FROM: JUSTICE DEPARTMENT
Tuesday, February 4, 2014
JPMorgan Chase to Pay $614 Million for Submitting False Claims for FHA-insured and VA-guaranteed Mortgage Loans
The Department of Justice today announced that JPMorgan Chase (JPMC) will pay $614 million for violating the False Claims Act by knowingly originating and underwriting non-compliant mortgage loans submitted for insurance coverage and guarantees by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA). JPMC is a bank and financial services company headquartered in New York.
“The resolution announced today is a product of the Justice Department’s continuing efforts to hold accountable those whose conduct contributed to the financial crisis,” said Associate Attorney General Tony West. “This settlement recovers wrongfully claimed funds for vital government programs that give millions of Americans the opportunity to own a home and sends a clear message that we will take appropriately aggressive action against financial institutions that knowingly engage in improper mortgage lending practices.”
“The Department of Justice will continue to hold accountable financial institutions whose irresponsible mortgage lending undermines the housing market and costs the taxpayers many millions of dollars,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “I thank U.S. Attorney Bharara and his team for their stellar efforts in this case and look forward to our coordinated efforts in these cases.”
As part of the settlement, which was handled by the U.S. Attorney’s Office for the Southern District of New York, JPMC admitted that, for more than a decade, it approved thousands of FHA loans and hundreds of VA loans that were not eligible for FHA or VA insurance because they did not meet applicable agency underwriting requirements. JPMC further admitted that it failed to inform the FHA and the VA when its own internal reviews discovered more than 500 defective loans that never should have been submitted for FHA and VA insurance.
“For years, JPMorgan Chase has enjoyed the privilege of participating in federally subsidized programs aimed at helping millions of Americans realize the dream of homeownership,” said U.S. Attorney for the Southern District of New York Preet Bharara. “Yet, for more than a decade, it abused that privilege. JPMorgan Chase put profits ahead of responsibility by recklessly churning out thousands of defective mortgage loans, failing to inform the government of known problems with those loans and leaving the government to cover the losses when the loans defaulted. With today’s settlement, however, JPMorgan Chase has accepted responsibility for its misconduct and has committed to reform its business practices. This settlement adds to the list of successful mortgage fraud cases this office has pursued.”
Beginning as early as 2002, JPMC falsely certified that loans it originated and underwrote were qualified for FHA and VA insurance and guarantees. As a consequence of JPMC’s misrepresentations, both the FHA and the VA incurred substantial losses when unqualified loans failed and caused the FHA and VA to cover the associated losses.
“This settlement with JP Morgan Chase will enable HUD to recover funds lost due to Chase’s past unacceptable mortgage underwriting practices,” said HUD’s Acting General Counsel Damon Smith. “In addition, Chase must now institute new and tighter controls to prevent abuses of FHA’s automated underwriting system. HUD will continue working with the Department of Justice to ensure that lenders are held accountable and are required to institute practices that will benefit both borrowers and the FHA insurance fund.”
“The agreement reached with JPMC was possible due to the dedication of the U.S. Attorney’s Office for the Southern District of New York and the hard work of the talented staff at the Office of Inspector General,” said Inspector General of the Department of Housing and Urban Development David A. Montoya. “It also demonstrates the combined commitment of the Justice Department and the Office of Inspector General to continuing efforts to enforce FHA mortgage insurance requirements.”
The FHA’s Single Family Mortgage Insurance Program enables low- and moderate- income borrowers to purchase homes by insuring qualified loans made by participating lenders, such as JPMC, against losses if the loans later default. A participating lender may only submit to the FHA creditworthy loans meeting certain requirements and must maintain a quality control program that can prevent and correct any deficiencies in the lender’s underwriting practices. The VA’s Loan Guaranty Program provides similar assistance to veterans, service members and qualifying surviving spouses.
“I commend the efforts of the United States Attorney’s Office for the Southern District of New York to hold lenders accountable for conduct that defrauds the government and deserving veterans who rely on VA’s Loan Guaranty Program to purchase their homes,” said Acting Inspector General for the Office of Inspector General, Department of Veterans Affairs Richard J. Griffin.
The settlement resolves allegations in a complaint filed by a private whistleblower.
Today’s settlement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov .
This settlement was the result of a coordinated effort among the U.S. Attorney’s Office for the Southern District of New York , the department’s Civil Division, the Department of Housing and Urban Development’s Inspector General and the Department of Veterans Affairs’ Inspector General.
Friday, February 7, 2014
DECEPTIVE SPAM MESSAGE SENDER SETTLES FTC CHARGES
FROM: FEDERAL TRADE COMMISSION
Marketer Settles FTC Charges He Sent Millions of Deceptive, Unwanted Text Messages
An affiliate marketer has agreed to settle Federal Trade Commission charges that he was responsible for sending millions of unwanted text messages to consumers that deceptively promised “free” gift cards and electronics.
The marketer, Jason Q. Cruz of West Bend, Wisc., was a subject in a series of FTC complaints targeting the senders of deceptive spam text messages. In its complaint against Cruz, the FTC alleged that he sent text messages to consumers around the country offering free merchandise, such as $1,000 gift cards to major retailers or free iPads, to those who clicked on links in the messages. A typical message read, “You have been selected for a $1,000 Walmart GiftCard, Enter code ‘FREE’ at [website address] to claim your prize: 161 left!”
Consumers who clicked on the links did not receive the “free” merchandise. Instead, consumers were taken to websites that requested personal information and required them to sign up for multiple risky trial offers to qualify for the supposedly “free” merchandise. Most of those trial offers were for questionable products and services that cost money and included recurring monthly charges.
“When scammers use unwanted text messages to entice consumers with deceptive offers, that’s a significant problem,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Banning a serial spammer like Mr. Cruz from sending unsolicited text messages helps the FTC take a huge cut out of scammers’ efforts to target consumers in this way.”
Under the terms of the stipulated final order, Cruz is permanently banned from sending or assisting others in sending unsolicited text messages to consumers. The order also bans Cruz from deceptively presenting an offer as “free,” and from misleading consumers about the use of their personal information.
The order also includes a judgment of more than $185,000, which represents all of the money Cruz received in connection with the scam. Under the terms of the order, all but $10,000 of the monetary judgment is suspended based on Cruz’s inability to pay the full amount.
In addition, Cruz is required to destroy all consumer information he may have acquired over the course of the scam and cooperate with any further FTC investigations.
The Commission vote approving the proposed stipulated final judgment was 4-0. The FTC filed the stipulated final judgment in the U.S. District Court for the Northern District of Illinois, Eastern Division. The District Court judge signed and approved the order on Jan. 16, 2014.
NOTE: Stipulated final judgments have the force of law when approved and signed by the District Court judge.
Marketer Settles FTC Charges He Sent Millions of Deceptive, Unwanted Text Messages
An affiliate marketer has agreed to settle Federal Trade Commission charges that he was responsible for sending millions of unwanted text messages to consumers that deceptively promised “free” gift cards and electronics.
The marketer, Jason Q. Cruz of West Bend, Wisc., was a subject in a series of FTC complaints targeting the senders of deceptive spam text messages. In its complaint against Cruz, the FTC alleged that he sent text messages to consumers around the country offering free merchandise, such as $1,000 gift cards to major retailers or free iPads, to those who clicked on links in the messages. A typical message read, “You have been selected for a $1,000 Walmart GiftCard, Enter code ‘FREE’ at [website address] to claim your prize: 161 left!”
Consumers who clicked on the links did not receive the “free” merchandise. Instead, consumers were taken to websites that requested personal information and required them to sign up for multiple risky trial offers to qualify for the supposedly “free” merchandise. Most of those trial offers were for questionable products and services that cost money and included recurring monthly charges.
“When scammers use unwanted text messages to entice consumers with deceptive offers, that’s a significant problem,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Banning a serial spammer like Mr. Cruz from sending unsolicited text messages helps the FTC take a huge cut out of scammers’ efforts to target consumers in this way.”
Under the terms of the stipulated final order, Cruz is permanently banned from sending or assisting others in sending unsolicited text messages to consumers. The order also bans Cruz from deceptively presenting an offer as “free,” and from misleading consumers about the use of their personal information.
The order also includes a judgment of more than $185,000, which represents all of the money Cruz received in connection with the scam. Under the terms of the order, all but $10,000 of the monetary judgment is suspended based on Cruz’s inability to pay the full amount.
In addition, Cruz is required to destroy all consumer information he may have acquired over the course of the scam and cooperate with any further FTC investigations.
The Commission vote approving the proposed stipulated final judgment was 4-0. The FTC filed the stipulated final judgment in the U.S. District Court for the Northern District of Illinois, Eastern Division. The District Court judge signed and approved the order on Jan. 16, 2014.
NOTE: Stipulated final judgments have the force of law when approved and signed by the District Court judge.
WINTER SNOWSTORM HITS BAGRAM AIRFIELD, AFGHANISTAN
FROM: U.S. DEFENSE DEPARTMENT
U.S. Army Sgt. Travis Stover clears snow off a CH-47 Chinook helicopter after a winter storm blankets the airfield on Bagram Airfield, Afghanistan, Feb. 6, 2014. Stover is assigned to 101st Airborne Division's 159th Combat Aviation Brigade. U.S. Army photo by Capt. John Giaquinto.
A U.S. Air Force airman defrosts a C-130J Super Hercules aircraft on Bagram Airfield, Afghanistan, Feb. 6, 2014. U.S. Air Force photo by Senior Airman Kayla Newman.
CFTC CHAIRMAN WETJEN'S TESTIMONY BEFORE SENATE COMMITTEE
FROM: COMMODITY FUTURES TRADING COMMISSION
Testimony of Acting Chairman Mark P. Wetjen Before the U.S. Senate Committee on Banking, Housing & Urban Affairs, Washington, DC
February 6, 2014
Good morning Chairman Johnson, Ranking Member Crapo and members of the Committee. Thank you for inviting me to today’s hearing on the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and customer information security. I am honored to testify as Acting Chairman of the Commodity Futures Trading Commission (“CFTC”). I also am pleased to join my fellow regulators in testifying today.
Now is a good time for not only this Committee, but all stakeholders in the CFTC to reflect on the agency’s progress in implementing financial reform and what the future might bring for this agency and the markets it oversees.
Due to Dodd-Frank and the efforts of my colleagues and staff at the CFTC, today there is both pre-trade and post-trade transparency in the swaps market that did not exist before. The public now can see the price and volume of swap transactions in real-time, and the CFTC’s Weekly Swaps Report provides a snapshot of the swaps market each week. The most liquid swaps are being traded on regulated platforms and exchanges, with a panoply of protections for those depending on the markets, and regulators themselves have a new window into the marketplace through swap data repositories (“SDRs”).
Transparency, of course, is helpful only if the information provided to the public and regulators can be usefully employed. Therefore, the CFTC also is taking steps to protect the integrity of that data and ensure that it continues to be reliable and useful for surveillance, systemic risk monitoring, and the enforcement of important financial reforms.
These transparency rules complement a number of equally important financial reforms. For example, the counterparty credit risks in the swaps market have been reduced as a large segment of the swaps market is now being cleared – as of last month, about 70 percent of new, arm’s-length swaps transactions were being cleared. Additionally, nearly 100 swap dealers and major swap participants (“MSPs”) have registered with the CFTC, bringing their swaps activity and internal risk-management programs under the CFTC’s oversight for the first time. We also have strengthened a range of futures and swaps customer protections.
As it has put these reforms in place, the CFTC has consistently worked to protect liquidity in the markets and ensure that end-users can continue using them to hedge risk as Congress directed.
The CFTC, in short, has completed most of its initial mandate under Dodd-Frank and has successfully ushered in improvements to the over-the-counter derivatives market structure for swaps, while balancing countervailing objectives.
Volcker Rule
In recent weeks, the Commission finalized the Volcker Rule, which was one of our last major rules under Dodd-Frank. The Volcker Rule was exceptional on account of the unprecedented coordination among the five financial regulators.
Congress required the banking regulators to adopt a joint Volcker Rule, but it also provided that the market regulators – the Securities and Exchange Commission (“SEC”) and the CFTC – need only coordinate with the prudential banking regulators in their rulemaking efforts. One of the hallmarks of the final rule is that the market regulators went beyond the congressional requirement to simply coordinate. In fact, the CFTC’s final rule includes the same rule text as that adopted by the other agencies. Building a consensus among five different government agencies was no easy task, and the level of coordination by the financial regulators on this complicated rulemaking was exceptional.
This coordination was thanks in no small part to leadership at the Department of the Treasury. Secretary Lew, Acting Deputy Secretary Miller, and others were instrumental in keeping the agencies on task and seeing this rulemaking over the finish line. Along with the other agencies, the CFTC received more than 18,000 comments addressing numerous aspects of the proposal. CFTC staff hosted a public roundtable on the proposed rule and met with a number of commenters. Through weekly inter-agency staff meetings, along with more informal discussions, the CFTC staff and the other agencies carefully considered the comments in formulating the final rule.
