FROM: U.S. DEPARTMENT OF VETERANS AFFAIRS
Veterans' Diseases Associated with Agent Orange » Respiratory Cancers
Veterans who develop respiratory cancer (lung, bronchus, larynx, or trachea) and
were exposed to Agent Orange or other herbicides during military service do not have to prove a connection between their disease and service to be eligible to receive VA health care and disability compensation.
About respiratory cancers
Respiratory cancers are cancers of the lung, larynx, trachea, and bronchus.
Symptoms vary, depending on the location of the cancer:
Lung cancer—a new cough or cough that doesn't go away, coughing up blood, shortness of breath, chest pain, hoarseness
Cancer of the trachea—dry cough, hoarseness, breathlessness, difficulty swallowing
Cancer of the larynx (at the top of the trachea)—hoarseness, voice changes, sore throat or earache, feeling of a lump in the throat
Cancer of the bronchus—cough, chest pain, coughing blood
Visit Medline Plus to learn more about treatment of cancer and the latest research from the National Institutes of Health.
Guard against lung cancer
Number one rule: Don’t smoke and avoid second-hand smoke. VA can help you every step of the way to quit smoking.
VA benefits for respiratory cancers
Veterans with respiratory cancers (lung, bronchus, larynx, or trachea) who were exposed to Agent Orange or other herbicides during service may be eligible for disability compensation and health care.
Veterans who served in Vietnam, the Korean demilitarized zone or another area where Agent Orange was sprayed may be eligible for an Agent Orange Registry health exam, a free, comprehensive examination.
Surviving spouses, dependent children and dependent parents of Veterans who were exposed to herbicides during military service and died as the result of respiratory cancers may be eligible for survivors' benefits.
Research on respiratory cancers and herbicides used in Vietnam
The Institute of Medicine (IOM) of the National Academy of Sciences concluded in its 1994 report "Veterans and Agent Orange: Health Effects of Herbicides Used in Vietnam" and in future updates that there is limited/suggestive evidence of an association between exposure to herbicides (2,4-D; 2,4,5-T and its contaminant TCDD; cacodylic acid; and picloram) and respiratory cancers.
In updates to this report, IOM noted that associations linking development of respiratory cancers and exposure to dioxin were found consistently only when herbicide exposures appeared to be high and prolonged.
Friday, August 16, 2013
SECRETARY OF STATE KERRY'S REMARKS AT DIPLOMATIC AND POLITICAL JOINT COORDINATING COMMITTEE
FROM: U.S. STATE DEPARTMENT
Remarks at the Diplomatic and Political Joint Coordinating Committee Meeting
Remarks
John Kerry
Secretary of State
Iraqi Foreign Minister Hoshyar Zebari
Deputy Secretary Conference Room
Washington, DC
August 15, 2013
SECRETARY KERRY: Well, good morning, everyone, and welcome. We’re very, very happy to welcome Foreign Minister Zebari and Ambassador Faily from Iraq, and the rest of the Iraqi delegation who we just met with and will be coming in here for a meeting following our opening comments. We’ve just had a very good bilateral meeting in which we discussed the challenges that Iraq faces, the importance of Iraq and its relationship with the United States, and we are going to continue those discussions this morning in the Joint Coordination Committee.
I want to start just by noting that since the time that this committee met last September, Iraq has taken a number of noteworthy diplomatic strides. I visited Iraq last March, and at that time, there was great division. Parties within Iraq were not talking to each other; there’d been a two-year hiatus in meetings. Since then, a host of progress has been made. First of all, Iraq has settled a number of difficult issues with Kuwait stemming from the 1991 Gulf War. Iraq has dramatically improved relations with Jordan. It has improved its relations with Turkey. In addition, it has also begun to stabilize broader relationships in the region, and we welcome Foreign Minister Zebari’s plan to meet with Foreign Minister Davutoglu of Turkey in the very near future in order to discuss issues of mutual interest.
We also welcome the fact that they have renewed relations with Kuwait and are currently paying very serious amounts of money as a matter of settling the claims from 1991. So there are significant things that are being achieved. We also welcome the internal political process that Iraq has made over the last months. But they – nobody should make any mistake, and we haven’t this morning. We know there are very significant challenges that still remain, and we must face them together.
Iraq sits at the intersection of regional currents of increasingly turbulent, violent, and unpredictable actions. Sunni and Shia extremists on both sides of the sectarian divide throughout the region have an ability to be able to threaten Iraq’s stability if they’re not checked. And al-Qaida, as we have seen, has launched a horrific series of assaults on innocent Iraqis, even taking credit for the deplorable bombings this past weekend that targeted families that were celebrating the Eid holiday. And this al-Qaida network, we know, stretches well beyond Iraq’s borders. With many al-Qaida leaders now operating in Syria, we all need to accelerate our work in order to set the conditions for a diplomatic settlement to the Syrian crisis. Iraq was in Geneva at the first meeting of Geneva, and the Foreign Minister himself made significant contributions to that process. I know that Iraqis support the vision of a stable and peaceful Syria, and we look forward to discussing how we can work to make that a reality.
We hope also to discuss this morning the issue of weapons flowing from the Syrian conflict into Iraq for use against Iraqis or weapons flowing through Iraq and going into Syria. It’s a two-way street and it’s a dangerous street. There has been some progress in this area since my visit to Iraq in March, but Foreign Minister Zardari – Zebari agrees there is very significant progress yet to be made.
So this morning, we will discuss the ongoing efforts of Iran and Hezbollah that are trying to fuel the dangerous conflict in the region from the other side. And we agreed that we cannot allow them to play on the sectarian divides that recruit young Iraqis to go fight in a foreign war, the same way that we cannot allow al-Qaida and other extremists to recruit young men from Iraq and elsewhere to join into their twisted version of jihad. So we are committed to helping Iraq to withstand these pressures and to bolster the moderate forces throughout the region.
