adjust for inflation. they have been rising with inflation. people on the other side will point to that and say there is no shortage. of course. is two problems with examining wages in the way they are trying to examine them.
2:34 pm
an academic problem that relates to something i will talk about in a moment. a comparative analysis with alternate fields. the first piece -- let's look at the industry and those wages. inhave had a 30% increase the number of technology workers in the u.s. the argument that there is a surplus yet wages have remained relatively flat is wrong. thatpponents often argue there is a lot of people who will do these jobs. if there were, we would see wages going down as a result of the number of workers that we are bringing in. that doesn't amount to a shortage. the mistake that people make when they're looking at wages is that they forget, this is a global market. it is a global industry. what causes increase in wages isn't simply on the labor side. it is on the demand side. i have a supply and demand that
2:35 pm
both have to move in proper direction or one has to move and the other not moving. we would see an increase in due to demand.s. if the west was the only alternative. this is the cornerstone of why we have to do something in order to make sure that we are bringing people here. the alternative isn't that we can bring anyone here so the jobs that we have open will naturally go to people who are ok at it or to someone who is here. jobs don't have to stay here. that is the reason why you don't see an increase in wages. we are competing globally for this labor supply. when you have u.s. workers based in the u.s. who have benefited from a couple of workers coming here, that is a much smarter policy outcome than cutting off workers to the u.s. and then saying, ok, we hope that global
2:36 pm
companies will just decide not india and ireland and china and start hiring heavily over there. the reason why demand has remained stable and wages remain stable is because there is relief. it is just outside the u.s. and we don't benefit from it. host: richard from austin, texas. independent line. good morning. caller: good morning. i'm glad to talk with you all this morning. in theseveral sons engineering business. one of them works for a large company here. and they 50 engineers started dealing with chinese companies. got rid of all but my son. he was the last engineer there.
2:37 pm
they took on the engineering documents from china. he refused to sign them. people. it will kill they let him go. now there is none there. borderaised on the south . people came across the border. cheaper labor for farmers. somehow, we've got into a country of and by the corporation instead of of and by the people. sorry for your'm son. that sounds like a really awful situation. of pieces in that as well. i'm not sure all of them are related to immigration. we need to be cautioned about our training partners. i'm a big believer that the only
2:38 pm
way we will really change things in china is to be active participants in their economy. once people see free markets at work, it will be much harder for to have thatimes influence over its workforce. et atnk he is trying to the knowledge transfer issues. that goes back to the other wage point i was going to make. side of wages is, you compare wages in an economy to other alternatives. a if you enter technology today, you will make more money than if you enter into the legal profession or into the business profession. there was a consistent bonus for entering. that is how you compare wages. it is a noisy indicator. we don't account for the simple
2:39 pm
wage study within a single industry how the economy is looking. how the overall picture of jobs looking. what we can do is look at it relative to being a lawyer or some kind of business executive. what we see insistently, technology workers are paid more money than their intellectual counterparts from an academic perspective. as far as knowledge transfer goes, in cases where that is happening, that is part of the economy is-- changing. i want to be very clear on this point -- that does not mean it is not a real problem or that some american workers aren't suffering as a result. we can't be callous or cold towards that. we have to find a way to do better workforce training in the bills that we pushed. our organization -- we put together a fund that would have provided a large amount of money towards workforce retraining for adult engineers who say, ok, i'm 90% there but i can't quite get
2:40 pm
the job interview i want because my resume doesn't look like it should work not good on the certifications that are necessary. will help tofund deal with some of this disruption issue where people -- they will not have jobs. it is a shame but it is part of what needs to happen in order for an economy to move forward. we can do a good job creating energy in this industry while also making sure that we're protecting u.s. workers. we can do both if we are smart about it. host: is it true that recent workers are more interested in the job itself and the less so where the job is? guest: i worked with 70,000 immigrants from india for years. e closef them wer friends of mine. broad statements about the plight that -- i don't think this person is meaning to sound a big, but that is
2:41 pm
generalization about a group of people. are people interested in having a job? yes, most are. to suggest that people aren't pursuing their own happiness or that they are not pursuing the american dream with the same energy as an american, i think goodis a dishonor to a group of people who are doing what they can to support their families. host: republican line. john, good morning. is, i wase thing it is theall about -- best thing i can think of. putting people to work to have these jobs already in the u.s. educate them to do better in their jobs. as far as immigration reform, wrong idea.
2:42 pm
i think people need to take a twitter andbook and that it is not immigration laws. what it is is illegal alien law. guest: i don't even know where to start in terms of the broadness of the comment. let's talk about sincerity. sincere in sides are this. too much of our time is spent in washington trying to demonize or turn into some kind of nefarious activity the efforts of others. i think the colors who are worried about the visas have some personal experiences that are not good with that visa. needs to work as well as we can make it work. willow bay perfect? it will never be perfect. -- will it be perfect?
2:43 pm
it will never be perfect. we assume some of the accountability for our activities and we know that there are risks. as far as what people are doing to improve their chances of thingsired, there are the government can do. but that responsibility rests on individual workers. if you want to be competitive, our country guarantees you an opportunity to be competitive. not the right to simply have a job. host: your organization that you s that you represent, do they ask you to recruit on american campuses? guest: absolutely. they are here in the u.s. it's why we have so many foreign students in this programs. to helpually pay support these programs and make them even more meaningful anduse they don't get loans they are not paid late. they are an integral part of the ecosystem with emory
2:44 pm
university's for computer science. we recruit primarily from u.s. schools. half of the engineers we encounter are foreign. we have to find some legal means for them to remain here. a lot of americans stop at undergrad. are they less motivated? i don't think that's it at all. if you were an undergrad in engineering and you are good and we know the professors can talk to you, our recruiting practices are so specific that bill gates used to say, he knew at each university which professors were the ones that needed to be looked at in terms of grades. if they had made a certain grade in that class, it was already a pretty good sign that they would be able to do well in this workforce. a lot of american students leave after undergrad because they can get jobs very quickly with that degree. stay a bit students longer for a variety of reasons.
2:45 pm
some of them are associated with our immigration system. if you have a masters degree, when you convert to a green card , you will be at a higher level of employment-based category and there will be less competition for that green card. stop at the undergrad level will be waiting for 10 years. the executive director for computer america. minnesota, paul. caller: i was in florida fo eight years ago and knew some waitresses that were under the h 1b visas. they were making three dollars an hour. it was legalized slavery. one of the dollars was paying room and board.
