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tv   Key Capitol Hill Hearings  CSPAN  June 14, 2016 7:00pm-12:01am EDT

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things like that. and, you know, in the fight at the moment. and the second one is the inability to have the political stomach for the fight. so we have seen -- we've often seen the operations previously in the middle east and afghanistan defined by the electoral cycle in some cases. and the feeling that we've certainly come across in witnesses to this committee and visits to baghdad and so on, that we need to fundamentally rethink how we go about these things and we need to have the stomach and the will to really see these things through. how do you think we can do that better both in parliament and nationally, and do you think we need to have a completely rejigging, rethinking of how we see these operations as we
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tackle the diverse threats of corruption and counterinsurgency and asymmetric threats? >> these are big questions. >> sorry. >> i'll do my best. these are big questions and it may be in the report is published will give us further guidance toward answering them. on corruption, you have to be right. we have to, you know, do far more, i think, to deal with the degree of corruption in these countries and the prime minister has taken a lead there more recently in the anti-corruption summit, the transparency, the way in which our aid is more carefully directed. and the pressure that we and others are putting to bear on some of these regimes to root out corruption in their countries. on these bigger questions, you know, do we have the stomach for
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it, are we doing it in the right way, these are very long -- i think we have learned these are very long campaigns to try and establish some of the values, not necessarily western values but the values that we take for granted here. the values of freedom, to the ability to get rid of the regime that you don't like. freedom to own property. freedom of expression. to get these values rooted in areas that they have not previously grown is a long-term, you know, undertaking. takes years and billions of dollars. thirdly, i think we've learned that in the end when you're dealing with insurgency and terrorism, in the end this has to be done by local forces. civ simply putting western boots or british boots on the ground as we learned fairly painfully i think in successive wars in
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afghanistan is not the total answer. but let's have a better military reply. >> from my perspective, i mean, you've spoken as to whether we have the endurance for it and if we think we need to have a sustained commitment there is clearly something about, you know, wider and better informed strategic communications publicly as to the purpose and degree of commitment the nation should expect. and whether it's prepared to match that commitment with the resource and the political stomach as you've termed it to see this thing through. from the military perspective we've learned a campaign is of finite duration even if the problem endures and there's a limit, therefore, to political tolerance for that duration and we need to use the time that we do have to best effect. i think we might reflect on
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afghanistan that we spent a near decade organizing our inputs rather than being clear about what our outputs are and ruthlessly focusing on those. we also determined that to get to the root of the problem we had insufficient boots on the ground and therefore the key metric was mass but then discovered that mass actually was, you know, subordinate to legitimacy and if there were reservations locally about one's very presence, one was not necessarily a net contributor. and we deduced from that that, therefore, we needed an indigenous proxy, legitimate element with which to engage. and it's easier in that country where those exists and it's much more difficult in those countries where one has to create it. >> the only thing i would add to that is to take us back where we started, almost where we started about the whole of government approach to these problems
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which, you know, certainly in the 20 years that i've been dealing with them, 20 years ago they felt like very military problems, military defense to deal with. it's so different to that now. the national security council construct, partly because of the way the machine works underneath that. they are truly interagency problems and we approach them in exactly that way and that's the necessary lesson that we learned over the years. >> thank you very much. >> in evidence to the committee, general, your former colleague, jonathan shore, used a rather striking phrase, he said that british government, successive british governments could be criticized for intervening in countries and regions that they did not understand and trying to achieve what he called cultural change on a management consultant timeline. what i take that to mean is the fact that in many cases,
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countries can be at a stage of development which might even be a hundred years or several hundred years away from the point of being able to make democratic institutions work. do you all feel that we have sufficiently understood that? because if we haven't, then we ought to think what, perhaps, politics in this country would have been like 500 years ago and how well that would have worked when we were burning people at the stake for heresy. have we absorbed that like in syria, for example? >> i think, you know, you're right. remind us that a degree of humility is needed in these things. when i do travel abroad and meet other governments, you know, i'm always quick when they talk
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about the mother of democracy and all of that, quick to remind them it is still less than 100 years which women have voted in this country. you know, we've not been this perfect democracy. relatively recently. and i'm struck, too, by the change that took place in west germany and in japan after the second world war which was annest, a collective effort by the west and largely by the united states of years and as i said earlier, of billions of dollars and a very large standing force. but a colossal effort over, as mr. mercer said, over several electoral cycles. it was a weighted effort that was required. so general jonathan may be on to something there. i'd like to improve on that. >> i don't know if i can. if jonathan's point is these things take time that is perfectly right.
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>> i think general shore occasionally goes further than your quote where he says it's the wrong political soil and we try to politicize tribal societies. which i think is unduly pessimistic but it depends on the frame of duration. >> three very interesting answers. thank you. ruth? >> someone who had been sitting here 100 years ago, two good questions. obviously partners is something very, very different and one of the necessary evils of this is that we are giving resources in support to people who are unaccountable to this parliament, to this house, but more broadly how are we going to deal with the future consequences of this? giving
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given this sets a new danger. in the long term, how are we going to deal with the fact that we're endangering individuals? >> i'm not quite sure what you're referring to in the question. >> now in our battle against isil, picking people who are not state actors. we're working with people in a way, we're providing resources to people outside the typical international framework we've done. there are going to be consequences to that in the long term. have we started thinking about what they may be and how we're going to deal with them? >> firstly, as a general rule, we don't use non-state actors as a general rule. the model in iraq, supporting a sovereign government is the one that normally applies and we would favor. there are exceptions when, you know, when that isn't possible. we've touched on some of that today. i think the quick answer to your question, you need to think very hard about it and think very hard about who you're providing
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support to. the nature of those individuals. the consequences longer term of doing that. some of those judgments are sometimes very fine and difficult. that's the process we apply to any kind of support to, you know, to a force whether it's -- >> we're using the same criteria regardless of who we're giving support to? >> yes. well, fundamentally, we are. it's in line with the law on conflict and how we expect any support that we give to be -- >> given the support to groups in syria, to non-state actors, i think that's what we're trying to get at. and therefore, we have to look at them very carefully, don't we? >> yeah. >> we're not giving them lethal support. we're being quite careful about that. when we train them outside of syria, we're quite careful about the groups we train and in the training we do insist on respect
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for armed conflict as we said. >> the second question i hope is a slightly more cheerful question. >> please. >> which won't be a nice end point, anyway. at some point, hostilities will end in syria. we envision a peacekeeping force of some kind at that point. have we started thinking about and planning for a british contribution to such force? i'm assuming given all of our commitment thus far, we would be fair to contribute if it was going to work, or whether our boots on the ground would be a positive or negative impact? >> well, that's the key criteria i think would be for the new government of syria to make clear exactly what security assistance it required. the new government in libya, for example, is very clear. they don't want foreign troops on the ground. they see that as undermining their authority right from the beginning.
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and obviously we can offer training and assistance and -- material assistance and that kind of thing, but we're not deploying troops there. so i think it would really depend what the demand was from the syrian government. we have a strong record of assisting in peacekeeping. as you know, more recently we're sending peacekeepers to somalia and south sudan in addition to the peacekeeping that we carry out in places like cypress and so on. >> thank you very much. it only remains for me to say i think this has been an excellent session. we've cut a huge amount of ground. it has been particularly impressive. thank you, mr. wilson. thank you, secretary of state. thank you general mark. the hearing is concluded. order. order. president barack obama says anti-muslim comments from donald trump don't represent, quote, the america we want, end quote. he spoke after meeting with his
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national security advisers on the threat posed by isis. he was also briefed on the investigation into the orlando nightclub shooting. here's a portion of what the president had to say after that meeting. >> for a while now, the main contribution of some of my friends on the other spside of aisle have made in the fight against isil is to criticize this administration and me for not using the phrase, radical islam. that's the key, they tell us. we can't beat isil unless we call them radical islamists. what exactly would using this label accomplish? what exactly would it change? would it make isil less committed to trying to kill americans?
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would it bring in more allies? is there a military strategy that is served by this? the answer is none of the above. calling a threat by a different name does not make it go away. this is a political distraction. since before i was president, i've been clear about how extremist groups have perverted islam to justify terrorism. as president, i have repeatedly called on our muslim friends and allies at home and around the world to work with us to reject this twisted interpretation of one of the world's great religions. there's not been a moment in my 7 1/2 years as president where we have not been able to pursue
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a strategy because we didn't use the label, radical islam. not once has an adviser of mine said, man, if we really used that phrase, we're going to turn this whole thing around. not once. so someone seriously thinks that we don't know who we're fighting? if there's anyone out there who thinks we're confused about who our enemies are, that would come as a surprise to the thousands of terrorists who we've taken off the battlefield. if the implication is that those of us up here and the thousands of people around the country and around the world who are working
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to defeat isil aren't taking the fight seriously, that'd come as a surprise to those who spent these last 7 1/2 years dismantling al qaeda and the fatah, for example, including the men and women in uniform who put their lives at risk and the special forces that i ordered to get bin laden and are now on the ground in iraq and in syria. they know full well who the enemy is. so do the intelligence and law enforcement officers who spend countless hours disrupting plots and protecting all americans. including politicians who tweet. and appear on cable news shows. they know who the nature of the enemy is. so there's no magic to the
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phrase, radical islam. it's a political talking point. it's not a strategy. and the reason i am careful about how i describe this threat has nothing to with political correctness and everything to do with actually defeating extremism. groups like isil and al qaeda want to make this war a war between islam and america. or between islam and the west. they want to claim that they are the true leaders of over a billion muslims around the world who reject their crazy notions. they want us to validate them by implying that they speak for those billion-plus people.
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that they speak for islam. that's their propaganda. that's how they recruit. and if we fall into the trap of painting all muslims with a broad brush and imply that we are at war with an entire religion, then we are doing the terrorist work for them. up until this point this argument about labels has mostly just been partisan rhetoric and sadly, we've all become accus m accustomed to that kind of partisanship. even when it involves the fight against these extremist groups. and that kind of yapping has not prevented folks across
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government from doing their jobs. after the surrender at appamatux. policies instituted at that time had a lasting impact on american history. this saturday starting at 1:00 p.m. eastern, "american history tv" on c-span3 is live from gettysburg college in bet gettysburg, pennsylvania, for the summer conference as authors, historian and professors examine topics that confronted our newly unified country such as freed peoples refugee camps with abigail cooper, assistant professor of history at brandeis university. reconstruction in the north with andrew slapp at east tennessee state university. and brooks simpson, professor of history at arizona state university. also hear conversations on the rush of the confederate veteran and the origins of the lost
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cause. the annual civil war institute summer conference live all day saturday beginning at 1:00 p.m. eastern on c-span3's "american history tv." for the complete "american history tv" weekend schedule, go to doug o'brien with the white house domestic policy council recently outlined obama administration initiatives. this was the keynote address of vote food 2016. better food, better health. a daytime georgetown university law center conference. this is about 40 minutes. good afternoon. it is not nap time. i'm actually thrilled to be in this role at this moment.
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i'm the executive director of the global social enterprise initiative at georgetown's mcdonough school of business and a partner to the o'neal institute as well. who we're very grateful for to alisa and her colleagues for putting on this conference and letting us be part of the party. i'm also thrilled to be in this role because i have the distinct honor of not being able to stand in your way of food, coffee, or kind bars, let alone the distinct honor of introducing the honorable doug o'brien. this issue is really an important emerging issue. better food, better health, better ecosystems. better policy. better marketplaces. they're all interlinked. and we at the global social enterprise initiative focus on some very key core issues that leverage the greatest assets of georgetown university.
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and health and wellbeing, impact investing, economic security, are just some of the areas where we focus. we've had the distinct honor of also partnering with the white house rural council, secretary vilsack, on issues related to rural development and rural economic development. on may 3rd, we co-convened a conference, actually the third in a series that was conducted collaboratively also with the georgetown law center and also with the global social enterprise initiative, each one in different years. that focused on rural opportunity investment. and on may 3rd, the focus was really around food systems and also conservation. some of the issues that have come up today. doug was there. doug spoke at that conference. and doug being senior adviser at
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the white house is really at that point which donna talked about earlier today. you know, if we want to for the rest of the afternoon, perhaps, we can call him the czar -- >> no, you can't. >> but we won't. but doug is at the confluence of the coordination point that we really need, have needed and will need going forward even in a new administration to deal with the issues, to ensure that the emerging context of food, markets, policy, health, wellness, access, and security, all come together. so with that, i'm going to introduce doug o'brien. you all have his bio in your folders. i think it's far more important that we hear from you. and then get a chance to ask you some questions if we may. doug o'brien. >> thank you. thank you.
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thank you for the introduction and i do want to thank the mcdonough school and the georgetown law center. that collaboration around the opportunity investment i think is a great example of what i want to talk about today and that is how from the federal level we need to think about collaboration, think about ways to either break down the silos or to deal with the silos as they are, to get to more of the impacts that society expects from the food system. these days. so i'm going to talk just a little bit about the food policy environment. i don't, with this crowd, have to spend much time at that at all. i want to make the point that i think that in this changing dynamic, the obama
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administration has really captured the potential and i'll provide some outcomes, some results in that. i want to spend a little bit of time talking about two or three different examples of policy approaches that we've taken within the obama administration that aren't necessarily in the textbook. they're not necessarily legislative. they're not necessarily in apa. but i argue they are critical to moving the ball forward in the food policy sphere. so just, you know, for a moment, to think about and kind of the window i'll think about is the beginning of 2009 to nearly mid 2016 and how much has changed in the can ulture of food and food policy. i happen to be on a list for the grocer manufacturers and daily, and this is the list service
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de-zade za designed for food manufacturers, for grocers and, you know, kind of the latest state of art how the private sector is moving toward accelerating more and more healthy options. across the board. almost falling over themselves to try and figure out how to access that new and emerging market. they don't do that by accident. they're responding to what society demands. think about seven, eight years ago. part of my frame is i have two little kids. 2, 5 and 7 years old. including the fact i've been up since 4:00 this morning. that's part of the frame, so i'll caveat that. when we go to fast food restaurants which very often, but now we can get cut fruit and milk pretty much anywhere we go. that seven or eight years ago wasn't a possibility at all.
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certainly firms big and small are providing more and more information, and, again, that is being responsive to a society at large and i think i'd argue both in my work around food policy, and i've also done a lot of community economic development work in the world geography in the past 7 or 12 years that one of the biggest changes that's going to occur around food policy, it's beginning to occur, as the millennials move into, you know, a major not only kind of consumer cohort, but also leaders in policy. from my observation, the way that millennials and i think, perhaps, one of the greatest factors is that they grew up connected. you grew up connected. i think maybe over half of you in here grew up connected. the way that you deal with information, the way that you network and the way that the
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generation feels empowered to change, to make change. i think will accelerate change within the food policy environment that more than a lot of people i think can -- people from my generation or perhaps older than really imagine how quick things can happen. you know, just a few kind of personal things about the culture of food policy. this morning, i had a k 9:00 meeting over at the department of agriculture. i'm over there every week or two. we had a meeting with the people's garden. right next to it was an all day farmers market that is also hosting some incubating businesses from the union market. they do an evening market now there. seven or eight years ago, there was a farmers market at usda. it was tucked in a parking lot and now it is front and center
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as this is part of the u.s. department of agriculture. it is the people's department. and that beautiful garden that they have tended over the last seven, going on eight years, is now sort of a staple of really them all. that didn't happen eight years ago. the -- and it's actually reflective also of the amazing growth of community gardens and actually gardens and federal properties that has occurred in the last eight or ten years and the kind of final talking about food culture, my 5-year-old boy, jimmy, yesterday when i was pouring cereal, he was trying to negotiate a different type of cereal than the one i wanted to offer him. he wanted to pull out the data point on how many grams of sugar are in his preferred one. he knows this. i mean, it's partly because my wife and i are certainly conscience of this kind of thing but actually i think he gets
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that from his daycare. when i was 5 years old, i grew up on a farm in iowa, and what i knew about breakfast was buttered white toast and bacon every morning and i didn't know if it had any sugar in it. i did enjoy those sandwiches on a daily basis. but even from that, you know, from a very early stage, i think we're going to see people being much, much more cognizant of what's in their food, how it's grown, where it comes from, and i think that's, you know, part of that cultural change is really reflective in what i mentioned before and what society wants to get out of the food system. i think a generation ago, most people at least from the federal policy level would think that we're looking for affordability. we're looking for some basic
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nutrition but making sure that families in particular, poor families can have access to food. we're looking to make sure that the farm economy is viable as part of the food system and that was -- that was mostly what we were looking at. but now, beyond those considerations, they're still very important ones but now society is much more interested in what type of environmental outcomes that we can get from the food policy system. what type of individual health, community health, public health, outcomes that we can see from the food system? and i think it really demands more for public policymakers. part of what i want to talk about before i'm done is what -- the way that the obama administration has responded to society's demand for more from its public policymakers. but take a minute to think about, again, this is from the federal level. i think -- i hope my talk complements dr. ingle's. i got to see the talk right
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before lunch and it was fantastic. the work that's done in state and local levels to inform, to nudge, to move not only those communities, but the national level, i think she's absolutely right and it's critical. i'm going to talk from the federal level and from the federal level, you think about the last seven years or so, what's happened in food policy and right off the bat, when the obama administration came in, two things happened. one was the first lady embraced, made her priority the let's move initiative, comprehensive initiative to deal with one of the critical public health issues of our time and that's obesi obesity. that initiative continues with huge momentum, just last week with major announcements about that priority moving forward. over at the department of agriculture, secretary vilsack and then-deputy secretary
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marigan rolled out something called know your farmer, know your food which i'll talk about in a little bit. an nisinitiative to hook acrosse department of agriculture. depending how you count them, 17, 23 agencies, dozens and dozens of programs on how those programs across the food system, the research, the production, nutrition, can support local and regional food systems. in 2010, congress passed and the president signed an absolutely transformative school nutrition act. the healthy, hungry free kids act. in 2014, we saw a farm bill from, you know, the farm bill that typically really comes from the ag committees of the house and the senate finally passed. president signed. and with the most significant work around local and regional food systems, around s.n.a.p.
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access issues, around organic system. relative to prior farm bills, it, you know, nearly doubled the mandatory resources for these types of programs. and then we saw a us dar srksus implemented that farm bill really in record time. this bill with hundreds and hundreds of pages and moved out not only on those priorities but on many of the other traditional agriculture commodity conservation programs. so, you know, what did all of that kind of big federal policy, transformational federal policy, what did it really result in? and this is the part where i'm going to give some numbers. and from the farm level, if we go up through the food chain, usda since 2009 has invested over a billion dollars in 40,000 firms. many farmers. but also small businesses that are part of the local, regional
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food system. things like high tunnels. kind of a, maybe for some, seems like a, you know, kind of a particular thing. high tunnels, though, are these plastic kind of hoop buildings that go over a plot of land that do critical things of extending the growing season for farmers so that they cap actually participate in an economically viable way in local regional food systems and they can grow things that so many more people are hoping and demanding that they grow. today, there's over 160,000 farmers selling into local and regional markets. we know that in this -- the market in the local and regional food scene is $12 billion in 0 2014. up from $5 billion in 2008. many industry experts are
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projecting that market to grow to $20 billion in the next few years. so some major moves and just on the farm side. infrastructure, there have been hundreds of investments in food hubs and warehouses and local processing. in food banks. to help support the local and regional food system. there have been $60 million in support for over 900 projects for promotion projects and other local food projects. in have been nearly 200 community food projects that the federal government funded providing dollars to communities to build out food systems that are healthier and that are supporting the local economy. in terms of communities, consumers, people, family, kids, over 30 million kids today, relative to 2009, are eating healthier school lunches. and that could be the data point that is most impactful.
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there's over 6,400 local food venders, farmers markets that accept s.n.a.p. today and that's up from nearly 7 a50 in 2008. more places that allow people who are on s.n.a.p. to shop at that local food market. there's $800 million spent by schools on local and regional foods. in 2013 and '14. that's more than double prior to that. there's lot happening, how food is produced, that it's distributed and it reaches our consumers. so, you know, how we got to many of those outcomes and different ones, i know this is a food policy council, or food policy conference about the future, but
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i'm going to talk a little bit about retrospect. i'm going to look backwards a little bit because i think some of the things that we did with the obama administration can inform the future. and i'm not going to talk about legislative work and i'm not going to talk about regulatory work that's more textbook. i'm an attorney. kind of more textbook tools that lawyers and policymakers have. but i'm going to talk about just three different efforts quickly on what we have done to really hot wire and build collaboration within the federal government to get to some digifferent outcome. the first one i'll mention is the know your farmer, know your food. let me ask, how many folks in this audience are familiar with that initiative at usda? okay. well over half. that's great. so i mentioned this before that in 2009, secretary vilsack and then-secretary marigan lifted up
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this initiative which today actually, at least from where i sit, just makes a lot of sense, right? all the, you know, 22 dozen or so agencies within the u.s. department of agriculture, that the authorities and the funding streams that they have are very obvious and relevant to those firms that want to participate in local and regional food systems. well that wasn't the case in 2008. and in 2009, as they rolled this out, and did the really kind of nuts and bolts work that have to happen within a big agency or across agencies to really move the ball forward. the first thing i'll talk about in this policy strategy isn't policy but it's people. when we think about moving any type of policy, here we're talking about food policy, who is on top of or part of that
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work, is really critical. in this case, you had a secretary of agriculture who was a two-term governor who had a very fogood grasp of what the executive could do with the myriad of tools in trying to move forward a big initiative. you had a deputy secretary steeped in local and regional food policy both on the hill and research awho knew and who actually served in the clinton administration. she knew where the tools were in the department of agriculture and she knew how to navigate the initiative within -- within this town so that it succeeded. having those two people on top moving this particular type of initiative was essential, actually. it was -- in my opinion, there's just no way it would have moved forward because at the beginning, the idea of having the u.s. department of
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agriculture, you know, strategically look at how its programs and funding streams could be used for local and regional food systems was actually quite controversial. it's not anymore. and that's, for a lot of reasons, part of it the cultura change. it looked across these myriad of programs and evaluated where there was also authority. didn't need to big brand new regs or some kind of big initiative on the hill. these were things that were already within the agency's authority that they were receiving resources through the appropriations process and just lifted them up to make sure that people understood. another thing, going back to the people point, another thing know wrr farmer, know your food did, identify people in the system, within the agency who were interested, had expertise and wanted to work on these kinds of issues.