Finally, I want to reiterate: Everyone at this table and all of the people who will share in this discussion this morning share a determination to succeed in overcoming the challenges that we face today despite their seriousness. The United States remains very committed to working together with the Iraqi Government to address regional challenges, and we welcome the steps that have been taken by the Iraqis to build a strong, democratic, and inclusive state. The Foreign Minister agrees with me that there is much that yet can be done internally in Iraq in order to meet some of those internal political challenges, and that progress cannot be made on security issues alone. There needs to be progress within Iraq on political issues, on economic issues, as well as on the larger constitutional issues that have been outstanding for too long. The Foreign Minister agrees that these are challenges we need to beat together.
Our common roadmap in this endeavor is the Strategic Framework Agreement, and that is what has brought us here today. So with this said, I again welcome the Iraqi delegation. We look forward to having a very constructive and successful conversation over the course of the morning and the day.
Thank you, Mr. Foreign Minister, and welcome.
FOREIGN MINISTER ZEBARI: Thank you. Thank you, Mr. Secretary. I appreciate very much what you have said. And we are here with our delegation, in fact, to reaffirm our commitment to our Strategic Framework Agreement with you, also to start meeting on the Joint Coordination Committee on political and diplomatic relations, which is a subcommittee of this SFA.
We have together endured many challenges together, Mr. Secretary, and our mutual relationship have continued engagement of the United States. We’ve always emphasized the importance, the significance, of continued U.S. engagement, which is critical for the success of Iraq and the Iraqi people on our ongoing transformation to a stable, inclusive, democratic, and prosperous country in the heart of the Middle East.
In recent months, as we have seen – and in recent days, in fact – we have seen the new violence or terrorist attacks by al-Qaida more frequently, and it has cost many, many lives. But despite all these attacks, the Iraqi people have not succumbed, in fact, to these atrocities, and I’m here to inform you and the Administration that Iraq is not heading – is not crashing, and it’s not heading to civil or sectarian war. There is a clear determination by the Iraqi leadership that really we’ve been there before in 2007, 2008, we are not going to go there again, and a great deal of self-respect.
The key message here: We’ve come here to seek your help and support and security cooperation with the Iraqi Government, and in fact, in counterterrorism and to have the capacity building for our security forces to stand up to face to this increasing threat from the nexus of al-Qaida and Al-Nusrah Front, as a spillover coming over from Syria, let’s say, into Iraq. And we’ve worked before on these issues. We look forward to your continued support. Al-Qaida is not a local threat; it’s a global threat, as we’ve seen by the recent closures of so many of your diplomatic missions in the region and in North Africa.
Mr. Secretary, I would like to confirm that really Iraq is having an independent and neutral position vis-a-vis the Syrian crisis, and we have said all along we believe that a political solution is the most viable way forward for Syria. We kept our distance on both sides of the conflict, and Iraq has not provided arms, money, or oil to the Syrian regimes. We have kept equidistant with the opposition and with the regime in order to play a helpful role, but our position is difficult. We’ve taken your positions, your views on the overfly, definitely taken some steps but we will do more to make sure that Iraq is independent of its actions and there’s no influence whatsoever here and there.
No volunteers are going – no Iraqi volunteers are going to Syria with the consent of the Iraqi Government at all. I mean, any volunteers who are going may be encouraged by some militias, by some people who want to fuel the conflict and the violence. But believe me, this is not the government policy as such, and we live in a region that we cannot disassociate from what is going on in Syria.
And we’ve seen the terrible event and atrocities that happened yesterday in Egypt. We have ongoing demonstrations in cities in many parts of Iraq, and really they have been going on for the last eight months, and neither the government or even the demonstrators have reached such a level of violence.
So once again, we look forward to our meeting with you and your teams. And Mr. Secretary, I want to say that Iraq is a reliable and dependable ally and partner to the United States. Thank you.
SECRETARY KERRY: Thank you. Thank you very much, Hoshyar, and we look forward to working with you on this, and we’ll work through these issues this morning --
FOREIGN MINISTER ZEBARI: Thank you, sir.
SECRETARY KERRY: -- and obviously for some time to come.
FOREIGN MINISTER ZEBARI: Thank you.
SECRETARY KERRY: Thank you, sir.
Remarks at the Diplomatic and Political Joint Coordinating Committee Meeting
Remarks
John Kerry
Secretary of State
Iraqi Foreign Minister Hoshyar Zebari
Deputy Secretary Conference Room
Washington, DC
August 15, 2013
SECRETARY KERRY: Well, good morning, everyone, and welcome. We’re very, very happy to welcome Foreign Minister Zebari and Ambassador Faily from Iraq, and the rest of the Iraqi delegation who we just met with and will be coming in here for a meeting following our opening comments. We’ve just had a very good bilateral meeting in which we discussed the challenges that Iraq faces, the importance of Iraq and its relationship with the United States, and we are going to continue those discussions this morning in the Joint Coordination Committee.
I want to start just by noting that since the time that this committee met last September, Iraq has taken a number of noteworthy diplomatic strides. I visited Iraq last March, and at that time, there was great division. Parties within Iraq were not talking to each other; there’d been a two-year hiatus in meetings. Since then, a host of progress has been made. First of all, Iraq has settled a number of difficult issues with Kuwait stemming from the 1991 Gulf War. Iraq has dramatically improved relations with Jordan. It has improved its relations with Turkey. In addition, it has also begun to stabilize broader relationships in the region, and we welcome Foreign Minister Zebari’s plan to meet with Foreign Minister Davutoglu of Turkey in the very near future in order to discuss issues of mutual interest.
We also welcome the fact that they have renewed relations with Kuwait and are currently paying very serious amounts of money as a matter of settling the claims from 1991. So there are significant things that are being achieved. We also welcome the internal political process that Iraq has made over the last months. But they – nobody should make any mistake, and we haven’t this morning. We know there are very significant challenges that still remain, and we must face them together.