Differences with Proposal
The agencies were responsive to the comments when appropriate, which led to several changes from the proposed Volcker Rule I would like to highlight.
The final Volcker Rule included some alterations to certain parts of the hedging-exemption requirements found in the proposal. For instance, the final rule requires banking entities to have controls in place through their compliance programs to demonstrate that hedges would likely be correlated with an underlying position. The final rule also requires ongoing recalibration of hedging positions in order for the entities to remain in compliance.
Additionally, the final rule provides that hedging related to a trading desk’s market-making activities is part of the trading desk’s financial exposure, which can be managed separately from the risk-mitigating hedging exemption.
Another modification to the proposal was to include under “covered funds” only those commodity pools that resemble, in terms of type of offering and investor base, a typical hedge fund.
CFTC Volcker Rule Implementation and Enforcement
The CFTC estimates that, under its Volcker regulations, it has authority over more than 100 registered swap dealers and futures commission merchants (“FCMs”) that meet the definition of “banking entity.” In addition, under Section 619, some of these banking entities may be subject to oversight by other regulators. For example, a joint FCM/broker-dealer would be subject to both CFTC and SEC jurisdiction and in such circumstances, the CFTC will monitor the activities of the entity directly and also coordinate closely with the other functional regulator(s).
In this regard, Section 619 of the Dodd-Frank Act amended the Banking Holding Company Act to direct the CFTC itself to write rules implementing Volcker Rule requirements for banking entities “for which the CFTC is the primary financial regulatory agency” as that term was defined by Congress in Dodd-Frank. Accordingly, as Congress directed, the CFTC’s final rule applies to entities that are subject to CFTC registration and that are banking entities, under the Volcker provisions of the statute.
To ensure consistent, efficient implementation of the Volcker Rule, and to address, among other things, the jurisdiction issues I just mentioned, the agencies have established a Volcker Rule implementation task force. That task force also will be the proper vehicle to examine the means for coordinated enforcement of the rule. Although compliance requirements under the Volcker Rule do not take effect until July 2015, the CFTC is exploring now whether to take additional steps, including whether to adopt formal procedures for enforcement of the rule. As part of this process, I have directed CFTC staff to consider whether the agency should adopt such procedures and to make recommendations in the near future.
Volcker Rule: Lowering Risk in Banking Entities
The final Volcker Rule closely follows the mandates of Section 619 and strikes an appropriate balance in prohibiting banking entities from engaging in the types of proprietary trading activities that Congress contemplated when considering Section 619 and in protecting liquidity and risk management through legitimate market making and hedging activities. In adopting the final rule, the CFTC and other regulators were mindful that exceptions to the prohibitions or restrictions in the statute, if not carefully defined, could conceivably swallow the rule.
Banking entities are permitted to continue market making—an important activity for providing liquidity to financial markets—but the agencies reasonably confined the meaning of the term “market making” to the extent necessary to maintain a market-making inventory to meet near-term client, customer or counterparty demands.
Likewise, the final rule permits hedging that reduces specific risks from individual or aggregated positions of the banking entity.
The final Volcker Rule also prohibits banking entities from engaging in activities that result in conflicts of interest with clients, customers or counterparties, or that pose threats to the safety and soundness of these entities, and potentially therefore to the U.S. financial system.
The final Volcker rule also limits banking entities from sponsoring or owning “covered funds,” which include hedge funds, private equity funds or certain types of commodity pools, other than under certain limited circumstances. The final rule focuses the prohibition on certain types of pooled investment vehicles that trade or invest in securities or derivatives.
Finally, and importantly, the final Volcker Rule requires banking entities to put in place a compliance program, with special attention to the firm’s compliance with the rule’s restrictions on market making, underwriting and hedging. It also requires the larger banking entities to report key metrics to regulators each month. This new transparency, once phased-in, will buttress the CFTC’s oversight of swap dealers and FCMs by providing it additional information regarding the risk levels at these registrants.
TruPS Interim Final Rule
Even with resource constraints, the CFTC has been responsive to public input and willing to explore course corrections, when appropriate. With respect to the Volcker Rule, the CFTC, along with the other agencies, last month unanimously finalized an interim final rule to allow banks to retain collateralized debt obligations backed primarily by trust-preferred securities (TruPS) issued by community banks. The agencies acted quickly to address concerns about restrictions in the final rule, demonstrating again the commitment of the agencies at this table to ongoing coordination. In doing so, the CFTC and the other agencies protected important markets for community banks, as Congress directed.
Implementation Stage of Dodd-Frank
Looking ahead through the lens of what already has been done, it is clear that the Commission and all stakeholders will need to closely monitor and, if appropriate, address the inevitable challenges that will come with implementing the new regulatory framework under Dodd-Frank.
For the CFTC, only a few rulemakings remain to be re-proposed or finalized in order to complete the implementation of Dodd-Frank. Indeed, in just a matter of days, the compliance date for perhaps the last remaining, major hallmark of the reform effort will arrive: the effective date of the swap-trading mandate.
Rules the Commission is working to address in the coming months include capital and margin requirements for un-cleared swaps, rulemakings intended to harmonize global regulations for clearinghouses and trading venues, and finalizing position limits.
There are other important matters in the months ahead as well.
Allow me to mention some of these matters before the Commission as we move forward with Dodd-Frank implementation.
Made Available to Trade Determinations
As a result of the trade execution mandate, many swaps will, for the first time, trade on regulated platforms and benefit from market-wide, pre-trade transparency. These platforms are designed to improve pricing for the buy-side, commercial end-users, and other participants that use these markets to manage risk. Additionally, SEFs, as registered entities, are required to establish and enforce comprehensive compliance and surveillance programs.
The Commission’s trade execution rules complement our other efforts to streamline participation in the markets by doing away with the need to negotiate bilateral credit arrangements and removing impediments to accessing liquidity. This not only benefits the end-users that the markets are intended to serve, but also new entrants seeking to compete for liquidity who now are able to access the markets on impartial terms. In essence, the Commission’s implementation of the trade execution mandate supports a transparent, risk-reducing swap-market structure under CFTC oversight.
In recent weeks, the “Made Available to Trade Determinations” filed by four swap execution facilities (“SEFs”) have been deemed certified, making mandatory the trading of a number of interest rate and credit default swaps on regulated platforms.
There have been some questions in this context about the trading of so-called “package transactions,” which often include a combination of financial instruments and at least one swap that is subject to the trade execution requirement. I have directed Division of Market Oversight (“DMO”) staff to hold an open-to-the-public roundtable, which will take place February 12, and to further examine these issues so that the CFTC can further consider the appropriate regulatory treatment of basis trades falling within the meaning of a “package transaction.”
Data
In order for the Commission to enforce the significant Dodd-Frank reforms, the agency must have accurate data and a clear picture of activity in the marketplace.
Last month, with the support of my fellow commissioners, I directed an interdivisional staff working group to review certain swap transaction data, recordkeeping and reporting provisions under Dodd-Frank. The working group, led by the director of DMO, will formulate and recommend questions for public comment regarding compliance with Part 45 reporting rules and related provisions, as well as consistency in regulatory reporting among market participants.
We have seen an incredible shift to a transparent, regulated swaps marketplace, and this is an appropriate review to ensure the data we are receiving is of the best possible quality so the Commission can effectively oversee the marketplace. I have asked the working group to review the incoming public comments and make recommendations to the Commission in June.
Concept Release on Risk Controls and System Safeguards for Automated Trading Environments
The CFTC’s Concept Release on Risk Controls and System Safeguards for Automated Trading Environments provides an overview of the automated trading environment, including its principal actors, potential risks, and responsive measures taken to date by the Commission or industry participants. It also discusses pre-trade risk controls; post-trade reports; system safeguards related to the design, testing and supervision of automated trading systems; and additional protections designed to promote safe and orderly markets. Within the release, the Commission asks 124 questions and is seeking extensive public input.
To give the public more time to provide comments, the CFTC extended the comment period, which continues through February 14.
Position Limits
The futures markets have a long history of embracing speculative position limits as a tool to reduce unwarranted price fluctuations and minimize the risk of manipulation, particularly in the spot month, such as corners and squeezes. Our proposed position limits rule builds on that history, increases transparency, and lessens the likelihood that a trader will accumulate excessively large speculative positions.
The Commission’s proposed rule respects congressional intent and addresses a district court decision related to the Commission’s new position-limits authority under Dodd-Frank.
The comment period on the re-proposed rule closes February 10, and I look forward to reviewing the public input.
International Coordination
Given that the U.S. has nearly delivered on its G20 commitments to derivatives reform, and the European Union is close behind, financial regulators recently have focused more time on the developing global market structure for swaps.
The G20 commitments were a reaction to a global financial crisis. Although the causes of that crisis are not as clear as some suggest, few would disagree that liquidity constraints at certain firms were at least exacerbated by exposures to derivatives.
The plain truth is that risk associated with derivatives is mobile and can migrate rapidly across borders in modern financial markets. An equally plain truth is that any efforts to monitor and manage global systemic risk therefore must be global in nature.
Risk mobility means that regulators in the U.S. and abroad do not have the luxury of limiting their oversight to financial activities occurring solely within their borders. Financial activities abroad may be confined to local markets in some cases, but the financial crisis, and more recent events, make clear that the rights and responsibilities that flow from these activities often are not.
Perhaps as important, Congress reacted to the financial crisis by authorizing the CFTC to oversee activities conducted beyond its borders in appropriate cases. It could have limited the CFTC’s oversight to only those entities and activities located or occurring within our shores, but it did not. In fact, Congress recognized in Dodd-Frank that even when activities do not obviously implicate U.S. interests, they can still create less obvious but legally binding obligations that are significant and directly relevant to the health of a U.S. firm; and which in the aggregate could have a material impact on the U.S. financial system as a whole.
So it is clear to me that the CFTC took the correct approach in adopting cross-border policies that account for the varied ways that risk can be imported into the U.S. At the same time, the CFTC’s policies tried to respect the limits of U.S. law and the resource constraints of U.S. and global regulators. That is in part why, last December, the CFTC approved a series of determinations allowing non-U.S. swap dealers and MSPs to comply with Dodd-Frank by relying on comparable and comprehensive home country regulations, otherwise known as “substituted compliance.”
Those approvals by the CFTC reflect a collaborative effort with authorities and market participants from each of the six jurisdictions with registered swap dealers. Working closely with authorities in Australia, Canada, the EU, Hong Kong, Japan, and Switzerland, the CFTC issued comparability determinations for a broad range of entity-level requirements. And in two jurisdictions, the EU and Japan, the CFTC also issued comparability determinations for a number of key transaction-level requirements.
It appears at this time that the substituted compliance approach has been successful in supporting financial reform efforts around the globe and a race-to-the-top in global derivatives regulation. Last month, for example, the European Union (“EU”) agreed on updated rules for markets in financial derivatives, or the Markets in Financial Instruments Directive II (“MiFiD II”), reflecting great progress on derivatives reform in the EU. Other jurisdictions that host a substantial market for swap activity are still working on their reforms, and certainly will be informed by the EU’s work and the CFTC’s ongoing coordination with foreign regulators.
As jurisdictions outside the U.S. continue to strengthen their regulatory regimes and meet their G20 commitments, the CFTC may determine that additional foreign regulatory requirements are comparable to and as comprehensive as certain requirements under Dodd-Frank.
The CFTC also has made great progress with the European Commission since both regulators issued the Path Forward statement last summer, and we are actively working with the Europeans to ensure that harmonized regulations on the two continents promote liquidity formation and sound risk management. Fragmented liquidity, and the regulatory and financial arbitrage that both drives and follows it, can lead to increased operational costs and risks as entities structure around the rules in primary swap markets.
Harmonizing regulations governing clearinghouses and trading venues, in particular, is critical to sound and efficient market structure. Even if firms are able to navigate the conflicts and complexities of differing regulatory regimes, regulators here and abroad must do what they can to avoid incentivizing corporate structures and inter-affiliate relationships that will only make global financial firms more difficult to understand, manage, and unwind during a period of market distress.
Conversely, this translates to open, competitive derivatives markets. It means efficient and liquid markets. A global regime is the best means to avoid balkanization of risk and risk management that may expose the U.S. financial system over time to risks that are unnecessary, needlessly complex, and difficult to predict and contain.
In light of the CFTC’s swaps authority, and the complexities of implementing a global regulatory regime, the Commission is working with numerous foreign authorities to negotiate and sign supervisory arrangements that address regulator-to-regulator cooperation and information sharing in a supervisory context. We currently are negotiating such arrangements with respect to swap dealers and MSPs, SDRs, SEFs, and derivatives clearing organizations.
As a final note on cross-border issues, on February 12 the Global Markets Advisory Committee (“GMAC”), which I sponsor, will meet to discuss the November 14, 2013, CFTC staff advisory on applicability of transaction-level requirements in certain cross-border situations.
The CFTC and Customer Information Security
The CFTC takes our responsibility to protect against the loss or theft of customer information seriously. However, the CFTC’s funding challenges, and thus our limited examinations staff, have an impact on the agency’s ability to examine and enforce critical rules that protect customer privacy and ensure firms have robust information security and other risk management policies in place.