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when you think about moving policy, that human element is critical. within the -- within know your farmer, know your food, so there was the internal strategy of making sure that those programmatic things were identified. that the people were identified and giving space to do the work then there was a significant external strategy. creation of a really comprehensive website that made clear what the programs were, what they could do. actually now if you go on the website, you can map not only where usda investmeninvestments number of federal agencies are investing in local food. all this information is downloadable. people can use the information to slice and dice and look at it in other ways and making sure that that partnership can occur across, between the federal government and the private sector. another initiative i'll mention, another really policy strategy around food, but really more
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broadly around rural, is white house rural council. so in 2011, by executive order, president obama created the white house rural council. it includes all of the federal agencies that have a rural ne nexus, some type of a responsibility to serve the rural geography or rural people. pretty much all the federal agencies except i think maybe the state department, that rural council is chaired by the secretary of agriculture. in this case, the only chair has been tom vilsack. the longest serving cabinet member. and what the white house rural council was designed to do was make sure the federal agencies were working together in a way to make the greatest impact in rural place as well as make sure that there's a place within the federal government, within the white house for partnership with external stakeholders with the private sector. rural topportunity investment i
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a perfect example of that. and the rural council has focused on a number of priorities including job creation and economic recovery. drought response. it's focused on manufacturing in rural places and accessing export markets, more recently child poverty has been a priority. but in the food space, what the white house rural council has done, i'll just mention a couple of things is something, i'll mention one really granular one. u.s. department of agriculture, food and nutrition service, folks who administer the s.n.a.p. program and other programs such as summer meals, one priority in recent years has been making sure rural places serve as many kids who are el swriel swribl for summer meals as possible. it's a big challenge. the only way kids can get summer meals, they tgo to a site,
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school, where they can be served. big problem in rural how to get the kids to a particular place. the white house rural council made it possible for the department of agriculture, food and nutrition work with hud, housing urban development agency, which actually has a lot of multifamily properties in the rural sphere. it is a perfect space for that congregate feedinggencies worki getting over a major obstacle and getting better impacts in the rural place. this is an example. another one i'll mention is local food, local places. this is a program that is also very closely aligned to what the white house has worked on and across the administration on place-based policy. basically place-based policy, you can look at, there was a memo that came out from a set of
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leaders in the white house in early 2009. and the memo directed the agencies to when at all possible orient their problematic delivery in a more place-based way. what does place-based mean? place-based means ensuring the federal government has really more, i'd say, proper role in community. and by that, the way that the federal government engages, that they're supporting the hole pri local priorities. it plays out in the food space, i think. also means those local strategists in the best practice, those strategies arrived at through a collaboratives mean where all the stakeholders, diverse set of
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stakeholders are at the table. the place-based strategy looks at the assets of the mace place very clear-eyed way. if the fwoel is to improve health outcomes for that community, then what are they measuring and do they have a rigorous set of measurements to get there? that's a place-based approach. and what the white house, what the obama administration has done, is when possible oriented its programs to support those local communities. local foods, local places is an example of that. this is an interagency. it's usda. the epa office of sustainable communities. cdc. sometimes t sometimes. basically came together, pooled their dollars for a program, an initiative so that communities who had a local regional food
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strategy, many with the public health objective, many an economic development, community development objective, many of them both. when that community has a strategy like that, these strategies aren't that easy to pull off. to do the assessments. to do the strategic planning. to do some of the early implementation to move it forward. and what local food, local places did is had all of these federal agencies that somewhere in their mission was to support a community that was trying to these objectives. they could come together with other agencies, pool the funds then the communities were chosen. the best of these strategies were chosen. and they received and are receiving technical assistance to help build up and accelerate their strategies. not only that, but you have that -- those communities have now sort of a special relationship with the agency. the agencies have some ownership of those strategies and want those strategies to succeed. and now we've had three
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different series from local foods, local places. i'll give you one concrete example. in williamson, west virginia, someone who was from williamson and went away, went to med school, came back, realized. williamson is a county that's experiencing some acute economic distress. and he came back and he realized that the community was suffering in a very comprehensive way. some significant public health challenges. and he partnered with a farmer and they had a vision and have a vision and are implementing this vision that a community health and wellness center when coupled with workforce development and agriculture and farming, that the outcomes that are both economic, creating jobs, now
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over 100 jobs in that small town, and improving public health making sure that people, many of them very low resource, have access to nutritious, healthy, fresh food, that you d together and you're gong do get better outcomes in that town. now, in the federal government, there's a lot of different outcomes there. i mean, their strategy touched on certainly usda and department of labor programs and what the obama administration has done is brought together these different agencies so they can work with the community to move forward these comprehensive strategies. now, i'm not going to pretend that the entire federal government has sort of been transformed into -- and all the silos are down but i will tell you that there's a culture within the obama administration and there is now a culture more
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and more in the career staff for this type of interagency collaboration. it is, you know, typically only kind of a wonkiest of wonks in washington, d.c. who are interested in these kinds of strategies. but if i'm talking the people that care about food policy, you should know about this. you should understand that this type of cross collaboration is critical to support communities, individuals and families. so, with that i think i'll just conclude and thank you for the time, you know, to be able to spend sometime on this critical issue with you an i look forward to some questions. thanks. [ applause ] >> well, i'll ask one then. tom sherman. so, typically when we think of
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food deserts we think of urban areas and certainly that's not true. rural areas have their own challenges and you talked about some of them. is there anything new in terms of on a greater scale, in terms of transportation or in terms of access that's different or most challenging for rural areas that just makes it a very different problem than urban? >> well, thank you for that question. and a couple of things. the -- depending on how you measure poverty, rural places actually have greater poverty than urban places do. if you look at the official poverty measure, that old poverty measure that backs out most of federal income assistance, then things are worse off in rural. if you look at the supplementary poverty measure that includes
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s.n.a.p. and social security and ssdi, then actually rural places aren't quite as bad off and sort of that fact is instructive and an excellent report that the council of economic advisers, domestic policy council and office of management and budget did in may of 2015. take a look at the white house roll council blog and you can find that and details an pulls some of that out. you know, in terms of you asked are there new challenges or dynamics affecting access to food and fresh and healthy food in rural places and i would say yes and no. i mean, part of the rural reality is less scale and more remoteness. that's -- that goes, like, literally goes with the territory. right? so, some of that isn't new. i think what might be new is
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that in the last ten years, now there's -- i have a code on here that has kind of a happy story to it, but if i have my dates right here, 2003 to 2014, poverty in rural places increased significantly. economic research service from usaid came out with a report two weeks ago that made clear that the major driver offen creased poverty in rural places in those ten years business inequality. i recommend you, commend you to that report from the economic research service. so, you know, so that's new. there's more families that have problems. now just in the last year and a half or two years that poverty rate is starting to trend down again which is fantastic. but in response, there's been work on both the 2008 and then the 2014 farm bill to adjust it a little bit. there's a program called the healthy food financing
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initiative that is a partnership between hhs, health and human services, and treasury, particularly the cdfi group, and usda to target financing to stores in areas of low access. food deserts has become sort of a -- that's a term of art so i'm going to stay away from that particular term. t that program is starting to grow. and i think we'll see, hopefully see more and more. there's -- candidly, i think a lot to learn yet about those areas of low food access. i think we have learned a lot in the last seven or eight years but in terms of exactly what strategies work, that really results in families buying and consuming more healthy foods in the rural sphere, i think there's still some to learn and a lot of people are doing that important work so thank you.
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>> hi. chris, fda. >> hi, chris. >> hi. our last speaker talked about local initiatives or initiatives at state or city level that can then be brought up to be national projects. interested in how the administration kind of looks for those types of initiatives going on at the state and local level and then how you can bring them up to national. healthy financing is an example of that but are there others? >> that's a great question and there's a fantastic point of food policy really utilizing the, you know, this laboratory that is the federal system. certainly, throughout our work on place base policy and local food an local places, part of the goal was to identify the great things that are happening in the local sphere. so we're able to lift him up. i didn't even mention and it really feeds into dr. ingall's
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later points about community towards health and we have going now in the third round of promise zones that the obama administration moved out on with over a dozen agencies working on food, housing, health, business issues that try to move the entire community forward. and those that have been designated promise zone are those areas that have kind of a sweet spot for a lot of place-based work has been places of great need which typically the indicator could be income or persistent poverty but those are the typical indicators or unemployment, places of great need, and places that indicate they have capacity and vision and the places are out there. eastern kentucky is a great example of it. there's one in south carolina.
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in pine ridge, south dakota. so we do a lot of work with those places and part of it is lifting those up to both tell the story, to policymakers but perhaps as important or more importantly to make sure that we can dig in. very rigorous mettics we are pulling out from those communities and their strategies so by the end of the administration we have a better sense of what type of comprehensive interventions are effective in getting the impacts we want and those that don't work, too. so to inform future policymakers so thanks for that question. all right. okay. >> thank you very much. >> all right. >> no but -- we need that one, still. great. sarah roesh is going to come and introduce our next panel. thank you, again, doug, and we
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look forward to continued progress from the white house roll council and other agencies. after the surrender at ap not tox, the united states faced more than a decade of challenges and policies instituted at this time had a lasting impact on american history. this saturday, starting at 1:00 p.m. eastern, american history tv on c-span3 is live from gettysburg college in gettysburg, pennsylvania, for the annual civil war institute summer conference as authors, historians and professors examine topics that confronted our newly unified country such as freed people's refugee camps with abigail cooper. reconstruction in the north with andrew slap, associate professor of history at east tennessee state university. and the post civil war career of grant with brooks simpson of arizona state university.
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also hear conversations on the return of the confederate vet reason and the origins of the lost cause. the annual civil war institute summer conference live all day saturday beginning at 1:00 p.m. eastern on c-span3's american history tv. for the complete american history tv weekend schedule, go to m ma senator elizabeth warren critical of the head of the s.e.c. for what she said failing to require companies to disclose more information to investors about their political activities. that s.e.c. oversight hearing is next on c-span3. and then the head of the tsa takes questions about airport security screening delays. later, a look at new fda regulations for e cigarettes. c-span's "washington journal" live every day with
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news and policy issues that impact you. coming up wednesday morning, homeland security committee ranking democrat congressman thompson of mississippi will discuss threats to the u.s. homeland in light of sunday's mass shooting in orlando, florida. and then congressman wittman on u.s. efforts to combat isis overseas and whether the military is prepared should the current tactics be changed. and california democratic representative jackie spear will discuss the latest on the mass shooting and what lawmakers learned from tuesday's closed door briefing with national security officials. be sure to watch c-span's "washington journal" beginning live 7:00 a.m. eastern wednesday morning. join the discussion. securities & exchange commission chair mary jo white testified at an oversight hearing and was asked about the effectiveness of corporate disclosures and wall street regulations. senator richard shelby chairs
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the senate banking committee. >> this morning, we will receive testimony from securities & exchange chair mary jo white. oversight of the commission's an important part of this committee's jurisdiction. the s.e.c. is an independent agency tasked with protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation. the s.e.c. is responsible for ensuring transparency so that investors have adequate information to make investment decisions and to mitigate conflicts of interest, fraud and manipulation.
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this regulatory paradigm is a reason why our capital markets have long been the envy of the world and the life blood of our economy. excessive and unnecessary regulation, however, may endanger america's status as a world's preferred financial center. first and foremost, i believe the s.e.c. should focus on its core mission. this is become more difficult as the commission has come under increased pressure to expand its mission and cater to special interests. examples of such efforts include attempts to force the s.e.c. to mandate disclosure on climate change and political contributions. these efforts are not new and the s.e.c. has with stood political pressure in the past. it's my expectation that it will continue to do so in the future. chair white, as you pointed out in a 2013 speech, and i'll quote
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you, we make our decisions based on an impartial assessment of the law and the facts and what we believe will further our commission and never in response to political pressure, lobbying or even public clamor. the s.e.c. must, i believe, continue to adhere to those principles and uphold its fundamental mission. it should also periodically review the appropriateness of its existing rules. for example, while the commission is undertaken work to review equity market structure, it's not engaged in a comprehensive review of its rules even in light of the so-called flash crash which happened over six years ago. i also hope that the s.e.c. will continue to take very seriously the importance of strong economic analysis when
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promulgating rules. as we have seen, agencies that fail to undertake such an analysis in their rule makings are vulnerable to legal challenges as well as they should be. an agency with thousands of employees like the s.e.c. should be able to analyze in detail the impact of its rules on the markets, investors, financial products and the broader economy. this is especially true today given the chum lative impact and unintended consequences of the new rules stemming from the financial crisis. if the cost of a rule outweighs its benefit then the rule should be eliminated. if a rule passes cost benefit muster it should then be implemented by the appropriate agency. the s.e.c. has a primary expertise in capital markets and should be the lead agency in regulating them. specifically, i'm concerned that attempts by other federal
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agencies to erode, madame chair, the s.e.c.'s jurisdiction could undermine the integrity and function of these markets. recent example of this include the department of labor's few dish yair duty rule, the fsoc's continued focus on managers and the federal reserve's targeted of a brokered dealers to rein in shadow banking. the s.e.c. has 88 decades of specific expertise in these matters. this should outweigh the desires of other regulators to expand their powers at the expanse of investors in the market. chairwoman white, i look forward to hearing your comments on this issues. senator brown? >> thank you, mr. chairman. welcome, madame chair. good the see you again. over three years you were c
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confi confirmed. and the job's act. that time the destruction of $13 trg in household wealth from the financial crisis was still fresh in our minds. the s.e.c. and other financial regulators had completed many of the wall street reform rulemakings and evaluated how to finish the implementation of the rest. when you last appeared before the committee in september 2014 you said the staff proceeding on the outstanding rules. we could expect to see additional rules shortly. although several rules have been proposed and some finalized many are still incomplete. in particular, the commission is not finished the derivatives rules of title 7 of the wall street reform act and the path to completion seems unclear. these rules are important because title 7's a key part of reform to the financial markets. by increasing transparency by enhancing oversight, by moving to more resilient and stable trading platforms, congress wanted to make sure future crises could be detected sooner
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and would do less damage. this isn't entirely on your shoulders, on the s.e.c.'s shoulders, but there are certain markets such as credit default swaps that depend on s.e.c. until the rules are completed the s.e.c. and other regulators won't have the benefit of a frame work that provides transparency and access to market data. another reform act rule outstanding prohibit incentive compensation and lead to losses at financial firms. we know what happened during the financial crisis in that regard. the multiagency rule was proposed in 2011. and reproposed last month. six years after wall street reform became law this rule still isn't finished. final rule would provide the market and the public with some assurance that senior executives at financial institutions won't be rewarded for taking inappropriate risks that could harm the markets, harm their
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employees, could harm the economy. i urge you and other regulators to finish that rule as quickly as possible. during your confirmation hearing you stated that you would make strengthening enforcement a high priority throughout your tenure. you said then and i agree that, quote, investors and market participants need to know that the playing field of our markets is level. and that wrongdoers, individual and institutional of whatever position or size will be aggressively and successfully called to account by the s.e.c. yet time and again we see repeat offenders enter into settlement after settlement that seemed to have no effect on stopping the problem in the first place. as the cop on the beat, the question set-top box what point is the s.e.c. going to stop handing out warnings and start giving tickets? this is evident in the waiver process, s.e.c. routinely granted waivers to banks following a variety of violations that could have resulted in the loss of
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privileges under security laws. unfortunately, granting the waivers eliminates a significant consequences that could promote better overall compliance at those institutions. finally i would like to return to an issue discussed many times in this committee. democrats in the senate repeatedly asked you to begin work on a corporate political spending disclosure rule. this is not a plea from a special interest as some on the other side of the aisle might say. this is good government policy. when you were last here you acknowledged the quote intense interest of investors and others unquote on this issue. but you pointed to the low priority of mandatory rulemaking. i realize this year's bill limits the s.e.c.'s work on that rule but it shouldn't prevent you from doing anything at all. i sincerely hope you begin work on a corporate spending disclosure rule. the interest and it's only become more intense. i'm interested in hearing your update, madame chair. thank you. >> madame chair, your written
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testimony in the entirety will be made part of the hearing record. you've been here many times. you proceed as you wish. >> thank you, mr. chairman, ranking member brown, other members of the committee. let me before i start just express, i'm sure i speak for everyone, my thoughts and prayers are with the victims of the orlando shootings and their family. thank you for inviting me to testify today. on the current work and initiatives of the s.e.c. which are as the chairman indicated summarized in some detail in my written testimony. as you know, the s.e.c. is a critical agency that is charged with protecting millions of investors and safeguarding the most vibrant markets in the world. and the commission has been very busy since i last testified before the committee in 2014. the last three years has each been marked by a vigorous enforcement and examination program with new tools and methods to protect investors and hold wrong doers accountable. in fiscal year 2015, alone, the
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commission brought over 800 enforcement actions, unprecedented number. secured over $4 billion in orders directing the payment of penalties and an all-time high. 2,000 exams, a 4-year high and more importantly, developed cutting edge cases and smarter, more efficient exams. the strength of the enforcement program is seen in the kinds, complexity and importance of the cases we bring that span the securities industry include first of their kind actions and focus heightened attention on market gatekeepers like exchanges, accountants and lawyers. significantly, approximately two thirds of our actions in fiscal year 2015 also involved charges against individuals. and we continue to obtain admissions in certain cases which we have done in over 40 ins instances since changing the protocol. the commission over three years pursued rules and other
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initiatives to protect investors, strengthen markets and open new avenues for capital raising. since i last testified, we, for example, advanced major rules addressing key ek tick market structures including controls on the technology used by key market participants. the transparency of alternative trading systems and the consolidated audit trail while moving forward with a broader assessment of other fundamental changes. we issued a series of proposals to address the increasingly complex portfolios and operations of mutual funds and exchange traded funds. we adopted new rules for crowd funding and smaller securities offerings under regulation a and also proposing additional avenues for small business to raise capital. we finalized mayor components of regime for security-based xap swaps and execute a comprehensive review of the effectiveness of the disclosure regime. this work is the efforts by the
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agency. both before and after i became chair. enlisting all of our policy divisions and offices. beyond the discretionary initiatives the commission adopted final rules for dodd-frank act and senator brown, title 7 is a major priority for 2016 which i'm sure we'll get into. we have also now completed the rule makings directed by the jobs act and significant progress on the rule makings required of us last year. whi the imperatives are carried forward each day by the dedicated staff of our decisions and offices. division of corporation finance reviews the annual and periodic reports of thousands of issuers each year helping to ensure that investors receive full and fair disclosure about the public companies in which they invest. last year, the division of trading and markets reviewed
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more than 2,100 filings from exchanges and other organizations the preserve a fair and orderly marketplace for all investors. the division of investment management covered more than 12,500 mutual funds and other investment companies where many individuals as you know invest hard-earned money to save for retirement, college and other important goals. our economists produced more than 30 papers and publications in 2015 including two major annual salyses analyses. i will have the privilege to participate in the annual awards ceremony at the commission where we recognize some of the tremendous work of some of our staff. the commission today is a stronger and more effective agency and i'm honored the lead the agency in this time. nevertheless, significant challenges remain if we are to address the growing size and complexity of the securities markets. it is critical gnat s.e.c. has the resources required to
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discharge our responsibilities. the new ones and the many others we have long held. in the face of a growing and ever-more sophisticated industry. i deeply appreciate that we must be prudent stewards of the funds appropriated and we strive to demonstrate how seriously we take that obligation by the work we do. at the same time, our resources are insufficient and the cuts and limitations to the s.e.c.'s budget that the house bill proposes would seriously imperil the progress we have made and diminish our ability to fulfill our mission. while more remains to be done and achieved, i'm impressed of the range of responsibilities. i want to again thank first and foremost the exceptional staff of the s.e.c., as well as my foal low commissioners, present and past and i want to thank the chairman, the ranking member and this committee as a whole for your support. your continued support will allow us to better protect investors and facilitate capital formation, more effectively
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oversee the markets and entity we regulate and build on the significant work we are doing. thank you very much. i'm happy to take your questions. >> thank you. madame chairman, i understand that the commission can vote to delegate certain of its authorities to the s.e.c. staff. including enforcement proceedings. once the commission has voted to delegate, how are you and your fellow commissioners at the securities & exchange commission made aware of the staff's use of that authority, and if the chair is recused on a specific matter, who's accountable for the staff's use of the delegated authority? >> the exchange act actually is explicit on this, mr. chairman, that the commission as a commission has the authority to delegate many of its certainly day-to-day functions. it doesn't have the power, for example, to delegate rulemaking to the staff. >> set out statutory?
