FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
Remarks of Chairman Gary Gensler at London City Week on Benchmark Interest Rates
April 22, 2013
Good afternoon. Thank you, Anthony, for that kind introduction. I’m honored to be joining you for City Week.
I’d like to talk about one of the most significant risks facing the capital markets today. That is the risk to market integrity as well as financial stability of the continued use of LIBOR, Euribor and similar benchmark interest rates.
Given their fundamental role in the capital markets and our economy, such benchmark rates must be based on facts, not fiction.
Coordinating with the FCA
The U.K. Financial Conduct Authority (FCA) (along with its predecessor the Financial Services Authority (FSA)) and Martin Wheatley have been valued partners of the U.S. Commodity Futures Trading Commission (CFTC) on this matter.
The CFTC initiated an investigation in 2008 related to the London Interbank Offered Rate (LIBOR). It is the reference rate for 70 percent of the U.S. futures market. It is also referenced by over half of the swaps market, which the CFTC was recently tasked to oversee.
The FCA has been instrumental in the CFTC’s investigations, leading to charges against Barclays and other banks for manipulative conduct regarding LIBOR and similar benchmarks.
Following the Barclays announcement, the international community asked Martin Wheatley and me to co-chair the International Organization of Securities Commissions (IOSCO) Task Force on Financial Market Benchmarks.
Last week, the task force published its second consultation paper outlining a set of international principles to enhance the integrity, reliability and oversight of benchmarks.
The IOSCO principles state that for benchmarks to be robust and reliable, among other things, they must have two essential elements: be anchored in observable transactions and supported by appropriate governance structures.
The IOSCO report further notes that in order to provide confidence that the price discovery system is reliable, benchmarks must be based on prices and rates formed by the competitive forces of supply and demand entered into at arm’s length between buyers and sellers in the market.
Unsecured, Interbank Market: Essentially Nonexistent
LIBOR, Euribor and similar interest rate benchmarks purport to represent the rate at which unsecured borrowing occurs between large banks.
The challenge we face, however, is that banks simply are not lending to each other as they once did. As Mervyn King, governor of the Bank of England, said in 2008 of LIBOR: "It is, in many ways, the rate at which banks do not lend to each other." He went on further to say: "[I]t is not a rate at which anyone is actually borrowing."
The lack of transactions in the unsecured, interbank lending market along with weak governance structures for related benchmarks undermines market integrity.
The dearth of transactions in this market is a result of many factors: the 2008 crisis, the continuing European debt crisis, the downgrading of large banks’ credit ratings, as well as central banks providing significant funding directly to banks.
There has been a significant structural shift in how financial market participants finance their balance sheets and trading positions. There is an increasing move from borrowing unsecured (without posting collateral) toward borrowings that are secured by posting collateral. In particular, this shift has occurred within the funding markets between banks.
In the aftermath of the financial crisis, for understandable reasons, banks have been hesitant to take on each other’s credit risk.
Recent changes to Basel capital rules further suggest that banks are unlikely to return to interbank lending on an unsecured basis.
Basel III includes a new asset correlation factor, which requires additional capital when a bank is exposed to another bank. This was included in the new standards to reduce financial system interconnectedness.
Basel III also includes a new requirement called the liquidity coverage ratio (LCR). Banks will have to hold a sufficient amount of high quality liquid assets to cover their projected net outflows over 30 days.
A number of major banks have indicated that this new LCR requirement alone would make it prohibitively expensive for banks to lend to each other in the interbank market for tenors greater than 30 days. Thus, it is unlikely that banks will return to the days when they would lend to each other for three months, six months or a year.
The shift away from banks funding each other in the unsecured market has led to a scarcity or outright absence of actual transactions underpinning LIBOR and other interest rate benchmarks.
Enforcement Actions
This situation – having benchmark rates that are not anchored in actual transactions – undermines market integrity and leaves the financial system with benchmarks that are prone to misconduct.
Further, significant incentives for misconduct exist when hundreds of trillions of dollars of financial instruments reference benchmarks based on essentially nonexistent markets.
Indeed, as law enforcement actions brought by the CFTC, the FCA and the U.S. Justice Department, among others, have shown, LIBOR and other benchmark rates have been readily and pervasively rigged.
Barclays, UBS and RBS paid fines of approximately $2.5 billion for manipulative conduct relating to these rates.
At each bank, the misconduct spanned many years.
At each bank it took place in offices in several cities around the globe.
At each bank it included numerous people – sometimes dozens, among them senior management.
Each case involved multiple benchmark rates and currencies. In one case, there were over 2,000 instances of misconduct during a six-year period.
And in each case, there was evidence of collusion with other banks.
In the UBS and RBS cases, one or more inter-dealer brokers painted false pictures to influence submissions of other banks, i.e., to spread the falsehoods more widely.
Barclays and UBS also were reporting falsely low borrowing rates in an effort to protect their reputations.
Thus we find ourselves in a situation where there are both the incentives and ability to manipulate a critical rate in our markets.
Market Data
Beyond these cases, there is a significant amount of publicly available market data that calls into question the integrity of LIBOR today.
Let’s take a look at what happened just in the last few weeks as the Cyprus crisis infected the Eurozone. Here is a view of one Eurozone bank’s one-year credit default swap (CDS) spread versus that same bank’s daily submissions to the U.S. dollar LIBOR panel (Slide 1).
The bank’s CDS spread, one market measure of its credit risk, widened dramatically. The bank, however, didn’t change its submission as to where it could borrow from other banks. Though CDS trade in a different market and are for a bank’s holding company, the disconnect, as shown in this slide, raises questions about the credibility of LIBOR.
In Slide 2, we look at the average of all five Eurozone banks that submit to LIBOR. The picture is similar.
Next, let’s turn to the volatility of three-month U.S. dollar LIBOR in comparison with the volatility of other short-term interest rates. LIBOR, the blue line, is far more stable than any other comparable rate. Other short-term rates have much higher volatility (Slide 3).
Also of note, is that the 18 banks submitting to U.S. dollar LIBOR collectively did not change their submissions on 85 percent of the 252 submission days in 2012. You can see in Slide 4 just how few times the banks actually changed their submissions over the course of last year.
In fact, some of the banks didn’t change their submissions for four to five straight months. This was during a period when there were a number of uncertainties in the market driven by elections, changing economic outlook and other events. And yet somehow these banks said they could still borrow at exactly the same rate for four to five months. Slide 5 represents the longest consecutive period last year that the submissions remained unchanged.
Taking another look at CDS spreads versus LIBOR submissions, this time over the last three years, highlights another query. As we see in Slides 6 and 7, during significant market upheavals in the second half of 2011, the market’s views of these two banks’ credit risk changed dramatically. Yet their LIBOR submissions moved only modestly.
While we’re done with slides today, two last points reflected in market data:
There is a well-known concept in finance called interest rate parity, basically that currency forward rates will align with interest rates in two different economies. Since the financial crisis, that has not been the case, whether looking at the dollar versus the euro, sterling or yen. Theory hasn’t been aligning with practice. The borrowing rate implied in the currency markets is quite different than LIBOR.
Lastly, why are the results of two leading interbank benchmark surveys – one done for LIBOR and the other for Euribor – so different when each asks about U.S, dollar borrowing? The same difference occurs in the surveys for euro borrowing. These rates are calculated on the basis of the banks’ answers to roughly the same question. For LIBOR, a bank is asked at what rate it thinks it can borrow, while for Euribor, a bank is asked at what rate it thinks other banks are able to borrow.
Promoting Market Integrity and Financial Stability
Whether we consider the broad structural shift away from unsecured, interbank lending; the recent enforcement actions; or questions that arise from current market data, I believe that LIBOR, Euribor and other similar interest rate benchmarks are unsustainable in the long run.
These benchmarks – referencing markets with insufficient transactions, particularly in longer tenors – undermine market integrity and threaten financial stability.
Market integrity
For capital and risk to be efficiently allocated within the economy, interest rate benchmarks should reflect actual price discovery anchored in observable transactions.
Without transactions in the underlying market, the situation is similar to trying to buy a house, when your estate agent can’t give you comparable transaction prices in the neighborhood – because no houses were sold in the neighborhood in years.
As IOSCO notes, a benchmark should derive its value from the competitive forces of buyers and sellers meeting in an underlying cash market.
Derivatives derive their value from an underlying cash market. Market integrity dictates that whether that underlying cash market is oil, corn or the rate at which banks are borrowing, it must be based on something that is real. It should be anchored in observable transactions.
Further, these rates were readily and pervasively rigged in the past, and incentives for and ability to rig it in the future remain.
When market integrity is compromised, this also undermines the public’s confidence in the financial system.
Financial stability
The financial system’s reliance on interest rate benchmarks, such as LIBOR and Euribor, leaves the system in a fragile state.
Further, continuing to support LIBOR and Euribor in the name of stability may have the opposite effect. Using benchmarks that threaten market integrity may create more instability in the long run.
Given the structural changes in the interbank market, a number of banks have withdrawn from Euribor and some other interest rate benchmarks. Though IOSCO’s task force recommends that users of benchmarks have robust fallback provisions in contracts, many contracts do not currently have such fallback provisions. Thus, there is a risk to financial stability absent a planned, smooth and orderly transition.
I believe to promote market integrity as well as financial stability, we must move forward in a coordinated global effort to identify alternative interest rate benchmarks anchored in observable transactions and plan a smooth and orderly transition from benchmarks referencing unsecured, interbank markets.
Moving Forward
There is no doubt there will be challenges to transitioning from these rates.
But the market does have experience with transitioning from benchmarks that have become obsolete in the past. When the euro was created, a number of interest rate benchmarks were discontinued. How many of you remember PIBOR, RIBOR, MIBOR and FIBOR? Transitions also have occurred for energy and shipping rate benchmarks.
Further Canadian dollar LIBOR and Australian dollar LIBOR will be discontinued this year, leading to necessary transitions in those markets.
The basic components of past transitions include: first, identifying a new and reliable benchmark, one that is anchored in transactions.
Market participants and regulators are currently considering alternative interest rate benchmarks anchored in observable transactions. For instance, the Bank of International Settlements’ (BIS) Economic Consultative Committee’s March report lists possible alternatives anchored in observable transactions: the overnight swaps rate (OIS) and short-term collateralized financing rates such as general collateral repo rates (GC repo).
Second, the new and existing benchmarks run in parallel for a period of time allowing market participants to see and compare the price or rate of the alternative benchmark versus the soon-to-be-discontinued benchmark. This period of the two benchmarks running in parallel has been used to facilitate a smooth transition.
Third, a date is announced well in advance of when the old or obsolete benchmark will be discontinued.
Conclusion
While ongoing international efforts targeting benchmarks have focused on governance principles, these efforts cannot address the central vulnerability of LIBOR, Euribor and similar interest rate benchmarks: the lack of transactions in the underlying market.
Given the known issues with these benchmarks, their scale and effect on market integrity, it is critical that international regulators work with market participants to promptly identify alternative interest rate benchmarks anchored in observable transactions with appropriate governance, as well as determine how to best smoothly transition to such alternatives.
Just as Canadian dollar LIBOR and Australian dollar LIBOR are being discontinued due to the lack of an underlying interbank market, U.S. dollar, sterling, yen and euro LIBOR face similar underlying market challenges. The scope, as we all know, is bigger.
But it’s best that we not fall prey to accepting that LIBOR or any benchmark is "too big to replace."
Just imagine if the quality and integrity of the drinking water across the globe had been compromised. Then, the official sector and the utilities react by addressing the problem in Australia and Canada, but not in England or the United States. They say that there are too many people relying on the current drinking water in those countries.
If this were to occur, how could the public be confident in continuing to drink this water?
I believe market participants and regulators around the globe do have the ability and the ingenuity to tackle the challenges of benchmark interest rates, even in the face of their scale, to restore integrity and promote financial stability.
Monday, April 22, 2013
SECRETARY OF DEFENSE HAGEL SAYS U.S. COMMITTED TO ISRAEL
FROM: U.S. DEFENSE DEPARTMENT
Hagel: United States Committed to Israel's Security
By Cheryl Pellerin
American Forces Press Service
ABOARD A MILITARY AIRCRAFT, April 21, 2013 - Israel is Defense Secretary Chuck Hagel's first stop during his inaugural trip to the Middle East this week, a visit he said will let the people of Israel know the United States is committed to their security.
The 6-day trip will take Hagel to Israel, Jordan, Saudi Arabia, Egypt and the United Arab Emirates to discuss common threats and interests in the region, and to finalize agreements that will boost a range of military capabilities for Israel, Saudi Arabia and the UAE.
"I'm going to Israel first because it is a nation that has had a very special relationship with the United States," Hagel said on his way to that nation during a briefing with reporters traveling with him.
"It is a nation today in a very dangerous, combustible region of the world, that in many ways finds itself isolated," he said, adding, "The other countries I'll be visiting are also allies of the United States, and the common threats that face [them and] Israel ... should be seen in a regional context."
Each nation has its own set of challenges, the secretary said, but overall the challenges are regional and include terrorism and the threat of nonstate actors who would bring down governments and impact societies.
"Those common threats certainly should build a set of common interests, with these countries working together," Hagel said, "and that's part of what I will be talking about as I visit each [nation].'
During a presidential trip in March to Israel and Jordan, Barack Obama delivered the same message, the secretary said, adding that during a visit to Turkey this weekend, Secretary of State John Kerry "will be talking about some of the same issues in a different kind of way, but essentially with the same focus of common interests."
As he spoke with reporters, Hagel extended his thoughts and prayers to victims of the Boston Marathon bombing and acknowledging the tireless work of law enforcement agencies in capturing one of the men suspected in the act of terrorism.
"I say this because we are on our way to a very troubled region ... but it reminds us that [no] region of the world is ... safe from these terrible acts," the secretary observed, adding, "If nothing else, it reminds us that all 7 billion of us are global citizens and many of us are confronted by the same kinds of threats and insecurities."
Among the region's most long-term threats is Iran, Hagel said.
"The Iranians must be prevented from developing the capacity to build a nuclear weapon and deliver it," he added. "The United States' policy has been very clear on this and everyone knows it."
