Monday, March 4, 2013
ATTORNERY GENERAL HOLDER SPEAKS AT EDMUND PETTUS BRIDGE CROSSING IN SELMA, ALABAMA
FROM: U.S. DEPARTMENT OF JUSTICEAttorney General Eric Holder Speaks at the Edmund Pettus Bridge Crossing Jubilee
Selma, Ala. ~ Sunday, March 3, 2013
Thank you – and thank you all for being here today. It’s an honor for Sharon and me to join so many friends, colleagues, and national civil rights leaders for this important celebration. And it’s a pleasure to be back in Selma today.
Each year, with the crossing of the Edmund Pettus Bridge, we commemorate the transformative events of nearly half a century ago. We honor generations of heroes – those brave men and women, seemingly ordinary but all extraordinary – who throughout history have risked, and too often given, their lives in order that others might live free. And we rededicate ourselves to the ongoing struggle – for equal rights, equal opportunity, and equal justice – that must continue to be our shared priority and our common cause.
My wife, Sharon, and I are proud to have a family connection to the Civil Rights Movement here in Alabama. 50 years ago this June – with Justice Department officials at their sides – two brave young students stepped past Governor George Wallace to integrate the University of Alabama. Sharon’s sister, Vivian Malone, was one of those brave students. And, although Vivian passed away a few years ago – far too soon – I know she’s here with us in spirit today.
Like all in this crowd who are old enough to remember the 1960s – when the Civil Rights Movement was at its height, and, never let it be forgotten, progress was anything but assured – I will always remember those turbulent days. It was a time of great uncertainty, when racial discrimination was institutionalized and segregation was the law of the land. It was a period of difficulty and danger for those who stood up – and spoke out – against an unjust, entrenched status quo.
But it was also a moment of hope, and significant promise, for legions of activists who kept faith in America’s ability to live up to its founding ideals – and who drew strength from the power of our legal system to serve as a strong, deft instrument of positive change. Though they could not have imagined it, it is the work of those brave activists that made the election of Barack Obama possible, that made the possibility of a black Attorney General real.
At its core, this is the struggle exemplified in the moment we remember today, when – in the first days of March, 1965, hundreds of peaceful activists, protesting to secure the right to vote, set out from Selma along the road to Montgomery. Alongside a young man named John Lewis – and a range of ordinary citizens and civil rights leaders – they made it as far as the bridge we’ll be crossing in just a short time. But there, they were met with terrible violence at the hands of state and local law enforcement, and dozens were hospitalized.
Fortunately, this dark incident failed to discourage those who rallied across the country for equal opportunity and equal rights. In fact, it provoked outrage throughout Alabama and around the world.
In the following days and weeks, as legal battles raged and protesters organized, thousands came to Selma to complete this march. And what became known as "Bloody Sunday" not only steeled the resolve of America’s civil rights leaders – it compelled our national policymakers to take action.
With the passage of the landmark Voting Rights Act of 1965, Congress and President Johnson finally created a robust safeguard for preventing discrimination and disenfranchisement in our elections – and provided a set of important tools which remain not only effective, but essential, even today.
For our nation’s Department of Justice, the fair and vigorous enforcement of this and other vital protections – and their defense against all Constitutional challenges – constitutes a top priority. Let me be clear: although our nation has indeed changed, although the South is far different now, and although progress has indeed been made, we are not yet at the point where the most vital part of the Voting Rights Act can be deemed unnecessary. The struggle for voting rights for all Americans must continue – and it will.
More broadly, the preservation of the progress we’ve gathered to celebrate represents a charge that has been entrusted to each of us, and a promise that tomorrow’s leaders – all of you – must strive to fulfill. It animates my efforts – and those of my colleagues at every level of the Justice Department – to safeguard the rights that so many have fought and died to secure.
We can all be proud of the track record that’s been established – and the results we’ve obtained – over the last few years. But as the history we commemorate proves, the Justice Department cannot do it alone.
So today – as we observe this milestone, and honor the sacrifices of those who were prevented from crossing this bridge half a century ago – let us also pledge our own commitment to continuing the work that remains unfinished. Let us challenge one another – and our nation – to aim higher, and to carry forward the fundamental ideals upon which this country was founded.
This is our solemn obligation. This is our unique opportunity. And this afternoon, in the moment of remembrance before us – as we reflect on our past, and consider how far we’ve come in the days since Bloody Sunday – I cannot help but feel optimistic about the country – and the world – that, together, we will imagine; plan for; and surely help to create.
Thank you.
FIRST U.S. AIR FORCE FEMALE FIGHTER PILOT COMMENTS ON CHANGE
FROM: U.S. AIR FORCE
AF first female fighter pilot continues to break stereotypes
by Randy Roughton
Air Force News Service
3/1/2013 - FORT MEADE, Md. (AFNS) -- After Col. Jeannie Leavitt finished pilot training at the top of her class in 1992, she was given her first choice of aircraft, with a few restrictions. Her first choice, the F-15 Strike Eagle, wasn't yet an option for female pilots.
"I was told you finished No. 1, but you cannot pick a fighter," Leavitt said. "You cannot pick a bomber. You cannot pick a special ops aircraft. There was a whole list of aircraft I couldn't fly, and I was directed to choose among the other aircraft."
Fortunately for Leavitt and all female Airmen with similar aspirations, the following year then-Defense Department Secretary Les Aspin ordered all service branches to drop restrictions on women flying combat missions. Leavitt became the Air Force's first female fighter pilot and later the service's first woman to graduate from the Air Force Weapons School at Nellis Air Force Base, Nev. Almost two decades later, she's been the nation's first female fighter wing commander since she assumed command of the 4th Fighter Wing at Seymour Johnson Air Force Base, N.C., in 2012.
While she recognizes her place in Air Force history, Leavitt prefers emphasizing her role as an officer and commander. When she learned she would be flying the F-15 while she was in the middle of T-38 Talon pilot instructor training at Randolph Air Force Base, Texas, Leavitt didn't care about publicity or the chance to make history. She just wanted to fly in fighters.
"When we first discussed it, the individual from headquarters I was talking to mentioned there would be a lot of publicity since I would be the first (woman)," she said. "What I told him was I didn't want the publicity, but I really want to fly fighters. The thing was, I wanted to be a fighter pilot. It was part of who I was and what I wanted to do. The notoriety and publicity wasn't what I wanted, but it came due to the timing."
Not everyone was happy about the defense secretary's decision, and Leavitt had to prove herself to those who questioned her abilities because of her gender.
"A lot of times people were resistant because it was change, and a lot of times people don't like change," she said. "Some people weren't in favor of the change that happened and didn't want women flying fighters. In many cases when I'd show up, once they saw I was competent, and I was a skilled pilot, and I wasn't trying to change their whole world, they became much more accepting of me."
Leavitt flew more than 2,500 hours in the F-15, including 300 combat hours, mostly in Afghanistan and Iraq. Maj. Gen. Lawrence L. Wells, 9th Air Force commander, flew the F-16 Fighting Falcon as an operations officer with Leavitt during Operation Southern Watch in 1996.
He recalls surprise when he first saw her at a mass pre-mission briefing because he didn't know any women were deployed in the area of responsibility at that time. But the surprise soon turned into admiration as he observed Leavitt, especially during a mission supporting a Royal Air Force Tornado GR1 during a threat of an Iraqi Roland surface-to-air missile. He could sense her professionalism and skill as he listened to tapes of her radio calls during the de-briefing after the mission.
"I remember thinking how cool and calm she sounded during the entire time," Wells said. "It was all just a very professional, well-run response to a potential threat, and I remember thinking at that time, 'This female fighter pilot is going to go far in our Air Force.'"
He also described the young F-15 pilot as "a great wingman," a trait he thinks will serve her well as a commander.
"We value in our young officers the ability to be in the right place at the right time," Wells said. "That's what a real wingman does. At the time, she was a great wingman, which in my view, makes her a better leader. Because you really have to know how to follow before you can lead. You have to understand what Airmen are thinking and how your Airmen are dealing with issues and what your young Airmen are focused on. Now having been a great wingman, she can be a great commander."
When Wells introduced Leavitt at her change of command ceremony at Seymour Johnson AFB in June, he chose his words carefully. Despite the historical significance of her career, Leavitt prefers recognition as an Air Force officer and commander. Wells chose remarks that would strike the same tone.
"I had some very specific things I wanted to say about her, and how I had seen her, not only in combat during Southern Watch, but also from kind of following her career," Wells said. "What I did not want to do in my speech was to highlight the fact that she was the first female commander. I was very sensitive to say the Air Force actually picked the right person to be in the right job at the right time, which I think speaks more for her as a professional Air Force officer, who, oh, by the way, just happens to be a female."
Leavitt now commands one of only three Air Force units with the Strike Eagle, along with 5,000 active-duty members and 12,000 civilians. Looking back on the progress women have made in her 20 years in the Air Force, the biggest difference she's seen is women in fighter squadrons are no longer unusual as she was in 1993.
"One thing that's changed is women are no longer a novelty," Leavitt said. "When I started flying fighters in 1993, there were no other women. So there were no female instructor pilots, no flight commanders and no squadron commanders. So it was quite a novelty to have a female in the fighter squadron. The good news is this opportunity opened up, and quite a few women followed in my path."
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| Col. Jeannie Leavitt in her F-15E Strike Eagle at Seymour Johnson Air Force Base, N.C. Leavitt, the first female fighter pilot, now commands the 4th Fighter Wing at Seymour Johnson. Air Force photo courtesy 4th Fighter Wing Public Affairs |
AF first female fighter pilot continues to break stereotypes
by Randy Roughton
Air Force News Service
3/1/2013 - FORT MEADE, Md. (AFNS) -- After Col. Jeannie Leavitt finished pilot training at the top of her class in 1992, she was given her first choice of aircraft, with a few restrictions. Her first choice, the F-15 Strike Eagle, wasn't yet an option for female pilots.
"I was told you finished No. 1, but you cannot pick a fighter," Leavitt said. "You cannot pick a bomber. You cannot pick a special ops aircraft. There was a whole list of aircraft I couldn't fly, and I was directed to choose among the other aircraft."
Fortunately for Leavitt and all female Airmen with similar aspirations, the following year then-Defense Department Secretary Les Aspin ordered all service branches to drop restrictions on women flying combat missions. Leavitt became the Air Force's first female fighter pilot and later the service's first woman to graduate from the Air Force Weapons School at Nellis Air Force Base, Nev. Almost two decades later, she's been the nation's first female fighter wing commander since she assumed command of the 4th Fighter Wing at Seymour Johnson Air Force Base, N.C., in 2012.
While she recognizes her place in Air Force history, Leavitt prefers emphasizing her role as an officer and commander. When she learned she would be flying the F-15 while she was in the middle of T-38 Talon pilot instructor training at Randolph Air Force Base, Texas, Leavitt didn't care about publicity or the chance to make history. She just wanted to fly in fighters.
"When we first discussed it, the individual from headquarters I was talking to mentioned there would be a lot of publicity since I would be the first (woman)," she said. "What I told him was I didn't want the publicity, but I really want to fly fighters. The thing was, I wanted to be a fighter pilot. It was part of who I was and what I wanted to do. The notoriety and publicity wasn't what I wanted, but it came due to the timing."
Not everyone was happy about the defense secretary's decision, and Leavitt had to prove herself to those who questioned her abilities because of her gender.
"A lot of times people were resistant because it was change, and a lot of times people don't like change," she said. "Some people weren't in favor of the change that happened and didn't want women flying fighters. In many cases when I'd show up, once they saw I was competent, and I was a skilled pilot, and I wasn't trying to change their whole world, they became much more accepting of me."
Leavitt flew more than 2,500 hours in the F-15, including 300 combat hours, mostly in Afghanistan and Iraq. Maj. Gen. Lawrence L. Wells, 9th Air Force commander, flew the F-16 Fighting Falcon as an operations officer with Leavitt during Operation Southern Watch in 1996.
He recalls surprise when he first saw her at a mass pre-mission briefing because he didn't know any women were deployed in the area of responsibility at that time. But the surprise soon turned into admiration as he observed Leavitt, especially during a mission supporting a Royal Air Force Tornado GR1 during a threat of an Iraqi Roland surface-to-air missile. He could sense her professionalism and skill as he listened to tapes of her radio calls during the de-briefing after the mission.
"I remember thinking how cool and calm she sounded during the entire time," Wells said. "It was all just a very professional, well-run response to a potential threat, and I remember thinking at that time, 'This female fighter pilot is going to go far in our Air Force.'"
He also described the young F-15 pilot as "a great wingman," a trait he thinks will serve her well as a commander.
