| 00:00:50 |
Johnson, Tim P. - U.S. Senator, [D] South Dakota
RISK AND IMPROVE OVERSIGHT IN THE DERIVATIVES MARKET. BEFORE WE GET TO THE MAIN SUBJECT, I WANT TO MAKE A FEW COMMENTS ABOUT THE RECENT NEWS MADE BY JPMORGAN...
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| 00:06:08 |
Shelby, Richard C. - U.S. Senator, [R] Alabama
ITIT'S PROPONENTS HAVE CLAIMED THEY WILL BUT IF IT FROM THE NEW LAW. WE NOW KNOW THAT BOTH OF THE CLAIMS ARE FALSE. SINCE LAST YEAR, GARY GENSLER OVERSAW...
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| 00:11:05 |
Johnson, Tim P. - U.S. Senator, [D] South Dakota
I WOULD LIKE TO INTRODUCE OUR WITNESSES, KNOWN OF WHOM ARE STRANGERS. MARY SCHAPIRO IS THE HEAD OF THE U.S. SECURITIES AND EXCHANGE COMMISSION. CHAIRMAN...
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| 00:11:37 |
Schapiro, Mary L. - Chair
I APPRECIATE THE OPPORTUNITY TO TESTIFY REGARDING THE SECURITY AND EXCHANGE COMMITTEES IMPLEMENTATION OF THE DODD/FRANK ACT. IT CREATES A NEW REGULATORY...
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| 00:16:46 |
Gensler, Gary G. - Chair
I AM PLEASED TO TESTIFY. I'M GOING TO SPEAK TO THE THREE TOPICS OF YOUR INVITATION LETTER. WHERE IS THE SFTC ONSLAUGHT MARKET REFORM? -- ON THE SWAP...
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| 00:22:02 |
Johnson, Tim P. - U.S. Senator, [D] South Dakota
I WILL ASK THE COURT TYPIFY MINUTES ON THE CLOCK. CHAIRMAN GENSLER, WHAT ROLE DO AGENCIES HAVE BEEN MONITORING THIS SWAP TRADE ISSUE IN THE JPMORGAN...
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| 00:22:51 |
Gensler, Gary G. - Chair
MENTIONED, WE ARE IN THE MIDDLE OF STANDING UP A REGIME THAT WILL TAKE MORE TIME. THE CREDIT DEFAULT SWAP INDICES ARE ALREADY UNDER OUR ANTI- MANIPULATION...
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| 00:24:42 |
Schapiro, Mary L. - Chair
WERE EXECUTED IN THE U.S. BROKERAGE DEALERS. THE ACTIVITY TOOK PLACE IN THE LONDON BRANCH. THE SEC DID NOT HAVE ANY DIRECT OVERSIGHT OUR KNOWLEDGE ON...
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| 00:27:16 |
Shelby, Richard C. - U.S. Senator, [R] Alabama
BEYOND THE REGIONAL RULES. >> SOME ARE SAYING THAT THE SEC AND CFTC WERE IN THE DARKENED THAT YOU DID NOT KNOW WHAT WAS GOING ON AT JPMORGAN. -- DARK...
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| 00:27:41 |
Gensler, Gary G. - Chair
I WOULD SAY THAT THE TRADES THAT CAME TO MANY OF OUR ATTENTION WITH PRESS REPORTS, BUT OUR STAFF WAS AWARE OF TRADES THAT ARE IN THE CLEARING HOUSES....
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| 00:29:25 |
Schapiro, Mary L. - Chair
CHAIRWOMAN SCHARPIRO, I POSE THE SAME QUESTION TO YOU. >> WE DO NOT HAVE OVERSIGHT RESPONSIBILITY OVER THE BROAD BASE AND THE PRODUCTS WHICH WERE SUBJECT...
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| 00:31:02 |
Gensler, Gary G. - Chair
THAT IS CORRECT. >> WE ARE ALSO LOOKING AT DECEPTIVE PRACTICES. THAT IS PART OF THIS NEW AUTHORITY THAT WE HAVE. WE HAVE THIS ONGOING INVESTIGATION....
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| 00:32:54 |
Menendez, Robert "Bob" - U.S. Senator, [D] New Jersey
THE LAST HEARING MF GLOBAL, I ASKED THE TRUSTEES WHO AT THE COMPANY WAS RESPONSIBLE FOR THE WRONGDOING. THEY INFORMED ME THAT THE INVESTIGATION WAS JUST...
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| 00:33:21 |
Schapiro, Mary L. - Chair
THIS POINT WHO IS RESPONSIBLE FOR WHAT TOOK PLACE AT MF GLOBAL ? >> I THINK AGENCIES COLLECTIVELY ARE WORKING VERY HARD TO UNTANGLE EXACTLY WHAT HAPPENED...
