FROM: DEFENSE DEPARTMENT
DOD Raises Awareness of Human Trafficking
By Terri Moon Cronk
American Forces Press Service
WASHINGTON, Jan. 15, 2014 – Defense Department officials have a zero-tolerance level for human trafficking and have stepped up awareness and education efforts to curb the crime overseas.
In an interview with American Forces Press Service and the Pentagon Channel, Brian Chin -- a program manager for the department’s effort to combat human trafficking, said DOD is broadening its training for those who work in contracting, acquisition and law enforcement, and that a yearly general course on how to recognize human trafficking has been mandatory for DOD civilians since 2005.
Chin works out of Qatar and oversees the program in Southwest Asia and the U.S. Central Command area of operations.
DOD defines human trafficking as the use of force, fraud or coercion to recruit, harbor, transport or obtain a person for commercial sex or labor services, Chin explained.
Combating human trafficking is not a war waged alone within DOD, he noted.
“The response to human trafficking requires a collaborative approach within all of DOD’s components and services,” Chin said, as well as working with agencies, such as the departments of State and Homeland Security to put a stop to the crimes of slavery and prostitution.
“A lot of our training is designed to sensitize our folks to realize that [a victim] is not just someone who’s serving our food, cleaning the barracks or picking up refuse around the bases that could be someone who’s there against their will and is being held in circumstances that fit [DOD’s] criteria for human slavery,” he said.
Victims of human trafficking can be difficult to identify, Chin said, because usually no physical indicators of coercion exist, and human traffickers are adept at influencing their victims to hide their victimization.
Commanders, other military leaders and all DOD components at all levels are “striving very hard to implement changes to federal laws and DOD-wide policies to push requirements for awareness programs, training for targeted audiences and reporting [cases] to the DOD [inspector general],” he said.
Chin called overseas human trafficking “widespread,” but acknowledged that the number of victims is difficult to quantify. Victims usually are lured from rural areas with promises of working in good-paying jobs, he said.
“A classic sign of human trafficking is indentured servitude, where the victims pay large fees in a very competitive arena to secure jobs,” he said, adding that the high pay they’re promised is just a lure.
The fees to secure jobs become loans, and victims find themselves working as indentured servants to work off what they owe, and they can’t return home because their passports are taken away, Chin said. Victims’ homes often are held as collateral for their employment, he added.
In many instances, victims are misled about where they’re going, he noted.
“One of the classic cases you see is beauticians and barbers [who are] told they’re going to a Gulf nation to work in a salon for a very good salary, and [when] they get off a plane, they’re actually in Afghanistan, working on a forward-operating base under completely different circumstances,” Chin said.
DOD’s efforts to train its personnel to recognize and report human trafficking are paying off, he said.
“Our awareness programs are having a tremendous effect on sensitizing all of our [personnel], and everybody understands what human trafficking is,” he said. “They’re starting to understand it’s not just a sex crime off our bases, especially in Afghanistan. … It’s also a labor crime.”
Thursday, January 16, 2014
CAPITAL REQUIREMENT PHILOSOPHIES BY SEC COMMISSIONER GALLAGHER
FROM: SECURITIES AND EXCHANGE COMMISSION
The Philosophies of Capital Requirements
Commissioner Daniel M. Gallagher
Washington, DC
Jan. 15, 2014
Thank you, Sarah [Kelsey, Exchequer Club Secretary], for that introduction. I’m very pleased to be here this afternoon.
Today, I’d like to talk about regulatory capital. Given the usual reaction I get when I raise this subject, just to be safe, I’ve barred the exits!
In all seriousness, though, there’s been a great deal of attention paid to regulatory capital recently, including new Dodd-Frank requirements, Basel III implementation (or non-implementation) issues, and even bipartisan Congressional efforts to raise capital requirements for large banks.[1] Almost all of that attention has naturally centered on the question of how much capital a financial institution should be required to hold. What’s missing from the conversation, however – and what I’d like to focus on today – is a proper understanding of the theories behind capital requirements, both for banks and for non-bank financial institutions.
You may have noticed my reference to the theories behind capital requirements, rather than a single theory. If so, you’re one step ahead of many policymakers both here and abroad, who often implicitly or explicitly advance a single, one-size-fits-all approach to capital. As I’ll explain, this is a mistaken view that has the potential to impact the U.S. economy.
Understanding capital requirements begins with addressing the fundamental question of why financial institutions need minimum capital levels. In the banking sector, where the regulated entities operate in a principal capacity and are leveraged institutions, capital requirements are rightly designed with the paramount goal of enhancing safety and soundness, both for individual banks and for the banking system as a whole. Bank capital requirements serve as an important cushion against unexpected losses. They incentivize banks to operate in a prudent manner by placing the bank owners’ equity at risk in the event of a failure. They serve, in short, to reduce risk and protect against failure, and they reduce the potential that taxpayers would be required to backstop the bank in a time of stress.
Capital requirements for broker-dealers, however, serve a different purpose. In the capital markets, we want investors and institutions to take risks – informed risks that they freely choose in pursuit of a return on their investments. Eliminate the risk of an investment, and you eliminate the opportunity for a return as well. Capital markets, in short, are predicated on risk.
Whereas bank capital requirements are based on the avoidance of failure, broker-dealer capital requirements are designed to manage failure by providing enough of a cushion to ensure that a failed broker-dealer can liquidate in an orderly manner, allowing for the orderly transfer of customer assets to another broker-dealer.
These two models of capital requirements, in other words, differ in fundamental ways - it’s certainly not a matter of comparing apples to apples. Applying bank-based capital requirements to non-bank financial entities, in fact, is rather like trying to manage an orange grove using apple orchard techniques – it’s the equivalent of trying to determine how best to grow oranges to be used in orange pie, orangesauce, and, as a special treat, delicious caramel oranges on a stick. If you think that metaphor is a bit strained, well, it is – but nowhere near as strained as imposing a bank capital regime on broker-dealers.
In order to fully understand the danger of imposing bank capital requirements on non-bank institutions, it’s helpful to take a bit of a detour to review the actions of the Federal Reserve during the height of the financial crisis, which leads us to that dreaded word: bailouts.
The word “bailout,” of course, has come to stand for everything wrong with the federal government’s response to the financial crisis. As with, I imagine, everyone except for bailout recipients themselves, I find the idea of using taxpayer money to prop up insolvent financial institutions repugnant. There’s a basic ant-and-grasshopper dynamic to bailouts: we naturally recoil from the idea of using the resources of prudent taxpayers to rescue institutions felled by their lack of prudence. So let’s be absolutely clear: I hate bailouts. We should all hate bailouts. Case closed.
But…what, exactly, is a bailout? Notwithstanding the risk of being misunderstood on an incredibly sensitive topic, I believe it is critically important to understand what is, and what is not, a bailout. And here we come to the concept of the Federal Reserve as the lender of last resort and the crucial difference between insolvency and illiquidity for financial institutions.
The Federal Reserve Act of 1913 established the Fed, through its use of the discount window, as the nation’s lender of last resort. The best starting point for understanding the concept of a lender of last resort remains Walter Bagehot’s seminal work Lombard Street. Writing in 1873, Bagehot, who may be familiar to you from his work as editor-in-chief of The Economist or his treatise on the English constitution, set forth what is sometimes referred to as “Bagehot’s Dictum.” My friend Paul Tucker, former Deputy Governor of the Bank of England, succinctly summarized Bagehot’s Dictum as follows: “to avert panic, central banks should lend early and freely…to solvent firms, against good collateral, and at ‘high rates.’”[2]
As you may recall me noting, I’m starkly against bailouts. But offering access to the discount window to illiquid, but not insolvent, banks against good collateral comports with the traditional role of a central bank as the lender of last resort and falls outside even an expansive definition of the dreaded concept of a bailout. Indeed, it falls squarely within the traditional understanding of a central bank’s paramount purpose.
In 2008, however, the Fed went well beyond offering access to the discount window to depository institutions in its capacity as the lender of last resort. Instead, what happened in 2008 was that the Fed became the investor of last resort, a tremendously different concept which does indeed lend itself to the terrible title of “bailout.” The acquisition of almost 80 percent of AIG in exchange for an $85 billion loan, for example, as well as the ownership of $29 billion in former Bear Stearns assets, marked a fundamental departure from the Fed’s traditional role. As explained by Professor Allan Meltzer, author of a history of the Federal Reserve, “This is unique, and the Fed has never done something like this before. If you go all the way back to 1921, when farms were failing and Congress was leaning on the Fed to bail them out, the Fed always said, ‘It's not our business.’ It never regarded itself as an all-purpose agency.” [3] One reporter aptly deemed the Fed’s actions in the financial crisis as a transformation into “The Fed Inc.”[4]
As the Fed explains on its web page detailing its “Mission,”[5] in an amusingly understated manner, “Over the years, its role in banking and the economy has expanded.”[6] The Fed describes its current duties as conducting the nation's monetary policy, supervising and regulating banking institutions, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions.[7] Notwithstanding the breadth of this mandate and the full plate of work you’d expect it to engender, the Fed has also taken steps to extend its regulatory paradigm – designed, once again, to prevent bank failures - to non-bank institutions as well. Such institutions include broker-dealers, which, as I noted earlier, have their own regulatory capital regime that is designed to manage, rather than prevent, failure in order to ensure the return of customer assets. In addition, Title II of Dodd-Frank was explicitly designed not to prevent failure, but instead to manage the liquidation of large, complex financial institutions close to failure – indeed, the very name of the Title is “Orderly Liquidation Authority.”
In light of this, a more cynical person might suggest that the Fed’s efforts to extend the failure-prevention paradigm of bank capital regulation to financial entities that are already subject to failure-management regulatory schemes implies an institutionalization of the concept of too-big-to-fail. Good thing I’m not a cynical guy.
I digress, but it is important to remember that the Fed’s lender of last resort activity during the financial crisis came after its intervention in the Bear failure as well as its bailout of AIG. To be fair, once the Fed resumed its traditional role as the lender, rather than investor, of last resort, it did so robustly. By March 2009, the Fed had lent a staggering $7.7 trillion dollars to beleaguered financial institutions, including $1.2 trillion on one day alone on December 5, 2008.[8] And you thought your holiday spending was high!
So what does all of this have to do with capital? To answer that question requires a better understanding of the recent and disturbing fascination with imposing bank-theory capital requirements on non-bank institutions. Here, the recent FSOC intervention in the money market mutual fund space is quite instructive.
In August 2012, a lack of consensus among the Commission on the best way to proceed with proposing reforms to our money market fund rules led to an ill-advised abdication of the issue to FSOC, which enthusiastically took up the cause, leading to an unprecedented -- albeit invited -- incursion into the regulatory purview of an independent regulator. The result was the issuance, in November 2012, of a report entitled “Proposed Recommendations Regarding Money Market Mutual Fund Reform,” in which FSOC floated – pun intended – the concept of a “NAV buffer,” that is, a capital requirement for money market funds.[9]
As I delved into the issue of money market fund reform following my return to the SEC as a Commissioner, it quickly became apparent to me that, perhaps in the hopes of staving off more stringent regulation, the industry was coalescing behind a capital buffer requirement of approximately 50 basis points, to be phased in over a several year period. For the largest money market funds, this would have resulted in an approximately 1 to 200 ratio – a $500 million buffer to support $100 billion in investments. This would amount to chicken feed in any serious capital adequacy determinations.
The ostensible reasoning behind a capital buffer for money market funds is that it would serve to mitigate the risk of investor panic leading to a run on a fund. Common sense, however, belies this notion. Do we really believe that investor panic would be assuaged by the comforting knowledge that for every one dollar they had on deposit, the money market fund had set aside half a penny?
Common sense also leads to the conclusion that there is no reason to assume that this view of capital requirements as a panacea to mitigate run risk is limited to money market funds. Indeed, the now notorious “Asset Management and Financial Stability” report issued by Treasury’s Office of Financial Research last September featured similar reasoning, as reflected in its implied support for “liquidity buffers” for asset managers.[10]
As I noted in my statement at last June’s open meeting at which the Commission voted to propose reforms to our money market fund rules, which by the way thankfully did not include a capital buffer, “It became clear to me early on in this process that the only real purpose for the proposed buffer was to serve as the price of entry into an emergency lending facility that the Federal Reserve could construct during any future crisis – in short, the “buffer” would provide additional collateral to facilitate a Fed bailout for troubled MMFs.”[11]
Indeed, some Fed officials and academics[12] have suggested as much. In a speech delivered last February, New York Fed President Bill Dudley, while expressing support for the FSOC-proposed money market fund reform mechanisms of a NAV buffer and a “minimum balance at risk,” explained his concern that “even after such reforms, we would still have a system in which a very significant share of financial intermediation activity vital to the economy takes place in markets and through institutions that have no direct access to an effective lender of last resort backstop.”[13] He went on to raise the possibility of expanding access to the lender of last resort to additional entities in exchange for “the right quid pro quo—the commensurate expansion in the scope of prudential oversight.” Arguing that “[s]ubstantial prudential regulation of entities—such as broker-dealers —that might gain access to an expanded lender of last resort would be required to mitigate moral hazard problems,” he concluded, “Extension of discount window-type access to a set of nonbank institutions would therefore have to go hand-in-hand with prudential regulation of these institutions.”[14]
Fed Governor Daniel Tarullo, on the other hand, indicated his discomfort with extending access to the discount window to non-bank entities in a speech last November, noting that he was “wary of any such extension of the government safety net.” In the context of addressing the “vulnerabilities” of short-term wholesale funding, he stated that he “would prefer a regulatory approach that requires market actors using or extending short-term wholesale funding to internalize the social costs of those forms of funding”[15] – that is, an increased capital charge. In a different speech earlier last year, he cited the risk of “regulatory arbitrage” if increased capital charges were applied “only to some types of wholesale funding, or only to that used by prudentially regulated entities”[16] and concluded, “Ideally, the regulatory charge should apply whether the borrower is a commercial bank, broker-dealer, agency Real Estate Investment Trust (REIT), or hedge fund.”[17]
All of this adds up to a terribly muddled situation. Is the Fed seeking to impose bank-based capital charges on non-bank entities in conjunction with granting them access to the discount window at the cost of submitting to prudential regulation, as Mr. Dudley suggests? Or is the situation just the opposite, as Governor Tarullo implies – would those additional capital charges be intended to prevent non-prudentially regulated financial entities from ever relying upon, as Governor Tarullo puts it, an extension of the “government safety net” the discount window provides?
Put another way, is the goal to expand the Fed’s role by making it the lender of last resort to non-bank entities such as money market funds and broker dealers, or is it to use its Bank Holding Company Act authority and its role in FSOC to dictate capital requirements to non-bank entities in order to prevent those entities from ever gaining access to the discount window?
These are more than purely semantic questions, although semantics play a role: one man’s expansion of the Fed’s role as the lender of last resort is another man’s institutionalization of bailouts for failing financial institutions.
In my opinion, both Governor Tarullo and Mr. Dudley raise very good points that warrant a healthy debate. The issues they raise, however, as well as the more general issue of how much capital is enough in the banking and capital markets, create a degree of confusion about the Fed’s role as the lender of last resort. Should the Fed still perform that role? If so, when and for what entities? Does such lending, in fact, constitute a bailout?
All of these questions require answers as we debate questions of capital adequacy. If we are to assume that the Fed will not, or cannot, expand its role as the lender of last resort to non-bank entities, including non-bank subsidiaries of bank holding companies, would it ever be possible to set capital requirements at a level that would guarantee avoidance of 2008-type scenarios? I think not, even if we were to impose capital requirements of 100%. To me, therefore, capital markets regulators simply cannot stray from the theory of capital as a tool to facilitate the unwinding of a failed firm with the goal of returning customer assets.
I certainly don’t want to leave the impression that I disregard the Fed’s concerns about capital requirements for bank affiliated non-bank financial institutions. Indeed, it is my hope in the coming year to work with Commission staff and FINRA to begin an in-depth review of whether it would be appropriate to establish separate capital rules for bank-affiliated broker-dealers. If we determine that such a bifurcated broker-dealer capital regime would be appropriate, however, any such regime would be based on the principles of our current program for broker-dealer net capital, and it would be crafted to stand on its own, without any reference to the discount window. On this and related issues, it is far past time that the SEC play an active role in the policy debate in order to ensure the ongoing vibrancy of our capital markets.
Before I conclude, I’d like to make one final point that is obvious but still needs to be reiterated: the judgment calls regulators make in establishing capital rules incentivize regulated entities in a manner that inevitably results in unforeseen (although often quite foreseeable) externalities. A classic example is the beneficial capital treatment provided to certain asset-back securities under what’s known as the “Recourse Rule.”[18] The Recourse Rule, issued by the Fed, the FDIC, the OCC and OTS as a supplement to their implementation of Basel I, hugely privileged highly rated ABS as well as ABS issued or guaranteed by a GSE. How hugely? Well, for every $100 of highly rated or GSE sponsored ABS, well-capitalized banks had to set aside $2. This compared to a $5 set-aside for unsecuritized mortgage loans and a $10 charge for commercial loans or corporate bonds. In other words, by holding ABS from these favored categories, banks could reduce their capital requirements by 60% compared to holding an equivalent amount of mortgage loans and by 80% compared to holding corporate loans or bonds.