"We value in our young officers the ability to be in the right place at the right time," Wells said. "That's what a real wingman does. At the time, she was a great wingman, which in my view, makes her a better leader. Because you really have to know how to follow before you can lead. You have to understand what Airmen are thinking and how your Airmen are dealing with issues and what your young Airmen are focused on. Now having been a great wingman, she can be a great commander."
When Wells introduced Leavitt at her change of command ceremony at Seymour Johnson AFB in June, he chose his words carefully. Despite the historical significance of her career, Leavitt prefers recognition as an Air Force officer and commander. Wells chose remarks that would strike the same tone.
"I had some very specific things I wanted to say about her, and how I had seen her, not only in combat during Southern Watch, but also from kind of following her career," Wells said. "What I did not want to do in my speech was to highlight the fact that she was the first female commander. I was very sensitive to say the Air Force actually picked the right person to be in the right job at the right time, which I think speaks more for her as a professional Air Force officer, who, oh, by the way, just happens to be a female."
Leavitt now commands one of only three Air Force units with the Strike Eagle, along with 5,000 active-duty members and 12,000 civilians. Looking back on the progress women have made in her 20 years in the Air Force, the biggest difference she's seen is women in fighter squadrons are no longer unusual as she was in 1993.
"One thing that's changed is women are no longer a novelty," Leavitt said. "When I started flying fighters in 1993, there were no other women. So there were no female instructor pilots, no flight commanders and no squadron commanders. So it was quite a novelty to have a female in the fighter squadron. The good news is this opportunity opened up, and quite a few women followed in my path."
JOINT U.S.-EGYPTIAN STATEMENT REGARDING MEETING IN CAIRO
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| Photo: The Nile In Cairo. Credit: U.S. CIA World Factbook. |
Joint Statement With Egyptian Foreign Minister Mohamed Amr
Joint Statement
John Kerry
Secretary of State
Foreign Ministry
Cairo, Egypt
March 2, 2013
FOREIGN MINISTER AMR: Good evening. I will be speaking in Arabic. (Via interpreter.) Today we welcome His Excellency, the Secretary of State of the United States of America, a very dear friend of ours. This is the first time we meet. In the past, we met with him of course as a chairman of the – with your foreign relations of the American Senate.
Today we appreciate Secretary Kerry as a friend for Egypt, and we are very happy to welcome him here, and we are actually very optimistic about his ability to push matters further. The visit of His Excellency, Secretary Kerry, the Secretary of State for the United States comes at a very important time after the Revolution of the 25th of January in Egypt. It comes as the first visitor to Egypt of – first Secretary of State visit after the election of a civil president that is elected through fair elections in Egypt.
During his meetings here at the Ministry of Foreign Affairs, we will discuss the relationships between the United States and Egypt. It is of course, as you know, a very strategic relationship. The relationship between the United States and Egypt is a strategic relationship, and it is also a multidimensional relationship that does not serve only the interests of the two states, but the interests of the whole region. It is a relationship that is based on equality and also mutual respect.
Of course, we expect from friends and this particularly from the United States as a strategic partner of Egypt to stand before Egypt during this very (inaudible) period and economic arena. Of course, as you know, there are various other issues that will be discussed of the region. There are a lot of changes happening in the Middle East region. There is the Palestinian issue, which is really the first issue for Egypt and for the Arab countries, and the situation in Syria as well.
Of course, one of the important subjects is to rid the Middle East area from nuclear weapons and weapons of mass destruction in general, and this, of course, the United States will have a great role in this issue. I will not take any more time, because we have a very heavy schedule. We have a lot of discussion, and we are also late, and it pleases me now to give the podium to His Excellency, the Secretary of State.
SECRETARY KERRY: Thank you very much. Shokran. Thank you very much, Mr. Foreign Minister. It’s a great pleasure for me to be back here in Egypt. And I thank you and President Morsy and the Egyptian people for a generous welcome. Thank you.
As you know, I’ve been to Egypt many times over the course of some 29 years. And I had the privilege of being here only a few weeks after the events in January in Tahrir Square. Then I came back with Senator McCain when we tried to help with some of the economic issues shortly thereafter. And each time that I’ve come here, I’ve tried to make it clear, and I make it particularly clear now on behalf of President Obama and the American people that we come here as friends for the Egyptian people, not for one government or one person or one party or ideology, but for the Egyptian people.
The Foreign Minister and I have just had a very constructive first meeting in which we have discussed a number of the issues of importance: Syria, the Mid-East peace process, and we agreed to continue those discussions over dinner and other topics. And we will certainly discuss in some depth how the United States can continue to help the Egyptian people achieve their aspirations for democracy and for opportunity. As your long time friends and partners, the American people support Egypt’s political and economic success and want to help work for that success.
And I emphasize again as strongly as I can, we’re not here to interfere. I’m here to listen. We’re not here to urge anybody to take one particular action or another. Though we have a point of view, and certainly I will express that. But what we support is democracy and the people and the nation of Egypt. And we look forward to working with listening to all of the Egyptian people as we work towards their path, what they choose to do to move forward to economic strength, to a vibrant democracy, and to a regional peace and security.
We do believe that in this moment of serious economic challenge, that it’s important for the Egyptian people to come together around the economic choices and to find some common ground in making those choices. It is important, even urgent, that the Egyptian economy gets stronger and that people have jobs and have opportunity and that the energy of this country can be focused on a more prosperous future.
So on behalf of President Obama and the American people, I’m here to listen and to better understand how we can help, because the health and strength and the future of Egypt is something that America cares deeply about. And when I visit with President Morsy tomorrow, I’ll be speaking with him about the very specific ways in which we would like to be able to help – more economic assistance, support for free enterprise and small business, growing Egypt’s exports to the United States, and investing in Egypt’s young people through education. And I say to my friend Mohamed, who I’ve gotten to know pretty well, we would of course only do these things in the consultation and in the conjunction with the decisions of the government, whichever government it is.
I was pleased to meet today with a cross-section of political and business leaders, and tomorrow I will meet with representatives of nongovernmental organizations. And today, I listened very carefully to the extraordinary passion and commitment of some of the opposition and their concerns about democracy, human rights – all values that we share in the United States. Each of the groups I talked about – business leaders, opposition, different political personalities, and the nongovernmental organizations – all of them, together, are vitally important to the health and strength of the democratic system. A vibrant democracy stimulates business, it supports a vibrant NGO sector, it encourages full political participation, and universal freedoms, and respect for the rights of women and for people of all faiths.
I listened carefully to their views about how to strengthen Egypt’s democracy, its economy, and its security, and I conveyed to them a very simple message: The best way to ensure human rights and strong political checks and balances in any democracy in Egypt, just like in the United States, is through the broadest possible political and economic participation.
There are many ways to demonstrate that activity. You can do it in protest or you can do it in participating, they’re all part of the mosaic of democracy. But we believe that being active, engaging in peaceful participation is essential to building strong communities and a healthy democracy. And we believe that it is vital to protect and to advance the universal rights that are in Egypt’s constitution: freedom of speech, freedom of religion, freedom of association, and equal rights and protections under the law for all Egyptians regardless of their gender, their faith, their ethnicity, or their political affiliation.
And I say there with both – I say with both humility and with a great deal of respect, that getting there requires a genuine give and take among Egypt’s political leaders and civil society groups, just as we are continuing to struggle with that in our own country. There must be a willingness on all sides to make meaningful compromises on the issues that matter most to all of the Egyptian people. You have upcoming elections and we are very pleased that the Egyptian Government is committed to welcoming Egyptian and international monitors to guarantee the transparency, accountability, and fairness of that election.
And finally, I want to thank the Minister, I want to thank Egypt and its leaders for being valuable partners in the pursuit of peace in this region. I appreciate enormously, and I want to share with you President Obama’s attitude for the role that President Morsy and Foreign Minister Amr played in reaching the Gaza ceasefire and their commitment to ensuring that it is honored. And we are very grateful for Egypt’s willingness to host the Syrian opposition as well as many of those people who are fleeing the violence and the oppression.
So the road ahead is long, there are tough choices to be made, but what is clear is we are confident that if all Egyptians stay focused on achieving the economic and the political opportunity that your people deserve and demand, this great nation will have the promising future that it deserves. Shokran. Thank you.
$32 MILLION WILL BE AVAILABLE TO HELP PREPARE INCARCERATED JUVENILES/WOMEN FOR WORK
FROM: U.S. DEPARTMENT OF JUSTICEDepartments of Justice and Labor Announce Availability of $32 Million in Grants to Help Formerly Incarcerated Juveniles and Women Prepare to Enter the Workforce
The Departments of Justice and Labor today announced the availability of approximately $32 million through two grant competitions that will offer job training, education and support services to formerly incarcerated youths and women.
"Expanding access to job training programs and educational opportunities is a proven strategy for reducing recidivism and preventing crime," said Attorney General Eric Holder. "By supporting efforts to help formerly incarcerated women and young adults rebuild their lives – and become productive, law-abiding members of their communities – the Departments of Justice and Labor are making good on our shared commitment to improving outcomes and ensuring public safety."
"We are a country that believes in second chances," said Department of Labor Acting Secretary Seth D. Harris. "Job training offers opportunities to learn skills and reshape lives. The grants announced today will provide critical support for women and young people who are eager for employment and a productive role in their communities."
The Department of Labor will award a total of $20 million to four organizations to operate programs that work with juvenile offenders and youths at-risk of becoming juvenile offenders in high-poverty, high-crime communities. Each organization may submit only one application for a grant of up to $5 million.
Additionally, the Department of Labor will award a total of $12 million to eight organizations to provide job training for formerly incarcerated individuals of all ages that leads to industry-recognized credentials. Mentoring and assistance connecting to supportive services such as housing, substance abuse and mental health treatment, and assistance with parenting and child reunification, also will be available to participants. These grants are designed to expand opportunities for both youths and adults who demonstrate characteristics most common to female former offenders. However, services must also be open to eligible formerly incarcerated males. Each organization may submit only one application for a grant of up to $1.5 million.
Reintegrating formerly incarcerated individuals is a government-wide effort supported by the Federal Interagency Reentry Council. Established by the U.S. Department of Justice and chaired by Attorney General Eric Holder, the council brings together numerous federal agencies to advance policies and programs to make communities safer, assist individuals returning to communities from prison or jail in becoming productive taxpaying citizens, and save taxpayer dollars by lowering the direct and collateral costs of incarceration.
FORMER COMMADER MEXICAN STATE POLICE PLEADS GUILTY TO DRUG CHARGES
FROM: U.S. DEPARTMENT OF JUSTICEFriday, March 1, 2013
Former Commander of Mexican State Police and Member of the Gulf Cartel Pleads Guilty to Drug Conspiracy Charges
Gilberto Lerma Plata, a former commander of the Mexican State Police and member of the Gulf Cartel, pleaded guilty today to conspiracy to import multi-ton quantities of marijuana into the United States, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
Lerma Plata, 50, pleaded guilty before U.S. District Judge Colleen Kollar-Kotelly in the District of Columbia.
On July 29, 2011, Lerma Plata was charged with conspiracy to manufacture and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana for importation into the United States. Lerma Plata was arrested in McAllen, Texas, on May 9, 2012.
"As a Mexican police officer, Gilberto Lerma Plata was supposed to protect the public from harm. Instead, he abused his power to further the notorious Gulf Cartel’s violent narcotics trafficking operations," said Acting Assistant Attorney General Raman. "This prosecution is the product of the Justice Department’s unwavering commitment to working with its domestic and foreign law enforcement partners to bring cartel members and associates to justice for their crimes."
"Using operatives such as former Mexican state police commander Gilberto Lerma Plata, the Gulf Cartel has smuggled huge amounts of dangerous drugs into the United States for far too long, while using violence, intimidation and public corruption to strengthen their ability to traffic drugs," said DEA Administrator Leonhart. "DEA will continue our aggressive and sustained efforts against the Gulf Cartel and other criminal groups by attacking not only their high level leadership and financial networks, but the drug trafficking facilitators who harm neighborhoods and communities in Mexico and the United States."
Lerma Plata was employed as the commander of the state police in Miguel Aleman, Tamaulipas, Mexico. According to court documents, Lerma Plata was on the Gulf Cartel’s payroll while he was employed by the state police, and he used his position of authority to engage in drug trafficking activities with the cartel. Intercepted conversations revealed that Lerma Plata and high ranking members of the Gulf Cartel discussed the shipment of large quantities of marijuana for distribution in the United States as well as the transportation from the United States of proceeds from the sales of the drugs and firearms.