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| 00:34:26 |
Gensler, Gary G. - Chair
IT IS PRIMARILY IN THE BANK THAT MUCH OF THIS EMANATED FROM THE LONDON SIDE, BRANCH, OF THE BANK. AS NEWS REPORTS, CREDIT DERIVATIVE PRODUCTS ARE AT...
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| 00:34:59 |
Schapiro, Mary L. - Chair
THAT THE FBI HAS OPENED A CRIMINAL INVESTIGATION. WE WILL ALL WORK CLOSELY TOGETHER. >> WITH WHICH OF THE TWO THAT I AM REFERRING TO? MF GLOBAL? >> WITH...
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| 00:38:20 |
Corker, Bob - U.S. Senator, [R] Tennessee
SENATOR? >> THANK YOU, MR. CHAIRMAN. WHEN AN EVENT LIKE THIS ONE HAPPENS IN THE MIDDLE OF A RULE MAKING PROCESS, THAT AFFECTS THINGS, DOES IT NOT? MEANING...
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| 00:40:47 |
Gensler, Gary G. - Chair
PROCESS, THINGS ARE MORE RISKY THAN THEY ALREADY ARE? I'D LIKE A COUPLE OF COMMENTS IN THAT REGARD. >> I THINK THAT THE JOB THAT YOU DELEGATED AND ASKED...
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| 00:43:55 |
Merkley, Jeffery "Jeff" - U.S. Senator, [D] Oregon
THANK YOU, SENATOR. THANK YOU ALL FOR YOUR TESTIMONY. I WANT TO RETURN TO THE BASIC PREMISE OF THE VOLCKER RULE. IN THE EFFORT TO CREATE THAT FIREWALL,...
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| 00:46:07 |
Schapiro, Mary L. - Chair
AND NOT IN THE HEDGE FUND BUSINESS? >> SIR, I THINK THAT IS A GREAT QUESTION. THE RATIONALE BEHIND THE THE QUIDDITY MANAGEMENT EXCLUSION THAT WAS INCLUDED...
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| 00:47:48 |
Gensler, Gary G. - Chair
SWAPS REGULATOR, WE WILL BE FOCUSED ON THE IMPLEMENTATION OF THE VOLCKER RULE. I DO NOT HAVE AS MANY VIEWS AS GERMAN SHAPIRO IN THE LIQUIDITY MANAGEMENT...
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| 00:49:20 |
Johanns, Mike - U.S. Senator, [R] Nebraska
I WANT TO UNDERSTAND THIS BETTER. YOU SAID THAT THE SEC DID NOT REGULATE THE LONDON BRANCH. THAT IT WAS SOMETHING ON THE OTHER SIDE. I AM TRYING TO MAYBE...
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| 00:49:44 |
Cover Shot, -
RISK MANAGEMENT THAT IS BEING DONE BY J.P. MORGAN HAD BEEN DONE IN SUCH A WAY THAT IT WOULD BE UNDER YOUR ID JURISDICTION? OR ARE YOU SAYING THAT THIS...
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| 00:49:58 |
Schapiro, Mary L. - Chair
IF DEBT TRADES WERE DONE IN AN SEC REGULATION OR BROKER- DEALER, THEN IT WOULD
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| 00:50:09 |
Cover Shot, -
CLEARLY BE UNDER YOUR JURISDICTION. EXCUSE ME. ARE THE SEC. >> THAT RAISES ANOTHER QUESTION. IF I WERE RUNNING J.P. MORGAN, COULD I SET THIS UP IN A...
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| 00:53:40 |
Gensler, Gary G. - Chair
I CAN GO ON AND ON. >> I THINK YOU ARE RIGHT ON BOTH POINTS. WE WILL OBVIOUSLY HAVE DIFFERENCES. THERE ARE DIFFERENT CULTURES, POLITICAL SYSTEMS, AND...
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| 00:55:57 |
Reed, John "Jack" F. - U.S. Senator, [D] Rhode Island
MAKING AND CLEVER RULEMAKING, YOU ARE TRYING TO DEFINE HEDGES IN THE WAY THAT COVERS THE LEGITIMATE OPERATIONS OF THE FINANCIAL INSTITUTIONS AND MINIMIZING...
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| 00:56:44 |
Schapiro, Mary L. - Chair
IS TRUE WITH THE MARKET MAKING EXTENSION AS WELL. WE BELIEVE DEEPLY THAT BUSINESSES HAVE TO BE ABLE TO ENGAGE IN BOTH ACTIVITIES SUCH AS MARKETING TO...