I’m reminded of the ubiquitous TV commercials featuring children’s responses to simple questions: what’s better, bigger or smaller, faster or slower, more or less? As the ads say, it’s not complicated. Concluding that setting aside less capital was better than setting aside more capital, banks loaded up their balance sheets accordingly, and by 2008, a staggering 93 percent of all the mortgage-backed securities held by American banks were either GSE-issued or rated AAA.[19] As noted in a 2010 report issued by the American Enterprise Institute, “If not for the recourse rule's privileging of mortgage-backed bonds, the burst housing bubble almost certainly would not have caused a banking crisis. The banking crisis, in turn, froze lending and caused the Great Recession.”[20]
As the Recourse Rule illustrates, regulatory capital requirements play a tremendous role in incentivizing financial institutions’ holdings. All the more important, therefore, that regulators use the right tool for the right job. We rightly take great pride in our capital markets, the deepest and safest in the world. We’re an entrepreneurial nation, and taking risks, whether with respect to investments or otherwise, is as American as apple pie. Superimposing upon those markets a capital regime based on the safety-and-soundness banking paradigm, on the other hand, would be as sensible as orange pie.
Thank you all for your attention this afternoon. I’d be happy to take questions.
[1] Terminating Bailouts for Taxpayer Fairness Act of 2013, S. 798, 113th Cong. (2013).
[2] Paul Tucker, Deputy Governor, Financial Stability, Bank of England, The Repertoire of Official Sector Interventions in the Financial System: Last Resort Lending, Market-Making, and Capital (May 28, 2009), available at http://www.bankofengland.co.uk/archive/Documents/historicpubs/speeches/2009/speech390.pdf.
[3] Edmund L. Andrews, A New Role for the Fed: Investor of Last Resort, N.Y. Times, September 18, 2008, available at http://www.nytimes.com/2008/09/18/business/18fed.html?pagewanted=print.
[4] Id.
[5] http://www.federalreserve.gov/aboutthefed/mission.htm
[6] Id.
[7] Id.
[8] Bob Ivry, Bradley Keoun and Phil Kuntz, Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress, Bloomberg, November 27, 2011, available at
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html. By comparison, Treasury’s much better-known TARP program entailed a mere $700 billion.
[9] Financial Stability Oversight Council, “Proposed Recommendations Regarding Money Market Mutual Fund Reform” (November 2012), available at http://www.treasury.gov/initiatives/fsoc/Documents/Proposed%20Recommendations%20Regarding%20Money%20Market%20Mutual%20Fund%20Reform%20-%20November%2013,%202012.pdf.
[10] U.S. Department of Treasury, Office of Financial Research, “Asset Management and Financial Stability,” (September 2013), available at http://www.treasury.gov/initiatives/ofr/research/Documents/OFR_AMFS_FINAL.pdf.
[11] Daniel M. Gallagher, Commissioner, Sec. & Exch. Comm’n, Statement at SEC Open Meeting – Proposed Rules Regarding Money Market Funds (June 5, 2013), available at
http://www.sec.gov/News/Speech/Detail/Speech/1365171575594#.UsneCvRDvqN.
[12] See, e.g., Comment Letter of Jeffrey N. Gordon (File No. FSOC-2012-0003) (Feb. 28, 2013), available at http://www.regulations.gov/#!documentDetail;D=FSOC-2012-0003-0131).
[13] William C. Dudley, President and Chief Executive Officer, Federal Reserve Bank of New York, Fixing Wholesale Funding to Build a More Stable Financial System (February 1, 2013), available at http://www.newyorkfed.org/newsevents/speeches/2013/dud130201.html.
[14] Id.
[15] Daniel K. Tarullo, Governor, Board of Governors of the Federal Reserve System, Shadow Banking and Systemic Risk Redgulation (November 22, 2013), available at http://www.federalreserve.gov/newsevents/speech/tarullo20131122a.htm.
[16] Daniel K. Tarullo, Governor, Board of Governors of the Federal Reserve System, Evaluating Progress in Regulatory Reforms to Promote Financial Stability (May 3, 2013), available at http://www.federalreserve.gov/newsevents/speech/tarullo20130503a.htm.
[17] Id.
[18] Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance: Capital Treatment of Recourse, Direct Credit Substitutes and Residual Interests in Asset Securitizations, 66 Fed. Reg. 59613 (November 29, 2001).
[19] Jeffrey Friedman and Wladimir Kraus, “A Silver Lining to the Financial Crisis,” American Enterprise Institute for Public Policy Research Regulation Outlook at 3 (January 2010), available at http://www.aei.org/files/2010/01/19/01-2010-Regulation-g.pdf (citing Viral V. Acharya and Matthew Richardson, “Causes of the Financial Crisis,” Critical Review 21 no. 2–3 at 195–210, table 1 (2009), available at http://pages.stern.nyu.edu/~sternfin/vacharya/public_html/acharya_richardson_critical.pdf)). See also Jeffrey Friedman, “A Perfect Storm of Ignorance,” Cato Policy Report (January/February 2010), available at http://www.cato.org/policy-report/januaryfebruary-2010/perfect-storm-ignorance. Note that this figure would be even higher if it included Recourse Rule-friendly AA-rated securitizations.
[20] Friedman and Kraus at 4.
The Philosophies of Capital Requirements
Commissioner Daniel M. Gallagher
Washington, DC
Jan. 15, 2014
Thank you, Sarah [Kelsey, Exchequer Club Secretary], for that introduction. I’m very pleased to be here this afternoon.
Today, I’d like to talk about regulatory capital. Given the usual reaction I get when I raise this subject, just to be safe, I’ve barred the exits!
In all seriousness, though, there’s been a great deal of attention paid to regulatory capital recently, including new Dodd-Frank requirements, Basel III implementation (or non-implementation) issues, and even bipartisan Congressional efforts to raise capital requirements for large banks.[1] Almost all of that attention has naturally centered on the question of how much capital a financial institution should be required to hold. What’s missing from the conversation, however – and what I’d like to focus on today – is a proper understanding of the theories behind capital requirements, both for banks and for non-bank financial institutions.
You may have noticed my reference to the theories behind capital requirements, rather than a single theory. If so, you’re one step ahead of many policymakers both here and abroad, who often implicitly or explicitly advance a single, one-size-fits-all approach to capital. As I’ll explain, this is a mistaken view that has the potential to impact the U.S. economy.
Understanding capital requirements begins with addressing the fundamental question of why financial institutions need minimum capital levels. In the banking sector, where the regulated entities operate in a principal capacity and are leveraged institutions, capital requirements are rightly designed with the paramount goal of enhancing safety and soundness, both for individual banks and for the banking system as a whole. Bank capital requirements serve as an important cushion against unexpected losses. They incentivize banks to operate in a prudent manner by placing the bank owners’ equity at risk in the event of a failure. They serve, in short, to reduce risk and protect against failure, and they reduce the potential that taxpayers would be required to backstop the bank in a time of stress.
Capital requirements for broker-dealers, however, serve a different purpose. In the capital markets, we want investors and institutions to take risks – informed risks that they freely choose in pursuit of a return on their investments. Eliminate the risk of an investment, and you eliminate the opportunity for a return as well. Capital markets, in short, are predicated on risk.
Whereas bank capital requirements are based on the avoidance of failure, broker-dealer capital requirements are designed to manage failure by providing enough of a cushion to ensure that a failed broker-dealer can liquidate in an orderly manner, allowing for the orderly transfer of customer assets to another broker-dealer.
These two models of capital requirements, in other words, differ in fundamental ways - it’s certainly not a matter of comparing apples to apples. Applying bank-based capital requirements to non-bank financial entities, in fact, is rather like trying to manage an orange grove using apple orchard techniques – it’s the equivalent of trying to determine how best to grow oranges to be used in orange pie, orangesauce, and, as a special treat, delicious caramel oranges on a stick. If you think that metaphor is a bit strained, well, it is – but nowhere near as strained as imposing a bank capital regime on broker-dealers.
In order to fully understand the danger of imposing bank capital requirements on non-bank institutions, it’s helpful to take a bit of a detour to review the actions of the Federal Reserve during the height of the financial crisis, which leads us to that dreaded word: bailouts.
The word “bailout,” of course, has come to stand for everything wrong with the federal government’s response to the financial crisis. As with, I imagine, everyone except for bailout recipients themselves, I find the idea of using taxpayer money to prop up insolvent financial institutions repugnant. There’s a basic ant-and-grasshopper dynamic to bailouts: we naturally recoil from the idea of using the resources of prudent taxpayers to rescue institutions felled by their lack of prudence. So let’s be absolutely clear: I hate bailouts. We should all hate bailouts. Case closed.
But…what, exactly, is a bailout? Notwithstanding the risk of being misunderstood on an incredibly sensitive topic, I believe it is critically important to understand what is, and what is not, a bailout. And here we come to the concept of the Federal Reserve as the lender of last resort and the crucial difference between insolvency and illiquidity for financial institutions.
The Federal Reserve Act of 1913 established the Fed, through its use of the discount window, as the nation’s lender of last resort. The best starting point for understanding the concept of a lender of last resort remains Walter Bagehot’s seminal work Lombard Street. Writing in 1873, Bagehot, who may be familiar to you from his work as editor-in-chief of The Economist or his treatise on the English constitution, set forth what is sometimes referred to as “Bagehot’s Dictum.” My friend Paul Tucker, former Deputy Governor of the Bank of England, succinctly summarized Bagehot’s Dictum as follows: “to avert panic, central banks should lend early and freely…to solvent firms, against good collateral, and at ‘high rates.’”[2]
As you may recall me noting, I’m starkly against bailouts. But offering access to the discount window to illiquid, but not insolvent, banks against good collateral comports with the traditional role of a central bank as the lender of last resort and falls outside even an expansive definition of the dreaded concept of a bailout. Indeed, it falls squarely within the traditional understanding of a central bank’s paramount purpose.
In 2008, however, the Fed went well beyond offering access to the discount window to depository institutions in its capacity as the lender of last resort. Instead, what happened in 2008 was that the Fed became the investor of last resort, a tremendously different concept which does indeed lend itself to the terrible title of “bailout.” The acquisition of almost 80 percent of AIG in exchange for an $85 billion loan, for example, as well as the ownership of $29 billion in former Bear Stearns assets, marked a fundamental departure from the Fed’s traditional role. As explained by Professor Allan Meltzer, author of a history of the Federal Reserve, “This is unique, and the Fed has never done something like this before. If you go all the way back to 1921, when farms were failing and Congress was leaning on the Fed to bail them out, the Fed always said, ‘It's not our business.’ It never regarded itself as an all-purpose agency.” [3] One reporter aptly deemed the Fed’s actions in the financial crisis as a transformation into “The Fed Inc.”[4]
As the Fed explains on its web page detailing its “Mission,”[5] in an amusingly understated manner, “Over the years, its role in banking and the economy has expanded.”[6] The Fed describes its current duties as conducting the nation's monetary policy, supervising and regulating banking institutions, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions.[7] Notwithstanding the breadth of this mandate and the full plate of work you’d expect it to engender, the Fed has also taken steps to extend its regulatory paradigm – designed, once again, to prevent bank failures - to non-bank institutions as well. Such institutions include broker-dealers, which, as I noted earlier, have their own regulatory capital regime that is designed to manage, rather than prevent, failure in order to ensure the return of customer assets. In addition, Title II of Dodd-Frank was explicitly designed not to prevent failure, but instead to manage the liquidation of large, complex financial institutions close to failure – indeed, the very name of the Title is “Orderly Liquidation Authority.”
In light of this, a more cynical person might suggest that the Fed’s efforts to extend the failure-prevention paradigm of bank capital regulation to financial entities that are already subject to failure-management regulatory schemes implies an institutionalization of the concept of too-big-to-fail. Good thing I’m not a cynical guy.
I digress, but it is important to remember that the Fed’s lender of last resort activity during the financial crisis came after its intervention in the Bear failure as well as its bailout of AIG. To be fair, once the Fed resumed its traditional role as the lender, rather than investor, of last resort, it did so robustly. By March 2009, the Fed had lent a staggering $7.7 trillion dollars to beleaguered financial institutions, including $1.2 trillion on one day alone on December 5, 2008.[8] And you thought your holiday spending was high!
So what does all of this have to do with capital? To answer that question requires a better understanding of the recent and disturbing fascination with imposing bank-theory capital requirements on non-bank institutions. Here, the recent FSOC intervention in the money market mutual fund space is quite instructive.
In August 2012, a lack of consensus among the Commission on the best way to proceed with proposing reforms to our money market fund rules led to an ill-advised abdication of the issue to FSOC, which enthusiastically took up the cause, leading to an unprecedented -- albeit invited -- incursion into the regulatory purview of an independent regulator. The result was the issuance, in November 2012, of a report entitled “Proposed Recommendations Regarding Money Market Mutual Fund Reform,” in which FSOC floated – pun intended – the concept of a “NAV buffer,” that is, a capital requirement for money market funds.[9]
As I delved into the issue of money market fund reform following my return to the SEC as a Commissioner, it quickly became apparent to me that, perhaps in the hopes of staving off more stringent regulation, the industry was coalescing behind a capital buffer requirement of approximately 50 basis points, to be phased in over a several year period. For the largest money market funds, this would have resulted in an approximately 1 to 200 ratio – a $500 million buffer to support $100 billion in investments. This would amount to chicken feed in any serious capital adequacy determinations.
The ostensible reasoning behind a capital buffer for money market funds is that it would serve to mitigate the risk of investor panic leading to a run on a fund. Common sense, however, belies this notion. Do we really believe that investor panic would be assuaged by the comforting knowledge that for every one dollar they had on deposit, the money market fund had set aside half a penny?
Common sense also leads to the conclusion that there is no reason to assume that this view of capital requirements as a panacea to mitigate run risk is limited to money market funds. Indeed, the now notorious “Asset Management and Financial Stability” report issued by Treasury’s Office of Financial Research last September featured similar reasoning, as reflected in its implied support for “liquidity buffers” for asset managers.[10]
As I noted in my statement at last June’s open meeting at which the Commission voted to propose reforms to our money market fund rules, which by the way thankfully did not include a capital buffer, “It became clear to me early on in this process that the only real purpose for the proposed buffer was to serve as the price of entry into an emergency lending facility that the Federal Reserve could construct during any future crisis – in short, the “buffer” would provide additional collateral to facilitate a Fed bailout for troubled MMFs.”[11]
Indeed, some Fed officials and academics[12] have suggested as much. In a speech delivered last February, New York Fed President Bill Dudley, while expressing support for the FSOC-proposed money market fund reform mechanisms of a NAV buffer and a “minimum balance at risk,” explained his concern that “even after such reforms, we would still have a system in which a very significant share of financial intermediation activity vital to the economy takes place in markets and through institutions that have no direct access to an effective lender of last resort backstop.”[13] He went on to raise the possibility of expanding access to the lender of last resort to additional entities in exchange for “the right quid pro quo—the commensurate expansion in the scope of prudential oversight.” Arguing that “[s]ubstantial prudential regulation of entities—such as broker-dealers —that might gain access to an expanded lender of last resort would be required to mitigate moral hazard problems,” he concluded, “Extension of discount window-type access to a set of nonbank institutions would therefore have to go hand-in-hand with prudential regulation of these institutions.”[14]
Fed Governor Daniel Tarullo, on the other hand, indicated his discomfort with extending access to the discount window to non-bank entities in a speech last November, noting that he was “wary of any such extension of the government safety net.” In the context of addressing the “vulnerabilities” of short-term wholesale funding, he stated that he “would prefer a regulatory approach that requires market actors using or extending short-term wholesale funding to internalize the social costs of those forms of funding”[15] – that is, an increased capital charge. In a different speech earlier last year, he cited the risk of “regulatory arbitrage” if increased capital charges were applied “only to some types of wholesale funding, or only to that used by prudentially regulated entities”[16] and concluded, “Ideally, the regulatory charge should apply whether the borrower is a commercial bank, broker-dealer, agency Real Estate Investment Trust (REIT), or hedge fund.”[17]
All of this adds up to a terribly muddled situation. Is the Fed seeking to impose bank-based capital charges on non-bank entities in conjunction with granting them access to the discount window at the cost of submitting to prudential regulation, as Mr. Dudley suggests? Or is the situation just the opposite, as Governor Tarullo implies – would those additional capital charges be intended to prevent non-prudentially regulated financial entities from ever relying upon, as Governor Tarullo puts it, an extension of the “government safety net” the discount window provides?
Put another way, is the goal to expand the Fed’s role by making it the lender of last resort to non-bank entities such as money market funds and broker dealers, or is it to use its Bank Holding Company Act authority and its role in FSOC to dictate capital requirements to non-bank entities in order to prevent those entities from ever gaining access to the discount window?
These are more than purely semantic questions, although semantics play a role: one man’s expansion of the Fed’s role as the lender of last resort is another man’s institutionalization of bailouts for failing financial institutions.
In my opinion, both Governor Tarullo and Mr. Dudley raise very good points that warrant a healthy debate. The issues they raise, however, as well as the more general issue of how much capital is enough in the banking and capital markets, create a degree of confusion about the Fed’s role as the lender of last resort. Should the Fed still perform that role? If so, when and for what entities? Does such lending, in fact, constitute a bailout?
All of these questions require answers as we debate questions of capital adequacy. If we are to assume that the Fed will not, or cannot, expand its role as the lender of last resort to non-bank entities, including non-bank subsidiaries of bank holding companies, would it ever be possible to set capital requirements at a level that would guarantee avoidance of 2008-type scenarios? I think not, even if we were to impose capital requirements of 100%. To me, therefore, capital markets regulators simply cannot stray from the theory of capital as a tool to facilitate the unwinding of a failed firm with the goal of returning customer assets.
I certainly don’t want to leave the impression that I disregard the Fed’s concerns about capital requirements for bank affiliated non-bank financial institutions. Indeed, it is my hope in the coming year to work with Commission staff and FINRA to begin an in-depth review of whether it would be appropriate to establish separate capital rules for bank-affiliated broker-dealers. If we determine that such a bifurcated broker-dealer capital regime would be appropriate, however, any such regime would be based on the principles of our current program for broker-dealer net capital, and it would be crafted to stand on its own, without any reference to the discount window. On this and related issues, it is far past time that the SEC play an active role in the policy debate in order to ensure the ongoing vibrancy of our capital markets.