The Gramm-Leach-Bliley Act was enacted in 1999 to ensure that financial institutions respect the privacy of their customers. Part 160 of the CFTC’s regulations was adopted pursuant to the Gramm-Leach-Bliley Act and addresses privacy and security safeguards for customer information. Under the law, swap dealers, FCMs and other CFTC registrants must have “policies and procedures that address administrative, technical and physical safeguards for the protection of customer records and information.” These policies and procedures are designed to protect against unauthorized access to customer records or information.
The CFTC is working to strengthen our registrants’ compliance with the law. The agency is poised to release a staff advisory to market participants outlining best practices for compliance. The advisory recommends, among other best practices, that registrants should assess existing privacy and security risks; design and implement a system of procedures and controls to minimize such risks; regularly test privacy and security controls, including periodic testing by an independent party; annually report to the board on these issues; and implement an incident response program that includes notifying the Commission and individuals whose information was or may be misused. In addition, the CFTC has recently issued new customer protection regulations that include, among other regulations, new requirements for risk management by firms. Security safeguards are an element of risk management that needs to be addressed by this new regulation.
Last year, the CFTC also issued interpretive guidance, mirroring that of other financial agencies, clarifying that reporting of suspected financial abuse of older Americans to appropriate law enforcement agencies does not violate the privacy provisions within Part 160 of the Commission’s rules.
Though enforcement of CFTC Part 160 rules is a challenge given our limited resources, we have enforced them in the past. In one instance, the CFTC settled a case with an FCM when an employee of that FCM placed files containing sensitive personally identifiable information on a public website, and the FCM did not have effective procedures in place to safeguard customer information.
In addition to Part 160, the CFTC’s Dodd-Frank rules for DCMs, SEFs and SDRs require these entities to notify the CFTC of all cybersecurity incidents that could potentially or actually jeopardize the security of information.
Last spring, the CFTC and SEC adopted final “red flags” rules under the Dodd-Frank Act requiring CFTC and SEC registrants to adopt programs to identify and address the risk of identity theft. As the law required, our rules establish special requirements for credit and debit card issuers to assess the validity of change of address, but currently, the CFTC entities that must follow these identity theft rules do not issue credit or debit cards. A number of firms, however, do accept credit and debit cards for payment, which presents a different type of risk.
The CFTC also has adopted a rule regarding the proper disposal of consumer information requiring reasonable measures, such as shredding, to protect against unauthorized access.
Retail Payment Systems
The Commission’s new customer protection rules on risk management require FCMs to develop risk management policies that address risks related to retail payment systems, such as anti-money laundering, identity theft, unauthorized access, and cybersecurity.
The CFTC currently does not have the resources to conduct any direct examinations of retail payment systems. The CFTC does indirectly look at the risks of retail payment systems through designated self-regulatory organizations (DSRO). The DSRO covers the operational aspects of the money movement through their risk-based programs. Additionally, DSROs perform a review of anti-money laundering at FCMs looking at a number of aspects of a retail payment system – source of funds, cash transactions, customer identity, money laundering and staff training.
For the vast majority of our registrants, the retail payment system is through normal banking channels, such as wire transfers. Only a few of our registrants accept credit or debit cards, and none currently accept virtual currency payment systems. Virtual currency, however, does present new risk, as a firm would be interacting outside of bank payment channels, increasing the risk of hacking or fraud, among other cybersecurity issues. The CFTC is working with registrants that are seeking to accept virtual currencies to educate them about best practices.
Data Breach Response
The CFTC’s response to a data breach incident would include immediately assessing the situation with the registrant to understand the magnitude of the breach and its implications on customers and the marketplace. We would coordinate with other regulators and law enforcement and together determine the appropriate course of action. Our response would include an analysis of the data compromised, immediate notification to affected customers (unless law enforcement prohibits that notification), supporting customers by having the firm provide free credit monitoring services, ensuring customers know how to change user IDs and passwords, and having the firm closely monitor customer activity to look for signs of identity theft.
Looking ahead, the Commission is considering implementing rules under Gramm-Leach-Bliley to expand upon our current customer protection regulations with more specificity regarding the security of customer information.
Resources
To be effective, the CFTC’s oversight of these registrants requires technological tools and staff with expertise to analyze complex financial information. On that note, I am pleased that the House and Senate have agreed to an appropriations bill that includes a modest budgetary increase to $215 million for the CFTC, lifting the agency’s appropriations above the sequestration level that has been challenging for planning and orderly operation of the agency. The new funding level is a step in the right direction. We will continue working with Congress to secure resources that match the agency’s critical responsibilities in protecting the safety and integrity of the financial markets under its jurisdiction. We need additional staff for surveillance, examinations, and enforcement, as well as investments in technology, to give the public confidence in our ability to oversee the vast derivatives markets.
Conclusion
For the CFTC, the Volcker Rule was one of the last remaining rulemakings required by Dodd-Frank. Only a few rulemakings remain to be re-proposed or finalized in order to complete the implementation of the legislation. Indeed, in just a matter of days, the compliance date for perhaps the last remaining major hallmark of the reform effort will arrive: the effective date of the swap-trading mandate. Looking forward, the agency will continue working to ensure an orderly transition to, and adoption of, the new market structure for swaps, and adjusting as necessary.
Thank you again for inviting me today. I would be happy to answer any questions from the Committee.
Last Updated: February 6, 2014
Testimony of Acting Chairman Mark P. Wetjen Before the U.S. Senate Committee on Banking, Housing & Urban Affairs, Washington, DC
February 6, 2014
Good morning Chairman Johnson, Ranking Member Crapo and members of the Committee. Thank you for inviting me to today’s hearing on the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and customer information security. I am honored to testify as Acting Chairman of the Commodity Futures Trading Commission (“CFTC”). I also am pleased to join my fellow regulators in testifying today.
Now is a good time for not only this Committee, but all stakeholders in the CFTC to reflect on the agency’s progress in implementing financial reform and what the future might bring for this agency and the markets it oversees.
Due to Dodd-Frank and the efforts of my colleagues and staff at the CFTC, today there is both pre-trade and post-trade transparency in the swaps market that did not exist before. The public now can see the price and volume of swap transactions in real-time, and the CFTC’s Weekly Swaps Report provides a snapshot of the swaps market each week. The most liquid swaps are being traded on regulated platforms and exchanges, with a panoply of protections for those depending on the markets, and regulators themselves have a new window into the marketplace through swap data repositories (“SDRs”).
Transparency, of course, is helpful only if the information provided to the public and regulators can be usefully employed. Therefore, the CFTC also is taking steps to protect the integrity of that data and ensure that it continues to be reliable and useful for surveillance, systemic risk monitoring, and the enforcement of important financial reforms.
These transparency rules complement a number of equally important financial reforms. For example, the counterparty credit risks in the swaps market have been reduced as a large segment of the swaps market is now being cleared – as of last month, about 70 percent of new, arm’s-length swaps transactions were being cleared. Additionally, nearly 100 swap dealers and major swap participants (“MSPs”) have registered with the CFTC, bringing their swaps activity and internal risk-management programs under the CFTC’s oversight for the first time. We also have strengthened a range of futures and swaps customer protections.
As it has put these reforms in place, the CFTC has consistently worked to protect liquidity in the markets and ensure that end-users can continue using them to hedge risk as Congress directed.
The CFTC, in short, has completed most of its initial mandate under Dodd-Frank and has successfully ushered in improvements to the over-the-counter derivatives market structure for swaps, while balancing countervailing objectives.
Volcker Rule
In recent weeks, the Commission finalized the Volcker Rule, which was one of our last major rules under Dodd-Frank. The Volcker Rule was exceptional on account of the unprecedented coordination among the five financial regulators.
Congress required the banking regulators to adopt a joint Volcker Rule, but it also provided that the market regulators – the Securities and Exchange Commission (“SEC”) and the CFTC – need only coordinate with the prudential banking regulators in their rulemaking efforts. One of the hallmarks of the final rule is that the market regulators went beyond the congressional requirement to simply coordinate. In fact, the CFTC’s final rule includes the same rule text as that adopted by the other agencies. Building a consensus among five different government agencies was no easy task, and the level of coordination by the financial regulators on this complicated rulemaking was exceptional.
This coordination was thanks in no small part to leadership at the Department of the Treasury. Secretary Lew, Acting Deputy Secretary Miller, and others were instrumental in keeping the agencies on task and seeing this rulemaking over the finish line. Along with the other agencies, the CFTC received more than 18,000 comments addressing numerous aspects of the proposal. CFTC staff hosted a public roundtable on the proposed rule and met with a number of commenters. Through weekly inter-agency staff meetings, along with more informal discussions, the CFTC staff and the other agencies carefully considered the comments in formulating the final rule.
Differences with Proposal
The agencies were responsive to the comments when appropriate, which led to several changes from the proposed Volcker Rule I would like to highlight.
The final Volcker Rule included some alterations to certain parts of the hedging-exemption requirements found in the proposal. For instance, the final rule requires banking entities to have controls in place through their compliance programs to demonstrate that hedges would likely be correlated with an underlying position. The final rule also requires ongoing recalibration of hedging positions in order for the entities to remain in compliance.
Additionally, the final rule provides that hedging related to a trading desk’s market-making activities is part of the trading desk’s financial exposure, which can be managed separately from the risk-mitigating hedging exemption.
Another modification to the proposal was to include under “covered funds” only those commodity pools that resemble, in terms of type of offering and investor base, a typical hedge fund.
CFTC Volcker Rule Implementation and Enforcement
The CFTC estimates that, under its Volcker regulations, it has authority over more than 100 registered swap dealers and futures commission merchants (“FCMs”) that meet the definition of “banking entity.” In addition, under Section 619, some of these banking entities may be subject to oversight by other regulators. For example, a joint FCM/broker-dealer would be subject to both CFTC and SEC jurisdiction and in such circumstances, the CFTC will monitor the activities of the entity directly and also coordinate closely with the other functional regulator(s).
In this regard, Section 619 of the Dodd-Frank Act amended the Banking Holding Company Act to direct the CFTC itself to write rules implementing Volcker Rule requirements for banking entities “for which the CFTC is the primary financial regulatory agency” as that term was defined by Congress in Dodd-Frank. Accordingly, as Congress directed, the CFTC’s final rule applies to entities that are subject to CFTC registration and that are banking entities, under the Volcker provisions of the statute.
To ensure consistent, efficient implementation of the Volcker Rule, and to address, among other things, the jurisdiction issues I just mentioned, the agencies have established a Volcker Rule implementation task force. That task force also will be the proper vehicle to examine the means for coordinated enforcement of the rule. Although compliance requirements under the Volcker Rule do not take effect until July 2015, the CFTC is exploring now whether to take additional steps, including whether to adopt formal procedures for enforcement of the rule. As part of this process, I have directed CFTC staff to consider whether the agency should adopt such procedures and to make recommendations in the near future.
Volcker Rule: Lowering Risk in Banking Entities
The final Volcker Rule closely follows the mandates of Section 619 and strikes an appropriate balance in prohibiting banking entities from engaging in the types of proprietary trading activities that Congress contemplated when considering Section 619 and in protecting liquidity and risk management through legitimate market making and hedging activities. In adopting the final rule, the CFTC and other regulators were mindful that exceptions to the prohibitions or restrictions in the statute, if not carefully defined, could conceivably swallow the rule.
Banking entities are permitted to continue market making—an important activity for providing liquidity to financial markets—but the agencies reasonably confined the meaning of the term “market making” to the extent necessary to maintain a market-making inventory to meet near-term client, customer or counterparty demands.
Likewise, the final rule permits hedging that reduces specific risks from individual or aggregated positions of the banking entity.
The final Volcker Rule also prohibits banking entities from engaging in activities that result in conflicts of interest with clients, customers or counterparties, or that pose threats to the safety and soundness of these entities, and potentially therefore to the U.S. financial system.
The final Volcker rule also limits banking entities from sponsoring or owning “covered funds,” which include hedge funds, private equity funds or certain types of commodity pools, other than under certain limited circumstances. The final rule focuses the prohibition on certain types of pooled investment vehicles that trade or invest in securities or derivatives.
Finally, and importantly, the final Volcker Rule requires banking entities to put in place a compliance program, with special attention to the firm’s compliance with the rule’s restrictions on market making, underwriting and hedging. It also requires the larger banking entities to report key metrics to regulators each month. This new transparency, once phased-in, will buttress the CFTC’s oversight of swap dealers and FCMs by providing it additional information regarding the risk levels at these registrants.
TruPS Interim Final Rule
Even with resource constraints, the CFTC has been responsive to public input and willing to explore course corrections, when appropriate. With respect to the Volcker Rule, the CFTC, along with the other agencies, last month unanimously finalized an interim final rule to allow banks to retain collateralized debt obligations backed primarily by trust-preferred securities (TruPS) issued by community banks. The agencies acted quickly to address concerns about restrictions in the final rule, demonstrating again the commitment of the agencies at this table to ongoing coordination. In doing so, the CFTC and the other agencies protected important markets for community banks, as Congress directed.