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>> statutorily done. >> okay. >> and so there are, you know, obviously we have hundreds an hundreds of delay to day thing that is we must do at the commission, so it's very important that the staff have delegated authority to act. as safeguards, however on that delegated authority, the commission can review any of those actions. the staff itself can decide to refer something to the commission even though it may have delegated authority for the commission to decide. and that -- the review of the commission really can be precipitated by any one commissioner's desire to do so. >> once the commission votes to delegate its authority to the staff, it's my understanding such delegation remains in place under future commissions and new commissioners do not have a chance to approve existing delegation of authority. is that correct? >> yes, it is, mr. chairman. i think essentially the way it works is that if one were to review or change a delegation it
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would be up to the chairman to put that on the agenda whoever the chairman is. >> madame chair, would you support an s.e.c. review of existing delegations including an analysis of their appropriateness? in other words, you look back, you do oversight, i hope, in your agency like we do here. is that -- isn't that important? >> well, i mean, it's certainly something i've discussed with various of my commissioners and we all have obviously the list of delegations that exist. and so, what i've urged my commissioners if they have an issue with any particular delegation is to bring that to my attention and we'll certainly look at it. >> you've often stated, madame chair, that the securities & exchange commission is an independent agency, that's the way we want it to be set up that way. and while one can expect some split votes, because of the way
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the commission is set up, there have been many party line 3-2 and 2-1 votes under your chairmanship. by comparison according to the press, a former chairman richard bredon never had a 3-2 vote and rarely would take a matter to a vote unless he knew he had a 5-0 vote. are there any areas that you can work on cooperatively with the other two commissioners to reach a unanimous decision? and if so, could you give us some examples? >> i certainly and i think we certainly strive for consensus. >> we know everything is not e unanimo unanimous. >> i had a figure and i think 65% to 70% of the votes are actually unanimous. obviously that's still a percentage that have not been unanimous. i think i discussed with you, mr. chairman, and probably
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senator brown and probably some of the other me believes of the economy tee, as well, what i found as chairman, we strive for unanimous that so many of the rulemakings under particularly the dodd-frank act and the controversy surrounding that at the time i think it was adopted i think has continued into the implementation of those rules, so that we have ended up i think with an extra challenge at reaching consensus because of this. >> madame chair, in 2013, you posted for comment a study on asset management by the office of financial research that was requested by fsoc. this allowed the public a meaningful opportunity to provide feedback on the study and the highlight -- and highlighted significant flaws. given the benefit of public comments on that study, will you commit to posted other fsoc requested studies of s.e.c. regulated entities? if not, why not?
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>> i think certainly at the s.e.c. and i think our other agencies, as well, i mean the benefit of the notice and comment process and even just a comment process if you're not in an apa rulemaking is enormous so i think getting that feedback is important. the report that you reference was a report of ofr. they publicized it but we did open a comment window because we thought it was important to get that public input. if we were in another situation like that and ofr or fsoc itself didn't post it, studies to make it easier for the public to comment, certainly we would seriously consider that, again. >> last question is in the area of repeated violations. there have been concerns raised by the public as well as members of this committee about repeated violations by s.e.c. registered entities. two years ago a former s.e.c. commissioner stated with respected to the most repeated violations of our security law and regulations and i'll quote.
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we need to ask ourselves a fundamental question. should the violating entity retain the privilege of paptding in our capital markets? a question to you is this. in your opinion, when is it appropriate for the s.e.c. to exercise its ability? if you could give us an example, that would help. >> i think it's enormously important power that we have and should wield it appropriate circumstances, obviously, to protect the markets. >> goes to the integrity of the market. >> absolutely right. absolutely right. i mean, i think you have to look, you know, very carefully at what the violations have been over what period of time, who was involved in them, obviously. you want an aggressive enforcement program to bring cases when they are there to bring i think. but there can come -- certainly can come a point, certainly quite open in the interest of strong protection of our markets that there comes a point where
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one of our regulated entities should no longer be registered and i wouldn't hesitate to bring up a proceedings to revoke the license. >> thank you. senator brown. >> thank you, mr. chairman. some of my colleagues, there seems to be a sort of collective amnesia on this panel in some cases and in this body about what happened in the financial crisis and since some of my colleagues as a result in the house and some here continue to push for the repeal of the wall street reform act and insisting it's created more problems in the financial system than it's prevented. a couple of questions. to skart with. are you concerned with efforts to repeal wall street reform? >> i think the reforms under dodd-frank act have been enormously important in strengthening our financial system. i say that as a collectively.
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i think our financial system is much stronger and resilient now. certainly, in part because of the actions undertaken by dodd-frank. >> okay. thank you. despite the improvements to date that you have mentioned and that are self evident with stronger, more stable financial system, this reform, of course, is still a work in progress. i mentioned the derivatives rules outstanding. i'm not just concerned it's taking s.e.c. so long to finish its rules, but also, that s.e.c. far behind other agencies. implementing rules in similar issue areas. cftc covers a much larger portion of the derif it is market and made more progress than s.e.c., even accounting for a few hiccups along the way with far fewer resources than you have. department of labor able to to pose and repropose and financial the fiduciary rule and the
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s.e.c. produced a study called for. neither of the cases was the process perfect, of course. nor is our final rules perfect but both agencies were able to adapt along the way and move forward. why is the s.e.c. slower than those agencies in what's not working? >> well, i think, again, i think what the s.e.c. was given between the dotd-frank act and the jobs act, plus, obviously, all of our various call them discretionary responsibilities which are vast we have undergone a historic level of regulatory activity of great complexity and about dodd-frank in particular, i have said it from the day i arrived i'm highly, deeply committed to getting the mandates under both of the sta choouts and now the f.a.s.t. act done promptly and well and need to last and need to be adaptable to how our markets change. i think with respect to sort of
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differences on the two you mentioned, i think on the department of labor rule that is an authority that dodd-frank gave the commission to decide whether to exercise or not. it's not a statutory mandate. now, i have said myself speaking for myself about a year ago after study i think there should be a fiduciary rule study from the s.e.c. speaking for myself. the staff proceeded to develop outlines of recommendations but it's up to the commission as a whole as whether to advance the rule and what its parameters could be. and to title 7 and the markets, you are right. our share of the market's about less than 5% i think but it's an important part of those markets. again, before i arrived and this is not meant by way of criticism at all. i see how it made sense and s.e.c. did with the title 7 rule makings is a policy statement
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that set forth a sequence of when the s.e.c. would final adopt a proposal first and then finalize the rules before they became effective and following that road map. i think there couldn't be a higher priority among all of the commissioners there. the three there and then two that left us last year to completing the title 7 rulemakings and in this terms of this regulatory year, this's a very high priority. we finalize add number of those rules since i was last here. but in terms of the reporting and the registration and regulatory mechanisms for dealers i'm hoping we're done with those by the end of this year. >> thank you. we know from during the financial crisis that how important the regulators work is good of shifting the business model to find gaps, areas of weakness in the regulatory structure. ngress for whatever reasons chose not to combine any of the
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financial agencies six years ago. obviously fsoc and beyond that not really combining the agencies and makes your cooperation that much more important. one more question. democratic members of this committee and others taken a look at the policies and prak tilgss of the waiver applications of the s.e.c. of financial institutions. i thank you and your staff for the information you provided to us, to the banking staff, for -- that so far. i hope we can count on you an your team additional assistance as needed when they make more requests. >> absolutely. i think it's an enormously important area. as you know, senator, it's an area i focused on at the outset of my tenure at chairman. we have made a number of changes i think to enhance the robustness of the process and the transparency of the process. we continue to lock at whether
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there's other enhancements the make sense particularly in the area i think of when we do not grant the waivers because, you know, in terms of making certain that the public knows that there are many cases including those involving financial institutions where the waivers are not granted but because of the nature of our process, that isn't as transparent for reasons that are historical and good ones and to encourage people to come in and talk to the staff about whether they qualify or they don't and often what they submit is nonpublic information but i continue to look at that aspect of our process. certainly since i became chair directed the staff to keep track of those instances that do come in to us, assuming they're not anonymous and obviously many people won't apply because they know under the guidelines they would be denied and not granted because of of the go ahead lines specify. >> thank you. we have particular concern of the last of transparency in those waivers that are granted.
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the public sees an institution violates the law. asks for a waiver. there's a short notice. what do you do to -- how can you assure us that the public will be and this committee and everybody in our society will be able to understand more when's happened and how you bring more transparency when these waivers are granted? >> on those granted and the ones you're addressing now, not those not granted they're publicized on the website an subject to in the case of so-called wixi waivers and bad actors waivers and some other waivers, as well, to what the criteria are that the staff or the commission considers when reviewing those requests. and then i think what is published on our website really does march through what those criteria are and the facts under each one. i'm open to considering it. >> we'll come to you about that.
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thank you. >> senator crapo. >> thank you. modernizing the market structure is complicated but necessary task and i appreciate the work down by the s.e.c. as well as by the market participants, investors and academics on this issue. senator warner and i held a subcommittee hearing on this in march and while there's positive work done in this area. there's concern about the pace. what are the top market structure objectives you want to achieve this year and how will it strengthen our markets and benefit investors? >> it's an enormously important area and as you know very high priority for me personally. both in terms of some specific short term reforms as well as that comprehensive review soup to nuts to the entire regulatory regime. we're building on fortunately, you know, i think the strongest, most reliable markets in the world but that does not mean that they cannot be enhanced an
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optimized. i think in terms of -- so i've been pleased an want things done sooner. that's my personality among other things and we certainly are concentrating a lot of resources on it. i've been pleased to date with the work of the msac, equity market structured advisory committee we formed early in 2015. they're tackling those core issues. i think as you know, senator, we've received the committee has received a recommendation from one of its subcommittees about the possibility of doing a make or take pilot. that's a core issue. we are expecting actually a telephonic meeting from the subcommittee the make a specific recommendation on july 8th. so i look forward to that. i think that's a very important area. we also, i've -- we've done a number of things. a lot of things have already been done in the market strauk chur arena. one is obviously in the area of resiliency of the markets. shortly after i testified here in 2014, we adopted sci which is
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the systems compliance and integrity rulemaking that's aimed right at the critical market infrastructures and enhancing the resiliency and that rule is really now just recently in the last few months but it's subject to examination for compliance now and enormously important to get that done. that is already done. i expect in this year rather eminently of rule for greater transparency of order routing for institutional orders as well as enhancing the disclosures that are made to -- on the retail side. again, that's very important information to our markets to ensure fairness, to see what your agents are doing as they, you know, execute your order so those are some examples. >> so you referenced the telephonic meeting on july 8th. that's a report from msac that you were referencing there? >> yes. that will be a further discussion by the full committee
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of their subcommittee's recommendation on the make or taker pie lot and taking up some other issues at this meeting. >> following that meeting, do you expect that the commission would be in a position to take the next action and move forward or when do you expect it could get to a commission decision? >> next step is for the staff of the commission and the commission, you know, to take in the recommendation from the committee but it will be up to the staff and the commission as to what to do, what the parameters should be. i do think it's an important -- to do this in a well-designed pilot because it really does touch on an important -- >> do you feel a feel for when the commission -- >> i don't -- i can't give you a specific time but this year priority to move that along as soon as we get the recommendation. >> thank you. >> i mean consider it at a staff and commission level. >> thank you. i also want to thank you for the past efforts to improve the transparency of the financial
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stability oversight council process. by seeking public comment on the asset management industry. there have been several hearings on the financial stability oversight council focused on ways to improve transparency and communication. excuse me. in the subcommittee hearing that senator warner and i held last year the witnesses agreed that fsoc needed to provide action to important financial institutions. on how they could derisk and ultimately shed the designation label. do you agree it would be appropriate to take steps to increase transparency, accountability and communication in the fsoc process? >> that's something to be committed to going forward. may not be completed any point in time and i think fsoc is committed to look for ways to enhance the transparency of that
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so sesz. so-called off ramp process is an existing process under the fsoc rules and guidance. it's an annual process but i also take your point about greater transparency of what the factors are that may be involved in that. >> thank you. >> senator markly? >> thank you, mr. chairman. one of the midwest egregious things in the lead-up to the meltdown for firms that put together securities and then they sold them saying these are the best things since sliced bread and while they were privately taking the failed because of the details they knew about the securities packaged. carl levin championed an end to this type of egregious conflict of interest. it's section 621. here we are now six years later. we don't even have a draft rule. why not? >> this is -- i agree it's an
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enormously important rule. and i -- i obviously know well the range of transactions that you are talking about it was intended to address. as i know, you know, senator merkley, there was a proposal issued in i think september of 2011 so -- which is still outstanding where we got tremendous comments, this was actually before the s.e.c. had also adopted its economic guidance so some of the comments that we got are one must really do very and i agree with that, you know, very intense, good economic analysis of this. also got comments that it wasn't tough enough or it was too tough or it swept in too much or didn't sweep in enough. it's proved to be much more complicated than certainly our experts in the agency envisioned. i think we asked in the proposal 100 questions and for us even that's a very large number. i mean, you know, who is covered? what is covered? and all sorts of, you know,
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various interpretation issues including with respect to what should the exceptions be which is also provided there. we had a recent issue and a comment come up as late as december 2015 as to whether certain fanny freddy guarantees, you know, would be handled because of the concern that those securitizations could not continue at least under the parameters of the proposal so it is one where the staff is working very hard to get a reproposal done as soon as it can but it's proven to be very, very difficult to draw the right lines. >> this is one of the most direct examples of unacceptable wall street behavior where congress took a very clear stand, wall street desperately wants this to never happen. the s.e.c. has gone year after year after year failing to get it done under the argument it's just too complex. it's just too difficult. i don't think anybody in america buys that this type of conflict
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of interest is too difficult. instructions have gone to the s.e.c. the s.e.c. has failed the public on this issue. and allowed this type of conflict of interest practice to continue. and i think it's absolutely unacceptable. and i would have said the same to the former chair back in 2013 but here we are three years later, now the responsibility rests with you. let me turn now to the issue of political spending being disclosed by corporations. a million public comments have been received supporting disclosure. because the owners of the company, the stockholders, feel like if the company's spending their money on political activity they have a right to know. and under the concept of money is speech if you don't get the know how your own money is spent it is really stolen speech. that's bad enough but it's
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certainly material to what investors understand about the future prospects for that company. what are they advocating for? what are they lobbying for? who are they lobbying for? who has which philosophies and positions and both from the viewpoint of individuals getting to know how their own money is spent on political speech and from the view of material issue related to the future performance of the company, it is imperative that there be disclosure. there was such a plan on the agenda when you took the chairmanship. but in october of 2013, you took it off the agenda. not even to hold the conversations to prepare the way on this, this is an issue of freedom of speech. it's an issue of knowing how your own money is being spent. it's an issue material to the future of the company and you took it off the agenda.
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why? why would you do such a thing? >> well, let me say first i deeply respect and understand the deep interest in this issue on all sides. and i think it's also important to note that if the issue is material in the context of a particular company as we sit here today that would need to be disclosed under the federal securities laws and we also have through our shareholder proposal rule 18a 8 avenues to share it with the particular companies an they make great use of that avenue. the average approval rate for such was 26% approval rate. and some companies over the years using that avenue there have been a few majority votes by those shareholders and those companies have generally gone ahead and made the disclosures voluntarily. certainly in large companies, the number of them voluntarily disclose political contributions has grown. i think more than half of the
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s&p 500 now provides that disclosure voluntarily which i think is a good thing. in terms of the reg flex issue which is what i think you're raising i think there's some misunderstanding about what was on the s.e.c. agenda and perhaps even, you know, what i did in reviewing the reg flex agenda as i found it. what is not been on the reg flex agenda at the s.e.c. before i arrived or after i arrived is to go forward with such a rule. what was on the reg flex agenda put on there in late 2012 and was there when i arrived was an item reflecting that the division of corporation finance would research and consider whether to recommend a rule proposal on this subject. my predecessor wrote to congress a response, actually to a congressional investigation on this issue that neither she nor the commission nor the staff had reached, you know, any
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conclusion about that and that no one was actually working on a rule proposal at that time. what i did when i arrived is looked at -- shortly after i arrived the first yaend was due and so i basically carried forward for the most part what was on the previous agenda including that item. in the fall, when i had been there a little longer, hay add chance for the staff to do a deep dive of all the items on the reg flex agenda, many there for many years. and were aspirational and what the reg flex agenda instruction, you know, has you do is to put on that agenda, you know, the items that you reasonably believe you can complete in the next 12 months. and so, as you know, i have prioritized since i arrived here completing the congressional mandates under the dodd-frank act and the jobs act as well as as we went forward --
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>> i'm way over my time and in courtesy i'll just stop you there because we can't get a full history and listed as a proposed rules stage in the april 2013 and taken off in 2013. you have the sole power on the commission to establish the agenda. this is an issue that goes to the core of who we are as a country that people cannot spend your money on political speech without telling you how the healthy're spending it or that you as an owner have a full right to know how your funds are being spent. i think for you to unilaterally remove it from the ruin making agenda was an affront to the core issues of the republic. it came after political pressure. i think it's unacceptable. i think you should put it back on the jend. >> that item and about 20 other tight items on the previous agenda i removed for the reasons i said and it was never on there to advance a proposed rule. >> senator rounds. >> thank you, mr. chairman.
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good morning, chair white. you've stated in the past that you believe there should be uniformity between the fiduciary rules issued by the department of labor and s.e.c. recently released a staff report of the dol's rule and found extensive disagreement of staff at the s.e.c. and the dol over the fiduciary rule. the report found in addition to the he fusal of an analysis of the cost and benefits of alternative proposals and required but that the staff economist from both agencies also had disagreements over the rule. in fact, the report found that the disagreements reached the point of the labor department's staff writing, and i quote, we have now gone far beyond the point where your input was helpful for me. if you have nothing new to bring up, please stop e-mailing me about this topic. end of quote.