Iran is also a state sponsor of terrorism, the secretary said, "[and] that in itself is a threat not just to the region but to our interests in the region and around the world. When you further expand that threat to the possibility of acquiring nuclear weapons," he added, the dimensions of the threat become pretty clear.
Hagel said he thinks Israel and the United States "see the threat of Iran exactly the same, as do many other countries," not just those in the Middle East, although the United States seeks more time for diplomacy and sanctions to work to stop Iran from pursuing nuclear capabilities.
"If you stop just for a moment and look at the U.N. sanctions, the international sanctions on Iran, I don't know of an international regime of sanctions that have been more effective and more unified and tougher than what's being applied to Iran," the secretary said.
The sanctions are hurting Iran significantly, he added, but if they don't work, "... I've said, the president's said, all the leaders of the last couple of administrations have said, that the military option is one option that must remain on the table ... but the military option I think most of us feel should be the last option."
In response to a question about whether Israel could decide to strike out alone against Iran's nuclear aspirations, Hagel replied that Israel is a sovereign nation and every sovereign nation has the right to defend itself.
"It is clear that Iran presents a threat in its nuclear program," the secretary said, "and Israel will make the decisions that Israel must make to protect itself and defend itself."
Certainly Israel has every right and responsibility to make their assessments, Hagel added, "but we're working very closely and will continue to work very closely with them."
Hagel: United States Committed to Israel's Security
By Cheryl Pellerin
American Forces Press Service
ABOARD A MILITARY AIRCRAFT, April 21, 2013 - Israel is Defense Secretary Chuck Hagel's first stop during his inaugural trip to the Middle East this week, a visit he said will let the people of Israel know the United States is committed to their security.
The 6-day trip will take Hagel to Israel, Jordan, Saudi Arabia, Egypt and the United Arab Emirates to discuss common threats and interests in the region, and to finalize agreements that will boost a range of military capabilities for Israel, Saudi Arabia and the UAE.
"I'm going to Israel first because it is a nation that has had a very special relationship with the United States," Hagel said on his way to that nation during a briefing with reporters traveling with him.
"It is a nation today in a very dangerous, combustible region of the world, that in many ways finds itself isolated," he said, adding, "The other countries I'll be visiting are also allies of the United States, and the common threats that face [them and] Israel ... should be seen in a regional context."
Each nation has its own set of challenges, the secretary said, but overall the challenges are regional and include terrorism and the threat of nonstate actors who would bring down governments and impact societies.
"Those common threats certainly should build a set of common interests, with these countries working together," Hagel said, "and that's part of what I will be talking about as I visit each [nation].'
During a presidential trip in March to Israel and Jordan, Barack Obama delivered the same message, the secretary said, adding that during a visit to Turkey this weekend, Secretary of State John Kerry "will be talking about some of the same issues in a different kind of way, but essentially with the same focus of common interests."
As he spoke with reporters, Hagel extended his thoughts and prayers to victims of the Boston Marathon bombing and acknowledging the tireless work of law enforcement agencies in capturing one of the men suspected in the act of terrorism.
"I say this because we are on our way to a very troubled region ... but it reminds us that [no] region of the world is ... safe from these terrible acts," the secretary observed, adding, "If nothing else, it reminds us that all 7 billion of us are global citizens and many of us are confronted by the same kinds of threats and insecurities."
Among the region's most long-term threats is Iran, Hagel said.
"The Iranians must be prevented from developing the capacity to build a nuclear weapon and deliver it," he added. "The United States' policy has been very clear on this and everyone knows it."
Iran is also a state sponsor of terrorism, the secretary said, "[and] that in itself is a threat not just to the region but to our interests in the region and around the world. When you further expand that threat to the possibility of acquiring nuclear weapons," he added, the dimensions of the threat become pretty clear.
Hagel said he thinks Israel and the United States "see the threat of Iran exactly the same, as do many other countries," not just those in the Middle East, although the United States seeks more time for diplomacy and sanctions to work to stop Iran from pursuing nuclear capabilities.
"If you stop just for a moment and look at the U.N. sanctions, the international sanctions on Iran, I don't know of an international regime of sanctions that have been more effective and more unified and tougher than what's being applied to Iran," the secretary said.
The sanctions are hurting Iran significantly, he added, but if they don't work, "... I've said, the president's said, all the leaders of the last couple of administrations have said, that the military option is one option that must remain on the table ... but the military option I think most of us feel should be the last option."
In response to a question about whether Israel could decide to strike out alone against Iran's nuclear aspirations, Hagel replied that Israel is a sovereign nation and every sovereign nation has the right to defend itself.
"It is clear that Iran presents a threat in its nuclear program," the secretary said, "and Israel will make the decisions that Israel must make to protect itself and defend itself."
Certainly Israel has every right and responsibility to make their assessments, Hagel added, "but we're working very closely and will continue to work very closely with them."
NAVY UNDERWATER PHOTOGRAPHY TRAINING AND MV-22 OSPREY LANDING
Mass Communication Specialist 3rd Class Nicholas Tenorio, left, photographs Mass Communication Specialist 3rd Class Wyatt Huggett during underwater photography training off the coast of Guantanamo Bay, Cuba. Expeditionary Combat Camera's Underwater Photo Team conducts semi-annual training to hone its divers' specialized skill set and ensure valuable support of Department of Defense activities worldwide. U.S. Navy photo by Chief Mass Communication Specialist Shane Tuck (Released) 130417-N-IZ904-032
An MV-22 Osprey from Marine Aircraft Group (MAG) 26 lands on the flight deck of the multipurpose amphibious assault ship USS Bataan (LHD 5) during flight operations. MSG-26 is performing launches and recoveries from the flight deck in order to complete required qualifications. Bataan is underway conducting training operations and qualifications. U.S. Navy photo by Mass Communication Specialist 2nd Class Gary A Prill (Released) 130410-N-RB564-029
CFTC CHARGES ACCOUNTING FIRM WITH IMPROPERLY AUDITING REGISTERED FUTURES COMMISSION MERCHANT
FROM: COMMODITY FUTURES TRADING COMMISSION
April 18, 2013
CFTC Charges Accounting Firm Tunney & Associates, P.C. and Its Sole Owner Michael Tunney with Failing to Properly Audit a Registered Futures Commission Merchant
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a Complaint against Tunney & Associates, P.C. (Tunney & Associates), an accounting firm with offices in Hammond, Indiana and Orland Park, Illinois, and Michael Tunney (Tunney), its sole owner and a certified public accountant (CPA) licensed in Illinois and Indiana, alleging violations of the CFTC’s Regulations related to conducting audits for The Linn Group, Inc. (TLG), a registered Futures Commission Merchant (FCM).
According to the Complaint, filed in the U.S. District Court for the Northern District of Illinois, Tunney & Associates served as TLG’s independent auditor and conducted TLG’s required year-end audits for 2007 through 2011. The Complaint alleges, however, that neither Tunney & Associates nor Tunney had any experience auditing FCMs or any entity that holds customer segregated accounts, and neither was qualified to conduct an FCM audit, and that Tunney had no understanding of the applicable Commodity Exchange Act or CFTC regulatory provisions prior to accepting any of the audit engagements. The Complaint states that Tunney & Associates and Tunney improperly relied on a non-employee, non-CPA, to perform all of the work on TLG’s 2007 through 2010 audits, and that Tunney conducted TLG’s 2011 audit on his own, despite the fact that he was not qualified to conduct an FCM audit.
The Complaint also alleges, among other things, that Tunney & Associates’ audits did not comport with Generally Accepted Auditing Standards (GAAS) or CFTC Regulations. For example, there was no planning for the auditing of TLG, and the audits failed to include appropriate tests of TLG’s accounting system, internal accounting controls, and procedures for safeguarding customer and firm assets.
TLG has entered into a settlement with the CFTC in connection with its failure to properly handle, monitor, and report customer funds it maintained as required by the Commodity Exchange Act (Act) and Regulations, and for supervision failures. As part of the settlement, TLG agreed to a $400,000 civil monetary penalty and retention of a consultant to review and improve TLG’s procedures as necessary to comply with the Act and Regulations TLG terminated the services of Tunney & Associates prior to entering into a settlement with the CFTC.
David Meister, the CFTC’s Director of Enforcement, stated, "Auditors are gatekeepers who perform a key role in a system designed to promote market integrity and protect market participants. An accountant who assumes the role of independent auditor for a CFTC registrant must be capable of satisfying his professional obligations. The audit function is meant to do more than earn the auditor a paycheck."
In the litigation, the CFTC seeks disgorgement of all benefits Tunney & Associates and Tunney received as a result of their conduct, civil monetary penalties, and permanent injunctions against further violations of the Commodity Exchange Act and Regulations, as charged.
The CFTC appreciates the assistance of the Division of Swap Dealer and Intermediary Oversight. The CFTC also appreciates the assistance of the National Futures Association.
The CFTC Division of Enforcement staff members responsible for this matter are Allison Passman, Joseph Patrick, Susan Gradman, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.
April 18, 2013
CFTC Charges Accounting Firm Tunney & Associates, P.C. and Its Sole Owner Michael Tunney with Failing to Properly Audit a Registered Futures Commission Merchant
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a Complaint against Tunney & Associates, P.C. (Tunney & Associates), an accounting firm with offices in Hammond, Indiana and Orland Park, Illinois, and Michael Tunney (Tunney), its sole owner and a certified public accountant (CPA) licensed in Illinois and Indiana, alleging violations of the CFTC’s Regulations related to conducting audits for The Linn Group, Inc. (TLG), a registered Futures Commission Merchant (FCM).
According to the Complaint, filed in the U.S. District Court for the Northern District of Illinois, Tunney & Associates served as TLG’s independent auditor and conducted TLG’s required year-end audits for 2007 through 2011. The Complaint alleges, however, that neither Tunney & Associates nor Tunney had any experience auditing FCMs or any entity that holds customer segregated accounts, and neither was qualified to conduct an FCM audit, and that Tunney had no understanding of the applicable Commodity Exchange Act or CFTC regulatory provisions prior to accepting any of the audit engagements. The Complaint states that Tunney & Associates and Tunney improperly relied on a non-employee, non-CPA, to perform all of the work on TLG’s 2007 through 2010 audits, and that Tunney conducted TLG’s 2011 audit on his own, despite the fact that he was not qualified to conduct an FCM audit.
The Complaint also alleges, among other things, that Tunney & Associates’ audits did not comport with Generally Accepted Auditing Standards (GAAS) or CFTC Regulations. For example, there was no planning for the auditing of TLG, and the audits failed to include appropriate tests of TLG’s accounting system, internal accounting controls, and procedures for safeguarding customer and firm assets.
TLG has entered into a settlement with the CFTC in connection with its failure to properly handle, monitor, and report customer funds it maintained as required by the Commodity Exchange Act (Act) and Regulations, and for supervision failures. As part of the settlement, TLG agreed to a $400,000 civil monetary penalty and retention of a consultant to review and improve TLG’s procedures as necessary to comply with the Act and Regulations TLG terminated the services of Tunney & Associates prior to entering into a settlement with the CFTC.
David Meister, the CFTC’s Director of Enforcement, stated, "Auditors are gatekeepers who perform a key role in a system designed to promote market integrity and protect market participants. An accountant who assumes the role of independent auditor for a CFTC registrant must be capable of satisfying his professional obligations. The audit function is meant to do more than earn the auditor a paycheck."
In the litigation, the CFTC seeks disgorgement of all benefits Tunney & Associates and Tunney received as a result of their conduct, civil monetary penalties, and permanent injunctions against further violations of the Commodity Exchange Act and Regulations, as charged.
The CFTC appreciates the assistance of the Division of Swap Dealer and Intermediary Oversight. The CFTC also appreciates the assistance of the National Futures Association.
The CFTC Division of Enforcement staff members responsible for this matter are Allison Passman, Joseph Patrick, Susan Gradman, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.
EPA ANNOUNCES PROPOSAL TO REDUCE TOXIC DISCHARGES INTO WATERWAYS BY POWER PLANTS
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| Lake Superior. Credit: Wikimedia. |
EPA Proposes to Reduce Toxic Pollutants Discharged into Waterways by Power Plants
WASHINGTON — In accordance with a consent decree and in line with requirements under the Clean Water Act, the U.S. Environmental Protection Agency (EPA) today will propose a range of options to help reduce dangerous pollutants, including mercury, arsenic, lead, and selenium that are released into America’s waterways by coal ash, air pollution control waste and other waste from steam electric power plants. Today’s proposal includes a variety of options for whether and how these different waste streams should be treated. EPA will take comment on all of these options, which it will use to help inform the most appropriate final standard.
Steam electric power plants currently account for more than half of all toxic pollutants discharged into streams, rivers and lakes from permitted industrial facilities in the United States. High exposure to these types of pollutants has been linked to neurological damage and cancer as well as damage to the circulatory system, kidneys and liver.Toxic heavy metals do not break down in the environment and can also contaminate sediment in waterways and impact aquatic life and wildlife, including large-scale die-offs of fish.
"America’s waterways are vital to the health and well-being of our communities," said Acting Administrator Bob Perciasepe. "Reducing the pollution of our waters through effective but flexible controls such as we are proposing today is a win-win for our public health and our economic vitality. We look forward to hearing from all stakeholders on the best way forward."
EPA has put a focus on ensuring any final rule would protect public health while being sensible and achievable, and in line with that goal, under every preferred option proposed by EPA today, more than half of America’s coal fired power plants would be in compliance without incurring any additional cost.
The proposal updates standards that have been in place since 1982, incorporating technology improvements in the steam electric power industry over the last three decades as required by the Clean Water Act. The proposed national standards are based on data collected from industry and provide flexibility in implementation through a phased-in approach and use of technologies already installed at a number of plants. Under the proposed approach, new requirements for existing power plants would be phased in between 2017 and 2022, and would leverage flexibilities as necessary.
Fewer than half of coal-fired power plants are estimated to incur costs under any of the proposed preferred options, because many power plants already have the technology and procedures in place to meet the proposed pollution control standards.