Iraq sits at the intersection of regional currents of increasingly turbulent, violent, and unpredictable actions. Sunni and Shia extremists on both sides of the sectarian divide throughout the region have an ability to be able to threaten Iraq’s stability if they’re not checked. And al-Qaida, as we have seen, has launched a horrific series of assaults on innocent Iraqis, even taking credit for the deplorable bombings this past weekend that targeted families that were celebrating the Eid holiday. And this al-Qaida network, we know, stretches well beyond Iraq’s borders. With many al-Qaida leaders now operating in Syria, we all need to accelerate our work in order to set the conditions for a diplomatic settlement to the Syrian crisis. Iraq was in Geneva at the first meeting of Geneva, and the Foreign Minister himself made significant contributions to that process. I know that Iraqis support the vision of a stable and peaceful Syria, and we look forward to discussing how we can work to make that a reality.
We hope also to discuss this morning the issue of weapons flowing from the Syrian conflict into Iraq for use against Iraqis or weapons flowing through Iraq and going into Syria. It’s a two-way street and it’s a dangerous street. There has been some progress in this area since my visit to Iraq in March, but Foreign Minister Zardari – Zebari agrees there is very significant progress yet to be made.
So this morning, we will discuss the ongoing efforts of Iran and Hezbollah that are trying to fuel the dangerous conflict in the region from the other side. And we agreed that we cannot allow them to play on the sectarian divides that recruit young Iraqis to go fight in a foreign war, the same way that we cannot allow al-Qaida and other extremists to recruit young men from Iraq and elsewhere to join into their twisted version of jihad. So we are committed to helping Iraq to withstand these pressures and to bolster the moderate forces throughout the region.
Finally, I want to reiterate: Everyone at this table and all of the people who will share in this discussion this morning share a determination to succeed in overcoming the challenges that we face today despite their seriousness. The United States remains very committed to working together with the Iraqi Government to address regional challenges, and we welcome the steps that have been taken by the Iraqis to build a strong, democratic, and inclusive state. The Foreign Minister agrees with me that there is much that yet can be done internally in Iraq in order to meet some of those internal political challenges, and that progress cannot be made on security issues alone. There needs to be progress within Iraq on political issues, on economic issues, as well as on the larger constitutional issues that have been outstanding for too long. The Foreign Minister agrees that these are challenges we need to beat together.
Our common roadmap in this endeavor is the Strategic Framework Agreement, and that is what has brought us here today. So with this said, I again welcome the Iraqi delegation. We look forward to having a very constructive and successful conversation over the course of the morning and the day.
Thank you, Mr. Foreign Minister, and welcome.
FOREIGN MINISTER ZEBARI: Thank you. Thank you, Mr. Secretary. I appreciate very much what you have said. And we are here with our delegation, in fact, to reaffirm our commitment to our Strategic Framework Agreement with you, also to start meeting on the Joint Coordination Committee on political and diplomatic relations, which is a subcommittee of this SFA.
We have together endured many challenges together, Mr. Secretary, and our mutual relationship have continued engagement of the United States. We’ve always emphasized the importance, the significance, of continued U.S. engagement, which is critical for the success of Iraq and the Iraqi people on our ongoing transformation to a stable, inclusive, democratic, and prosperous country in the heart of the Middle East.
In recent months, as we have seen – and in recent days, in fact – we have seen the new violence or terrorist attacks by al-Qaida more frequently, and it has cost many, many lives. But despite all these attacks, the Iraqi people have not succumbed, in fact, to these atrocities, and I’m here to inform you and the Administration that Iraq is not heading – is not crashing, and it’s not heading to civil or sectarian war. There is a clear determination by the Iraqi leadership that really we’ve been there before in 2007, 2008, we are not going to go there again, and a great deal of self-respect.
The key message here: We’ve come here to seek your help and support and security cooperation with the Iraqi Government, and in fact, in counterterrorism and to have the capacity building for our security forces to stand up to face to this increasing threat from the nexus of al-Qaida and Al-Nusrah Front, as a spillover coming over from Syria, let’s say, into Iraq. And we’ve worked before on these issues. We look forward to your continued support. Al-Qaida is not a local threat; it’s a global threat, as we’ve seen by the recent closures of so many of your diplomatic missions in the region and in North Africa.
Mr. Secretary, I would like to confirm that really Iraq is having an independent and neutral position vis-a-vis the Syrian crisis, and we have said all along we believe that a political solution is the most viable way forward for Syria. We kept our distance on both sides of the conflict, and Iraq has not provided arms, money, or oil to the Syrian regimes. We have kept equidistant with the opposition and with the regime in order to play a helpful role, but our position is difficult. We’ve taken your positions, your views on the overfly, definitely taken some steps but we will do more to make sure that Iraq is independent of its actions and there’s no influence whatsoever here and there.
No volunteers are going – no Iraqi volunteers are going to Syria with the consent of the Iraqi Government at all. I mean, any volunteers who are going may be encouraged by some militias, by some people who want to fuel the conflict and the violence. But believe me, this is not the government policy as such, and we live in a region that we cannot disassociate from what is going on in Syria.
And we’ve seen the terrible event and atrocities that happened yesterday in Egypt. We have ongoing demonstrations in cities in many parts of Iraq, and really they have been going on for the last eight months, and neither the government or even the demonstrators have reached such a level of violence.
So once again, we look forward to our meeting with you and your teams. And Mr. Secretary, I want to say that Iraq is a reliable and dependable ally and partner to the United States. Thank you.
SECRETARY KERRY: Thank you. Thank you very much, Hoshyar, and we look forward to working with you on this, and we’ll work through these issues this morning --
FOREIGN MINISTER ZEBARI: Thank you, sir.
SECRETARY KERRY: -- and obviously for some time to come.
FOREIGN MINISTER ZEBARI: Thank you.
SECRETARY KERRY: Thank you, sir.
OPENING STATEMENT BY SEC CHAIRMAN WHITE AT OPEN MEETING
FROM: SECURITIES AND EXCHANGE COMMISSION
Opening Statement at the SEC Open Meeting
Chairman Mary Jo White
U.S. Securities and Exchange Commission
Washington, D.C.
June 5, 2013
This is an open meeting of the Securities and Exchange Commission on June 5, 2013.
Today, the Commission will consider proposals that would reform the way money market funds operate in order to make them less susceptible to runs.