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chair white, how do you believe the s.e.c. can structure a uniform fiduciary rule when it appears there's disagreements of the two agencies over the fundamental goals of the rule? >> i think what i've said in the past is i believe that there should be a uniform fiduciary duty rule for broker dealers and investment advisers when they are giving securities advice to at least retail investors. that's really under our rules. the department of labor and s.e.c. are separate agencies. the rules aren't identical in certain areas where our registrants may overlap with theirs. in terms of the department of labor, s.e.c. staff interactions on their rule proposal and there was a prior one, as well, and i think the comments you mentioned is from 2012, actually, on the prior proposal and i wasn't here then, but i'll say that the s.e.c. staff did give
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substantial what we call technical assistance to the dol staff, you know, on the current now final but then proposed rule. including technical assistance on, you know, our own rules and what they provided but also the likely or the possible is a better word i think impacts, you know, on the availability of reasonably priced advice by brokers and the impact on the broker model itself. the nature of those exercises and we have done it with other agencies on other rules where we have that tech kl assistance to provide was not really to reach agreement but to make sure we were giving our best technical input and assistance to department of labor and obviously made the decision of what the proposal should be, put it out for notice and comment. i think it was focused on some of those same issues. >> would it be fair to say that based upon the rule which is in
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effect right now out of dol would it be fair and i don't want to put words in your mouth but would it be fair to say there's concerns of the availability of the investment advice to the smaller investors and the perhaps a limiting of some of that advice right now based upon the traditional way that is we provide investment services to some of your smaller invest to recalls in the united states today? >> i mean, again, that is an issue that, again, i'm very focused on that issue myself in connection with the work on a uniform fiduciary duty rule. certainly the labor department was focused on it. you know, and i think, you know, certain changes were made i think in response to that concern and possible impact but i think to some degree and this would be true of our rules, too, you know, you need to see what happens as the rules are implemented. certainly, we are available, you know, to provide whatever help
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and assistance we can to, you know, our registrants if they run into a situation of, you know, conflict with our rules. nobody's come to us yet for this. >> my concern is as we try to proverdict individuals we limit availability to them of opportunities to invest. and i'm good to go 92 into one of the areas hire. one recent trend is the even crease in issuance of private shares which can have significantly less disclosure requirements relative to public share offerings. priority offerings can only be sold at qualified high net worth investors in 2014 more than $2 trillion was raised privately. private stock issuance is under the sec's regulation deaccounted for more than 1.3 trillion of this amount in comparison registered public offerings amounted to approximately 1.35 trillion in 2014. are you concerned by the fact that issuances of private stock
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has now outstripped public shares sold to all retail investors in terms of new issuance? doesn't this kind of point to a trend here of kind of the guys who can afford the -- the guys who are capable of investing large amounts of money are basically providing a lot of the new public issuances they're receiving it and the smaller retail folks seem to be not in that position? isn't there something going on here that maybe isn't moving in the right direction? >> well, again, i think we have an obligation and we do monitor both the private and the public hash markets you know very closely and continuously. i mean, as you know, we have a tri-part hide mission which is protect investors an assure the fair and functioning market and to facilitate capital formation. i don't see those three pieces to be in conflict but they need to be taken into consideration in terms of everything we do. i think the point you're also
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making is on who should be within the definition of accredited investor, which obviously drives a lot of what happens on the private side of the markets. i mean, clearly from our inception that concept is meant to protect investors, protect investors who may not be able to protect themselves. that obviously hits the core of our investor protection mission which we feel obviously very strongly about. in terms of, you know, the public markets, i mean, one thing i do think we have a responsibility for and we certainly are looking at this constantly is whether by virtue of our rules, is there something about our rules for the public markets that is unnecessarily driving away, you know, public offerings? so we look very closely at that. obviously we've had with the jobs act, the ipo on ramp, some things that make it somewhat easier to do that, again, we're still focused on investor
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protection, but i think this whole range of issues deserves and is getting very close attention from the sec. we published as you may know the staff's credited investor study with a series of recommendations open that and that also hits some of the issues you're mentioning. >> mr. chairman, thank you. >> chair white, i'd like to bring you to the plight of the citizens in puerto rico. this is a situation where puerto rico finds itself paying 33 cents of every dollar that it has towards its debts. the government has been forced to make excruciating decisions to shut down schools, scale back essential services, hospitals with no access to power are closing the doors. the island is losing at least one doctor each day, and we have one muof the most significant migrations from the island to the mainland in quite some time, which underlines the critical importance of a congressional
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solution which will allow the government to restructure its debts and protect the people. but beyond those reasonable and necessary solutions that should come from the congress, the people of puerto rico deserve to know whether illegal activity by advisers to puerto rico and its municipal entities controlled and contributed to the current debt crisis. dodd/frank explicitly mandated that the sext s.e.c. and the municipalities board protects municipal entities. yet despite the problems on the island, neither the s.e.c. nor the msrb has held one hearing. commission meeting, niinitiativ or any particular attention to puerto rico's debt crisis at least not to my knowledge. so what i want to know is -- all of whom subject to the s.e.c. and msrb regulations have done so free of conflict of interest,
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whether they packaged and sold bonds worthy of the savings of hardworking investors and most importantly whether they've acted in the best interests of the puerto rican government and people. how will the s.e.c. pursue this element of their crisis? >> well, i mean, i couldn't, you know, agree more with obviously the state of that crisis and what -- what our government collectively in my view needs to do to address that in a positive way. but in terms of the s.e.c.'s jurisdiction there, i mean, we have actually -- i mean, very closely attended with respect to investments in various funds with bonds that may be at risk in terms of investor protection, we put out guidance on some of that from our investment management division. we also have brought and there are two i think public enforcement actions that have dealt with brokers who have
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misled investors about the riskiness of those bonds. >> in puerto rico? >> yes. both of them. one this year and i think one in 2014. i can give your staff the details of that. again, i can't comment on specifics of anything ongoing that we're looking at, but i think i can say that we're very focused on the issues that you raise in some of the other work we're doing. >> so you know, several colleagues of this committee and others have joined me in a letter to you and to the commission urging you to be not just a cop on the street and wall street but also in san juan. and to make sure that those who may have contributed to this crisis are fully prosecuted. sending a strong message is critical. i'd like -- i look forward to your continuing work in that regard and i'd like to be
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advised of what's happening when it is available to be public. secondly, i'd like to go back to the question of corporate political spending. i continue to believe that transparency and disclosure to shareholders is the utmost importance, both as a matter of corporate governance and investor protection. and it's into the just me. 1.2 million americans have implored the s.e.c. to act as virtue of their commentary during the rule making. it's been nearly six months since i along with 96 members of congress wrote to you asserting that the s.e.c. retains the authority to take critical steps to prepare for a possible rule on the issue of corporate political spending. and as we indicated in the letter, we expected and continue to expect the agency to move forward with plans to prepare for a rule making. now, i know that the 2016 omni bus act as seen by the commission as preventing them
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from taking the type of action, but that action specifically talks about issuing, implementing, or finalizing a rule. it does not speak to preparing a rule for that moment because i can assure you that that provision will die. that provision will die. and we need not wait for it to die when 1.2 million americans have said to you, probably in an unprecedented number, that they want to see a rule in this regard. so i hope that -- and i'd like to get from you a sense of whether or not -- i mean, we have pending nominees to the s.e.c. i don't care for the way either of them answered me on this question. i'd like to know, are you going to at least prepare and respond to those 1.2 million americans and nearly 100 members of congress who believe that you should move forward in this regard? >> sir, again, you may have heard some of my answers to senator merkley's questions, and
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i deeply respect the strong views of those that you've mentioned. there are very strong views on both sides of this issue. and i've also mentioned kind of how the disclosure is developing both voluntarily and through our shareholder proposal process. but the issue of the s.e.c. doing a rule making to mandate political disclosures by all public be companies is not on our -- agenda. so with or without the appropriations language, the priorities that we are pursuing and pursuing is hard and as fast and as well as we can are really the ones that i've outlined since my early days here, which are the mandated congressional rule makings and certain of the mission critical initiatives. i've talked about asset management and equity structure. so i -- that is the status now, and i say that with a full
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appreciation of the deeply held views on this on all sides, including by i think it's 200-plus unique comment letters we've gotten on the petition that you referenced. >> i'll just close. 1.2 million americans i think it's very rarely have the s.e.c. seen that extent of commentary tells you the incredible importance that people believe in the nature of unlimited corporate spending at a time when n our national pol sicks that determines decisions in every asset of our life. so i think that should be a far greater level of consideration by the s.e.c. than it presently is. thank you, mr. chairman. >> senator, we have over 300 million people in this country so 1.6 million, what, would be about a third of 1%? and self-generated? i hope that you as chairman of the s.e.c. or any agency would
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not react to generated mail from republicans or democrats but would do what's best for the country and also under your jurisdiction. it's my understanding this is under the basic jurisdiction of the federal election commission for what it's worth. >> chair white, welcome back. you observed a few moments ago that one of the responsibilities of the s.e.c. is to facilitate capital formation. there's legislation that i think would be very constructive to that end. it was introduced in the house by congressman mulvaney, and what it would do is streamline some of the regulations affecting business development companies, bdcs, and included in that is a modest increase in the leverage they'd be permitted to use from a 1 to 1 ratio to a 1 to 2 ratio f. this were adopted,
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it seems to me, bdcs would be better able to provide loans that they do provide to small and medium sized companies, which by the way are finding it more difficult to access bank loans given the regulations of dodd/frank. it would also allow better returns for investors potentially with some added risk that would be fully disclosed to those investors. and it has demonstrated extremely broad bipartisan support in the house i think the bill passed the house financial services committee 53-4. and it was included in legislation that passed the house floor overwhelmingly. we have not taken this up yet, but my understanding chair white is that you have some concerns about the leverage component in this. and i'm wondering if you could briefly because i've got limited time tell me why you're concerned about the increasing the leverage of bdcs. >> yes. i mean, first, let me just say that i think bdcs have been very good vehicles for growth. they were designed to be that
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for developing companies that might not otherwise be financed. i think the -- 1980. the current reality is that retail investors hold the majority of those shares so that always raises our investor protection antenna and i think we have worked over the years and the staff to try to facilitate bdcs' operations because they have sort of a patch work quilt of regulations because of their exemptions from some of the investment act provisions. i've written about this in i -- i think when i first got here in october of 2013 there were some changes made in the bill which i think improved it. i appreciate those. and then i've recently also written a letter late last year to chairman -- and ranking member watters. i still have investment protection concerns or i wouldn't have written the letter. >> what is the concern? >> one is leverage. >> what about the leverage? >> it doubles your leverage which means your upside and
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downside potential are obviously multiplied or are multiple. and i think it's a higher level of leverage than any sort of counterpart kinds of funds have. >> so -- >> secondly, i think it allows more investment in financial institutions than was originally conceived and allows investments in registered investment advisers. >> so plenty it is true that it the risk profile increases the exposure. but so does investing in a bank. a bank is a highly leveraged entity. retail investors are allowed to buy securities on margin. do you support allowing retail investors to continue to buy securities on margin? >> i mean, i'm certainly not opposed to that. but i think there are more issues with respect to this bill and risks with respect to this bill than just that. >> well, but that's what -- >> that's one of them. >> that's what leverage is about. i thought leverage was the main concern. i would simply observe that there are many, many opportunities for an investor to
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take on leverage if an investor sees fit to do so. buying options, for instance, can create the equivalent of enormous leverage. much, much more than this very limited increase that would be after all managed by a professionally managed company. so i would really urge you to consider that among the various ways that retail investor can achieve leverage this would be a very modest -- it's heavily regulated. it's run by professionals and the upside benefit i think is very significant. let me touch on another item here. i think the s.e.c. has a proposed rule that would govern the use of derivatives by registered investment companies. and of course derivatives are used for a variety of reasons. they're all disclosed. it's articulated. if the s.e.c. were merely consolidated previous guidance letters then i rather doubt we would have seen the volume of comments that have resulted. in fact, i think there are some things new. one that i'm concerned about is that the exposure that's used to
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cap the amount of derivatives is based simply on the aggregate notional amount of those derivatives when in fact notional amounts are a terrible proxy for risk. they don't measure risk at all. so why are we using the notional amount to determine the limit on these investment companies' derivative holdings? >> i think that is one of among several important issue that's we teed up in the rule proposal and one as you point out we've gotten a lot of comments on which the staff is very thoroughly going through as they consider what their recommendation will be for the final rule. you know, that's one of the -- probably one of the most frequently kpented on aspects of it, not all critical mind you by a number that are for the reasons you state. >> so is it your intention that there will be some modification here and there will be a measure other than simply the really
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meaningless notional principal amount? >> again, i can't get ahead of the process, but i can say that we are very folk you used on that issue and the nature of our notice in comment process is that we very seriously consider all of the comments and try to basically propose a final rule that is optimal and better than our proposals. >> okay. thank you, mr. chairman. thank you. >> senator donnelldonnelly. >> thank you mrsh, mr. chairman. good morning. thank you so much for being here. in 1982 the s.e.c. adopted rule 10b-18 to provide a safe harbor from market manipulation liability on certain stock buybacks. buybacks could have been considered market manipulation back then. recently in my home state of indiana 2100 workers were let go by a highly profitable company in order to get $3 an hour jobs to mexico. the ceo said returning cash to share owners continues to be a
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top priority. we're targeting $22 billion of total shareholder returns to share repurchases and dividends through 2017. of that 22 billion, 16 billion will come -- stock buybacks while firing 2100 workers in indiana in order to get $3 an hour jobs in mexico to help fund the stock buyback. i will also note that the savings they get from this are less than one-half of 1% of the amount of the stock buyback. so my question is, you know, in 1982, this could have been considered market manipulation. what does the s.e.c. think of actions like this now? >> well, i mean, the safe harbor rule that you mention does not immunize liability from market
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manipulation if it occurs. you know, it's basically designed to impose some rules to at least try to prevent market manipulation but it doesn't -- for example, if the buyback is done on the basis of material nonpublic information, you know, a fraud action can be brought. i mean, that's -- safe harbor doesn't deal with that at all. i'm acutely aware of the -- sort of the whole set of issue with buybacks. gotten a lot of attention in a lot of situations so we're focused on it. but the s.e.c. -- >> let me ask you this. should the s.e.c. play a larger oversight role in overseeing stock buybacks as this has been funded by firing american workers? >> well, again, without -- i mean, i take your point completely. i think the s.e.c. i don't think has the authority to tell a company how to spend its money. what we can do and we're focused on doing because we also have
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disclosure rules with respect to buybacks that provide transparency to investors and the public frankly of companies that buy back at least shares registered with the s.e.c. under 12g and we are addressing that issue in our disclosure effectiveness review in our recent sk to -- >> let me ask you, do you think this was the conduct envisioned when the rule was changed back in the '80s? >> well, again, i think it is very -- i'm not sure what "the conduct" is you're describing. the way you're describing it -- and i'm not doubting it at all -- is obviously a horrific set of events and had obviously very significant unfortunate negative consequences. but again, i think what we have designed with our rule makings and we're looking at it again to see if we can't do more is to
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avoid market manipulation, which is within our jurisdiction. >> well, in the s.e.c.'s eyes, who is the corporate responsibility to? is it to just shareholders? dhoe owe a duty to the entire corporate efrntnterprise includ workers? what is the corporation's responsibility in the eyes of the s.e.c.? who is it to? >> the fiduciary duty of the boarder, for example, and the officers is to their shareholders. but by my saying that, i don't want to exclude that i think there aren't duties and responsibilities -- >> well, does the s.e.c. assume that they have any responsibility to their workers, or can they just fire them willy-nilly? >> that is not a subject that's within the jurisdiction of the s.e.c. unless it is something that by virtue of what is within our authority to do has a positive impact on that. >> well, when you look at this, i think a big part of this is corporate short-termism.
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i don't know if that's a very technical term, but it's the reality of life. i met with these workers this morning. they were making $13 an hour. their ceo made 11 ceo before him made 150 million out on his last day and they're making $13 an hour on a very, very, very profitable plant and they're fired so their jobs could go to $3 an hour in mexico to help fund the stock buyback. do you inherently see something wrong with this business model? is this the american dream, that we all fight for? is this what the s.e.c. expects in conduct from the corporations that you regulate? >> well, i mean, what we expect from the corporations we regulate frankly citizens expect from those we don't regulate also is fairness to not only their shareholders and the fiduciary duty they hold to
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shareholders which is within our direct bailiwick but also to their employees as well. i mean, there are studies out there on the buyback s and the benefits and the detriments that kind of go both ways depending upon the context of the particular company, when they're buying back, what they're doing with their funds, what they have to do with their funds and so forth. but i take your point. >> thank you, mr. chairman. >> senator cotton? >> thank you. thank you, mr. chair. i want to talk a little bit about finra and its structure. finra is defined as i self-regulatory organization, is that correct? >> yes. >> does finra operate with a mandate from the federal government? >> finra is, as you point out, a self-regulatory organization that is a membership organization but it certainly is an organization that is primarily responsible for the surveillance and regulation of broker dealers.
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>> does it use tulools that are similar to or typical of those of an independent government regulatory agency? >> certainly on its exam and enforcement side. i mean, they have tools we don't have, frankly, because it's a membership organization too. the things they can do that we can't do under our own authorities but they certainly use surveillance tools. they use enforcement. they use exams which are similar. >> and they make rules that will govern the conduct of their members? >> they certainly make rules. many of them are subject to s.e.c. approval, but yes. >> are there any other private organizations that are similarly structured and oriented within the securities law space? >> not at the present time. >> what sort of input, to your knowledge, do finra members have into finra's regulatory policy agenda? >> i don't know the specifics of that. obviously they have a board structure and they obviously are
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a membership organization. >> what authority does the s.e.c. have over the finra board? >> we certainly oversee finra. we inspect finra. our exam staff does on various issues, some of their programs, obviously we have some authority over their rules as well, some of their rules. >> do you have the power to appoint board members? >> no. >> to remove board members? >> no. >> finra exercises investigative and prosecutorial functions related to s.e.c. rules, federal security laws and its own rules? >> yes, generally speaking. yes. there's some exceptions to that you but yes. >> are those functions executive power in your opinion? >> you know, obviously i know this is an issue that people talk about all the time, but they're not a government entity. but i'm not -- the answers i gave are accurate i believe in terms their powers.
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>> to your knowledge, does finra employ paid lobbyists? >> i don't know. >> thank you. i'd like to turn to a separate topic, shareholder activism as it's sometimes called. on a number of occasions you've commented on the role that economically motivated investors play in the capital markets. in a speech last year in new orleans you noted that, quote, an intense debate is taking place in the business legal and academic communities as to whether activism by messahedge is a positive or negative force in the economy. in that speech you also said that the s.e.c.'s role in any given contest between shareholders and boards of public companies quote is not to determine whether activist campaigns are beneficial or detrimental but rather to ensure that shareholders are provided with the information they need and that all play by the rules. so putting aside the question of any particular dispute, any particular company, any particular investor, do you believe that unbalanced engaged shareholders provide critical market checks and balances to
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provide greater corporate productivity and management accountability? >> that's a very broad question. i certainly think they can. >> you've also spoken favorably in the past about the role of cost benefit analysis at the commission. given your views on the importance of a data driven approach to developing public policy, are you concerned about some appeals to emotion that we see from some involved in the debate about so-called activists investing which is is sometimes also portrayed as short-term investing? >> well, i think, you know, the s.e.c. is an independent agency. and has always been. i'm an independent head of that agency and so i think it's very important for us to keep our eye on the ball and based on the merits which i think we do. >> in this space you're committed to developing rigorous
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-- any other limitations on marketplace participants before rule changes would be mroepzed and adopt snd. >> certainly any of our rules are subject to that economic analysis. >> thank you for that. thank you for your appearance today. >> thank you mrsh, mr. chairman. thank you for being here, mary jo. i appreciate the work that you do. i want to talk -- i appreciate you taking the blame for a lot of stuff. but i want to talk to you about your -- the commission right now. how many members are active on your commission? how many members do you have on the commission? >> we have three. >> and it's my understanding and correct me if i'm wrong it's been that way for about the last eight months, right? >> the last -- want the hours and minutes? the last six months. >> six months. is it true that since you've only got three any one of those three can say if they don't like a potential vote that might be
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coming up just stay away and then you don't have a quorum and you can't work? >> well, as a commission of three, we have to have all three commissioners to do a rule making. >> yeah. so any one of them can walk away from the table and you're sunk, right? pretty good power. >> they could, but i think we're very focused all three of us on getting the work done, too. >> that's good. what about your staffing? how are you staffed up? do you have adequate staff? >> i think the s.e.c. is significantly underresourced agency for our responsibilities. but -- >> would that change if you became a self-funded agency? >> it would. >> could you give me sort of -- i mean, are you 20% down, 30% down on staffing measures? >> i mean, i've certainly talked mainly and i suppose in the context of our ability to cover on the examination side
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investment advisers which are obviously enormously important to investors, particularly retail investors. i've also talked about how we are so outspent on the i.t. side by those we regulate that in those areas, you know, we've done some analyses but again what i try too to do is i respect the appropriations process, the congressional oversight process and try to make the best case i can for more adequate -- more and adequate resources. >> well, look, there's been ten people speak ahead of me, and some of them have been very critical, some on my side of the aisle have been very critical about you not doing some of the work that is assigned. i could be critical, too, and by the way, i am. but the fact is that you've got to play the hand dealt to you and the hand that's dealt to you is a pretty weak hand right now, in my opinion. would you agree that if you were fully staff up and you had five commissioners you'd be much more effective and would get more work done? >> i think the answer to that is
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yes, certainly being staffed up would accomplish that. >> so we had a fiduciary rule that several have talked about that got put out by the d.o.l., and i was critical because i thought it was a job you should have done and i think if you would have been fully up would have gotten it done, but unfortunately it didn't happen. is there any plans to get that fiduciary rule happening from the s.e.c.'s standpoint? >> i'm certainly committed to getting it done because i think it's of enormous importance. but i've also made clear how difficult and long a road that is under section 913 of the dodd/frank act and that i'm one vote. >> yeah. and so fair point. and it's been documented that there was some differences between the s.e.c. and the d.o.l. when that rule was put out. and i don't hear you saying it's going to be done before this administration is out the door. >> well, i'm committed to moving
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it as fast and as well as i can, but i can't give you that commitment, no. >> but in all practicality -- >> it's a longer route than that. >> okay. so we've got at d.o.l. rule. so the question occurred to me, do you have to enforce the d.o.l. rule? >> we do not. >> so who enforces it on investment advisers and broker dealers? >> i mean, they're enforcing the rules is their responsibility. >> so the d.o.l. enforce the rules on all investor broker -- >> they would enforce their own rules -- >> traditionally, wasn't that a job for the s.e.c.? >> not as to their rules, no. >> no. but as far as investment advisers and broker deal rz? >> and still is. still is. except not with respect to nir rules but with respect to our rules. >> so tell me how this is going to work. i mean, practically, how is it going to work? >> i think it's -- you know, again, independent agencies, independent rules, we've had before this rule rules by d.o.l.
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and rules by the s.e.c. that overlap so to speak, and we've managed our way through that pretty well. you know, we clearly will watch this as it goes forward and if issues arise, you know, we'll certainly be available, i'm sure d.o.l. will be available to coordinate if a conflict should develop. and if we -- if and when i hope we go forward with our own rule makie ing obviously we'll coordinate with them about any new issue that's might arise with respect to that. >> mr. chairman, i'll put a few more questions on the record, but thank you very much. >> thank you. >> chairwoman, thank you very much for your presence today. we've had a conversation in the appropriations process. want to continue to ask you about deals with the regulations of the national marketing system. the question i have is whether the nms plan governance model should be reformed to reflect
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evolution of our markets and add additional participants as voting members. the s.e.c. -- do she have the ll authority to -- paepants in the governance of nms plans? >> subject to our own rule process. one thick i should mention is we actually have recommendations coming from the subcommittee of the equity market structure -- but we essentially are typically in the position of approving a rule filing but we can also issue orders to solicit rule filings if i can say it that way. >> so maybe there's more to this story thab me just asking you whether you have the authority. is there smig omething in the w? can you bring me up to speed on this topic? >> it's certainly a topic that
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the commission is focused on, pfaff is focused on and so is our equity market structure advisory committee and in particular i think it's called our trading venues subcommittee. and that's one of the topics indeed that they discussed at their last meeting with the full committee i think end of april. and is or may be the subject of recommendations. >> do you have any personal thoughts on this topic or are you just waiting for those recommendations? >> i'm very well aware of the issues. i know some accommodations have been made which obviously other participants, advisory participa participants, have not found sufficient or satisfactory. so it's an issue i'm focused on. it's an issue i continue to consider whether and what changes if so should be made. >> i want to follow up a bit on the senator from arkansas' conversation about finra oversight. i noticed that finra appointed a new ceo yesterday who is a former employee of the s.e.c. i
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guess my question is, how do you satisfy the need for congressional oversight of finra? is it just a matter of we have oversight over the s.e.c. and the s.e.c. has oversight over finra? or is there a greater opportunity? we have no appropriations process there, no confirmation process, occasionally finra representation is before congress in a setting like this you but beyond that, it seems to me that finra's role is growing more engaged in regulatory activities and congress has little oversight in that regard. >> well, you certainly as you indicate have oversight authority over the s.e.c. who has oversight authority and exam authority over finra. and it's an important one i think and finra is a very important component of our
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investme investor protection and market safe guarding. since i've come to the s.e.c. as chair, we've henhanced our oversight of finra and continue to do so. i think i heard rick catch em, the outgoing president and ceo, detective that he at least he understands the interest by congress given their activities and the importance of their activities in learning about them and if oversight is quite the right word for the reasons you indicated. i think rick and robert cook who is his successor are just tremendous public servants. we work very well with them. obviously we oversee them so there's -- but i've found them both to be extraordinarily knowledgeable. i know rick better than i know robert, but i know them both. about the markets, very committed to investor protection. that's always a's safeguard. >> i think you're telling me that my assurance is that you are watching over finra and we
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need to watch -- i know you wouldn't say this -- over the . s.e.c. maybe you would say that. >> it will happen anyway, right? >> right. >> no. i think that is correct, and i think it's also i guess the other part of my answer was that i'm aware of the need and we've moved in that direction to enhance our oversight of finra at the s.e.c. >> you may use your position to encourage finra to be cooperative with congress, open and available to us, that would be useful. >> yes. >> thank you. mr. chairman? >> senator warren? >> thank you, mr. chairman. thank you for being here, chair white. as you know, the s.e.c.'s mission is to protect investors and our capital markets and requiring companies to disclose information is a critical part of that mission. publicly traded companies may not like disclosing potentially embarrassing or damaging information, but the s.e.c.'s job is to look out for inve
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investor,s not for big companies. there's a lot you could be doing to protect investors there are still 20 mandatory dodd/frank rules from 2010 that the s.e.c. hasn't completed and there are more than a million people including countless investors and former s.e.c. commissioners pushing the agency to require publicly traded companies to disclose their political contributions. but instead of moving forward on issues intended to help investors, you've actually headed in the opposite direction. since your first year in office, you've dedicated significant s.e.c. time and resources to a project you invented and called the disclosure effectiveness initiative. according to a 2013 speech you gave, your big idea behind this project is that the s.e.c. might be requiring companies to disclose too much information causing investors to suffer from something you call information
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overload. now, i'm all for eliminating redundant disclosures or improving the way that information is presented, but honestly i have never heard of the concept of information overload in the context of investing in stocks. i've never heard of the idea that investors actually want less information than they're getting. so i have a pretty simple question. the s.e.c. is an investor protection agency so when you launched your project, what evidence did you have that information overload was a real problem that investors wanted you to solve? >> it's an issue, senator warren, that the commission has been looking at for really decades among others. but the purpose of disclosure effectiveness -- by the way, it wasn't invented by me. it was basically in response to a congressional mandate to a
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report that reviewed our entire -- >> i'm sorry. when was this report you were talking about? >> it was i think presented to congress filed with congress in i think at the end of 2013. >> so now wait. are you talking about the jobs act report? >> yes. >> because that one i actually have looked at. and what was asked of you was that the s.e.c. review one subset of disclosures to see if that subset should be be modified as they apply to one subset of companies. so-called emerging growth companies. your project has gone way beyond the boundaries identified in that law. >> yeah, emerging growth companies are a large swath of the -- we've been for decades at the s.e.c. is my point have been undergoing -- >> that's not my question. >> there's nothing more important. >> my question is, when you launched your initiative called
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the information overload, this is what you identified. i just want to know what evidence you have that this is a real problem that investors have come to you and said, we're worried about getting too much information? just what evidence did you have? >> first of all, the review is not limited to duplicative or overloaded information. it's really -- >> you mean the review in the 2012 jobs act. >> no, no. our review. it ae's meant to make disclosur more meaningful to investors and we've also gotten comments i will say recently from all kinds of constituents including our investor advisory committee about identifying and really not objecting to removing things that are repetitive, duplicative, not useful. and the purpose much this review is to make disclosure more meaningful for investors. >> i started this by saying i don't have a problem with getting rid of duplication, with making it more effective. the question i asked you about is whether or not this so-called information overload is a real problem identified by investors
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that have come to you. let's be honest about this. i cannot find and you have not produced a single investor who has complained to the s.e.c. about receiving too much information. investors don't want less information about the companies where they put their money. in fact, i think that's ridiculous. the s.e.c.'s own investor advisory committee which includes everyone from hedge funds to pension funds to retail investors say recently that the current amount of disclosure -- and here was their word -- is appropriate. so who wants less information to be disclosed? it's pretty clear. the national chamber of commerce, which represents the giant companies that have to do the disclosing. the chamber has produced a fact-free report whining about this nonexistent information overload problem in 2014 shortly after you launched your initiative.