2:46 pm
the money they were making was all off tips. what you rancho h1b, thatat were an was illegal and i hope you reported it. there may have been some other scam going on there. or any temporary visa you see, be a responsible citizen and make a few phone calls. you can find that there are reporting systems for all sorts of things related to immigration practices in the u.s. report it. if those girls are making three dollars an hour and even that three dollars is being taken away from them, that is illegal.
2:47 pm
i would argue, if on a visa or not, we cannot legislate by anecdote. that is a serious problem. we have lots of serious problems that we don't take extreme actions to try to solve. i talked about the issue of drunk driving a lot. , that is an agree awful thing. people die as a result. families are destroyed as a result. the easiest solution would be to stop the highway system. territory. -- tear it apart. that is not a smart solution. we talked to someone who was lost someone, i know with the pain of loss is. you can communicate that to someone. you talk about someone's livelihood. you can't convince someone who was laid off that it's ok, don't
2:48 pm
worry, it's good for the country. we need to be respectful of the fact that some people are hurting as a result of this. but we don't talk about shutting down highways as a result of drunk driving because a lot of good does come from that highway and we have to keep that in mind. those of us were not personally involved in it. the same is true of our visa system. than bad comes from it. more good than bad. that's the point that people in both parties must keep in mind. 's economyr country depends on immigration to this country. host: brooklyn, new york on our democrats line. the morning. caller: good morning. one of the comments that i have is that the gentleman mentioned 85,000e visas are
2:49 pm
per year and the individuals who want to come from other countries need degrees to enter the u.s. to obtain positions in companies. are we saying that the education s in otherin the othe countries are much higher than those in the u.s.? that these individuals qualified to be able to come and take these positions but did not have the same business opportunities in their countries to develop their own businesses that conversely are saying that 100% of the same qualified individuals are fully employed and the makeup is the 85,000 individuals. guest: that's a good question. this is your first time looking at this issue, you're a bright individual for capturing all that. i think the answer to the first
2:50 pm
part related to education systems. fine at the seventh grade and then something is happening. what we're seeing is, in computer science, you begin to and the an early age language. math is a language. ideas andsents replaced latin as a universal and which. you have to speak it fluently in order to feel confident in doing some of this computer science or becausends of sites is you're inventing. it's like writing a novel. if you can't speak it language it will be hard to write a novel. our education system is not producing people who feel really confident entering into college
2:51 pm
and competing against foreign students. what they sacrifice and china -- this is just me -- i'm not an expert in international education. i would let to see a segment on why this is happening in the u.s. my opinion based on what bill gates has said to me, they are good at memorization because they're hungry. they are hungry and they have a specific national policy that they are going to try to identify. almost like russia used to do for the olympics. they will try to identify that t talent and hammer home math and science. are they violating what we would consider constitutional rights in doing it that way? could we ever replicate that in the u.s.? i don't know. we may not want to. we might lose the creativity that our country produces in the technology space.
2:52 pm
if we are to look at the examples of other countries, what we are realizing is that they are producing a lot of the wind young people and mathematics were able to successfully compete in the most competitive computer science programs in the world. that is in the u.s. as far as full employment, there's always some unemployment . i have an ongoing debate with people on the other side as to what full length limit is for the technology space. some people argue that because because of the high competition that 1-2% is full employment and technology. it's fivection, percent. if i have them transition to other projects, that is normal rate of unemployment. theould argue it's more in 3-4%, which is where we are right now. we have a large number of immigrants coming in and a u.s. work force that exists and low
2:53 pm
unemployment in this field. i have a rising but -- background in economics -- people are not counting on the ,act that some of the demand there is a relief valve. in agriculture, i have to pick the crops where they grow. find peoplei can't here, the relief for that demand is outside the country. we have full employment in this country but the point isn't what we have now come it's what we could have. we could hire even more people and those people could create more opportunities for american jobs. we are talking about the jobs calculator. at one of these folks will create more jobs for americans. if we change the system, we could create more jobs. it's counterintuitive, but we can do it. one smart individual can do a lot to help with unemployment in the west host: 85,000 is the threshold
2:54 pm
for h1b. what is the ideal number? they would move with the markets and fluctuate according to the man. it has been as high as 195,000. lags --congress always we joke about how congress can't do a proper regulation or a visa system because they are always behind. in the late 90's and technology and they passed a bill that gave us 195,000 visas just in time for bubble to burst and we never even used most of them. then it dropped down again and bubble burst and we recovered and we need morgan. we would like to see something where the market fluctuates according to demand. host: companies are outsourcing i.t. departments. guest: outsourcing is also
2:55 pm
interesting. -- main country outsourcing it's a natural kind of outsourcing where i had to move jobs overseas. the e-mail is asking about in country. this goes to another part of this debate where there are different types of people using the h1b system. companies like microsoft or arele or intel or oracle bringing people in and transitioning to green cards. there are companies that are called nondependent companies and most of their workforce is u.s. e we these individual companies like ibm, mostly american workforce and do the1b outsourcing were talking about. then there are companies that are mostly what we call dependent companies.
2:56 pm
these are large outsourcing firms that are primarily comprised of h1b, up to 80%. it is a major source of controversy over the visa. host: pat, good morning. washington, d.c. ayller: i wanted to s something. are you a millennial? guest: no. i was born in the 1970's. as you know, back in the 1970's, that is when the computer age really started to be introduced. it didn't take off but it was just being introduced. basically, around the world, we had to explain and make a rough draft of what it was that we saw. that was wha wind the vision was born.
2:57 pm
they had to train millennial's and we had to do it in steps. that the government -- they had to put down what we were doing. what our vision was, set an agenda. this is where we want to go. the first level of millennial's and reformers are the ones who -- we get people from the outside. i'm not knocking immigrants. years. them 10 pledge -- at the same time, we doing a trust market now that we kno have an american brand. guest: i know where you were headed with that. there are compliments and substitutes.