As many people know, money market funds are investment vehicles that hold a pool of high-quality, short-term securities. In the early 1980s, the Commission provided money market funds with an exemption making them distinct from mutual funds and certain other investment products. That exemptive rule (Rule 2a-7) allowed these funds generally to maintain a stable share price of $1.00 instead of changing their share prices according to the market value of the securities held by the fund.
The industry has changed substantially since that time. Money market funds are now a significant piece of the nation's financial system. Over the years, money market funds have become a popular investment product for both retail and institutional investors. They also have become an important provider of short-term financing to corporations, banks and governments. All told, money market funds hold nearly $3 trillion in assets, the majority of which are in institutional funds.
While money market funds have thus long served as an important investment vehicle, the financial crisis of 2008 highlighted the susceptibility of these products to runs. In September of that year - at the height of the financial crisis - a money market fund called the Reserve Primary Fund "broke the buck" - a term used when the value of a fund drops and investors are no longer able to get back the full dollar they put in.
Within the same week of that occurrence, investors pulled approximately $300 billion from other institutional prime money market funds. The contagion effect was rapid. The short term credit market dried up, and corporations had trouble borrowing to run their businesses. This reaction contributed to the significant disruption that already was consuming the financial system.
To stop this run, the government stepped in with unprecedented support in the form of the Treasury temporary money market fund guarantee program and Federal Reserve liquidity facilities.
In the aftermath of that experience, the Commission - in 2010 - adopted a series of reforms that increased the resiliency of money market funds. But, as the Commission stated at that time, those reforms were only a first step. Today's proposal takes the critical additional step of addressing the stable value pricing of institutional prime funds - at the heart of the 2008 run - and proposing methods to stop a money market fund run before such a run becomes a systemically destabilizing event.
It has been a journey to get to this point. Commission staff has spent literally years studying different reform alternatives and performing extensive economic analysis in arriving at these recommendations.
These proposals are important in and of themselves and because they advance the public debate that will shape the final rules to address one of the most prominent events arising from the financial crisis.
Today's proposal contains two alternative reforms that could be adopted separately or combined into a single reform package to address run risk in money market funds.
Floating NAV
The first proposed alternative would require that all institutional prime money market funds operate with a floating net asset value (NAV). That is, they could no longer value their entire portfolio at amortized cost and they could not round their share prices to the nearest penny. The set "dollar" would be replaced by a share price that actually fluctuates, reflecting the changing values in these money market funds.
This floating NAV proposal specifically targets the funds where the problems during the financial crisis occurred: institutional, prime money market funds.
Retail and government money market funds - which have not historically faced runs in even the worst of times - would be exempt from the proposed floating NAV requirement.
This approach would thus preserve the stable value fund product for those retail investors who have found it to be convenient and beneficial. It also would allow municipal and corporate investors to have access to government money market funds - a stable value product - if they need it, although it would be a product that holds federal government securities as opposed to the higher-yielding investments of a prime fund.
We are soliciting commenters' views regarding the impact of targeting the floating NAV reform to institutional prime funds and whether government and retail money market funds also should operate with a floating NAV, as well as commenters' views regarding whether today's proposal would effectively differentiate retail funds from institutional funds by imposing a $1 million redemption limit. These and other important questions are specifically posed in the proposal.
I believe the floating NAV reform proposal is important for a number of reasons:
First, by eliminating the ability of early redeemers to receive $1.00 - even when the fund has experienced a loss and its shares are worth somewhat less - this proposal should reduce incentives for shareholders to redeem from institutional prime money market funds in times of stress.
Second, the proposal increases transparency and highlights investment risk because shareholders would experience price changes as an institutional prime money market fund's value fluctuates.
And, third, the proposal is targeted, by focusing reform on the segment of the market that experienced the run in the financial crisis.
Fees & Gates
The second proposed alternative seeks to directly counter potentially harmful redemption behavior during times of stress.
Under this alternative, non-government money market funds would be required to impose a 2 percent liquidity fee if the fund's level of weekly liquid assets fell below 15 percent of its total assets, unless the fund's board determined that it was not in the best interest of the fund. That determination would be subject to the board's fiduciary duty, and we believe it would be a high hurdle. After falling below the 15 percent weekly liquid assets threshold, the fund's board would also be able to temporarily suspend redemptions in the fund for up to 30 days - or "gate" the fund.
This "fees and gates" alternative potentially could enhance our regulation in several ways:
First, it could more equitably allocate liquidity risk by assigning liquidity costs in times of stress (when liquidity is expensive) to redeeming shareholders - the ones who create the liquidity costs and disruption.
Second, this alternative would provide new tools to allow funds to better manage redemptions in times of stress, and thereby potentially prevent harmful contagion effects on investors, other funds, and the broader markets. If the beginning of a run or significantly heightened redemptions occur, they would no longer continue unchecked, potentially spiraling into a crisis. The imposition of liquidity fees or gates would be an available tool to directly counteract a run.
And, third, this approach also is targeted, focusing the potential limitations on a money market fund investor's experience to times of stress when unfettered liquidity can have real costs.
The two alternative approaches in today's proposal target the common goal of reducing the incentive to redeem in times of stress, albeit in different ways. Accordingly, the proposal requests comment on whether a better reform approach would be to combine the two alternatives into a single reform package - requiring that prime institutional funds have a floating NAV and be able to impose fees and gates in times of stress, and that retail funds be able to impose fees and gates. We specifically solicit and I am interested in commenters' views on this combined approach.
Greater Diversification, Disclosure and Reporting
Importantly, the staff's recommendations also contain a number of other significant reform proposals - tightening diversification requirements, enhancing disclosure requirements, strengthening stress testing and improving reporting on both money market funds and unregistered liquidity funds that could serve as alternatives to money market funds for some investors. These proposed reforms should further enhance the resiliency and transparency of this important product and are significant complements to the other proposals.
Today's proposal is the product of very hard work by all those who have sought to meaningfully reform this investment product that is such a critical piece of the nation's financial fabric.