The four preferred options differ in the number of waste streams covered (such as fly ash handling systems, treatment of air pollution control waste and bottom ash), the size of the units controlled and the stringency of the treatment controls to be imposed. EPA estimates that the regulations would reduce pollutant discharges by 470 million to 2.62 billion pounds annually and reduce water use by 50 billion to 103 billion gallons per year.
EPA also announced its intention to align this Clean Water Act rule with a related rule for coal combustion residuals (CCRs, also known as "coal ash") proposed in 2010 under the Resource Conservation and Recovery Act. The two rules would apply to many of the same facilities and would work together to reduce pollution associated with coal ash and related wastes. EPA is seeking comment from industry and other stakeholders to ensure that both final rules are aligned to reduce pollution efficiently and minimize regulatory burdens.
There are approximately 1,200 steam electric power plants that generate electricity using nuclear fuel or fossil fuels such as coal, oil, and natural gas in the U.S. Approximately 500 of these power plants are coal fired units which are the primary source of the pollutants being addressed by the proposed regulation. Power plants that are smaller than 50 megawatts would not be impacted by these new standards, and the majority of coal-fired power plants would incur no costs under the proposed standards.
The public comment period on the proposed rule will be open for 60 days after publication in the Federal Register. The agency is under a consent decree to take final action by May 22, 2014.
ISAF NEWS FROM AFGHANISTAN FOR APRIL 22, 2013
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| U.S. Army Sgt. Nichole D. Sharp and her military working dog, Hatos, search a truck while assessing security in the new customs yard under construction near the Afghanistan-Pakistan border in the Spin Boldak district in Afghanistan's Kandahar province, April 8, 2013. Sharp, a military police officer, is assigned to the 3rd Infantry Division. U.S. Army photo by Staff Sgt. Shane Hamann |
FROM: U.S. DEPARTMENT OF DEFENSE
Afghan, Coalition Forces Arrest Insurgents During Searches
Compiled from International Security Assistance Force Joint Command News Releases
WASHINGTON, April 22, 2013 - Combined Afghan and coalition security forces arrested seven insurgents yesterday during searches for Taliban leaders in two of Afghanistan's provinces, military officials reported.
The arrests took place in three separate operations:
-- In Kandahar province's Kandahar district, a combined force arrested an insurgent while searching for a senior Taliban leader who is believed to have operational control over a group of insurgents responsible for attacks against Afghan and coalition forces. He is believed to be a key insurgent facilitator in the area, procuring and distributing weapons and other military supplies.
-- Also in Kandahar's Kandahar district, a combined force arrested four insurgents while searching for a Taliban leader who is believed to manage a network of insurgents throughout the province while gathering intelligence to use against Afghan and coalition forces. He also has participated in executions of Afghan officials, assisted in obtaining weapons for insurgents, and had a direct association with Abdullah Wakil, the former Taliban leader for the province's Panjwai district, who was killed March 31 during a combined operation
-- A combined force in Nangarhar province's Khugyani district arrested three insurgents while searching for a Taliban leader who is believed to be responsible for assassinations of government officials, facilitating the movement of money and distributing weapons to insurgents and conducting attacks against Afghan and coalition forces.
In April 20 Afghanistan operations:
-- Feda Mohammad, a senior Islamic Movement of Uzbekistan leader, was killed during an operation in Balkh province's Balkh district. Also known as Omari, Mohammad had a long history of planning attacks against civilians and Afghan and coalition forces. Prior to Afghan New Year celebrations in March, he coordinated a failed attack against public gatherings, specifically targeting Balkh's governor and other government officials with suicide bombers. He also had extensive experience facilitating the movement of improvised explosive devices.
-- A combined force in Khost province's Matun district arrested a Haqqani network leader who is believed to be involved in planning and conducting attacks against Afghan and coalition forces. He has also performed reconnaissance operations for his cell. The security force also arrested two other insurgents.
In other news, Afghan and coalition security forces today confirmed the death of senior Taliban leader Mullah Hayatullah during an April 18 operation in Kandahar's Maiwand district. One of the top officials for the Taliban in the district, Hayatullah was responsible for organizing and planning attacks against Afghan and coalition forces. He also facilitated the movement of insurgent weapons and supplies and plotted to assassinate Afghans who support the local government and Afghan forces.
GOVERNMENT ANNOUNCES $475 MILLION FOR COMMUNITY COLLEGE/EMPLOYER TRAINING PARTNERSHIPS
FROM: U.S. DEPARTMENT OF EDUCATION
U.S. Departments of Education and Labor Announce Availability of $474.5 Million to Strengthen Training Partnerships Between Community Colleges and Employers
WASHINGTON – The U.S. Department of Education, in partnership with the U.S. Department of Labor, today announced the availability of $474.5 million to create and expand innovative partnerships between community colleges and businesses to educate and train workers with the skills employers need. This is the third round of funding since 2009 under the Trade Adjustment Assistance Community College and Career Training (TAACCCT) grant program, for a total of nearly $1.5 billion.
"Equipping our nation's students with the skills they need is one of the best investments we can make to keep our economy growing," said U.S. Secretary of Education Arne Duncan. "This third round of funding will build on the work of earlier grantees by strengthening partnerships between institutions and employers so students develop the skills and attain the credentials they need for jobs in high-need fields now and in the future."
Acting Secretary of Labor Seth Harris announced the new funding today at an event with Under Secretary of Education Martha Kanter at Contra Costa College training facility in Richmond, Calif. The college is part of the "Design-It Build-It Ship-It" consortium of 10 community colleges in San Francisco's East Bay area that was awarded $15 million in the second round of TAACCCT grants to support regional partnerships, build career pathways, and enhance industry engagement in the advanced manufacturing, logistics, and engineering industries.
"Building a well-educated workforce is critical to achieve President Obama's mission to grow the economy from the middle class out," said Acting Secretary Harris. "This new round of funding will expand our capacity to provide world-class job skills to thousands of workers around the country in occupations we know are growing now and will continue to grow in the future."
Contra Costa Community College received $600,000 as part of the consortia grant to serve as the regional lead for Advanced Automotive Technologies and to develop new degree programs and accelerated certificates in partnership with Richmond Workforce Investment Board and the San Pablo Economic Development Corporation.
Administered by the Department of Labor in close collaboration with the Department of Education, the TAACCCT program is one component of President Obama's plan to help every American have at least one year of post-secondary education and for America to have the highest proportion of college graduates in the world by 2020.
This latest round of funding will invest in innovative and evidence-based training models that include strong partnerships with local employers and employer organizations, including sector-based strategies. Strong partnerships and work-based training will help ensure that curricula and training are aligned with the practical skills and competencies industries seek from workers.
Funds will also encourage community colleges to better track data on the employment and earnings of students after they graduate as a tool to improve their programming and to create employment results scorecards that will help prospective students choose between training programs.
Finally, models funded this year will use advanced online and technology-based job training tools. Course materials developed with this funding will be available publicly through the Open Educational Resources initiative to users to modify, update and build on instructional content. Additionally, all grantees will be required to evaluate their programs to build knowledge on what strategies are most effective in helping students gain skills and succeed in the workplace.
U.S. Departments of Education and Labor Announce Availability of $474.5 Million to Strengthen Training Partnerships Between Community Colleges and Employers
WASHINGTON – The U.S. Department of Education, in partnership with the U.S. Department of Labor, today announced the availability of $474.5 million to create and expand innovative partnerships between community colleges and businesses to educate and train workers with the skills employers need. This is the third round of funding since 2009 under the Trade Adjustment Assistance Community College and Career Training (TAACCCT) grant program, for a total of nearly $1.5 billion.
"Equipping our nation's students with the skills they need is one of the best investments we can make to keep our economy growing," said U.S. Secretary of Education Arne Duncan. "This third round of funding will build on the work of earlier grantees by strengthening partnerships between institutions and employers so students develop the skills and attain the credentials they need for jobs in high-need fields now and in the future."
Acting Secretary of Labor Seth Harris announced the new funding today at an event with Under Secretary of Education Martha Kanter at Contra Costa College training facility in Richmond, Calif. The college is part of the "Design-It Build-It Ship-It" consortium of 10 community colleges in San Francisco's East Bay area that was awarded $15 million in the second round of TAACCCT grants to support regional partnerships, build career pathways, and enhance industry engagement in the advanced manufacturing, logistics, and engineering industries.
"Building a well-educated workforce is critical to achieve President Obama's mission to grow the economy from the middle class out," said Acting Secretary Harris. "This new round of funding will expand our capacity to provide world-class job skills to thousands of workers around the country in occupations we know are growing now and will continue to grow in the future."
Contra Costa Community College received $600,000 as part of the consortia grant to serve as the regional lead for Advanced Automotive Technologies and to develop new degree programs and accelerated certificates in partnership with Richmond Workforce Investment Board and the San Pablo Economic Development Corporation.
Administered by the Department of Labor in close collaboration with the Department of Education, the TAACCCT program is one component of President Obama's plan to help every American have at least one year of post-secondary education and for America to have the highest proportion of college graduates in the world by 2020.
This latest round of funding will invest in innovative and evidence-based training models that include strong partnerships with local employers and employer organizations, including sector-based strategies. Strong partnerships and work-based training will help ensure that curricula and training are aligned with the practical skills and competencies industries seek from workers.
Funds will also encourage community colleges to better track data on the employment and earnings of students after they graduate as a tool to improve their programming and to create employment results scorecards that will help prospective students choose between training programs.
Finally, models funded this year will use advanced online and technology-based job training tools. Course materials developed with this funding will be available publicly through the Open Educational Resources initiative to users to modify, update and build on instructional content. Additionally, all grantees will be required to evaluate their programs to build knowledge on what strategies are most effective in helping students gain skills and succeed in the workplace.
STATEMENT FROM FDIC OFFICIALS ON "TOO BIG TO FAIL" BANKS
FROM: FEDERAL DEPOSIT INSURANCE CORPORATION
Statement of Federal Deposit Insurance Corporation by James R. Wigand, Director, Office Of Complex Financial Institutions And Richard J. Osterman, Jr., Acting General Counsel on Who Is Too Big To Fail? Examining the Application of Title I of the Dodd-Frank Act before the Subcommittee on Oversight and Investigations; Committee on Financial Services; U.S. House of Representatives; 2128 Rayburn House Office Building
April 16, 2013
Chairman McHenry, Ranking Member Green, and members of the Subcommittee, thank you for the opportunity to testify on behalf of the Federal Deposit Insurance Corporation (FDIC) on Sections 165 and 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Our testimony will focus on the FDIC's role and progress in implementing Section 165, including the resolution plan requirements and the requirements for stress testing by certain financial institutions.
Section 165 of the Dodd-Frank Act
Resolution Plans
Under the Dodd-Frank Act, bankruptcy is the preferred resolution framework in the event of a systemic financial company's failure. To make this prospect achievable, Title I of the Dodd-Frank Act requires that all large, systemic financial companies prepare resolution plans, or "living wills", to demonstrate how the company would be resolved in a rapid and orderly manner under the Bankruptcy Code in the event of the company's material financial distress or failure. This requirement enables both the firm and the firm's regulators to understand and address the parts of the business that could create systemic consequences in a bankruptcy.
The FDIC intends to make the living will process under Title I of the Dodd-Frank Act both timely and meaningful. The living will process is a necessary and significant tool in ensuring that large financial institutions can be resolved through the bankruptcy system.
The FDIC and the Federal Reserve Board issued a joint rule to implement Section 165(d) requirements for resolution plans – (the 165(d) Rule) – in November 2011. The 165(d) Rule requires systemically important financial institutions (SIFIs) -- bank holding companies with total consolidated assets of $50 billion or more, and nonbank financial companies that the Financial Stability Oversight Council (FSOC) determines could pose a threat to the financial stability of the United States -- to develop, maintain, and periodically submit resolution plans to regulators.
In addition to the resolution plan requirements under the Dodd-Frank Act, the FDIC issued a separate rule which requires all insured depository institutions (IDIs) with greater than $50 billion in assets to submit resolution plans to the FDIC for their orderly resolution under the Federal Deposit Insurance Act. The 165(d) Rule and the IDI resolution plan rule are designed to work in tandem by covering the full range of business lines, legal entities and capital-structure combinations within a large financial firm.
The 165(d) Rule establishes a schedule for staggered annual filings. The first group of filers -- bank holding companies and foreign banking organizations with $250 billion or more in non-bank assets ("first wave" filers) -- submitted their initial resolution plans on July 1, 2012. Financial companies with less than $250 billion, but more than $100 billion in non-bank assets ("second wave" filers), will file their initial plans by July 1, 2013, and all other bank holding companies – those with assets over $50 billion – ("third wave" filers) are scheduled to file by December 31, 2013. While the general expectation is that firms will file annually, regulators may require that a plan be updated on a more frequent schedule, and a firm must provide notice to regulators of any event that may have a material effect on its resolution plan.
Eleven firms comprised the first wave of filers. The nine firms that submitted plans on July 1, 2012, were Bank of America Corporation, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS, Credit Suisse, and Barclays. The two other first wave filers, Bank of New York Mellon Corporation and State Street Corporation, submitted plans on October 1, 2012. The second wave filers include Wells Fargo, BNP Paribas, HSBC, and RBS. The third wave filers include approximately 115 firms, the large majority being foreign financial companies conducting business in the U.S.
The 165(d) Rule sets out the information to be included in a firm's resolution plan. The key objectives laid out in the Rule for the initial resolution plans submitted by first wave filers are identifying each firm's critical operations and core business lines, mapping those operations and core business lines to each firm's material legal entities, and identifying the key obstacles to a rapid and orderly resolution in bankruptcy. With regard to key obstacles, these might include such areas as a firm's internal organizational structure, interconnections of the firm to other systemic financial companies, management information system limitations, default and termination provisions of certain types of financial contracts, cross-jurisdictional operations, and funding mechanisms.
The 165(d) Rule provides that smaller, less complex financial institutions subject to the filing requirements may be eligible to file a less detailed, tailored resolution plan, for which the information requirements generally are limited to the firm's nonbanking operations, and the interconnections between the nonbanking operations and its IDI operations.