2:58 pm
it's really simple to do, even from high school economics. a complement is something that goes with a company. andher it be an engine wheels and the car, they all come home and each other. a substitute would be one engine and another engine. you can have both. if you do, you will have some decisions to make. the value of both goes down. when looking at immigration policy, we are trying to think about what's good immigration policy, especially on the business side. we need to be very careful that we are coupled limiting and not substituting. this is true of highly skilled and agricultural workers. this is true of construction. a lot of time and energy is trying to make arguments about complements and substitutes. if we aresagree that we a
2:59 pm
bringing in substitutes, it is bad for our country. coupled three, what do you do? do you not get all of the value out of the system because you are worried about smaller instances of substitution? if there are problems with substitution, yet most of it is koppelman three, people will be upset and vocal. becomplementary, people will upset and vocal. it's also members of the supreme court that need to catch up on technology. i wanted to say that, with regard to your well spoken remarks about language, there is always legitimate
3:00 pm
>> and all of "washington journal" available online at every day at 7:00 a.m. eastern. we are going to take you live to a hearing of the securities and exchange commission. she'll be testifying before the house appropriations subcommittee on financial services. that's mary jo white at the witness' table. she'll talk about the president's $1.7 billion request for the agency. that's up from what the congress gave her last year. live coverage here on c-span.
3:01 pm
>> the hearing will come to order. i want to welcome our witness, s.e.c. chair mary jo white. thank you for being here today to testify before our subcommittee. the securities and exchange commission has a uniquely important job of maintaining fair and efficient security markets, encouraging capital formation and protecting investors. this is not an easy task, but it is a critical part of keeping our economy thriving.
3:02 pm
for fiscal year 2015, the s.e.c. is asking for $350 million or 26% increase over last year's funding level. this is an especially large increase for any agency. and while the s.e.c. is funded by fees, i believe congressional oversight over your budget is an important task on the commission's activities -- check on the commission's activities. what we want from the s.e.c. is a security's regulator who is both capable and economical. it's easy to argue that money will solve all the problems in the world, but we expect to see results before appropriating additional dollars. last year the house included bill language fully funding the office of economic and risk analysis. i'm anxious to see how you're using that funding to hire more economists in order to increase the cost-benefit analysis performed during the s.e.c. rulemaking. in addition, i'm interested to hear your thoughts on the
3:03 pm
municipal advisory rule, which the s.e.c. released earlier this year. i'm concerned that it might be regulatory overreach in an area that could benefit from more competition and not less. american investors and all those who use the u.s. securities market deserves to know there is a cop on the beat who is protecting our markets. the commission has had embarrassing and damaging inspections in enforcement lapses in the past, such as failing to look at the ponzi scheme and also due diligence ch as the constitution lease debacle, material weaknesses in the commission's financial statements. with the increases that congress has given the s.e.c. over the past decade, there can be no more excuses. chair white, your fiscal year 2015 budget request asks for increases in almost every
3:04 pm
office and division across the s.e.c., including overall requests of $467 new f.t.e. we heard the claim that the s.e.c. needs increased staffing and funding to get through the dodd-frank mandated rule makings, however, the staffing and funding levels that the s.e.c. cannot exponentially increase forever. this is not an efficient use of your funds, nor will it protect american investors. i'm eager to hear how the s.e.c. plans to judiciously use its funding in key areas in order to best leverage its expertise and capabilities to protect our capital markets and investors and facilitate the overall growth of capital. so thank you, again, for being here today. i look forward to your testimony and now i'd like to recognize the ranking member serrano. >> thank you, mr. chairman. i join you in also welcoming chair white before the subcommittee to testify on the fiscal year 2015 budget request for the securities and exchange
3:05 pm
commission. last year when we spoke, chair white, you were just settling into your new position. now almost a year of service in this new position, i have been heartened by what i have even in many years. i appreciate as a former prosecutor you have taken a tough line on wrongdoers by moving through more admonitions of guilt and made dodd-frank an implementation priority and have moved the ball forward on some of the law's most important and complicated provisions. all that said, you cannot continue to protect investors and to make sure that our financial system is secure without sufficient resources. for all the important compromises that were reached in last december's appropriations bill, i think we did fall short of the mark in providing the necessary funding for the s.e.c. i am concerned about the impact this funding level is having on the commission currently, and i believe that more needs to be done in fiscal year 2015.
3:06 pm
which brings us to your request today. your request of $1.7 billion in fiscal year 2015 allows the s.e.c. to keep pace with the growing markets you oversee. the increasingly complex transactions that take place and the expanded role you play in the wake of the financial crisis. without a significant increase from the fiscal year 2014 funding level for the s.e.c., we're sending a signal that market actors should not expect consequences for risky, unethical and illegal behavior. i think that should be extremely troubling for all of us. at this point, we all know the consequences of an s.e.c. that is underfunded and unable or unwilling in past administrations to oversee all securities laws. our markets suffer, our investors suffer, our taxpayers suffer and ultimately our nation suffers. we need a strongest -- we need the strongest cops on the beat on wall street to make sure we
3:07 pm
have strong protections in place and to deter future misconduct. i take your request for additional resources seriously, and i hope my colleagues will as well. chair white, once again, welcome and i look forward to your testimony. thank you, mr. chairman. >> thank you, mr. serrano. and now i'd like to recognize the ranking member of the full committee, mrs. lowey. >> thank you very much, mr. chair, and welcome. i'd like to certainly thank chairman crenshaw, ranking member serrano for holding this hearing and it's a delight. welcome. chair mary jo white for testifying before us today, and we thank you for your agreeing to serve this great country of ours. we know how important the responsibility you have is. madam chair, you come before us with a budget request for fiscal year 2015 of $1.7
3:08 pm
billion, which would support the s.e.c.'s responsibilities as well as the hiring of an additional 639 employees. these additional positions, which would help the s.e.c. to examine investment advisors, enhance its core investigate keeping up with the changing markets. year after year the s.e.c.'s budget authority has been kept below what is needed to meet demand and the needs of our increasingly global economy. in fact, the republican majority kept the s.e.c. budget at more than $300 million below the president's request in f.y. 2014. this approach is nonsense. the s.e.c. is entirely fee funded, and as such providing adequate funding authority will not take a time of your u.s.