The case is being prosecuted by Trial Attorneys Adrián Rosales and Darrin McCullough of the Criminal Division’s Narcotic and Dangerous Drug Section. The investigation in this case was led by the DEA’s Houston Field Division and the DEA Bilateral Investigation Unit.
LONG-LIVED HIGH-ENERGY ELECTRONS BETWEEN THE BELTS
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| This NASA rendering depicts Earth's Van Allen radiation belts and the path of the Van Allen Probe spacecraft, which were launched in August 2012. Data from the spacecraft have confirmed a never-before-seen phenomenon—a long-lived zone of high-energy electrons residing between the inner and outer radiation belts. Credit: NASA illustration |
Instruments detect never-before-seen phenomenon in Earth’s Magnetosphere
LOS ALAMOS, N.M., March 1, 2013—U.S. researchers, including a trio from Los Alamos National Laboratory, have witnessed the mysterious appearance of a relatively long-lived zone of high-energy electrons stored between Earth’s Van Allen radiation belts.
The surprising findings, discovered by NASA’s Van Allen Probes (formerly known as the Radiation Belt Storm Probes), were outlined Thursday in Science Express and during a press conference at NASA headquarters in Washington, D.C. The research was led by Dan Baker of the University of Colorado, Boulder, Laboratory for Atmospheric and Space Physics.
"Nature keeps on surprising us by producing long-lived harsh environments in space in regions not previously considered," said Los Alamos plasma physicist Reiner Friedel of LANL’s Intelligence and Space Research Division. "This finding may impact the planning of future space missions."
The Van Allen radiation belts — named in honor James Van Allen, who discovered them nearly 50 years ago — are a pair of donut shaped zones of charged particles that surround Earth and occupy the inner region of our planet’s Magnetosphere. The outer belt contains extremely high-energy electrons, while the inner belt is comprised of energetic protons and electrons. The belts have been studied extensively since the dawn of the Space Age, because the high-energy particles in the outer ring can cripple or disrupt spacecraft. Long-term observation of the belts have hinted that the belts can act as efficient and powerful particle accelerators; the recent observations by the Van Allen Probes—a pair of spacecraft launched in August 2012—now seem to confirm this.
Shortly after launch, the spacecraft activated their Relativistic Electron-Proton Telescope (REPT) instruments to measure particles within the belts and their immediate environs. The instrument immediately detected on September 1, 2012, the presence of a stable zone of high-energy electrons residing between the belts. This donut-shaped third ring nestled between the belts existed for nearly a month before being obliterated by a powerful shockwave of particles emanating from center of the solar system.
Such a distinct, long-lasting ring of high-energy electrons had never before been seen by any prior instrument in space or on Earth. The findings suggest that the Van Allen Belts somehow capture and store energetic electrons in a circular path around our home planet, perhaps in much the same way as a cyclotron can capture and store charged particles here on Earth.
"One of the main reasons the Van Allen Probe instruments are seeing these new features are their unprecedented sensitivity and rejection of backgrounds," Friedel said. "As the mission proceeds, we expect further surprises that will challenge our conventional wisdom on the transport, loss and energization processes in these highly energetic electron radiation regions."
In addition to Friedel, Los Alamos research team members include Geoffrey D. Reeves and Michael G. Henderson. The research team is also represented by the Goddard Space Flight Center, University of New Hampshire, The Southwest Research Institute, Dartmouth College, the University of California—Los Angeles, University of Iowa, and The Aerospace Corporation.
RECENT DOD PHOTOS FROM AFGHANISTAN
FROM: U.S. DEPARTMENT OF DEFENSE
A coalition force member provides overwatch for the Afghan national army special forces soldiers conducting a satellite patrol while engaging insurgents during a firefight in Herat province, Afghanistan, Feb. 17, 2013. Coalition force members and Afghan special forces teams conducted satellite patrols from a temporary patrol base to lure insurgents out of hiding. U.S. Marine Corps photo by Sgt. Pete Thibodeau.
U.S. Army Spc. Michael Jones begins a security sweep after dismounting from his tactical vehicle during a mission in Farah City, Afghanistan, Feb. 18, 2013. Jones is assigned to assigned to Provincial Reconstruction Team Farah. U.S. Navy photo by Lt. j.g. Matthew Stroup.
Sunday, March 3, 2013
NEWLY CONSTRUCTED QALAT RADIO STATION TURNED OVER TO AFGHAN OFFICIAL
FROM: U.S. AIR FORCE
U.S. Air Force Lt. Col. Justin Kraft, commander of the Zabul Provincial Reconstruction Team, hands the keys to the newly complete Qalat radio station to Bismullah Lodin, a radio station official, during a ceremony in Qalat Afghanistan, Jan. 17. The radio station was dedicated in memory U.S. Air Force Lt. Col. John Darin Loftis, who died Feb. 25, 2012 from wounds received during an attack in Kabul. Loftis was a former member of Z PRT and instrumental in the development of the new radio station in Zabul Province. (U.S. Air Force Photo by Staff Sgt. Patrice Clarke)
SECRETARY OF STATE KERRY'S REMARKS AT ROUNDTABLE WITH BUSINESS LEADERS IN CAIRO
FROM: U.S. STATE DEPARTMENT
Remarks at Top of Roundtable Discussion With Business Leaders
Remarks
John Kerry
Secretary of State
Marriott Zamalek Hotel
Cairo, Egypt
March 2, 2013
SECRETARY KERRY: I apologize to everybody for being detained, but I had a very, very spirited, as you can imagine, conversation with members of the opposition, and it was really valuable – very, very valuable. And I’m very grateful to them for taking the time to come and share thoughts. It was really a conversation – we could have gone on for a couple of more hours, and I wish I’d had the time actually to do that because I thought it was very productive.
But I particularly am glad to be back here in Cairo and back here with some of you I met previously and others for the first time. But this is my first trip to Cairo as Secretary of State, obviously, and a lot of things have been happening in the course of the last year, so I wanted to have a chance to be able to talk with you a little bit about the economic challenge that Egypt is facing.
We’ve been a longtime friend and partner, and the American people support Egypt and want its political and economic success. And we really look forward to being able to work with Egypt as it continues to play a very critical role in the region’s economy and in its security issues. We come here – I come here – on behalf of President Obama, committed not to any party, not to any one person, not to any specific political point of view, but filled with the commitment that Americans have to democracy, to a robust commitment to our values – to human rights, to freedom of expression, to tolerance.
And these are things that, historically, the strong civil society of Egypt has cared about. We believe it’s very important for the Egyptian people to come together around those values, but also to come together to meet the economic challenge at this particular moment. It is paramount, essential, urgent that the Egyptian economy get stronger, that it get back on its feet. And it’s very clear that there’s a circle of connections in how that can happen. To attract capital, to bring money back here that will invest, to give business the confidence to be able to move forward, there has to be a sense of security and there has to be a sense of economic and political viability.
And so we understand that. You have to get people back to work, and the energy of this country needs to hopefully be able to move from the streets to enterprise and to work and to daily life and to building the strength of that civil society. And so I’m here primarily to listen to you and you tell me what you think you need to do that. But it’s clear to us that the IMF arrangement needs to be reached, that we need to give the marketplace the confidence. And that very capable and entrepreneurial Egyptian Diaspora that is currently in many parts of the world with its capital, needs to feel comfortable that it could come back here and that there’s a viability in going forward.
So when I speak with President Morsy tomorrow, I will be speaking with him about the very specific ways that we, the United States, that President Obama, would like to see us engage, including economic assistance, support for private businesses, growing Egypt’s exports to the United States, investing in Egypt’s people through education. There are some very specific things that we need to do, and all of them we would only do in consultation with the government of this country. These are not things that we would do on our own without a government desiring it or wanting it or being part of it, obviously. But they are only things that we can do with the same confidence that you make your choices, knowing that Egypt is going to make the right fundamental economic decisions with respect to the IMF and that it stands ready to provide the foundation for sustainable and inclusive growth.
So we’re working on a number of initiatives towards supporting greater trade and business development. Last September, we brought more than 100 representatives from American businesses to Cairo in order to explore these very opportunities. We’re certainly ready to try to do that and try to do more. And I spoke in the last days with Prime Minister Qandil, with President Hollande of France, with Chancellor Angela Merkel, yesterday with Prime Minister Erdogan of Turkey – all of them are prepared to be helpful, but all of them believe that Egypt needs to make some fundamental economic choices.
The sad thing is that shortly after the visit of those 100 businesses last year, there was a problem in terms of the violence with respect to the Embassy and the community and it deterred people from following up on that. So a clear message: The United States is committed to helping Egypt become an economically successful, democratic nation. And I know that most of you here are – or all of you here are too. And I look forward for hearing from you your thoughts about the ways in which that can happen rapidly and what we can do most effectively to try to help make it happen. And I thank for listening to those opening comments.
On that note, I invite any members of the chamber or any of the businesses here to speak up. We’re going to – sorry – wait for the press. Apologize. Thank you all very much. Appreciate your being here.
Remarks at Top of Roundtable Discussion With Business Leaders
Remarks
John Kerry
Secretary of State
Marriott Zamalek Hotel
Cairo, Egypt
March 2, 2013
SECRETARY KERRY: I apologize to everybody for being detained, but I had a very, very spirited, as you can imagine, conversation with members of the opposition, and it was really valuable – very, very valuable. And I’m very grateful to them for taking the time to come and share thoughts. It was really a conversation – we could have gone on for a couple of more hours, and I wish I’d had the time actually to do that because I thought it was very productive.
But I particularly am glad to be back here in Cairo and back here with some of you I met previously and others for the first time. But this is my first trip to Cairo as Secretary of State, obviously, and a lot of things have been happening in the course of the last year, so I wanted to have a chance to be able to talk with you a little bit about the economic challenge that Egypt is facing.
We’ve been a longtime friend and partner, and the American people support Egypt and want its political and economic success. And we really look forward to being able to work with Egypt as it continues to play a very critical role in the region’s economy and in its security issues. We come here – I come here – on behalf of President Obama, committed not to any party, not to any one person, not to any specific political point of view, but filled with the commitment that Americans have to democracy, to a robust commitment to our values – to human rights, to freedom of expression, to tolerance.
And these are things that, historically, the strong civil society of Egypt has cared about. We believe it’s very important for the Egyptian people to come together around those values, but also to come together to meet the economic challenge at this particular moment. It is paramount, essential, urgent that the Egyptian economy get stronger, that it get back on its feet. And it’s very clear that there’s a circle of connections in how that can happen. To attract capital, to bring money back here that will invest, to give business the confidence to be able to move forward, there has to be a sense of security and there has to be a sense of economic and political viability.
And so we understand that. You have to get people back to work, and the energy of this country needs to hopefully be able to move from the streets to enterprise and to work and to daily life and to building the strength of that civil society. And so I’m here primarily to listen to you and you tell me what you think you need to do that. But it’s clear to us that the IMF arrangement needs to be reached, that we need to give the marketplace the confidence. And that very capable and entrepreneurial Egyptian Diaspora that is currently in many parts of the world with its capital, needs to feel comfortable that it could come back here and that there’s a viability in going forward.
So when I speak with President Morsy tomorrow, I will be speaking with him about the very specific ways that we, the United States, that President Obama, would like to see us engage, including economic assistance, support for private businesses, growing Egypt’s exports to the United States, investing in Egypt’s people through education. There are some very specific things that we need to do, and all of them we would only do in consultation with the government of this country. These are not things that we would do on our own without a government desiring it or wanting it or being part of it, obviously. But they are only things that we can do with the same confidence that you make your choices, knowing that Egypt is going to make the right fundamental economic decisions with respect to the IMF and that it stands ready to provide the foundation for sustainable and inclusive growth.
So we’re working on a number of initiatives towards supporting greater trade and business development. Last September, we brought more than 100 representatives from American businesses to Cairo in order to explore these very opportunities. We’re certainly ready to try to do that and try to do more. And I spoke in the last days with Prime Minister Qandil, with President Hollande of France, with Chancellor Angela Merkel, yesterday with Prime Minister Erdogan of Turkey – all of them are prepared to be helpful, but all of them believe that Egypt needs to make some fundamental economic choices.
The sad thing is that shortly after the visit of those 100 businesses last year, there was a problem in terms of the violence with respect to the Embassy and the community and it deterred people from following up on that. So a clear message: The United States is committed to helping Egypt become an economically successful, democratic nation. And I know that most of you here are – or all of you here are too. And I look forward for hearing from you your thoughts about the ways in which that can happen rapidly and what we can do most effectively to try to help make it happen. And I thank for listening to those opening comments.
On that note, I invite any members of the chamber or any of the businesses here to speak up. We’re going to – sorry – wait for the press. Apologize. Thank you all very much. Appreciate your being here.