Before I conclude, I’d like to make one final point that is obvious but still needs to be reiterated: the judgment calls regulators make in establishing capital rules incentivize regulated entities in a manner that inevitably results in unforeseen (although often quite foreseeable) externalities. A classic example is the beneficial capital treatment provided to certain asset-back securities under what’s known as the “Recourse Rule.”[18] The Recourse Rule, issued by the Fed, the FDIC, the OCC and OTS as a supplement to their implementation of Basel I, hugely privileged highly rated ABS as well as ABS issued or guaranteed by a GSE. How hugely? Well, for every $100 of highly rated or GSE sponsored ABS, well-capitalized banks had to set aside $2. This compared to a $5 set-aside for unsecuritized mortgage loans and a $10 charge for commercial loans or corporate bonds. In other words, by holding ABS from these favored categories, banks could reduce their capital requirements by 60% compared to holding an equivalent amount of mortgage loans and by 80% compared to holding corporate loans or bonds.
I’m reminded of the ubiquitous TV commercials featuring children’s responses to simple questions: what’s better, bigger or smaller, faster or slower, more or less? As the ads say, it’s not complicated. Concluding that setting aside less capital was better than setting aside more capital, banks loaded up their balance sheets accordingly, and by 2008, a staggering 93 percent of all the mortgage-backed securities held by American banks were either GSE-issued or rated AAA.[19] As noted in a 2010 report issued by the American Enterprise Institute, “If not for the recourse rule's privileging of mortgage-backed bonds, the burst housing bubble almost certainly would not have caused a banking crisis. The banking crisis, in turn, froze lending and caused the Great Recession.”[20]
As the Recourse Rule illustrates, regulatory capital requirements play a tremendous role in incentivizing financial institutions’ holdings. All the more important, therefore, that regulators use the right tool for the right job. We rightly take great pride in our capital markets, the deepest and safest in the world. We’re an entrepreneurial nation, and taking risks, whether with respect to investments or otherwise, is as American as apple pie. Superimposing upon those markets a capital regime based on the safety-and-soundness banking paradigm, on the other hand, would be as sensible as orange pie.
Thank you all for your attention this afternoon. I’d be happy to take questions.
[1] Terminating Bailouts for Taxpayer Fairness Act of 2013, S. 798, 113th Cong. (2013).
[2] Paul Tucker, Deputy Governor, Financial Stability, Bank of England, The Repertoire of Official Sector Interventions in the Financial System: Last Resort Lending, Market-Making, and Capital (May 28, 2009), available at http://www.bankofengland.co.uk/archive/Documents/historicpubs/speeches/2009/speech390.pdf.
[3] Edmund L. Andrews, A New Role for the Fed: Investor of Last Resort, N.Y. Times, September 18, 2008, available at http://www.nytimes.com/2008/09/18/business/18fed.html?pagewanted=print.
[4] Id.
[5] http://www.federalreserve.gov/aboutthefed/mission.htm
[6] Id.
[7] Id.
[8] Bob Ivry, Bradley Keoun and Phil Kuntz, Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress, Bloomberg, November 27, 2011, available at
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html. By comparison, Treasury’s much better-known TARP program entailed a mere $700 billion.
[9] Financial Stability Oversight Council, “Proposed Recommendations Regarding Money Market Mutual Fund Reform” (November 2012), available at http://www.treasury.gov/initiatives/fsoc/Documents/Proposed%20Recommendations%20Regarding%20Money%20Market%20Mutual%20Fund%20Reform%20-%20November%2013,%202012.pdf.
[10] U.S. Department of Treasury, Office of Financial Research, “Asset Management and Financial Stability,” (September 2013), available at http://www.treasury.gov/initiatives/ofr/research/Documents/OFR_AMFS_FINAL.pdf.
[11] Daniel M. Gallagher, Commissioner, Sec. & Exch. Comm’n, Statement at SEC Open Meeting – Proposed Rules Regarding Money Market Funds (June 5, 2013), available at
http://www.sec.gov/News/Speech/Detail/Speech/1365171575594#.UsneCvRDvqN.
[12] See, e.g., Comment Letter of Jeffrey N. Gordon (File No. FSOC-2012-0003) (Feb. 28, 2013), available at http://www.regulations.gov/#!documentDetail;D=FSOC-2012-0003-0131).
[13] William C. Dudley, President and Chief Executive Officer, Federal Reserve Bank of New York, Fixing Wholesale Funding to Build a More Stable Financial System (February 1, 2013), available at http://www.newyorkfed.org/newsevents/speeches/2013/dud130201.html.
[14] Id.
[15] Daniel K. Tarullo, Governor, Board of Governors of the Federal Reserve System, Shadow Banking and Systemic Risk Redgulation (November 22, 2013), available at http://www.federalreserve.gov/newsevents/speech/tarullo20131122a.htm.
[16] Daniel K. Tarullo, Governor, Board of Governors of the Federal Reserve System, Evaluating Progress in Regulatory Reforms to Promote Financial Stability (May 3, 2013), available at http://www.federalreserve.gov/newsevents/speech/tarullo20130503a.htm.
[17] Id.
[18] Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance: Capital Treatment of Recourse, Direct Credit Substitutes and Residual Interests in Asset Securitizations, 66 Fed. Reg. 59613 (November 29, 2001).
[19] Jeffrey Friedman and Wladimir Kraus, “A Silver Lining to the Financial Crisis,” American Enterprise Institute for Public Policy Research Regulation Outlook at 3 (January 2010), available at http://www.aei.org/files/2010/01/19/01-2010-Regulation-g.pdf (citing Viral V. Acharya and Matthew Richardson, “Causes of the Financial Crisis,” Critical Review 21 no. 2–3 at 195–210, table 1 (2009), available at http://pages.stern.nyu.edu/~sternfin/vacharya/public_html/acharya_richardson_critical.pdf)). See also Jeffrey Friedman, “A Perfect Storm of Ignorance,” Cato Policy Report (January/February 2010), available at http://www.cato.org/policy-report/januaryfebruary-2010/perfect-storm-ignorance. Note that this figure would be even higher if it included Recourse Rule-friendly AA-rated securitizations.
[20] Friedman and Kraus at 4.
FDA RECOMMENDED MAXIMUM AMOUNT OF ACETAMINOPHEN PER TABLET
FROM: FOOD AND DRUG ADMINISTRATION
The Division of Drug Information (DDI) is CDER's focal point for public inquiries. We serve the public by providing information on human drug products and drug product regulation by FDA.
On January 14, 2014, FDA is recommending health care professionals discontinue prescribing and dispensing prescription combination drug products that contain more than 325 milligrams (mg) of acetaminophen per tablet, capsule, or other dosage unit. There are no available data to show that taking more than 325 mg of acetaminophen per dosage unit provides additional benefit that outweighs the added risks for liver injury. Further, limiting the amount of acetaminophen per dosage unit will reduce the risk of severe liver injury from inadvertent acetaminophen overdose, which can lead to liver failure, liver transplant, and death.
We recommend that health care providers consider prescribing combination drug products that contain 325 mg or less of acetaminophen. We also recommend that when a pharmacist receives a prescription for a combination product with more than 325 mg of acetaminophen per dosage unit that they contact the prescriber to discuss a product with a lower dose of acetaminophen. A two tablet or two capsule dose may still be prescribed, if appropriate. In that case, the total dose of acetaminophen would be 650 mg (the amount in two 325 mg dosage units). When making individual dosing determinations, health care providers should always consider the amounts of both the acetaminophen and the opioid components in the prescription combination drug product.
In January 2011 we asked manufacturers of prescription combination drug products containing acetaminophen to limit the amount of acetaminophen to no more than 325 mg in each tablet or capsule by January 14, 2014. We requested this action to protect consumers from the risk of severe liver damage which can result from taking too much acetaminophen. This category of prescription drugs combines acetaminophen with another ingredient intended to treat pain (most often an opioid), and these products are commonly prescribed to consumers for pain, such as pain from acute injuries, post-operative pain, or pain following dental procedures.
The Division of Drug Information (DDI) is CDER's focal point for public inquiries. We serve the public by providing information on human drug products and drug product regulation by FDA.
On January 14, 2014, FDA is recommending health care professionals discontinue prescribing and dispensing prescription combination drug products that contain more than 325 milligrams (mg) of acetaminophen per tablet, capsule, or other dosage unit. There are no available data to show that taking more than 325 mg of acetaminophen per dosage unit provides additional benefit that outweighs the added risks for liver injury. Further, limiting the amount of acetaminophen per dosage unit will reduce the risk of severe liver injury from inadvertent acetaminophen overdose, which can lead to liver failure, liver transplant, and death.
We recommend that health care providers consider prescribing combination drug products that contain 325 mg or less of acetaminophen. We also recommend that when a pharmacist receives a prescription for a combination product with more than 325 mg of acetaminophen per dosage unit that they contact the prescriber to discuss a product with a lower dose of acetaminophen. A two tablet or two capsule dose may still be prescribed, if appropriate. In that case, the total dose of acetaminophen would be 650 mg (the amount in two 325 mg dosage units). When making individual dosing determinations, health care providers should always consider the amounts of both the acetaminophen and the opioid components in the prescription combination drug product.
In January 2011 we asked manufacturers of prescription combination drug products containing acetaminophen to limit the amount of acetaminophen to no more than 325 mg in each tablet or capsule by January 14, 2014. We requested this action to protect consumers from the risk of severe liver damage which can result from taking too much acetaminophen. This category of prescription drugs combines acetaminophen with another ingredient intended to treat pain (most often an opioid), and these products are commonly prescribed to consumers for pain, such as pain from acute injuries, post-operative pain, or pain following dental procedures.
PRESS SECRETARY'S PRESS GAGGLE ABOARD AIR FORCE ONE
FROM: THE WHITE HOUSE
Press Gaggle by Press Secretary Jay Carney Aboard AF1 en route Raleigh, NC, 1/15/2014
Aboard Air Force One
En Route Raleigh, North Carolina
10:25 A.M. EST
MR. CARNEY: Good morning, ladies and gentlemen. Welcome aboard Air Force One for the first outing of the New Year. I hope you look forward to it as I do. I just wanted to say a couple of things about where we’re going and the event the President will participate in.
Today the President will visit Vacon, a company that manufactures AC drives, which are used to control the speed of electric motors to maximize energy efficiency. At 11:35 a.m. the President will tour the R&D facility, accompanied by Dan Isaksson, Vacon vice president, and Secretary Moniz. At 1:00 p.m. at North Carolina State University, the President will announce new steps with the private sector to strengthen the manufacturing sector, boost advanced manufacturing, and attract good jobs with good wages that a growing middle class requires.
The President will announce the selection of a North Carolina headquartered consortium of businesses and universities led by North Carolina State University to lead a manufacturing innovation institute for next generation power electronics.
President Obama has declared the year 2014 a “Year of Action.” And while he will continue to work with Congress on new measures to create jobs and grow the economy, he will also use his executive authority to get things done. After shedding jobs for a decade, our manufacturers have added 568,000 jobs over the past nearly four years, including 80,000 over the past five months. Manufacturing production has grown since the end of the recession at its fastest pace in over a decade. The President is committed to building on that progress.
With that, I’ll take your questions.
Q: Could you respond to some of the criticisms that Judge Bates made of recommendations regarding surveillance? He objects, for example, to the appointment of a special advocate to a rigorous procedure for national security letters, and so on.
MR. CARNEY: Mark, as you know, we are in the final stages of wrapping up the administration’s review of our signals intelligence programs. As we’ve been saying, we’re not going to discuss decisions and outcomes while the review is ongoing, and we wouldn’t discuss observations or assessments by others about recommendations that the President himself is considering as he makes final decisions prior to his remarks at the Justice Department on Friday.
Q: What about the New York Times story today that the NSA is using radio waves to tap into computers around the world and monitor them?
MR. CARNEY: As you know, I won’t discuss specific tools or processes. But the NSA operates under heavy oversight and is focused on discovering and developing intelligence about valid and foreign intelligence targets, such as terrorists, human traffickers, and drug smugglers. They are not interested in the personal information about ordinary Americans, nor do they use foreign intelligence capabilities to steal the trade secrets of foreign companies on behalf of, or give intelligence that we collect to U.S. companies to enhance their international competitiveness or increase their bottom line.
Q: Do you have anything to add to your statement last night about the unemployment insurance? Who is to blame for this?
MR. CARNEY: I think if you look at my statement, we’re very disappointed that Republicans blocked a common-sense, compromise solution that would have extended unemployment insurance benefits to the 1.3 million Americans and their families who have been cut off from this emergency assistance.
It’s very frustrating when, again, the previous President, a Republican, signed similar extensions five times without offsets. And Majority Leader Senator Reid has gone quite a distance to try to accommodate the concerns of Republicans who have shown a desire and an interest in extending these benefits when it comes to offsets and when it comes to offering amendments.
So we’re going to continue to work with congressional leaders, with Senate leaders to move this forward. The need is urgent. It should not be tied up in ideological or partisan debate. The Americans who need this assistance are Republicans, they're Democrats, they're independents, they're unaffiliated -- they're Americans. And Congress should act.
Q: Will the President address the vote or the lack of votes in the Senate in his remarks today?
MR. CARNEY: He might bring it up in his remarks, but it’s certainly not the focus of his remarks.
Q: Agenda for his meeting with Senate Democrats? What’s at the top of the agenda?
MR. CARNEY: Well, it’s basically to sync our watches on the policy agenda that the President has been putting forward and will add to in his State of the Union address. So there will be a broad array of topics, including -- as you heard him say yesterday at the Cabinet meeting -- efforts we’re undertaking to work with Congress legislatively to move the country forward and efforts that he can undertake using the unique authorities and powers that a President has to make advances on behalf of the middle class and the American economy. And today’s event in North Carolina is a perfect example of the President using that power and that authority.
Q: Jay, speaking of today’s event, these manufacturing institutes, as you know, were an initiative announced at the State of the Union last year, and here we are two weeks before this year’s State of the Union. Is there any frustration that it’s taken him close to a year to announce the establishment of the first one of what’s supposed to eventually be 45 of these institutes?
MR. CARNEY: Not at all. I mean, I think if we had announced everything in a week, you would have said it wasn’t serious, it wasn’t real, and the assessments made about where to launch these initiatives weren’t vigorous and substantive.
I think that we have seen extremely positive growth in our manufacturing sector. We’ve seen areas with huge potential for further growth, especially in advanced manufacturing, in technologies and businesses that the United States can dominate, and by doing so can create high-paying jobs that support middle-class families here at home.
This is something the President is very committed to, and he’s very excited about today’s event.
Q: “Year of Action” -- his economic issues can we see -- expect action on more health care actions, immigration, other issues on the President’s domestic agenda?
MR. CARNEY: The answer is, yes. I think the point that the President has been making and others have made on his behalf is that in many ways the American economy, as it has emerged from the recovery, has grown steadily and created 8.2 million jobs, is on a precipice of even greater strides forward. And we want to do everything we can, using our authorities, the President's authorities to take action through the executive and through the power of the pen and the power of the phone, as well as take action through and with Congress legislatively on immigration reform and so many other issues that we can work together on.
It bears notice that, despite all of our differences, despite our disappointment and frustration with the decision by Republicans to block UI benefits thus far, that there has also been steady progress on the omnibus legislation that is the product of a bipartisan compromise on a budget deal. And that omnibus legislation, that funding bill protects some of the President's key priorities, including in manufacturing, SelectUSA, including in early childhood education and others.
So there's a lot of positive things that can happen and are happening on behalf of the economy and the middle class and the American people, and we just need to keep moving forward. So the President is going to talk a lot about, in the days ahead and in the State of the Union address, ways that we can use all the tools available to us to grow the economy and create jobs that middle-class families can depend on.
Q: Can you talk about the significance of the phrase “Year of Action” compared to previous years, which seemed were also years of action? Why are you pointing out that this year is a year of action?
MR. CARNEY: Well, that’s a profound question, Zack. The fact of the matter is this President has throughout his time in office utilized the tools available to him. But we're going to reinvigorate that process. We're going to continue to look for creative and innovative ideas to do things like advance the cause of developing high-tech and other advanced manufacturing centers across the country; to expand access to early childhood education; to move forward with rebuilding our infrastructure.
One other positive outcome of the omnibus legislation that’s moving through the Congress now is that it provides significant funds for TIGER investments -- for TIGER grants. And that goes right to the infrastructure needs that we have in this country. And as you know, investment in infrastructure, as had been recognized by both Democrats and Republicans over the years, provide an immediate jolt to the economy, immediate job creation, as well as long-term positive benefits because of improved infrastructure.
Q: Jay, can I ask about Iran? As you know and have reacted to, Iran's foreign minister laid a wreath at the grave of a Hezbollah leader who was involved in a terrorist attack against Americans. And we spoke yesterday about these reports of a Russian-Iran oil-for-goods deal. You’ve made the case repeatedly of why you think Congress should wait and give diplomacy a chance. Are you concerned that events like these, which you can't control, could have a negative effect and sort of weaken the argument that you're making with folks on the Hill that, look, you need to give us a window of time to try to get a deal done?
MR. CARNEY: Well, I’d say a couple things. On the matter of the Iranian foreign minister honoring Imad Mugniyah, the United States condemns the decision taken by the Iranian foreign minister to place a wreath at the grave of a former leader of the Lebanese Hezbollah responsible for heinous acts of terrorism that killed hundreds of innocent people, including Americans. The inhumane violence that Mugniyah perpetrated and that Lebanese Hezbollah continues to perpetrate in a region with Iran’s financial and materiel support has had profoundly destabilizing and deadly effects for Lebanon and the region.
The decision to commemorate an individual who has participated in such vicious acts and whose organization continues to actively support terrorism worldwide sends the wrong message and will only exacerbate tensions in the region.