There have been important and thoughtful comments throughout this process, including suggestions and recommendations from investors, the industry, and fellow regulators. We have given them all very careful consideration and they have proven invaluable to us formulating the important proposals we are voting on today.
In this regard I especially would like to thank all of my fellow Commissioners for their contributions and the spirit of cooperation in which we worked leading up to today's meeting.
I want to reiterate that our goal is to implement an effective reform that decreases the susceptibility of money market funds to run risk and prevents money market fund events similar to those that occurred in 2008 from repeating themselves. With this goal in mind, I very much look forward to the comments and am very pleased that, with my fellow Commissioners, we are moving this reform process forward.
Before I ask Norm Champ, Director of the Division of Investment Management, to discuss the proposed reforms, I would like to thank Norm and his team: Diane Blizzard, Sarah ten Siethoff, Thoreau Bartmann, Brian Johnson, Adam Bolter, Amanda Wagner, Kay Vobis, Jaime Eichen, and Megan Monroe for their tireless work on this rulemaking.
This rulemaking was a true team effort between the Division of Investment Management and the Division of Risk, Strategy and Financial Innovation, so I want to also express my gratitude for the work of Craig Lewis, Kathleen Hanley, Jennifer Marietta-Westberg, Woodrow Johnson, Jennifer Bethel, Virginia Meany, Dan Hiltgen, and Mila Sherman. I also would like to acknowledge the critical work and analysis included in the staff's economic study published late last year, which was highly influential in developing today's proposed reforms.
Thanks as well to Anne Small, Meridith Mitchell, Lori Price, Cathy Ahn, Jill Felker, and Kevin Christy from the Office of the General Counsel; Jim Burns, David Blass, Haime Workie, and Natasha Greiner from the Division of Trading and Markets; and Paul Beswick, Rachel Mincin, and Jeff Minton from the Office of the Chief Accountant.
And now I'll turn the meeting over to Norm Champ to provide a fuller explanation of the proposed reforms we are considering today.
Opening Statement at the SEC Open Meeting
Chairman Mary Jo White
U.S. Securities and Exchange Commission
Washington, D.C.
June 5, 2013
This is an open meeting of the Securities and Exchange Commission on June 5, 2013.
Today, the Commission will consider proposals that would reform the way money market funds operate in order to make them less susceptible to runs.
As many people know, money market funds are investment vehicles that hold a pool of high-quality, short-term securities. In the early 1980s, the Commission provided money market funds with an exemption making them distinct from mutual funds and certain other investment products. That exemptive rule (Rule 2a-7) allowed these funds generally to maintain a stable share price of $1.00 instead of changing their share prices according to the market value of the securities held by the fund.
The industry has changed substantially since that time. Money market funds are now a significant piece of the nation's financial system. Over the years, money market funds have become a popular investment product for both retail and institutional investors. They also have become an important provider of short-term financing to corporations, banks and governments. All told, money market funds hold nearly $3 trillion in assets, the majority of which are in institutional funds.
While money market funds have thus long served as an important investment vehicle, the financial crisis of 2008 highlighted the susceptibility of these products to runs. In September of that year - at the height of the financial crisis - a money market fund called the Reserve Primary Fund "broke the buck" - a term used when the value of a fund drops and investors are no longer able to get back the full dollar they put in.
Within the same week of that occurrence, investors pulled approximately $300 billion from other institutional prime money market funds. The contagion effect was rapid. The short term credit market dried up, and corporations had trouble borrowing to run their businesses. This reaction contributed to the significant disruption that already was consuming the financial system.
To stop this run, the government stepped in with unprecedented support in the form of the Treasury temporary money market fund guarantee program and Federal Reserve liquidity facilities.
In the aftermath of that experience, the Commission - in 2010 - adopted a series of reforms that increased the resiliency of money market funds. But, as the Commission stated at that time, those reforms were only a first step. Today's proposal takes the critical additional step of addressing the stable value pricing of institutional prime funds - at the heart of the 2008 run - and proposing methods to stop a money market fund run before such a run becomes a systemically destabilizing event.
It has been a journey to get to this point. Commission staff has spent literally years studying different reform alternatives and performing extensive economic analysis in arriving at these recommendations.
These proposals are important in and of themselves and because they advance the public debate that will shape the final rules to address one of the most prominent events arising from the financial crisis.
Today's proposal contains two alternative reforms that could be adopted separately or combined into a single reform package to address run risk in money market funds.
Floating NAV
The first proposed alternative would require that all institutional prime money market funds operate with a floating net asset value (NAV). That is, they could no longer value their entire portfolio at amortized cost and they could not round their share prices to the nearest penny. The set "dollar" would be replaced by a share price that actually fluctuates, reflecting the changing values in these money market funds.
This floating NAV proposal specifically targets the funds where the problems during the financial crisis occurred: institutional, prime money market funds.
Retail and government money market funds - which have not historically faced runs in even the worst of times - would be exempt from the proposed floating NAV requirement.
This approach would thus preserve the stable value fund product for those retail investors who have found it to be convenient and beneficial. It also would allow municipal and corporate investors to have access to government money market funds - a stable value product - if they need it, although it would be a product that holds federal government securities as opposed to the higher-yielding investments of a prime fund.
We are soliciting commenters' views regarding the impact of targeting the floating NAV reform to institutional prime funds and whether government and retail money market funds also should operate with a floating NAV, as well as commenters' views regarding whether today's proposal would effectively differentiate retail funds from institutional funds by imposing a $1 million redemption limit. These and other important questions are specifically posed in the proposal.
I believe the floating NAV reform proposal is important for a number of reasons:
First, by eliminating the ability of early redeemers to receive $1.00 - even when the fund has experienced a loss and its shares are worth somewhat less - this proposal should reduce incentives for shareholders to redeem from institutional prime money market funds in times of stress.
Second, the proposal increases transparency and highlights investment risk because shareholders would experience price changes as an institutional prime money market fund's value fluctuates.
And, third, the proposal is targeted, by focusing reform on the segment of the market that experienced the run in the financial crisis.