FIRST AIR FORCE CYBERSPACE GROUP ACTIVATED
FROM: U.S. AIR FORCE
Air Force Reserve Command activated the 960th Cyberspace Operations Group at Joint Base San Antonio-Lackland, Texas, March 1, 2013. As the first cyberspace group in the Air Force, the 960th CYOG will have administrative control over 10 Reserve cyber organizations spread throughout the country. Photo Credit: U.S. Air Force.
EXERCISE OBANGAME EXPRESS 2013 ENDS
 |
| 130223-N-ZL691-067 DOUALA, Cameroon (Feb. 23, 2013) Chief Hospital Corpsman Kevin Carpenter observes Cameroonian sailors practice medical techniques as part of Exercise Obangame Express 2013 (OE-13). OE-13 is a multinational at-sea naval exercise designed to increase counter-piracy capabilities of partner nations and deter other maritime crime in the Gulf of Guinea. (U.S. Navy photo by Mass Communication Specialist 2nd Class Josh Bennett/Released) |
Obangame Express 2013 Comes to a Successful Close
Story Number: NNS130301-17Release Date: 3/1/2013 2:39:00 PM
By Mass Communication Specialist 2nd Class Jason Howard, Navy Public Affairs Support Element-East Detachment Europe
DOUALA, Cameroon (NNS) -- Exercise Obangame Express 2013 (OE-13), an at-sea naval exercise focused on counter-piracy and maritime security operations wrapped up in the Gulf of Guinea, Feb. 28.
OE-13 provided African, European and Atlantic partner maritime services the opportunity to work together, share information and refine methods in order to help Gulf of Guinea maritime nations better monitor and enforce their territorial waters and exclusive economic zones.
"Over the past week, the participants in this exercise conducted training which improved the interoperability between maritime forces of the participating nations, as well as the skills of individual Sailors," said Gen. Carter F. Ham, commander, United States Africa Command. "Maritime partnerships and maritime security and safety are increasingly important in the Gulf of Guinea region to combat a variety of challenges including maritime crime, illicit trafficking and piracy."
The exercise included a wide variety of training for all participating forces including at-sea ship boarding and queries, air operations, communication drills and regional information sharing.
"Obangame Express helps promote relationships between nations to combat these illicit activities in the Gulf of Guinea," said Capt. Dave Rollo, U.S. exercise director for OE-13. "These acts of piracy are not just an American problem. They are not just a Cameroonian problem; They're a global problem."
"Our naval forces must effectively strengthen the intervention capacity, using maritime surveillance systems and reliable equipment," said Mebe Ngo'o Edgard Alain, Cameroonian minister delegate of the presidency in charge of defence. "The required harmonization of operational procedures of multinational players involved in securing the Gulf of Guinea guarantees the effectiveness of our naval forces in maintaining maritime security and safety.
"Maritime security is a pre-requisite for attracting investment, promoting trade and continuing economic development," said Alain. "These things guarantee an improved quality of life for our citizens."
Participating countries in this year's exercise were Belgium, Benin, Brazil, Cameroon, Cote d'Ivorie, Equatorial Guinea, France, Gabon, Netherlands, Nigeria, Republic of Congo, Sao Tome and Principe, Spain, Togo and the United States.
FEMA SAYS NEW YORK SUVIVORS PROVIDED $2 BILLION
$2 billion provided to NY survivors by FEMA, SBA
Release date:
March 1, 2013
Release Number:
NR-180
NEW YORK — The Federal Emergency Management Agency and the U.S. Small Business Administration have approved more than $2 billion in direct assistance to homeowners, renters and businesses affected by Hurricane Sandy. This includes:
Nearly $918 million in FEMA grants approved for individuals and households
More than $793 million for housing assistance
More than $124 million for other needs
More than $1.1 billion in SBA disaster loans approved for homeowners, renters and businesses
:Other assistance
More than $717 million approved in FEMA Public Assistance grants to communities and eligible nonprofit organizations that serve the public
More than $2.6 billion in National Flood Insurance Program payments made to policy holders
5.3 million cubic yards of debris removed
269,192 people contacted FEMA for help or information
180,406 housing inspections completed
164,194 visits to Disaster Recovery Centers
More than 500 voluntary agencies involved in recovery
25 languages used to communicate assistance information to survivors
Release date:
March 1, 2013
Release Number:
NR-180
NEW YORK — The Federal Emergency Management Agency and the U.S. Small Business Administration have approved more than $2 billion in direct assistance to homeowners, renters and businesses affected by Hurricane Sandy. This includes:
More than $124 million for other needs
:Other assistance
More than $2.6 billion in National Flood Insurance Program payments made to policy holders
5.3 million cubic yards of debris removed
269,192 people contacted FEMA for help or information
180,406 housing inspections completed
164,194 visits to Disaster Recovery Centers
More than 500 voluntary agencies involved in recovery
25 languages used to communicate assistance information to survivors
U.S. STATE DEPARTMENT STATEMENT ON BULGARIA'S NATIONAL DAY
 |
| Map: Bulgaria. Credit: CIA World Factbook. |
On the Occasion of Bulgaria's National Day
Press Statement
John Kerry
Secretary of State
Washington, DC
February 28, 2013
On behalf of President Obama and the people of the United States, I am delighted to congratulate the people of Bulgaria on the occasion of your national day on March 3.
This September our two nations will celebrate 110 years of bilateral diplomatic relations. As a close friend and NATO Ally, we recognize Bulgaria’s invaluable contributions to achieving our mutual goals around the world. Our countries continue to cooperate in many areas, including global security, law enforcement, expanding our economic and commercial ties, and supporting democratic transitions around the world. Together we are working to give millions of people hope for a more democratic and peaceful future.
As you celebrate this special day, know that the United States is a partner and friend. I wish all the people of Bulgaria the very best and look forward to deepening our cooperation even more in the years to come.
ADDITIONAL INFORMATION FROM CIA WORLD FACTBOOK
The Bulgars, a Central Asian Turkic tribe, merged with the local Slavic inhabitants in the late 7th century to form the first Bulgarian state. In succeeding centuries, Bulgaria struggled with the Byzantine Empire to assert its place in the Balkans, but by the end of the 14th century the country was overrun by the Ottoman Turks. Northern Bulgaria attained autonomy in 1878 and all of Bulgaria became independent from the Ottoman Empire in 1908. Having fought on the losing side in both World Wars, Bulgaria fell within the Soviet sphere of influence and became a People's Republic in 1946. Communist domination ended in 1990, when Bulgaria held its first multiparty election since World War II and began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime. The country joined NATO in 2004 and the EU in 2007.
MUTATION AND DENGUE FEVER
 Photo: Mosquito. Credit: NSF/Wikipedia. |
It's 2001 in Myanmar (formerly known as Burma), a country in Southeast Asia. Almost 200 people have died, and more than 15,000 are ill--all having contracted dengue fever.
Dengue is a disease transmitted by mosquitoes and caused by four types of dengue virus. Infection may not result in symptoms, or may cause mild, flu-like illness--or hemorrhagic fever.
Dengue virus infects some 50-100 million people annually in Southeast Asia, South America and parts of the United States.
In 1998, a pandemic of dengue resulted in 1.2 million cases of dengue hemorrhagic fever in 56 countries.
In Myanmar, dengue is endemic. The disease has occurred there in three- to five-year cycles since the first recorded outbreak in 1970. Each one has been more deadly.
What caused the widespread infection in Myanmar in 2001, a disease that resulted from one type of dengue virus, DENV-1? For more than a decade, researchers have been working to solve the puzzle.
All viruses not created equal
Could the DENV-1 in Myanmar have been different in some way, perhaps "defective"?
Defective viruses result from genetic mutations or deletions that eliminate essential functions. They're generated in viruses with high mutation rates, but were believed to be unimportant.
But it now appears that defective viruses may be able to play a critical role in the spread of disease.
In a paper published this week in the journal PLoS Pathogens, scientists funded by the National Science Foundation (NSF) report a significant link between one such defective virus and the high rate of transmission of DENV-1 in Myanmar in 2001.
"The idea has always been that defective viruses are either meaningless or detrimental," says James Lloyd-Smith, an ecologist and evolutionary biologist at University of California, Los Angeles.
"We've found the opposite--that the defective virus is actually helping the normal, functional virus. It's bizarre and hard to believe, but the data are the data."
"We've shown that the defective virus not only goes with the normal virus, but increases the transmission of that virus," says scientist Ruian Ke, also of UCLA.
While defective viruses can't complete their life cycle on their own, if they're able to get into the same cell with a non-defective virus, they can "hitch-hike" with the non-defective one and propagate.
Deadly outbreak of DENV-1
The research team--James Lloyd-Smith; Ruian Ke; John Aaskov, a virologist at Queensland University of Technology in Brisbane, Australia; and Edward Holmes, a biologist at the University of Sydney--found that the presence of a defective DENV-1 virus may have led to a spike in dengue fever cases in Myanmar during 2001-2002.
"The causes of epidemics are much more complicated than we thought," says Sam Scheiner, NSF program director for the joint NSF-National Institutes of Health Ecology and Evolution of Infectious Diseases (EEID) Program. At NSF, EEID is funded by the Directorates for Biological Sciences and Geosciences.
In addition to EEID, the research was supported by NSF's Advancing Theory in Biology Program.
"Pathogens can depend on the presence of other microbial species or, as in this case, other varieties of the same species," says Scheiner. "Understanding these interactions is critical for predicting when the next epidemic might occur--and how to prevent it."
In the study, Ke designed a mathematical model to learn how the defective DENV-1 virus interacted with the normal virus.
Aaskov and Holmes collected genetic sequences from the defective viruses from 15 people sampled over an 18-month period in Myanmar. All were infected with DENV-1 virus; nine were also infected with the defective version.
Ke discovered that the lineage of defective viruses emerged between June 1998 and February 2001; it spread through the population until at least 2002.
The following year, the lineage appeared in the South Pacific island of New Caledonia, carried there by a mosquito or a person.
The scientists analyzed the genetic sequences of the defective and normal viruses to estimate how long the defective virus had been transmitting in the human population.
"We can see from the gene sequence of the defective version that it's the same lineage, and is a continued propagation of the virus," says Lloyd-Smith.
"From 2001 to 2002, it went from being quite rare to being in all nine people we sampled that year," says Lloyd-Smith. "Everyone sampled who was getting dengue fever was getting the defective version along with the functional virus.
"It rose from being rare to being very common in just one year."
Most surprisingly, say the scientists, the combination of the defective virus with the normal virus was "more fit" than the normal dengue virus alone.
"What we've shown is that this defective virus, which everyone had thought was useless or even detrimental to the fitness of the functional virus, actually appears to have made it better able to spread," Lloyd-Smith says.
Ke calculated that the defective virus makes it at least 10 percent more transmissible. "It was spreading better with its defective cousin tagging along than on its own," says Lloyd-Smith.
It takes two (viruses) to tango
The functional virus and defective virus travel in unison. The two transmit together in an unbroken chain.
"That's not just a matter of getting into the same human or the same mosquito--they need to get into the same cell inside that human or mosquito in order to share their genes, and for the defective version to continue hitchhiking," says Lloyd-Smith.
"We're gaining insights into the cellular biology of how dengue is infecting hosts. It must be the case that frequently there are multiple infections of single cells."
The defective virus appeared one to three years before the major epidemics in 2001 and 2002.
"One could imagine that if you build an understanding of this mechanism, you could measure it, see it coming and potentially get ahead of it," says Lloyd-Smith.
Defective viruses: disease transmitters beyond dengue?
Might defective viruses play a role in the transmission of the flu, measles and other diseases?
"There are a few signs that this phenomenon may be happening in other viruses," Lloyd-Smith says.
"We may be cracking open the book on the possible interactions between normal, functional viruses and the defective ones that people thought were just dead-ends.
"These supposedly meaningless viruses may be having a positive effect--positive for the virus, not for us.
"There's great variation from year to year in dengue epidemics in various locations, but we don't understand why. This is a possible mechanism."
Why would a defective virus increase transmission of a disease?
Lloyd-Smith offers two hypotheses.
One is that the presence of the defective virus with the functional virus in the same cell makes the functional virus replicate better within the cell by an unknown mechanism.
"It might give the virus flexibility in how it expresses its genes, and may make it more fit and better able to reproduce under some circumstances," Lloyd-Smith says.
A second idea is that the defective virus may be interfering with the disease-causing virus, making the disease less intense.
People then have a milder infection, and because they don't feel as sick, they're more likely to go out of their homes and spread the disease.