Now, I think this speaks to the fact that through the P5-plus-1 and the agreements that have been negotiated, and the process moving forward, we are addressing with our international partners the profound and important challenge of ensuring that Iran does not develop and obtain a nuclear weapon. There are a host of vital national security interests at stake here, as well as the national security interests of our allies and friends.
Even as we pursue that and do it in a way that demands transparency and verifiability from the Iranians, we do not let up in our views and our positions when it comes to other activities, including the support of terrorist organizations that Iran engages in.
On the matter of the reports about the oil-for-goods deal with Iran that Russia may be engaged in, we've been very clear that we're concerned about that. When we saw those reports, press reports, it was immediately raised at the highest levels by Secretary Kerry, with Foreign Minister Lavrov. And I can tell you that if that deal moves forward it would raise serious concerns as it would be inconsistent with the terms of the P5-plus-1 agreement with Iran and could potentially trigger U.S. sanctions against the entities and individuals involved in any such transactions.
So our disposition has not changed on these matters. And that's why it’s so important to be clear that the actions that Iran takes, the steps it takes to either comply with or not comply with commitments it makes are what we judge Iran by -- not by statements meant for a domestic audience or by promises rather than action. So we’re going to press forward.
When it comes to the need to implement the Joint Plan of Action and engage in negotiations through the P5-plus-1 with the Iranians, it is absolutely the right thing to do to test whether or not we can resolve the challenge posed by Iran’s nuclear program peacefully.
The President retains all options, including military options, to fulfill his policy goal. But it is absolutely preferable to him, to the American people, and to all those who demand that Iran forsake nuclear weapons that this be resolved peacefully.
Q: The Senate Intelligence Committee has released a declassified report on Benghazi that found that -- or concluded that the attacks there were preventable and based on known security shortfalls, and the explanations for what caused the attack were -- inaccurately referred to the protests without sufficient eyewitness accounts or intelligence to base that on. Is there any response to those findings today?
MR. CARNEY: Well, you know the administration has made extraordinary efforts to work with seven different congressional committees investigating what happened before, during, and after the Benghazi attacks, including testifying at 13 congressional hearings, participating in 50 staff briefings, and providing over 25,000 pages of documents.
Today’s report largely reaffirms the findings reached by the independent Benghazi Accountability Review Board, and a number of the recommendations are consistent with the work the State Department has taken to improve diplomatic security, including upgrading security cameras, improving fire-protective equipment, and increasing Marine security guard presence.
I’d refer you to the State Department for the status on implementing each of those recommendations. But as you know, the administration is focused on two pieces: bringing to justice those responsible for the deaths of four Americans; and making sure that we take the steps necessary to improve the security at vulnerable facilities so that our men and women serving overseas in diplomatic positions are -- rather, to improve their security, as I said.
So I think this reinforces what other investigations have found, which is that there was not enough security to protect the four Americans who lost their lives and that there are things that we must do and that we are doing to ensure that we do everything we can to protect the security of Americans serving overseas, often in difficult circumstances and dangerous circumstances.
Q: Jay, any details on the First Lady's 50th birthday party?
MR. CARNEY: No, I don’t have anything on that. I’d refer you to the East Wing.
Q: No Jay-Z, Beyoncé dance party? (Laughter.)
Q: Are you going?
MR. CARNEY: Again, I'd refer you to the East Wing.
Q: Have you been invited?
MR. CARNEY: I'd refer you to the East Wing. (Laughter.)
Q: Do you dance?
MR. CARNEY: I do. Anybody else?
Q: One other thing. Can you confirm that the President is going to nominate Maria Contreras-Sweet to head the SBA?
MR. CARNEY: I can. The President will do that this afternoon --
Q: In his remarks?
MR. CARNEY: No, upon return to the White House. And I think if you look at her remarkable career, you will see that she is an excellent candidate for this position. And the President is grateful that he will be able to nominate her today.
Q: One more for you. What do the lobbying efforts look like from the White House on the fast-track TPA bill?
MR. CARNEY: It’s a priority of the President’s, his entire trade agenda, and we’re working with Congress to move that forward.
Q: Thank you.
MR. CARNEY: Thanks.
END
Press Gaggle by Press Secretary Jay Carney Aboard AF1 en route Raleigh, NC, 1/15/2014
Aboard Air Force One
En Route Raleigh, North Carolina
10:25 A.M. EST
MR. CARNEY: Good morning, ladies and gentlemen. Welcome aboard Air Force One for the first outing of the New Year. I hope you look forward to it as I do. I just wanted to say a couple of things about where we’re going and the event the President will participate in.
Today the President will visit Vacon, a company that manufactures AC drives, which are used to control the speed of electric motors to maximize energy efficiency. At 11:35 a.m. the President will tour the R&D facility, accompanied by Dan Isaksson, Vacon vice president, and Secretary Moniz. At 1:00 p.m. at North Carolina State University, the President will announce new steps with the private sector to strengthen the manufacturing sector, boost advanced manufacturing, and attract good jobs with good wages that a growing middle class requires.
The President will announce the selection of a North Carolina headquartered consortium of businesses and universities led by North Carolina State University to lead a manufacturing innovation institute for next generation power electronics.
President Obama has declared the year 2014 a “Year of Action.” And while he will continue to work with Congress on new measures to create jobs and grow the economy, he will also use his executive authority to get things done. After shedding jobs for a decade, our manufacturers have added 568,000 jobs over the past nearly four years, including 80,000 over the past five months. Manufacturing production has grown since the end of the recession at its fastest pace in over a decade. The President is committed to building on that progress.
With that, I’ll take your questions.
Q: Could you respond to some of the criticisms that Judge Bates made of recommendations regarding surveillance? He objects, for example, to the appointment of a special advocate to a rigorous procedure for national security letters, and so on.
MR. CARNEY: Mark, as you know, we are in the final stages of wrapping up the administration’s review of our signals intelligence programs. As we’ve been saying, we’re not going to discuss decisions and outcomes while the review is ongoing, and we wouldn’t discuss observations or assessments by others about recommendations that the President himself is considering as he makes final decisions prior to his remarks at the Justice Department on Friday.
Q: What about the New York Times story today that the NSA is using radio waves to tap into computers around the world and monitor them?
MR. CARNEY: As you know, I won’t discuss specific tools or processes. But the NSA operates under heavy oversight and is focused on discovering and developing intelligence about valid and foreign intelligence targets, such as terrorists, human traffickers, and drug smugglers. They are not interested in the personal information about ordinary Americans, nor do they use foreign intelligence capabilities to steal the trade secrets of foreign companies on behalf of, or give intelligence that we collect to U.S. companies to enhance their international competitiveness or increase their bottom line.
Q: Do you have anything to add to your statement last night about the unemployment insurance? Who is to blame for this?
MR. CARNEY: I think if you look at my statement, we’re very disappointed that Republicans blocked a common-sense, compromise solution that would have extended unemployment insurance benefits to the 1.3 million Americans and their families who have been cut off from this emergency assistance.
It’s very frustrating when, again, the previous President, a Republican, signed similar extensions five times without offsets. And Majority Leader Senator Reid has gone quite a distance to try to accommodate the concerns of Republicans who have shown a desire and an interest in extending these benefits when it comes to offsets and when it comes to offering amendments.
So we’re going to continue to work with congressional leaders, with Senate leaders to move this forward. The need is urgent. It should not be tied up in ideological or partisan debate. The Americans who need this assistance are Republicans, they're Democrats, they're independents, they're unaffiliated -- they're Americans. And Congress should act.
Q: Will the President address the vote or the lack of votes in the Senate in his remarks today?
MR. CARNEY: He might bring it up in his remarks, but it’s certainly not the focus of his remarks.
Q: Agenda for his meeting with Senate Democrats? What’s at the top of the agenda?
MR. CARNEY: Well, it’s basically to sync our watches on the policy agenda that the President has been putting forward and will add to in his State of the Union address. So there will be a broad array of topics, including -- as you heard him say yesterday at the Cabinet meeting -- efforts we’re undertaking to work with Congress legislatively to move the country forward and efforts that he can undertake using the unique authorities and powers that a President has to make advances on behalf of the middle class and the American economy. And today’s event in North Carolina is a perfect example of the President using that power and that authority.
Q: Jay, speaking of today’s event, these manufacturing institutes, as you know, were an initiative announced at the State of the Union last year, and here we are two weeks before this year’s State of the Union. Is there any frustration that it’s taken him close to a year to announce the establishment of the first one of what’s supposed to eventually be 45 of these institutes?
MR. CARNEY: Not at all. I mean, I think if we had announced everything in a week, you would have said it wasn’t serious, it wasn’t real, and the assessments made about where to launch these initiatives weren’t vigorous and substantive.
I think that we have seen extremely positive growth in our manufacturing sector. We’ve seen areas with huge potential for further growth, especially in advanced manufacturing, in technologies and businesses that the United States can dominate, and by doing so can create high-paying jobs that support middle-class families here at home.
This is something the President is very committed to, and he’s very excited about today’s event.
Q: “Year of Action” -- his economic issues can we see -- expect action on more health care actions, immigration, other issues on the President’s domestic agenda?
MR. CARNEY: The answer is, yes. I think the point that the President has been making and others have made on his behalf is that in many ways the American economy, as it has emerged from the recovery, has grown steadily and created 8.2 million jobs, is on a precipice of even greater strides forward. And we want to do everything we can, using our authorities, the President's authorities to take action through the executive and through the power of the pen and the power of the phone, as well as take action through and with Congress legislatively on immigration reform and so many other issues that we can work together on.
It bears notice that, despite all of our differences, despite our disappointment and frustration with the decision by Republicans to block UI benefits thus far, that there has also been steady progress on the omnibus legislation that is the product of a bipartisan compromise on a budget deal. And that omnibus legislation, that funding bill protects some of the President's key priorities, including in manufacturing, SelectUSA, including in early childhood education and others.
So there's a lot of positive things that can happen and are happening on behalf of the economy and the middle class and the American people, and we just need to keep moving forward. So the President is going to talk a lot about, in the days ahead and in the State of the Union address, ways that we can use all the tools available to us to grow the economy and create jobs that middle-class families can depend on.
Q: Can you talk about the significance of the phrase “Year of Action” compared to previous years, which seemed were also years of action? Why are you pointing out that this year is a year of action?
MR. CARNEY: Well, that’s a profound question, Zack. The fact of the matter is this President has throughout his time in office utilized the tools available to him. But we're going to reinvigorate that process. We're going to continue to look for creative and innovative ideas to do things like advance the cause of developing high-tech and other advanced manufacturing centers across the country; to expand access to early childhood education; to move forward with rebuilding our infrastructure.
One other positive outcome of the omnibus legislation that’s moving through the Congress now is that it provides significant funds for TIGER investments -- for TIGER grants. And that goes right to the infrastructure needs that we have in this country. And as you know, investment in infrastructure, as had been recognized by both Democrats and Republicans over the years, provide an immediate jolt to the economy, immediate job creation, as well as long-term positive benefits because of improved infrastructure.
Q: Jay, can I ask about Iran? As you know and have reacted to, Iran's foreign minister laid a wreath at the grave of a Hezbollah leader who was involved in a terrorist attack against Americans. And we spoke yesterday about these reports of a Russian-Iran oil-for-goods deal. You’ve made the case repeatedly of why you think Congress should wait and give diplomacy a chance. Are you concerned that events like these, which you can't control, could have a negative effect and sort of weaken the argument that you're making with folks on the Hill that, look, you need to give us a window of time to try to get a deal done?
MR. CARNEY: Well, I’d say a couple things. On the matter of the Iranian foreign minister honoring Imad Mugniyah, the United States condemns the decision taken by the Iranian foreign minister to place a wreath at the grave of a former leader of the Lebanese Hezbollah responsible for heinous acts of terrorism that killed hundreds of innocent people, including Americans. The inhumane violence that Mugniyah perpetrated and that Lebanese Hezbollah continues to perpetrate in a region with Iran’s financial and materiel support has had profoundly destabilizing and deadly effects for Lebanon and the region.
The decision to commemorate an individual who has participated in such vicious acts and whose organization continues to actively support terrorism worldwide sends the wrong message and will only exacerbate tensions in the region.
Now, I think this speaks to the fact that through the P5-plus-1 and the agreements that have been negotiated, and the process moving forward, we are addressing with our international partners the profound and important challenge of ensuring that Iran does not develop and obtain a nuclear weapon. There are a host of vital national security interests at stake here, as well as the national security interests of our allies and friends.
Even as we pursue that and do it in a way that demands transparency and verifiability from the Iranians, we do not let up in our views and our positions when it comes to other activities, including the support of terrorist organizations that Iran engages in.
On the matter of the reports about the oil-for-goods deal with Iran that Russia may be engaged in, we've been very clear that we're concerned about that. When we saw those reports, press reports, it was immediately raised at the highest levels by Secretary Kerry, with Foreign Minister Lavrov. And I can tell you that if that deal moves forward it would raise serious concerns as it would be inconsistent with the terms of the P5-plus-1 agreement with Iran and could potentially trigger U.S. sanctions against the entities and individuals involved in any such transactions.
So our disposition has not changed on these matters. And that's why it’s so important to be clear that the actions that Iran takes, the steps it takes to either comply with or not comply with commitments it makes are what we judge Iran by -- not by statements meant for a domestic audience or by promises rather than action. So we’re going to press forward.
When it comes to the need to implement the Joint Plan of Action and engage in negotiations through the P5-plus-1 with the Iranians, it is absolutely the right thing to do to test whether or not we can resolve the challenge posed by Iran’s nuclear program peacefully.
The President retains all options, including military options, to fulfill his policy goal. But it is absolutely preferable to him, to the American people, and to all those who demand that Iran forsake nuclear weapons that this be resolved peacefully.
Q: The Senate Intelligence Committee has released a declassified report on Benghazi that found that -- or concluded that the attacks there were preventable and based on known security shortfalls, and the explanations for what caused the attack were -- inaccurately referred to the protests without sufficient eyewitness accounts or intelligence to base that on. Is there any response to those findings today?
MR. CARNEY: Well, you know the administration has made extraordinary efforts to work with seven different congressional committees investigating what happened before, during, and after the Benghazi attacks, including testifying at 13 congressional hearings, participating in 50 staff briefings, and providing over 25,000 pages of documents.
Today’s report largely reaffirms the findings reached by the independent Benghazi Accountability Review Board, and a number of the recommendations are consistent with the work the State Department has taken to improve diplomatic security, including upgrading security cameras, improving fire-protective equipment, and increasing Marine security guard presence.
I’d refer you to the State Department for the status on implementing each of those recommendations. But as you know, the administration is focused on two pieces: bringing to justice those responsible for the deaths of four Americans; and making sure that we take the steps necessary to improve the security at vulnerable facilities so that our men and women serving overseas in diplomatic positions are -- rather, to improve their security, as I said.
So I think this reinforces what other investigations have found, which is that there was not enough security to protect the four Americans who lost their lives and that there are things that we must do and that we are doing to ensure that we do everything we can to protect the security of Americans serving overseas, often in difficult circumstances and dangerous circumstances.
Q: Jay, any details on the First Lady's 50th birthday party?
MR. CARNEY: No, I don’t have anything on that. I’d refer you to the East Wing.
Q: No Jay-Z, Beyoncé dance party? (Laughter.)
Q: Are you going?
MR. CARNEY: Again, I'd refer you to the East Wing.
Q: Have you been invited?
MR. CARNEY: I'd refer you to the East Wing. (Laughter.)
Q: Do you dance?
MR. CARNEY: I do. Anybody else?
Q: One other thing. Can you confirm that the President is going to nominate Maria Contreras-Sweet to head the SBA?
MR. CARNEY: I can. The President will do that this afternoon --
Q: In his remarks?
MR. CARNEY: No, upon return to the White House. And I think if you look at her remarkable career, you will see that she is an excellent candidate for this position. And the President is grateful that he will be able to nominate her today.
Q: One more for you. What do the lobbying efforts look like from the White House on the fast-track TPA bill?
MR. CARNEY: It’s a priority of the President’s, his entire trade agenda, and we’re working with Congress to move that forward.
Q: Thank you.
MR. CARNEY: Thanks.
END
PHONY MORTGAGE RELIEF SCAM GETS DEFENDANTS BANNED FROM BUSINESS
FROM: FEDERAL TRADE COMMISSION
Defendants in Phony Mortgage Relief Scheme to Pay Nearly $3.6 Million; Orders Ban Them from Mortgage Relief Business
The South Florida-based defendants in an alleged mortgage relief scam will surrender their assets and be banned permanently from providing mortgage relief and debt relief services to consumers under a settlement with the Federal Trade Commission. This settlement represents the FTC’s largest judgment to date against a purported mortgage assistance relief provider.
In 2012, as part of the Distressed Homeowner Initiative, a multi-agency federal enforcement crackdown, the FTC charged 11 companies and five individuals with running an illegal mortgage relief scheme, which operated under various names, including Prime Legal Plans. Using Reaching U Network, a sham non-profit front, and a maze of other companies, the scheme reeled in consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments. The FTC obtained a court order shutting down the operation and freezing the defendants’ corporate and personal assets pending settlement of the case.
“Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They broke the law by taking money upfront and making false promises.”
The FTC charged that the defendants promised consumers that they would prevent foreclosure or significantly lower their mortgage payments by conducting audits of consumers’ loans and providing access to full-service, expert legal representation to fight their lenders. The defendants, who marketed their programs in English and Spanish through a national outbound telemarketing campaign, allegedly told consumers that “80 percent of mortgages contain some fraud” and, in some cases, that even a small error in their loan documents could nullify the mortgage. The defendants also allegedly told consumers that they would be assigned an expert mortgage foreclosure defense attorney in their state who would “halt the foreclosure process” and save their homes. But instead of helping consumers, the defendants charged them illegal advance fees ranging from $595 to $750 per month, while delivering little or no help and driving them deeper into debt. In addition to alleging that the defendants deceived consumers, the FTC charged that the scheme violated the Mortgage Assistance Relief Services Rule’s ban on advance fees for mortgage relief. The FTC also asserted that the Defendants placed numerous calls to numbers listed on the national Do Not Call Registry.