3:09 pm
taxpayer dollars, nor will it have any impact on the deficit or the debt. i worry that the republican majority's budget restrictions on the s.e.c. are purposely intended to make it more difficult for the s.e.c. to do its job. by robbing the s.e.c. of its needed funding, the republican majority is making it more likely that fraud will go undetected and that investors will be left at risk. and when this occurs, they will use that opportunity as a way to deny future funding. it's a cynical and unnecessary cycle. for our economy to succeed, investors need faith in their ability of the regulator to do its job. these misguided budget restrictions only harm the ability of the s.e.c. to succeed. i look forward to discussing the importance of the s.e.c.'s
3:10 pm
budget request in a moment, and i thank you, again, for appearing before us. >> thank you. i'd like to now recognize chair white for your opening statement. your written statement will be made part of the record. if you can keep your remarks to about five minutes, that will give us more time for questions. please. >> thank you very much. chairman scren shaw, ranking members lowey and serrano and members of the subcommittee, thank you for inviting me to testify in support of the president's fiscal year 2015 budget request for the securities and exchange commission. now more than ever, investors in our markets need a strong, vigilant and adequately resourced s.e.c. from fiscal 2001 to fiscal 2014, trading volume in the equity markets more than doubled to a projected $71 trillion. the complexity of financial products and the speed with which they are traded increased exponentially. assets under management of tual funds grew by 131% to
3:11 pm
$14.8 trillion. and assets under management of investment advisors jumped almost 200% to $55 trillion. today, there are over 25,000 s.e.c. registrants, including broker-dealers, transfer agents, credit rating agencies, exchanges and others. during this time of unprecedented growth and change in our markets, the s.e.c. has also been given new and significant responsibilities for over-the-counter derivatives, private fund advisors, municipal advisors, crowdfunding portals and more. the president's $1.7 billion budget request would enable the s.e.c. to address critical core priorities, including enhancing examination coverage for investment advisors and other key entities who deal with retail and institutional investors. protecting investors by expanding our enforcements programs, investigative
3:12 pm
capabilities and strengthening our ability to litigate against wrongdoers, leveraging technology to make our technology more efficient and to improve our ability to identify a variety of market risks, including emerging frauds. as you know and have alluded to in your opening rarkts, the s.e.c.'s funding is deficit neutral which means the amount congress appropriates does not impact the deficit. the funding available for other agencies or count against caps in the congressional budget framework. nonetheless, i fully recognize my responsibility to be an effective and prudent stuart of the funds appropriated and pursue only the things we need to advance our mission. i believe our accomplishments this past year should give congress and the public confidence that we will do so. while certainly more remains to be done, since my arrival april, 2013, we have proposed significant rule makings,
3:13 pm
including those by the dodd-frank across the regulatory spectrum of our jurisdiction. we are also now more aggressively enforcing the securities laws, requiring for the first time admissions to hold certain wrongdoers more publicly accountable and obtaining disorders of penalties of $3.5 billion in fiscal 2013, the highest in the agency's history. and we've taken a data-driven disciplined approach to addressing complex market structure issues, such as high frequency trading and dark pools, implementing a powerful tool tool called mitus. it would permit the s.e.c. to increase its examination coverage of investment advisors who everyday investors are increasingly turning to for retirement and family needs. while the s.e.c. has made the most of its limited resources, we nevertheless were examine to -- only 9% of advisors in 2013. as a point of reference, in
3:14 pm
2001, the s.e.c. had 19 examiners per $1 trillion in investment advisor assets under management. today we have only 8%. more coverage is plainly needed as the industry itself has acknowledge. very importantly, this budget request would also allow us to better leverage technology across the agency to support a number of key initiatives, including modernization, a multiyear effort to simplify the financial reporting process for public companies and other filers, completion of the enterprise data warehouse and additional analytical tools which will allows to organize, analyze large amounts of data for risk analysis and fraud detection. enhancements to the tips, complaints and referral systems to act on the high volume of tips that we receive. information security to upgrade tools and processes responding to the ever increasing cyber and other security threats. and modernization of to
3:15 pm
make it more informative for investors and public companies. this budget request also allows us to continue augments our division of economic and risk analysis by adding financial economists and other experts to assist with economic analysis in rulemaking, investigations and examinations and structured data initiatives. i firmly believe that the funding we are seeking is fully justified by our important and growing responsibilities to investors, companies and the markets. your support will allow us to better fulfill our mission and to build on the significant progress the agency has achieved, which i am committed to continuing and enhancing. i'm happy to answer your questions. thank you. >> thank you very much. let me start by asking a couple questions just about efficiency . one of the things that i think
3:16 pm
most of us are aware, the funding for the s.e.c. i think since -- in the last decade has increased about 66%. if you go back to 2001, from that point till now, the funding has increased about 220%. so over the years there have been a lot of money spent with the s.e.c., and as has been pointed out by everyone, it's a fee-funded agency but we take our oversight responsibility and we're just trying to make sure, whether it's taxpayers' dollars or fee-driven money that it's spent effectively and efficiently. and last year when the s.e.c. asked for 26% increase, you'd been on the job a month, but now you've been on the job for a year. and your view is that you need another 27% increase. and so when you talk a lot about technology, let me just ask you, can you point to some of the, i guess, savings you've
3:17 pm
been able to leverage this technology and this analytical capability, is that something you've been working on? can you tell us a little bit how you've been working on that side of the equation? >> yes. and this is done really throughout the agency, but i specifically work with our chief operating officer on savings throughout the agency, whether it is driven by investments in technology, which it often is, or wherever else in the agency to the extent we get more efficient, there are cost savings in that that are measured. under different metrics. i'll give you two examples. we saved $6 million a year, including for this year, from consolidating our operations center. it's now all in the headquarters. we'll save $6 trillion in fiscal 2015 and $6 -- $6
3:18 pm
million in fiscal 2015 and $6 million in the next years. and we saved money in enhancing various processes, making maintenance less required. so those are two examples, but i take very seriously, chairman crenshaw, with the funding that we do get and obviously i made for me - we need it and our agency to do the job responsibly. it is to affect cost savings with these moneys and we are doing that and committed to doing it. >> thank you. now, one of the things that i noticed, you got a pretty large amount of carryover funding from previous years. i think the quarterly report says the balance was $112 million. so that was last year when you were subject to the sequester and that fenced off $66 million or about 5% of the appropriations. and this carryover still
3:19 pm
amounts to about 8% of your total appropriations level. so you take that with the fact you got access to this $100 million mandatory reserve fund and you can spend up to $100 million on that. so i guess i know you always talk about additional resources and certain constraints, but could you tell us why you have such a high carryover balance? >> we have,s as you know, no new fund so we're able to carry over the balance if we don't spend it in that year. it's a product of responsible financial planning. we basically, because of the continuing resolution, really spent very conservatively in early 2013. so that's some of it. we also tried very hard to hire in our new positions when we do get appropriated funds, you know, very wisely. so we're hiring the right eople to do the job most
3:20 pm
feshtively and efficiently -- effectively and efficiently. i think $30 million of that is also from, again, very good financial management by our folks which is from deobligating moneys that were committed on closed out contracts. so -- and these moneys are, i will say, and i spent a lot of time on this, very much taken into consideration in terms of the request for making. >> at the end of 2014, do you expect to have a carryover balance? >> i can't answer that as i sit here. certainly we are committed to -- and we've actually enhanced our h.r. function so we will be able to hire more efficiently as well as continue to hire prudently. that's where a lot of that expense comes from. but we do think in terms of the request that we made in 2015 that we would be able, if granted those funds, to hire in those positions. again, we want to be prudent about those hires. but we do think we can do that, yes, sir.