Implementation Stage of Dodd-Frank
Looking ahead through the lens of what already has been done, it is clear that the Commission and all stakeholders will need to closely monitor and, if appropriate, address the inevitable challenges that will come with implementing the new regulatory framework under Dodd-Frank.
For the CFTC, only a few rulemakings remain to be re-proposed or finalized in order to complete the implementation of Dodd-Frank. Indeed, in just a matter of days, the compliance date for perhaps the last remaining, major hallmark of the reform effort will arrive: the effective date of the swap-trading mandate.
Rules the Commission is working to address in the coming months include capital and margin requirements for un-cleared swaps, rulemakings intended to harmonize global regulations for clearinghouses and trading venues, and finalizing position limits.
There are other important matters in the months ahead as well.
Allow me to mention some of these matters before the Commission as we move forward with Dodd-Frank implementation.
Made Available to Trade Determinations
As a result of the trade execution mandate, many swaps will, for the first time, trade on regulated platforms and benefit from market-wide, pre-trade transparency. These platforms are designed to improve pricing for the buy-side, commercial end-users, and other participants that use these markets to manage risk. Additionally, SEFs, as registered entities, are required to establish and enforce comprehensive compliance and surveillance programs.
The Commission’s trade execution rules complement our other efforts to streamline participation in the markets by doing away with the need to negotiate bilateral credit arrangements and removing impediments to accessing liquidity. This not only benefits the end-users that the markets are intended to serve, but also new entrants seeking to compete for liquidity who now are able to access the markets on impartial terms. In essence, the Commission’s implementation of the trade execution mandate supports a transparent, risk-reducing swap-market structure under CFTC oversight.
In recent weeks, the “Made Available to Trade Determinations” filed by four swap execution facilities (“SEFs”) have been deemed certified, making mandatory the trading of a number of interest rate and credit default swaps on regulated platforms.
There have been some questions in this context about the trading of so-called “package transactions,” which often include a combination of financial instruments and at least one swap that is subject to the trade execution requirement. I have directed Division of Market Oversight (“DMO”) staff to hold an open-to-the-public roundtable, which will take place February 12, and to further examine these issues so that the CFTC can further consider the appropriate regulatory treatment of basis trades falling within the meaning of a “package transaction.”
Data
In order for the Commission to enforce the significant Dodd-Frank reforms, the agency must have accurate data and a clear picture of activity in the marketplace.
Last month, with the support of my fellow commissioners, I directed an interdivisional staff working group to review certain swap transaction data, recordkeeping and reporting provisions under Dodd-Frank. The working group, led by the director of DMO, will formulate and recommend questions for public comment regarding compliance with Part 45 reporting rules and related provisions, as well as consistency in regulatory reporting among market participants.
We have seen an incredible shift to a transparent, regulated swaps marketplace, and this is an appropriate review to ensure the data we are receiving is of the best possible quality so the Commission can effectively oversee the marketplace. I have asked the working group to review the incoming public comments and make recommendations to the Commission in June.
Concept Release on Risk Controls and System Safeguards for Automated Trading Environments
The CFTC’s Concept Release on Risk Controls and System Safeguards for Automated Trading Environments provides an overview of the automated trading environment, including its principal actors, potential risks, and responsive measures taken to date by the Commission or industry participants. It also discusses pre-trade risk controls; post-trade reports; system safeguards related to the design, testing and supervision of automated trading systems; and additional protections designed to promote safe and orderly markets. Within the release, the Commission asks 124 questions and is seeking extensive public input.
To give the public more time to provide comments, the CFTC extended the comment period, which continues through February 14.
Position Limits
The futures markets have a long history of embracing speculative position limits as a tool to reduce unwarranted price fluctuations and minimize the risk of manipulation, particularly in the spot month, such as corners and squeezes. Our proposed position limits rule builds on that history, increases transparency, and lessens the likelihood that a trader will accumulate excessively large speculative positions.
The Commission’s proposed rule respects congressional intent and addresses a district court decision related to the Commission’s new position-limits authority under Dodd-Frank.
The comment period on the re-proposed rule closes February 10, and I look forward to reviewing the public input.
International Coordination
Given that the U.S. has nearly delivered on its G20 commitments to derivatives reform, and the European Union is close behind, financial regulators recently have focused more time on the developing global market structure for swaps.
The G20 commitments were a reaction to a global financial crisis. Although the causes of that crisis are not as clear as some suggest, few would disagree that liquidity constraints at certain firms were at least exacerbated by exposures to derivatives.
The plain truth is that risk associated with derivatives is mobile and can migrate rapidly across borders in modern financial markets. An equally plain truth is that any efforts to monitor and manage global systemic risk therefore must be global in nature.
Risk mobility means that regulators in the U.S. and abroad do not have the luxury of limiting their oversight to financial activities occurring solely within their borders. Financial activities abroad may be confined to local markets in some cases, but the financial crisis, and more recent events, make clear that the rights and responsibilities that flow from these activities often are not.
Perhaps as important, Congress reacted to the financial crisis by authorizing the CFTC to oversee activities conducted beyond its borders in appropriate cases. It could have limited the CFTC’s oversight to only those entities and activities located or occurring within our shores, but it did not. In fact, Congress recognized in Dodd-Frank that even when activities do not obviously implicate U.S. interests, they can still create less obvious but legally binding obligations that are significant and directly relevant to the health of a U.S. firm; and which in the aggregate could have a material impact on the U.S. financial system as a whole.
So it is clear to me that the CFTC took the correct approach in adopting cross-border policies that account for the varied ways that risk can be imported into the U.S. At the same time, the CFTC’s policies tried to respect the limits of U.S. law and the resource constraints of U.S. and global regulators. That is in part why, last December, the CFTC approved a series of determinations allowing non-U.S. swap dealers and MSPs to comply with Dodd-Frank by relying on comparable and comprehensive home country regulations, otherwise known as “substituted compliance.”
Those approvals by the CFTC reflect a collaborative effort with authorities and market participants from each of the six jurisdictions with registered swap dealers. Working closely with authorities in Australia, Canada, the EU, Hong Kong, Japan, and Switzerland, the CFTC issued comparability determinations for a broad range of entity-level requirements. And in two jurisdictions, the EU and Japan, the CFTC also issued comparability determinations for a number of key transaction-level requirements.
It appears at this time that the substituted compliance approach has been successful in supporting financial reform efforts around the globe and a race-to-the-top in global derivatives regulation. Last month, for example, the European Union (“EU”) agreed on updated rules for markets in financial derivatives, or the Markets in Financial Instruments Directive II (“MiFiD II”), reflecting great progress on derivatives reform in the EU. Other jurisdictions that host a substantial market for swap activity are still working on their reforms, and certainly will be informed by the EU’s work and the CFTC’s ongoing coordination with foreign regulators.
As jurisdictions outside the U.S. continue to strengthen their regulatory regimes and meet their G20 commitments, the CFTC may determine that additional foreign regulatory requirements are comparable to and as comprehensive as certain requirements under Dodd-Frank.
The CFTC also has made great progress with the European Commission since both regulators issued the Path Forward statement last summer, and we are actively working with the Europeans to ensure that harmonized regulations on the two continents promote liquidity formation and sound risk management. Fragmented liquidity, and the regulatory and financial arbitrage that both drives and follows it, can lead to increased operational costs and risks as entities structure around the rules in primary swap markets.
Harmonizing regulations governing clearinghouses and trading venues, in particular, is critical to sound and efficient market structure. Even if firms are able to navigate the conflicts and complexities of differing regulatory regimes, regulators here and abroad must do what they can to avoid incentivizing corporate structures and inter-affiliate relationships that will only make global financial firms more difficult to understand, manage, and unwind during a period of market distress.
Conversely, this translates to open, competitive derivatives markets. It means efficient and liquid markets. A global regime is the best means to avoid balkanization of risk and risk management that may expose the U.S. financial system over time to risks that are unnecessary, needlessly complex, and difficult to predict and contain.
In light of the CFTC’s swaps authority, and the complexities of implementing a global regulatory regime, the Commission is working with numerous foreign authorities to negotiate and sign supervisory arrangements that address regulator-to-regulator cooperation and information sharing in a supervisory context. We currently are negotiating such arrangements with respect to swap dealers and MSPs, SDRs, SEFs, and derivatives clearing organizations.
As a final note on cross-border issues, on February 12 the Global Markets Advisory Committee (“GMAC”), which I sponsor, will meet to discuss the November 14, 2013, CFTC staff advisory on applicability of transaction-level requirements in certain cross-border situations.
The CFTC and Customer Information Security
The CFTC takes our responsibility to protect against the loss or theft of customer information seriously. However, the CFTC’s funding challenges, and thus our limited examinations staff, have an impact on the agency’s ability to examine and enforce critical rules that protect customer privacy and ensure firms have robust information security and other risk management policies in place.
The Gramm-Leach-Bliley Act was enacted in 1999 to ensure that financial institutions respect the privacy of their customers. Part 160 of the CFTC’s regulations was adopted pursuant to the Gramm-Leach-Bliley Act and addresses privacy and security safeguards for customer information. Under the law, swap dealers, FCMs and other CFTC registrants must have “policies and procedures that address administrative, technical and physical safeguards for the protection of customer records and information.” These policies and procedures are designed to protect against unauthorized access to customer records or information.
The CFTC is working to strengthen our registrants’ compliance with the law. The agency is poised to release a staff advisory to market participants outlining best practices for compliance. The advisory recommends, among other best practices, that registrants should assess existing privacy and security risks; design and implement a system of procedures and controls to minimize such risks; regularly test privacy and security controls, including periodic testing by an independent party; annually report to the board on these issues; and implement an incident response program that includes notifying the Commission and individuals whose information was or may be misused. In addition, the CFTC has recently issued new customer protection regulations that include, among other regulations, new requirements for risk management by firms. Security safeguards are an element of risk management that needs to be addressed by this new regulation.
Last year, the CFTC also issued interpretive guidance, mirroring that of other financial agencies, clarifying that reporting of suspected financial abuse of older Americans to appropriate law enforcement agencies does not violate the privacy provisions within Part 160 of the Commission’s rules.
Though enforcement of CFTC Part 160 rules is a challenge given our limited resources, we have enforced them in the past. In one instance, the CFTC settled a case with an FCM when an employee of that FCM placed files containing sensitive personally identifiable information on a public website, and the FCM did not have effective procedures in place to safeguard customer information.
In addition to Part 160, the CFTC’s Dodd-Frank rules for DCMs, SEFs and SDRs require these entities to notify the CFTC of all cybersecurity incidents that could potentially or actually jeopardize the security of information.
Last spring, the CFTC and SEC adopted final “red flags” rules under the Dodd-Frank Act requiring CFTC and SEC registrants to adopt programs to identify and address the risk of identity theft. As the law required, our rules establish special requirements for credit and debit card issuers to assess the validity of change of address, but currently, the CFTC entities that must follow these identity theft rules do not issue credit or debit cards. A number of firms, however, do accept credit and debit cards for payment, which presents a different type of risk.
The CFTC also has adopted a rule regarding the proper disposal of consumer information requiring reasonable measures, such as shredding, to protect against unauthorized access.
Retail Payment Systems
The Commission’s new customer protection rules on risk management require FCMs to develop risk management policies that address risks related to retail payment systems, such as anti-money laundering, identity theft, unauthorized access, and cybersecurity.
The CFTC currently does not have the resources to conduct any direct examinations of retail payment systems. The CFTC does indirectly look at the risks of retail payment systems through designated self-regulatory organizations (DSRO). The DSRO covers the operational aspects of the money movement through their risk-based programs. Additionally, DSROs perform a review of anti-money laundering at FCMs looking at a number of aspects of a retail payment system – source of funds, cash transactions, customer identity, money laundering and staff training.
For the vast majority of our registrants, the retail payment system is through normal banking channels, such as wire transfers. Only a few of our registrants accept credit or debit cards, and none currently accept virtual currency payment systems. Virtual currency, however, does present new risk, as a firm would be interacting outside of bank payment channels, increasing the risk of hacking or fraud, among other cybersecurity issues. The CFTC is working with registrants that are seeking to accept virtual currencies to educate them about best practices.
Data Breach Response
The CFTC’s response to a data breach incident would include immediately assessing the situation with the registrant to understand the magnitude of the breach and its implications on customers and the marketplace. We would coordinate with other regulators and law enforcement and together determine the appropriate course of action. Our response would include an analysis of the data compromised, immediate notification to affected customers (unless law enforcement prohibits that notification), supporting customers by having the firm provide free credit monitoring services, ensuring customers know how to change user IDs and passwords, and having the firm closely monitor customer activity to look for signs of identity theft.
Looking ahead, the Commission is considering implementing rules under Gramm-Leach-Bliley to expand upon our current customer protection regulations with more specificity regarding the security of customer information.