In conducting the research, Lloyd-Smith and Ke combined genetic sequence analyses with sophisticated mathematical models and bioinformatics.
"We were able to show that this defective virus transmitted in an unbroken chain across this population in Myanmar for a year-and-a-half," Lloyd-Smith says.
"Without gene sequencing, we wouldn't have been able to establish that."
The biologists hope their work will help turn the tide of the next deadly outbreak of dengue in Myanmar--and in other tropical countries around the globe.
SEC. OF DEFENSE HAGEL NOTES CIVILIAN PAIN CAUSED BY SEQUESTER
FROM: U.S. DEFENSE DEPARTMENT
Hagel Notes Sequester's 'Particular Pain' for Civilians
By Karen ParrishAmerican Forces Press Service
WASHINGTON, March 1, 2013 - Defense Department civilian employees will "particularly" feel the pain sequester will bring to the entire defense workforce, Defense Secretary Chuck Hagel said today.
In his first Pentagon press briefing, Hagel outlined the steps the Pentagon and the services will take as the budget mechanism known as sequester, which takes effect at midnight, trims roughly half a trillion dollars from defense spending over the next 10 years.
Along with cost-cutting actions by the services to curtail training and maintenance, the department has already announced it will furlough civilian employees beginning in late April, cutting their work hours and pay by 20 percent for the rest of the fiscal year.
"Our number one concern is our people, military and civilian, the millions of men and women of this department who work very hard every day to ensure America's security," the secretary said. "I know that these budget cuts will cause pain, particularly among our civilian workforce and their families. I'm also concerned, as we all are, about the impact on readiness that these cuts will have across our force."
Deputy Defense Secretary Ash Carter joined Hagel for today's conference and shared his views about defense civilian workers.
"As you know, our civilian workforce is about 800,000 strong," Carter said. "Those people, too, are dedicated to the defense mission." Nearly 90 percent of DOD civilians live outside of Washington, he noted, and nearly half of them are veterans.
"So they're dedicated to the mission, too," he said. "And as the year goes on, many of them will be subject to furlough."
Civilians make important contributions to the nation's defense, Carter said. "They do real things that are really important to us. And they've had their pay frozen for years; now they're subject to furlough."
The deputy secretary said the reason civilians join the department, and the reason "I hope they'll stick with us," is because of mission.
"They're committed to what we do, which is defend the country and hope to make a better world," he said. "That's why they do it."
Saturday, March 2, 2013
CFTC CHAIRMAN GENSLER'S TESTIMONY BEFORE SENATE COMMITTEE ON AGRICULTURE, NUTRITION & FORESTRY
Testimony of Chairman Gary Gensler Before the US Senate Committee On Agriculture, Nutrition & Forestry, Washington, DC
February 27, 2013
Good afternoon Chairwoman Stabenow, Ranking Member Cochran and members of the Committee. I thank you for inviting me to today’s hearing on oversight of the Commodity Futures Trading Commission (CFTC). I also want to thank the CFTC Commissioners and staff for their hard work and dedication.
Introduction
I am pleased to have the opportunity to discuss with you the CFTC’s efforts on behalf of the public. The agency has been directed by Congress to oversee and police the nation’s derivatives markets, both in the futures and swaps markets. It strives to promote transparency, fairness and integrity in these markets. The CFTC continues to carry out its historical mission regarding the rapidly changing futures market, while developing and integrating comprehensive standards for the swaps market. The Commission has reorganized its divisions to best ensure ongoing oversight of the futures market, as well as the swaps markets. We also have implemented improvements in protections for customer funds and are developing others. We continue to engage in targeted enforcement efforts in the public interest, such as the historic actions regarding benchmark rates, including the London Interbank Offered Rate (LIBOR), a reference rate for much of the U.S. futures and swaps markets.
The New Era of Swaps Market Reform
Congress made history with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the CFTC now oversees the entire derivatives marketplace – across both futures and swaps. The common-sense rules of the road for the swaps market that Congress included in the law have taken shape and market participants are adapting to them.
For the first time, the public is benefiting from seeing the price and volume of each swap transaction. This post-trade transparency builds upon what has worked for decades in the futures and securities markets. The new swaps market information is available free of charge on a website, like a modern-day ticker tape.
For the first time, the public will benefit from the greater access to the markets and the risk reduction that comes with central clearing. Required clearing of interest rate and credit index swaps between financial entities begins next month.
For the first time, the public is benefitting from specific oversight of swap dealers. More than 70 swap dealers have provisionally registered. They are subject to standards for sales practices, recordkeeping and business conduct to help lower risk to the economy and protect the public from fraud and manipulation.
An earlier economic crisis led President Roosevelt and Congress to enact similar common-sense rules of the road for the futures and securities markets. I believe these critical reforms of the 1930s have been at the foundation of our strong capital markets and many decades of economic growth.
In the 1980s, the swaps market emerged. Until now, though, it had lacked the benefit of rules to promote transparency, lower risk and protect the public, rules that we have come to depend upon in the futures and securities markets. What followed was the 2008 financial crisis – a crisis that was due in part to swaps markets. Eight million American jobs were lost. In contrast, the futures market, supported by earlier reforms, weathered the financial crisis.
Congress and the President responded to the worst economic crisis since the Great Depression and carefully crafted the Dodd-Frank swaps provisions. They borrowed from what has worked best in the futures market for decades: transparency, clearing and oversight of intermediaries.
The CFTC has largely completed swaps market rulewriting, with 80 percent behind us. On October 12, the CFTC and Securities and Exchange Commission’s (SEC) foundational definition rules went into effect. This marked the new era of swaps market reform.
The CFTC is seeking to consider and finalize the remaining Dodd-Frank Act swaps reforms this year. In addition, as Congress directed the CFTC to do, I believe it’s critical that we continue our efforts to put in place aggregate speculative position limits across futures and swaps on physical commodities.
The agency has completed each of these Congressionally-directed reforms with an eye toward ensuring that the swaps market works for end-users, America’s primary job providers. It’s the end-users in the non-financial side of our economy that provide 94 percent of private sector jobs.
Dodd-Frank Act swaps market reforms benefit end-users by lowering costs and increasing access to the markets. They benefit end-users through greater transparency – shifting information from Wall Street to Main Street. Following Congress’ direction, end-users are not required to bring swaps into central clearing. Further, the Commission’s proposed rule on margin provides that end-users will not have to post margin for uncleared swaps. Also, non-financial companies, other than those genuinely making markets in swaps, will not be required to register as swap dealers. Lastly, when end-users are required to report their transactions, they are given more time to do so than other market participants.
Congress also authorized the CFTC to provide relief from the Dodd-Frank Act’s swaps reforms for certain electricity and electricity-related energy transactions between rural electric cooperatives and federal, state, municipal and tribal power authorities. Similarly, Congress authorized the CFTC to provide relief for certain transactions on markets administered by regional transmission organizations and independent system operators. The CFTC is looking to soon finalize exemptive orders related to these transactions, as Congress authorized.
The CFTC has worked to complete the Dodd-Frank reforms in a deliberative way – not against a clock. We have been careful to consider public input, as well as the costs and benefits of each rule. CFTC Commissioners and staff have met more than 2,000 times with members of the public, and we have held 23 public roundtables. The agency has received more than 39,000 comment letters on matters related to reform. The rules also have benefited from close consultation with domestic and international regulators and policymakers.
Throughout this process, the Commission has sought input from market participants on appropriate schedules to phase in compliance with swaps reforms. Now, over two-and-a-half years since Dodd-Frank passed and with 80 percent of our rules finalized, the market is moving to implementation. Thus, it’s the natural order of things that market participants have questions and have come to us for further guidance. The CFTC welcomes inquiries from market participants, as some fine-tuning is expected. As it is sometimes the case with human nature, the agency receives many inquiries as compliance deadlines approach.
My fellow commissioners and I, along with CFTC staff, have listened to market participants and thoughtfully sorted through issues as they were brought to our attention, as we will continue to do.
I now will go into further detail on the Commission’s efforts to implement the Dodd-Frank Act’s swaps market reform, our efforts to enhance protections for futures and swaps customers, and the CFTC’s work with international regulators regarding benchmarks.
Transparency – Lowering Cost and Increasing Liquidity, Efficiency, Competition
Transparency – a longstanding hallmark of the futures market – both pre- and post-trade – lowers costs for investors, consumers and businesses. It increases liquidity, efficiency and competition. A key benefit of swaps reform is providing this critical pricing information to businesses and other end-users across this land that use the swaps market to lock in a price or hedge a risk.
As of December 31, 2012, provisionally registered swap dealers are reporting in real time their interest rate and credit index swap transactions to the public and to regulators through swap data repositories. These are some of the same products that were at the center of the financial crisis. Building on this, swap dealers will begin reporting swap transactions in equity, foreign exchange and other commodity asset classes tomorrow. Other market participants will begin reporting April 10.
With these transparency reforms, the public and regulators now have their first full window into the swaps marketplace.
To further enhance liquidity and price competition, the CFTC is working to finish the pre-trade transparency rules for swap execution facilities (SEFs), as well as the block rule for swaps. SEFs would allow market participants to view the prices of available bids and offers prior to making their decision on a transaction. These rules will build on the democratization of the swaps market that comes with the clearing of standardized swaps.
Clearing – Lowering Risk and Democratizing the Market
Since the late 19th century, clearinghouses have lowered risk for the public and fostered competition in the futures market. Clearing also has democratized the market by fostering access for farmers, ranchers, merchants, and other participants.
A key milestone was reached in November 2012 with the CFTC’s adoption of the first clearing requirement determinations for swaps. The vast majority of interest rate and credit default index swaps will be brought into central clearing. This follows through on the U.S. commitment at the 2009 G-20 meeting that standardized swaps should be brought into central clearing by the end of 2012. Compliance will be phased in throughout this year. Swap dealers and the largest hedge funds will be required to clear March 11, and all other financial entities follow June 10. Accounts managed by third party investment managers and ERISA pension plans have until September 9 to begin clearing.
Consistent with the direction of Dodd-Frank, the Commission in the fall of 2011 adopted a comprehensive set of rules for the risk management of clearinghouses. These final rules were consistent with international standards, as evidenced by the Principles for Financial Market Infrastructures (PFMIs) consultative document that had been published by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions (CPSS-IOSCO).
In April of 2012, CPSS-IOSCO issued the final Principles. The Commission’s clearinghouse risk management rules cover the vast majority of those standards. Commission staff are working expeditiously to recommend the necessary steps so that the Commission may implement any remaining items from the PFMIs not yet incorporated in our clearinghouse rules. I look forward to the Commission considering action on this in 2013.
I expect that soon we will complete a rule to exempt swaps between certain affiliated entities within a corporate group from the clearing requirement. This year, the CFTC also will be considering possible clearing determinations for other commodity swaps, including energy swaps.
Swap Dealer Oversight - Promoting Market Integrity and Lowering Risk
Comprehensive oversight of swap dealers, a foundational piece of Dodd-Frank, will promote market integrity and lower risk to taxpayers and the rest of the economy. Congress directed that end-users be able to continue benefitting from customized swaps (those not brought into central clearing) while being protected through the express oversight of swap dealers. In addition, Dodd-Frank extended the CFTC’s existing oversight of previously regulated intermediaries to include their swaps activity.
As the result of CFTC rules completed in the first half of last year, more than 70 swap dealers are now provisionally registered. This initial group of dealers includes the largest domestic and international financial institutions dealing in swaps with U.S. persons. It includes the 16 institutions commonly referred to as the G16 dealers. Other entities will register once they reach the de minimis threshold for swap dealing activity.
In addition to reporting trades to both regulators and the public, swap dealers will implement crucial back office standards that lower risk and increase market integrity. These include promoting the timely confirmation of trades and documentation of the trading relationship. Swap dealers also will be required to implement sales practice standards that prohibit fraud, require fair treatment of customers and improve transparency.
The CFTC is collaborating closely domestically and internationally on a global approach to margin requirements for uncleared swaps. We are working along with the Federal Reserve, the other U.S. banking regulators, the SEC and our international counterparts on a final set of standards to be published by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO). The CFTC’s proposed margin rules excluded non-financial end-users from margin requirements for uncleared swaps. We have been advocating with global regulators for an approach consistent with that of the CFTC. I would anticipate that the CFTC, in consultation with European regulators, would take up final margin rules, as well as related rules on capital, in the second half of this year.
Following Congress’ mandate, the CFTC also is working with our fellow domestic financial regulators to complete the Volcker Rule. In adopting the Volcker Rule, Congress prohibited banking entities from proprietary trading, an activity that may put taxpayers at risk. At the same time, Congress permitted banking entities to engage in certain activities, such as market making and risk mitigating hedging. One of the challenges in finalizing a rule is achieving these multiple objectives.