3:21 pm
>> well, thank you very much. we're going to go to questions among the committee members and we'll observe the five-minute rule. people will be recognized by seniority if they were here when the meeting started. the late comers will be recognized in the order which they arrived. and we'll actually make a special concession through our ranking member, mrs. lowey, and call on her for the next round of questions. >> very kind because unfortunately there are several hearings going on at the same time. thank you very much. madam chair, in fiscal year 2013, due to budget constraints, the s.e.c. examined only about 9% of registered investment advisors. over the past decade, the number of investment advisors has increased by 40%, and the assets under management by these very advisors has more than doubled to $55 trillion,
3:22 pm
and yet funding for the s.e.c. has not kept up with the need. the overwhelming majority of investment advisors worked with their best interest in mind, helping them save for retirement, making smart investments. there are always bad apples. i'm sure we can all agree that examining 9% of investment advisors is just much too low. if only 9% of investment advisors are examined per year, how does the s.e.c. prioritize examination? why are these exams important to mom and pop investors? and how can investors have faith in the market if 40% of investment advisors have never been examined? >> there's no question that this is a stark example of the extreme challenge presented by our current level of funding.
3:23 pm
it's elsewhere throughout our functions, but in this investor advisor space, what we do with our limited resources is to obviously try to apply them as wisely as we can. we do risk-based assessments of where we should go on various parameters, the size of the investment advisor, recidivism, you know, kinds of products. i also instructed our examiners in our national exam program that i don't want to be absent from the smaller spaces either because that's where more and more retail investors, in particular, are relying on investment advisors that tell them what to do with their retirement money or money for their children's education, they cannot afford to lose these moneys. so they are, you know, helped by every examine we do, not only at the smaller level, but the ones we do at the larger investment advisors as well because their pension funds
3:24 pm
tend to be managed by those larger investment advisors. and just another concern. i have to say it exactly that way. we do find issues when we do find these -- do these examinations. 75% to 80% of our examinations receive a deficiency let remember of some kind. 35% of those significantly deficiencyy finding which means a finding by our staff that there is harm to a customer or client or a significant risk of harm to our client or some kind of recidivism. a good thing that happens in our exam, 86% to 93% of the investment advisors we do find a problem will tell us they have remediated those problems. we obviously test it down the road. about 15% of the findings are actually referred to enforcement. we also return value actually when we revisit the investment
3:25 pm
advisor and find a problem with fees they have been overcharged or misallocated, they will voluntarily return them to investors as a result of our examine. so it's a critical function that we must find a way. i believe we are using our resources very wisely to get greater coverage. >> following up on that, the news often carries stories of the large frauds and justifiablely so. but what we don't here day-to-day of the stories of working class families being targeted and taken advantage of by fraud. what trends has the s.e.c. noticed in fraud, how would the budget help combat these frauds? >> a large part of our budget request is to meet the enforcement needs so we can better protect investors. what we're seeing in enforcement, we clearly still
3:26 pm
have cases against various kinds against very prominent wall street firms. there's a rise in micro cap fraud which can impact the retail investor quite significantly. we see a rise in affinity fraud which are some of the most galling kind of securities violations which is essentially frauds directed at victims, victim investors based on race, religion, age. they are veterans. and it's something we have been very aggressive about in order to be able to meet these crimes that are occurring against our retail investors. there's an uptick in really across our range of enforcement priorities, financial reporting frauds, various kinds of market trading, ider integrity issues. so really is across the board. we try, again, to use our resources in the wisest way we
3:27 pm
can to go to priority areas. >> just lastly, mr. chairman, i just wanted to mention one other issue which has concerned me greatly and i have bean part of many briefings focused on this issue and that is the whole cyberattacks. companies have a responsibility to their shareholders. i know that in the past when companies should have meat security breaches public which could have helped future breaches conducted in a similar is manner, rather than sharing this information, companies have kept it private, leaving many more at risk. ry do think investors have the right to know if companies that they're invested in have been victims of cyberattacks so they can ensure the steps are taken to prevent mitigate future criminal actions. so if you can comment briefly, should companies report with the s.e.c.? that report with the s.e.c. be required to disclose cyberattacks?