Fees & Gates
The second proposed alternative seeks to directly counter potentially harmful redemption behavior during times of stress.
Under this alternative, non-government money market funds would be required to impose a 2 percent liquidity fee if the fund's level of weekly liquid assets fell below 15 percent of its total assets, unless the fund's board determined that it was not in the best interest of the fund. That determination would be subject to the board's fiduciary duty, and we believe it would be a high hurdle. After falling below the 15 percent weekly liquid assets threshold, the fund's board would also be able to temporarily suspend redemptions in the fund for up to 30 days - or "gate" the fund.
This "fees and gates" alternative potentially could enhance our regulation in several ways:
First, it could more equitably allocate liquidity risk by assigning liquidity costs in times of stress (when liquidity is expensive) to redeeming shareholders - the ones who create the liquidity costs and disruption.
Second, this alternative would provide new tools to allow funds to better manage redemptions in times of stress, and thereby potentially prevent harmful contagion effects on investors, other funds, and the broader markets. If the beginning of a run or significantly heightened redemptions occur, they would no longer continue unchecked, potentially spiraling into a crisis. The imposition of liquidity fees or gates would be an available tool to directly counteract a run.
And, third, this approach also is targeted, focusing the potential limitations on a money market fund investor's experience to times of stress when unfettered liquidity can have real costs.
The two alternative approaches in today's proposal target the common goal of reducing the incentive to redeem in times of stress, albeit in different ways. Accordingly, the proposal requests comment on whether a better reform approach would be to combine the two alternatives into a single reform package - requiring that prime institutional funds have a floating NAV and be able to impose fees and gates in times of stress, and that retail funds be able to impose fees and gates. We specifically solicit and I am interested in commenters' views on this combined approach.
Greater Diversification, Disclosure and Reporting
Importantly, the staff's recommendations also contain a number of other significant reform proposals - tightening diversification requirements, enhancing disclosure requirements, strengthening stress testing and improving reporting on both money market funds and unregistered liquidity funds that could serve as alternatives to money market funds for some investors. These proposed reforms should further enhance the resiliency and transparency of this important product and are significant complements to the other proposals.
Today's proposal is the product of very hard work by all those who have sought to meaningfully reform this investment product that is such a critical piece of the nation's financial fabric.
There have been important and thoughtful comments throughout this process, including suggestions and recommendations from investors, the industry, and fellow regulators. We have given them all very careful consideration and they have proven invaluable to us formulating the important proposals we are voting on today.
In this regard I especially would like to thank all of my fellow Commissioners for their contributions and the spirit of cooperation in which we worked leading up to today's meeting.
I want to reiterate that our goal is to implement an effective reform that decreases the susceptibility of money market funds to run risk and prevents money market fund events similar to those that occurred in 2008 from repeating themselves. With this goal in mind, I very much look forward to the comments and am very pleased that, with my fellow Commissioners, we are moving this reform process forward.
Before I ask Norm Champ, Director of the Division of Investment Management, to discuss the proposed reforms, I would like to thank Norm and his team: Diane Blizzard, Sarah ten Siethoff, Thoreau Bartmann, Brian Johnson, Adam Bolter, Amanda Wagner, Kay Vobis, Jaime Eichen, and Megan Monroe for their tireless work on this rulemaking.
This rulemaking was a true team effort between the Division of Investment Management and the Division of Risk, Strategy and Financial Innovation, so I want to also express my gratitude for the work of Craig Lewis, Kathleen Hanley, Jennifer Marietta-Westberg, Woodrow Johnson, Jennifer Bethel, Virginia Meany, Dan Hiltgen, and Mila Sherman. I also would like to acknowledge the critical work and analysis included in the staff's economic study published late last year, which was highly influential in developing today's proposed reforms.
Thanks as well to Anne Small, Meridith Mitchell, Lori Price, Cathy Ahn, Jill Felker, and Kevin Christy from the Office of the General Counsel; Jim Burns, David Blass, Haime Workie, and Natasha Greiner from the Division of Trading and Markets; and Paul Beswick, Rachel Mincin, and Jeff Minton from the Office of the Chief Accountant.
And now I'll turn the meeting over to Norm Champ to provide a fuller explanation of the proposed reforms we are considering today.
TWO FORMER TRADERS AT JPMORGAN & CHASE CO. CHARGED WITH FRAUD
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission v. Javier Martin-Artajo and Julien G. Grout, Civil Action No. 13-CV-5677 (S.D.N.Y.)
The Securities and Exchange Commission announced today that it charged two former traders at JPMorgan Chase & Co. with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.
The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio's investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan's internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan's reported first quarter income before income tax expense to be overstated by $660 million.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Martin-Artajo and Grout.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Martin-Artajo and Grout worked in JPMorgan's chief investment office (CIO), which created the portfolio known as Synthetic Credit Portfolio (SCP) as a hedge against adverse credit events. The portfolio was primarily invested in credit derivative indices and tranches. The market value of SCP's positions began to steadily decline in early 2012 due to improving credit conditions and a recent change in investment strategy. Martin-Artajo and Grout began concealing the losses in March 2012 by providing management with fraudulent valuations of SCP's investments.
The SEC alleges that Martin-Artajo directed Grout to revise the manner in which he marked SCP's investments. Instead of continuing to price the portfolio's positions based on the mid-market prices contained in dealer quotes the CIO received, SCP's positions were instead marked at the most aggressive end of the dealers' bid-offer spread. On several occasions, Martin-Artajo provided a desired daily loss target that would enable the concealment of the extent of the losses. Grout entered the marks every day into JPMorgan's books and records, and sent daily profit and loss reports to CIO management in which he understated SCP's losses. For a period, Grout maintained a spreadsheet to track the difference between his marks and the mid-market prices previously used to value SCP's positions. By mid-March, this spreadsheet showed that the difference had grown to $432 million.