Resources
To be effective, the CFTC’s oversight of these registrants requires technological tools and staff with expertise to analyze complex financial information. On that note, I am pleased that the House and Senate have agreed to an appropriations bill that includes a modest budgetary increase to $215 million for the CFTC, lifting the agency’s appropriations above the sequestration level that has been challenging for planning and orderly operation of the agency. The new funding level is a step in the right direction. We will continue working with Congress to secure resources that match the agency’s critical responsibilities in protecting the safety and integrity of the financial markets under its jurisdiction. We need additional staff for surveillance, examinations, and enforcement, as well as investments in technology, to give the public confidence in our ability to oversee the vast derivatives markets.
Conclusion
For the CFTC, the Volcker Rule was one of the last remaining rulemakings required by Dodd-Frank. Only a few rulemakings remain to be re-proposed or finalized in order to complete the implementation of the legislation. Indeed, in just a matter of days, the compliance date for perhaps the last remaining major hallmark of the reform effort will arrive: the effective date of the swap-trading mandate. Looking forward, the agency will continue working to ensure an orderly transition to, and adoption of, the new market structure for swaps, and adjusting as necessary.
Thank you again for inviting me today. I would be happy to answer any questions from the Committee.
Last Updated: February 6, 2014
CDC REPORT ON CHILD PASSENGER SAFETY
FROM: CENTERS FOR DISEASE CONTROL AND PREVENTION
New CDC Vital Signs: Child Passenger Safety
One in three children who died in crashes in 2011 was not buckled up, according to a new CDC Vital Signs report. CDC analyzed 2002–2011 data from the Fatality Analysis Reporting System, collected by the National Highway Traffic Safety Administration, to determine the number and rate of motor-vehicle occupant deaths, and the percentage of child deaths among children age 12 and younger who were not buckled up. Motor vehicle crash deaths among children age 12 and younger decreased by 43 percent in the past decade (2002-2011), however, more than 9,000 children died in crashes during that period.
Research has shown that using age- and size-appropriate child restraints (car seats, booster seats, and seat belts) is the best way to save lives and reduce injuries in a crash, yet only 2 out of every 100 children live in states that require car seat or booster seat use for children age 8 and under. Almost half of all black (45 percent) and Hispanic (46 percent) children who died in crashes were not buckled up, compared to 26 percent of white children (2009-2010).
To help keep children safe on the road, parents and caregivers can:
Buckle children in car seats, booster seats, and seat belts in the back seat—on every trip, no matter how short.
Rear-facing car seat from birth up to age 2. Buckle children in a rear-facing seat until age 2 or when they reach the upper weight or height limit of that seat.
Forward-facing car seat from age 2 up to at least age 5. When children outgrow their rear-facing seat, they should be buckled in a forward-facing car seat until at least age 5 or when they reach the upper weight or height limit of that seat.
Booster seat from age 5 up until seat belt fits properly. Once children outgrow their forward-facing seat, they should be buckled in a booster seat until seat belts fit properly. The recommended height for proper seat belt fit is 57 inches tall.
Seat belt once it fits properly without a booster seat. Children no longer need to use a booster seat once seat belts fit them properly. Seat belts fit properly when the lap belt lays across the upper thighs (not the stomach) and the shoulder belt lays across the chest (not the neck).
Install and use car seats according to the owner’s manual or get help installing them from a certified Child Passenger Safety Technician.
Buckle children age 12 and under in the back seat.
New CDC Vital Signs: Child Passenger Safety
One in three children who died in crashes in 2011 was not buckled up, according to a new CDC Vital Signs report. CDC analyzed 2002–2011 data from the Fatality Analysis Reporting System, collected by the National Highway Traffic Safety Administration, to determine the number and rate of motor-vehicle occupant deaths, and the percentage of child deaths among children age 12 and younger who were not buckled up. Motor vehicle crash deaths among children age 12 and younger decreased by 43 percent in the past decade (2002-2011), however, more than 9,000 children died in crashes during that period.
Research has shown that using age- and size-appropriate child restraints (car seats, booster seats, and seat belts) is the best way to save lives and reduce injuries in a crash, yet only 2 out of every 100 children live in states that require car seat or booster seat use for children age 8 and under. Almost half of all black (45 percent) and Hispanic (46 percent) children who died in crashes were not buckled up, compared to 26 percent of white children (2009-2010).
To help keep children safe on the road, parents and caregivers can:
Buckle children in car seats, booster seats, and seat belts in the back seat—on every trip, no matter how short.
Rear-facing car seat from birth up to age 2. Buckle children in a rear-facing seat until age 2 or when they reach the upper weight or height limit of that seat.
Forward-facing car seat from age 2 up to at least age 5. When children outgrow their rear-facing seat, they should be buckled in a forward-facing car seat until at least age 5 or when they reach the upper weight or height limit of that seat.
Booster seat from age 5 up until seat belt fits properly. Once children outgrow their forward-facing seat, they should be buckled in a booster seat until seat belts fit properly. The recommended height for proper seat belt fit is 57 inches tall.
Seat belt once it fits properly without a booster seat. Children no longer need to use a booster seat once seat belts fit them properly. Seat belts fit properly when the lap belt lays across the upper thighs (not the stomach) and the shoulder belt lays across the chest (not the neck).
Install and use car seats according to the owner’s manual or get help installing them from a certified Child Passenger Safety Technician.
Buckle children age 12 and under in the back seat.
THREE NATIVE AMERICAN TRIBES TO IMPLEMENT SPECIAL DOMESTIC VIOLENCE CRIMINAL JURISDICTION
FROM: JUSTICE DEPARTMENT
Thursday, February 6, 2014
Justice Department Announces Three Tribes to Implement Special Domestic Violence Criminal Jurisdiction Under Vawa 2013
Three American Indian tribes – the Pascua Yaqui Tribe of Arizona, the Tulalip Tribes of Washington, and the Umatilla Tribes of Oregon – will be the first in the nation to exercise special criminal jurisdiction over certain crimes of domestic and dating violence, regardless of the defendant’s Indian or non-Indian status, under a pilot project authorized by the Violence Against Women Reauthorization Act of 2013 (VAWA 2013).
“This is just the latest step forward in this administration’s historic efforts to address the public safety crisis in Indian country,” said Attorney General Eric Holder. “Every day, we’re working hard to strengthen partnerships with tribal leaders and confront shared challenges – particularly when it comes to protecting Indian women and girls from the shocking and unacceptably high rates of violence they too often face. With the important new tools provided by the Violence Against Women Reauthorization Act of 2013, these critical pilot projects will facilitate the first tribal prosecutions of non-Indian perpetrators in recent times. This represents a significant victory for public safety and the rule of law, and a momentous step forward for tribal sovereignty and self-determination.”
Although the provisions authorizing the special jurisdiction take effect generally in March 2015, the law also gives the Attorney General discretion to grant a tribe’s request to exercise the jurisdiction earlier, through a voluntary pilot project. The authority to approve such requests has been delegated to Associate Attorney General Tony West. Associate Attorney General West today congratulated tribal leaders on this historic achievement in letters to the three tribes.
“The old jurisdictional scheme failed to adequately protect the public – particularly native women – with too many crimes going unprosecuted and unpunished amidst escalating violence in Indian Country,” stated Associate Attorney General West. “Our actions today mark a historic turning point. We believe that by certifying certain tribes to exercise jurisdiction over these crimes, we will help decrease domestic and dating violence in Indian Country, strengthen tribal capacity to administer justice and control crime, and ensure that perpetrators of sexual violence are held accountable for their criminal behavior.”
Since the Supreme Court’s 1978 opinion in Oliphant v. Suquamish Indian Tribe, tribes have been prohibited from exercising criminal jurisdiction over non-Indian defendants. This included domestic violence and dating violence committed by non-Indian abusers against their Indian spouses, intimate partners, and dating partners. Even a violent crime committed by a non-Indian husband against his Indian wife, in the presence of her Indian children, in their home on the Indian reservation, could not be prosecuted by the tribe. In granting the pilot-project requests of the Pascua Yaqui, Tulalip, and Umatilla tribes today, the United States is recognizing and affirming the tribes’ inherent power to exercise “special domestic violence criminal jurisdiction” (SDVCJ) over all persons, regardless of their Indian or non-Indian status, for crimes committed on or after Feb. 20, 2014.
As described in the Department of Justice’s Final Notice on the pilot project, today’s decisions are based on a diligent, detailed review of application questionnaires submitted by the tribes in December 2013, along with excerpts of tribal laws, rules, and policies, and other relevant information. That review, conducted in close coordination with the Department of the Interior and after formal consultation with affected Indian tribes, led the Justice Department to determine that the criminal justice systems of the Pascua Yaqui, Umatilla, and Tulalip tribes have adequate safeguards in place to fully protect defendants’ rights under the Indian Civil Rights Act of 1968, as amended by VAWA 2013.
The Department of Justice is posting notices of the pilot-project designation on the Tribal Justice and Safety Web site (www.justice.gov/tribal/) and in the Federal Register. In addition, each tribe’s application questionnaire and related tribal laws, rules, and policies will be posted on the Web site. These materials will serve as a resource for those tribes that may also wish to participate in the pilot project or to commence exercising SDVCJ in March 2015 or later, after the pilot project has concluded.
Thursday, February 6, 2014
Justice Department Announces Three Tribes to Implement Special Domestic Violence Criminal Jurisdiction Under Vawa 2013
Three American Indian tribes – the Pascua Yaqui Tribe of Arizona, the Tulalip Tribes of Washington, and the Umatilla Tribes of Oregon – will be the first in the nation to exercise special criminal jurisdiction over certain crimes of domestic and dating violence, regardless of the defendant’s Indian or non-Indian status, under a pilot project authorized by the Violence Against Women Reauthorization Act of 2013 (VAWA 2013).
“This is just the latest step forward in this administration’s historic efforts to address the public safety crisis in Indian country,” said Attorney General Eric Holder. “Every day, we’re working hard to strengthen partnerships with tribal leaders and confront shared challenges – particularly when it comes to protecting Indian women and girls from the shocking and unacceptably high rates of violence they too often face. With the important new tools provided by the Violence Against Women Reauthorization Act of 2013, these critical pilot projects will facilitate the first tribal prosecutions of non-Indian perpetrators in recent times. This represents a significant victory for public safety and the rule of law, and a momentous step forward for tribal sovereignty and self-determination.”
Although the provisions authorizing the special jurisdiction take effect generally in March 2015, the law also gives the Attorney General discretion to grant a tribe’s request to exercise the jurisdiction earlier, through a voluntary pilot project. The authority to approve such requests has been delegated to Associate Attorney General Tony West. Associate Attorney General West today congratulated tribal leaders on this historic achievement in letters to the three tribes.
“The old jurisdictional scheme failed to adequately protect the public – particularly native women – with too many crimes going unprosecuted and unpunished amidst escalating violence in Indian Country,” stated Associate Attorney General West. “Our actions today mark a historic turning point. We believe that by certifying certain tribes to exercise jurisdiction over these crimes, we will help decrease domestic and dating violence in Indian Country, strengthen tribal capacity to administer justice and control crime, and ensure that perpetrators of sexual violence are held accountable for their criminal behavior.”
Since the Supreme Court’s 1978 opinion in Oliphant v. Suquamish Indian Tribe, tribes have been prohibited from exercising criminal jurisdiction over non-Indian defendants. This included domestic violence and dating violence committed by non-Indian abusers against their Indian spouses, intimate partners, and dating partners. Even a violent crime committed by a non-Indian husband against his Indian wife, in the presence of her Indian children, in their home on the Indian reservation, could not be prosecuted by the tribe. In granting the pilot-project requests of the Pascua Yaqui, Tulalip, and Umatilla tribes today, the United States is recognizing and affirming the tribes’ inherent power to exercise “special domestic violence criminal jurisdiction” (SDVCJ) over all persons, regardless of their Indian or non-Indian status, for crimes committed on or after Feb. 20, 2014.
As described in the Department of Justice’s Final Notice on the pilot project, today’s decisions are based on a diligent, detailed review of application questionnaires submitted by the tribes in December 2013, along with excerpts of tribal laws, rules, and policies, and other relevant information. That review, conducted in close coordination with the Department of the Interior and after formal consultation with affected Indian tribes, led the Justice Department to determine that the criminal justice systems of the Pascua Yaqui, Umatilla, and Tulalip tribes have adequate safeguards in place to fully protect defendants’ rights under the Indian Civil Rights Act of 1968, as amended by VAWA 2013.
The Department of Justice is posting notices of the pilot-project designation on the Tribal Justice and Safety Web site (www.justice.gov/tribal/) and in the Federal Register. In addition, each tribe’s application questionnaire and related tribal laws, rules, and policies will be posted on the Web site. These materials will serve as a resource for those tribes that may also wish to participate in the pilot project or to commence exercising SDVCJ in March 2015 or later, after the pilot project has concluded.
MV CAPE RAY READY FOR SYRIAN CHEMICAL NEUTRALIZATION MISSION
FROM: U.S. DEFENSE DEPARTMENT
Cape Ray Arrives in Spain to Await Syrian Chemical Mission
American Forces Press Service
WASHINGTON, Feb. 13, 2014 – The container ship M/V Cape Ray has arrived at Rota, Spain, for a port visit while en route to aid in removal of Syrian chemical materials, Pentagon spokesman Army Col. Steve Warren said.