Under the settlements announced today, the defendants are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or service or making advertising claims that are unsupported by competent and reliable evidence. They also are prohibited from placing unsolicited calls both to numbers listed on the Do Not Call Registry and to any number in an area code for which they have not paid the fee to access the list of numbers on the Do Not Call Registry.
The settlements require the Defendants to pay nearly $3.6 million to redress consumer victims. Under the terms of the settlements:
A $25.1 million judgment, reflecting the total amount of fees taken in by the scheme, is imposed on Derek Radzikowski, Jason Desmond, Prime Legal Plans LLC, and five other corporate defendants. The judgment will be suspended when they surrender their assets – an estimated $3.5 million. The order also resolves allegations against Desmond’s wife, relief defendant Shelie Desmond, by requiring her to turn over an estimated $110,000 in unearned ill-gotten gains that she received from the scheme.
$1,428,658 judgments are imposed on Andrew Primavera and Lazaro Dinh and four corporate defendants. The judgments, entered August 22, 3013, reflect these defendants’ ill-gotten gains, and were suspended after they surrendered their assets: about $20,0000 from Dinh and $1,600 from Primavera. The Dinh order also resolved allegations against two relief defendants: the San Lazaro Irrevocable Life Insurance and its trustee, Dinh’s sister Maria Soltura. The $336,929 judgment against Soltura and the Trust was suspended when the FTC received the $1,575 that was frozen in the trust’s bank account when the FTC shut down the operation last year.
A $392,215 judgment was imposed against Christopher N. Edwards and Reaching U Network, Inc., and a $102,417 judgment was imposed upon Kim E. Landolfi. The judgments, entered May 22, 2013, reflect these defendants’ ill-gotten gains and were suspended when they surrendered frozen assets to the FTC: approximately $950 from Edwards and Reaching U Network, Inc. and $40,000 from Landolfi.
If it is later determined that a defendant provided false financial information to the FTC, the full amount of the judgment against that defendant will become due.
Under federal law, foreclosure rescue and loan modification service providers are banned from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable. For consumer information about avoiding mortgage and foreclosure rescue scams, see this FTC material.
The Commission vote approving the consent decree for Radzikowski, Desmond, Prime Legal Plans LLC; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; American Hardship, LLC; Legal Servicing and Billing Partners LLC; and Back Office Support Systems LLC was 4-0. The consent decree was filed in the U.S. District Court for the Southern District of Florida and entered by the court on December 27, 2013.
NOTE: Consent decrees have the force of law when approved and signed by the District Court judge.
Defendants in Phony Mortgage Relief Scheme to Pay Nearly $3.6 Million; Orders Ban Them from Mortgage Relief Business
The South Florida-based defendants in an alleged mortgage relief scam will surrender their assets and be banned permanently from providing mortgage relief and debt relief services to consumers under a settlement with the Federal Trade Commission. This settlement represents the FTC’s largest judgment to date against a purported mortgage assistance relief provider.
In 2012, as part of the Distressed Homeowner Initiative, a multi-agency federal enforcement crackdown, the FTC charged 11 companies and five individuals with running an illegal mortgage relief scheme, which operated under various names, including Prime Legal Plans. Using Reaching U Network, a sham non-profit front, and a maze of other companies, the scheme reeled in consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments. The FTC obtained a court order shutting down the operation and freezing the defendants’ corporate and personal assets pending settlement of the case.
“Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They broke the law by taking money upfront and making false promises.”
The FTC charged that the defendants promised consumers that they would prevent foreclosure or significantly lower their mortgage payments by conducting audits of consumers’ loans and providing access to full-service, expert legal representation to fight their lenders. The defendants, who marketed their programs in English and Spanish through a national outbound telemarketing campaign, allegedly told consumers that “80 percent of mortgages contain some fraud” and, in some cases, that even a small error in their loan documents could nullify the mortgage. The defendants also allegedly told consumers that they would be assigned an expert mortgage foreclosure defense attorney in their state who would “halt the foreclosure process” and save their homes. But instead of helping consumers, the defendants charged them illegal advance fees ranging from $595 to $750 per month, while delivering little or no help and driving them deeper into debt. In addition to alleging that the defendants deceived consumers, the FTC charged that the scheme violated the Mortgage Assistance Relief Services Rule’s ban on advance fees for mortgage relief. The FTC also asserted that the Defendants placed numerous calls to numbers listed on the national Do Not Call Registry.
Under the settlements announced today, the defendants are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or service or making advertising claims that are unsupported by competent and reliable evidence. They also are prohibited from placing unsolicited calls both to numbers listed on the Do Not Call Registry and to any number in an area code for which they have not paid the fee to access the list of numbers on the Do Not Call Registry.
The settlements require the Defendants to pay nearly $3.6 million to redress consumer victims. Under the terms of the settlements:
A $25.1 million judgment, reflecting the total amount of fees taken in by the scheme, is imposed on Derek Radzikowski, Jason Desmond, Prime Legal Plans LLC, and five other corporate defendants. The judgment will be suspended when they surrender their assets – an estimated $3.5 million. The order also resolves allegations against Desmond’s wife, relief defendant Shelie Desmond, by requiring her to turn over an estimated $110,000 in unearned ill-gotten gains that she received from the scheme.
$1,428,658 judgments are imposed on Andrew Primavera and Lazaro Dinh and four corporate defendants. The judgments, entered August 22, 3013, reflect these defendants’ ill-gotten gains, and were suspended after they surrendered their assets: about $20,0000 from Dinh and $1,600 from Primavera. The Dinh order also resolved allegations against two relief defendants: the San Lazaro Irrevocable Life Insurance and its trustee, Dinh’s sister Maria Soltura. The $336,929 judgment against Soltura and the Trust was suspended when the FTC received the $1,575 that was frozen in the trust’s bank account when the FTC shut down the operation last year.
A $392,215 judgment was imposed against Christopher N. Edwards and Reaching U Network, Inc., and a $102,417 judgment was imposed upon Kim E. Landolfi. The judgments, entered May 22, 2013, reflect these defendants’ ill-gotten gains and were suspended when they surrendered frozen assets to the FTC: approximately $950 from Edwards and Reaching U Network, Inc. and $40,000 from Landolfi.
If it is later determined that a defendant provided false financial information to the FTC, the full amount of the judgment against that defendant will become due.
Under federal law, foreclosure rescue and loan modification service providers are banned from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable. For consumer information about avoiding mortgage and foreclosure rescue scams, see this FTC material.
The Commission vote approving the consent decree for Radzikowski, Desmond, Prime Legal Plans LLC; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; American Hardship, LLC; Legal Servicing and Billing Partners LLC; and Back Office Support Systems LLC was 4-0. The consent decree was filed in the U.S. District Court for the Southern District of Florida and entered by the court on December 27, 2013.
NOTE: Consent decrees have the force of law when approved and signed by the District Court judge.
Wednesday, January 15, 2014
NLRB ISSUES COMPLAINT AGAINST WALMART REGARDING WORKER PROTESTERS
FROM: NATIONAL LABOR RELATIONS BOARD
Office of Public Affairs 202-273-1991 publicinfo@nlrb.gov www.nlrb.gov NLRB Office of the General Counsel Issues Complaint against Walmart January 15, 2014 The National Labor Relations Board (NLRB) Office of the General Counsel has issued a consolidated complaint against Walmart alleging that the company violated the rights of its employees as a result of activities surrounding employee protests in 14 states. The Office of the General Counsel informed Walmart that complaints were authorized in November of 2013, but withheld issuing the complaints to allow time for settlement discussions. The discussions have not been successful and a consolidated complaint has issued regarding some of the alleged violations of federal law. More than 60 Walmart supervisors and one corporate officer are named in the complaint. Cases were consolidated to avoid unnecessary costs or delay. Walmart must respond to the complaint by January 28, 2014. No hearing date has been set. The Office of General Counsel has authorized or issued complaints in other Walmart cases and additional charges remain under investigation.
The National Labor Relations Act guarantees the right of private sector employees to act together to try to improve their wages and working conditions with or without a union. The consolidated complaint involves more than 60 employees, 19 of whom were discharged allegedly as a result of their participation in activities protected by the National Labor Relations Act. The Office of the General Counsel alleges that Walmart violated the Act when: During two national television news broadcasts and in statements to employees at Walmart stores in California and Texas, Walmart unlawfully threatened employees with reprisal if they engaged in strikes and protests; At stores in California, Colorado, Florida, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, North Carolina, Ohio, Texas and Washington, Walmart unlawfully threatened, disciplined, and/or terminated employees for having engaged in legally protected strikes and protests; At stores in California, Florida, Missouri and Texas, Walmart unlawfully threatened, surveilled, disciplined, and/or terminated employees in anticipation of or in response to employees’ other protected concerted activities. #
Office of Public Affairs 202-273-1991 publicinfo@nlrb.gov www.nlrb.gov NLRB Office of the General Counsel Issues Complaint against Walmart January 15, 2014 The National Labor Relations Board (NLRB) Office of the General Counsel has issued a consolidated complaint against Walmart alleging that the company violated the rights of its employees as a result of activities surrounding employee protests in 14 states. The Office of the General Counsel informed Walmart that complaints were authorized in November of 2013, but withheld issuing the complaints to allow time for settlement discussions. The discussions have not been successful and a consolidated complaint has issued regarding some of the alleged violations of federal law. More than 60 Walmart supervisors and one corporate officer are named in the complaint. Cases were consolidated to avoid unnecessary costs or delay. Walmart must respond to the complaint by January 28, 2014. No hearing date has been set. The Office of General Counsel has authorized or issued complaints in other Walmart cases and additional charges remain under investigation.
The National Labor Relations Act guarantees the right of private sector employees to act together to try to improve their wages and working conditions with or without a union. The consolidated complaint involves more than 60 employees, 19 of whom were discharged allegedly as a result of their participation in activities protected by the National Labor Relations Act. The Office of the General Counsel alleges that Walmart violated the Act when: During two national television news broadcasts and in statements to employees at Walmart stores in California and Texas, Walmart unlawfully threatened employees with reprisal if they engaged in strikes and protests; At stores in California, Colorado, Florida, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, North Carolina, Ohio, Texas and Washington, Walmart unlawfully threatened, disciplined, and/or terminated employees for having engaged in legally protected strikes and protests; At stores in California, Florida, Missouri and Texas, Walmart unlawfully threatened, surveilled, disciplined, and/or terminated employees in anticipation of or in response to employees’ other protected concerted activities. #
U.S. DEFENSE DEPARTMENT CONTRACTS FOR JANUARY 15, 2014
FROM: DEFENSE DEPARTMENT
CONTRACTS
DEFENSE LOGISTICS AGENCY
Bluewater Defense Inc., San Lorenzo, Puerto Rico, has been awarded a maximum $108,083,360 modification (P00013) exercising the first option year on a one-year base contract (SPM1C1-13-D-1020) with four one-year option periods for various types of permethrin uniform trousers. This is a firm-fixed-price, indefinite-delivery/indefinite-quantity contract. Location of performance is Puerto Rico with a Jan. 17, 2015 performance completion date. Using military service is Army. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Intercomp Co.*, Medina, Minn., has been awarded a maximum $60,000,000 modification (P00102) exercising the fourth option year on a one-year base contract (SPM8EF-10-D-0001) with four one-year option periods for various weight set commercial scales. This is a firm-fixed-price, indefinite-delivery/indefinite-quantity contract. Location of performance is Minnesota with a Feb. 15, 2015 performance completion date. Using military services are Army, Navy, Air Force, and Marine Corps. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
KPMG LLP, McLean, Va., has been awarded a maximum $10,730,426 firm-fixed-price contract to all necessary management services, personnel and documentation required to support DLA’s financial audit. This contract is a competitive acquisition, and there were six offers received. Location of performance is Virginia with a Jan. 15, 2015 performance completion date. Using services are federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Contracting Services, Richmond, Va., (SP4703-11-A-0017-0038).
AIR FORCE
Northrop Grumman Systems Corp., Northrop Grumman Information Systems, Herndon, Va., has been awarded a $52,298,661 firm-fixed-price cost-reimbursement modification (P00013) to exercise option contract line items on an existing contract (FA8726-13-C-0001) to continue performance of comprehensive tasks and provide personnel, facilities, aircraft subsystems and support equipment for the Battlefield Airborne Communications Node E-11A platform. Work will be performed at Kandahar Air Base, Afghanistan, as well as Wichita, Kan., and is expected to be completed by Jan. 23, 2015. Fiscal 2014 operations and maintenance funds in the amount of $31,778,000 are being obligated at time of award. Air Force Life Cycle Management Center/HNAK, Hanscom Air Force Base, Mass., is the contracting activity.
NAVY
Bell-Boeing Joint Project Office, Amarillo, Texas, is being awarded $26,682,561 for cost-plus-fixed-fee, cost reimbursable delivery order 0067 against a previously issued basic ordering agreement (N00019-12-G-0006) in support of the V-22 aircraft. This order provides for on-site flight test management, flight test engineering, design engineering, and related efforts for the Naval Rotary Wing Aircraft Test Squadron. Work will be performed at Patuxent River Naval Air Station, Patuxent River, Md. (53 percent); Philadelphia, Pa. (32 percent); and Fort Worth, Texas (15 percent), and is expected to be completed in December 2014. Fiscal 2013 aircraft procurement and fiscal 2014 research, development, test and evaluation, Navy funds in the amount of $26,682,561 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
Raytheon Co., Integrated Defense Systems, Tewksbury, Mass., is being awarded a $25,485,600 modification to a previously awarded contract (N00024-10-C-5126) for fiscal 2014 class services engineering efforts in support of DDG 1000 Zumwalt Class Destroyer Program. These efforts include class engineering, integration and production, and training and life cycle support services. Work will be performed in Portsmouth, R.I. (29 percent); Tewksbury, Mass. (26 percent); Sudbury, Mass. (26 percent); Moorestown, N.J. (10 percent); Marlboro, Mass. (6 percent); Herndon, Va. (1 percent); Houston, Texas (1 percent); Leesburg, Va. (0.5 percent), and Minneapolis, Minn. (0.5 percent), and is expected to be completed by December 2014. Fiscal 2014 research, development, test and evaluation; fiscal 2014 operations and maintenance, Navy, fiscal 2008 and 2014 shipbuilding and conversion, Navy funding in the amount of $10,829,922 will be obligated at time of award. Contract funds in the amount of $200,000 will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.
Rolls-Royce Corp., Indianapolis, Ind., is being awarded a $13,556,862 modification to a previously awarded firm-fixed-price contract (N00019-10-C-0020) to provide 17,226 engine flight hours in support of the MV-22 aircraft. Work will be performed in Oakland, Calif. (70 percent) and Indianapolis, Ind. (30 percent), and is expected to be completed in November 2013. Fiscal 2014 operations and maintenance, Navy funds in the amount of $13,556,862 are being obligated on this award, all of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
*Small Business
CONTRACTS
DEFENSE LOGISTICS AGENCY
Bluewater Defense Inc., San Lorenzo, Puerto Rico, has been awarded a maximum $108,083,360 modification (P00013) exercising the first option year on a one-year base contract (SPM1C1-13-D-1020) with four one-year option periods for various types of permethrin uniform trousers. This is a firm-fixed-price, indefinite-delivery/indefinite-quantity contract. Location of performance is Puerto Rico with a Jan. 17, 2015 performance completion date. Using military service is Army. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Intercomp Co.*, Medina, Minn., has been awarded a maximum $60,000,000 modification (P00102) exercising the fourth option year on a one-year base contract (SPM8EF-10-D-0001) with four one-year option periods for various weight set commercial scales. This is a firm-fixed-price, indefinite-delivery/indefinite-quantity contract. Location of performance is Minnesota with a Feb. 15, 2015 performance completion date. Using military services are Army, Navy, Air Force, and Marine Corps. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
KPMG LLP, McLean, Va., has been awarded a maximum $10,730,426 firm-fixed-price contract to all necessary management services, personnel and documentation required to support DLA’s financial audit. This contract is a competitive acquisition, and there were six offers received. Location of performance is Virginia with a Jan. 15, 2015 performance completion date. Using services are federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Contracting Services, Richmond, Va., (SP4703-11-A-0017-0038).
AIR FORCE
Northrop Grumman Systems Corp., Northrop Grumman Information Systems, Herndon, Va., has been awarded a $52,298,661 firm-fixed-price cost-reimbursement modification (P00013) to exercise option contract line items on an existing contract (FA8726-13-C-0001) to continue performance of comprehensive tasks and provide personnel, facilities, aircraft subsystems and support equipment for the Battlefield Airborne Communications Node E-11A platform. Work will be performed at Kandahar Air Base, Afghanistan, as well as Wichita, Kan., and is expected to be completed by Jan. 23, 2015. Fiscal 2014 operations and maintenance funds in the amount of $31,778,000 are being obligated at time of award. Air Force Life Cycle Management Center/HNAK, Hanscom Air Force Base, Mass., is the contracting activity.