Section 165(d) of the Dodd-Frank Act requires the FDIC and the Federal Reserve Board to review each resolution plan. If, as a result of their review, the FDIC and the Federal Reserve Board jointly determine that the resolution plan is not credible or would not facilitate an orderly resolution of the firm under the Bankruptcy Code, then the company must resubmit the plan with revisions, including, if necessary, proposed changes in business operations or corporate structure. If the company fails to resubmit a credible plan that would result in orderly resolution under the Bankruptcy Code, the FDIC and the Federal Reserve may jointly impose more stringent capital, leverage, or liquidity requirements; growth, activities, or operations restrictions; or, after two years and in consultation with the FSOC, divestiture requirements.
Federal Reserve Board and FDIC staff reviewed the first wave filers' plans for informational completeness to ensure that all information requirements of the Rule were addressed in the plans. The initial plan submissions for the first wave filers were created using an assumption of the individual firm's failure under "baseline" economic conditions as a starting point. Subsequent submissions are required to take into account "adverse" and "severely adverse" economic conditions.
The eleven firms that submitted initial plans in 2012 will be expected to revise and update their submissions in their subsequent 2013 versions, pursuant to guidance that the FDIC and the Federal Reserve Board will provide to these companies. Resolution plans submitted in 2013 will be subject to informational completeness reviews and reviews for creditability or resolvability under the Bankruptcy Code. Going forward, the FDIC and the Federal Reserve Board expect the revised plans to focus on key issues and obstacles to an orderly resolution in bankruptcy, including global cooperation and the risk of ring-fencing or other precipitous actions. To assess this potential risk, the firms will need to provide a jurisdiction-by-jurisdiction analysis of the actions each would need to take in a resolution, as well as the actions to be taken by host authorities, including supervisory and resolution authorities. Other key issues expected to be addressed in the plans include: the risk of multiple, competing insolvency proceedings; the continuity of critical operations -- particularly maintaining access to shared services and payment and clearing systems; the potential systemic consequences of counterparty actions; and global liquidity and funding with an emphasis on providing a detailed understanding of the firm's funding operations and cash flows.
Stress Testing
Section 165 of the Dodd-Frank Act requires the FDIC to issue regulations for FDIC-supervised banks with total consolidated assets of more than $10 billion to conduct annual stress tests. The banks must report their respective stress test results to the FDIC and the Federal Reserve Board and these results also are summarized in a public document. The FDIC views the stress tests as an important source of forward-looking analysis that will enhance the supervisory process for these institutions. Furthermore, these stress tests will support ongoing improvement in a bank's internal assessments of capital adequacy and overall capital planning.
The Dodd-Frank Act requires the FDIC to coordinate with the other supervisory agencies to issue regulations that are consistent and comparable. While each banking agency issued separate final rules with respect to their supervised entities, the final rules were nearly identical across the agencies. The FDIC finalized its rule on annual stress tests on October 15, 2012. Complementing this rulemaking, the FDIC also issued proposed reporting templates that were developed jointly with the other agencies. Lastly, the agencies are working closely on proposed guidance to ensure consistent treatment for all covered financial institutions under the final rule.
Certain insured institutions and bank holding companies with assets of $50 billion or more comprised the first set of companies to conduct stress tests, which were completed in March 2013. Using September 30, 2012 financial data, institutions developed financial projections under defined stress scenarios provided by the agencies in November 2012. Each company publicly disclosed the results of their stress tests on or before March 31st of this year.
Institutions with assets greater than $10 billion, but less than $50 billion, and larger institutions that have not had previously conducted stress tests, will conduct their first round of stress tests later this fall.
Section 121 of the Dodd-Frank Act
Section 121 authorizes the Federal Reserve Board, with the concurrence of two-thirds of the voting members of the Financial Stability Oversight Council (FSOC), to take various actions with respect to a bank holding company with assets of $50 billion or more or a nonbank financial company supervised by the Federal Reserve Board, if it is determined that company poses a grave threat to the financial stability of the United States. Section 121 also grants the company, upon its request, the opportunity to request a written or oral hearing before the Federal Reserve Board to contest proposed actions.
As a voting member of the FSOC, the FDIC would participate in any discussions involving findings made by the Federal Reserve Board under this section and would carefully weigh the case and its merit in exercising our FSOC vote. To date, the FSOC has not heard any matters involving the use of this "grave threat" authority.
Conclusion
The FDIC has made significant progress in the implementation of Section 165 of the Dodd-Frank Act. Our goal is to ensure that firms that could pose a systemic risk to the financial system develop and maintain resolution plans that identify each firm's critical operations and core business lines, map those operations and core business lines to each firm's material legal entities, and identify and address the key obstacles to a rapid and orderly resolution in bankruptcy. Ensuring that any institution, regardless of size or complexity, can be effectively resolved through the bankruptcy process will contribute to the stability of our financial system and will avoid many of the difficult choices regulators faced in dealing with systemic institutions during the last crisis.
Statement of Federal Deposit Insurance Corporation by James R. Wigand, Director, Office Of Complex Financial Institutions And Richard J. Osterman, Jr., Acting General Counsel on Who Is Too Big To Fail? Examining the Application of Title I of the Dodd-Frank Act before the Subcommittee on Oversight and Investigations; Committee on Financial Services; U.S. House of Representatives; 2128 Rayburn House Office Building
April 16, 2013
Chairman McHenry, Ranking Member Green, and members of the Subcommittee, thank you for the opportunity to testify on behalf of the Federal Deposit Insurance Corporation (FDIC) on Sections 165 and 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Our testimony will focus on the FDIC's role and progress in implementing Section 165, including the resolution plan requirements and the requirements for stress testing by certain financial institutions.
Section 165 of the Dodd-Frank Act
Resolution Plans
Under the Dodd-Frank Act, bankruptcy is the preferred resolution framework in the event of a systemic financial company's failure. To make this prospect achievable, Title I of the Dodd-Frank Act requires that all large, systemic financial companies prepare resolution plans, or "living wills", to demonstrate how the company would be resolved in a rapid and orderly manner under the Bankruptcy Code in the event of the company's material financial distress or failure. This requirement enables both the firm and the firm's regulators to understand and address the parts of the business that could create systemic consequences in a bankruptcy.
The FDIC intends to make the living will process under Title I of the Dodd-Frank Act both timely and meaningful. The living will process is a necessary and significant tool in ensuring that large financial institutions can be resolved through the bankruptcy system.
The FDIC and the Federal Reserve Board issued a joint rule to implement Section 165(d) requirements for resolution plans – (the 165(d) Rule) – in November 2011. The 165(d) Rule requires systemically important financial institutions (SIFIs) -- bank holding companies with total consolidated assets of $50 billion or more, and nonbank financial companies that the Financial Stability Oversight Council (FSOC) determines could pose a threat to the financial stability of the United States -- to develop, maintain, and periodically submit resolution plans to regulators.
In addition to the resolution plan requirements under the Dodd-Frank Act, the FDIC issued a separate rule which requires all insured depository institutions (IDIs) with greater than $50 billion in assets to submit resolution plans to the FDIC for their orderly resolution under the Federal Deposit Insurance Act. The 165(d) Rule and the IDI resolution plan rule are designed to work in tandem by covering the full range of business lines, legal entities and capital-structure combinations within a large financial firm.
The 165(d) Rule establishes a schedule for staggered annual filings. The first group of filers -- bank holding companies and foreign banking organizations with $250 billion or more in non-bank assets ("first wave" filers) -- submitted their initial resolution plans on July 1, 2012. Financial companies with less than $250 billion, but more than $100 billion in non-bank assets ("second wave" filers), will file their initial plans by July 1, 2013, and all other bank holding companies – those with assets over $50 billion – ("third wave" filers) are scheduled to file by December 31, 2013. While the general expectation is that firms will file annually, regulators may require that a plan be updated on a more frequent schedule, and a firm must provide notice to regulators of any event that may have a material effect on its resolution plan.
Eleven firms comprised the first wave of filers. The nine firms that submitted plans on July 1, 2012, were Bank of America Corporation, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS, Credit Suisse, and Barclays. The two other first wave filers, Bank of New York Mellon Corporation and State Street Corporation, submitted plans on October 1, 2012. The second wave filers include Wells Fargo, BNP Paribas, HSBC, and RBS. The third wave filers include approximately 115 firms, the large majority being foreign financial companies conducting business in the U.S.
The 165(d) Rule sets out the information to be included in a firm's resolution plan. The key objectives laid out in the Rule for the initial resolution plans submitted by first wave filers are identifying each firm's critical operations and core business lines, mapping those operations and core business lines to each firm's material legal entities, and identifying the key obstacles to a rapid and orderly resolution in bankruptcy. With regard to key obstacles, these might include such areas as a firm's internal organizational structure, interconnections of the firm to other systemic financial companies, management information system limitations, default and termination provisions of certain types of financial contracts, cross-jurisdictional operations, and funding mechanisms.
The 165(d) Rule provides that smaller, less complex financial institutions subject to the filing requirements may be eligible to file a less detailed, tailored resolution plan, for which the information requirements generally are limited to the firm's nonbanking operations, and the interconnections between the nonbanking operations and its IDI operations.
Section 165(d) of the Dodd-Frank Act requires the FDIC and the Federal Reserve Board to review each resolution plan. If, as a result of their review, the FDIC and the Federal Reserve Board jointly determine that the resolution plan is not credible or would not facilitate an orderly resolution of the firm under the Bankruptcy Code, then the company must resubmit the plan with revisions, including, if necessary, proposed changes in business operations or corporate structure. If the company fails to resubmit a credible plan that would result in orderly resolution under the Bankruptcy Code, the FDIC and the Federal Reserve may jointly impose more stringent capital, leverage, or liquidity requirements; growth, activities, or operations restrictions; or, after two years and in consultation with the FSOC, divestiture requirements.
Federal Reserve Board and FDIC staff reviewed the first wave filers' plans for informational completeness to ensure that all information requirements of the Rule were addressed in the plans. The initial plan submissions for the first wave filers were created using an assumption of the individual firm's failure under "baseline" economic conditions as a starting point. Subsequent submissions are required to take into account "adverse" and "severely adverse" economic conditions.
The eleven firms that submitted initial plans in 2012 will be expected to revise and update their submissions in their subsequent 2013 versions, pursuant to guidance that the FDIC and the Federal Reserve Board will provide to these companies. Resolution plans submitted in 2013 will be subject to informational completeness reviews and reviews for creditability or resolvability under the Bankruptcy Code. Going forward, the FDIC and the Federal Reserve Board expect the revised plans to focus on key issues and obstacles to an orderly resolution in bankruptcy, including global cooperation and the risk of ring-fencing or other precipitous actions. To assess this potential risk, the firms will need to provide a jurisdiction-by-jurisdiction analysis of the actions each would need to take in a resolution, as well as the actions to be taken by host authorities, including supervisory and resolution authorities. Other key issues expected to be addressed in the plans include: the risk of multiple, competing insolvency proceedings; the continuity of critical operations -- particularly maintaining access to shared services and payment and clearing systems; the potential systemic consequences of counterparty actions; and global liquidity and funding with an emphasis on providing a detailed understanding of the firm's funding operations and cash flows.
Stress Testing
Section 165 of the Dodd-Frank Act requires the FDIC to issue regulations for FDIC-supervised banks with total consolidated assets of more than $10 billion to conduct annual stress tests. The banks must report their respective stress test results to the FDIC and the Federal Reserve Board and these results also are summarized in a public document. The FDIC views the stress tests as an important source of forward-looking analysis that will enhance the supervisory process for these institutions. Furthermore, these stress tests will support ongoing improvement in a bank's internal assessments of capital adequacy and overall capital planning.
The Dodd-Frank Act requires the FDIC to coordinate with the other supervisory agencies to issue regulations that are consistent and comparable. While each banking agency issued separate final rules with respect to their supervised entities, the final rules were nearly identical across the agencies. The FDIC finalized its rule on annual stress tests on October 15, 2012. Complementing this rulemaking, the FDIC also issued proposed reporting templates that were developed jointly with the other agencies. Lastly, the agencies are working closely on proposed guidance to ensure consistent treatment for all covered financial institutions under the final rule.
Certain insured institutions and bank holding companies with assets of $50 billion or more comprised the first set of companies to conduct stress tests, which were completed in March 2013. Using September 30, 2012 financial data, institutions developed financial projections under defined stress scenarios provided by the agencies in November 2012. Each company publicly disclosed the results of their stress tests on or before March 31st of this year.
Institutions with assets greater than $10 billion, but less than $50 billion, and larger institutions that have not had previously conducted stress tests, will conduct their first round of stress tests later this fall.
Section 121 of the Dodd-Frank Act
Section 121 authorizes the Federal Reserve Board, with the concurrence of two-thirds of the voting members of the Financial Stability Oversight Council (FSOC), to take various actions with respect to a bank holding company with assets of $50 billion or more or a nonbank financial company supervised by the Federal Reserve Board, if it is determined that company poses a grave threat to the financial stability of the United States. Section 121 also grants the company, upon its request, the opportunity to request a written or oral hearing before the Federal Reserve Board to contest proposed actions.
As a voting member of the FSOC, the FDIC would participate in any discussions involving findings made by the Federal Reserve Board under this section and would carefully weigh the case and its merit in exercising our FSOC vote. To date, the FSOC has not heard any matters involving the use of this "grave threat" authority.
Conclusion
The FDIC has made significant progress in the implementation of Section 165 of the Dodd-Frank Act. Our goal is to ensure that firms that could pose a systemic risk to the financial system develop and maintain resolution plans that identify each firm's critical operations and core business lines, map those operations and core business lines to each firm's material legal entities, and identify and address the key obstacles to a rapid and orderly resolution in bankruptcy. Ensuring that any institution, regardless of size or complexity, can be effectively resolved through the bankruptcy process will contribute to the stability of our financial system and will avoid many of the difficult choices regulators faced in dealing with systemic institutions during the last crisis.