International Coordination on Swaps Market Reform
In enacting financial reform, Congress recognized the basic lessons of modern finance and the 2008 crisis. During a default or crisis, risk knows no geographic border. Risk from our housing and financial crisis contributed to economic downturns around the globe. Further, if a run starts on one part of a modern financial institution, regardless of where it is around the globe, it invariably means a funding and liquidity crisis rapidly spreads and infects the entire consolidated financial entity.
This phenomenon was true with the overseas affiliates and operations of AIG, Lehman Brothers, Citigroup and Bear Stearns.
AIG Financial Products, for instance, was a Connecticut subsidiary of the New York insurance giant that used a French bank license to basically run its swaps operations out of Mayfair in London. Its collapse nearly brought down the U.S. economy.
Last year’s events at JPMorgan Chase, which executed swaps through its London branch, are a stark reminder of stark reality. Transactions may be entered into by an offshore office, but the institution here in the United States absorbs the losses. Trades being booked offshore by U.S. financial institutions should not be confused with keeping that risk offshore.
Failing to incorporate these basic lessons of modern finance into the CFTC’s oversight of the swaps market would fall short of the goals of Dodd-Frank reform. It would leave the public at risk.
More specifically, I believe that Dodd-Frank reform applies to transactions entered into by overseas branches of U.S. entities with non-U.S. persons, as well as between overseas affiliates guaranteed by U.S. entities. Failing to do so would mean American jobs and markets may move offshore, but, particularly in times of crisis, risk would come crashing back to our economy.
Similar lessons of modern finance were evident, as well, with the collapse of the hedge fund Long-Term Capital Management in 1998. It was run out of Connecticut, but its $1.2 trillion swaps were booked in its Cayman Islands affiliate. The risk from those activities, as the events of the time highlighted, had a direct and significant effect here in the United States.
The same was true when Bear Stearns in 2007 bailed out two of its sinking hedge fund affiliates, which had significant investments in subprime mortgages. They both were organized offshore. This was just the beginning of the end, as within months, the Federal Reserve provided extraordinary support for the failing Bear Stearns.
We must thus ensure that collective investment vehicles, including hedge funds, that either are managed (or otherwise have their principal place of business) in the United States or are directly or indirectly majority owned by U.S. persons are not able to avoid the clearing requirement – or any other Dodd-Frank requirement – simply due to how they might be organized.
Last July, the Commission published for public comment proposed guidance addressing market participants’ obligations under the Dodd-Frank Act (and Commission regulations) with respect to their cross-border activities. In December, the Commission granted time-limited relief until this July for non-U.S. swap dealers (and foreign branches of U.S. swap dealers) from certain Dodd-Frank swap requirements. The relief is limited to transactions involving such registered non-U.S. swap dealers and was intended to facilitate their transition to the new swaps regime; it does not extend to transactions where neither counterparty is registered as a swap dealer or major swap participant. It also does not extend to transactions between U.S. swap dealers and counterparties that are not registered as swap dealers or major swap participants, such as hedge funds.
We are hearing, though, that some swap dealers may be promoting to hedge funds an idea to avoid required clearing, at least during an interim period from March until July. I would be concerned if, in an effort to avoid clearing, swap dealers route to their foreign affiliates trades with hedge funds organized offshore, even though such hedge funds are managed (or otherwise have their principal place of business) in the United States or they are majority owned by U.S. persons. Such effort is not consistent with the spirit of Dodd-Frank or the international consensus to clear all standardized swaps. The CFTC is working to ensure that this idea does not prevail and develop into a practice that leaves the American public at risk. If we don’t address this, the P.O boxes may be offshore, but the risk will flow back here.
Congress understood these issues and addressed these realities of modern finance in Section 722(d) of the Dodd-Frank Act, which states that swaps reforms shall not apply to activities outside the United States unless those activities have "a direct and significant connection with activities in, or effect on, commerce of the United States." Congress provided this provision solely for swaps under the CFTC’s oversight and provided a different standard for securities-based swaps under the SEC’s oversight.
To give financial institutions and market participants guidance on section 722(d), the CFTC last June sought public consultation on its interpretation of this provision. The proposed guidance is a balanced, measured approach, consistent with the cross-border provisions in Dodd-Frank and Congress’ recognition that risk easily crosses borders.
Pursuant to Commission guidance, foreign firms that do more than a de minimis amount of swap-dealing activity with U.S. persons would be required to register with the CFTC within about two months after crossing the de minimis threshold. A number of international financial institutions are among the swap dealers that are provisionally registered with the CFTC.
Where appropriate, we are committed to permitting foreign firms and, in certain circumstances, overseas branches and guaranteed affiliates of U.S. swap dealers, to meet Dodd-Frank requirements through compliance with comparable and comprehensive foreign rules. We call this substituted compliance.
For foreign swap dealers, the Commission would allow such substituted compliance for entity-level requirements, as well as for certain transaction-level requirements when facing overseas branches of U.S. entities and overseas affiliates guaranteed by U.S. entities. Entity-level requirements include capital, chief compliance officer and swap data recordkeeping. Transaction-level requirements include clearing, margin, real-time public reporting, trade execution, trading documentation and sales practices.
When foreign swaps dealers transact with a U.S. person, though, compliance with Dodd-Frank regulation is required.
To assist foreign swap dealers with Dodd-Frank compliance, the CFTC recently finalized an exemptive order that applies until mid-July 2013. This time-limited Final Order incorporates many suggestions from ongoing consultation on cross-border issues with foreign regulatory counterparts and market participants. For instance, the definition of "U.S. person" in the Order benefited from comments in response to the Commission’s July 2012 proposal.
Under its terms, a foreign swap dealer may phase in compliance with certain entity-level requirements. In addition, foreign dealers will have time-limited relief from specified transaction-level requirements when they transact with overseas affiliates guaranteed by U.S. entities, as well as with foreign branches of U.S. swap dealers.
The Final Order provides time for the Commission to continue working with foreign regulators as they implement comparable swaps reforms and as the Commission considers substituted compliance determinations for the various foreign jurisdictions with entities that have registered as swap dealers under Dodd-Frank.
The CFTC will continue engaging with our international counterparts through bilateral and multilateral discussions on reform and cross-border swaps activity. Earlier this month, SEC Chairman Walter and I had a productive meeting with international market regulators in Brussels.
Given our different cultures, political systems and legislative mandates some differences are inevitable, but we’ve made great progress internationally on an aligned approach to reform. The CFTC is committed to working through any instances where we are made aware of a conflict between U.S. law and that of another jurisdiction.
Customer Protection
Dodd-Frank included provisions directing the CFTC to enhance the protection of swaps customer funds. While it was not a requirement of Dodd-Frank, in 2009 the CFTC also reviewed and updated customer protection rules for futures market customers. As a result, a number of the enhancements affect both futures and swaps market customers. I would like to review these enhancements, as well as an important customer protection proposal.
The CFTC’s completed amendments to rule 1.25 regarding the investment of customer funds benefit both futures and swaps customers. The amendments include preventing in-house lending of customer money through repurchase agreements.The CFTC’s gross margining rules for futures and swaps customers require clearinghouses to collect margin on a gross basis. FCMs are no longer able to offset one customer’s collateral against another or to send only the net to the clearinghouse.
Swaps customers further benefit from the new so-called LSOC (legal segregation with operational comingling) rules, which ensure funds are protected individually all the way to the clearinghouse.
The Commission also worked closely with market participants on new customer protection rules adopted by the self-regulatory organization (SRO), the National Futures Association (NFA). These include requiring FCMs to hold sufficient funds for U.S. foreign futures and options customers trading on foreign contract markets (in Part 30 secured accounts). Starting last year, they must meet their total obligations to customers trading on foreign markets computed under the net liquidating equity method. In addition, withdrawals of 25 percent or more of excess segregated funds would necessitate pre-approval in writing by senior management and must be reported to the designated SRO and the CFTC.
These steps were significant, but market events have further highlighted that the Commission must do everything within our authorities and resources to strengthen oversight programs and the protection of customers and their funds.
In the fall of 2012, the Commission sought public comment on a proposal that would strengthen the controls around customer funds at FCMs. It would set new regulatory accounting requirements and would raise minimum standards for independent public accountants who audit FCMs. And it would provide regulators with daily direct electronic access to the FCMs’ bank and custodial accounts for customer funds. Last week, the CFTC held a public roundtable on this proposal, the third roundtable focused on customer protection.
Further, the CFTC intends to finalize a rule this year on segregation for uncleared swaps.
Benchmark Interest Rates
I’d like to now turn to the three cases the CFTC brought against Barclays, UBS and RBS for manipulative conduct with respect to LIBOR and other benchmark interest rate submissions. The reason it’s important to focus on these matters is not because there were $2.5 billion in fines, though the U.S. penalties against these three banks of more than $2 billion were significant. What this is about is the integrity of the financial markets. When a reference rate, such as LIBOR – central to borrowing, lending and hedging in our economy – has been so readily and pervasively rigged, it’s critical to discuss how to best change the system. We must ensure that reference rates are honest and reliable reflections of observable transactions in real markets.
The three cases shared a number of common traits. At each institution the misconduct spanned multiple years, involved offices in multiple cities around the globe, included numerous people, and affected multiple benchmark rates and currencies. In each case, there was evidence of collusion among banks. In both the UBS and RBS cases, one or more inter-dealer brokers were asked to paint false pictures to influence submissions of other banks, i.e., to spread the falsehoods more widely. At Barclays and UBS, the banks also were reporting falsely low borrowing rates in an effort to protect their reputation.
Why does this matter?
The derivatives marketplace that the CFTC oversees started about 150 years ago. Futures contracts initially were linked to physical commodities, like corn and wheat. Such clear linkage ultimately comes from the ability of farmers, ranchers and other market participants to physically deliver the commodity at the expiration of the contract. As the markets evolved, cash-settled contracts emerged, often linked to markets for financial commodities, like the stock market or interest rates. These cash-settled derivatives generally reference indices or benchmarks.
Whether linked to physical commodities or indices, derivatives – both futures and swaps – should ultimately be anchored to observable prices established in real underlying cash markets. And it’s only when there are real transactions entered into at arm’s length between buyers and sellers that we can be confident that prices are discovered and set accurately.
When market participants submit for a benchmark rate that lacks observable underlying transactions, even if operating in good faith, they may stray from what real transactions would reflect. When a benchmark is separated from real transactions, it is more vulnerable to misconduct.
Today, LIBOR is the reference rate for 70 percent of the U.S. futures market, most of the swaps market and nearly half of U.S. adjustable rate mortgages. It’s embedded in the wiring of our financial system.
The challenge we face is that the market for interbank, unsecured borrowing has greatly diminished over the last five years. Some say that it is essentially nonexistent. In 2008, Mervyn King, the governor of the Bank of England, said of Libor: "It is, in many ways, the rate at which banks do not lend to each other."
The number of banks willing to lend to one another on such terms has been sharply reduced because of economic turmoil, including the 2008 global financial crisis, the European debt crisis that began in 2010, and the downgrading of large banks’ credit ratings. In addition, there have been other factors that have led to unsecured, interbank lending drying up, including changes to Basel capital rules and central banks providing funding directly to banks.
Fortunately, much work is occurring internationally to address these issues. I want to commend the work of Martin Wheatley and the UK Financial Services Authority (FSA) on the "Wheatley Review of LIBOR." Additionally, the CFTC and the FSA are co-chairing the International Organization of Securities Commissions (IOSCO) Task Force that is developing international principles for benchmarks and examining best mechanisms or protocols for transition, if needed. On January 11, the IOSCO Task Force published the Consultation Report on Financial Benchmarks. The consultation report said: "The Task Force is of the view that a benchmark should as a matter of priority be anchored by observable transactions entered into at arm’s length between buyers and sellers in order for it to function as a credible indicator of prices, rates or index values." It went on to say: "However, at some point, an insufficient level of actual transaction data raises concerns as to whether the benchmark continues to reflect prices or rates that have been formed by the competitive forces of supply and demand."
Among the questions for the public in the report are the following:
What are the best practices to ensure that benchmark rates honestly reflect market prices?
What are best practices for benchmark administrators and submitters?
What factors should be considered in determining whether a current benchmark’s underlying market is sufficiently robust? For instance, what is an insufficient level of actual transaction activity?
And what are the best mechanisms or protocols to transition from an unreliable or obsolete benchmark?