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| 00:57:41 |
Roll Tape 2, -
AREA THAT REALLY INCENTIVIZES OUTSIDE RISK TAKING IN A WAY THAT THREATENS THE FRANCHISE BY ENCOURAGING PEOPLE TO TAKE BIGGER RISK THAN THEY SHOULD. I...
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| 00:58:52 |
Gensler, Gary G. - Chair
CONGRESS ANTICIPATED IT BECAUSE THEY INCLUDED MAJOR SWAP PARTICIPANTS. CONGRESS SAID IF YOU ARE NOT FINANCIAL, YOU CAN CHOOSE IF YOU ARE INVOLVED IN...
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| 01:03:00 |
Toomey, Pat - U.S. Senator, [R] Pennsylvania
I USED THE EXPRESSION ABOUT PORTFOLIO HEDGING THAT IS TIED TO SPECIFIC POSITIONS. I AM WONDERING IF YOU COULD CLARIFY THAT, BECAUSE IF YOU TIE HEDGES...
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| 01:03:47 |
Gensler, Gary G. - Chair
AND SAID THIS HAD TO BE TIED TO THE RISK OF EITHER INDIVIDUAL OR AGGREGATE POSITIONS, TIED TO THE SPECIFIC RISK OF SOME AGGREGATE POSITIONS. IT HAS...
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| 01:08:34 |
Hagan, Kay R - U.S. Senator, [D] North Carolina
IN SENATOR REED'S DISCUSSION, YOU MENTIONED DATA COLLECTION, AND WHEN WILL THIS DATA BE COLLECTED? >> THE SECURITY BASED SWAP REPORTING DATA COLLECTION...
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| 01:08:59 |
Schapiro, Mary L. - Chair
WE HAVE ONE SET OF RULES LEFT TO PROPOSE AND THEN WE HAVE DONE ONE FINAL, WE WOULD DO ANOTHER FINAL IN THE NEXT MONTH OR SO, AND THEN A STEADY STREAM...
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| 01:10:19 |
Gensler, Gary G. - Chair
SAY AND MAYBE TO SENATOR TOOMEY'S COMMENTS, IN ADDITION TO CAPITAL TRANSPARENCY COMING OUT IN THE CREDIT DEFAULT SWAPS INDUSTRY AREA AND IN INTEREST...
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| 01:13:02 |
Schapiro, Mary L. - Chair
THE VALUE AT RISK. A METRIC THAT LISTED THE FINANCIAL INSTITUTIONS INCLUDE IN THEIR FILINGS -- CAN YOU DISCUSS THE VALUE AT RISK AND HOW IT IS USED...
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| 01:15:16 |
Schumer, Charles E. - U.S. Senator, [D] New York
CUTS IN THE CAPITAL CONTEXT. WE ALLOW CERTAIN FIRMS, A SMALL NUMBER, THE USE THE BAR TO COMPLETE THE MARKET RISK DETECTION FROM THE CAPITAL. IF THEY...
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| 01:16:23 |
Schapiro, Mary L. - Chair
TO THE OVERSIGHT YOU ARE BEING ASKED TO DO BY EVERYONE ON BOTH SIDES OF THE AISLE? >> WE ASKED AND ASKED TO TAKE ON NEW RESPONSIBILITIES, BUT HEDGE FUNDS...
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| 01:18:17 |
Gensler, Gary G. - Chair
I THINK THIS IS A GOOD INVESTMENT FOR THE AMERICAN PUBLIC. CFTC IS FUNDED AT $205 MILLION. IMAGINE IN FOOTBALL, THERE WERE EIGHT TIMES THE NUMBER OF TEAMS,...
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| 01:22:25 |
Schapiro, Mary L. - Chair
THE REQUIREMENTS TO ACCOUNT FOR THAT. >> I MIGHT ADD THAT THE TWO MAIN CLEARING HOUSES HAVE A CONCENTRATION WHERE WHEN POSITIONS GET LARGE THEY ADD ADDITIONAL...
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| 01:23:11 |
Shelby, Richard C. - U.S. Senator, [R] Alabama
THERE DISCUSSIONS ABOUT POSSIBLE SHORTFALLS IN CUSTOMER ACCOUNTS? THIS IS CENTRAL TO WHAT WE'RE LOOKING AT. >> I THANK YOU FOR THE QUESTION. I HAD NO
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| 01:23:41 |
Gensler, Gary G. - Chair
INDIVIDUAL CONVERSATIONS WITH JON CORZINE. I PARTICIPATED ON THAT SUNDAY ON A GROUP CALL WITH CHAIRMAN SCHAPIRO. PRESENTATIONS WERE COMING OVER A CONFERENCE...
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| 01:31:10 |
Warner, Mark R. - U.S. Senator, [D] Virginia
SHOULD NOT HAVE, AND IF CFTC DID NOT KNOW THAT, THERE IS A PROBLEM, BUT IF YOU DID KNOW IT AND DID NOT DO ANYTHING ABOUT IT, THAT IS A PROBLEM. >> MY...