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you know, information overload is a problem that was invented to justify a project aimed at making life easier for big companies and harder for inve invest investors. in fact, keith higgins, the s.e.c.'s head of the corporation finance division and the lead on this project kind of let the cat out of the bag in 2014 when he said in a speech, the aim of this project was, quote, to reduce the burden on companies consistent with our mission of investor protection wherever we can. now, i recognize that congressional republicans slip language into the must pass highway bill at the end of last year that asked the s.e.c. to review disclosures with the eye to eliminating ones that are unnecessary. of course that doesn't justify the s.e.c. dedicating resources to this project for two years before that. but nevertheless --
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>> the concern was expressed about, you know, too much information could sort of cloud the meaningful. i think -- >> instead of -- >> it's much narrower than its intent. one of the most important thin about a disclosure effectiveness review, we're also talking about adding information in this review that's needed to be added for example on foreign taxes and other things. but is also the manner in which the information is being provided to investors, giveren how -- which is a huge -- >> chair white, we're over time. let me just stop you there. i have said now three times i think in just this brief exchange, i'm fine with cutting out duplication.
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i'm fine with making the information clearer. and as should be clear, i'm fine with providing more information. what i'm trying to identify is something that you specifically have targeted and talked about. i am frustrated that at your direction the s.e.c. has voluntarily spent two years trying to address a problem that you have no evidence exists. instead of making up work to help giant corporations, the s.e.c. should do its job, starting with the 20 required rules under dodd/frank that still aren't fixed six years after the law was passed. your job is to look out for investors, but you've put the interests of the chamber of commerce and their big business members at the top of your priority list. a year ago i called your leadership at the s.e.c. extremely disappointing. today i am more disappointed than ever. thank you, mr. chairman. >> and i'm disappointed at your disappointment and could not
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disagree any more with your characterization of what we're trying to do to improve our disclosure regime for investors. to make it better. >> when you bring me evidence of this so-called information overload that you have initiated, then we can have more conversation about how disappointing the leadership has been. >> for the range of issues we are addressing including that. >> well, i'd like to see some evidence that there really is a problem here. >> senator warner. >> thank you, mr. chairman. chair white, it's good to see you again. i want to move to another area of concern that i have of i've seen evidence recently and i'm sure you probably have as well, rbc put together a chart of its complexity is a little overwhelming that there were 839 different fee structures, i'm
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getting to the make or take issue, with 2700 different iterations in terms of incentives and rebates within our market structure right now that quite honestly give the impression that the system is rigged to direct trading through to those firms and entities that are going to give you the biggest rebate or fee structure. it seems to me there's an extraordinary amount of conflict of interest here in the whole question of the brokers and their clients. when we look at this and we've got obviously the complexity of our markets and trying to make sure, i agree with senator warren we've got to get information out in a clear and transparent way. boy, oh, boy, you talk about an area that is opaque, how are we going to get through this? now, you've talked about this
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back in 2014, the negative outcomes of some of this structure. you know, i strongly believe we need to move quickly on the make or taker pilot. i would encourage you that when we look at this maker taker pilot, we have both lit and unlit when we think about again you look at that rbc chart and then you add the dark pools behind it, enormous challenges and that we don't -- you know, i know that the trade act component issue added a whole series of complexity to the tick size project and my hope is that we won't see those same kind of great to have you but potentially items that dramatically slow down the ability for us to bring more transparency to our markets in particularly in terms of this
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area where there appears to be an anorms amount of conflict of interest. could you speak to that. >> first, i'll say and i think i said it at the committee meeting as well, but i do think we should proceed with a -- promptly proceed with a well-designed pilot. the discussion of the -- >> how promptly do you think? considering what we saw the tick size and we've gone through this a number of times. >> and the tick size as you know we ended up having to order the basically sros to commit a plan that would work. i think it's enormously important it will launch in october of this year. but obviously it took a while to do that. i mean, i do think you've got to be careful that you're getting the information that you need to have from these pilots. i think you may not, senate oeo warner have been in the room when i said we're expecting a -- meeting from the subcommittee that's in charge of this subject matter at the subcommittee level to the full committee on july
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8th. and frankly i urged that to happen sooner than their next scheduled meeting. so that we could move this along. it obviously is up to the commission and the staff recommending to the commission what those parameters should be. but it is one that i think, again, everything is more complicated than it seems. i don't think the system is rigged you but i think it's developed in a way that we've really got to figure out how to deal with that. and i am particularly concerned about the conflicts of interest. >> again, you sort through this despoke byzantine process and how any investor small or large for that matter really knows where their trades are being directed based upon the level of fees and rebates. it just -- we need more market confidence and i really think moving aggressively on this -- >> i think our transparency
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proposals are an important part of that, too. >> let me, last few seconds here, go back. senator moran raised some of the question around market governance. as more and more of these exchanges the security exchange processors and are making decisions to make huge capital investments in technology sometimes that technology which may give them that fractional second advantage over others and as i've said before, you know, i don't want to appear as a lud-ite but i do believe at some point speed and -- the god of liquidity is not always the complete answer. but as we sort through this and with all the various exchanges, can you expand on what you said to senator moran in terms of governance? how do we make sure in terms of market governance we've got all the right parties at the table
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sorting through these issues in. >> well, again, i'm not sure we're talking about the nms governance which we were addressing, but frankly my whole idea for the equity market structure advisory committee was to try to bring in expertises across the range of constituents and also to make sure we had a panel at every one of those meetings that had everybody else there that had a different point of view and an expertise. and i've been very pleased with it so far. it's also something that folk y focuses and i think mofz along more promptly the commission's comprehensive review of this issue and it really needs to be there. in terms of the speed issue, certainly you get to diminishing returns i think you had that conversation with steve loupe rella at your subcommittee meeting. i don't think you roll back technology. we've had tremendous benefits obviously to retail investors
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and institutional investors in our markets in the technological advances. sometimes people talk about high frequency traders as if they're one thing. and they're not. they're not monolithic. they have different strategies so one of the proposals that the staff is working on is an anti-trading disruption rule which sort of deals with when markets are particularly vulnerable liquidity being taken away by virtue of speed to avoid that. so the issues again are complicated but i'm largely agreeing with you. >> my time is expired. i just want to say, mr. chairman, as we look at complexities and equities market as we've seen complexities and the bond market, even if the treasuries markets obviously the options markets and my fear sometimes that some of these bespoke products and the incentive systems, i worry that the complexity has gotten so great and the effect it has on the overall market ecosystem
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that it's bleeding from one market into another. and i appreciate chair white your comments but would love to come back and revisit that. >> senator schumer. >> thank you, mr. chairman. welcome back, chairwoman white, my fellow new yorker and as you know i have a great deal of respect for you. but i'm going to go back to the issue i care so much about. i just want to -- the money i am now involved in a lot of our campaigns, our races, the money that is pouring in is unprecedented. and it is undisclosed. and it's a few organizations. one is the koch brother organizations, chamber of commerce, pouring in and poisoning our politics and we don't know where that money comes from. the share hoirlds don't know where that money comes from. it is i'll have to tell you, it's more important than anything else to me before the s.e.c. all the things between
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shareholder and corporate governance pale before what's happening in america. and you want to know why people are so discontent? in part, it's because a few powerful people can send cascades of money into our system, the ads they put on tv have nothing to do with the issues they care about. and you, frankly, are aiding and abetting it at the s.e.c. because we can't do everything and we know that our house republicans mitch mcconnell is insisting that this stay they gain from this and it's short-term gain because in part people become so discontent with the powers that be that they not only go against the -- they go against the republican establishment, witness the last prima primary. and i just don't get it. i just don't get why
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corporations that give money shouldn't tell their shareholders. these are major decisions. they have effects on the corporations. if exxon and i'm just picking one i have no idea what they do undisclosed, but if they put a ton of money of undisclosed into the chamber of commerce to fight global warming -- let's just assume that -- their shareholders have a right to know. they may be making a bad decision. i think you're hurting america. you are hurting america. and i know you can stay in your narrow little box and say, well, the rules of the s.e.c. are limited and this and that. first, a lot of people don't agree with that. most people. second, the public, i mean, i know senator shelby said 1.2 million petitions is a small amount compared to the population of america. that's true. but how many other issues have you gotten 1.2 million petitioners calling you? and i wish you would change your
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mind. i'm just so disappointed. so disappointed. because every one of our commissioners should be a citizen. they have to do things within the law. this is within the law. and you've made the decision not to go forward. so let me just ask you this. this is a relevant question. menendez touched on this issue, but i want to come back to this. john coats analyzed that the s.e.c. -- the republican leadership insisted that this provision be put in the bill. shows you the provision that says that congress can't touch what you do. but it wasn't that explicit. and as i understand it, it only explicitly prohibited the s.e.c. from finalizing, issuing or implementing such a rule during this appropriated period. so do you disagree with coats' analysis? and second, if you don't
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disagree with his interpretation, will you add this issue to the s.e.c.'s agenda? >> i mean, i haven't studied his interpretation of it, and i think -- let me just say that, you know, obviously i respect you enormously. >> it's a mutual respect. >> and i also deeply respect the views on all sides of this issue. and i think -- you know, again, i sort of explained what the s.e.c. was looking at earlier when i came in and so forth. i won't basically repeat that or what i've prioritized for the benefit of investors and our markets since i've been there, although i certainly made a commitment to advance the mandated rule makings and other mission critical issues. but having said that, i've also talked about the avenues for shareholders to bring this issue to their companies, which is in our rules, the 14a-h shareholder
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proposal wrote the average approval rate for those petitions last year was about 26%. i also and i said it earlier certainly applaud those companies that are voluntarily information which by the way, they are doing in greater numbers. >> what else can you do to encourage companies to do it voluntarily? i understand the worst ones are not going to do it. the violators are not going to do it. >> i think there was a report that came out i think in 2015. showing that over half of the s&p 500 makes disclosures, and half of them have policies governing their spending. so that material was provided. obviously, our rules could never reach the koch brothers because it's not a public company. so our rules, the rules, the
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campaign finance reform, i know you're not taking the position they are. but subject to doing the rule making has actually not been on the sec's agenda before me or after me. >> since you're not prohibited from starting the process would you be willing to start the process? >> well, again, the subject is not on our red flag's agenda now, and so it's not one of the priorities that we are advancing, so of i get to that before i get to what could we do or couldn't we do under the appropriations language, which obviously the appropriations language is there with its prohibitions. the corporate finance staff did look at this, actually before the item was put on the red flag's agenda in 2012, which is the recommendation to advance the proposed rule -- >> time has expired.
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but i'm explicitly asking you the question, which is are you willing to start the process that is allowed even with the legislation we passed? >> i have not researched the legal issue but the answer it is it is not a subject that is currently on our regular flag's agenda because of the priorities. >> i would just say to you your priorities are out of line with what corporate america needs and what america needs and i hope when you go to bed late at night you think about that because our country is basically being steered in an all direction by a narrow few wealthy people, at the very least there ought to be disclosure. >> thank you, mr. chairman. and thank you chair wait for appearing as you know i have been working on a number of provisions within the homeland security and government affairs committee regarding supervision
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of independent agency rule-making. obviously, still concerned that we have been unable to eff oo effectuate the implementation of the long-standing order and has met with as you know great resistance from all the independent agencies. it's not going to be the basis of my question but i just want to remind you that when we met you offered to actually sit down and have a conversation about this. because i think there is a growing amount of concern in the regulated community that there is not the kinds of safeguards that other rule making have. and so i just want to remind you that i have not forgotten about that. but i want to ask you about sec rule making in small business. as you know, senator heller and i introduced a bipartisan bill
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that would create an office of small business, within the small business advocate within the sec. i'm wondering if you have had the chance to review that legislation and if you have an opinion? >> well, first let me say that i think -- we've really prioritized the -- the interests of -- and perspectives if i can say that, and special needs of small businesses, and the day i arrived, and taking a number of steps. we actually have in our division corporation finance an office of small business policy, which responds to you know, a thousand-plus -- sometimes nearly 2,000 requests for you know how do i navigate the rules, how do i do this and that? they look at all of our rules from the perspective of how this will impact small businesses. so it's a very highly functioning unit. so in terms of -- i'm an advocate for small business.
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so conceptually, i'm an advocate for small business. i know the staff has given some input on this, but i worry if the bill is adopted that we don't fragment or dilute the opportunities that we have. >> i feel that way with a lot of small business, they're being left behind. their captivatatiitalization is restricted in ways where they feel -- they need to create an advocacy which is not just the good will of the chair and the rest of the commission, but to basically be that voice that is heard on small business. >> i certainly understand the priority on it, i can say that. that is why we also have the office we have. but the priority that you're putting it on in this way, as well. >> and i don't know if you have had a chance to answer questions about the department of labor
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fiduciary rule yet. >> i have, but i kind of just read the testimony on the rule rather than what's been said. the sec has been credited for adopting a march 2012 current guidance on economic analysis and rule-making which emphasizes the rule making including relevant cost benefits. it's generally recognized that accurately measuring the bene t benefits is more important rather than determining the costs that can be quantified or modified. what lessons if any have you learned to justify regulations actually when these limitations exist? >> well, i think obviously we -- adopted, implemented our economic guidance, i think it was march of 2012.
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we take the cost benefit economic analysis of our rules and treat our rules you know, quite seriously. and i think it's working very well. we've actually received sort of some compliments on it authnd t thoroughness of it, and i wouldn't say much about it but you alluded to the bills that are pending to sort of add more factors. what i worry about is the compromise of independence and burdens at least at the sec, i think we are discharging -- >> and i'm running out of time. but i just want to reiterate that, that we can all have good intentions. but sometimes we need a cop on the beat who is going to be reviewing the work. and so that is really what we're asking for in that legislation. and we'll continue to talk about what makes the independent agencies comfortable as we move forward. but i haven't given up on my challenge of making sure that
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there is some oversight that assists this body in terms of oversight on independent agency regulations. so thank you very much for appearing and thank you for your work. if you haven't been thanked already as you know i'm greatly appreciative that you have stepped up and taken the chair. >> thank you very much. >> one last question, mr. chairman, first, one brief comment. i join the senator's plea to move on that with you, i think there is a huge majority of the country people paying attention. we need to do that, and so many members of this committee do. along with other members of both houses i sent you a letter in march asking you to consider rule-making pursuant to a petition that would enhance the board nominees. you were asked on the provisions
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and could you give this committee an idea on what you're doing? >> yes, this is an example of an existing rule that we have that investors have basically indicated is not providing useful enough information on diversity. there is no difference on diversity, so those concerns resonate with me and i have had the division of corporate and finance to work on what the disclosures have been in the past, what they are now and how we might enhance that rule. so they have not completed that process but they're well into it. and i expect them to make a recommendation to me fairly soon. >> please keep me ap priprised the findings, thank you. >> we appreciate your appearance here today and look forward to some more. >> thank you, mr. chairman.
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the house oversight committee will vote on whether to censure john koskinen on the
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t topic of political groups. the pentagon said that progress is being made by libya in driving isis from the oil-rich country. watch live coverage at 2 p.m. eastern, also on c-span 3. after the surrender, the united states faced more than ten years of challenges during reconstruction. and policies instituted at that time had a lasting impact on american history. this saturday, starting at 1:00 p.m. eastern, american history tv is live from gettysburg college from gettysburg, pennsylvania, and the authors and historians addressed issues
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such as freedom with abigail cooper, reconstruction in the north, with the associate professor of history, and the post civil war career with the professor of history. also hear about the confederate and the origins of lost cause, the annual summer conference live all day saturday beginning at 1:00 p.m. eastern on c-span 3's american history tv. for the complete american history tv weekend schedule go to we are going public. we'll be watched by our friends and by people across the country.
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and i would hope as i said before the senate may change, not as an institution, but may become a more efficient body because of televised proceedings. >> the proceedings of the united states senate are being broadcast to the nation on television for the first time. not that we have operated in secret until now. millions of americans have sat in the galleries and observed senate debates during their visits to washington. but today they can witness the proceedings in their own homes. >> and in effect, the senate floor has been a kind of a stage. the senators have been acting on that stage. the audience is in the galleries. and by our action today we haven't really fundamentally altered that situation. we've simply enlarged the galleries and pushed out the walls to include all the american people who wish to
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watch. >> commemorating 30 years. congress has approved a $28 million of a shift in funding from the tsa to try to alleviate long security lines. next, the head of the transportation security administration peter neffenger takes questions, senator ron johnson chairs the senate homeland security committee.
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good morning, this hearing will come to order. i apologize for my tardiness, what should have taken ten minutes took an hour. but i want to welcome the witnesses, try and catch my breath. appreciate your testimony. obviously there's a fair amount of interest in this hearing. i think at the heart of what is currently ailing the tsa is the fact that we really have two completely contradictory goals.
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on the other hand we want efficient throughput so we can get passengers to their flights on time, and at the same time we need 100% security. all of this is being driven -- we have to understand the root cause of the problem here is islamic terrorists. since the inception of the tsa we have spent about $95 billion just on tsa alone. the cost of islamic terror to the world, to the civilized world, is enormous. so if you really want to talk about addressing the root cause of the problem is we have got to defeat islamic terrorists. where they reside. but again, you know, i appreciate all the witnesses' testimony. the fact that we consciously made a decision to decrease the number of tsa workers obviously didn't work out very well. i appreciate the fact that we're
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beefing up training, unity effort. i mean, all these things are positive signs. i appreciate fact that mr. neffenger you are working with the inspector general's office and gao, it comes through clear on testimony. i apologize for being late. do ask unanimous consent that my opening remarks, my written opening statement be included in the record and with that i will turn it over to senator carper and i will catch my breath. >> mr. chairman, we're glad you're here. i had a couple of trains that were shot out under me coming down from delaware. i know the feeling. thank you for joining us this morning. this is going to be a good hearing. this is going to be a real good hearing, it's a timely hearing. as we all know the transportation security administration was created in the wake of the attacks on september 11th and we understand while the terrorist threats to our aviation system that the agency was created to combat. having said that, though, we oftentimes fail to acknowledge an undeniable tension that exists alluded to by the chairman, an undeniable tension that exists at the core of tsa's mission.
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on the one hand we ask tsa to screen literally millions of passengers and their luggage carefully every day to prevent explosives, weapons and other dangerous items from finding a way on board our aircraft. on the other hand millions of passengers, we've been among them, we've all been there, want to get on board our airplanes on time and without the aggravation that security screening can oftentimes bring. given the long wait times we've recently witnessed at security check points at a number of airports across america we know that it can be difficult to strike the right balance between security and convenience. some might even be tempted to say that we can't have both. that effective security measures invariably bring with them inconvenience, lines and even missed flights. i disagree. in fact, i believe that many of the problems we've witnessed at some of our airports are imminently solvable but first we need to better understand the scope of the challenge and its
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genesis. after the department of homeland security's office of inspector general produced a troubling report last year revealing vulnerabilities at tsa check points admiral neffenger took several steps to tighten security. while the steps that he and his team have taken have contributed to longer waits for some, there are other reasons why tsa has struggled lately. i want to talk about a couple of them. resource constraints and increased air travel have plays a significant role. tsa is being asked literally to do more with less. while inept management and leadership at some airports have been a major factor the truth is that staffing at tsa has dropped by more than 10% since 2011. at the same time the staffing has gone down passenger volume at our airports has increased by more than 10%. tsa must be nimble enough to handle this growth in air travel, especially the surges that occur during the busy summer travel season like we're
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seeing now and at other times during the year. the good news is that admiral neffenger and secretary johnson have moved quickly to reduce wait times and do some without compromising security. is there more we can do? >> sure there is. i'm going to talk about a couple of those things. based on the reports that we've seen these efforts are already beginning to bear fruit and help keep passengers moving during the busy memorial day weekend. but security, let me just say this, security in our airplanes, it cannot all be on tsa and admiral neffenger and his leadership team. this is a shared responsibility. it cannot all be on tsa and mr. neffenger. congress must work with the administration to ensure that the agency has the resources it needs to effectively carry out their mission. funding levels and appropriations bills awaiting action, we have some appropriators here, you folks are doing a good job with respect to funding levels with the tsa and they move tsa in the right direction. we need to enact those bills.