CDC SAYS TWO FOODBORNE GERM CAUSED INFECTIONS INCREASED IN 2012
FROM: CENTERS FOR DISEASE CONTROL AND PREVENTION
Infections from some foodborne germs increased, while others remained unchanged in 2012
The nation’s annual food safety report card is out and it shows that 2012 rates of infections from two germs spread commonly through food have increased significantly when compared to a baseline period of 2006-2008, while rates of most others have not changed during the same period. The data are part of the Foodborne Diseases Active Surveillance Network (FoodNet) report released today by the Centers for Disease Control and Prevention (CDC). Infections from campylobacter -- which is linked to many foods, including poultry, raw milk and produce – has risen up to 14 percent in 2012 compared to 2006-2008. They were at their highest level since 2000. Vibrio infections as a whole were up 43 percent when compared with the rates observed in 2006-2008. Vibrio vulnificus, the most severe strain, has not increased. Foodborne vibrio infections are most often associated with eating raw shellfish.
"The U.S. food supply remains one of the safest in the world," said CDC Director Tom Frieden, M.D., M.P.H. "However, some foodborne diseases continue to pose a challenge. We have the ability, through investments in emerging technologies, to identify outbreaks even more quickly and implement interventions even faster to protect people from the dangers posed by contaminated food."
While progress had been made in the past few years in reducing infections from a dangerous type of E. coli, Shiga toxin-producing E. coli (STEC) O157, rates in 2012 went back up. Incidence of STEC O157 infection had decreased to 0.95 per 100,000 population in 2010, but last year went back up to 1.12 per 100,000 population. FoodNet, a collaboration among CDC, ten state health departments, the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS), and the U.S. Food and Drug Administration (FDA), tracks whether selected infections are increasing or decreasing. Overall in 2012, FoodNet’s 10 sites reported 19,531 illnesses, 4,563 hospitalizations and 68 deaths from nine germs commonly spread through foods.
Campylobacter is associated with eating raw or undercooked poultry, raw milk dairy products, contaminated produce and contaminated water. It is also acquired through contact with infected animals. Campylobacter usually causes diarrhea, stomach pain and fever that resolve in about a week. Vibrio lives naturally in sea water and foodborne vibrio infection is most often linked to eating raw oysters. It is rare, but can cause serious, life-threatening infection, especially in people with liver disease.
In 2011, FSIS implemented new and revised industry performance standards for campylobacter and salmonella, respectively, to decrease the presence of these pathogens in broiler chickens and turkeys.
"The performance standards FSIS implemented are an important consumer protection measure," said USDA Under Secretary for Food Safety Elisabeth Hagen, M.D. "These standards are at the core of USDA’s mission. While tough, they are achievable and a critical tool in our effort to drive down illnesses from these pathogens in Americans each year."
FDA is working closely with its federal and state partners to better understand the root causes of the increase in Vibrio. In addition, the Agency is implementing the Food Safety Modernization Act.
"New prevention-based rules under the Food Safety Modernization Act will help to reduce foodborne illness in general and new enforcement authorities allow us to take action to keep harmful foods out of the marketplace," said Michael Taylor, Deputy Commissioner for Foods and Veterinary Medicine at FDA.
People who want to reduce their risk of foodborne illness should assume raw chicken and other meat carry bacteria that can cause illness, and should not allow these foods to cross-contaminate surfaces and other foods. People should also cook chicken and other meat well, avoid consuming unpasteurized milk and unpasteurized soft cheeses. It is always best to cook seafood thoroughly. People at greater risk for foodborne illness with the most severe outcomes, such as pregnant women and people with weakened immune systems, should not eat raw or partially cooked seafood, including oysters that have been treated after harvest.
About FoodNet
FoodNet collects information to track rates and determine trends in laboratory-confirmed illnesses caused by nine pathogens transmitted commonly by food: campylobacter, cryptosporidium, cyclospora, listeria, salmonella, STEC O157 and non-O157, shigella, vibrio and yersinia. Annual data are compared with data from a recent period (2006-2008) and with data from the first years of surveillance (1996-1998) to measure progress. FoodNet is a collaboration among CDC, ten state health departments, the USDA’s Food Safety and Inspection Service, and the FDA. FoodNet covers 48 million people, encompassing about 15 percent of the American population. The sites are the states of Connecticut, Georgia, Maryland, Minnesota, New Mexico, Oregon, and Tennessee, and selected counties in California, Colorado, and New York.
Infections from some foodborne germs increased, while others remained unchanged in 2012
The nation’s annual food safety report card is out and it shows that 2012 rates of infections from two germs spread commonly through food have increased significantly when compared to a baseline period of 2006-2008, while rates of most others have not changed during the same period. The data are part of the Foodborne Diseases Active Surveillance Network (FoodNet) report released today by the Centers for Disease Control and Prevention (CDC). Infections from campylobacter -- which is linked to many foods, including poultry, raw milk and produce – has risen up to 14 percent in 2012 compared to 2006-2008. They were at their highest level since 2000. Vibrio infections as a whole were up 43 percent when compared with the rates observed in 2006-2008. Vibrio vulnificus, the most severe strain, has not increased. Foodborne vibrio infections are most often associated with eating raw shellfish.
"The U.S. food supply remains one of the safest in the world," said CDC Director Tom Frieden, M.D., M.P.H. "However, some foodborne diseases continue to pose a challenge. We have the ability, through investments in emerging technologies, to identify outbreaks even more quickly and implement interventions even faster to protect people from the dangers posed by contaminated food."
While progress had been made in the past few years in reducing infections from a dangerous type of E. coli, Shiga toxin-producing E. coli (STEC) O157, rates in 2012 went back up. Incidence of STEC O157 infection had decreased to 0.95 per 100,000 population in 2010, but last year went back up to 1.12 per 100,000 population. FoodNet, a collaboration among CDC, ten state health departments, the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS), and the U.S. Food and Drug Administration (FDA), tracks whether selected infections are increasing or decreasing. Overall in 2012, FoodNet’s 10 sites reported 19,531 illnesses, 4,563 hospitalizations and 68 deaths from nine germs commonly spread through foods.
Campylobacter is associated with eating raw or undercooked poultry, raw milk dairy products, contaminated produce and contaminated water. It is also acquired through contact with infected animals. Campylobacter usually causes diarrhea, stomach pain and fever that resolve in about a week. Vibrio lives naturally in sea water and foodborne vibrio infection is most often linked to eating raw oysters. It is rare, but can cause serious, life-threatening infection, especially in people with liver disease.
In 2011, FSIS implemented new and revised industry performance standards for campylobacter and salmonella, respectively, to decrease the presence of these pathogens in broiler chickens and turkeys.
"The performance standards FSIS implemented are an important consumer protection measure," said USDA Under Secretary for Food Safety Elisabeth Hagen, M.D. "These standards are at the core of USDA’s mission. While tough, they are achievable and a critical tool in our effort to drive down illnesses from these pathogens in Americans each year."
FDA is working closely with its federal and state partners to better understand the root causes of the increase in Vibrio. In addition, the Agency is implementing the Food Safety Modernization Act.
"New prevention-based rules under the Food Safety Modernization Act will help to reduce foodborne illness in general and new enforcement authorities allow us to take action to keep harmful foods out of the marketplace," said Michael Taylor, Deputy Commissioner for Foods and Veterinary Medicine at FDA.
People who want to reduce their risk of foodborne illness should assume raw chicken and other meat carry bacteria that can cause illness, and should not allow these foods to cross-contaminate surfaces and other foods. People should also cook chicken and other meat well, avoid consuming unpasteurized milk and unpasteurized soft cheeses. It is always best to cook seafood thoroughly. People at greater risk for foodborne illness with the most severe outcomes, such as pregnant women and people with weakened immune systems, should not eat raw or partially cooked seafood, including oysters that have been treated after harvest.
About FoodNet
FoodNet collects information to track rates and determine trends in laboratory-confirmed illnesses caused by nine pathogens transmitted commonly by food: campylobacter, cryptosporidium, cyclospora, listeria, salmonella, STEC O157 and non-O157, shigella, vibrio and yersinia. Annual data are compared with data from a recent period (2006-2008) and with data from the first years of surveillance (1996-1998) to measure progress. FoodNet is a collaboration among CDC, ten state health departments, the USDA’s Food Safety and Inspection Service, and the FDA. FoodNet covers 48 million people, encompassing about 15 percent of the American population. The sites are the states of Connecticut, Georgia, Maryland, Minnesota, New Mexico, Oregon, and Tennessee, and selected counties in California, Colorado, and New York.
SUPERNOVA REMNANT SN 1006
FROM: NASA
This year, astronomers around the world have been celebrating the 50th anniversary of X-ray astronomy. Few objects better illustrate the progress of the field in the past half-century than the supernova remnant known as SN 1006.
When the object we now call SN 1006 first appeared on May 1, 1006 A.D., it was far brighter than Venus and visible during the daytime for weeks. Astronomers in China, Japan, Europe, and the Arab world all documented this spectacular sight. With the advent of the Space Age in the 1960s, scientists were able to launch instruments and detectors above Earth's atmosphere to observe the universe in wavelengths that are blocked from the ground, including X-rays. SN 1006 was one of the faintest X-ray sources detected by the first generation of X-ray satellites.
A new image of SN 1006 from NASA's Chandra X-ray Observatory reveals this supernova remnant in exquisite detail. By overlapping ten different pointings of Chandra's field-of-view, astronomers have stitched together a cosmic tapestry of the debris field that was created when a white dwarf star exploded, sending its material hurtling into space. In this new Chandra image, low, medium, and higher-energy X-rays are colored red, green, and blue respectively.
The new Chandra image provides new insight into the nature of SN 1006, which is the remnant of a so-called Type Ia supernova. This class of supernova is caused when a white dwarf pulls too much mass from a companion star and explodes, or when two white dwarfs merge and explode. Understanding Type Ia supernovas is especially important because astronomers use observations of these explosions in distant galaxies as mileposts to mark the expansion of the universe.
The new SN 1006 image represents the most spatially detailed map yet of the material ejected during a Type Ia supernova. By examining the different elements in the debris field -- such as silicon, oxygen, and magnesium -- the researchers may be able to piece together how the star looked before it exploded and the order that the layers of the star were ejected, and constrain theoretical models for the explosion.
Scientists are also able to study just how fast specific knots of material are moving away from the original explosion. The fastest knots are moving outward at almost eleven million miles per hour, while those in other areas are moving at a more leisurely seven million miles per hour. SN 1006 is located about 7,000 light years from Earth. The new Chandra image of SN 1006 contains over eight days worth of observing time by the telescope. These results were presented at a meeting of High Energy Astrophysics Division of the American Astronomical Society in Monterey, CA.
NASA's Marshall Space Flight Center in Huntsville, Ala., manages the Chandra program for NASA's Science Mission Directorate in Washington. The Smithsonian Astrophysical Observatory controls Chandra's science and flight operations from Cambridge, Mass.
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Credits: NASA/CXC/Middlebury College/F.Winklerch |
FROM: NASA
This year, astronomers around the world have been celebrating the 50th anniversary of X-ray astronomy. Few objects better illustrate the progress of the field in the past half-century than the supernova remnant known as SN 1006.
When the object we now call SN 1006 first appeared on May 1, 1006 A.D., it was far brighter than Venus and visible during the daytime for weeks. Astronomers in China, Japan, Europe, and the Arab world all documented this spectacular sight. With the advent of the Space Age in the 1960s, scientists were able to launch instruments and detectors above Earth's atmosphere to observe the universe in wavelengths that are blocked from the ground, including X-rays. SN 1006 was one of the faintest X-ray sources detected by the first generation of X-ray satellites.
A new image of SN 1006 from NASA's Chandra X-ray Observatory reveals this supernova remnant in exquisite detail. By overlapping ten different pointings of Chandra's field-of-view, astronomers have stitched together a cosmic tapestry of the debris field that was created when a white dwarf star exploded, sending its material hurtling into space. In this new Chandra image, low, medium, and higher-energy X-rays are colored red, green, and blue respectively.
The new Chandra image provides new insight into the nature of SN 1006, which is the remnant of a so-called Type Ia supernova. This class of supernova is caused when a white dwarf pulls too much mass from a companion star and explodes, or when two white dwarfs merge and explode. Understanding Type Ia supernovas is especially important because astronomers use observations of these explosions in distant galaxies as mileposts to mark the expansion of the universe.
The new SN 1006 image represents the most spatially detailed map yet of the material ejected during a Type Ia supernova. By examining the different elements in the debris field -- such as silicon, oxygen, and magnesium -- the researchers may be able to piece together how the star looked before it exploded and the order that the layers of the star were ejected, and constrain theoretical models for the explosion.
Scientists are also able to study just how fast specific knots of material are moving away from the original explosion. The fastest knots are moving outward at almost eleven million miles per hour, while those in other areas are moving at a more leisurely seven million miles per hour. SN 1006 is located about 7,000 light years from Earth. The new Chandra image of SN 1006 contains over eight days worth of observing time by the telescope. These results were presented at a meeting of High Energy Astrophysics Division of the American Astronomical Society in Monterey, CA.
NASA's Marshall Space Flight Center in Huntsville, Ala., manages the Chandra program for NASA's Science Mission Directorate in Washington. The Smithsonian Astrophysical Observatory controls Chandra's science and flight operations from Cambridge, Mass.
Sunday, April 21, 2013
DOJ SETTLES WITH CHILDREN'S CENTER OVER ALLEGED AMERICANS WITH DISABILITIES ACT VIOLATIONS
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, April 17, 2013
Justice Department Settles with Apple Tree Children’s Center in Norwalk, Iowa
The Justice Department announced today that it reached a settlement with Apple Tree Children’s Center of Norwalk, Iowa, to remedy alleged violations of the Americans with Disabilities Act (ADA). The agreement resolves allegations that Apple Tree Children’s Center failed to ensure that children with disabilities, including children with Down syndrome, have a full and equal opportunity to participate in and benefit from its private pre-school programs.