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| 01:33:07 |
Schapiro, Mary L. - Chair
WE ARE CONCERNED THAT THE ADMINISTRATION IS SLOW ON GETTING THE OFR NOMINEE. THEY HAVE ONE TO GET PASSED, BUT I WOULD LIKE YOU TO WEIGH IN ON THE ABILITY...
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| 01:34:19 |
Gensler, Gary G. - Chair
I WOULD SAY HAVING WITNESSED WHAT WAS ITS PREDECESSOR, THE PRESIDENT'S WORKING GROUP IN THE 1990'S -- BEING HONORED TO SERVE THAT AND IN THIS ADMINISTRATION...
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| 01:37:28 |
Schapiro, Mary L. - Chair
BE A WAY WE COULD SUBSTITUTE PLANS. >> WE WILL LAY OUT A COMPREHENSIVE APPROACH TO CROSS- BORDER PUBLICATION. WE WILL DO THAT BEFORE WE SEND OUT THE...
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| 01:38:12 |
Gensler, Gary G. - Chair
A COMPETITIVE FIELD THAT THEY CAN COMPETE IN, LIKE A BARCLAYS BANK, DEUTSCHE BANK.
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| 01:38:28 |
Merkley, Jeffery "Jeff" - U.S. Senator, [D] Oregon
IT IS TRYING TO GET THAT BALANCE AS WELL. >> THANK YOU, SENATOR WARNER. CHAIRMAN, YOU MENTIONED TWICE THE LIST OF FACTORS THAT WERE ESSENTIALLY WAYS TO...
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| 01:40:30 |
Schapiro, Mary L. - Chair
WHEN HAVE YOU CROSSED THE LINE, DO YOU HAVE AN EXCUSE TO DO HEDGE FUNDS WITHOUT TRADING? WHERE DO YOU SEE THOSE LINES BEING DRAWN IN THIS? >> I AGREE,...
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| 01:43:30 |
Gensler, Gary G. - Chair
TO PERMIT HEDGING. A QUESTION ABOUT HEDGING, HEDGING HAS A LOWER RISK. THAT IS WHAT CONGRESS WANTED IN THIS PROVISION. THEY DO OVERLAP. IT IS NOT A PERFECT...
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| 01:46:09 |
Warner, Mark R. - U.S. Senator, [D] Virginia
HAVE AN INCIDENT LIKE THIS, IT COULD BE A BLESSING THAT IT IS HAPPENING WITH THE STRONGEST FINANCIAL INSTITUTION WE HAVE, AND THANK GOODNESS WE HAVE HIGHER...
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| 01:48:04 |
Gensler, Gary G. - Chair
IS A CENTRAL CLEARING, SO A DEALER FACING THE HEDGE FUND IS NOT YET IN. THAT WILL HELP A LOT. WE SPENT A LOT OF TIME WITH THE FDIC ON TITLE 2 TO GIVE...
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| 01:50:11 |
Shelby, Richard C. - U.S. Senator, [R] Alabama
THESE LARGE INSTITUTIONS ARE HOW OUR SOCIETY MANAGES THAT. >> YOU CANNOT TAKE THAT OUT AND SHOULD NOT TRY TO. >> IF YOU MICROMANAGE WHAT ENTITIES ARE...
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| 01:51:51 |
Gensler, Gary G. - Chair
MORE TRANSPARENT MARKETS ARE THAT IT IS HARDER TO MISUNDERSTAND THE RISK THAT YOU HAVE. THE RISK GETS PRICED IN THE MARKETPLACE, AND IT MIGHT BE PAINFUL,...
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| 01:52:40 |
Warner, Mark R. - U.S. Senator, [D] Virginia
THANK YOU. I THINK WE ARE ON THE POINT OF WRAPPING UP. >> COULD I JUST ADD -- I AGREE YOU CANNOT TAKE RISK OUT -- BUT THERE IS A POINT WHERE THERE IS...
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| 01:53:18 |
Merkley, Jeffery "Jeff" - U.S. Senator, [D] Oregon
OF CAPITAL, THE QUESTION IS NOT WHETHER IT IS RISKY. OF COURSE IT IS RISKY. SUBSIDIZED BY TAXPAYERS DEPOSITS, AND OCCASIONALLY THOSE BETS GO BAD, YOU...
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| 01:54:18 |
End, -
THE COMMITTEE IS ADJOURNED. [CAPTIONS COPYRIGHT NATIONAL CABLE SATELLITE CORP. 2012] [CAPTIONING PERFORMED BY NATIONAL CAPTIONING INSTITUTE] >> UP
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NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.