NAVY
Bell-Boeing Joint Project Office, Amarillo, Texas, is being awarded $26,682,561 for cost-plus-fixed-fee, cost reimbursable delivery order 0067 against a previously issued basic ordering agreement (N00019-12-G-0006) in support of the V-22 aircraft. This order provides for on-site flight test management, flight test engineering, design engineering, and related efforts for the Naval Rotary Wing Aircraft Test Squadron. Work will be performed at Patuxent River Naval Air Station, Patuxent River, Md. (53 percent); Philadelphia, Pa. (32 percent); and Fort Worth, Texas (15 percent), and is expected to be completed in December 2014. Fiscal 2013 aircraft procurement and fiscal 2014 research, development, test and evaluation, Navy funds in the amount of $26,682,561 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
Raytheon Co., Integrated Defense Systems, Tewksbury, Mass., is being awarded a $25,485,600 modification to a previously awarded contract (N00024-10-C-5126) for fiscal 2014 class services engineering efforts in support of DDG 1000 Zumwalt Class Destroyer Program. These efforts include class engineering, integration and production, and training and life cycle support services. Work will be performed in Portsmouth, R.I. (29 percent); Tewksbury, Mass. (26 percent); Sudbury, Mass. (26 percent); Moorestown, N.J. (10 percent); Marlboro, Mass. (6 percent); Herndon, Va. (1 percent); Houston, Texas (1 percent); Leesburg, Va. (0.5 percent), and Minneapolis, Minn. (0.5 percent), and is expected to be completed by December 2014. Fiscal 2014 research, development, test and evaluation; fiscal 2014 operations and maintenance, Navy, fiscal 2008 and 2014 shipbuilding and conversion, Navy funding in the amount of $10,829,922 will be obligated at time of award. Contract funds in the amount of $200,000 will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.
Rolls-Royce Corp., Indianapolis, Ind., is being awarded a $13,556,862 modification to a previously awarded firm-fixed-price contract (N00019-10-C-0020) to provide 17,226 engine flight hours in support of the MV-22 aircraft. Work will be performed in Oakland, Calif. (70 percent) and Indianapolis, Ind. (30 percent), and is expected to be completed in November 2013. Fiscal 2014 operations and maintenance, Navy funds in the amount of $13,556,862 are being obligated on this award, all of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
*Small Business
SYRIA DONOR'S CONFERENCE REMARKS BY SECRETARY OF STATE KERRY
FROM: STATE DEPARTMENT
Press Availability at the Syria Donors' Conference
Press Availability
John Kerry
Secretary of State
Bayan Palace
Kuwait City, Kuwait
January 15, 2014
SECRETARY KERRY: Well, good afternoon. Thanks for being patient and waiting to have a chance to share some thoughts about both today and other issues that may be on your minds.
It was really heartening to take part in this conference here today and see the level of concern, but also the growing level of support for what has to be done in Syria. And I think that it's very key for all of us to maintain a united resolve, a shared resolve in the days to come, both in providing humanitarian relief, but also in pressing for the political solution. As I said earlier today, there is just no joy in a repeated conference to continue to be forced in conscience to support a growing number of refugees, when we really need to undo the underlying cause of the creation of those refugees. And so, it is critical for all of us to be laser beam-focused on finding that political solution and ending the violence all together, once and for all.
We are very grateful to Secretary General Ban Ki-moon for convening this today, and for his direction of significant focus, as well as resources, into this. And I want to thank again his Highness Sheikh Sabah Al Ahmed Al Jaber Al Sabah, for bringing everybody together and providing these extraordinary facilities for people to be able to act.
The human toll of this crisis is really clear for everybody to see now, almost to the point where the repetition of the numbers -- when you say 130,000 lives have been lost, there is a numbness that sets in, and it's hard for people to relate to what that really means on a daily basis, in terms of violence on the ground, disrupted families, loss of life. And you begin to get a better sense of that when you see it graphically, as we did in pictures and film today. What I saw, personally, at the Za’atari camp in Jordan really left an imprint on me in terms of not only the frustration and even anger that people there felt, because they don't see their lives changing and they don't see the crisis ending, but also the frustration that I felt with the global power gridlock on trying to do something that really meets the level of the challenge. And in the faces of those refugees, as well as in their numbers, there is a level of pain and a level of suffering that everybody in the world ought to share in some way, but which really demands a much greater response than has been provided yet by the community of nations.
So, I am proud that the United States of America is leading the charge, not only with respect to a response to the refugees, but also to try to end the creation of the refugees. And we today provided an additional -- through the grace of the American people -- another $380 million that brings our total to about 1.7 billion that we have provided -- the leading nation in the effort to try to deal with this crisis.
Now, some of our support will help Syrians immediately as they cope with one of the cruelest winters on record. And with our contributions today, we are providing, specifically, fuel for heating and cooking, we are providing thermal blankets and other critical winter supplies for tens of thousands of people.
In addition, we are also investing and meeting the longer-term needs of Syria's neighbors. After providing generous support for refugees for three years, to Lebanon, Turkey, and Jordan, who are all now under strain that I talked about earlier today, we also want to make sure that these nations are able to keep their hospitals and their schools up and running, and their economies growing, as they witness these enormous numbers of people, and particularly young children, coming into their societies. So that's why we contributed an additional $78 million in assistance for refugees living in Lebanon today, and we are delivering support to UN agencies and partners so that children will be able to see a doctor or go to school. You saw photos of kids in school. We are also trying to provide assistance so that parents will be able to pay rent and put a roof over their heads. Otherwise, we run the risk that abject poverty is going to become another threat to Lebanon’s sovereignty and stability.
We are also providing an additional $61 million in assistance to refugees in Jordan, where we see too many Syrian boys and girls who are now working at jobs in their teens -- low teens, some of them -- rather than being in school, learning and growing. Contributions from the United States have already helped to place 80 percent of Syrian refugee children in classrooms across Jordan. That's an extraordinary accomplishment, and something that Americans ought to be very proud of. But it also means there are still 30,000 children who are not in school. So our support today will ensure that many of these boys and girls are no longer going to be denied their childhood right to an education.
Now, some of the more than $30 million that we committed to refugees in Turkey today will also fund schooling and support children who are traumatized by war. We obviously are not able to wipe away the horror of some of the things these kids have seen and lived through, but what we can do is help to provide them with a future brighter than the life they live today, and we can do that with funding for things like teacher training, educational materials, and quality medical care, all of which is designated in the funding that we are providing.
All of the additional support that the United States announced today, whether in Syria, Turkey, Lebanon, or Jordan, in the wider region, is vital to security now, and it's absolutely essential for the region's next generation.
For many of the six-and-a-half million men and women who are displaced within Syria, some
of the contributions made on their behalf today will obviously not matter if it can’t reach them. So, access is critical. And the refusal of humanitarian access by both the regime and elements of the opposition is an outrage. We believe firmly that this is an affront to human dignity, and we are going to continue to find ways to raise the profile of this issue, so people understand it. Access is critical. And the Assad regime needs to provide that access.
In Paris this weekend, Foreign Minister Lavrov and I discussed what we can do, working with the International Committee of the Red Cross and others, to deliver humanitarian aid to besieged areas. And earlier this morning in the general gathering, I had a chance to meet with the president and director of the Red Cross, International Red Cross, who had just come back from Damascus, where they are engaged in discussions, and they told me firsthand how they get an agreement from one agency, and then they go to the other to have that agreement carried out, and the other agency takes it away. So they have told me personally stories of how they will have an agreed-upon access set up, and then the day comes along where the convoy is going to deliver the goods, and they say, "No, it's too insecure today, and you can't go," and they shut it down. And so, this excuse, this process, is a calculated, designed process by the Assad regime to deny people, as a matter of a weapon of war, the access that they have a right to for the delivery of these goods. And one of the things that I am determined to do coming out of here, is make certain that we hold them accountable. And this will clearly be a subject of discussion going into the Geneva meetings.
We also need to see a more positive climate for these talks. And my hopes are that in the next days, with a visit of Foreign Minister Muallem to Moscow, and with other efforts, that we will be able to secure from the Assad regime the steps necessary for a ceasefire in whatever number of places that might be able to be achieved. And we will continue to press for that. I will be talking with Foreign Minister Lavrov later today on the return trip home in order to see what progress we can make there.
So, a lot of nations, including the United States, made generous contributions today, or pledges for those contributions. But the greatest single pledge that our nations can make is to work together and commit to the hard work of diplomacy, in order to bring an end to this endless cycle of creating of refugees and of loss of life. And to put a stopper to the suffering and to end this crisis once and for all, we need to find a political solution. And we will remain committed to that effort.
I would be happy to take any questions at this point.
MODERATOR: The first question will be from (inaudible) of Reuters.
QUESTION: Thank you very much. Mr. Secretary, you just talked about holding Assad accountable concerning humanitarian access, and you talked earlier today (inaudible) about the need for them to stop (inaudible) other atrocities. But what are the specific consequences for Assad if he doesn't do this? Given President Obama's decision not to use force or to support outside force in Syria, how seriously do you think he takes your threats?
And a quick follow-up question. There is a report in the BBC today quoting Syria's deputy foreign minister saying some Western security officials have actually been in touch with the Damascus government to coordinate or talk about the threat of Islamic extremism. Is there any truth to that?
SECRETARY KERRY: I don't know anything about that. Certainly not under my auspices have there been any outreach or contact with that respect -- with that regard.
With respect to the issue of consequences, as I said previously, we are reviewing, in the State Department, a whole set of different options with respect to how to have a greater impact with respect to the humanitarian crisis, so that we're not simply standing up like this and talking about it. But those options are not yet ready for prime time. Our team is working on them, we're looking at how we might be able to have a greater impact directly on this issue of direct humanitarian access.
And with respect to the consequences, there are a number of different options. But, obviously, paramount among them is the fact that in London the London 11 nations committed in the communique to hold anybody who violates international laws with respect to the conduct of war or conflict accountable. And there are plenty of international organizations that are available through which to move to do that. And there are nations ready and willing to begin to bring those kinds of actions and complaints, should it be necessary.
So, I think President Assad needs to understand, and the people around him need to understand, that accountability goes on for some period of time. And there are people today paying the price in the Hague and elsewhere for their choices. So we are not without options, but we are working on some more immediate, and we will see where we are with respect to those choices when the time is right.
MODERATOR: The last question will be from (inaudible):
QUESTION: Thank you very much, Mr. Secretary. My question is really on Israel. Mr. Secretary, were you pleasantly shocked or upset by the comments made by the Israeli Defense Minister in this serious diplomatic role between Israel and the United States? Is it not a sign of a lack of confidence between the two allies? And is it not a sign of serious disagreements for the security plan and framework agreement you are working on?
And finally, on Egypt, could we have your position on the referendum which could lead to presidential (inaudible) by General al-Sisi.
SECRETARY KERRY: What was that last part, again?
QUESTION: Sorry, the --
SECRETARY KERRY: On Egypt.
QUESTION: The referendum could lead to presidential bid by General al-Sisi.
SECRETARY KERRY: Oh. Well, I'm -- let me take the second part, first. I'm not going to comment on the outcome with respect to Egypt yet, or what may or may not happen politically, because they're in the midst of this process even today. And our hope is that it will be a process that is transparent and accountable, and one that can give confidence to people that they are going to move down the road that has been promised.
But we don't know yet. It's too early, and we're going to watch very, very closely, and make judgments as we go forward. And we remain hopeful -- though not yet certain -- that the right steps will be taken. And the proof will be in the actions that are taken not just today, in the referendum, but in the days ahead. And we intend to watch very, very closely.
With respect to Israel, Prime Minister Netanyahu and I talk regularly, and we are both very committed to moving the process forward. And we just can't let one set of comments undermine that effort, and I don't intend to. Yesterday, when I was in Rome, meeting with the Foreign Secretary of the Holy See, and preparing for the Donors' Conference here today, we kept focused on what we're trying to do to move forward. Everywhere I go, even here today, everybody I talk to expressed gratitude for the efforts the United States is making for President Obama's commitment to try to make peace between Palestinians and Israelis. And we all know the very, very difficult choice in trying to deal with that. The process is hard. And we've always known that, as we approach the time for these difficult choices, it's going to be difficult. I mean there are hard choices to be made.
So, we're going to work with both sides. I will work with the willing participants who are committed to peace, and committed to this process. And after five months of negotiations, I believe strongly in the prospects for peace, and I know that the status quo is not sustainable. So we will continue to work, and I will work undeterred.
Thank you all very much. Appreciate it.
Press Availability at the Syria Donors' Conference
Press Availability
John Kerry
Secretary of State
Bayan Palace
Kuwait City, Kuwait
January 15, 2014
SECRETARY KERRY: Well, good afternoon. Thanks for being patient and waiting to have a chance to share some thoughts about both today and other issues that may be on your minds.
It was really heartening to take part in this conference here today and see the level of concern, but also the growing level of support for what has to be done in Syria. And I think that it's very key for all of us to maintain a united resolve, a shared resolve in the days to come, both in providing humanitarian relief, but also in pressing for the political solution. As I said earlier today, there is just no joy in a repeated conference to continue to be forced in conscience to support a growing number of refugees, when we really need to undo the underlying cause of the creation of those refugees. And so, it is critical for all of us to be laser beam-focused on finding that political solution and ending the violence all together, once and for all.
We are very grateful to Secretary General Ban Ki-moon for convening this today, and for his direction of significant focus, as well as resources, into this. And I want to thank again his Highness Sheikh Sabah Al Ahmed Al Jaber Al Sabah, for bringing everybody together and providing these extraordinary facilities for people to be able to act.
The human toll of this crisis is really clear for everybody to see now, almost to the point where the repetition of the numbers -- when you say 130,000 lives have been lost, there is a numbness that sets in, and it's hard for people to relate to what that really means on a daily basis, in terms of violence on the ground, disrupted families, loss of life. And you begin to get a better sense of that when you see it graphically, as we did in pictures and film today. What I saw, personally, at the Za’atari camp in Jordan really left an imprint on me in terms of not only the frustration and even anger that people there felt, because they don't see their lives changing and they don't see the crisis ending, but also the frustration that I felt with the global power gridlock on trying to do something that really meets the level of the challenge. And in the faces of those refugees, as well as in their numbers, there is a level of pain and a level of suffering that everybody in the world ought to share in some way, but which really demands a much greater response than has been provided yet by the community of nations.
So, I am proud that the United States of America is leading the charge, not only with respect to a response to the refugees, but also to try to end the creation of the refugees. And we today provided an additional -- through the grace of the American people -- another $380 million that brings our total to about 1.7 billion that we have provided -- the leading nation in the effort to try to deal with this crisis.
Now, some of our support will help Syrians immediately as they cope with one of the cruelest winters on record. And with our contributions today, we are providing, specifically, fuel for heating and cooking, we are providing thermal blankets and other critical winter supplies for tens of thousands of people.
In addition, we are also investing and meeting the longer-term needs of Syria's neighbors. After providing generous support for refugees for three years, to Lebanon, Turkey, and Jordan, who are all now under strain that I talked about earlier today, we also want to make sure that these nations are able to keep their hospitals and their schools up and running, and their economies growing, as they witness these enormous numbers of people, and particularly young children, coming into their societies. So that's why we contributed an additional $78 million in assistance for refugees living in Lebanon today, and we are delivering support to UN agencies and partners so that children will be able to see a doctor or go to school. You saw photos of kids in school. We are also trying to provide assistance so that parents will be able to pay rent and put a roof over their heads. Otherwise, we run the risk that abject poverty is going to become another threat to Lebanon’s sovereignty and stability.
We are also providing an additional $61 million in assistance to refugees in Jordan, where we see too many Syrian boys and girls who are now working at jobs in their teens -- low teens, some of them -- rather than being in school, learning and growing. Contributions from the United States have already helped to place 80 percent of Syrian refugee children in classrooms across Jordan. That's an extraordinary accomplishment, and something that Americans ought to be very proud of. But it also means there are still 30,000 children who are not in school. So our support today will ensure that many of these boys and girls are no longer going to be denied their childhood right to an education.
Now, some of the more than $30 million that we committed to refugees in Turkey today will also fund schooling and support children who are traumatized by war. We obviously are not able to wipe away the horror of some of the things these kids have seen and lived through, but what we can do is help to provide them with a future brighter than the life they live today, and we can do that with funding for things like teacher training, educational materials, and quality medical care, all of which is designated in the funding that we are providing.
All of the additional support that the United States announced today, whether in Syria, Turkey, Lebanon, or Jordan, in the wider region, is vital to security now, and it's absolutely essential for the region's next generation.
For many of the six-and-a-half million men and women who are displaced within Syria, some
of the contributions made on their behalf today will obviously not matter if it can’t reach them. So, access is critical. And the refusal of humanitarian access by both the regime and elements of the opposition is an outrage. We believe firmly that this is an affront to human dignity, and we are going to continue to find ways to raise the profile of this issue, so people understand it. Access is critical. And the Assad regime needs to provide that access.
In Paris this weekend, Foreign Minister Lavrov and I discussed what we can do, working with the International Committee of the Red Cross and others, to deliver humanitarian aid to besieged areas. And earlier this morning in the general gathering, I had a chance to meet with the president and director of the Red Cross, International Red Cross, who had just come back from Damascus, where they are engaged in discussions, and they told me firsthand how they get an agreement from one agency, and then they go to the other to have that agreement carried out, and the other agency takes it away. So they have told me personally stories of how they will have an agreed-upon access set up, and then the day comes along where the convoy is going to deliver the goods, and they say, "No, it's too insecure today, and you can't go," and they shut it down. And so, this excuse, this process, is a calculated, designed process by the Assad regime to deny people, as a matter of a weapon of war, the access that they have a right to for the delivery of these goods. And one of the things that I am determined to do coming out of here, is make certain that we hold them accountable. And this will clearly be a subject of discussion going into the Geneva meetings.
We also need to see a more positive climate for these talks. And my hopes are that in the next days, with a visit of Foreign Minister Muallem to Moscow, and with other efforts, that we will be able to secure from the Assad regime the steps necessary for a ceasefire in whatever number of places that might be able to be achieved. And we will continue to press for that. I will be talking with Foreign Minister Lavrov later today on the return trip home in order to see what progress we can make there.