3:28 pm
and when you meet with private sector partners, what resources do they need from the government to help effectively manage cyberthreats? and how can the s.e.c. encourage information sharing? this has been a major issue, and i don't know that we're making much breakthrough in it. >> i share your concerns about how serious and long term threat really is across the issues. not only the impact on investors but to our economy, to our national security, there's no question about that. we actually held a roundtable last week on cybersecurity really to emphasize that. not only with respect to our registrants and public companies but to bring together the various government agencies , you know, who are charged with dealing with the cyberthreat to talk about, among other issues, the coordination among the government agencies. the department of homeland security which is a national security issue is in effect the
3:29 pm
coordinating agency among the federal agencies. and the emphasis there which is so critical is we must have a public-private partnership on this. i think the government needs to do better at sharing information with the private sector. obviously you need to get requisite security clearances. in terms of disclosure by public companies, you know, i think just to commend the staff of the s.e.c. in 2011, the staff of the s.e.c. actually put out guidance to public companies regarding their obligations to disclose cyberrisks and cyberincidence if they were material which of course is our disclosure regime. it's been i think -- regarded as very helpful guidance. the staff has followed up to see if the disclosures have improved. we think they have improved. it's a continuing process and priority. >> thank you and thank you, mr. chairman. >> thank you. mr. womack. >> thank you, mr. chairman. chair white, as i'm sure you
3:30 pm
are aware, i, along with my colleagues, many of whom are on this dieas and others -- die ace and others on the financial -- dias and others on the financial services committee, as you know, two such firms, one of which is in the process of being sold, controlled about 97% of that market. and actually become kind of de facto corporate government standard barriers in the united states. these firms have obvious conflicts of interests and their services sometimes don't the fiduciary responsibility to their clients. did the s.e.c. host the roundtable because it recollection we have problems there -- because it recognizes we have problems there? >> it was quite constructive and there were actually more areas of agreement than we
3:31 pm
might have expected before we called the roundtable. i will take two sort of upfront points. the proxy firms are quite important to our proxy system and engagement of shareholders with the companies they own. there's also no question that a number of concerns and issues have been raised, including whether the disclosures that they are actually required to make, you know, have been adequate on conflicts of interests. so there was a lot of dialogue about that. there was also dialogue about the fiduciary duty that investor advisors have when they actually retain a proxy advisory firm because they have a fiduciary duty and they retain that fiduciary duty. they make sure that the proxy advisory firm is discharging the service they are providing for the investor advisory firm well and so forth. where i think we are on that, and i can say i actually received quite recently,
3:32 pm
following that roundtable, recommendations from our staff, primarily in corporate and finance and investment management as to what steps, if any, what action, if any, the s.e.c. should take following that roundtable on those issues. i expect in fairly short order to be discussing that with my fellow commissioners. >> in your opinion, were there broad areas of agreement on improving the transparency? >> i think there was agreement, at least at that roundtable, and i think probably more broudly than that roundtable in terms of some of the disclosures of conflicts of interest in particular there was room for improvement there. i also think it's -- interestingly, the chamber has put out best practices guide on this, if i might call it that, which i think has spurred very useful dialogue before and after that round table. so i think one of the positive things that came out of that roundtable is that the various interested parties are continuing to discuss, you know, issues that divide them a bit to try to close that gap
3:33 pm
and really make the process work better. i think that's very healthy as well. >> it's my understanding that the firms -- that these firms are relying on s.e.c. staff guidance in choosing not to disclose conflicts of interests. do you share my concerns that the commission is effectively encouraging these firms to withhold such information? >> i don't -- i don't think that actually came out certainly not as an area of agreement at the roundtable. i think the point of view of the s.e.c., we wanted to sure there was clarity on those issues. so to the extent questions have been raised about that, we want to make sure there is perfect clarity. we obviously we'd like to pay a lot of eanings whether it's guidance on one of our rules what impact it will be having. >> are they reviewing the jones no action letters to allow the conflicts to occur unchecked? >> i think i described the
3:34 pm
status which i got the recommendation from the staff as to what action, if any, should be taken. >> when would you expect action? >> well, i would expect to be in discussion with my commission, my commissioners about next steps in the next, you know, pretty short order in the next -- within a matter of weeks, i think. >> ok. thank you, madam chair. >> thank you. mr. serrano. > thank you, mr. chairman. within of the things you'll continue to hear, especially in the majority party is cuts, cuts, cuts and the budget in general and i don't think we pay attention at times to the ramification of those cuts. so my question to you is -- do you think -- are you confident that the meltdown course by wall street in 2008 won't happen again, especially if
3:35 pm
congress continues to cut? or do you think there are mechanisms in place where there is a balance of both resources for oversight and mechanisms in place that can in fact stop us from a meltdown we had in 2008? >> without, i guess, making perhaps predictions, i can't , e at least categorically certainly what the actions initiative, including legislative initiatives we've taken since the crisis are designed, you know, to prevent that. and there has been a lot of progress on that. i think the regulatory agencies are doing their respective jobs a lot better. they're more focused on systemic risk issues. they're working better with each other. one of the biggest mistakes we can make, though, falling into any kind of complacency about the possibility of a repetition of any kind of event any near what we faced during the financial crisis.
3:36 pm
the s.e.c. i think is a very important agency to be sure it is not underresourced so it can do its job to prevent risks from actually materializing in the ways they should not and can be prevented. i think one of the other mistakes we should not make is when we have a reform like we now -- which i think is very positive -- regulate the over-the-counter derivatives markets, that we're able to implement, you know, those rules that we have adopted or in the process of adopting. so resources for implementation of these reforms is critical. and i do worry that we may be underresourced for that task. i think that would be a mistake. >> now, let's assume for a second that i was wrong with my opening part of the statement and we in fact come up with more funding for the s.e.c. what areas would you like to see where more enforcement should take place? >> i think broad enforcement as we can bring to bear is what
3:37 pm
our responsibility is. i mean, it's a -- and that means -- let me be clearer on that. we need to be acting and sending very strong messages of deterrence across market participants. we need not to be neglecting the smaller violations because smaller violations can become bigger violations. on the exam side, i think we need to be focused and broadly covering problems before they actually materialize into serious enforcement issues. so if we were to get sufficient funding and clearly what we're asking for in fiscal 2015 ask for 126 new positions in enforcement, some technology that will help us be smarter in detecting fraud sooner, that will help us also when we get tips in. we get 15,000 tips in a year to not only take them in the right way but analyze them in the
3:38 pm
right way, analyze them quickly and out to our investigative staff to jump on them when they occur. then what we can do is try to act before the money's all gone in a very serious broad. we can try to freeze assets, suspend trading. we do that to good ends. so across the band of our enforcement functions is where we ought to apply those resources. >> now, has the number of fallen?ctions is it because of the sequester or is it because of the complexity of cases or ongoing investigations? >> we brought actually -- i think the numbers don't tell the whole story. it's always important to emphasize because we brought very high-quality, very complex cases not only this past year but certainly i think for a number of years. we brought a number, 684 enforcement actions in this past fiscal year compared to i think 734 in the prior year. so that's a 48-case difference.