On February 20, the IOSCO task force hosted a roundtable in London, which was followed by a second public roundtable yesterday at the CFTC to gather input from market participants and other interested parties. I expect the final report incorporating public input will be published this spring.
Resources
The CFTC’s hardworking team of 690 is less than 10 percent more in numbers than at our peak in the 1990s. Yet since that time, the futures market has grown five-fold, and the swaps market is eight times larger than the futures market.
To provide for effective market implementation of swaps reforms by the CFTC requires additional resources. Investments in both technology and people are needed for effective oversight of these markets by regulators.
Though data has started to be reported to the public and to regulators, we need the staff and technology to access, review and analyze the data. Though more than 70 entities have registered as new swap dealers, we need people to answer their questions and work with the NFA on the necessary oversight to ensure market integrity. Furthermore, as market participants expand their technological sophistication, CFTC technology upgrades are critical for market surveillance and to enhance customer fund protection programs.
Without sufficient funding for the CFTC, the nation cannot be assured this agency can closely monitor for the protection of customer funds and utilize our enforcement arm to its fullest potential to go after bad actors in the futures and swaps markets. Without sufficient funding for the CFTC, the nation cannot be assured that this agency can effectively enforce essential rules that promote transparency and lower risk to the economy.
The CFTC is currently funded at $207 million. To fulfill our mission for the benefit of the public, the President requested $308 million for fiscal year 2013 and 1,015 full-time employees.
Thank you again for inviting me today, and I look forward to your questions.
February 27, 2013
Good afternoon Chairwoman Stabenow, Ranking Member Cochran and members of the Committee. I thank you for inviting me to today’s hearing on oversight of the Commodity Futures Trading Commission (CFTC). I also want to thank the CFTC Commissioners and staff for their hard work and dedication.
Introduction
I am pleased to have the opportunity to discuss with you the CFTC’s efforts on behalf of the public. The agency has been directed by Congress to oversee and police the nation’s derivatives markets, both in the futures and swaps markets. It strives to promote transparency, fairness and integrity in these markets. The CFTC continues to carry out its historical mission regarding the rapidly changing futures market, while developing and integrating comprehensive standards for the swaps market. The Commission has reorganized its divisions to best ensure ongoing oversight of the futures market, as well as the swaps markets. We also have implemented improvements in protections for customer funds and are developing others. We continue to engage in targeted enforcement efforts in the public interest, such as the historic actions regarding benchmark rates, including the London Interbank Offered Rate (LIBOR), a reference rate for much of the U.S. futures and swaps markets.
The New Era of Swaps Market Reform
Congress made history with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the CFTC now oversees the entire derivatives marketplace – across both futures and swaps. The common-sense rules of the road for the swaps market that Congress included in the law have taken shape and market participants are adapting to them.
For the first time, the public is benefiting from seeing the price and volume of each swap transaction. This post-trade transparency builds upon what has worked for decades in the futures and securities markets. The new swaps market information is available free of charge on a website, like a modern-day ticker tape.
For the first time, the public will benefit from the greater access to the markets and the risk reduction that comes with central clearing. Required clearing of interest rate and credit index swaps between financial entities begins next month.
For the first time, the public is benefitting from specific oversight of swap dealers. More than 70 swap dealers have provisionally registered. They are subject to standards for sales practices, recordkeeping and business conduct to help lower risk to the economy and protect the public from fraud and manipulation.
An earlier economic crisis led President Roosevelt and Congress to enact similar common-sense rules of the road for the futures and securities markets. I believe these critical reforms of the 1930s have been at the foundation of our strong capital markets and many decades of economic growth.
In the 1980s, the swaps market emerged. Until now, though, it had lacked the benefit of rules to promote transparency, lower risk and protect the public, rules that we have come to depend upon in the futures and securities markets. What followed was the 2008 financial crisis – a crisis that was due in part to swaps markets. Eight million American jobs were lost. In contrast, the futures market, supported by earlier reforms, weathered the financial crisis.
Congress and the President responded to the worst economic crisis since the Great Depression and carefully crafted the Dodd-Frank swaps provisions. They borrowed from what has worked best in the futures market for decades: transparency, clearing and oversight of intermediaries.
The CFTC has largely completed swaps market rulewriting, with 80 percent behind us. On October 12, the CFTC and Securities and Exchange Commission’s (SEC) foundational definition rules went into effect. This marked the new era of swaps market reform.
The CFTC is seeking to consider and finalize the remaining Dodd-Frank Act swaps reforms this year. In addition, as Congress directed the CFTC to do, I believe it’s critical that we continue our efforts to put in place aggregate speculative position limits across futures and swaps on physical commodities.
The agency has completed each of these Congressionally-directed reforms with an eye toward ensuring that the swaps market works for end-users, America’s primary job providers. It’s the end-users in the non-financial side of our economy that provide 94 percent of private sector jobs.
Dodd-Frank Act swaps market reforms benefit end-users by lowering costs and increasing access to the markets. They benefit end-users through greater transparency – shifting information from Wall Street to Main Street. Following Congress’ direction, end-users are not required to bring swaps into central clearing. Further, the Commission’s proposed rule on margin provides that end-users will not have to post margin for uncleared swaps. Also, non-financial companies, other than those genuinely making markets in swaps, will not be required to register as swap dealers. Lastly, when end-users are required to report their transactions, they are given more time to do so than other market participants.
Congress also authorized the CFTC to provide relief from the Dodd-Frank Act’s swaps reforms for certain electricity and electricity-related energy transactions between rural electric cooperatives and federal, state, municipal and tribal power authorities. Similarly, Congress authorized the CFTC to provide relief for certain transactions on markets administered by regional transmission organizations and independent system operators. The CFTC is looking to soon finalize exemptive orders related to these transactions, as Congress authorized.
The CFTC has worked to complete the Dodd-Frank reforms in a deliberative way – not against a clock. We have been careful to consider public input, as well as the costs and benefits of each rule. CFTC Commissioners and staff have met more than 2,000 times with members of the public, and we have held 23 public roundtables. The agency has received more than 39,000 comment letters on matters related to reform. The rules also have benefited from close consultation with domestic and international regulators and policymakers.
Throughout this process, the Commission has sought input from market participants on appropriate schedules to phase in compliance with swaps reforms. Now, over two-and-a-half years since Dodd-Frank passed and with 80 percent of our rules finalized, the market is moving to implementation. Thus, it’s the natural order of things that market participants have questions and have come to us for further guidance. The CFTC welcomes inquiries from market participants, as some fine-tuning is expected. As it is sometimes the case with human nature, the agency receives many inquiries as compliance deadlines approach.
My fellow commissioners and I, along with CFTC staff, have listened to market participants and thoughtfully sorted through issues as they were brought to our attention, as we will continue to do.
I now will go into further detail on the Commission’s efforts to implement the Dodd-Frank Act’s swaps market reform, our efforts to enhance protections for futures and swaps customers, and the CFTC’s work with international regulators regarding benchmarks.
Transparency – Lowering Cost and Increasing Liquidity, Efficiency, Competition
Transparency – a longstanding hallmark of the futures market – both pre- and post-trade – lowers costs for investors, consumers and businesses. It increases liquidity, efficiency and competition. A key benefit of swaps reform is providing this critical pricing information to businesses and other end-users across this land that use the swaps market to lock in a price or hedge a risk.
As of December 31, 2012, provisionally registered swap dealers are reporting in real time their interest rate and credit index swap transactions to the public and to regulators through swap data repositories. These are some of the same products that were at the center of the financial crisis. Building on this, swap dealers will begin reporting swap transactions in equity, foreign exchange and other commodity asset classes tomorrow. Other market participants will begin reporting April 10.
With these transparency reforms, the public and regulators now have their first full window into the swaps marketplace.
To further enhance liquidity and price competition, the CFTC is working to finish the pre-trade transparency rules for swap execution facilities (SEFs), as well as the block rule for swaps. SEFs would allow market participants to view the prices of available bids and offers prior to making their decision on a transaction. These rules will build on the democratization of the swaps market that comes with the clearing of standardized swaps.
Clearing – Lowering Risk and Democratizing the Market
Since the late 19th century, clearinghouses have lowered risk for the public and fostered competition in the futures market. Clearing also has democratized the market by fostering access for farmers, ranchers, merchants, and other participants.
A key milestone was reached in November 2012 with the CFTC’s adoption of the first clearing requirement determinations for swaps. The vast majority of interest rate and credit default index swaps will be brought into central clearing. This follows through on the U.S. commitment at the 2009 G-20 meeting that standardized swaps should be brought into central clearing by the end of 2012. Compliance will be phased in throughout this year. Swap dealers and the largest hedge funds will be required to clear March 11, and all other financial entities follow June 10. Accounts managed by third party investment managers and ERISA pension plans have until September 9 to begin clearing.
Consistent with the direction of Dodd-Frank, the Commission in the fall of 2011 adopted a comprehensive set of rules for the risk management of clearinghouses. These final rules were consistent with international standards, as evidenced by the Principles for Financial Market Infrastructures (PFMIs) consultative document that had been published by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions (CPSS-IOSCO).
In April of 2012, CPSS-IOSCO issued the final Principles. The Commission’s clearinghouse risk management rules cover the vast majority of those standards. Commission staff are working expeditiously to recommend the necessary steps so that the Commission may implement any remaining items from the PFMIs not yet incorporated in our clearinghouse rules. I look forward to the Commission considering action on this in 2013.
I expect that soon we will complete a rule to exempt swaps between certain affiliated entities within a corporate group from the clearing requirement. This year, the CFTC also will be considering possible clearing determinations for other commodity swaps, including energy swaps.
Swap Dealer Oversight - Promoting Market Integrity and Lowering Risk
Comprehensive oversight of swap dealers, a foundational piece of Dodd-Frank, will promote market integrity and lower risk to taxpayers and the rest of the economy. Congress directed that end-users be able to continue benefitting from customized swaps (those not brought into central clearing) while being protected through the express oversight of swap dealers. In addition, Dodd-Frank extended the CFTC’s existing oversight of previously regulated intermediaries to include their swaps activity.
As the result of CFTC rules completed in the first half of last year, more than 70 swap dealers are now provisionally registered. This initial group of dealers includes the largest domestic and international financial institutions dealing in swaps with U.S. persons. It includes the 16 institutions commonly referred to as the G16 dealers. Other entities will register once they reach the de minimis threshold for swap dealing activity.
In addition to reporting trades to both regulators and the public, swap dealers will implement crucial back office standards that lower risk and increase market integrity. These include promoting the timely confirmation of trades and documentation of the trading relationship. Swap dealers also will be required to implement sales practice standards that prohibit fraud, require fair treatment of customers and improve transparency.
The CFTC is collaborating closely domestically and internationally on a global approach to margin requirements for uncleared swaps. We are working along with the Federal Reserve, the other U.S. banking regulators, the SEC and our international counterparts on a final set of standards to be published by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO). The CFTC’s proposed margin rules excluded non-financial end-users from margin requirements for uncleared swaps. We have been advocating with global regulators for an approach consistent with that of the CFTC. I would anticipate that the CFTC, in consultation with European regulators, would take up final margin rules, as well as related rules on capital, in the second half of this year.
Following Congress’ mandate, the CFTC also is working with our fellow domestic financial regulators to complete the Volcker Rule. In adopting the Volcker Rule, Congress prohibited banking entities from proprietary trading, an activity that may put taxpayers at risk. At the same time, Congress permitted banking entities to engage in certain activities, such as market making and risk mitigating hedging. One of the challenges in finalizing a rule is achieving these multiple objectives.
International Coordination on Swaps Market Reform
In enacting financial reform, Congress recognized the basic lessons of modern finance and the 2008 crisis. During a default or crisis, risk knows no geographic border. Risk from our housing and financial crisis contributed to economic downturns around the globe. Further, if a run starts on one part of a modern financial institution, regardless of where it is around the globe, it invariably means a funding and liquidity crisis rapidly spreads and infects the entire consolidated financial entity.
This phenomenon was true with the overseas affiliates and operations of AIG, Lehman Brothers, Citigroup and Bear Stearns.
AIG Financial Products, for instance, was a Connecticut subsidiary of the New York insurance giant that used a French bank license to basically run its swaps operations out of Mayfair in London. Its collapse nearly brought down the U.S. economy.
Last year’s events at JPMorgan Chase, which executed swaps through its London branch, are a stark reminder of stark reality. Transactions may be entered into by an offshore office, but the institution here in the United States absorbs the losses. Trades being booked offshore by U.S. financial institutions should not be confused with keeping that risk offshore.
Failing to incorporate these basic lessons of modern finance into the CFTC’s oversight of the swaps market would fall short of the goals of Dodd-Frank reform. It would leave the public at risk.