The vessel -- part of the Transportation Department Maritime Administration's Ready Reserve Force program -- left Portsmouth, Va., Jan. 27. Hundreds of government and contract personnel worked for several months to prepare the vessel to neutralize Syrian chemical materials and precursors using hydrolysis technology.
“When Syria has completed removal of its chemical materials, MV Cape Ray will depart Rota and proceed to the transloading port in Italy, where she will take the chemicals on board,” Warren said in a statement announcing the vessel’s arrival in Spain. “Our ship is prepared and our crew is trained to safely neutralize Syria's chemical materials. We stand ready to fulfill our contributions to this international effort; it is time for Syria to live up to their obligations to the international community."
By offering Rota for a port of call before MV Cape Ray receives a load of chemical materials and embarks on the destruction phase of its mission, Spain is making a contribution to the United Nations-sanctioned multinational effort to rid Syria of its chemical weapons materials, officials at the U.S. Embassy in Madrid said.
The United States plans to neutralize the chemicals at sea in international waters using proven hydrolysis technology, embassy officials added. All waste from the hydrolysis process aboard MV Cape Ray will be safely and properly stored on board until it is disposed of at commercial facilities to be determined by the Organization for the Prohibition of Chemical Weapons, they added, emphasizing that no hydrolysis byproducts will be released into the sea or air.
Defense Secretary Chuck Hagel sent a message to the Cape Ray’s crew, wishing them well as they left Portsmouth.
“As you all know, your task will not be easy,” Hagel wrote. “Your days will be long and rigorous. But your hard work, preparation and dedication will make the difference.
“You are ready,” the secretary continued. “We all have complete confidence in each of you. You represent the best of our nation, not only because of your expertise and commitment, but because of your willingness to serve when called upon. For that, we will always be grateful. We are also grateful to your families for the love and support they have given you. On behalf of our country and the American people, I wish you much success. Take care of yourselves. God bless you all.”
Cape Ray Arrives in Spain to Await Syrian Chemical Mission
American Forces Press Service
WASHINGTON, Feb. 13, 2014 – The container ship M/V Cape Ray has arrived at Rota, Spain, for a port visit while en route to aid in removal of Syrian chemical materials, Pentagon spokesman Army Col. Steve Warren said.
The vessel -- part of the Transportation Department Maritime Administration's Ready Reserve Force program -- left Portsmouth, Va., Jan. 27. Hundreds of government and contract personnel worked for several months to prepare the vessel to neutralize Syrian chemical materials and precursors using hydrolysis technology.
“When Syria has completed removal of its chemical materials, MV Cape Ray will depart Rota and proceed to the transloading port in Italy, where she will take the chemicals on board,” Warren said in a statement announcing the vessel’s arrival in Spain. “Our ship is prepared and our crew is trained to safely neutralize Syria's chemical materials. We stand ready to fulfill our contributions to this international effort; it is time for Syria to live up to their obligations to the international community."
By offering Rota for a port of call before MV Cape Ray receives a load of chemical materials and embarks on the destruction phase of its mission, Spain is making a contribution to the United Nations-sanctioned multinational effort to rid Syria of its chemical weapons materials, officials at the U.S. Embassy in Madrid said.
The United States plans to neutralize the chemicals at sea in international waters using proven hydrolysis technology, embassy officials added. All waste from the hydrolysis process aboard MV Cape Ray will be safely and properly stored on board until it is disposed of at commercial facilities to be determined by the Organization for the Prohibition of Chemical Weapons, they added, emphasizing that no hydrolysis byproducts will be released into the sea or air.
Defense Secretary Chuck Hagel sent a message to the Cape Ray’s crew, wishing them well as they left Portsmouth.
“As you all know, your task will not be easy,” Hagel wrote. “Your days will be long and rigorous. But your hard work, preparation and dedication will make the difference.
“You are ready,” the secretary continued. “We all have complete confidence in each of you. You represent the best of our nation, not only because of your expertise and commitment, but because of your willingness to serve when called upon. For that, we will always be grateful. We are also grateful to your families for the love and support they have given you. On behalf of our country and the American people, I wish you much success. Take care of yourselves. God bless you all.”
DENTIST WHO DIDN'T REPORT CREDIT CARD PAYMENTS, PLEADS GUILTY TO TAX EVASION
FROM: JUSTICE DEPARTMENT
Thursday, February 6, 2014
Georgia Dentist Pleads Guilty to Tax Evasion
Dr. Dayo Obebe of Muscogee County, Ga., pleaded guilty today in federal court in Columbus, Ga., to one count of tax evasion, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.
According to court documents, Obebe is a dentist licensed in Georgia and Alabama, where he operated the Moon Road Cosmetic & Family Dentistry in Columbus, Ga., and the Brent Dental Dentistry in Brent, Ala. In 2004, Obebe began intentionally concealing money he earned from patients who paid with credit cards from his accountants and the IRS by placing credit card payments into a separate bank account from other cash and check receipts. Consequently, Obebe intentionally underreported his total income from the dental practice on his 2004, 2005 and 2006 federal income tax returns by more than $500,000 and falsely claimed a tax refund.
In 2007, the IRS audited Obebe’s tax return. In 2008 Obebe lied during an audit when he stated that he accurately reported his income on his tax return, when he knew that he had earned substantially more income over the three-year period than he had reported to the IRS. In total, Obebe evaded paying over $185,000 in tax to the IRS on his 2004, 2005 and 2006 federal income tax returns.
Obebe faces a statutory maximum sentence of five years in prison, three years of supervised release and a $250,000 fine. In addition, according to the plea agreement, he has agreed to pay restitution to the IRS in the amount of $189,661. Sentencing has not been scheduled.
The case was investigated by special agents of the IRS - Criminal Investigation, and Trial Attorneys Charles Edgar and Justin Gelfand for the Tax Division are prosecuting the case.
Thursday, February 6, 2014
Georgia Dentist Pleads Guilty to Tax Evasion
Dr. Dayo Obebe of Muscogee County, Ga., pleaded guilty today in federal court in Columbus, Ga., to one count of tax evasion, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.
According to court documents, Obebe is a dentist licensed in Georgia and Alabama, where he operated the Moon Road Cosmetic & Family Dentistry in Columbus, Ga., and the Brent Dental Dentistry in Brent, Ala. In 2004, Obebe began intentionally concealing money he earned from patients who paid with credit cards from his accountants and the IRS by placing credit card payments into a separate bank account from other cash and check receipts. Consequently, Obebe intentionally underreported his total income from the dental practice on his 2004, 2005 and 2006 federal income tax returns by more than $500,000 and falsely claimed a tax refund.
In 2007, the IRS audited Obebe’s tax return. In 2008 Obebe lied during an audit when he stated that he accurately reported his income on his tax return, when he knew that he had earned substantially more income over the three-year period than he had reported to the IRS. In total, Obebe evaded paying over $185,000 in tax to the IRS on his 2004, 2005 and 2006 federal income tax returns.
Obebe faces a statutory maximum sentence of five years in prison, three years of supervised release and a $250,000 fine. In addition, according to the plea agreement, he has agreed to pay restitution to the IRS in the amount of $189,661. Sentencing has not been scheduled.
The case was investigated by special agents of the IRS - Criminal Investigation, and Trial Attorneys Charles Edgar and Justin Gelfand for the Tax Division are prosecuting the case.
U.S. SETS EXPORT RECORD ACCORDING TO EXPORT-IMPORT BANK
FROM: U.S. EXPORT-IMPORT BANK
U.S. Exports Reach $2.3 Trillion in 2013
For Fourth Consecutive Year, U.S. Sets Export Record
Washington, D.C. – The United States has set another annual record for the fourth consecutive year by exporting $2.3 trillion in goods and services in 2013, according to data released today by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department.
The data also reveals that U.S. exports supported nearly 10 million American jobs in 2013.
In December, the U.S. exported $191.3 billion of goods and services.
“As the numbers prove, American entrepreneurs will continue to outperform their competitors in the global marketplace, as long as they are given a level playing field,” said Export-Import Bank Chairman and President Fred P. Hochberg. “Under the strategic direction established by President Obama’s National Export Initiative, we continue to export more goods at a record pace. By exporting $2.3 trillion in U.S. goods and services and supporting 10 million American jobs, America’s exporters continue to make critical contributions to our economy.”
Exports of goods and services over the last twelve months totaled $2.3 trillion, which is 44.0 percent above the level of exports in 2009. During the same timeframe, exports have been growing at an annualized rate of 9.5 percent when compared to 2009. Among the major export markets (i.e., markets with at least $6 billion in annual imports of U.S. goods), the countries with the largest annualized increase in U.S. goods purchases, when compared to 2009, occurred in Panama (25.9 percent), Russia (20.3 percent), Peru (19.6 percent), Hong Kong (19.2 percent), United Arab Emirates (19.1 percent), Colombia (18.5 percent), Chile (17.1 percent), Ecuador (16.8 percent), Argentina (16.3 percent), and Indonesia (15.5 percent).
U.S. Exports Reach $2.3 Trillion in 2013
For Fourth Consecutive Year, U.S. Sets Export Record
Washington, D.C. – The United States has set another annual record for the fourth consecutive year by exporting $2.3 trillion in goods and services in 2013, according to data released today by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department.
The data also reveals that U.S. exports supported nearly 10 million American jobs in 2013.
In December, the U.S. exported $191.3 billion of goods and services.
“As the numbers prove, American entrepreneurs will continue to outperform their competitors in the global marketplace, as long as they are given a level playing field,” said Export-Import Bank Chairman and President Fred P. Hochberg. “Under the strategic direction established by President Obama’s National Export Initiative, we continue to export more goods at a record pace. By exporting $2.3 trillion in U.S. goods and services and supporting 10 million American jobs, America’s exporters continue to make critical contributions to our economy.”
Exports of goods and services over the last twelve months totaled $2.3 trillion, which is 44.0 percent above the level of exports in 2009. During the same timeframe, exports have been growing at an annualized rate of 9.5 percent when compared to 2009. Among the major export markets (i.e., markets with at least $6 billion in annual imports of U.S. goods), the countries with the largest annualized increase in U.S. goods purchases, when compared to 2009, occurred in Panama (25.9 percent), Russia (20.3 percent), Peru (19.6 percent), Hong Kong (19.2 percent), United Arab Emirates (19.1 percent), Colombia (18.5 percent), Chile (17.1 percent), Ecuador (16.8 percent), Argentina (16.3 percent), and Indonesia (15.5 percent).
Thursday, February 6, 2014
UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT FOR FEBRUARY 1, 2014
UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
SEASONALLY ADJUSTED DATA
In the week ending February 1, the advance figure for seasonally adjusted initial claims was 331,000, a decrease of 20,000 from the previous week's revised figure of 351,000. The 4-week moving average was 334,000, an increase of 250 from the previous week's revised average of 333,750.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending January 25, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 25 was 2,964,000, an increase of 15,000 from the preceding week's revised level of 2,949,000. The 4-week moving average was 2,985,500, an increase of 25,750 from the preceding week's revised average of 2,959,750.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 355,224 in the week ending February 1, a decrease of 2,432 from the previous week. There were 388,442 initial claims in the comparable week in 2013.
The advance unadjusted insured unemployment rate was 2.6 percent during the week ending January 25, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 3,441,429, an increase of 44,278 from the preceding week. A year earlier, the rate was 2.9 percent and the volume was 3,743,414.
The total number of people claiming benefits in all programs for the week ending January 18 was 3,467,640, a decrease of 115,861 from the previous week. There were 5,590,480 persons claiming benefits in all programs in the comparable week in 2013.
No state was triggered "on" the Extended Benefits program during the week ending January 18.
Initial claims for UI benefits filed by former Federal civilian employees totaled 1,280 in the week ending January 25, a decrease of 638 from the prior week. There were 1,874 initial claims filed by newly discharged veterans, a decrease of 372 from the preceding week.
There were 21,600 former Federal civilian employees claiming UI benefits for the week ending January 18, a decrease of 2,189 from the previous week. Newly discharged veterans claiming benefits totaled 30,596, a decrease of 2,090 from the prior week.
The Emergency Unemployment Compensation (EUC) program expired on January 1, 2014, and under current law no EUC payments will be made for weeks of unemployment after this date.
The highest insured unemployment rates in the week ending January 18 were in Alaska (5.9), Pennsylvania (4.1), Delaware (4.0), New Jersey (3.9), Illinois (3.7), Montana (3.7), Michigan (3.6), Puerto Rico (3.6), Rhode Island (3.6), and Wisconsin (3.6).
The largest increases in initial claims for the week ending January 25 were in Indiana (+5,407), Massachusetts (+1,050), and Nebraska (+12), while the largest decreases were in New York (-7,083), Texas (-4,152), Michigan (-3,929), Florida (-3,879), and New Jersey (-3,605).