The SEC alleges that contrary to JPMorgan's accounting policy, Martin-Artajo instructed Grout on March 30 to wait for better prices after the close of trading in London in the hope that activity in the U.S. markets could support better marks for SCP's positions. The concealment of losses continued beyond the first quarter. By late April, trading counterparties raised collateral disputes over SCP positions totaling more than a half-billion dollars. Shortly thereafter, JPMorgan's management stripped the SCP traders of their marking authority and began valuing the book at the consensus mid-market prices.
The SEC's complaint alleges that Martin-Artajo and Grout violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1, and aided and abetted pursuant to Section 20(e) of the Exchange Act violations of Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-11 and 13a-13.
The SEC's investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Daniel Michael, Kapil Agrawal, Eli Bass, Daniel Nigro, Sharon Bryant, and Christopher Mele of the New York Regional Office. The litigation will be led by Joseph Boryshansky.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York, Federal Bureau of Investigation, United Kingdom Financial Conduct Authority, Office of the Comptroller of the Currency, Federal Reserve Bank of New York, and Commodity Futures Trading Commission.
Securities and Exchange Commission v. Javier Martin-Artajo and Julien G. Grout, Civil Action No. 13-CV-5677 (S.D.N.Y.)
The Securities and Exchange Commission announced today that it charged two former traders at JPMorgan Chase & Co. with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.
The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio's investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan's internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan's reported first quarter income before income tax expense to be overstated by $660 million.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Martin-Artajo and Grout.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Martin-Artajo and Grout worked in JPMorgan's chief investment office (CIO), which created the portfolio known as Synthetic Credit Portfolio (SCP) as a hedge against adverse credit events. The portfolio was primarily invested in credit derivative indices and tranches. The market value of SCP's positions began to steadily decline in early 2012 due to improving credit conditions and a recent change in investment strategy. Martin-Artajo and Grout began concealing the losses in March 2012 by providing management with fraudulent valuations of SCP's investments.
The SEC alleges that Martin-Artajo directed Grout to revise the manner in which he marked SCP's investments. Instead of continuing to price the portfolio's positions based on the mid-market prices contained in dealer quotes the CIO received, SCP's positions were instead marked at the most aggressive end of the dealers' bid-offer spread. On several occasions, Martin-Artajo provided a desired daily loss target that would enable the concealment of the extent of the losses. Grout entered the marks every day into JPMorgan's books and records, and sent daily profit and loss reports to CIO management in which he understated SCP's losses. For a period, Grout maintained a spreadsheet to track the difference between his marks and the mid-market prices previously used to value SCP's positions. By mid-March, this spreadsheet showed that the difference had grown to $432 million.
The SEC alleges that contrary to JPMorgan's accounting policy, Martin-Artajo instructed Grout on March 30 to wait for better prices after the close of trading in London in the hope that activity in the U.S. markets could support better marks for SCP's positions. The concealment of losses continued beyond the first quarter. By late April, trading counterparties raised collateral disputes over SCP positions totaling more than a half-billion dollars. Shortly thereafter, JPMorgan's management stripped the SCP traders of their marking authority and began valuing the book at the consensus mid-market prices.
The SEC's complaint alleges that Martin-Artajo and Grout violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1, and aided and abetted pursuant to Section 20(e) of the Exchange Act violations of Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-11 and 13a-13.
The SEC's investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Daniel Michael, Kapil Agrawal, Eli Bass, Daniel Nigro, Sharon Bryant, and Christopher Mele of the New York Regional Office. The litigation will be led by Joseph Boryshansky.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York, Federal Bureau of Investigation, United Kingdom Financial Conduct Authority, Office of the Comptroller of the Currency, Federal Reserve Bank of New York, and Commodity Futures Trading Commission.
CHECK SERVICES COMPANY WILL PAY $3.5 MILLION SO SETTLE ALLEGED FCRA VIOLATIONS
FROM: U.S. FEDERAL TRADE COMMISSION
Certegy Check Services to Pay $3.5 Million for Alleged Violations of the Fair Credit Reporting Act and Furnisher Rule
Penalty is Second-largest in a Fair Credit Reporting Act Matter
Certegy Check Services, Inc., one of the nation’s largest check authorization service companies, has agreed to pay $3.5 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA).
Certegy, based in St. Petersburg, Florida, is a consumer reporting agency (CRA) that compiles consumers’ personal information and uses it to help retail merchants throughout the United States determine whether to accept consumers’ checks. Under the FCRA, consumers whose checks are denied based on information Certegy provides the merchant, have the right to dispute that information and have Certegy correct any inaccuracies.
The FTC’s complaint alleges, among other things, that Certegy did not follow proper dispute procedures. The complaint further alleges that Certegy failed to follow reasonable procedures to assure maximum possible accuracy of the information it provided to its merchant clients, as required by the FCRA.
Among other things, the settlement requires Certegy to make improvements in these areas. This case is part of a broader initiative to target the practices of data brokers, which often compile, maintain, and sell sensitive consumer information. Consumer reporting agencies like Certegy are data brokers that sell information to companies making important decisions about consumers, such as their ability to get credit or pay for goods and services by check.
“Inaccurate information in a consumer reporting agency’s file can have a huge impact on a person’s everyday life, starting with their check being denied at the grocery store,” said Jessica L. Rich, Director of FTC’s Bureau of Consumer Protection. “In this case, we alleged that Certegy delivered a one-two punch: the company not only failed to assure that the information it provided to retailers was accurate, but it also failed to follow proper dispute procedures. Today’s settlement will benefit consumers who use checks to pay for essential goods and services, including many older consumers and people without alternate means of payment, such as credit cards.”
In addition to the allegations described above, the complaint alleges that Certegy violated the FCRA by failing to create a streamlined process for consumers to obtain free annual reports that they are entitled to; and establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information it furnishes to other CRAs. This is the first Commission action alleging violations of the Furnisher Rule, which went into effect on July 1, 2010. The settlement requires Certegy to comply with the Furnisher Rule, as well as the requirement to maintain a streamlined process so that consumers can request their free annual reports.