So, a lot of nations, including the United States, made generous contributions today, or pledges for those contributions. But the greatest single pledge that our nations can make is to work together and commit to the hard work of diplomacy, in order to bring an end to this endless cycle of creating of refugees and of loss of life. And to put a stopper to the suffering and to end this crisis once and for all, we need to find a political solution. And we will remain committed to that effort.
I would be happy to take any questions at this point.
MODERATOR: The first question will be from (inaudible) of Reuters.
QUESTION: Thank you very much. Mr. Secretary, you just talked about holding Assad accountable concerning humanitarian access, and you talked earlier today (inaudible) about the need for them to stop (inaudible) other atrocities. But what are the specific consequences for Assad if he doesn't do this? Given President Obama's decision not to use force or to support outside force in Syria, how seriously do you think he takes your threats?
And a quick follow-up question. There is a report in the BBC today quoting Syria's deputy foreign minister saying some Western security officials have actually been in touch with the Damascus government to coordinate or talk about the threat of Islamic extremism. Is there any truth to that?
SECRETARY KERRY: I don't know anything about that. Certainly not under my auspices have there been any outreach or contact with that respect -- with that regard.
With respect to the issue of consequences, as I said previously, we are reviewing, in the State Department, a whole set of different options with respect to how to have a greater impact with respect to the humanitarian crisis, so that we're not simply standing up like this and talking about it. But those options are not yet ready for prime time. Our team is working on them, we're looking at how we might be able to have a greater impact directly on this issue of direct humanitarian access.
And with respect to the consequences, there are a number of different options. But, obviously, paramount among them is the fact that in London the London 11 nations committed in the communique to hold anybody who violates international laws with respect to the conduct of war or conflict accountable. And there are plenty of international organizations that are available through which to move to do that. And there are nations ready and willing to begin to bring those kinds of actions and complaints, should it be necessary.
So, I think President Assad needs to understand, and the people around him need to understand, that accountability goes on for some period of time. And there are people today paying the price in the Hague and elsewhere for their choices. So we are not without options, but we are working on some more immediate, and we will see where we are with respect to those choices when the time is right.
MODERATOR: The last question will be from (inaudible):
QUESTION: Thank you very much, Mr. Secretary. My question is really on Israel. Mr. Secretary, were you pleasantly shocked or upset by the comments made by the Israeli Defense Minister in this serious diplomatic role between Israel and the United States? Is it not a sign of a lack of confidence between the two allies? And is it not a sign of serious disagreements for the security plan and framework agreement you are working on?
And finally, on Egypt, could we have your position on the referendum which could lead to presidential (inaudible) by General al-Sisi.
SECRETARY KERRY: What was that last part, again?
QUESTION: Sorry, the --
SECRETARY KERRY: On Egypt.
QUESTION: The referendum could lead to presidential bid by General al-Sisi.
SECRETARY KERRY: Oh. Well, I'm -- let me take the second part, first. I'm not going to comment on the outcome with respect to Egypt yet, or what may or may not happen politically, because they're in the midst of this process even today. And our hope is that it will be a process that is transparent and accountable, and one that can give confidence to people that they are going to move down the road that has been promised.
But we don't know yet. It's too early, and we're going to watch very, very closely, and make judgments as we go forward. And we remain hopeful -- though not yet certain -- that the right steps will be taken. And the proof will be in the actions that are taken not just today, in the referendum, but in the days ahead. And we intend to watch very, very closely.
With respect to Israel, Prime Minister Netanyahu and I talk regularly, and we are both very committed to moving the process forward. And we just can't let one set of comments undermine that effort, and I don't intend to. Yesterday, when I was in Rome, meeting with the Foreign Secretary of the Holy See, and preparing for the Donors' Conference here today, we kept focused on what we're trying to do to move forward. Everywhere I go, even here today, everybody I talk to expressed gratitude for the efforts the United States is making for President Obama's commitment to try to make peace between Palestinians and Israelis. And we all know the very, very difficult choice in trying to deal with that. The process is hard. And we've always known that, as we approach the time for these difficult choices, it's going to be difficult. I mean there are hard choices to be made.
So, we're going to work with both sides. I will work with the willing participants who are committed to peace, and committed to this process. And after five months of negotiations, I believe strongly in the prospects for peace, and I know that the status quo is not sustainable. So we will continue to work, and I will work undeterred.
Thank you all very much. Appreciate it.
GSA ADMINISTRATOR TESTIFIES ON GOVERNMENT TRAVEL AND CONFERENCE SPENDING
FROM: GENERAL SERVICES ADMINISTRATION
Examining Conference and Travel Spending Across the Federal Government
Senate Committee on Homeland Security and Governmental Affairs
“Examining Conference and Travel Spending Across the Federal Government”
January 14, 2014
Good morning Chairman Carper, Doctor Coburn, and Members of the Committee. My name is Dan Tangherlini, and I am the Administrator of the U.S. General Services Administration (GSA).
GSA’s mission is to deliver the best value in real estate, acquisition, and technology services to Government and the American people. GSA’s travel policies reflect this mission. GSA instituted internal travel and conference policies that reduce costs, provide strong oversight, and ensure that travel only occurs when necessary. Additionally, as part of GSA’s mission to serve our Federal partners and reduce costs, we are providing tools that assist agencies to better manage their travel and conference spending.
GSA’s Policies –
GSA has rigorous controls and oversight mechanisms to ensure that all proposed travel and conference expenses are cost-effective, serve legitimate mission needs, and have appropriate levels of review.
Travel can only be approved when all other alternatives, including video-conferencing, teleconferencing, and webinars have been considered. Additionally, travel must be for work related to GSA’s essential mission, such as building inspections. To ensure all travel requests received appropriate review, GSA has instituted policies that limit the use of blanket authorizations and require that travel is authorized in advance on a trip-by-trip basis.
Conferences require submission of a detailed justification, a proposed budget, and review and approval from multiple divisions. At a minimum, this means any conference, no matter the proposed cost, is reviewed both by the head of the relevant division and GSA’s Chief Administrative Services Officer (CASO). In line with Administration policies, when the proposed cost of a conference is more than $100,000, the Deputy Administrator must approve it. Conferences over $500,000 are prohibited unless I approve them and document the justification for why they must be held. Even attendance at a conference requires multiple layers of approval. Employees must submit for approval a justification for their attendance and an estimate of their expenses.
GSA requires online training regarding conference attendance for GSA employees. This training highlights GSA’s important policy of considering cost-effective alternatives like teleconferencing, and ensures every employee understands the difference between appropriate and inappropriate expenses. Employees receive training regarding the Federal Travel Regulation, ensuring better compliance. GSA has also presented the conference training to other agencies to either incorporate into their own training courses or to use our web capability for their own agency use.
In line with the Administration’s policies, GSA also has improved transparency into conference expenses. We post all approved, agency-sponsored conferences with a cost of over $100,000 on a publicly available website that includes the budget and a justification for why the conference was held. In Fiscal Year (FY) 2013, GSA held no conference above that amount.
All told, these policies have dramatically reduced costs, improved oversight, and made certain that travel and conference expenses are fully justified and mission-related. In Fiscal Years 2012 and 2013, GSA saved in total more than $68 million in nonessential travel and transportation costs.1
Government-Wide Efforts –
This Administration has been clear about the need to cut wasteful spending and increase efficiency. Executive Order 13589, “Promoting Efficient Spending,” directs agencies to cut waste in Federal Government spending and identify opportunities to promote efficient and effective spending, including a reduction in conference and travel costs. OMB Memorandum M-12-12, “Promoting Efficient Spending to Support Agency Operations,” implements the executive order, and provides policies and practices to achieve these efficiencies. Among other items, this Memorandum directs agencies to require the approval of senior officials for conferences with expenses over $100,000, prohibit conferences with expenses of more than $500,000 (unless the agency’s head provides a waiver finding that exceptional circumstances exist whereby spending in excess of $500,000 on a single conference is the most cost-effective option to achieve a mission goal), and increase transparency by reporting these costs publicly.
To further these efforts Government-wide, GSA has identified ways we can assist agencies by providing tools to help them better manage their travel and conference costs. For example, to help agencies prioritize use of Federally-owned space, GSA has created an online tool known as “Federal Meeting Facilities,”2 which identifies Federal agencies that have conference and meeting space for agencies’ use. Conducting 1 Compared to an FY 2010 baseline.
2 “Federal Meeting Facilities.” U.S. General Services Administration. February 2013. U.S. General Services Administration. February 2013. http://fedmeetingspace.cfo.gov. business and hosting conferences in space controlled by the Federal Government is one way to reduce travel and related costs. The tool allows agencies to search and sort through a variety of different offerings, with contact information for the agency point of contact to work with to secure the space.
Additionally, GSA’s E-Gov Travel Service 2 (ETS2) will further consolidate online travel booking services, driving additional cost-savings and efficiencies, while delivering improved accountability and reducing waste. ETS2 will adhere to regulations and support policy for conference travel spending reporting and other travel related activities, in order to both meet the requirements of OMB and provide greater transparency for customer agencies.
GSA is also utilizing data to allow agencies to make more informed decisions about where to host conferences, when they are determined to be necessary to their mission. GSA’s Conference Planning Tool compares potential destinations by major cost drivers, such as contract airfare and per diem rates, enabling agencies to make data-backed decisions on where conferences should be held. GSA is training administrative officers in over 20 Federal agencies on how to identify low cost destinations and venues for conferences and meetings.
Additionally, GSA eliminated what was known as the conference lodging allowance. Previously, this permitted travelers attending a conference to exceed the maximum lodging per diem rate by up to 25 percent, if staying at the site of the conference, when authorized.
Finally, GSA is interested in finding ways to further reduce the Government’s travel costs long-term. In FY 2012, GSA formed the Government-Wide Travel Advisory Committee (GTAC). The GTAC’s purpose is to review existing travel policies, processes, and procedures to determine ways agencies can achieve their mission-related travel needs in an effective and efficient manner at the lowest possible cost. To ensure we received input from all relevant stakeholders, the Committee’s members were chosen from the travel industry, Federal, State and local governments, travel and convention bureaus, and representatives from corporations. The GTAC has been providing advice and recommendations for improvements to increase travel efficiency and effectiveness, reduce costs, and incorporate industry best practices. To ensure transparency on how recommendations have been formulated, Committee business is posted publicly, in line with the rules for Federal Advisory Committees. The GTAC worked in partnership with industry to formally review and endorse GSA’s methodology for determining Federal per diem rates, which we used to adjust FY 2014 rates.
In sum, GSA believes that these Government-wide efforts will result in significant savings for the Federal government and the American people.
Conclusion –
The Administration is focused on improving the effectiveness and efficiency of Government, including reducing travel and conference costs. GSA is committed to helping with those efforts. GSA has rigorous internal policies, provides tools to other agencies to help them make more informed travel and conference spending decisions, and is working on broader reforms and programs that would result in greater savings long-term.
Examining Conference and Travel Spending Across the Federal Government
Senate Committee on Homeland Security and Governmental Affairs
“Examining Conference and Travel Spending Across the Federal Government”
January 14, 2014
Good morning Chairman Carper, Doctor Coburn, and Members of the Committee. My name is Dan Tangherlini, and I am the Administrator of the U.S. General Services Administration (GSA).
GSA’s mission is to deliver the best value in real estate, acquisition, and technology services to Government and the American people. GSA’s travel policies reflect this mission. GSA instituted internal travel and conference policies that reduce costs, provide strong oversight, and ensure that travel only occurs when necessary. Additionally, as part of GSA’s mission to serve our Federal partners and reduce costs, we are providing tools that assist agencies to better manage their travel and conference spending.
GSA’s Policies –
GSA has rigorous controls and oversight mechanisms to ensure that all proposed travel and conference expenses are cost-effective, serve legitimate mission needs, and have appropriate levels of review.
Travel can only be approved when all other alternatives, including video-conferencing, teleconferencing, and webinars have been considered. Additionally, travel must be for work related to GSA’s essential mission, such as building inspections. To ensure all travel requests received appropriate review, GSA has instituted policies that limit the use of blanket authorizations and require that travel is authorized in advance on a trip-by-trip basis.
Conferences require submission of a detailed justification, a proposed budget, and review and approval from multiple divisions. At a minimum, this means any conference, no matter the proposed cost, is reviewed both by the head of the relevant division and GSA’s Chief Administrative Services Officer (CASO). In line with Administration policies, when the proposed cost of a conference is more than $100,000, the Deputy Administrator must approve it. Conferences over $500,000 are prohibited unless I approve them and document the justification for why they must be held. Even attendance at a conference requires multiple layers of approval. Employees must submit for approval a justification for their attendance and an estimate of their expenses.
GSA requires online training regarding conference attendance for GSA employees. This training highlights GSA’s important policy of considering cost-effective alternatives like teleconferencing, and ensures every employee understands the difference between appropriate and inappropriate expenses. Employees receive training regarding the Federal Travel Regulation, ensuring better compliance. GSA has also presented the conference training to other agencies to either incorporate into their own training courses or to use our web capability for their own agency use.
In line with the Administration’s policies, GSA also has improved transparency into conference expenses. We post all approved, agency-sponsored conferences with a cost of over $100,000 on a publicly available website that includes the budget and a justification for why the conference was held. In Fiscal Year (FY) 2013, GSA held no conference above that amount.
All told, these policies have dramatically reduced costs, improved oversight, and made certain that travel and conference expenses are fully justified and mission-related. In Fiscal Years 2012 and 2013, GSA saved in total more than $68 million in nonessential travel and transportation costs.1
Government-Wide Efforts –
This Administration has been clear about the need to cut wasteful spending and increase efficiency. Executive Order 13589, “Promoting Efficient Spending,” directs agencies to cut waste in Federal Government spending and identify opportunities to promote efficient and effective spending, including a reduction in conference and travel costs. OMB Memorandum M-12-12, “Promoting Efficient Spending to Support Agency Operations,” implements the executive order, and provides policies and practices to achieve these efficiencies. Among other items, this Memorandum directs agencies to require the approval of senior officials for conferences with expenses over $100,000, prohibit conferences with expenses of more than $500,000 (unless the agency’s head provides a waiver finding that exceptional circumstances exist whereby spending in excess of $500,000 on a single conference is the most cost-effective option to achieve a mission goal), and increase transparency by reporting these costs publicly.
To further these efforts Government-wide, GSA has identified ways we can assist agencies by providing tools to help them better manage their travel and conference costs. For example, to help agencies prioritize use of Federally-owned space, GSA has created an online tool known as “Federal Meeting Facilities,”2 which identifies Federal agencies that have conference and meeting space for agencies’ use. Conducting 1 Compared to an FY 2010 baseline.
2 “Federal Meeting Facilities.” U.S. General Services Administration. February 2013. U.S. General Services Administration. February 2013. http://fedmeetingspace.cfo.gov. business and hosting conferences in space controlled by the Federal Government is one way to reduce travel and related costs. The tool allows agencies to search and sort through a variety of different offerings, with contact information for the agency point of contact to work with to secure the space.
Additionally, GSA’s E-Gov Travel Service 2 (ETS2) will further consolidate online travel booking services, driving additional cost-savings and efficiencies, while delivering improved accountability and reducing waste. ETS2 will adhere to regulations and support policy for conference travel spending reporting and other travel related activities, in order to both meet the requirements of OMB and provide greater transparency for customer agencies.
GSA is also utilizing data to allow agencies to make more informed decisions about where to host conferences, when they are determined to be necessary to their mission. GSA’s Conference Planning Tool compares potential destinations by major cost drivers, such as contract airfare and per diem rates, enabling agencies to make data-backed decisions on where conferences should be held. GSA is training administrative officers in over 20 Federal agencies on how to identify low cost destinations and venues for conferences and meetings.
Additionally, GSA eliminated what was known as the conference lodging allowance. Previously, this permitted travelers attending a conference to exceed the maximum lodging per diem rate by up to 25 percent, if staying at the site of the conference, when authorized.
Finally, GSA is interested in finding ways to further reduce the Government’s travel costs long-term. In FY 2012, GSA formed the Government-Wide Travel Advisory Committee (GTAC). The GTAC’s purpose is to review existing travel policies, processes, and procedures to determine ways agencies can achieve their mission-related travel needs in an effective and efficient manner at the lowest possible cost. To ensure we received input from all relevant stakeholders, the Committee’s members were chosen from the travel industry, Federal, State and local governments, travel and convention bureaus, and representatives from corporations. The GTAC has been providing advice and recommendations for improvements to increase travel efficiency and effectiveness, reduce costs, and incorporate industry best practices. To ensure transparency on how recommendations have been formulated, Committee business is posted publicly, in line with the rules for Federal Advisory Committees. The GTAC worked in partnership with industry to formally review and endorse GSA’s methodology for determining Federal per diem rates, which we used to adjust FY 2014 rates.
In sum, GSA believes that these Government-wide efforts will result in significant savings for the Federal government and the American people.
Conclusion –
The Administration is focused on improving the effectiveness and efficiency of Government, including reducing travel and conference costs. GSA is committed to helping with those efforts. GSA has rigorous internal policies, provides tools to other agencies to help them make more informed travel and conference spending decisions, and is working on broader reforms and programs that would result in greater savings long-term.
U.S. DEFENSE DEPARTMENT CONTRACTS FOR JANUARY 14, 2014
FROM: DEFENSE DEPARTMENT
DEFENSE LOGISTICS AGENCY
Pacsgear, Inc.,* Pleasanton, Calif., has been awarded a maximum $30,000,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for radiology systems, subsystems, accessories, service, manual, and repair/spare parts. This contract is a competitive acquisition, and there were fifty offers received. This is a one-year base contract with four one-year option periods. Location of performance is California with a Jan. 13, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal year 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE2D1-14-D-0003).