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but airport and air carriers have a responsibility to reduce wait times as well. i've been encouraged with the willingness of private sector stakeholders to contribute their own resources and ideas to solve this problem. a longer term solution is being administrated, we just talked about it, it's been demonstrated in realtime at london's heathrow airport. in the spirit of finding out what works and doing more of that tsa announced an innovation lane in atlanta, i'm sure we will hear more about them in a partnership between tsa and delta airlines to improve passenger throughput by 29%. while that shows great promise over the long haul airlines have taken a number of steps that can make a difference which is reassigning their own employees to help tsa in some places. the most important step we can take is continue to dramatically grow participation in trusted traveler programs like pre check
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that speed the vetting of the speed of the screening of vetted passengers and shortened wait times for those not in pre check lines. i'm encouraged by steps that tsa has taken to increase pre check enrollments, we're told they have soared by 3500 a day to 16,000 a day at the end of last month where we look forward to learning more today about additional ways we can encourage enrollment in this program. it's important to keep in mind there are very real security let's through aviation system. these guys aren't stupid. they're trying to come up with bombs that are harder for dogs to detect. today's solution may not work tomorrow. those are already changing their tactics that require that we
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constantly address airport screening checks and airplanes. we need to stay on top of growth in air travel and changing travel patterns so tsa and their partners are not caught with dealing with logistical challenges they aren't prepared for. that is why strong leadership is critical seeing us through these difficult times. leadership is a lot like integrity. integrity, if you don't have it nothing else happens. i think we are blessed for leadership and i'm grateful admiral neffenger for your willingness to serve. this is a shared responsibility each of us need to do our part. if we do we will be much safer as a nation. let's roll. thank you. >> thank you, senator carper. it is the tradition to swear in witnesses. if you will stand and raise your right hand. do you wear swear the testimony you will give before this committee will be the truth, the whole truth and nothing but the truth so help you god? please be seated. >> our first witness is admiral
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peter neffenger. admiral neffenger is the admiral of the security and safety administration. he mansion a workforce of 60,000 employees. is responsible for security operations at approximately 440 airports throughout the you straights. prior to joining tsa he served as the commandante. >> thank you, chairman. good morning, chairman johnson, ranking member carper, distinguished members of the committee. thank you for the opportunity to appear before you today. i sincerely appreciate the committee's oversight and support of tsa and our important counterterrorism mission. since taking office on july 4th last year i've traveled extensively to observe our operations and meet with our employees and they are truly impressive. their patriotism, sense of duty, commitment is exemplary. i committed to addressing the immediate challenges we faced in our security mission while positioning tsa for the future. to that end over the past 11 months we have undertaken a systematic and deliberate transportation of tsa.
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our strategies included through elements, first focus on security effectiveness in the wake of the inspector general's findings that was our fundamental mission and that is our most important mission. second, resourcing to meet demand and third transforming the system. we are holding ourselves accountable to high standards of effectiveness and we're supporting our front line officers in their critical counterterrorism mission. we have renewed our focus on security, revised alarm resolution procedures, ceased risky practices, retained the entire workforce and ensure we stay focused. with congress' help we overhauled our approach to training at all levels of the agency including leadership training and established the first ever tsa academy in january 1st of this year with initial course offerings focused on training front line transportation security officers.
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this intensive training enables tsa to achieve consistency, develop a culture, instill core values and raise performance. second, we are resourcing to meet demand. with help from congress we halted the reduction of our screening workforce this past year, we are making investments in new technology, converting part-time officers to full-time, shifting screeners and k-9 resources to high volume airports, we have begun hiring federal air marshals consistent with our new operations. we completed a review of personnel policies and practices which led to a number of significant changes and we are designing a human capital management system to address recruitment, development, promotion, assignment and retention. third, we are transforming tsa in fundamental ways to ensure mature enterprise wide approach and an agency prepared to address the real and sustained terrorist threat.
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we have reinvigorated partnerships with the airlines, airport operators and we're working closely with congress to address the ongoing security commission demands. we're overhauling management practices across the agency. we conducted an independent review of our acquisition program, we're building a new planning programming budgeting and execution process, we're modernizing among other initiatives our innovation team is taking advantage of existing technology to establish automated lanes at selected checkpoints and as noted, through a public private partnership with delta airlines we have installed two new automated lanes done in nine weeks and became operational in atlanta. initial results show dramatic improvements. we have similar projects planned in the coming months. this year tsa will screen some 742 million people projected. by comparison in 2013 tsa screened 643 million people. so our approach to screening requires a similar transformation and we are meeting that challenge head on. with the support of corporation for our recent reprogramming request we have brought on board 768 new tsa officers, our federal security directors have redeployed behavior detection officers as needed, we placed
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additional k-9 teams at our highest volume airports and activated our deployment search to search the airports of greatest need. and we're beginning to see positive results. nationwide over memorial day 99% of passengers waited less than 30 minutes in standard security lines, 93% of passengers waited less than 15 minutes and in pre check lines 93% of passengers waited less than five minutes. over that six-day period -- since last memorial day we screened 10.3 million passengers, a 3% increase over the same period last year and we did so effectively and in a way that protected the system. four factors in my opinion have contributed to our ability to move people more efficiently and effectively through check points, first, the new resources that we receive from congress through the reprogramming and other proactive efforts have allowed us to effectively open more checkpoint lanes at peak
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periods to manage the volume. second, we placed a strategic focus on the seven largest airports in the system because if you can prevent problems from happening there you don't have problems that cascade throughout the system. third, we established a national incident command center, this allows us to focus daily on screening, operations, hour by hour at the seven largest airports to look to see what the challenges are as they develop and to move resources in realtime to address those challenges. we have expanded that to the top 20 largest airports and this is a full-time command center which will stay in operation. finally we are conducting daily operational calls from a that command center airport by airport with the airports, airlines and federal security directors to ensure collaboration, information sharing and realtime movement of necessary resources. none of this would have been possible without the tremendous efforts of our front line officers.
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they have performed admirably and always deserve our thanks but we are not celebrating and we are not letting up. passenger volume will remain high throughout the summer and we will need to continue to manage resources aggressively. in the short term tsa airlines airports congress and travelers working together can improve the passenger experience while maintaining security. i'd like to thank the airlines and airports for hiring staff to support nonsecurity duties in the airports, but longer term we know we have to continue to right size tsa to ensure we meet the demands placed upon us. we look forward to working with congress to get it right both in terms of staffing and developing new approaches to aviation security. our front line officers are focused on their security mission, it's up to us to ensure that they have what they need. thank you for the opportunity to appear today. thanks for the committee's support and i look forward to your questions. >> thank you, admiral neffenger. next witness is mr. john roth the inspector general of the department of homeland security. before joining the office of the inspector general he served as the director of the office of criminal investigations at the food and drug administration. mr. roth.
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>> thank you. chairman johnson, ranking member carper and members of the committee, thank you for inviting me here to testify this morning. about a year ago i testified before this committee at a hearing about tsa. during that hearing i testified that we remain deeply concerned about tsa's ability to execute its important mission. at the time i testified that tsa's reaction to the vulnerabilities that our audits uncovered reflected tsa's failure to understand the gravity of the situation. since that time we have conducted more audits and released more reports that challenge tsa's management of its programs and operations. however, i believe that we are in a different place now than we were last june. as a result of our audit reports and a vigorous response by dhs, tsa is now for the first time in memory critically assessing its deficiencies in an honest and objective light. tsa's leadership has embraced the oag's oversight rule and appears to be addressing vulnerabilities, however, we should not minimize the significance of the challenges that tsa faces and the risk that failure brings.
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the stakes are enormous. nowhere is the asymmetric threat of terrorism more evidence than in the area of aviation security. tsa cannot afford to miss a single genuine threat without catastrophic consequences and yet a terrorist only needs to get it right once. fortunately tsa's response to our most recent testing has been significant. dhs and tsa has instituted a series of changes well before our audit was even final. as part of that effort tsa initiated a tiger team program that resulted in a list of 22 major corrective actions that tsa has taken or is planning to take. we are generally satisfied with the response we have seen at tsa. these efforts have resulted in significant changes to tsa leadership, operations, training and policy. we will continue to monitor tsa's efforts to increase the effectiveness of checkpoint operations and will continue to conduct covert testing. we have a round of covert testing scheduled for this summer and are presently developing the testing protocols. consistent with our obligations
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on the inspector general act we will report our results to this committee as well as other committees of jurisdiction. we applaud tsa's effort to use risk based passenger screening such as pre check because it allows tsa to focus on high risk or unknown passengers instead of known vetted passengers who pose less risk to aviation security. however, while reliance on intelligence is necessary, we believe that tsa in the past has overstated the effect of reliance on intelligence and a risk based approach. the hard truth is that the vast majority of times the identities of those who commit terrorist acts are simply unknown to or misjudged by the intelligence community. what this means is that there's no easy substitute for the checkpoint. the checkpoint must necessarily be intelligence driven but the nature of terrorism today means that each and every passenger must be screened in some way. unfortunately tsa made incorrect budget assumptions in 2014 and 2015 about the impact that risk based security would have on its operations.
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for the administration's 2016 budget, for example, tsa believed that it could reduce the screener workforce by more than 1600 screeners, full-time employees, stating that risk based security requires fewer resources and would allow tsa to transition to a smaller workforce. likewise in the administration's fy 2015 request tsa asked for a reduction of over 1400 full time screeners based on claimed deficiencies and risk based security. however, our testing and audits found that tsa had been incurring unacceptable risks in its approach and tsa has now limited some of the more dangerous practices -- i'm sorry, eliminated some of the more dangerous practices that we identified. moreover, with he believe that even if tsa had not changed its approach to screening the planned decline in screener workforce was too optimistic. as a result the long lines we are seeing this summer are not mysterious. tsa because of the decisions it
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made in 2014 have fewer screeners but are facing more passenger volume than ever before. we will continue to examine tsa's programs and operations and report our results. in addition to the new round of been look -- penetration testing we have been looking at the -- we are in the process of cond t conducting a number of auditions and inspections. including a look at the federal air marshall service, their use of behavioral detection officers and tsa's oversight of the badges that are used to get access to secure parts of the airport. mr. chairman, this concludes my testimony. i welcome any questions that you or other members of the committee ma i have. >> thank you, inspector general roth. our next witness is ms. jennifer grover, ms. grover is the director of homeland security and justice team at the government accountability office, in this position she oversees roles of tsa's programs and operations. ms. grover. >> good morning, chairman johnson, ranking member carper, other senators and staff. in recent weeks travelers, members of congress and others have raised concerns about long airport security lines. as you've both noted this
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morning one of the challenges inherent in tsa's mission is the tension between taking the time to do the job right and moving passengers through as efficiently as possible. but first and foremost tsa is responsible for ensuring transportation security. my statement today will focus on two points, first, changes that tsa made to improve the security effectiveness of its expedited screening programs which likely contribute to today's long lines. and second, new information showing that tsa should improve its oversight of screener performance to ensure that screeners are carrying out their task accurately. >> first regarding expedited screening, as we've heard already this morning tsa has made recent changes to tighten security that likely contribute to the long screening lines. in november 2015 tsa modified its risk assessment rules which reduced the number of passengers that were automatically designated as low risk.
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at the same time tsa cut back significantly on its use of managed inclusion, which is used to divert nonprechecked passengers into the pre check lanes when they would otherwise be underused. tsa still uses this program at airports where passenger screening k-9s are available but has discontinued its use otherwise. according to tsa these changes were necessary to improve the security of their expedited screening programs and resulted in a 20% decrease in the number of passengers receiving expedited screening. despite the concerns that tsa has made, gao continues to be concerned about the effectiveness of the remaining managed inclusion program of. we await the results of tests that tsa is planning to evaluate the security effectiveness of the program as we recommended in december 2014. my second point is about tsa's
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oversight of its screener performance. our recent review of screener training and testing showed that tsa could improve its oversight of the screener's ability to identify prohibited items. tsa conducts tests to monitor screener performance, however, we to under that much of the testing data was missing over multiple years. for example, screeners are regularly tested on their ability to identify images of threat items hidden in carry on baggage and tsa policy requires fsds who are the local tsa officials to submit the data to headquarters. in every year from 2009 through 2014 tsa headquarters did not receive any of this data for a substantial percentage of airports. we recommend that tsa ensure that fsds submit complete image testing results to headquarters as required for airports across the country to confirm that the
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screener image testing is being carried out as intended and to allow for future national analysis of the data for trends that could inform screener training. we also found that tsa's covert test results are not reliable. fsds conduct covert testing at airports on a regular basis, but when tsa headquarters brought in a contractor last year to independently perform the same tests the contractor obtained noticeably different results. specifically screeners performed more poorly on the tests conducted by the contractor. tsa is in the process of determining the root cause for the differences, but initial results suggest that fsds may have trouble obtaining on mouse -- anonymous role-players to keep the tests covert. tsa has briefed its fsds on the results and continues to work
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with the contractor to examine the issue. in conclusion, tsa has taken positive steps to improve the security effectiveness of its expedited screening programs, though these changes likely contribute to today's long screening lines, yet more work remains for tsa to ensure that screeners are carrying out their tasks accurately. tsa should improve its oversight of screener performance by more effectively screening and monitoring screening testing data and ensuring the reliability of its covert testing data. chairman johnson, ranking member carper this concludes my statement. i look forward to your questions. >> i appreciate the attendance but because we have pretty strong attendance we will limit questions to five minutes and i will start. admiral neffenger, we're putting an awful lot of wait on the expedited screening procedures, tsa pre check, that type thing. what metric do you use or what do we know about what is the faster throughput of that program? >> so the difference between expedited lane and standard lane, roughly -- at peak if you have an efficient team working it you can move 250 people per
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hour through a pre-check lane, it's about 150 people through a standard screen it's a significant improvement. ing lane. >> what percent -- because we know the number of people signed up for pre check but we don't -- i don't know how often they travel. what percent of passengers currently are in tsa pre check? >> on a daily basis we move about 30% of the traveling population through pre check lanes. that's a combination of people who have signed up for pre check, people who are in cleared populations like department of defense individuals who hold security clearances and the like, and then a very small piece based upon rules. >> and we're all concerned about that algorithm, correct? it's what inspector general and gao were concerned about that, call that manage inclusion. >> i wouldn't call that manage inclusion. manage inclusion was the practice of taking just unknown people and randomly assigning. we don't do that anymore. these are people who are looked
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at, they are looked at through a rules-based calculation assigned, a risk value. >> you're looking at that because we're concerned about that, correct? >> yes, sir. >> i do know there are about 200 adjudicators that are waiting to be approved by tsa. i know in milwaukee people can't sign up and get their application -- they can't apply. there is i think about a 45-day waiting period. where are you at in terms of approving those adjudicators so more people can sign up for tsa pre check. >> we've been working closely with the vendor. we have all the capacity we need to approve it. as long as we get a completed application, you have to fill out the standard form that we all fill out for security clearances. if we get a completed application we can process that application inside of seven days. >> i do know they're waiting at the milwaukee airport. that application office is clogged. >> i'll check on that one in particular. >> i would appreciate that. >> yes, sir. >> where are we at in terms of new technology?
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you talked about two new automated lanes in atlanta. can you describe those in greater detail? >> i will. so these are two lanes -- this is existing equipment, this is equipment that i first saw when i visited london heathrow airport last year. essentially if you think of the current system it's a fully manual system, you have to push your bag along a table, you have to engage the conveyor belt at the x-ray machine then you have to pull your bag out the other side. it's a single file system. you are in line behind whoever is in front of you and until their stuff moves through. so first it's an automated conveyor belt, so it's an automated roller system, an automatic bin return, there are five stations at which individuals can stand, you can move five people at a time up to the checkpoint. as you put things in your bin and push it on to the conveyor belt you can cycle right in. there's no waiting for the person in front of you. and then on the other end it has an automatic divert.
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the bins from rfid technology so they are tracked to the individual, it pulls the person whose bag has been diverted off the line. bottom line is we are seeing just in the initial phase of operating these two lanes about a 30% increase in throughput at the same level of effectiveness. it also allows us to be much more effective on our end to gao's point. one of the problems that we have is giving realtime right now feedback to an officer on their performance. this does that. it allows us to do realtime performance monitoring. >> are you looking at first better detection technology but -- better than the ait machines or are you just -- >> yes, sir. >> are you really exploring that? >> yes, sir. what we're looking at is the next phase would be to incorporate so-called cat scan technology, computed tomography technology in the checkpoint. we have a couple approved systems that we can put in, we're looking to prototype pilot
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one of those this summer. this gives us a much more defined ability to see what we're -- it's a system we use in check baggage and it's a substantial improvement over the x-ray. >> we held a hearing on the dogs at dhs. what i've learned i'm incredibly impressed by the ability, the nose of a dog, there is no technology that can beat it. where are you in terms of trying to beef up the number of k-9 units we have? >> tsa itself operates a little over 300 k-9 teams of which 148 have been trained to do passenger screening. my goal is to get the rest of those trained for passenger screening, that will take about another eight, nine months or so. but i'd like to see a total of about 500 dog teams. that would allow me to address the highest volume airports in a very efficient way. >> i want to be supportive of those efforts. senator carper. >> thanks.
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admiral he h, i want to go backa conversation you and i had several weeks ago. there had been long waits, a lot of frustration at o'hare and i urged you to go there and to see for yourself what had happened, what had gone wrong and i want to thank you for going. tell us what you found. tell us what has been done and what lessons that you learned have you been able to take away and to spread to other airports, to other security stations across america? >> thanks for that and thank you for the opportunity to talk about that earlier. there's a couple pieces of that answer. the first is what happened at chicago, that was truly in my opinion and in my investigation it was just a failure to get enough lanes opened in advance of what was an anticipated significant increase in volume for that day. it was sort of the first day of the volume season. we saw about a 13% increase in volume from the previous week and we didn't have enough lanes open and once you're behind it's very challenging to catch up. the first thing we did was to look at what caused that and to make immediate operational changes, opening a checkpoint earlier, making sure that the lanes are fully staffed when you do. we put a new temporary
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management team in, which i'm pleased to say within 24 hours really turned that situation around and we haven't seen a repeat of that. what we learned out of that, though, is that you really do need to pay attention to these large hub airports and out of that really came the development of a daily national command center focused specifically on screening operations. we've always focused on our daily operations but you need to really look at screening. checkpoint by checkpoint at the major airports across the country. in this case we decided to focus for the memorial day weekend on the seven largest airports, these are the big multi-hub airports where all the traffic originates essentially. if you start to have problems in one you're going to cascade it across the system. so by doing that by taking the
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resources that we were able to put into place as a result of the reprogramming, overtime hours, new hires as well as converting people from part-time to full-time, we dramatically increased the staffing available and then we watch it very carefully on a daily basis to make sure it's applied to the right locations. the lesson learned out of that is that you have to be lacer focused on the actual operations airport by airport at the largest airports and can't let yourself get behind because once you're behind it's like a traffic jam, it's very challenging to clear it out. >> i talked earlier about leadership, the importance of leadership, i think we're blessed with leadership that you provide. talk to us about your ability to put around you the kind of leadership that you need to lead tsa and the flexibility you have to put in place the kind of leadership teams that will better ensure that we don't see the kind of jam ups and confusion that we witnessed at o'hare. >> well, i've made a number of leadership changes over the course of the past year, some just in the past few months. it's critical that you get the right leaders in the right places for the first time ever we now have a chief of operations for tsa. before that we had a series of operational programs that in my
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opinion were not fully integrated and as a result you can have a problem that arises without a vision of how to deal with that. so we have a chief of operations now, i have a new deputy administrator and i have a new chief of staff and i have a new head of my screening operations section. those have made a substantial difference and we made some field changes where necessary to ensure that you have the right people. >> good. thank you. the chairman asked about the issue of a pre check contractor staffing backlog. i've heard reports there was a backlog and the folks that vet the tsa pre check applicants there aren't enough of them and a delay as much as 40 days in doing that vetting process and i think i just heard you say earlier in response to our chairman's question that's really a seven-day wait and that's not extraordinary. is that correct? >> i think we've fixed the problem with respect to clearing the contractor's people who do the vetting work.
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we've got a process in place. we can handle anybody they give us and turn it around very quickly. we're now working with the contractor on expanding the number of mobile enrollment centers, ensuring that we balance their staffing workload so that they provide staffing to the highest volume of locations. >> very briefly tell us what do we need to do? we are all about doing our job, we want you to do your job, your folks to do their jobs. what do we need to do in our jobs to enable all of you to be more effective. >> that's a great open-ended question. congress has been extremely supportive this past year, you have helped us to grow back some staff that we needed. i do believe that tsa is smaller than it needs to be to meet the demands of the system. it was significantly helpful to get those 1600 people that they were slated to lose back on the books. the tsa academy has been a cultural game changer for us.