Under the settlement agreement, Apple Tree Children’s Center will pay $2,500 to the child’s parents and will make reasonable modifications in policies, practices and procedures to ensure that its programs and services are accessible to children with disabilities. Apple Tree will also provide training on its obligations under Title III of the ADA to all staff who participate in the admissions process, enrollment decisions and consideration of requests for reasonable modifications of any of its policies, practices or procedures. In addition, Apple Tree will designate a staff member as its ADA compliance officer to ensure its compliance with Title III of the ADA and to review proposed decisions to exclude children with disabilities from enrollment or proposed denials of any requested reasonable modifications.
"Children with disabilities, including those with Down syndrome, have the right to full and equal participation in pre-school educational programs. The department is committed to upholding civil rights for all people with disabilities," said Eve Hill, Senior Counselor to the Assistant Attorney General for the Civil Rights Division.
The ADA requires that public accommodations, including pre-school programs, provide children with disabilities, including those with Down syndrome, full and equal enjoyment of the public accommodation’s goods, services and facilities.
Wednesday, April 17, 2013
Justice Department Settles with Apple Tree Children’s Center in Norwalk, Iowa
The Justice Department announced today that it reached a settlement with Apple Tree Children’s Center of Norwalk, Iowa, to remedy alleged violations of the Americans with Disabilities Act (ADA). The agreement resolves allegations that Apple Tree Children’s Center failed to ensure that children with disabilities, including children with Down syndrome, have a full and equal opportunity to participate in and benefit from its private pre-school programs.
Under the settlement agreement, Apple Tree Children’s Center will pay $2,500 to the child’s parents and will make reasonable modifications in policies, practices and procedures to ensure that its programs and services are accessible to children with disabilities. Apple Tree will also provide training on its obligations under Title III of the ADA to all staff who participate in the admissions process, enrollment decisions and consideration of requests for reasonable modifications of any of its policies, practices or procedures. In addition, Apple Tree will designate a staff member as its ADA compliance officer to ensure its compliance with Title III of the ADA and to review proposed decisions to exclude children with disabilities from enrollment or proposed denials of any requested reasonable modifications.
"Children with disabilities, including those with Down syndrome, have the right to full and equal participation in pre-school educational programs. The department is committed to upholding civil rights for all people with disabilities," said Eve Hill, Senior Counselor to the Assistant Attorney General for the Civil Rights Division.
The ADA requires that public accommodations, including pre-school programs, provide children with disabilities, including those with Down syndrome, full and equal enjoyment of the public accommodation’s goods, services and facilities.
INFOMERCIAL "TEACH ME TO TRADE" SALESWOMAN SETTLES FRAUD CHARGES WITH SEC
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Former "Teach Me to Trade" Saleswoman and Infomercial Personality Linda (Knudsen) Woolf Agrees to Settle Securities Fraud Charges and Pay a $225,000 Penalty
The Securities and Exchange Commission announced that on April 16, 2013 the United States District Court for the Eastern District of Virginia entered settled final judgments against Linda (Knudsen) Woolf and Hands On Capital, Inc. Securities and Exchange Commission v. Linda Woolf, Hands On Capital, Inc., et al, Civil Action No. 1:08cv235 (E.D.Va. filed March 11, 2008). The final judgments resolve the Commission’s case against Woolf and Hands On Capital.
Woolf sold securities trading products and services such as classes, mentoring, and software called "Teach Me to Trade" to investors who wanted to learn how to trade securities. The Commission’s complaint alleges that Woolf told investors at Teach Me to Trade workshops that she had purchased mentoring, classes and software to learn to trade and had quickly turned profits by trading securities using Teach Me to Trade methods. The Commission alleges that Woolf’s tales of making money by trading were untrue; she was not a successful securities trader. Woolf sold the products and services pursuant to an independent contractor agreement between Hands On Capital and Teach Me to Trade
Under the terms of the settlement, Woolf (who filed for bankruptcy while this action was pending) agreed to pay a civil penalty of $225,000. Without admitting or denying the Commission’s allegations, Woolf and Hands On Capital also consented to the entry of final judgments permanently enjoining them from future violations of Section 10(b) of the Securities Exchange Act of 1934. Additionally, the final judgments will permanently enjoin Woolf and Hands On Capital from receiving compensation for participating in the development, presentation, promotion, marketing, or sale of any classes, workshops, or seminars (and from receiving compensation for any sales of connected products or services) given to actual or prospective securities investors concerning securities trading.
Former "Teach Me to Trade" Saleswoman and Infomercial Personality Linda (Knudsen) Woolf Agrees to Settle Securities Fraud Charges and Pay a $225,000 Penalty
The Securities and Exchange Commission announced that on April 16, 2013 the United States District Court for the Eastern District of Virginia entered settled final judgments against Linda (Knudsen) Woolf and Hands On Capital, Inc. Securities and Exchange Commission v. Linda Woolf, Hands On Capital, Inc., et al, Civil Action No. 1:08cv235 (E.D.Va. filed March 11, 2008). The final judgments resolve the Commission’s case against Woolf and Hands On Capital.
Woolf sold securities trading products and services such as classes, mentoring, and software called "Teach Me to Trade" to investors who wanted to learn how to trade securities. The Commission’s complaint alleges that Woolf told investors at Teach Me to Trade workshops that she had purchased mentoring, classes and software to learn to trade and had quickly turned profits by trading securities using Teach Me to Trade methods. The Commission alleges that Woolf’s tales of making money by trading were untrue; she was not a successful securities trader. Woolf sold the products and services pursuant to an independent contractor agreement between Hands On Capital and Teach Me to Trade
Under the terms of the settlement, Woolf (who filed for bankruptcy while this action was pending) agreed to pay a civil penalty of $225,000. Without admitting or denying the Commission’s allegations, Woolf and Hands On Capital also consented to the entry of final judgments permanently enjoining them from future violations of Section 10(b) of the Securities Exchange Act of 1934. Additionally, the final judgments will permanently enjoin Woolf and Hands On Capital from receiving compensation for participating in the development, presentation, promotion, marketing, or sale of any classes, workshops, or seminars (and from receiving compensation for any sales of connected products or services) given to actual or prospective securities investors concerning securities trading.
THE TASK FORCE THAT WORKS FOR TRANSITION IN AFGHANISTAN
FROM: U.S. DEPARTMENT OF DEFENSE
Task Force Works Toward Successful Transition in Afghanistan
By Donna Miles
American Forces Press Service
WASHINGTON, April 19, 2013 - With an eye toward 2014 and lessons learned from the drawdown in Iraq, a new task force in Afghanistan is working to ensure a smooth transition of responsibilities that will set the Afghan government and security forces up for future success, the task force commander reported.
The NATO-Afghanistan Transformation Task Force stood up in January as part of the International Security Assistance Force staff, Air Force Maj. Gen. Michael J. Kingsley told American Forces Press Service during a telephone interview from the Afghan capital of Kabul.
Its goal, he explained, is to ensure the well-coordinated transfer or termination of hundreds of tasks being carried out by NATO or U.S. Forces Afghanistan. This includes about 20 tasks identified for transfer to ministries within the Afghan government by December 2014.
Marine Corps Gen. John R. Allen, who recently retired as the ISAF and U.S. Forces Afghanistan commander, recognized that the transition process in Iraq had started too late, Kingsley said. This overwhelmed both Iraqi government and U.S. interagency capacities, a problem exacerbated when failure to reach a bilateral security agreement speeded up the drawdown timetable.
"This task force was born from the lessons from Iraq," Kingsley said. "General Allen knew the importance of getting ahead of this game to understand what tasks needed to be transferred to which agency, and the need to start that process early."
Building on groundwork laid by a U.S.-headed Interagency Operational Planning Team, the NATTF includes staff from eight ISAF nations and across the interagency spectrum.
One of its first missions was to evaluate 977 tasks ISAF and U.S. forces were carrying out and identify which could be eliminated or had overlap. Based on guidance from the North Atlantic Council about what specific roles NATO will and won't play in Afghanistan in 2015 and beyond, the task force then prioritized what they deemed the 371 tasks critical for transition, Kingsley said.
It's an exercise that's never been done, he acknowledged, noting that it's laying groundwork that can be applied to future missions around the world.
Top priority through the team's paring-down process went to tasks that, if not successfully transferred, would have a negative impact on the success of the entire Afghanistan campaign, Kingsley said. This includes capabilities required for the Afghanistan government's long-term viability, many that need to be built incrementally.
"What we are dealing with is infrastructure and civil-military tasks that have a pretty large consequence to the success of this country," Kingsley said, pointing to aviation and telecommunications as examples.
Seven members of the task force team are dedicated exclusively to the transfer of airport navigational aids and control of civilian airspace and other aviation assets to Afghanistan's Ministry of Transportation and Civil Aviation.
It's a complex issue, Kingsley explained, involving not just the transfer of assets and infrastructure, but also the development of laws, policies and expertise to run the aviation enterprise. Another part of the equation is getting Afghanistan's three airlines, all now blacklisted by the European Union, up to safety and credibility standards for accreditation.
"All of that has to be developed by the Afghans, because right now they have almost zero capability," Kingsley said. "But aviation transition is vital, because in a landlocked country like this, it is a primary means of commerce."
Meanwhile, a U.S. team is helping the Afghans develop a fiber-optic network around Afghanistan. "The potential for their income revenue is amazing," Kingsley said. "It could reach a potential $1.5 billion per year, if we can successfully transfer that task to the Afghans."
While helping the Afghans build capacity in these and other vital areas, Kingsley acknowledged that it's not likely to be completed and fully operational by December 2014. "So the second part of what we are doing is to enable them to contract that capability to bridge the gap until they gain the capacity," he said.
The task force also is working with the Afghans to ensure a smooth transfer of tasks related to the NATO and U.S. mission in Afghanistan to build up the Afghan national security forces. This covers the gamut, Kingsley said, from medical evacuation and logistics capabilities, to the ability to conduct operations, intelligence and security and provide mobility.
Throughout the process, Kingsley called communication -- across the international community, the interagency and with Afghanistan government leaders -- a vital part of the effort. That helps lay out a timetable for what needs to be done, and when, and to identify shortfalls early on so they don't become surprises later in the drawdown process, Kingsley said.
The carefully planned process not only builds Afghan capacity, he said, but also enables Afghanistan to step up and demonstrate its sovereignty. That, he said, helps allay concern in Afghanistan and among the international community about the country's post-2014 future, he said.
"To me, the biggest challenge is ensuring that [the Afghanistan government] and the Afghans understand and are able to accomplish the tasks that we are going to transfer to them," Kingsley said. "Through this process, we want to ensure they are set up for success."
The successful transfer of civil-military tasks is the next logistical step in the strategic partnership the United States and Afghanistan are building for the future, he said.
"This is big part of building that long-term strategic partnership," Kingsley said.
Task Force Works Toward Successful Transition in Afghanistan
By Donna Miles
American Forces Press Service
WASHINGTON, April 19, 2013 - With an eye toward 2014 and lessons learned from the drawdown in Iraq, a new task force in Afghanistan is working to ensure a smooth transition of responsibilities that will set the Afghan government and security forces up for future success, the task force commander reported.
The NATO-Afghanistan Transformation Task Force stood up in January as part of the International Security Assistance Force staff, Air Force Maj. Gen. Michael J. Kingsley told American Forces Press Service during a telephone interview from the Afghan capital of Kabul.
Its goal, he explained, is to ensure the well-coordinated transfer or termination of hundreds of tasks being carried out by NATO or U.S. Forces Afghanistan. This includes about 20 tasks identified for transfer to ministries within the Afghan government by December 2014.
Marine Corps Gen. John R. Allen, who recently retired as the ISAF and U.S. Forces Afghanistan commander, recognized that the transition process in Iraq had started too late, Kingsley said. This overwhelmed both Iraqi government and U.S. interagency capacities, a problem exacerbated when failure to reach a bilateral security agreement speeded up the drawdown timetable.
"This task force was born from the lessons from Iraq," Kingsley said. "General Allen knew the importance of getting ahead of this game to understand what tasks needed to be transferred to which agency, and the need to start that process early."
Building on groundwork laid by a U.S.-headed Interagency Operational Planning Team, the NATTF includes staff from eight ISAF nations and across the interagency spectrum.
One of its first missions was to evaluate 977 tasks ISAF and U.S. forces were carrying out and identify which could be eliminated or had overlap. Based on guidance from the North Atlantic Council about what specific roles NATO will and won't play in Afghanistan in 2015 and beyond, the task force then prioritized what they deemed the 371 tasks critical for transition, Kingsley said.
It's an exercise that's never been done, he acknowledged, noting that it's laying groundwork that can be applied to future missions around the world.
Top priority through the team's paring-down process went to tasks that, if not successfully transferred, would have a negative impact on the success of the entire Afghanistan campaign, Kingsley said. This includes capabilities required for the Afghanistan government's long-term viability, many that need to be built incrementally.
"What we are dealing with is infrastructure and civil-military tasks that have a pretty large consequence to the success of this country," Kingsley said, pointing to aviation and telecommunications as examples.
Seven members of the task force team are dedicated exclusively to the transfer of airport navigational aids and control of civilian airspace and other aviation assets to Afghanistan's Ministry of Transportation and Civil Aviation.
It's a complex issue, Kingsley explained, involving not just the transfer of assets and infrastructure, but also the development of laws, policies and expertise to run the aviation enterprise. Another part of the equation is getting Afghanistan's three airlines, all now blacklisted by the European Union, up to safety and credibility standards for accreditation.
"All of that has to be developed by the Afghans, because right now they have almost zero capability," Kingsley said. "But aviation transition is vital, because in a landlocked country like this, it is a primary means of commerce."
Meanwhile, a U.S. team is helping the Afghans develop a fiber-optic network around Afghanistan. "The potential for their income revenue is amazing," Kingsley said. "It could reach a potential $1.5 billion per year, if we can successfully transfer that task to the Afghans."
While helping the Afghans build capacity in these and other vital areas, Kingsley acknowledged that it's not likely to be completed and fully operational by December 2014. "So the second part of what we are doing is to enable them to contract that capability to bridge the gap until they gain the capacity," he said.