Robin Industries, Inc., Independence, Ohio, has been awarded a maximum $10,694,880 firm-fixed-price contract for vehicle track shoe assemblies. This contract is a competitive acquisition and there were two offers received. This is a one-year base contract with one option period. Locations of performance are Ohio and Texas with a Nov. 14, 2014 performance completion date. Using military service is Army. Type of appropriation is fiscal year 2014 Army working capital funds. The contracting activity is the Defense Logistics Agency Land and Maritime, Warren, Mich., (SPRDL1-14-C-0027).
Esaote North America, Inc., Indianapolis, Ind., has been awarded a maximum $7,500,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for radiology systems, subsystems, accessories, services, manual, and repair parts. This contract is a competitive acquisition and there were fifty offers received. This is a one-year base contract with four one-year option periods. Location of performance is Indiana with a Jan. 13, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal year 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE2D1-14-D-0002).
ARMY
Stanley Consultants, Inc., Muscatine, Iowa was awarded a $60,000,000 firm-fixed-price indefinite-delivery/indefinite-quantity foreign military sales contract for general and design architect-engineer services for U.S. Central Command. Funds and work performance location will be determined with each order. Estimated completion date is Jan 13, 2019. Bids were solicited via the Internet with twenty received. Army Corps of Engineers, Winchester, Va., is the contracting activity (W912ER-14-D-0001).
Baker-AECOM (joint venture), Moon Township, Pa. was awarded a $60,000,000 firm-fixed-price indefinite-delivery/indefinite-quantity foreign military sales contract for general and design architect-engineer services for U.S. Central Command. Funds and work performance location will be determined with each order. Estimated completion date is Jan 13, 2019. Bids were solicited via the Internet with twenty received. Army Corps of Engineers, Winchester, Va. is the contracting activity (W912ER-14-D-0002).
Alutiiq Diversified Services, LLC, Anchorage, Alaska was awarded a $6,989,861 firm-fixed-price bridge contract for Redstone Information Technology Services to maintain operational continuity until the selection board has evaluated contractor proposals. Fiscal 2014 operations and maintenance (Army) funds in the amount of $25,774 were obligated at the time of the award. Work will be performed in Huntsville, Ala. Army Contracting Command, Redstone Arsenal, Ala. is the contracting activity (W9124P-14-C-0023).
NAVY
Bechtel Plant Machinery Inc., Monroeville, Pa., is being awarded a $593,104,854 cost-plus-fixed-fee contract for naval nuclear propulsion components. Work will be performed in Monroeville, Pa. (66 percent), and Schenectady, N.Y. (34 percent). No completion date or additional information is provided on naval nuclear propulsion program contracts. Fiscal 2014 shipbuilding and conversion, Navy contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity (N00024-14-C-2101).
General Dynamics Electric Boat Corp., Groton, Conn., is being awarded a $15,000,000 cost-plus-fixed-fee modification to previously awarded contract (N00024-13-C-4308) to provide non-nuclear submarine repair work on Groton-based submarines under the New England Maintenance Manpower Initiative (NEMMI). Under the terms of the contract, Electric Boat will provide NEMMI tasks in support of non-nuclear maintenance, modernization and repair of operational nuclear powered submarines, floating dry docks, support and service craft and plant equipment assigned to the Naval Submarine Support Facility, New London, Conn. Work will be performed in New London, Conn., and is expected to be completed by December 2014. Fiscal 2014 operations and maintenance, Navy contract funds in the amount of $15,000,000 will be obligated at time of award, and will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity (N00024-13-C-4308).
Lockheed Martin Mission Systems and Training, Manassas, Va., is being awarded an $8,863,977 cost-plus-incentive-fee modification to previously awarded contract (N00024-09-C-6247) for the production of Technical Insertion 14 (TI-14) Integrated Submarine Imaging Systems (ISIS) and spares. The ISIS provides mission critical, all weather, visual, and electronic search, digital image management, indication, warning, and platform architecture interface capabilities. Work will be performed in Johnstown, Pa. (46 percent), Manassas, Va. (26 percent), Northampton, Mass. (17 percent), and Chantilly, Va. (11 percent), and is expected to be completed by March 2017. Fiscal 2013 and 2014 shipbuilding and conversion, Navy and Fiscal 2014 other procurement, Navy contract funds in the amount of $8,863,977 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.
DEFENSE ADVANCED RESEARCH PROJECTS AGENCY
Agentase LLC, Pittsburgh, Pa., has been awarded an $11,206,720 cost contract. The work will support the DARPA’s In Vivo Nanoplatforms program (IVN). IVN seeks to develop new classes of adaptable nanoparticles for persistent, distributed, unobtrusive physiologic and environmental sensing as well as the treatment of physiologic abnormalities, illness and infectious disease. Work will be performed in Pittsburgh, Pa., (44.59 percent); Cambridge, Mass., (8.04 percent); Davis, Calif., (40.92 percent) and College Station, Texas, (6.45 percent). The estimated completion date is April 14, 2015. Fiscal 2013 research and development funds are being obligated at time of award. The contracting activity is DARPA, Arlington, Va., (HR0011-14-C-0030).
*Small Business
DEFENSE LOGISTICS AGENCY
Pacsgear, Inc.,* Pleasanton, Calif., has been awarded a maximum $30,000,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for radiology systems, subsystems, accessories, service, manual, and repair/spare parts. This contract is a competitive acquisition, and there were fifty offers received. This is a one-year base contract with four one-year option periods. Location of performance is California with a Jan. 13, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal year 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE2D1-14-D-0003).
Robin Industries, Inc., Independence, Ohio, has been awarded a maximum $10,694,880 firm-fixed-price contract for vehicle track shoe assemblies. This contract is a competitive acquisition and there were two offers received. This is a one-year base contract with one option period. Locations of performance are Ohio and Texas with a Nov. 14, 2014 performance completion date. Using military service is Army. Type of appropriation is fiscal year 2014 Army working capital funds. The contracting activity is the Defense Logistics Agency Land and Maritime, Warren, Mich., (SPRDL1-14-C-0027).
Esaote North America, Inc., Indianapolis, Ind., has been awarded a maximum $7,500,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for radiology systems, subsystems, accessories, services, manual, and repair parts. This contract is a competitive acquisition and there were fifty offers received. This is a one-year base contract with four one-year option periods. Location of performance is Indiana with a Jan. 13, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal year 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE2D1-14-D-0002).
ARMY
Stanley Consultants, Inc., Muscatine, Iowa was awarded a $60,000,000 firm-fixed-price indefinite-delivery/indefinite-quantity foreign military sales contract for general and design architect-engineer services for U.S. Central Command. Funds and work performance location will be determined with each order. Estimated completion date is Jan 13, 2019. Bids were solicited via the Internet with twenty received. Army Corps of Engineers, Winchester, Va., is the contracting activity (W912ER-14-D-0001).
Baker-AECOM (joint venture), Moon Township, Pa. was awarded a $60,000,000 firm-fixed-price indefinite-delivery/indefinite-quantity foreign military sales contract for general and design architect-engineer services for U.S. Central Command. Funds and work performance location will be determined with each order. Estimated completion date is Jan 13, 2019. Bids were solicited via the Internet with twenty received. Army Corps of Engineers, Winchester, Va. is the contracting activity (W912ER-14-D-0002).
Alutiiq Diversified Services, LLC, Anchorage, Alaska was awarded a $6,989,861 firm-fixed-price bridge contract for Redstone Information Technology Services to maintain operational continuity until the selection board has evaluated contractor proposals. Fiscal 2014 operations and maintenance (Army) funds in the amount of $25,774 were obligated at the time of the award. Work will be performed in Huntsville, Ala. Army Contracting Command, Redstone Arsenal, Ala. is the contracting activity (W9124P-14-C-0023).
NAVY
Bechtel Plant Machinery Inc., Monroeville, Pa., is being awarded a $593,104,854 cost-plus-fixed-fee contract for naval nuclear propulsion components. Work will be performed in Monroeville, Pa. (66 percent), and Schenectady, N.Y. (34 percent). No completion date or additional information is provided on naval nuclear propulsion program contracts. Fiscal 2014 shipbuilding and conversion, Navy contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity (N00024-14-C-2101).
General Dynamics Electric Boat Corp., Groton, Conn., is being awarded a $15,000,000 cost-plus-fixed-fee modification to previously awarded contract (N00024-13-C-4308) to provide non-nuclear submarine repair work on Groton-based submarines under the New England Maintenance Manpower Initiative (NEMMI). Under the terms of the contract, Electric Boat will provide NEMMI tasks in support of non-nuclear maintenance, modernization and repair of operational nuclear powered submarines, floating dry docks, support and service craft and plant equipment assigned to the Naval Submarine Support Facility, New London, Conn. Work will be performed in New London, Conn., and is expected to be completed by December 2014. Fiscal 2014 operations and maintenance, Navy contract funds in the amount of $15,000,000 will be obligated at time of award, and will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity (N00024-13-C-4308).
Lockheed Martin Mission Systems and Training, Manassas, Va., is being awarded an $8,863,977 cost-plus-incentive-fee modification to previously awarded contract (N00024-09-C-6247) for the production of Technical Insertion 14 (TI-14) Integrated Submarine Imaging Systems (ISIS) and spares. The ISIS provides mission critical, all weather, visual, and electronic search, digital image management, indication, warning, and platform architecture interface capabilities. Work will be performed in Johnstown, Pa. (46 percent), Manassas, Va. (26 percent), Northampton, Mass. (17 percent), and Chantilly, Va. (11 percent), and is expected to be completed by March 2017. Fiscal 2013 and 2014 shipbuilding and conversion, Navy and Fiscal 2014 other procurement, Navy contract funds in the amount of $8,863,977 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.
DEFENSE ADVANCED RESEARCH PROJECTS AGENCY
Agentase LLC, Pittsburgh, Pa., has been awarded an $11,206,720 cost contract. The work will support the DARPA’s In Vivo Nanoplatforms program (IVN). IVN seeks to develop new classes of adaptable nanoparticles for persistent, distributed, unobtrusive physiologic and environmental sensing as well as the treatment of physiologic abnormalities, illness and infectious disease. Work will be performed in Pittsburgh, Pa., (44.59 percent); Cambridge, Mass., (8.04 percent); Davis, Calif., (40.92 percent) and College Station, Texas, (6.45 percent). The estimated completion date is April 14, 2015. Fiscal 2013 research and development funds are being obligated at time of award. The contracting activity is DARPA, Arlington, Va., (HR0011-14-C-0030).
*Small Business
REMARKS BY SECRETARY KERRY, LEBANESE PRIME MINISTER MIKATI
FROM STATE DEPARTMENT
Remarks With Lebanese Prime Minister Mikati Before Their Meeting
Remarks
John Kerry
Secretary of State
Bayan Palace
Kuwait City, Kuwait
January 15, 2014
SECRETARY KERRY: I just want to say what a pleasure it is to meet with the Prime Minister. And I want to make it clear that President Obama and the United States stand very firmly behind our friends in Lebanon. The challenge of Lebanon is enormous; they have 870,000 refugees, and they are really feeling the spillover effects of the violence in Syria.
So, today, the United States will be providing an additional $76 million, which is the largest amount we have put in directly into Lebanon for the refugee challenge. In addition to that, we will continue to work very directly with the Lebanese armed forces and their ability to be able to stand up against the sectarian violence that is ripping apart Lebanon yet again. This is not new. So, we admire the efforts to put together a government, but we are very clear that that government needs to not provide an opportunity for legitimization of any terrorist organization or violence within Lebanon. We know it's very difficult, nothing is easy there.
But, Mr. Prime Minister, we are very much sympathetic to the challenges you are facing, and very sorry for the violence that stole a very good man, Mohamad Chatah. So we are here to help.
PRIME MINISTER MIKATI: Thank you.
SECRETARY KERRY: And I look forward to our conversation.
PRIME MINISTER MIKATI: (Inaudible) for the financial support for the Syrian refugees in Lebanon, and because I know the full support of Mr. Obama Administration to Lebanon since I've been in power, always supporting, recognizing what we are doing. And now yourself, Mr. Secretary, what you are doing for the whole peace process in the Middle East is very important, either about Iranian issue or about the Palestinian-Israeli issue, which we put and we press on your hand to proceed and to have it as soon as possible.
SECRETARY KERRY: Thank you.
PRIME MINISTER MIKATI: Thank you.
SECRETARY KERRY: Thank you very much.
Remarks With Lebanese Prime Minister Mikati Before Their Meeting
Remarks
John Kerry
Secretary of State
Bayan Palace
Kuwait City, Kuwait
January 15, 2014
SECRETARY KERRY: I just want to say what a pleasure it is to meet with the Prime Minister. And I want to make it clear that President Obama and the United States stand very firmly behind our friends in Lebanon. The challenge of Lebanon is enormous; they have 870,000 refugees, and they are really feeling the spillover effects of the violence in Syria.
So, today, the United States will be providing an additional $76 million, which is the largest amount we have put in directly into Lebanon for the refugee challenge. In addition to that, we will continue to work very directly with the Lebanese armed forces and their ability to be able to stand up against the sectarian violence that is ripping apart Lebanon yet again. This is not new. So, we admire the efforts to put together a government, but we are very clear that that government needs to not provide an opportunity for legitimization of any terrorist organization or violence within Lebanon. We know it's very difficult, nothing is easy there.
But, Mr. Prime Minister, we are very much sympathetic to the challenges you are facing, and very sorry for the violence that stole a very good man, Mohamad Chatah. So we are here to help.
PRIME MINISTER MIKATI: Thank you.
SECRETARY KERRY: And I look forward to our conversation.
PRIME MINISTER MIKATI: (Inaudible) for the financial support for the Syrian refugees in Lebanon, and because I know the full support of Mr. Obama Administration to Lebanon since I've been in power, always supporting, recognizing what we are doing. And now yourself, Mr. Secretary, what you are doing for the whole peace process in the Middle East is very important, either about Iranian issue or about the Palestinian-Israeli issue, which we put and we press on your hand to proceed and to have it as soon as possible.
SECRETARY KERRY: Thank you.
PRIME MINISTER MIKATI: Thank you.
SECRETARY KERRY: Thank you very much.
WHITE HOUSE STATEMENT REGARDING IRANIAN HONORS TO HEZBOLLAH OFFICIAL
FROM: THE WHITE HOUSE
Statement by NSC Spokesperson Caitlin Hayden on Iranian Foreign Minister Zarif Honoring Lebanese Hezbollah Official
The United States condemns the decision taken by Iranian Foreign Minister Mohammad Javad Zarif Khonsari to place a wreath at the grave of Imad Mugniyah, a former leader of Lebanese Hezbollah responsible for heinous acts of terrorism that killed hundreds of innocent people, including Americans. The inhumane violence that Mugniyah perpetrated – and that Lebanese Hezbollah continues to perpetrate in the region with Iran's financial and material support -- has had profoundly destabilizing and deadly effects for Lebanon and the region.
The decision to commemorate an individual who has participated in such vicious acts, and whose organization continues to actively support terrorism worldwide, sends the wrong message and will only exacerbate tensions in the region.
Statement by NSC Spokesperson Caitlin Hayden on Iranian Foreign Minister Zarif Honoring Lebanese Hezbollah Official
The United States condemns the decision taken by Iranian Foreign Minister Mohammad Javad Zarif Khonsari to place a wreath at the grave of Imad Mugniyah, a former leader of Lebanese Hezbollah responsible for heinous acts of terrorism that killed hundreds of innocent people, including Americans. The inhumane violence that Mugniyah perpetrated – and that Lebanese Hezbollah continues to perpetrate in the region with Iran's financial and material support -- has had profoundly destabilizing and deadly effects for Lebanon and the region.
The decision to commemorate an individual who has participated in such vicious acts, and whose organization continues to actively support terrorism worldwide, sends the wrong message and will only exacerbate tensions in the region.
THE MISSOURI RIVER AS SEEN FROM SPACE
The Missouri River rises in the Rocky Mountains of western Montana, and flows generally to the southeast for 3,767 kilometers (2,341 miles) to its confluence with the Mississippi River north of St. Louis, Missouri. It is the longest river in North America. The river does not follow a straight southeasterly course along this distance, but includes many meander bends such as the one in this astronaut photograph from the International Space Station. This particular bend is occupied by Lake Sharpe, an approximately 130 kilometer (80 mile) long reservoir formed behind the Big Bend Dam on the Missouri River near Lower Brule, South Dakota. The lake surface is frozen and covered with snow, presenting a uniform white appearance. As meander bends develop, they tend to assume a distinctive U shape. Over time, the river channel can continue to cut into the ends of the “U,” eventually bringing them so close together that the river then cuts across the gap to achieve a shorter flow path and cut off the meander bend. When this happens and the meander ceases to be part of the active river channel, it may become an oxbow lake. The distance across the narrow neck of land (image lower right) associated with this meander is approximately 1 kilometer (0.62 miles). However, the river flow is controlled by the Big Bend Dam downstream, so the natural process of meander cutoff has been significantly slowed. Snow cover also highlights circular agricultural fields on the small peninsula within the meander bend.
This type of field indicates center-pivot irrigation, where water is distributed from a central point radially outwards using sprinklers to cover the field area. Crops grown here include corn and soybeans, according to data from the U.S. Department of Agriculture’s CropScape database. Astronaut photograph ISS038-E-23651 was acquired on Dec. 26, 2013, with a Nikon D3X digital camera using a 1000 millimeter lens, and is provided by the ISS Crew Earth Observations experiment and Image Science & Analysis Laboratory, Johnson Space Center. The image was taken by the Expedition 38 crew. It has been cropped and enhanced to improve contrast, and lens artifacts have been removed. > View annotated image Image Credit: NASA Caption-William L. Stefanov, Jacobs, NASA-JSC.
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