More specifically, I believe that Dodd-Frank reform applies to transactions entered into by overseas branches of U.S. entities with non-U.S. persons, as well as between overseas affiliates guaranteed by U.S. entities. Failing to do so would mean American jobs and markets may move offshore, but, particularly in times of crisis, risk would come crashing back to our economy.
Similar lessons of modern finance were evident, as well, with the collapse of the hedge fund Long-Term Capital Management in 1998. It was run out of Connecticut, but its $1.2 trillion swaps were booked in its Cayman Islands affiliate. The risk from those activities, as the events of the time highlighted, had a direct and significant effect here in the United States.
The same was true when Bear Stearns in 2007 bailed out two of its sinking hedge fund affiliates, which had significant investments in subprime mortgages. They both were organized offshore. This was just the beginning of the end, as within months, the Federal Reserve provided extraordinary support for the failing Bear Stearns.
We must thus ensure that collective investment vehicles, including hedge funds, that either are managed (or otherwise have their principal place of business) in the United States or are directly or indirectly majority owned by U.S. persons are not able to avoid the clearing requirement – or any other Dodd-Frank requirement – simply due to how they might be organized.
Last July, the Commission published for public comment proposed guidance addressing market participants’ obligations under the Dodd-Frank Act (and Commission regulations) with respect to their cross-border activities. In December, the Commission granted time-limited relief until this July for non-U.S. swap dealers (and foreign branches of U.S. swap dealers) from certain Dodd-Frank swap requirements. The relief is limited to transactions involving such registered non-U.S. swap dealers and was intended to facilitate their transition to the new swaps regime; it does not extend to transactions where neither counterparty is registered as a swap dealer or major swap participant. It also does not extend to transactions between U.S. swap dealers and counterparties that are not registered as swap dealers or major swap participants, such as hedge funds.
We are hearing, though, that some swap dealers may be promoting to hedge funds an idea to avoid required clearing, at least during an interim period from March until July. I would be concerned if, in an effort to avoid clearing, swap dealers route to their foreign affiliates trades with hedge funds organized offshore, even though such hedge funds are managed (or otherwise have their principal place of business) in the United States or they are majority owned by U.S. persons. Such effort is not consistent with the spirit of Dodd-Frank or the international consensus to clear all standardized swaps. The CFTC is working to ensure that this idea does not prevail and develop into a practice that leaves the American public at risk. If we don’t address this, the P.O boxes may be offshore, but the risk will flow back here.
Congress understood these issues and addressed these realities of modern finance in Section 722(d) of the Dodd-Frank Act, which states that swaps reforms shall not apply to activities outside the United States unless those activities have "a direct and significant connection with activities in, or effect on, commerce of the United States." Congress provided this provision solely for swaps under the CFTC’s oversight and provided a different standard for securities-based swaps under the SEC’s oversight.
To give financial institutions and market participants guidance on section 722(d), the CFTC last June sought public consultation on its interpretation of this provision. The proposed guidance is a balanced, measured approach, consistent with the cross-border provisions in Dodd-Frank and Congress’ recognition that risk easily crosses borders.
Pursuant to Commission guidance, foreign firms that do more than a de minimis amount of swap-dealing activity with U.S. persons would be required to register with the CFTC within about two months after crossing the de minimis threshold. A number of international financial institutions are among the swap dealers that are provisionally registered with the CFTC.
Where appropriate, we are committed to permitting foreign firms and, in certain circumstances, overseas branches and guaranteed affiliates of U.S. swap dealers, to meet Dodd-Frank requirements through compliance with comparable and comprehensive foreign rules. We call this substituted compliance.
For foreign swap dealers, the Commission would allow such substituted compliance for entity-level requirements, as well as for certain transaction-level requirements when facing overseas branches of U.S. entities and overseas affiliates guaranteed by U.S. entities. Entity-level requirements include capital, chief compliance officer and swap data recordkeeping. Transaction-level requirements include clearing, margin, real-time public reporting, trade execution, trading documentation and sales practices.
When foreign swaps dealers transact with a U.S. person, though, compliance with Dodd-Frank regulation is required.
To assist foreign swap dealers with Dodd-Frank compliance, the CFTC recently finalized an exemptive order that applies until mid-July 2013. This time-limited Final Order incorporates many suggestions from ongoing consultation on cross-border issues with foreign regulatory counterparts and market participants. For instance, the definition of "U.S. person" in the Order benefited from comments in response to the Commission’s July 2012 proposal.
Under its terms, a foreign swap dealer may phase in compliance with certain entity-level requirements. In addition, foreign dealers will have time-limited relief from specified transaction-level requirements when they transact with overseas affiliates guaranteed by U.S. entities, as well as with foreign branches of U.S. swap dealers.
The Final Order provides time for the Commission to continue working with foreign regulators as they implement comparable swaps reforms and as the Commission considers substituted compliance determinations for the various foreign jurisdictions with entities that have registered as swap dealers under Dodd-Frank.
The CFTC will continue engaging with our international counterparts through bilateral and multilateral discussions on reform and cross-border swaps activity. Earlier this month, SEC Chairman Walter and I had a productive meeting with international market regulators in Brussels.
Given our different cultures, political systems and legislative mandates some differences are inevitable, but we’ve made great progress internationally on an aligned approach to reform. The CFTC is committed to working through any instances where we are made aware of a conflict between U.S. law and that of another jurisdiction.
Customer Protection
Dodd-Frank included provisions directing the CFTC to enhance the protection of swaps customer funds. While it was not a requirement of Dodd-Frank, in 2009 the CFTC also reviewed and updated customer protection rules for futures market customers. As a result, a number of the enhancements affect both futures and swaps market customers. I would like to review these enhancements, as well as an important customer protection proposal.
The CFTC’s completed amendments to rule 1.25 regarding the investment of customer funds benefit both futures and swaps customers. The amendments include preventing in-house lending of customer money through repurchase agreements.The CFTC’s gross margining rules for futures and swaps customers require clearinghouses to collect margin on a gross basis. FCMs are no longer able to offset one customer’s collateral against another or to send only the net to the clearinghouse.
Swaps customers further benefit from the new so-called LSOC (legal segregation with operational comingling) rules, which ensure funds are protected individually all the way to the clearinghouse.
The Commission also worked closely with market participants on new customer protection rules adopted by the self-regulatory organization (SRO), the National Futures Association (NFA). These include requiring FCMs to hold sufficient funds for U.S. foreign futures and options customers trading on foreign contract markets (in Part 30 secured accounts). Starting last year, they must meet their total obligations to customers trading on foreign markets computed under the net liquidating equity method. In addition, withdrawals of 25 percent or more of excess segregated funds would necessitate pre-approval in writing by senior management and must be reported to the designated SRO and the CFTC.
These steps were significant, but market events have further highlighted that the Commission must do everything within our authorities and resources to strengthen oversight programs and the protection of customers and their funds.
In the fall of 2012, the Commission sought public comment on a proposal that would strengthen the controls around customer funds at FCMs. It would set new regulatory accounting requirements and would raise minimum standards for independent public accountants who audit FCMs. And it would provide regulators with daily direct electronic access to the FCMs’ bank and custodial accounts for customer funds. Last week, the CFTC held a public roundtable on this proposal, the third roundtable focused on customer protection.
Further, the CFTC intends to finalize a rule this year on segregation for uncleared swaps.
Benchmark Interest Rates
I’d like to now turn to the three cases the CFTC brought against Barclays, UBS and RBS for manipulative conduct with respect to LIBOR and other benchmark interest rate submissions. The reason it’s important to focus on these matters is not because there were $2.5 billion in fines, though the U.S. penalties against these three banks of more than $2 billion were significant. What this is about is the integrity of the financial markets. When a reference rate, such as LIBOR – central to borrowing, lending and hedging in our economy – has been so readily and pervasively rigged, it’s critical to discuss how to best change the system. We must ensure that reference rates are honest and reliable reflections of observable transactions in real markets.
The three cases shared a number of common traits. At each institution the misconduct spanned multiple years, involved offices in multiple cities around the globe, included numerous people, and affected multiple benchmark rates and currencies. In each case, there was evidence of collusion among banks. In both the UBS and RBS cases, one or more inter-dealer brokers were asked to paint false pictures to influence submissions of other banks, i.e., to spread the falsehoods more widely. At Barclays and UBS, the banks also were reporting falsely low borrowing rates in an effort to protect their reputation.
Why does this matter?
The derivatives marketplace that the CFTC oversees started about 150 years ago. Futures contracts initially were linked to physical commodities, like corn and wheat. Such clear linkage ultimately comes from the ability of farmers, ranchers and other market participants to physically deliver the commodity at the expiration of the contract. As the markets evolved, cash-settled contracts emerged, often linked to markets for financial commodities, like the stock market or interest rates. These cash-settled derivatives generally reference indices or benchmarks.
Whether linked to physical commodities or indices, derivatives – both futures and swaps – should ultimately be anchored to observable prices established in real underlying cash markets. And it’s only when there are real transactions entered into at arm’s length between buyers and sellers that we can be confident that prices are discovered and set accurately.
When market participants submit for a benchmark rate that lacks observable underlying transactions, even if operating in good faith, they may stray from what real transactions would reflect. When a benchmark is separated from real transactions, it is more vulnerable to misconduct.
Today, LIBOR is the reference rate for 70 percent of the U.S. futures market, most of the swaps market and nearly half of U.S. adjustable rate mortgages. It’s embedded in the wiring of our financial system.
The challenge we face is that the market for interbank, unsecured borrowing has greatly diminished over the last five years. Some say that it is essentially nonexistent. In 2008, Mervyn King, the governor of the Bank of England, said of Libor: "It is, in many ways, the rate at which banks do not lend to each other."
The number of banks willing to lend to one another on such terms has been sharply reduced because of economic turmoil, including the 2008 global financial crisis, the European debt crisis that began in 2010, and the downgrading of large banks’ credit ratings. In addition, there have been other factors that have led to unsecured, interbank lending drying up, including changes to Basel capital rules and central banks providing funding directly to banks.
Fortunately, much work is occurring internationally to address these issues. I want to commend the work of Martin Wheatley and the UK Financial Services Authority (FSA) on the "Wheatley Review of LIBOR." Additionally, the CFTC and the FSA are co-chairing the International Organization of Securities Commissions (IOSCO) Task Force that is developing international principles for benchmarks and examining best mechanisms or protocols for transition, if needed. On January 11, the IOSCO Task Force published the Consultation Report on Financial Benchmarks. The consultation report said: "The Task Force is of the view that a benchmark should as a matter of priority be anchored by observable transactions entered into at arm’s length between buyers and sellers in order for it to function as a credible indicator of prices, rates or index values." It went on to say: "However, at some point, an insufficient level of actual transaction data raises concerns as to whether the benchmark continues to reflect prices or rates that have been formed by the competitive forces of supply and demand."
Among the questions for the public in the report are the following:
What are best practices for benchmark administrators and submitters?
What factors should be considered in determining whether a current benchmark’s underlying market is sufficiently robust? For instance, what is an insufficient level of actual transaction activity?
And what are the best mechanisms or protocols to transition from an unreliable or obsolete benchmark?
On February 20, the IOSCO task force hosted a roundtable in London, which was followed by a second public roundtable yesterday at the CFTC to gather input from market participants and other interested parties. I expect the final report incorporating public input will be published this spring.
Resources
The CFTC’s hardworking team of 690 is less than 10 percent more in numbers than at our peak in the 1990s. Yet since that time, the futures market has grown five-fold, and the swaps market is eight times larger than the futures market.
To provide for effective market implementation of swaps reforms by the CFTC requires additional resources. Investments in both technology and people are needed for effective oversight of these markets by regulators.
Though data has started to be reported to the public and to regulators, we need the staff and technology to access, review and analyze the data. Though more than 70 entities have registered as new swap dealers, we need people to answer their questions and work with the NFA on the necessary oversight to ensure market integrity. Furthermore, as market participants expand their technological sophistication, CFTC technology upgrades are critical for market surveillance and to enhance customer fund protection programs.
Without sufficient funding for the CFTC, the nation cannot be assured this agency can closely monitor for the protection of customer funds and utilize our enforcement arm to its fullest potential to go after bad actors in the futures and swaps markets. Without sufficient funding for the CFTC, the nation cannot be assured that this agency can effectively enforce essential rules that promote transparency and lower risk to the economy.
The CFTC is currently funded at $207 million. To fulfill our mission for the benefit of the public, the President requested $308 million for fiscal year 2013 and 1,015 full-time employees.
Thank you again for inviting me today, and I look forward to your questions.
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