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and more importantly, we have pending the bill that would allow us to bring on more staff and convert more from part time to full-time. those are very important because that helps us to address the challenge of just getting lanes manned at peak periods. the second real important task is -- i mentioned those two automated lanes. that is an example of the way we need to modernize and bring tsa into the 21st century. and this is technology that exists, i have technology i. t. backbone systems that need to be updated. i need to connect the systems that need to be currently connected. i can't see the health of the systems because i have independent operations that can't be linked together because of cyber security systems. and i need to do a better job of getting realtime performance data on my work force that i
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can't currently do. so those are the types of things i plan to bring forward to congress in the coming weeks. i think we have a good strategy, and it will help us raise the concerns that the inspector general and the gao have raised with respect to performance and their work has been critical in determining how we go forward on this. >> in closing, let us know how we can continue to help. >> thank you. >> we'll do questions in in order of arrival. >> thank you, mr. chairman. and thank you for your service, admiral neffenger. and i will say that with the exception of flying on one exception, these folks have been very, very professional. and that is over the last ten years. so thank you very much and the people who serve under you. and i want to talk about the national security. we talked about it before and the need to get it deployed throughout the country. could you talk about -- and i know you're under budget constraints and that may be
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something we can do as it applies to full body scanners. but can you talk about your progress on getting full body scanners to the airports that don't have them currently? how is that progress going? >> well, as you know we've identified the numbers that we need to do that. let me preface it and say we need that capability everywhere we need it. we know that terrorist groups are focused on their ability to get into the system. >> weakest link. >> so we have -- we're working through the administration right now, the department of administration to put forward what we hope would be a request that would allow us to purchase the additional equipment that we would need. not every place can actually accept one, but wherever we can put one that is a good goal. >> thank you, for the gao and aig, have you guys done any research into the effectiveness of the full body scanners and whether we should be concerned
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in the aprirports that only hav magnatrometers? >> there is a cause for concern, not having an ait in a specific facility. >> do you find the same, jennifer? >> they do different jobs, so they're looking for different things and they have different purposes. so there is a cost if you don't have an ait. >> and administrator neffenger, you talked about a new scanner that you're working on now that will be more effective. which is good for you. i always worry about scanners, i never know if i'm getting radiated or not. do you guys have protections on the parameters that you work with under health situations? >> the scanners that i was referring to are really the ones that are checking the -- check the carry-on baggage.
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>> yeah, but you said there will be similar technology applied to us. >> oh, no, if i did that -- no, the technology that we're currently using is non-penetrating, it's just the radio waves bouncing off. we have no intention of using anything else. >> certainly, when i get in an airport i look out and the passengers that went through the magnatrometer or full body scanners, whatever it may be. there are airport personnel, can you tell me if they go through the same procedure as passengers? >> very few go through the same procedures as passengers. this is a population that is already vetted against criminal terrorist data bases. some airports do screening in the area of magnetometers, and they're subject to random screening throughout the day. the passenger screening is more intense -- >> more intense for the people who work there, would you say?
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>> remember, we know something about these people that have bandaged acce-- badgeed access, you're doing continuous vetting -- >> so administrator, are they vetted monthly, weekly, daily? >> so you're continuously vetted against the data base and the extended categories that feed that data base. >> so you're comfortable with it, as the administrator of the tsa you're comfortable while we're out there with the employees. that is all i want to know. >> i think there is more work to be done. we need to keep our eye on the insider population. if of yyou have a trusted populn you need to do it in a way that is designed to deter and detect and ideally interrupt.
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>> so do you keep a record of it? >> we do, if we find it we keep a record. and contraband items we work with local law enforcement to deal with whatever conflict may result from that. >> and so do you have the ability -- do you have the ability if you find somebody that has contraband items to get them terminated? >> yes, sir, we do. >> thank you. >> senator enzy? >> thank you, mr. chairman, and i thank you for the testimony that you have done. i go home pretty much every weekend to wyoming, which means flying. and i try to get into some businesses there because i find out that any business i'm not familiar with looks pretty simple until i take a look at it. so that is probably what we see as we go through airports, too. but i am worried -- about the management at the security points themselves.
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not for whether they're stopping the bad stuff or not. but whether they're getting people through the lines. several times i have found a manager at one of these checkpoints and asked them some questions like why they had three people training one person on how to look at the driver's license, instead of having two of those people helping somewhere else. i also find two check podiums for one line to be able to get through the screening. so they continually are holie h up the line because if they get more people through they get stacked up and can't get through the x-ray machine. and then there will be another line that is not being used with x-rays. so i always wonder why the management doesn't say just open one podium if we're only going to open one line from there. or otherwise take the second person from the podium and help
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to staff the second line from there. i'm seeing the lines growing and growing behind me. and -- my result of when i have you're coming through the airport if you'll let us know in advance we make sure you get through security. i want you to know that's not the point. the point is i want my customers to be able to get through the line just as easily. and i want to be able to do that. i've also seen one screener taking three times as long to look at the screen for the item coming through, and calling for somebody to do a bag check on almost everything that comes through. and nobody checks to see if that person is just extra careful or if they're actually finding those kinds of things. also, at dulles i really like the little sign that they have that says how many minutes of
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wait at the different lines. one of the things that fascinates me here in d.c. is almost everything is precheck. so the regular line is usually one minute, the precheck line is 20 minutes. now, in casper, wyoming, when you go through they don't have a precheck line and a regular line. but if you have precheck on your ticket they hand you this orange card that you can take through with you. and then you have the same thing -- except for having to remove your computer you have the same thing as if you were in a regular precheck line. and it kind of expedites things. instead of taking regular people and putting them in a precheck line. sometimes maybe we ought to be taking precheck people and put them in a regular line and give them an orange card so they can be expedited. another thing that i hear frequently is why are they so many people that don't appear to have anything to do at the checkpoint.
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my suggestion, on that is the same as that if they don't have anything to do, is there some kind of a collection point where they can be out of sight at the moment so people aren't counting how many people are just standing around. then there's a pool to draw on when there's another use for them. so i guess what my question is, besides observations that i've done is there some kind of an incentive system for people to suggest improvement? people that work for tsa to suggest improvements and how does that incentive system work? >> there is. and to your observations, one of the things that i've found, we found is that by focusing, as i said daily on screening operations you start to identify some of the changes maybe you've seen.
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i suspect those are problems here and there. because we're not seeing that big across the system. but what we can do is rapidly identify those kinds of problems and then get the best practices out there. so it is about front line leadership, supervisory leadership and moving the measuring performance and moving those measures of good performance to other places. that's been very helpful. we do look for -- i happen to believe that front line people are probably some of the best source of information for how to improve a process. they see it, they live with it every day. in fact when the people who are now operating those new automated lanes down in atlanta first took a look at it, our transportation security officers found more efficient ways to operate it. they instantly saw how much they could do differently as a result of that. i'm happy to give you an idea of how it works and how we put it to use back through the system.
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>> i appreciate that. my time has expired. i will be submitting some questions on rural airports where they have very few passengers and some things that could be done there. thank you. >> thank you, senator ernst. >> thank you mr. chairman and thank you to senator ayotte for allowing me to jump ahead. you all have an important job. we want to make sure our constituents are traveling comfortably and safely. so thank you for taking on the roles that you have. administer neffenger, it seems as though a lot of the issues that we're seeing, a lot of the underlying problems come from mismanagement of resources. we've heard a number of them today. and so i do think that's something we need to really hone in on. inspector general roth's noted recent audits reflect issues
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with tsa stewardship of taxpayer dollars. and as a straightforward example -- this is pretty blatant, but recent media reports revealed that tsa spent tens of thousands on dollars on a mobile application -- maybe you know where i'm going with this -- with the randomizer. and it's an arrow on a screen of an ipad that randomly tells passengers to go to the left or right line. and this is government spending here. this is the epitome of wasteful washington spending. and what we would like to hear is how you will assure us and the american people tsa will take the taxpayer dollars and be responsible stewards of those dollars. >> i was outraged too. that app was used in 2013 and we don't use it anymore. i'm concerned about that.
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one of the things i did in the coast guard was work on reforming the entire acquisition projects. insuring the requirements lead to capability and don't buy capability you don't need at a higher price than you should be paying for it. and so when i first got here, within the first month i brought in the defense acquisition university. it looks at how we do government procurement. they conducted a pretty in depth review or a three month period. they made recommendations which we're beginning to put into place and working with the department and our other overseers to do that. i want to see us spend that kind of money. the money we have is critically important to the mission of security that i don't want to see it wasted as we go forward. i've committed to being as open and transparent as i need to be with not only our current expenditures but the things we
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have carried forward from the past to insure we don't do that and have invited oversight in to take a hard look at that. i'm fully in your camp on that score. i can't justify some of the actions that were taken in the past, but i can assure you that i will at least under my watch keep them from happening again. >> we can't blame you for previous years' administration. the thoughtful approach you're taking is very much appreciated by many of us. and we hope that we can see that at all levels through the tsa and hope to see continuous improvements. thank you very much, i appreciate it. >> thank you, senator ayotte. >> thank you, chairman. i want to thank you all for being here today. i wanted to ask admiral neffenger, there were some pieces of the reauthorization bill of the faa that recently passed the senate, including an amendment that i was part of to
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address insider security threats as well as an amendment that is focused on the tsa precheck enhancement act to insure that you have -- are able to expand that program. are both of those pieces important to get past? >> we're supportive of both of those pieces legislation. they codify things we're already doing. that's important. you want to make sure you put good institutional practices in place for the future. both of those are positive for tsa. >> good. i hope that the house will take up the faa reauthorization. i wanted to ask about admiral you state they're concentrating on improving tsa protocols, pretraining and refocusing the workforce and driving
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technological improvements. one thing you haven't mentioned as an existing tool is the screening partnership program. where tsa acts as the oversight entity but not the operator contract ing with security companies. and so what i've heard is that there's long waiting lines to get applications approved and that the tsa attitude doesn't seem to be that supportive of this program. particularly as we look at this program, just to use an example in portsmouth at the international airport, that is an spp airport. and one of 22 airports nationally in the spp, unfortunately, what i've heard from my local airport is that tsa has imposed contracting limitation and the security contractor that limits the flexibility of staff at the airport to respond to dynamic needs.
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so i guess i would like to know it seems to me when we've seen, for example, the implementation in san francisco of the spp partnership, are you interested in also looking at a vibrant screening partnership program, and how does the agency see s p, p as a way to consider reducing lines? what is your view of this program? i do have a follow up, because having looked at what the inspector general and also the gao has looked at on this program, i know there's an outstanding issue where tsa has not shared with the congress or with those who are looking at oversight the cost estimates so that we can as policymakers compare the spp programs verses the tsa programs and determine what's the efficient effective way to have security at the airports. >> thanks, senator. when i came into this job i was interested in understanding the spp program better. that's a program that an airport can request to bring in a private contract screening work force the work force is contracted to the federal government through tsa.
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but they can choose to do so if they like. and i've been committed to making that as straightforward a process as possible. in fact, we've stream lined significantly the application process over the course of this past year so that they don't have long waits. it's governed by the federal acquisition rules. there's a certain amount of wait that's required for the announcement, bid process and so forth. we have stream lined that significantly. i don't know the problem in portsmouth. i'll look into that for you. i'm not aware of the specifics. >> i appreciate it. >> i will check into that. i would hope it's not the case that there's anybody making it more difficult. we are officially neutral. if an airport wants to go to a private screening contractor we'll work with them. >> one thing i wanted to follow up with ms. grover on, as i understand even though congress has made the request that tsa has not reported cost comparisons between the federal and private screening at spp
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airports to us as policymakers, is that true? >> at the time of our report, which was in november 2015, that's what we found. i don't know if tsa has taken actions over this past winter. but we did recommend that they should provide regular information to you about the relative costs. >> to my knowledge it's not been approved. >> we have done that. it now includes the -- whether the so-called imputed costs -- the issue was that we were using just the cost to tsa. but it didn't include, you know, retirement cost and so forth that the rest of the federal government would pick up. now the imputed costs are those that are outside the budget but still costing the taxpayer for an employee at tsa. that's the piece that needed to be added in to give the full burden cost of -- >> are we doing any comparisons on wait lines between the different programs and how -- on this issue of management in terms of efficiency between the two programs? >> we have done that.
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what we're seeing is comparable across the board. it has to do with making sure the staffing is in place and the staffing allocations are correct. right now, we're seeing roughly comparable wait times across the whole system. as i said, really focusing on these biggest volume airports has been a dramatic improvement in our ability to manage lines effectively. >> i hope with the information being transmitted to gao we'll have an opportunity to see that analysis as well. thank you. >> thank you. one thing i love about the committee is the members ask great questions, i want to follow up on the spp program. so we talked about cost, we talked about the metrics. is it the exact same process? are those partners -- are they able to do it a different way or
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do it the exact same way tsa does it? >> so they train with tsa, they train at the tsa academy. they train to same standards and you have a federal security director, a tsa employee, who managed the contract of that work force or worked with the contractor to manage the work force. so they should be performing to the same standards across the system. >> so there wouldn't be innovation on part of those partners in terms of screening, they're done the exact same way? >> it currently is. >> with that process, they're required to do it the same way. >> there's a set of standards provided you're right, yes, sir. >> senator peters? >> thank you, mr. chairman. i'd like to thank our panelists for being here today and for your work. this is obviously, tough work and the fact you have to find a needle in a hay stacked. if the needle gets through the impact could be catastrophic. we appreciate your efforts to
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keep us safe but also moving through efficiently. we have heard the horror story of chicago, the delays that occurred there and happened on a few occasions. but i want to get a sense of what's happening around the country. admiral, you talked about your focus on some of the major airports, obviously, we have many, many airports where people are going through. where are we in terms of the overall system of airports? are there a number of airports you're concerned about? how would you break that down in places where we have problems in the whole system? >> i think the positive side of this is that we're not seeing problem -- if you take the top 20 airports which represent about 58% of the daily travel volume, these are the big hub airports and then the lesser hub
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airports associated with it. the remaining 430 or so are really doing pretty well. when you get stories of long wait times, it's there. which is why i really wanted to retool our strategic -- approach to this to focus specifically on those airports. making sure you get the resources in there to get ahead of the expected surge of people coming. we get good data from reservation systems and the airlines on who to expect and make sure you get your lanes manned at the time. i think that's the positive side if you can work on those 20 airports you can really for the most part solve the problems in
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the whole system. >> speaking of the detroit airport which is one i hear about regularly. i travel through as well. from my personal experience when i have travelled, the volumes have been similar to what i've experienced over the last few years. we still get complaints from my constituents particularly in the morning hours. could you address what's happening in detroit, good and bad and lessons learned? >> detroit is a good example. you have exceptionally strong work force there, very stable work force. we've been able to convert more of those to full time. that's helpful because that immediately reduces attrition. a lot of people want fulltime jobs. when they can't get them then they leave for a full time job. you've got a good management staff in place and have strong relations with the airport. they have good things to say about our folks there. what we've seen is it's a matter of insuring you get a checkpoint opened well in advance of the time you expect the surge of passengers to come in. you work closely with the airline and airports to manage the surge as it's moving from the ticket counter and the lines
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and you have fully staffed lanes. that's the absolute key to doing that. if you can do that, then you can efficiently move those people through the line and doing the job the way we should. the lesson we learned in detroit is they got ahead of that. if you noticed over memorial day weekend they had exceptionally good numbers going through there. people moved very efficiently. we didn't have any extended wait times there. >> i appreciate your efforts on acquisition reform and procurement, certainly it was a very disturbing to members of this committee with some of the media reports that occurred last year about the way equipment was not performing the way it was advertised and people were able to get items through. to what extent going forward will we hold contractors who design and build these machines to much higher standards than they've been held to in the past? and they must be held accountable but we can simp -- we simply cannot accept the types of failures that we have seen in the past. >> i spent a lot of time with our major equipment contractors when i first came on board. and we've had a lot of lengthy discussions about performance standards, performance of the equipment, maintenance of the equipment and so forth going forward. i'm very interested in seeing, >> thank you, admiral. >> thank you. >> by the way, when you're connecting in detroit it's great
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for my fit bit challenges with my wife. media reports that occurred last year about the way equipment was not performing the way it was advertised and people were able to get items through. to what extent going forward will we hold contractors who design and build these machines to much higher standards than they've been held to in the past? and they must be held accountable but we can simp -- we simply cannot accept the types of failures that we have seen in the past. >> i spent a lot of time with our major equipment contractors when i first came on board. and we've had a lot of lengthy discussions about performance standards, performance of the equipment, maintenance of the equipment and so forth going forward. i'm very interested in seeing, you know, more participation by the private sector in the types of capabilities we need. i think we need more
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architecture, we need the ability for some of the really talented innovative minds out there to participate in increasing our ability to do the job more effectively. >> thank you, admiral. >> thank you. >> by the way, when you're connecting in detroit it's great for my fit bit challenges with my wife. a lot of long walks. senator langford. >> not as much as charlotte is a help for that. thank y'all for being here and your testimony today. i think everyone has reiterated the same thing. safety is a primary consideration. we never want there to be a consideration to say let's speed everything up. that was part of our conversations even a year ago when you were going through the confirmation process and the concern with the precheck line precheck had become plus another randomized. it was all about speed. from the ig's report to come back and say we're overly optimistic on staffing so we have a drop in staff and we have
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an increase in passengers and it's not rocket science to figure out why we have long lines to go through that. i want to make sure everyone is loud and clear, we're focused on safety. it's not just about speed. there are plenty of people that as we through airports see tsa workers standing around or not in a hurry when people are waiting in long lines. people under the safety and want to see efficiency in the process with that. with that, let me highlight a couple things i want to bring up. we have briefly discussed the innovation that happened in atlanta. and i'd like to be able to talk more how that could be multiplied. delta airlines spent a million dollars researching a better way
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to do the tsa check line in their home airport in atlanta. developed a system, partnered with tsa, implemented the system. it's proven to be much faster. for a million dollars at that airport now their check in is much faster. the concern i have is, where do we have more opportunities for the private sector to be able to engage with tsa to help innovate in other areas and be able to not only put private sector folks in places that are non-security and better innovation in the process as well. >> this is where i see the greatest promise going forward. originally, it was patterned after the work that was done in europe to create more automated systems as you move through. in discussions with a number of airports and airlines shortly after i came in, i said -- i was looking for opportunities to partner to do some innovation pilots. originally it was can we do a couple of pilot projects. delta airlines offered to jump in and purchase a couple of these automated systems. this happens to be in use at heathrow airport. they move quickly. you're right, just these first two lanes alone have shown promise in terms of improving
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efficiency. a 30% improvement by their own count. i think there's -- that is certainly a critical element of transforming the system. other airlines and airports have come forward and said they want to do the same thing. i put together an innovation project team, which is focused specifically on these public private partnerships, managing it -- you don't want to create a hodgepodge of systems. you want to do something that makes sense. not just to automate the lane but look at the technology that can be added that can lead to electronic gates to let you into a checkpoint that could move the i d check to a kiosk and then
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you keep the person sterile as they come through. building that true curb to gate security environment as opposed to just focusing it around the checkpoint. i'm excited we have a pretty good plan going forward. it's mapped out. we're building the architecture with various airlines and airports. we've got about a dozen airports that have come forward along with the airlines that service them to talk about doing this transformation. this is happening over the course of the next six months. happy to provide you with a more detailed brief but i think you'd find it promising. >> i think you would find plenty of people to help you innovate to try to find ways to evaluate how do we move people faster through this spot and still keep the innovation we have. with the technology piece of it it would be the expectation of everyone here as well, early on in tsa's history there were a lot of overpromised made by some manufacturers, we overpurchased in some areas, ended up having in ware houses lots of equipment sitting there unused. we don't want to see that. nor have equipment put in place that says one thing and can't fulfill what it's stated to actually do.
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we want to make sure that that process stays in place in all of our equipment. not only purchasing the right amount, having the equipment that can fulfill what it's asked to do. thank you for that. i ask for your continued attention on things like the tsa precheck. in oklahoma we had a computer glitch for a while that you couldn't sign up for tsa precheck for a period of time. there were lots of other ways to be able not only have innovation and getting ppeople through the line but getting people registered for precheck so we can get that background. precheck is really precheck and more people are actually able to go through that process to be able to be checked off. i would appreciate continued attention for that. >> yes, sir. >> i yield back. >> senator portman. >> thank you mr. chairman. admiral great to have you here before us. you're talking to a pretty tough audience because we're are
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frequent flyers. i go back and forth from ohio a couple week, couple times i guess. we're also all precheck i would think. when i'm in the precheck line in cincinnati columbus and cleveland it's shorter than dulles. a lot of the questions we're asking you are about not precheck but how do we expedite everybody. by the way, the tsa folks who i deal with every week, are courteous, professional, the vast majority of them. vast majority. i remember being here at a hearing recently that a senator thanks them as they go through. on the other hand they do all work for us as taxpayers. and that customer service side -- >> when i say that people say to me are you rob portman? not yet. >> i go incognito through there. yeah. but you talked about the training and the performance measurement.
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i appreciate your leadership. i'm glad you're there. we talked a second ago about what you've done in terms of the training, on the customer service side what are you doing in terms of measuring performance and training? >> you know, that was one of my big concerns when i came in. and in fact, i extend beyond customer service. this is what true public service is all about. providing an important service to the public in a way that treats them with respect and dignity and that recognizes the inherent inconvenient of what you're doing. that's an important thing to do. we built that into our new tsa academy training. all of our new hires now, there's an entire component on what it means to be a public servant. what that public is that you serve. these are people who are your fellow citizens. we -- there's a part of it where think of this as your family members -- assuming you like your family members -- as they're coming through. i hope people are seeing -- we're getting reports that people are seeing a difference among the work force. we've done that through the
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entire work force. you know, that takes front line leadership to make it work. so we're also working on that first line supervisory leadership training. >> i appreciate that attitude and approach. i know that's your personal approach. i do think it expedites the process as well. there's a safety aspect to this also in addition to the fact that it is a matter of customer service for the taxpayers who are inconvenienced. this report last june was incredibly troubling. mr. roth hasn't got to ask many questions i may not give you a chance either.