Certegy Check Services to Pay $3.5 Million for Alleged Violations of the Fair Credit Reporting Act and Furnisher Rule
Penalty is Second-largest in a Fair Credit Reporting Act Matter
Certegy Check Services, Inc., one of the nation’s largest check authorization service companies, has agreed to pay $3.5 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA).
Certegy, based in St. Petersburg, Florida, is a consumer reporting agency (CRA) that compiles consumers’ personal information and uses it to help retail merchants throughout the United States determine whether to accept consumers’ checks. Under the FCRA, consumers whose checks are denied based on information Certegy provides the merchant, have the right to dispute that information and have Certegy correct any inaccuracies.
The FTC’s complaint alleges, among other things, that Certegy did not follow proper dispute procedures. The complaint further alleges that Certegy failed to follow reasonable procedures to assure maximum possible accuracy of the information it provided to its merchant clients, as required by the FCRA.
Among other things, the settlement requires Certegy to make improvements in these areas. This case is part of a broader initiative to target the practices of data brokers, which often compile, maintain, and sell sensitive consumer information. Consumer reporting agencies like Certegy are data brokers that sell information to companies making important decisions about consumers, such as their ability to get credit or pay for goods and services by check.
“Inaccurate information in a consumer reporting agency’s file can have a huge impact on a person’s everyday life, starting with their check being denied at the grocery store,” said Jessica L. Rich, Director of FTC’s Bureau of Consumer Protection. “In this case, we alleged that Certegy delivered a one-two punch: the company not only failed to assure that the information it provided to retailers was accurate, but it also failed to follow proper dispute procedures. Today’s settlement will benefit consumers who use checks to pay for essential goods and services, including many older consumers and people without alternate means of payment, such as credit cards.”
In addition to the allegations described above, the complaint alleges that Certegy violated the FCRA by failing to create a streamlined process for consumers to obtain free annual reports that they are entitled to; and establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information it furnishes to other CRAs. This is the first Commission action alleging violations of the Furnisher Rule, which went into effect on July 1, 2010. The settlement requires Certegy to comply with the Furnisher Rule, as well as the requirement to maintain a streamlined process so that consumers can request their free annual reports.
Thursday, August 15, 2013
DEFENSE SECRETARY HAGEL'S STATEMENT ON U.S.-EGYPT DEFENSE RELATIONSHIP
FROM: U.S. DEFENSE DEPARTMENT
Secretary of Defense Chuck Hagel Statement on U.S. - Egypt Defense Relationship
Today I called Egyptian Minister of Defense Al-Sisi to discuss the U.S. - Egypt defense relationship. Since the recent crisis began, the United States has made it clear that the Egyptian government must refrain from violence, respect freedom of assembly, and move toward an inclusive political transition. Recent developments, including the violence that has resulted in hundreds of deaths across the country, have undermined those principles. As President Obama has announced, the United States military will not conduct the Bright Star training exercise scheduled for later this year.
In my discussion with Minister Al-Sisi, I reiterated that the United States remains ready to work with all parties to help achieve a peaceful, inclusive way forward. The Department of Defense will continue to maintain a military relationship with Egypt, but I made it clear that the violence and inadequate steps towards reconciliation are putting important elements of our longstanding defense cooperation at risk.
Secretary of Defense Chuck Hagel Statement on U.S. - Egypt Defense Relationship
Today I called Egyptian Minister of Defense Al-Sisi to discuss the U.S. - Egypt defense relationship. Since the recent crisis began, the United States has made it clear that the Egyptian government must refrain from violence, respect freedom of assembly, and move toward an inclusive political transition. Recent developments, including the violence that has resulted in hundreds of deaths across the country, have undermined those principles. As President Obama has announced, the United States military will not conduct the Bright Star training exercise scheduled for later this year.
In my discussion with Minister Al-Sisi, I reiterated that the United States remains ready to work with all parties to help achieve a peaceful, inclusive way forward. The Department of Defense will continue to maintain a military relationship with Egypt, but I made it clear that the violence and inadequate steps towards reconciliation are putting important elements of our longstanding defense cooperation at risk.
'MADE IN AMERICA' STAMPS DEDICATED
FROM: U.S. DEPARTMENT OF LABOR
'Made in America' With the DOL Stamp of Approval
The contributions of America's industrial-era workers have been memorialized on Forever stamps titled "Made in America: Building a Nation." The stamps, which feature black-and-white photographs of early 20th-century industrial workers, were dedicated on Aug. 8 at the Department of Labor's headquarters. Joining Secretary of Labor Thomas E. Perez at the first-day-of-issue ceremony was Postmaster General Patrick R. Donahoe. "Stamps are like a miniature American portrait gallery," said Perez. "They are an expression of our values and a connection to our past. That's why it's so fitting that that this series depicts Americans at work. These iconic images tell a powerful story about American economic strength and prosperity. These men and women and millions like them really did build a nation." Donahoe added: "With Labor Day around the corner, the Postal Service is proud to honor the men and women who helped build this country with their own hands. They mined the coal that warmed our homes. They made the clothes we wore on our backs. Let each stamp serve as a small reminder of the dedication, work ethic, and sacrifices that make America great."
'Made in America' With the DOL Stamp of Approval
The contributions of America's industrial-era workers have been memorialized on Forever stamps titled "Made in America: Building a Nation." The stamps, which feature black-and-white photographs of early 20th-century industrial workers, were dedicated on Aug. 8 at the Department of Labor's headquarters. Joining Secretary of Labor Thomas E. Perez at the first-day-of-issue ceremony was Postmaster General Patrick R. Donahoe. "Stamps are like a miniature American portrait gallery," said Perez. "They are an expression of our values and a connection to our past. That's why it's so fitting that that this series depicts Americans at work. These iconic images tell a powerful story about American economic strength and prosperity. These men and women and millions like them really did build a nation." Donahoe added: "With Labor Day around the corner, the Postal Service is proud to honor the men and women who helped build this country with their own hands. They mined the coal that warmed our homes. They made the clothes we wore on our backs. Let each stamp serve as a small reminder of the dedication, work ethic, and sacrifices that make America great."
Subscribe to:
Posts (Atom)