SEASONALLY ADJUSTED DATA
In the week ending February 1, the advance figure for seasonally adjusted initial claims was 331,000, a decrease of 20,000 from the previous week's revised figure of 351,000. The 4-week moving average was 334,000, an increase of 250 from the previous week's revised average of 333,750.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending January 25, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 25 was 2,964,000, an increase of 15,000 from the preceding week's revised level of 2,949,000. The 4-week moving average was 2,985,500, an increase of 25,750 from the preceding week's revised average of 2,959,750.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 355,224 in the week ending February 1, a decrease of 2,432 from the previous week. There were 388,442 initial claims in the comparable week in 2013.
The advance unadjusted insured unemployment rate was 2.6 percent during the week ending January 25, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 3,441,429, an increase of 44,278 from the preceding week. A year earlier, the rate was 2.9 percent and the volume was 3,743,414.
The total number of people claiming benefits in all programs for the week ending January 18 was 3,467,640, a decrease of 115,861 from the previous week. There were 5,590,480 persons claiming benefits in all programs in the comparable week in 2013.
No state was triggered "on" the Extended Benefits program during the week ending January 18.
Initial claims for UI benefits filed by former Federal civilian employees totaled 1,280 in the week ending January 25, a decrease of 638 from the prior week. There were 1,874 initial claims filed by newly discharged veterans, a decrease of 372 from the preceding week.
There were 21,600 former Federal civilian employees claiming UI benefits for the week ending January 18, a decrease of 2,189 from the previous week. Newly discharged veterans claiming benefits totaled 30,596, a decrease of 2,090 from the prior week.
The Emergency Unemployment Compensation (EUC) program expired on January 1, 2014, and under current law no EUC payments will be made for weeks of unemployment after this date.
The highest insured unemployment rates in the week ending January 18 were in Alaska (5.9), Pennsylvania (4.1), Delaware (4.0), New Jersey (3.9), Illinois (3.7), Montana (3.7), Michigan (3.6), Puerto Rico (3.6), Rhode Island (3.6), and Wisconsin (3.6).
The largest increases in initial claims for the week ending January 25 were in Indiana (+5,407), Massachusetts (+1,050), and Nebraska (+12), while the largest decreases were in New York (-7,083), Texas (-4,152), Michigan (-3,929), Florida (-3,879), and New Jersey (-3,605).
PRESIDENT OBAMA'S REMARKS AT NATIONAL PRAYER BREAKFAST
FROM: THE WHITE HOUSE
Remarks by the President at National Prayer Breakfast
Washington Hilton
Washington, D.C.
9:11 A.M. EST
THE PRESIDENT: Thank you. Please, everyone have a seat. Giving all praise and honor to God, who brought us here this morning.
Thank you so much for our two outstanding co-chairs, Louie and Jan. And I have to say, I would have enjoyed a behind-the-scenes look at the two of these folks getting this breakfast organized this morning. (Laughter.) But there does seem to be that sibling thing a little bit, Louie. (Laughter.) They love each other, but they’ve got to go at each other a little bit. I, by the way, have always found Louie to be unbelievably gracious every time I’ve seen him. Now, I don’t watch TV, I’ve got to admit. (Laughter.) But he is a good man and a great storyteller, and Janice was just reminding me the first time we saw each other was at one of my first events when I first ran for office.
It’s wonderful to see all of the dignitaries and friends who are here today. To the Presidents, and Prime Ministers, the leaders of business and the nonprofit community; to my incredible friend and Vice President, Joe Biden; to my Cabinet members who are here and members of the administration who do such great work every single day; to my fellow Hawaiian, it is wonderful to see you. I should tell you that my surfing is not that good. (Laughter.) I just want to be clear. But my bodysurfing is pretty good.
SENATOR HIRONO: Bodysurfing is fun. (Laughter.)
THE PRESIDENT: It is. (Laughter.) And to Raj Shah, who is just such an incredible young leader and is out there every single day, I could not be more proud of his outstanding leadership at USAID. And it’s a good reminder -- (applause) -- it’s a good reminder of the dedicated public servants that I have the chance to interact with every single day. And they do great work, don’t always get a lot of credit, sometimes get subject to the sort of criticism that you do when you’re in public life, but Raj is single-minded in terms of trying to help as many people as possible all around the world and is an extraordinary representative for our country. So I’m very, very proud of him -- although he does always make me feel like an underachiever whenever I listen to him. (Laughter.) I’m thinking, I should have been working harder and not slouching. (Laughter.)
Dale Jones and everyone else who worked on this breakfast this morning, thank you, and obviously I’m thrilled to be joined by my extraordinary wife and she does a great job every single day keeping me in line. (Applause.)
Just two other thank-yous. To our men and women in uniform all around the world, we pray for them. (Applause.) Many of them doing such great work to keep us safe. And then there is one colleague of mine who is missing today. A great friend of mine who I came into the Senate with, Senator Tom Coburn. Tom is going through some tough times right now but I love him dearly even though we’re from different parties. He’s a little closer to Louie’s political perspective than mine but he is a good man and I’m keeping him and his family in my prayers all the time. So just a shout-out to my good friend, Tom Coburn. (Applause.)
So each time we gather, it’s a chance to set aside the rush of our daily lives; to pause with humility before an Almighty God; to seek His grace; and, mindful of our own imperfections, to remember the admonition from the Book of Romans, which is especially fitting for those of us in Washington: “Do not claim to be wiser than you are.”
So here we put aside labels of party and ideology, and recall what we are first: all children of a loving God; brothers and sisters called to make His work our own. But in this work, as Lincoln said, our concern should not be whether God is on our side, but whether we are on God’s side.
And here we give thanks for His guidance in our own individual faith journeys. In my life, He directed my path to Chicago and my work with churches who were intent on breaking the cycle of poverty in hard-hit communities there. And I’m grateful not only because I was broke and the church fed me, but because it led to everything else. It led me to embrace Jesus Christ as my Lord and Savior. It led me to Michelle -- the love of my life -- and it blessed us with two extraordinary daughters. It led me to public service. And the longer I serve, especially in moments of trial or doubt, the more thankful I am of God’s guiding hand.
Now, here, as Americans, we affirm the freedoms endowed by our Creator, among them freedom of religion. And, yes, this freedom safeguards religion, allowing us to flourish as one of the most religious countries on Earth, but it works the other way, too -- because religion strengthens America. Brave men and women of faith have challenged our conscience and brought us closer to our founding ideals, from the abolition of slavery to civil rights, workers’ rights.
So many of you carry on this good work today -- for the child who deserves a school worthy of his dreams; for the parents working overtime to pull themselves out of poverty; for the immigrants who want to step out of the shadows and become a full member of our American family; for the young girl who prays for rescue from the modern slavery of human trafficking, an outrage that we must all join together to end.
Through our Office of Faith-Based and Neighborhood Partnerships, led by Melissa Rogers, we’re proud to work with you on this and many other issues. And I invite you to join us in a new initiative that I announced in my State of the Union address -- an effort to help more young men of color overcome the odds, because so many boys in this country need that mentor to help them become a man and a good father.
I’ve felt the love that faith can instill in our lives during my visits to the Holy Land and Jerusalem -- sacred to Jews and Christians and Muslims. I’ve felt it in houses of worship -- whether paying my respects at the tomb of Archbishop Romero in San Salvador, or visiting a synagogue on the eve of Rosh Hashanah, the Blue Mosque in Istanbul or a Buddhist temple in Bangkok. And I’ve felt the compassion of so many faith leaders around the world, and I am especially looking forward to returning to the Vatican next month to meet His Holiness, Pope Francis, whose message about caring for the “least of these” is one that I hope all of us heed. Like Matthew, he has answered the call of Jesus, who said “follow me,” and he inspires us with his words and deeds, his humility, his mercy and his missionary impulse to serve the cause of social justice.
Yet even as our faith sustains us, it’s also clear that around the world freedom of religion is under threat. And that is what I want to reflect on this morning. We see governments engaging in discrimination and violence against the faithful. We sometimes see religion twisted in an attempt to justify hatred and persecution against other people just because of who they are, or how they pray or who they love. Old tensions are stoked, fueling conflicts along religious lines, as we’ve seen in the Central African Republic recently, even though to harm anyone in the name of faith is to diminish our own relationship with God. Extremists succumb to an ignorant nihilism that shows they don’t understand the faiths they claim to profess -- for the killing of the innocent is never fulfilling God’s will; in fact, it’s the ultimate betrayal of God’s will.
Today, we profess the principles we know to be true. We believe that each of us is “wonderfully made” in the image of God. We, therefore, believe in the inherent dignity of every human being -- dignity that no earthly power can take away. And central to that dignity is freedom of religion -- the right of every person to practice their faith how they choose, to change their faith if they choose, or to practice no faith at all, and to do this free from persecution and fear.
Our faith teaches us that in the face of suffering, we can’t stand idly by and that we must be that Good Samaritan. In Isaiah, we’re told “to do right. Seek justice. Defend the oppressed.” The Torah commands: “Know the feelings of the stranger, having yourselves been strangers in the land of Egypt.” The Koran instructs: “Stand out firmly for justice.” So history shows that nations that uphold the rights of their people -- including the freedom of religion -- are ultimately more just and more peaceful and more successful. Nations that do not uphold these rights sow the bitter seeds of instability and violence and extremism. So freedom of religion matters to our national security. (Applause.)
As I’ve said before, there are times when we work with governments that don’t always meet our highest standards, but they’re working with us on core interests such as the security of the American people. At the same time, we also deeply believe that it’s in our interest, even with our partners, sometimes with our friends, to stand up for universal human rights. So promoting religious freedom is a key objective of U.S. foreign policy. And I’m proud that no nation on Earth does more to stand up for the freedom of religion around the world than the United States of America. (Applause.)
It is not always comfortable to do, but it is right. When I meet with Chinese leaders -- and we do a lot of business with the Chinese, and that relationship is extraordinarily important not just to our two countries but to the world -- but I stress that realizing China’s potential rests on upholding universal rights, including for Christians, and Tibetan Buddhists, and Uighur Muslims. (Applause.)
When I meet with the President of Burma, a country that is trying to emerge out of a long darkness into the light of a representative government, I’ve said that Burma’s return to the international community depends on respecting basic freedoms, including for Christians and Muslims. I’ve pledged our support to the people of Nigeria, who deserve to worship in their churches and mosques in peace, free from terror. I’ve put the weight of my office behind the efforts to protect the people of Sudan and South Sudan, including religious minorities.
As we support Israelis and Palestinians as they engage in direct talks, we’ve made clear that lasting peace will require freedom of worship and access to holy sites for all faiths. I want to take this opportunity to thank Secretary Kerry for his extraordinary passion and principled diplomacy that he’s brought to the cause of peace in the Middle East. Thank you, John. (Applause.)
More broadly, I’ve made the case that no society can truly succeed unless it guarantees the rights of all its peoples, including religious minorities, whether they’re Ahmadiyya Muslims in Pakistan, or Baha’i in Iran, or Coptic Christians in Egypt. And in Syria, it means ensuring a place for all people -- Alawites and Sunni, Shia and Christian.
Going forward, we will keep standing for religious freedom around the world. And that includes, by the way, opposing blasphemy and defamation of religion measures, which are promoted sometimes as an expression of religion, but, in fact, all too often can be used to suppress religious minorities. (Applause.) We continue to stand for the rights of all people to practice their faiths in peace and in freedom. And we will continue to stand against the ugly tide of anti-Semitism that rears it's ugly head all too often.
I look forward to nominating our next ambassador-at-large for international religious freedom to help lead these efforts. And we’re moving ahead with our new strategy to partner more closely with religious leaders and faith communities as we carry out our foreign policy. And I want to thank Shaun Casey, from the Wesley Theological Seminary, for leading this work at the State Department. Shaun I think is here today and we want to thank him for the outstanding work that he’s doing. (Applause.) Thank you, Shaun. (Applause.)
So around the world we’re elevating our engagement with faith leaders and making it a regular part of our diplomacy. And today, I invite you to join us in focusing on several pressing challenges. Let’s do more together to advance human rights, including religious freedom. Let’s do more to promote the development that Raj describes -- from ending extreme poverty to saving lives, from HIV/AIDS to combating climate change so that we can preserve God’s incredible creation. On all these issues, faith leaders and faith organizations here in the United States and around the world are incredible partners, and we're grateful to them.
And in contrast to those who wield religion to divide us, let’s do more to nurture the dialogue between faiths that can break cycles of conflict and build true peace, including in the Holy Land.
And finally, as we build the future we seek, let us never forget those who are persecuted today, among them Americans of faith. We pray for Kenneth Bae, a Christian missionary who’s been held in North Korea for 15 months, sentenced to 15 years of hard labor. His family wants him home. And the United States will continue to do everything in our power to secure his release because Kenneth Bae deserves to be free. (Applause.)
We pray for Pastor Saeed Abedini. He’s been held in Iran for more than 18 months, sentenced to eight years in prison on charges relating to his Christian beliefs. And as we continue to work for his freedom, today, again, we call on the Iranian government to release Pastor Abedini so he can return to the loving arms of his wife and children in Idaho. (Applause.)