3:39 pm
it's hard to tease out, you know, the effective sequester specifically on that. i think the 686 cases we brought was really a robust, strong effort by enforcement. sequester and the budget limitations certainly impacted us elsewhere in enforcement and across the agency. >> i have to tell you something, mr. chairman, i don't know if i asked a great question or bad question. >> it's probably my answer. >> i have no idea what that's about but something is going on here that makes me nervous. so i'll stop right here, mr. chairman. >> why don't you ask another question and we'll clear out the room. thank you. mr. diaz-balart. >> thank you very much, mr. chairman. i just want to make sure i understood you, chairman crenshaw, when you talked that the s.e.c.'s budget has increased 220% since 2001 and i believe 2/3 -- 66% in the last decade. the reason i wanted to just
3:40 pm
repeat what you said is because i think only in d.c. is a 220% increase or -- since 2001 is considered a cut. i just thought that was illustrative what we do in washington i think the american people would have to differ whether that is a cut or not and i don't think it is. madam chair woman, thank you for being here. let me throw out a couple ings in regards to the municipal provisions of dodd-frank which not many banks -- and i'm really particularly concerned about community banks. they're having some difficulty determining whether they need to or not register with the s.e.c. as municipal advisors. it's no secret that community banks have long provided financial services to local ew piss palts -- municipalities and few previously registered with the s.e.c. and they are setting up to help
3:41 pm
banks determining whether registration is necessary. now, the deadline for that evaluation, to evaluate their situation and decide whether or not to register -- and by the way which also would be potentially whether or not they can continue to provide their services to municipalities is i believe coming up on july 1. and the idea, can you estimate for the subcommittee, let us know when those facts, which i think would be very helpful, would be available to guide the community banks? >> i can't give you a specific time frame. the staff did put out in january staff guidance on a number of issues in that space and who is to register and under what circumstances. it sounds like from your question that those f.a.q.'s may not have fully answered the question that you're posing now. the staff has since -- by the way, we also put off the effective date until july. to as actually in january
3:42 pm
give the industry and potential folks who need to register more time to dialogue with the staff. that's going on as we speak and has been since before january when the f.a.q.'s were put out and also afterwards. i think it's anticipated we will put out additional guidance on some of the additional questions that have been raised before the july effective date. >> it would be great once you have the -- once the staff has a better idea, if they could let us know, let our staff know. and then also kind of a related the about the rule makes, municipality rulemaking board has made a rule for municipal advisors that could force some banks, including the community banks and some regional banks to choose between -- we're being told -- providing advisory services or traditional banking services, loan r it's deposits or
3:43 pm
money. i understand the proposed rule, there's a knew fiduciary duty which would impose, i believe, that says any entity providing advisory services could not act as a principal in providing other financial services. the concern is obviously some local municipalities have long looked at banks to provide both banking services and also advisory services. and yet my understanding is under the rule that barnings would have to choose which one of the -- banks would have to choose which one of the two which i may be wrong which is why i'm putting it out there. if that's true then some local school boards or town councils would have to decide which one of the two and frankly may even have to break long existing relationships that have worked for them. so if that rule -- if i'm accurate about what i believe to be the case -- if it is submitted in that way, will the
3:44 pm
s.e.c. attempt to make the rule workable to prevent this disruption, this potential disruption in many relationships that might affect a lot of municipalities and school boards and to throw a pun out there -- hopefully if they like their bank they should be able to keep it. if you like your bank you should be able to keep it. hopefully that rule will be taken under consideration. any thoughts on that? if that rule comes out, would you be willing to work with banks and municipalities to make sure they don't face that? >> again, if sounds like what you're saying implements mrsb rules that will come before the commission. if it comes to the commission for approval obviously we will focus on all aspects of it. i will say, get back to whatever additional information i can provide specifically at this stage, i'm not sure if there is additional information i can display supply but i will say when the msrb and the
3:45 pm
s.e.c. considers any rulemaking -- i mean, you look very, very closely at the economic impacts of those rules, the cost-benefit analysis that the chairman was alluding to in his opening statement,es that a very critical aspect of all of our rulemaking. so i can't really speak more specifically today to that point, but maybe i can supply additional information. >> the rule hasn't come out as far as i know. when it does get out it will become interesting. >> thank you. i can't get ahead of the train. >> mr. quigley. >> thank you, mr. chairman. welcome, madam chair. as you know, the s.e.c. requires public companies to report their financial xdrl structured data format. unfortunately, the s.e.c. doesn't necessarily enforce the quality of that data. and what we're hearing from
3:46 pm
many is that is virtually useless for them. a lot of trust that's needed to trust this data to make critical decisions is tough to rely upon. can you update us on your efforts to enforce the quality of these submissions for public companies? >> as you know, the commission actually began to require that certain financial information be filed in the xdrl format with the largest issuers in 2009 and then over the four years the requirement -- over the next four years, the requirement was phased in for the mid-sized and the smaller filers. basically allowing them more time to sort of adjust to the new requirements which do have some complexity to them. this actually also allowed the larger and more sophisticated companies to assist in the markets' development of software tools to meet these obligations, provided some, you know, additional time for
3:47 pm
diversification of the support community that you really need to assist filers in tagging their data. over the last five years, we've actually seen -- from our staffs' perspective, an improvement in the quality of data as filers have become more familiar with the process. frankly, the number of vendors actually providing the support services has increased. we still believe there is room for further improvements. nevertheless, and our office of risk assessment and interactive data which was actually in our division of economic analysis -- economic and risk analysis continues actually to be a resource for both issuers and vendors with questions about filing xdrl. we have actually gotten a lot of positive feedback on that nd staffs in our division, corporation finance have actively participated really in frying to educate the xdrl
3:48 pm
filer community on how to actually be able to do this more easy. basically continuing to evaluate ways to enhance the usefulness of it and give specific guidance because i know it's been needed and asked for for those who must file. that's the current status. >> what would it take? data is important. the reason we have them filed is important. what would it take besides guidance and education to let them know that you're serious about this? there's too much at stake to give bad information. >> again, i think we have particularly in the last, you know, year-plus been sending a very strong -- i believe -- strong message. maybe not strong enough from your question, and i'll look into it immediately, actually, but really having our division of economic and risk analysis as a resource on those issues i
3:49 pm
think has helped significantly. i'll see if there is more we can do. >> i appreciate if you can get back to the committee. let me hop over to the jobs act. mr. chairman, i think i'm correct every member of this subcommittee voted for the jobs act. i think it passed 390-23. not something that happens every day here. but there's been some delay and slow progress in implementing all the rules here. can you give us an update on where the s.e.c. is on that process? >> yes. as i've said before i was confirmed and i said after i was confirmed about a year ago now that one of my immediate top priorities was to implement, you know, both the dodd-frank act and the jobs act rulemaking mandates given to the s.e.c. we did this past july lift the
3:50 pm
ban on general solicitation and same day actually adopted the disqullification of -- disqualification of bad actors part of dodd-frank. we proposed the crowdfunding rules. we proposed the comment period has just closed in february on the crowdfunding proposal. and in march, actually, with respect to reg. we refer to it as reg a plus. sort of confirming our regulations which are statutory. >> anything else getting close to being finalized? >> when the comment period is closed -- let me say it this way. they are all priorities for 2014. >> ok. thank you. thank you, mr. chairman. >> thank you. mr. yoder. >> thank you, mr. chairman.