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i'm going to tell you about your report. 95%. so in 95% of the time tsa was not finding dangerous items, shocking. this was before your time. we also found that there were 73 individuals employed by the aviation industry that were on the terror watch list. at the time i did questions as part of your confirmation you were going to put things in place and look at the systemic problems. can you give us a report on where you are? mr. roth said you're doing testing and audits, but didn't say what the percentage was. >> i can't talk about percentage of what we're finding in open session. we're better. as you know, one of the biggest concerns i had was to find out why did we have failure rate of that magnitude. and as it turns out, it was really that we were asking the front line work force to do something directly in opposition
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to what their job was. if their job is to insure something doesn't get past the checkpoint you can't ride them about moving people faster through a checkpoint. if i put myself in the shoes of a front line officer, they're torn -- told i can't hold things up. we have retrained the whole work force, i think we're significantly better. i hope the testing bears that out. >> mr. roth? >> as i indicated in my testimony we are going to do some covert testing this summer. i will be candid that we have taken a look at some of the red team testing that tsa has done. we think that our testing will be more objective and i think those results will be more accurate. we won't wait and see what happens. >> this committee will be interested in the results of that test and the terror watch list. you're comfortable that's been addressed? >> there are two lists one is the terrorist data base and the other is the tide list.
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they did not have access to the larger list, it was largely bureaucratic inertia not on tsa's part. that's been fixed. and we think that tsa now has all the information it needs to be able to adjudicate those things. >> i want to ask you a on the record about cuba. opening an additional airports with screening we would not think is acceptable. there's been travel from afghanistan to cuba and so on. i'll ask questions for the record on that issue. i want to express my concern right now that we be sure those airports are fully vetted and have property security screening in place. >> senator hidencamp. >> thank you, mr. chairman and thanks for stepping up and serving once again your country,
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admiral. we really appreciate this. we were very glad to confirm you. i can tell you from this testimony and our dialogue our trust has been well-served. but we have some business that needs to get taken care of. and you know, i kind of tell people occasionally if you've ever been to a penitentiary and have the the warden bring out a box, they have box of handmade weapons, you know, from tooth brushes that have been shaved off to just simply plastic knives that can be used to kill other people. so we have to be careful that we don't overstate, you know, the risk that there is. even though we're looking for traditional weapons, we let people on with knitting needles. so, you know, we sometimes frustrate the public because they look at this in a lens of commonsense. one of the things i want to ask is, whether when you look at the metrics -- that's for anybody
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here -- and we look at this transition now to bag fees that has resulted in more people doing carry ones i believe. has that been a problem? is there a way to do prescreen for baggage on carry on that would help the line move quicker, and also would provide greater security for -- in terms of what's in the bags? >> i'll start the answers on that. the first thing is we've been working closely with the airlines to enforce the one plus one rule. it's the case that there is more stuff coming through a checkpoint, more carry on baggage by definition is going to slow things down. the other thing is to encourage people to really double check their bag, pack wisely. prohibited item in a bag of any type causes something to stop
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for a moment. we encourage people to double check their bags make sure they haven't put anything in there that shouldn't go. there's very clear information on the website now. it says, you know, what shouldn't go in there. if they have question at all, ask somebody as they come in the airport. i think trying to keep the number of bags coming through to a minimum. the one plus one rule is a must. many airlines are working hard to enforce that. and insuring passengers double check before they come through o. one it's an inconvenience to the individual who forgets they leave something in there. it is true we find a lot of contraband items coming through, a lot of -- we had a phenomenal number of loaded weapons at checkpoints last year. it always astonishes me that people forget they have a weapon in their bag when they come
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through. that is one of the most important things we can do. we're looking at whether there are ways to do something different with carry on baggage before you get to a checkpoint. but, again, that's part of the technology improvement we're thinking of. >> i would encourage you to think beyond the box with what could happen with carry on baggage. we're all standing in line with our carry ones, with a couple extra lines they could be screened ahead of time as we're moving through the line. i think that would give you more time to actually check the carry on luggage. you know, i can tell you it's incredibly frustrating when you see someone bring something through that they shouldn't. just a couple weeks ago i had a bottle of water in my back pack, how often do i fly and i've made that mistake. and so you just get -- you don't always know. and so i want to ask, finally about the 2013 gao report noting that tsa could not provide evidence to justify its spot program and that screening of passengers by observation techniques. gao recommended congress should consider the absence of validated evidence for using behavioral indicators to
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identify threats to aviation security. while assessing the potential benefits and costs in making future funding decisions for aviation security. obviously, dhs did not concur with the recommendation. have you reviewed the report? since you've been there do you come to the same conclusion as dhs did, department of homeland security did when they had the review? >> i have reviewed the report. there's a couple of elements to this that i think are important. so the first thing i did was to figure out is anybody else doing behavioral detection of some sort? a lot of law enforcement agencies around the world use
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it. there are other security agencies that do it. i think there is some value in considering to look at whether behavioral detection is a valuable element to add in. we're looking a at how we can look at the people we've assigned. we're pushing a lot of those people back into security screening duties this summer. we're having them work with k-9 teams. i think there is work to be done on validation of the indicators in the way in which we do behavioral detection. >> i don't want to belabor the point but it can be a valuable tool, there is science to this, are you applying the right science? thank you for the time. >> thank you, senator. just to pick up that's what israel does, correct? >> they do. in fact, a lot of what the israelis are doing has informed
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what we're doing. we've trained with the israelis on behavioral detection. >> that's a more intensive process? >> it has more elements to it than we're currently using. >> a number of people are proposing to force airports or airlines to drop the baggage fees to force them, you know, allow more people to check bags. does that really gain us anything? we still have to run those bags through a detection system, correct? >> you know it's hard to know whether it would dramatically change the way things are. i think there's more to be gained by reminding people to minimize their carry on baggage to the one plus one the airlines require. that makes things much smoother. i have concerns about the baggage system's ability to handle a checked bag without modifications the way we're doing it in some airports. so what i've committed to doing with the airlines and airports is working on minimizing the amount of carry on. a lot of that stuff gets gate checked anyhow. i assume it doesn't come through the checkpoint if it's going to
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be gate checked on the plane and insuring we have the appropriate staff there to handle. >> you're confirming my suspicion that may not gain us a whole lot. basically -- there's an awful lot to be said for having the passengers with their bag in terms of security as well. without getting into the detail of the failure of the ait machines, has there been any thought given to a machine followed by a metal detector? >> we've looked at that. as we look at the changing of the thinking behind screening. i want to get away from static system. we're looking at systems that integrate that technology. the challenge is you have to be careful because then metal detectors set off people with artificial hips. we're looking at ways to
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integrate more of the technology. that's why i want to activate the private sector more effectively than we have. i think there are ways to do this that are smarter. >> generally people that know they're going to set off a detector can talk about it. that would improve security dramatically if people went through both? general roth? >> again, two different machines look for two different kinds of things. my understanding as far as the tsa's protocols now when there is an alarm on the ait that is, for example, suspicious, they have the ability then to run people through. >> again, the -- yeah, i don't want to get into detail, but i've seen videos. there's a real problem in terms
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of what one machine detects and the other doesn't. if you go through both i think you would increase the level of security. >> i'll defer to tsa on that. our testing hasn't shown that. >> there's probably -- it gets challenging to talk about this in open session. i'd be happy to sit down with you in closed session to do so. we're looking at those kinds of capabilities. i'm concerned about what can do and the other can't do. the k-9's play a role in here. if i could sit down -- >> we'll talk about that in closed session. again, listen, i truly appreciate, reading the testimony was -- it came across very clear. as general roth talked about, you're doing a great job at really looking at this honestly, admitting you have a problem, assessing what's happened in the agency. so i just want to ask the inspector general. on a scale of one to ten in terms of critical assessment we've got from what to what in terms of improvement? >> we have gone from night to day. i can't put a number on it. we went from a cultural situation where we were fought at every turn to now where they embrace oversight in a way that
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is a positive method. >> admiral, that's to your credit. thank you for your service doing that. let me ask you the harder question. that's the first step in solving the problem. how about actual implementation of the solutions? where are we at? let's say we're at one where are we at now on a scale of one to ten? >> we have a number of challenges i will not underestimate it. there's a 23 point plan that tsa has put in place. we're satisfied with the progress they're making. it's by no means complaint. there are issues with regard to tsa as a contract administrator for example. there are issues as far as tsa as a regulator with local airports, how well are they relating the local airports. we have concerns about insider threat. while tsa talked about the recurrent vetting. you are either convicted of certain defenses or you're not. there's not a holistic look at
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an airport worker who has unrestricted access to aircraft. they are either sort of convicted or not convicted. if they're not convicted there is no holistic vetting that would occur with federal employees. you know, where we look at a whole range of things before we determine whether they're trustworthy. >> i hate putting words in people's mouths. from the first step admitting we have a problem, we've taken the step. in terms of solving the problem you say we have a long way to go? >> yes. >> i would agree with that. i think we've made substantial progress in just enumerating what the issues are. these are issues that will take time to correct. >> i don't envy you your task. god bless you for your service.
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senator mccaskill. >> thank you very much, mr. chairman. i'd like to talk about senior executive service. i understand, mr. neffenger that the bonuses that were paid to the form or assistant manager happened before your watch. but there was $90,000 in bonuses paid to the assistant administrator of the office of security operations. at the same time that all of those tests were failing. that the ig was conducting the tests and showing 67 out of 70 weapons got through. and those bonuses were paid in a way to hide them. they were paid over time. obviously clearly exceeding a 20% cap. i know that you have made changes to make sure that doesn't happen again. this is really a system of this ses service i think and the lack of reform that's occurred with the senior executive service. i liked to point out every time i get a chance on the other hand how senior executive service
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began. it began as an idea i think the chairman would agree with you need to get talent in management and government. you would hire competitive with the private sector and these managers would go from agency to agency and get expertise. well that's long since been abandoned. these are people who have burrowed in one agency. that hang out long enough to figure out how to get ses and then they get paid a lot more and this is where we've seen a lot of abuse in terms of bonuses. so let me ask you this, with your reforms, is there any connection to bonuses paid on whether the agency is succeeding? in the private sector the bonus pool changes based on how the company did. and that's not been the way in government. i don't think anybody looking objectively at tsa would say that the bonus pool should be really big. are you now tying bonuses to the
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performance of the agency and not just performance of the individual? >> it's a combination of both now. i want to just also preface it by adding i have severely limited both the type and the number of bonuses that can be handed out in an agency. i've put controls on it above me. my concern was that the agency had the ability to independently assign bonuses. i now require department oversight for that and i've asked the department to do that. i'm a strong believer in controls. i believe there's a need to have the ability to give bonuses when people have done good work. you want to keep good people in government. so the notion and the practice of bonuses is not necessarily a bad one. there has to be management carefully, it has to be controlled and appropriate.
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>> if you look that data, no one could objectively look at the data and say that tsa has high marks in terms of the things you look at in management, in terms of morale and -- you know, on all the measurements out there. i am hoping -- i think you're trying to do better in that regard. we need a look at ses reform at a larger capacity not just at tsa. i think there's a lot of issues with senior executive service. i have serious concerns related to this is the whistle blower retaliation. i read with interest the article that was published in april about the high level of whistle blower retaliation at tsa. the case that struck me was a man took his case all the way to the supreme court and won. on whistle blower retaliation that he'd been wrongfully fired. he lost ten years, it took him ten years to win. he lost ten years of promotions and tsa said we can't speculate how much he would have been promoted in teyears. they put him back at his other
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job and frankly he's still getting passed over to this day. i ask you mr. roth how does tsa compare to other dhs components as far as the number of whittle blower complaints and whistle blower retaliation complaints. >> we haven't done a study of that. that would be interesting to know. i can take that back. >> what can we do about the lost years of salary and compensation and promotion for the time period that someone litigates them being treated unfairly? >> well, the individual you're speaking of did get full back pay for that full ten year period along with the cost of living increases that would have occurred during that time. in addition to other things. he got a sizable payment for back pay. and it included the cost of living increases. i understand that there -- he
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has ongoing litigation, so it would be inappropriate for me to comment anymore upon that because i want to make sure he gets the appropriate due process. i am committed to supporting people who bring forward complaints. i'm committed to them being treated fairly. i will not stand for retaliation inside the agency. i understand there have been allegations of that and in one case proof of that in the past. my position is, i don't want to inadvertently bias any action. if you have information, we'll work with the office of special counsel going forward. and more importantly, i will take swift against people if they do something under my watch that indicates they retaliated. >> i would love a response to the people who are laid out in the "new york times" article as to the agency's position on these people and what occurred and how they've been made whole, the woman who was forced to leave her assignment after she complained. there's a number of them in here
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as you know, it's pretty damning. and it says it's much higher than, for example, the irs, that has many more employees in terms of the rate of complaints. it went up significantly the number of complaints. so i want you to take a look at that. my time is up. i would say on the other hand i hope you're thinking about every airport -- you got a group of frequent flyers up here. everyone flies hope every weekend. no one uses tsa more than all of us because we're flying twice a week. we see a lot in the airports. i am bombarded with kiosks wanting to sell me sun glasses, pillows, cases for my iphone. i'd love to see a kiosk for precheck. i mean, how simple to put up a kiosk in the airport for someone to sign up for precheck. it wouldn't be that expensive.
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frankly you could probably staff it with -- especially in the nonpeak hours with people who are waiting for surges in people coming for flights. i bet you could do it pretty cost effectively at $85 a pop. that's more than a lot of cell phone colors. >> the vendor is looking at dramatically increasing the number of mobile sites just for that reason. >> kiosks, not an office somewhere you've got to go into the bowels of the airport to find it. i'm talking about right there, neon letters with a big smily face. maybe we could sell cell phone covers at the same place. thank you. >> senator carper. >> easy pass is not the same. we have a much different vetting process with easy pass as opposed to precheck. when you come into delaware, we have -- collect tolls on i-95. there is a place easy on the road to stop off if you want to get an easy pass you can. on north south highway that goes down to our beaches it's easy to pull off and get yourself an easy pass. that's a good idea.
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thank you for the work you are doing to make tsa better. admiral, i'm struck by apparent success of tsa's efforts to reduce wait times ahead of memorial day holiday. security checkpoint wait times were mostly average. i think 99% of passengers for 30% waiting 15 minutes. take a few minutes and tell us how you and your team were able to cut wait times in such short order. >> four things. first, we got new resources through programming. thousands of overtime hours. we were able to convert people from part time to full time. we moved additional canine units into the largest airports. that was number one. second was standing up -- focusing on the top seven airports primarily looking across top 20 in addition to that. that allows us to address
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problems at the places where they begin. third was national incident command center to manage that on a daily basis. checkpoint screening operations and a daily phone call with airport federal security director and airline partners in that airport, airport by airport across top airports. >> i mentioned in my opening statement we included in the appropriations committee out by senate appropriations committee, additional moneys for human resources, personal resources, dogs, canine and maybe infrastructure and technology improvements. do you still believe they are going to be needed? >> absolutely. >> that's all i need. thanks very much. talk to us about the role your employees made. they are on the front lines. they see the stuff every day, talk to people every day. how do you ask them for their -- make sure they are gathered and acted upon. >> we still need to work better
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at that. what i've tried to do is both anecdotally and more structured solicit information on how best to do the job we're doing. we bring them short-term details technology office, work in the test facility. they give us ideas how to improve what we're doing. looking at automated, frontline tso's up and said how would you run this thing. there's a lot of just great tactical knowledge they have in their head on how to do this job better day to day. we're trying to capture that in a much more systematic way. >> one of the ways i always found to improve employee moral, whether federal government or state or some other regard is training. folks in delaware love to come
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to diagnosis specialized training regardless what their jobs would be. not only better job but sense of self-worth is enhanced as well. i want to encourage you to do the training. the other thing i wanted to ask is, you talked a little about the range of weapons that we find, your folks find on passengers trying to get onto a plane. i think you actually have an instagram feed. can you take a min and tell us, if you will, speak about some of the dangerous items tsa screeners discover and carry on baggage and checkpoint and the importance of careful and effective security screening in order to identify and in some cases overt threats. >> we've seen a lot of loaded handguns come through checkpoints. last year i think it was somewhere around there. loaded chambers.
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these are weapons that are dangerous. two weeks ago we had two smoke grenades, live smoke grenades found in carry on luggage coming through. you get inert items coming through, things that look like grenades but those are a concern, too. you can't tell from a distance. quite a few knives, concealed weapons, canes with knives, swords embedded in them. you name it, somebody is trying to get them through checkpoints, throwing knives, brass knuckles, all sorts of stuff you don't want in an aircraft environment, given the way we know some people have been acting lately. >> last thing i would say, i was elected governor in '92, along with other newly elected governors in '92 we went to new governors school, hosted by national governors association, governor of colorado, and learned a lot. there's three days, faculty with existing governors and spouses,
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grizzled veterans i call them. one of the best lessons i learned in those three days was one of the governors said when have you a problem, you face a problem in your state as governor, don't make a one-day problem a one week problem or one month problem or one year problem. own the problem. own the problem. take responsibility for the problem. say this is what we're going to do. we're going to fix the problem. apologize and then do it. the way i watch you perform and head of tsa, i'm reminded of that advice. i don't know that you will ever be a governor but you're certainly prepared with the terrain you've gone through as well. i want to close with preamble of constitution, we're very proud of the constitution, delaware first state that ratified constitution one week entire united states of america. pretty good week. the preamble to the constitution
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begins with these words, we, the people of the united states, in order to form a more perfect union. it doesn't say form a perfect union. we didn't. we continue to amend the constitution over time and the ideas always get better. how do we get better. clearly tsa is doing a better job. we're grateful for that. we're anxious to know how we can help make that happen, even more expeditiously. we want to thank our friends at gio and ig's office for the good work doing, wind beneath the wings, keep up the good work. one last thing we're in africa on a family vacation i heard this old african saying, if you want to go fast, travel alone. if you want to go far, travel together. in this instance, so this is team sport, we're going to travel together. i think to the extent we do, we're going to go a longways toward where we need to go. thank you. so other people can get where they need to go. thank you. >> senator, thank you. i want to thank our witnesses,
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peter neffenger, really, we do appreciate the enormity of your task, significant challenge. i think you've really shown you've taken some pretty great strides that first step, the problem, worked in a very methodical, very military fashion quite honestly, which i think we all appreciate. inspector roth and miss grover thank you for your contributions as well. thank you for your time, your testimony, you answered our questions. with that the hearing record will remain open 15 days june 22nd 5:00 p.m. submission of statement and questions for the record, this hearing is adjourned.
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following a meeting with his security counsel, president obama spoke about the shooting in orlando and the use of radical islam to speak of terrorists. >> for awhile now the main contribution from friends on the other side of the isle made until the fight against isil is to criticize this administration and me for not using the phrase radical islam. that's the key they tell us.
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we can't be isil unless we call them radical islamists. when exactly would using this label accomplish? exactly would it change? would it make isil less committed to try to kill americans? would it bring in more alleys? is there a military strategy served by this? the answer is none of the above. calling a threat by a different name does not make it go away. this is a political distraction. since before i was president i've been clear about how
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extremist groups proverbed islam to justify terrorism. i've repeatedly called on muslim allies at home and around the world to work to reject this twisted interpretation of one of the world's great religions. there's not been a moment in my seven and a half years as president where we have not been able to pursue a strategy because we didn't use the label radical islam. not once has an advisor of mine said man, if we really used that phrase, we're going to turn this whole thing around. not once. so someone seriously thinks that we don't know who we're fighting. if there's anyone out there that
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thinks we're confused about who our enemies are, that could come as a surprise to the thousands of terrorists who we've taken off the battle field. if the implication is that those of us up here and the thousands of people around the country and around the world who are working to defeat isil aren't taking the fight seriously, that would come as a surprise to those who spent these last seven and a half years dismantling al qaeda including the men and women in uniform that put their lives at risk and the special forces i ordered to get bin laden and are now on the ground in iraq and syria. they know full well who the enemy is. so do the intelligence and law enforcement officers who spent
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countless hours disrupting plots. and protecting all americans. including politicians who tweet. and appear on cable news shows. they know who the nature of the enemy is. so there is no magic phrase is lal. it's a political talking point. it's not a strategy. and the reason i am careful how i describe this threat has nothing to do with political correctness and everything to do with actually defeating extremism. groups like isil and al qaeda want to make this war a war between islam and america. or between islam and the west.
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they want to claim that they are the true leaders of over a billion muslims around the world who reject their crazy notions. they want us to validate them by implying that they speak for those billion plus people, that they speak for islam. that's their propaganda. that's how they recruit. and if we fall into the trap of painting all muslims with a broad brush and imply that we are at war with an entire religion, then we are doing the terrorist work for them. up until this point, this argument about labels is mostly just been partisan rhetoric and
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sadly, we've all become accustomed to that kind of partisanship. even when it involves the fight against these extremist groups, and that kind of yapping has not prevented folks across government from doing their jobs. >> i often say that 50 is not the new 30 and 60 is not the new 40, 50 is the new 50 and it looks good and it's okay and people are to own their age and we ought not be talking about being over 50 as the period of decline. >> sunday night aarp ceo talks about the health and financial challenges older americans face and what aarp is doing to assist them and author of the book disrupt ageing, a bold new path
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to living your best life at every age. >> the fastest growing age segment in this country is people over the age of 85 and the second is people over the age of 100. so when these programs were put in place, life expectancy was 67 or 68 and so not only are there more people in the system, but they are living longer and so we have to be able to look at these programs and make meaningful adjustments that is going to be allow people to live with dignity at a much longer period of time. >> sunday night at 8:00 eastern on cspn's q and a. the food and drug administration has finalized regulations that would make electronic or e cigarettes subject to the same federal rules as traditional cigarettes and other tobacco products. next, a panel talks about the public health implications and possible legal challenges to the
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fda's proposed rule. the forum was hosted by the american enterprise institute. good morning. welcome to the aie conference on e cigarettes and public health. what's next after the fda rule? i'm alan, a resident scholar here at aie and i want to welcome those of you in the room, those of you watching on the web cast and those of you watching on c-span. last month, the food and drug administration released a sweeping regulation extending authority to e cigarettes and those not previously regulated by the agency. the fda describes it as a measure to protect public health but many observers argue it will threaten public health with the availability of e cigarettes, a safer alternative to combustible cigarettes. all five of our panelist share concerns about the regulation. because time is short, i will not detail the imminent
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qualifications but urge you to look through the materials where you can see them set forth in detail. today we'll hear first from the university of pittsburgh who will present an overview of the relevant issues and my colleague sal lee will discuss the


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