The task force also is working with the Afghans to ensure a smooth transfer of tasks related to the NATO and U.S. mission in Afghanistan to build up the Afghan national security forces. This covers the gamut, Kingsley said, from medical evacuation and logistics capabilities, to the ability to conduct operations, intelligence and security and provide mobility.
Throughout the process, Kingsley called communication -- across the international community, the interagency and with Afghanistan government leaders -- a vital part of the effort. That helps lay out a timetable for what needs to be done, and when, and to identify shortfalls early on so they don't become surprises later in the drawdown process, Kingsley said.
The carefully planned process not only builds Afghan capacity, he said, but also enables Afghanistan to step up and demonstrate its sovereignty. That, he said, helps allay concern in Afghanistan and among the international community about the country's post-2014 future, he said.
"To me, the biggest challenge is ensuring that [the Afghanistan government] and the Afghans understand and are able to accomplish the tasks that we are going to transfer to them," Kingsley said. "Through this process, we want to ensure they are set up for success."
The successful transfer of civil-military tasks is the next logistical step in the strategic partnership the United States and Afghanistan are building for the future, he said.
"This is big part of building that long-term strategic partnership," Kingsley said.
DOL OBTAINS $35 MILLION IN BACK WAGES FOR PUERTO RICAN CORRECTIONS AND REHABILITATION WORKERS
FROM: U.S. DEPARTMENT OF LABOR
US Department of Labor obtains more than $35 million in back wages for nearly 5,000 workers in the commonwealth of Puerto Rico
Recovery is among largest in department's history
SAN JUAN, Puerto Rico — Following an investigation by the U.S. Department of Labor's Wage and Hour Division that found violations of the federal Fair Labor Standards Act's overtime and record-keeping provisions, the commonwealth of Puerto Rico has agreed to pay $35,037,586 in back wages and interest to 4,490 current and former employees of the territory's Department of Corrections and Rehabilitation. This is one of the largest settlements in the Wage and Hour Division's history.
The agreement is a part of a consent judgment approved today by Judge Juan M. Pérez Giménez of the U.S. District Court for the Commonwealth of Puerto Rico. Officials representing the commonwealth and the Department of Corrections and Rehabilitation also have agreed to take significant steps to ensure future compliance with the law, including installing an electronic timekeeping system at its facilities, training supervisors in the use of the new system, hiring additional staff to reduce the need for overtime and adjusting daily tours of duty for guards.
The commonwealth government already has restored more than $15 million in back wages due to employees for overtime hours worked since November 2011. The remaining back wages will be paid on an installment basis, and distributed to current and former employees as scheduled through 2016.
"We are pleased that the commonwealth of Puerto Rico has been our partner, through a long and arduous process, in correcting the improper payment of back wages," said acting Secretary of Labor Seth D. Harris. "This agreement returns hard-earned wages to workers and underscores the U.S. Department of Labor's commitment to ensuring that workers receive the wages they earn, as mandated by federal law."
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular hourly rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. In general, "hours worked" includes all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees' wages, hours and other conditions of employment be maintained.
Under certain conditions, employees of state or local government agencies may receive compensatory time off, at a rate of not less than one and one-half hours for each overtime hour worked, instead of cash overtime pay. Law enforcement personnel may accrue or "bank" up to 480 hours of comp time. In this case, the Department of Corrections and Rehabilitation regularly allowed employees' comp time "banks" to greatly exceed 480 hours. The back wages found due for the employees are the cash amounts of unpaid comp time accrued in excess of the limit.
"The Labor Department has been working tirelessly with the commonwealth of Puerto Rico to reach this agreement," said Mary Beth Maxwell, acting deputy administrator of the Wage and Hour Division. "I am very pleased that staff in our Caribbean region persevered, ensured these employees will be paid the back wages they are owed and brought this case to conclusion. Thanks to this resolution, thousands of employees will see money put back into their pockets – and into their local economies."
U.S. ANNOUNCES NEW $123 MILLION IN NON-LETHAL ASSISTANCE TO SYRIAN PEOPLE
FROM: U.S. DEPARTMENT OF STATE
Secretary Kerry Announces Doubling of U.S. Non-lethal Assistance to the Syrian Opposition and New Humanitarian Aid for the Syrian Crisis
Fact Sheet
Office of the Spokesperson
Washington, DC
April 20, 2013
Following his meetings with Syrian Coalition President al-Khatib, members of the Coalition’s leadership, and international partners supporting the Syrian opposition, Secretary of State John Kerry announced the United States’ intention to double non-lethal assistance to the Syrian opposition, as well as provide additional humanitarian aid to Syrians in need.
The new non-lethal assistance underscores the United States’ firm support for a political solution to the crisis in Syria and for the opposition’s advancement of an inclusive, tolerant vision for a post-Assad Syria. The United States will work with the Syrian Coalition and other opposition representatives to determine how the new $123 million in non-lethal assistance can best support their efforts to meet the needs of the Syrian people and lead the way to a political transition that will bring an end to this conflict, and build the inclusive, democratic Syria that its people deserve. This new pledge brings our total non-lethal assistance to the Syrian opposition and civil society groups to $250 million.
The United States will also use a portion of this non-lethal assistance to implement President Obama’s directive to provide an expanded range of support to the Supreme Military Council (SMC). We intend to expand this new support beyond military food rations and medical kits to include other types of non-lethal supplies, which would be determined in collaboration with SMC leadership.
Secretary Kerry urged international partners gathered in Istanbul, as well as all Friends of the Syrian People, to make similar pledges of assistance to the Coalition and the Supreme Military Council with the goal of reaching $1 billion in total international support for the opposition.
In recognition of the devastating humanitarian situation as a result of the crisis in Syria, Secretary Kerry also announced nearly $25 million in additional food assistance for the Syrian people. This aid will provide 25,500 metric tons of wheat – providing four months’ supply of flour to over one million people – as well as food rations for those inside Syria and refugees in Jordan affected by the violence. The United Nations World Food Program will begin distributing the wheat to those in need in all 14 Syrian governorates as quickly as possible. The United States is the largest donor of food assistance both within Syria and for refugees in the affected neighboring countries and is providing a total of over $409 million in humanitarian assistance for the Syrian crisis.
Secretary Kerry Announces Doubling of U.S. Non-lethal Assistance to the Syrian Opposition and New Humanitarian Aid for the Syrian Crisis
Fact Sheet
Office of the Spokesperson
Washington, DC
April 20, 2013
Following his meetings with Syrian Coalition President al-Khatib, members of the Coalition’s leadership, and international partners supporting the Syrian opposition, Secretary of State John Kerry announced the United States’ intention to double non-lethal assistance to the Syrian opposition, as well as provide additional humanitarian aid to Syrians in need.
The new non-lethal assistance underscores the United States’ firm support for a political solution to the crisis in Syria and for the opposition’s advancement of an inclusive, tolerant vision for a post-Assad Syria. The United States will work with the Syrian Coalition and other opposition representatives to determine how the new $123 million in non-lethal assistance can best support their efforts to meet the needs of the Syrian people and lead the way to a political transition that will bring an end to this conflict, and build the inclusive, democratic Syria that its people deserve. This new pledge brings our total non-lethal assistance to the Syrian opposition and civil society groups to $250 million.
The United States will also use a portion of this non-lethal assistance to implement President Obama’s directive to provide an expanded range of support to the Supreme Military Council (SMC). We intend to expand this new support beyond military food rations and medical kits to include other types of non-lethal supplies, which would be determined in collaboration with SMC leadership.
Secretary Kerry urged international partners gathered in Istanbul, as well as all Friends of the Syrian People, to make similar pledges of assistance to the Coalition and the Supreme Military Council with the goal of reaching $1 billion in total international support for the opposition.
In recognition of the devastating humanitarian situation as a result of the crisis in Syria, Secretary Kerry also announced nearly $25 million in additional food assistance for the Syrian people. This aid will provide 25,500 metric tons of wheat – providing four months’ supply of flour to over one million people – as well as food rations for those inside Syria and refugees in Jordan affected by the violence. The United Nations World Food Program will begin distributing the wheat to those in need in all 14 Syrian governorates as quickly as possible. The United States is the largest donor of food assistance both within Syria and for refugees in the affected neighboring countries and is providing a total of over $409 million in humanitarian assistance for the Syrian crisis.
SECRETARY OF STATE KERRY AND MEXICAN FOREIGN SECRETARY MEADE MAKE COMMENTS AFTER MEETING
FROM: U.S. DEPARTMENT OF STATE
Remarks With Mexican Foreign Secretary Jose Antonio Meade After Their Meeting
Remarks
John Kerry
Secretary of State
Treaty Room
Washington, DC
April 19, 2013
Good morning, everybody. Before we begin (cough) – excuse me, allergy season. Before we begin, I just want to say that, as a father and a grandfather, my thoughts are, of course, in my hometown right now, Boston, where events are still unfolding and the entire city is on lockdown. We’re continuing to learn more every moment about the terror attack on Monday and the pursuit of justice that is following it. I think it’s fair to say that for this entire week, we’ve been in a pretty direct confrontation with evil, and I want to congratulate and thank all the law enforcement authorities for the extraordinary job that they have been doing on behalf of our citizens. In the past few days, we’ve seen the best and we’ve seen the worst of human behavior, and it’s the best that all of us really want to focus on. Like everyone, we’re going to keep watching, and we’ll await word from the law enforcement officers before commenting further.
It’s a huge pleasure for me and an important moment to welcome one of our most important partners, our close neighbor, and our friend. And I want to welcome my friend, the Foreign Secretary. One of the first phone calls I made when I became Secretary of State was to Jose, and I’m really honored to see him here today. We share an alma mater together. He was a graduate student, and I was an undergraduate, and so whatever we don’t say right today, you can blame it on him. (laughter)
We obviously share much, much more than an alma mater. Both of us are privileged to represent our extraordinary countries, and we share a remarkable friendship and a very, very strong partnership that is growing stronger all the time. For generations, we’ve lived side by side as families and neighbors sharing geography and sharing common interests and sharing hopes and dreams. The Foreign Secretary and I share a firm commitment to the unique components of our relationship, and we share a common vision for what we can achieve through even greater cooperation and partnership.
We share a friendship and an open line of communication starting with, as I said, the earliest conversations that I had when I assumed this office. So we intend to remain in close contact with each other. We talked about that today. We have a lot of things to continue to cooperate on. We want to increase the economic growth of both of our countries. We want to expand economic opportunity for our people, and we want to provide greater security for the people of the United States and of Mexico.
Our countries share one of the most successful and interconnected economic partnerships in the world, and it’s based on mutual respect and shared responsibility. Bilateral trade amounted to nearly $500 billion last year. That’s more than four times what it was only 20 years ago. High-level economic delegations have already been meeting in the course of this year, and we are exploring ways to strengthen our existing partnership, avenues for increased economic cooperation. I’m convinced we’re going to find them.
The people of the United States at this moment are also intently focused on the immigration debate. So let me note that the two countries have made significant progress in building and strengthening our security over the course of the last 10 years. Almost one million people legally cross the U.S.-Mexico border every single day, and more than 1.25 billion in trade passes between our two countries every single day. And you can’t do that without major cooperation, but also without providing major opportunities for both of our countries.
The Foreign Secretary and I agree that if we’re going to sustain these gains, we have to expand the educational opportunities for our young people. Already thousands of Mexicans and American students study in each other’s countries every single year, and we are developing cross-cultural understanding and 21st century skills that make North America’s platform for innovation and economic growth stand out from countries all around the world. President Obama’s 100,000 Strong in the Americas Initiative will create even more opportunity for students over the course of the next years.
And finally, we know we have a responsibility to continue to address our security challenges. We’re going to continue to effect close security cooperation, ensuring respect for human and civil rights, and I think we all understand those are both deeply enshrined in both U.S. and Mexican constitutions. We know that citizen security is critical to the people of both of our countries.
So Mr. Secretary, it’s really good to welcome you here to Washington. I look forward to our conversation. I know President Obama is very much looking forward to his trip to Mexico in May and meeting with President Peña Nieto. I think there we will be able to solidify some of the things we’re talking about here today, so welcome to Washington, and thank you very, very much for the extraordinary partnership that we share.
FOREIGN SECRETARY MEADE: Thank you. Thank you, sir. Well, good morning, ladies and gentlemen. Allow me first to express once again the solidarity of the people and Government of Mexico with the United States for the horrific incidents that took place last Monday in Boston. We stand beside you. We have you in our hearts and in our prayers. I also want once again to (inaudible) our condolences to those affected by the explosion at a fertilizer plant in the town of West in Texas. I want to take this opportunity today this morning to commend the FBI, the law enforcement community, the Boston police for their outstanding work in facing with this issue in, as you have said, a very heroic fashion.
Secretary Kerry and myself have just concluded a very productive meeting. We identified priorities for our work in the coming weeks and months on many of the key components of a broad bilateral agenda. We touched upon education, investment, infrastructure, border security. We talked about the importance of security cooperation. We talked and identified and welcomed many of the issues that are now being discussed in the U.S. Congress. We welcomed the introduction of the immigration reform bill in the U.S. Senate. We welcomed the fact that that concept be debated seriously and something constructively could at some point be achieved. That’s an issue that’s relevant for Mexico as well.
Mexico and the United States have a very strong relationship. Translating Secretary Kerry’s numbers in a more dramatic fashion, we trade more than $1 million per minute. That is, I think, a number that is a testament to the health of our relationship, to the importance of that relationship. Mexico is the most important export market for 22 of the 50 United States’ states. Mexico – the U.S. exports to Mexico more than it does to China and Japan combined. The U.S. exports to Mexico more than it does to many European countries, taken as a group. And I think that the success that we can tell in terms of trade is something that should be built upon so that we can look at the relationship through a North American perspective, and through that perspective, find common answers to global problems and problems that are common to our bilateral regions.
I can think of no better partner to work with than Secretary Kerry. His personal leadership of some of the world’s best causes have long been recognized, from peace and security to climate change, democracy, immigration, human rights. As I told him a few minutes ago, our bilateral partnership projects, both regionally and global issues as well, I think are going to be in good hands, and we are very, very grateful for that relationship and for that work that we will do together.