3:51 pm
madam chair, thank you for joining us today. last year, as you may recall, the appropriations committee considered an amendment and adopted on a bipartisan basis that would have required the s.e.c. and the cftc to develop a single rule as to how they apply the cross-border application of swaps and derivatives regulations. i think as we also repeated -- it seems like government to have the s.e.c. and the cftc, how the market is being treated and regulated. the cftc and the s.e.c. has chosen not to issue a joint rule or a rule that is similar in approximate nature. my questions are, can you let the committee know what differences, if any, still exist between the s.e.c.'s proposed cross-border regime and the one that's been implemented by the cftc? can you let the committee know what steps the s.e.c. may have taken during the past year to ensure consistent application of dodd-frank rules to transnational swaps and
3:52 pm
security-based swaps? and then as you know, your european counterparts have been highly critical of the approach that's been taken by former chair beginsler of the cftc and when chairman beginsler was there, will you commit to work to ensure that the u.s. has a cross-border regulatory approach that works for the global market and doesn't disadvantage you -- companies with their foreign competitors? >> i'll give you that commitment. really since i first arrived, i've been not only in dialogue with the cftc at the principal level and in putting acting chair and generally his successor, if confirmed, about this as well as former chairman international
3:53 pm
counterparts. we are really entering our adoption phase in 2014 at the s.e.c. one of the specific sets of questions that we posed in our cross-border proposal was precisely about the importance of consistency because we recognize that to be important. we are not actually obligated to do a joint rule so it's not a joint rulemaking in a technical sense but we certainly recognize the importance of consistency. and so, you know, we be working and are working with the cftc and our foreign counterparts, you know, on that aspect of these rule makings. to some degree we have gone before to see what's needed to close the remaining gaps there. i'm not suggesting they will be identical. e markets are somewhat different. the differences -- couple differences i will cite that are still there between s.e.c. nd cftc is now we go about the
3:54 pm
defining u.s. person and compliance. in substance, we are much more in sync and we are not in sync and we'll continue to work on the differences. >> i say the u.s. person difference is significant. that was frankly when the appropriations committee addressed that last year in full committee, that was one of the thrusts why the committee chose to take it up is we have the s.e.c. and cftc defining who is a u.s. person is differently. that's a real problem for certainty in the markets and predictability. i think we're all concerned -- and i'm sure you are as well -- about really backlash we eceived from european treasury secretaries and folks about the cftc's rules. s.e.c. has been much i think clearer and better in their approach. we hope they'll follow your lead and you'll continue to provide leadership to help them work together.
3:55 pm
i understand the s.e.c., i think, and my colleague, mr. diaz-balart, was discussing the community bonds issue. i understand the s.e.c. is close to filing a rule that would regulate money markets, mutual funds. it would increase the borrowing costs and shrinking the market from municipal bonds. what steps are you taking that any final rule will not negatively affect them? >> we'll -- clearly we've gotten a number of comments since we proposed the money markets fund rule. i think it was last -- i'd say last june, i think. the comment on whether the -- in effect community funds should be exempted like the government funds are is a major comment we received and the staff has been quite focused on that, as have our economists in particular in our division of economic and risk analysis. in terms of -- i can't be more
3:56 pm
specific as to where we are on the specifics because it is something that is currently in discussion between the staff and the commission. >> all right. thank you, madam chair. thank you, mr. chairman. >> thank you. mr. graves. >> thank you, mr. chairman. chairwoman white, thank you for joining us. good to see you again. i'm sure it was difficult to balance the difficult task of consumer protection in free markets and investing and responsibility and then you combine that with the laws that we passed and ask you to enforce and the difficulty in doing that. i know you're doing your best that you can. i really appreciated your comments a minute ago when you referenced the economic analysis that's very important as you consider rules that you're going to adopt. it seems of late one of the most highly concerning rules right now is the volcker rule,
3:57 pm
as you are aware. and we would have an interest, i guess, as a subcommittee here as to the response you gave them to their letter when they asked about the economic analysis and had it -- in the letter it referenced it had not been performed and yet you were moving forward with the rule which was in violation of the law and they asked for response to that. were you able to provide that response to them? if you had, could we get a copy of that? >> sure. we did respond to that. first, i would say we did and the agency is, again, did not have to do a joint rulemaking on this but did actually act jointly on this. and there was economic analysis done which is reflected actually throughout the rule on various issues and comments came in raising economic impact issues and the final rule is quite responsive to major issues. what we did not do, given the context of the joint dynamic of the rulemaking was apply our
3:58 pm
guidance and no other agency applied a specific agency procedure to the rulemaking. so i think that's what -- that reference is. under -- we basically adopted, as a legal matter, we adopted under the bank holding company act which doesn't have the same requirements as our s.e.c. acts do with respect to various other factors we take into account, but as i say, the main point economic analysis was very much part of that rulemaking but not one agency guidance. >> did the economic analysis that you provide comply with in essence the judge's ruling? and i sort of have the reference is the case was the chamber of commerce vs. s.e.c. an adequate analysis had not occurred. failure to tell the public and the congress of a proposed
3:59 pm
regulation, it makes promulgation of the rule arbitrary and capricious and not in accordance with law. i guess it meets what the court requests as well? >> i thought -- i think the references in the opinion were to various requirements under the securities law which is statutory requirements. again, this particular rule was adopted under the bank holding company act which has different provisions in it. >> ok. if i could ask just another quick question. i have here the s.e.c. claims there is an interagency working group that's tasked with a coordination, i guess of some -- this is again referencing the authorizing committee had sent you. but a working group that was working together on some of these proposed rules and such. can you share with us who is part of that working group and
4:00 pm
how many times they've met and such? >> i can't give you a presize number on how many times they've met. they -- essentially it is senior staff from all of the adopting agencies. the federal reserve board, cftc, s.e.c., o.c.c., i think i got everybody in there. and they meet quite frequently in person. >> continue to watch this online at the house is gaveling in for legislative work, including a couple of bills do you go with ukraine, russia sanctions and funding for the voice of america and radio free europe. live house coverage here on c-span. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014] on, resignation is accepted. the chair lays before the hoe


info Stream Only

Uploaded by TV Archive on