As you all know, in a couple of weeks we will receive President Obama in Mexico. We are honored by his decision to travel to our country to meet with President Peña Nieto. This will be the second face-to-face conversation between them in just over five months, a testament to the commitment to advance our economic agenda, to deepen the ties between our societies, to ensuring the security of our citizens. They have instructed both of us, both our governments, to continue working together as responsible neighbors.
Thank you again, Secretary Kerry. Thank you all for your attention.
SECRETARY KERRY: Thank you very much Jose. I appreciate it.
MS. PSAKI: We’ll take two questions, and the first will be from Brad Klapper with the Associated Press.
QUESTION: Thank you. Mr. Secretary, what does the Boston attack say about the threat to the U.S. posed by Chechen extremists? Have you been in touch with Russia or any other country on the matter? Wouldn’t the Russians see this as a validation of their arguments on Chechnya, and maybe even Syria, regarding terrorism? And then just lastly, what role did State specifically play in the investigation into the bombings? Thank you.
SECRETARY KERRY: Well, Brad, look, at this point law enforcement officers are carrying out an ongoing investigation, and frankly they’re at some critical stages here and it would just be entirely inappropriate for me to be commenting on the tick-tock or on the larger issues outside of it. The FBI is the lead entity with respect to this investigation and they will lay out the details of contacts and information at the appropriate moment.
The important thing right now is, the President has said, we’re going to find those responsible and bring them to justice. We are part of the way there, and the President intends to finish that job.
QUESTION: And just on the question of Syria, wouldn’t an event like this, if it has any connection to Chechnya or separatists in southern Russia, wouldn’t this strengthen the Russian --
SECRETARY KERRY: Well, let’s – I’m not going to get into speculation. I’m not going to deal with a hypothetical. Let’s wait and see what the FBI details at the appropriate time. The one thing I will say is terror is terror, and this underscores the importance of all of us maintaining vigilance and cooperating together internationally. That’s part of what we’re talking about here. Terror anywhere in the world against any country is unacceptable, and we need to continue to stand up and fight against it in the way that we are. It strengthens, actually, my resolve and my sense that we’re on the right track, but there’s more we can do and we’re going to continue to do it. President Obama has made this a critical component of his foreign policy, and obviously this just emphasizes that.
MS. PSAKI: The next question will come from Jose Lopez Zamorano from Notimex.
QUESTION: Thank you. Secretary Meade, the Mexican government has expressed its interest in broadening the agenda with the U.S. beyond security issues. In that regard, and due to the upcoming visit of President Obama to Mexico, what kind of new initiatives or programs can we expect along the road?
And Secretary Kerry, after 9/11 attacks, obviously security became center stage for the U.S., but at the same time some countries in Latin America saw that the relationship with them was put in the back burner for several years. Do you anticipate that this event in Boston could derail your intent, express intent, to reach out to the region?
FOREIGN SECRETARY MEADE: We have agreed to enlarge our agenda and we are going to be talking about initiatives that have to do with high-level engagement in terms of an economic dialogue. We will be talking and we will find a mechanism to continue to talk in terms of education and research and innovation. So those issues and a structure around them will be center point in the agendas and the talks and issues discussed by President Obama and President Peña Nieto.
SECRETARY KERRY: The answer is profoundly yes, we do intend – I intend to personally. And in fact, I had intended to try to travel to the region next week, but because of the events this week and because of some other things happening, I’ve had to postpone that just temporarily. And I mean temporarily. I will be getting to the region very shortly. President Obama is traveling to the region. President Obama feels very strongly and has asked me to focus on how we can strengthen our economic partnerships in Latin America and Central America, and I intend to do that.
We talked today – I think the beginning of our conversation today, the very first thing out of my mouth was we don’t want to define this relationship with Mexico or with other countries in the context of security or counternarcotics trafficking. We want to define it much larger in the context of our citizens’ economic needs and our capacity to do more on the economic frontier. I am convinced we’re going to growth that relationship.
In terms of jobs, we talked about ways to link up perhaps ultimately with the Transatlantic Investment Trade and Partnership Program. In the long run it may be possible to find ways to strengthen both of us through those kinds of initiatives. And of course, Mexico is a partner in the Trans-Pacific Partnership. So we are already growing this relationship. We’re going to continue to grow
Remarks With Mexican Foreign Secretary Jose Antonio Meade After Their Meeting
Remarks
John Kerry
Secretary of State
Treaty Room
Washington, DC
April 19, 2013
Good morning, everybody. Before we begin (cough) – excuse me, allergy season. Before we begin, I just want to say that, as a father and a grandfather, my thoughts are, of course, in my hometown right now, Boston, where events are still unfolding and the entire city is on lockdown. We’re continuing to learn more every moment about the terror attack on Monday and the pursuit of justice that is following it. I think it’s fair to say that for this entire week, we’ve been in a pretty direct confrontation with evil, and I want to congratulate and thank all the law enforcement authorities for the extraordinary job that they have been doing on behalf of our citizens. In the past few days, we’ve seen the best and we’ve seen the worst of human behavior, and it’s the best that all of us really want to focus on. Like everyone, we’re going to keep watching, and we’ll await word from the law enforcement officers before commenting further.
It’s a huge pleasure for me and an important moment to welcome one of our most important partners, our close neighbor, and our friend. And I want to welcome my friend, the Foreign Secretary. One of the first phone calls I made when I became Secretary of State was to Jose, and I’m really honored to see him here today. We share an alma mater together. He was a graduate student, and I was an undergraduate, and so whatever we don’t say right today, you can blame it on him. (laughter)
We obviously share much, much more than an alma mater. Both of us are privileged to represent our extraordinary countries, and we share a remarkable friendship and a very, very strong partnership that is growing stronger all the time. For generations, we’ve lived side by side as families and neighbors sharing geography and sharing common interests and sharing hopes and dreams. The Foreign Secretary and I share a firm commitment to the unique components of our relationship, and we share a common vision for what we can achieve through even greater cooperation and partnership.
We share a friendship and an open line of communication starting with, as I said, the earliest conversations that I had when I assumed this office. So we intend to remain in close contact with each other. We talked about that today. We have a lot of things to continue to cooperate on. We want to increase the economic growth of both of our countries. We want to expand economic opportunity for our people, and we want to provide greater security for the people of the United States and of Mexico.
Our countries share one of the most successful and interconnected economic partnerships in the world, and it’s based on mutual respect and shared responsibility. Bilateral trade amounted to nearly $500 billion last year. That’s more than four times what it was only 20 years ago. High-level economic delegations have already been meeting in the course of this year, and we are exploring ways to strengthen our existing partnership, avenues for increased economic cooperation. I’m convinced we’re going to find them.
The people of the United States at this moment are also intently focused on the immigration debate. So let me note that the two countries have made significant progress in building and strengthening our security over the course of the last 10 years. Almost one million people legally cross the U.S.-Mexico border every single day, and more than 1.25 billion in trade passes between our two countries every single day. And you can’t do that without major cooperation, but also without providing major opportunities for both of our countries.
The Foreign Secretary and I agree that if we’re going to sustain these gains, we have to expand the educational opportunities for our young people. Already thousands of Mexicans and American students study in each other’s countries every single year, and we are developing cross-cultural understanding and 21st century skills that make North America’s platform for innovation and economic growth stand out from countries all around the world. President Obama’s 100,000 Strong in the Americas Initiative will create even more opportunity for students over the course of the next years.
And finally, we know we have a responsibility to continue to address our security challenges. We’re going to continue to effect close security cooperation, ensuring respect for human and civil rights, and I think we all understand those are both deeply enshrined in both U.S. and Mexican constitutions. We know that citizen security is critical to the people of both of our countries.
So Mr. Secretary, it’s really good to welcome you here to Washington. I look forward to our conversation. I know President Obama is very much looking forward to his trip to Mexico in May and meeting with President Peña Nieto. I think there we will be able to solidify some of the things we’re talking about here today, so welcome to Washington, and thank you very, very much for the extraordinary partnership that we share.
FOREIGN SECRETARY MEADE: Thank you. Thank you, sir. Well, good morning, ladies and gentlemen. Allow me first to express once again the solidarity of the people and Government of Mexico with the United States for the horrific incidents that took place last Monday in Boston. We stand beside you. We have you in our hearts and in our prayers. I also want once again to (inaudible) our condolences to those affected by the explosion at a fertilizer plant in the town of West in Texas. I want to take this opportunity today this morning to commend the FBI, the law enforcement community, the Boston police for their outstanding work in facing with this issue in, as you have said, a very heroic fashion.
Secretary Kerry and myself have just concluded a very productive meeting. We identified priorities for our work in the coming weeks and months on many of the key components of a broad bilateral agenda. We touched upon education, investment, infrastructure, border security. We talked about the importance of security cooperation. We talked and identified and welcomed many of the issues that are now being discussed in the U.S. Congress. We welcomed the introduction of the immigration reform bill in the U.S. Senate. We welcomed the fact that that concept be debated seriously and something constructively could at some point be achieved. That’s an issue that’s relevant for Mexico as well.
Mexico and the United States have a very strong relationship. Translating Secretary Kerry’s numbers in a more dramatic fashion, we trade more than $1 million per minute. That is, I think, a number that is a testament to the health of our relationship, to the importance of that relationship. Mexico is the most important export market for 22 of the 50 United States’ states. Mexico – the U.S. exports to Mexico more than it does to China and Japan combined. The U.S. exports to Mexico more than it does to many European countries, taken as a group. And I think that the success that we can tell in terms of trade is something that should be built upon so that we can look at the relationship through a North American perspective, and through that perspective, find common answers to global problems and problems that are common to our bilateral regions.
I can think of no better partner to work with than Secretary Kerry. His personal leadership of some of the world’s best causes have long been recognized, from peace and security to climate change, democracy, immigration, human rights. As I told him a few minutes ago, our bilateral partnership projects, both regionally and global issues as well, I think are going to be in good hands, and we are very, very grateful for that relationship and for that work that we will do together.
As you all know, in a couple of weeks we will receive President Obama in Mexico. We are honored by his decision to travel to our country to meet with President Peña Nieto. This will be the second face-to-face conversation between them in just over five months, a testament to the commitment to advance our economic agenda, to deepen the ties between our societies, to ensuring the security of our citizens. They have instructed both of us, both our governments, to continue working together as responsible neighbors.
Thank you again, Secretary Kerry. Thank you all for your attention.
SECRETARY KERRY: Thank you very much Jose. I appreciate it.
MS. PSAKI: We’ll take two questions, and the first will be from Brad Klapper with the Associated Press.
QUESTION: Thank you. Mr. Secretary, what does the Boston attack say about the threat to the U.S. posed by Chechen extremists? Have you been in touch with Russia or any other country on the matter? Wouldn’t the Russians see this as a validation of their arguments on Chechnya, and maybe even Syria, regarding terrorism? And then just lastly, what role did State specifically play in the investigation into the bombings? Thank you.
SECRETARY KERRY: Well, Brad, look, at this point law enforcement officers are carrying out an ongoing investigation, and frankly they’re at some critical stages here and it would just be entirely inappropriate for me to be commenting on the tick-tock or on the larger issues outside of it. The FBI is the lead entity with respect to this investigation and they will lay out the details of contacts and information at the appropriate moment.
The important thing right now is, the President has said, we’re going to find those responsible and bring them to justice. We are part of the way there, and the President intends to finish that job.
QUESTION: And just on the question of Syria, wouldn’t an event like this, if it has any connection to Chechnya or separatists in southern Russia, wouldn’t this strengthen the Russian --
SECRETARY KERRY: Well, let’s – I’m not going to get into speculation. I’m not going to deal with a hypothetical. Let’s wait and see what the FBI details at the appropriate time. The one thing I will say is terror is terror, and this underscores the importance of all of us maintaining vigilance and cooperating together internationally. That’s part of what we’re talking about here. Terror anywhere in the world against any country is unacceptable, and we need to continue to stand up and fight against it in the way that we are. It strengthens, actually, my resolve and my sense that we’re on the right track, but there’s more we can do and we’re going to continue to do it. President Obama has made this a critical component of his foreign policy, and obviously this just emphasizes that.
MS. PSAKI: The next question will come from Jose Lopez Zamorano from Notimex.
QUESTION: Thank you. Secretary Meade, the Mexican government has expressed its interest in broadening the agenda with the U.S. beyond security issues. In that regard, and due to the upcoming visit of President Obama to Mexico, what kind of new initiatives or programs can we expect along the road?
And Secretary Kerry, after 9/11 attacks, obviously security became center stage for the U.S., but at the same time some countries in Latin America saw that the relationship with them was put in the back burner for several years. Do you anticipate that this event in Boston could derail your intent, express intent, to reach out to the region?
FOREIGN SECRETARY MEADE: We have agreed to enlarge our agenda and we are going to be talking about initiatives that have to do with high-level engagement in terms of an economic dialogue. We will be talking and we will find a mechanism to continue to talk in terms of education and research and innovation. So those issues and a structure around them will be center point in the agendas and the talks and issues discussed by President Obama and President Peña Nieto.
SECRETARY KERRY: The answer is profoundly yes, we do intend – I intend to personally. And in fact, I had intended to try to travel to the region next week, but because of the events this week and because of some other things happening, I’ve had to postpone that just temporarily. And I mean temporarily. I will be getting to the region very shortly. President Obama is traveling to the region. President Obama feels very strongly and has asked me to focus on how we can strengthen our economic partnerships in Latin America and Central America, and I intend to do that.
We talked today – I think the beginning of our conversation today, the very first thing out of my mouth was we don’t want to define this relationship with Mexico or with other countries in the context of security or counternarcotics trafficking. We want to define it much larger in the context of our citizens’ economic needs and our capacity to do more on the economic frontier. I am convinced we’re going to growth that relationship.
In terms of jobs, we talked about ways to link up perhaps ultimately with the Transatlantic Investment Trade and Partnership Program. In the long run it may be possible to find ways to strengthen both of us through those kinds of initiatives. And of course, Mexico is a partner in the Trans-Pacific Partnership. So we are already growing this relationship. We’re going to continue to grow
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