And as we pray for all prisoners of conscience, whatever their faiths, wherever they’re held, let’s imagine what it must be like for them. We may not know their names, but all around the world there are people who are waking up in cold cells, facing another day of confinement, another day of unspeakable treatment, simply because they are affirming God. Despite all they’ve endured, despite all the awful punishments if caught, they will wait for that moment when the guards aren’t looking, and when they can close their eyes and bring their hands together and pray.
In those moments of peace, of grace, those moments when their faith is tested in ways that those of us who are more comfortable never experience; in those far-away cells, I believe their unbroken souls are made stronger. And I hope that somehow they hear our prayers for them, that they know that, along with the spirit of God, they have our spirit with them as well, and that they are not alone.
Today we give humble thanks for the freedoms we cherish in this country. And I join you in seeking God’s grace in all of our lives. I pray that His wisdom will give us the capacity to do right and to seek justice, and defend the oppressed wherever they may dwell.
I want to thank all of you for the extraordinary privilege of being here this morning. I want to ask you for your prayers as I continue in this awesome privilege and responsibility as President of the United States. May God bless the United States of America, and God bless all those who seek peace and justice. Thank you very much. (Applause.)
END
Remarks by the President at National Prayer Breakfast
Washington Hilton
Washington, D.C.
9:11 A.M. EST
THE PRESIDENT: Thank you. Please, everyone have a seat. Giving all praise and honor to God, who brought us here this morning.
Thank you so much for our two outstanding co-chairs, Louie and Jan. And I have to say, I would have enjoyed a behind-the-scenes look at the two of these folks getting this breakfast organized this morning. (Laughter.) But there does seem to be that sibling thing a little bit, Louie. (Laughter.) They love each other, but they’ve got to go at each other a little bit. I, by the way, have always found Louie to be unbelievably gracious every time I’ve seen him. Now, I don’t watch TV, I’ve got to admit. (Laughter.) But he is a good man and a great storyteller, and Janice was just reminding me the first time we saw each other was at one of my first events when I first ran for office.
It’s wonderful to see all of the dignitaries and friends who are here today. To the Presidents, and Prime Ministers, the leaders of business and the nonprofit community; to my incredible friend and Vice President, Joe Biden; to my Cabinet members who are here and members of the administration who do such great work every single day; to my fellow Hawaiian, it is wonderful to see you. I should tell you that my surfing is not that good. (Laughter.) I just want to be clear. But my bodysurfing is pretty good.
SENATOR HIRONO: Bodysurfing is fun. (Laughter.)
THE PRESIDENT: It is. (Laughter.) And to Raj Shah, who is just such an incredible young leader and is out there every single day, I could not be more proud of his outstanding leadership at USAID. And it’s a good reminder -- (applause) -- it’s a good reminder of the dedicated public servants that I have the chance to interact with every single day. And they do great work, don’t always get a lot of credit, sometimes get subject to the sort of criticism that you do when you’re in public life, but Raj is single-minded in terms of trying to help as many people as possible all around the world and is an extraordinary representative for our country. So I’m very, very proud of him -- although he does always make me feel like an underachiever whenever I listen to him. (Laughter.) I’m thinking, I should have been working harder and not slouching. (Laughter.)
Dale Jones and everyone else who worked on this breakfast this morning, thank you, and obviously I’m thrilled to be joined by my extraordinary wife and she does a great job every single day keeping me in line. (Applause.)
Just two other thank-yous. To our men and women in uniform all around the world, we pray for them. (Applause.) Many of them doing such great work to keep us safe. And then there is one colleague of mine who is missing today. A great friend of mine who I came into the Senate with, Senator Tom Coburn. Tom is going through some tough times right now but I love him dearly even though we’re from different parties. He’s a little closer to Louie’s political perspective than mine but he is a good man and I’m keeping him and his family in my prayers all the time. So just a shout-out to my good friend, Tom Coburn. (Applause.)
So each time we gather, it’s a chance to set aside the rush of our daily lives; to pause with humility before an Almighty God; to seek His grace; and, mindful of our own imperfections, to remember the admonition from the Book of Romans, which is especially fitting for those of us in Washington: “Do not claim to be wiser than you are.”
So here we put aside labels of party and ideology, and recall what we are first: all children of a loving God; brothers and sisters called to make His work our own. But in this work, as Lincoln said, our concern should not be whether God is on our side, but whether we are on God’s side.
And here we give thanks for His guidance in our own individual faith journeys. In my life, He directed my path to Chicago and my work with churches who were intent on breaking the cycle of poverty in hard-hit communities there. And I’m grateful not only because I was broke and the church fed me, but because it led to everything else. It led me to embrace Jesus Christ as my Lord and Savior. It led me to Michelle -- the love of my life -- and it blessed us with two extraordinary daughters. It led me to public service. And the longer I serve, especially in moments of trial or doubt, the more thankful I am of God’s guiding hand.
Now, here, as Americans, we affirm the freedoms endowed by our Creator, among them freedom of religion. And, yes, this freedom safeguards religion, allowing us to flourish as one of the most religious countries on Earth, but it works the other way, too -- because religion strengthens America. Brave men and women of faith have challenged our conscience and brought us closer to our founding ideals, from the abolition of slavery to civil rights, workers’ rights.
So many of you carry on this good work today -- for the child who deserves a school worthy of his dreams; for the parents working overtime to pull themselves out of poverty; for the immigrants who want to step out of the shadows and become a full member of our American family; for the young girl who prays for rescue from the modern slavery of human trafficking, an outrage that we must all join together to end.
Through our Office of Faith-Based and Neighborhood Partnerships, led by Melissa Rogers, we’re proud to work with you on this and many other issues. And I invite you to join us in a new initiative that I announced in my State of the Union address -- an effort to help more young men of color overcome the odds, because so many boys in this country need that mentor to help them become a man and a good father.
I’ve felt the love that faith can instill in our lives during my visits to the Holy Land and Jerusalem -- sacred to Jews and Christians and Muslims. I’ve felt it in houses of worship -- whether paying my respects at the tomb of Archbishop Romero in San Salvador, or visiting a synagogue on the eve of Rosh Hashanah, the Blue Mosque in Istanbul or a Buddhist temple in Bangkok. And I’ve felt the compassion of so many faith leaders around the world, and I am especially looking forward to returning to the Vatican next month to meet His Holiness, Pope Francis, whose message about caring for the “least of these” is one that I hope all of us heed. Like Matthew, he has answered the call of Jesus, who said “follow me,” and he inspires us with his words and deeds, his humility, his mercy and his missionary impulse to serve the cause of social justice.
Yet even as our faith sustains us, it’s also clear that around the world freedom of religion is under threat. And that is what I want to reflect on this morning. We see governments engaging in discrimination and violence against the faithful. We sometimes see religion twisted in an attempt to justify hatred and persecution against other people just because of who they are, or how they pray or who they love. Old tensions are stoked, fueling conflicts along religious lines, as we’ve seen in the Central African Republic recently, even though to harm anyone in the name of faith is to diminish our own relationship with God. Extremists succumb to an ignorant nihilism that shows they don’t understand the faiths they claim to profess -- for the killing of the innocent is never fulfilling God’s will; in fact, it’s the ultimate betrayal of God’s will.
Today, we profess the principles we know to be true. We believe that each of us is “wonderfully made” in the image of God. We, therefore, believe in the inherent dignity of every human being -- dignity that no earthly power can take away. And central to that dignity is freedom of religion -- the right of every person to practice their faith how they choose, to change their faith if they choose, or to practice no faith at all, and to do this free from persecution and fear.
Our faith teaches us that in the face of suffering, we can’t stand idly by and that we must be that Good Samaritan. In Isaiah, we’re told “to do right. Seek justice. Defend the oppressed.” The Torah commands: “Know the feelings of the stranger, having yourselves been strangers in the land of Egypt.” The Koran instructs: “Stand out firmly for justice.” So history shows that nations that uphold the rights of their people -- including the freedom of religion -- are ultimately more just and more peaceful and more successful. Nations that do not uphold these rights sow the bitter seeds of instability and violence and extremism. So freedom of religion matters to our national security. (Applause.)
As I’ve said before, there are times when we work with governments that don’t always meet our highest standards, but they’re working with us on core interests such as the security of the American people. At the same time, we also deeply believe that it’s in our interest, even with our partners, sometimes with our friends, to stand up for universal human rights. So promoting religious freedom is a key objective of U.S. foreign policy. And I’m proud that no nation on Earth does more to stand up for the freedom of religion around the world than the United States of America. (Applause.)
It is not always comfortable to do, but it is right. When I meet with Chinese leaders -- and we do a lot of business with the Chinese, and that relationship is extraordinarily important not just to our two countries but to the world -- but I stress that realizing China’s potential rests on upholding universal rights, including for Christians, and Tibetan Buddhists, and Uighur Muslims. (Applause.)
When I meet with the President of Burma, a country that is trying to emerge out of a long darkness into the light of a representative government, I’ve said that Burma’s return to the international community depends on respecting basic freedoms, including for Christians and Muslims. I’ve pledged our support to the people of Nigeria, who deserve to worship in their churches and mosques in peace, free from terror. I’ve put the weight of my office behind the efforts to protect the people of Sudan and South Sudan, including religious minorities.
As we support Israelis and Palestinians as they engage in direct talks, we’ve made clear that lasting peace will require freedom of worship and access to holy sites for all faiths. I want to take this opportunity to thank Secretary Kerry for his extraordinary passion and principled diplomacy that he’s brought to the cause of peace in the Middle East. Thank you, John. (Applause.)
More broadly, I’ve made the case that no society can truly succeed unless it guarantees the rights of all its peoples, including religious minorities, whether they’re Ahmadiyya Muslims in Pakistan, or Baha’i in Iran, or Coptic Christians in Egypt. And in Syria, it means ensuring a place for all people -- Alawites and Sunni, Shia and Christian.
Going forward, we will keep standing for religious freedom around the world. And that includes, by the way, opposing blasphemy and defamation of religion measures, which are promoted sometimes as an expression of religion, but, in fact, all too often can be used to suppress religious minorities. (Applause.) We continue to stand for the rights of all people to practice their faiths in peace and in freedom. And we will continue to stand against the ugly tide of anti-Semitism that rears it's ugly head all too often.
I look forward to nominating our next ambassador-at-large for international religious freedom to help lead these efforts. And we’re moving ahead with our new strategy to partner more closely with religious leaders and faith communities as we carry out our foreign policy. And I want to thank Shaun Casey, from the Wesley Theological Seminary, for leading this work at the State Department. Shaun I think is here today and we want to thank him for the outstanding work that he’s doing. (Applause.) Thank you, Shaun. (Applause.)
So around the world we’re elevating our engagement with faith leaders and making it a regular part of our diplomacy. And today, I invite you to join us in focusing on several pressing challenges. Let’s do more together to advance human rights, including religious freedom. Let’s do more to promote the development that Raj describes -- from ending extreme poverty to saving lives, from HIV/AIDS to combating climate change so that we can preserve God’s incredible creation. On all these issues, faith leaders and faith organizations here in the United States and around the world are incredible partners, and we're grateful to them.
And in contrast to those who wield religion to divide us, let’s do more to nurture the dialogue between faiths that can break cycles of conflict and build true peace, including in the Holy Land.
And finally, as we build the future we seek, let us never forget those who are persecuted today, among them Americans of faith. We pray for Kenneth Bae, a Christian missionary who’s been held in North Korea for 15 months, sentenced to 15 years of hard labor. His family wants him home. And the United States will continue to do everything in our power to secure his release because Kenneth Bae deserves to be free. (Applause.)
We pray for Pastor Saeed Abedini. He’s been held in Iran for more than 18 months, sentenced to eight years in prison on charges relating to his Christian beliefs. And as we continue to work for his freedom, today, again, we call on the Iranian government to release Pastor Abedini so he can return to the loving arms of his wife and children in Idaho. (Applause.)
And as we pray for all prisoners of conscience, whatever their faiths, wherever they’re held, let’s imagine what it must be like for them. We may not know their names, but all around the world there are people who are waking up in cold cells, facing another day of confinement, another day of unspeakable treatment, simply because they are affirming God. Despite all they’ve endured, despite all the awful punishments if caught, they will wait for that moment when the guards aren’t looking, and when they can close their eyes and bring their hands together and pray.
In those moments of peace, of grace, those moments when their faith is tested in ways that those of us who are more comfortable never experience; in those far-away cells, I believe their unbroken souls are made stronger. And I hope that somehow they hear our prayers for them, that they know that, along with the spirit of God, they have our spirit with them as well, and that they are not alone.
Today we give humble thanks for the freedoms we cherish in this country. And I join you in seeking God’s grace in all of our lives. I pray that His wisdom will give us the capacity to do right and to seek justice, and defend the oppressed wherever they may dwell.
I want to thank all of you for the extraordinary privilege of being here this morning. I want to ask you for your prayers as I continue in this awesome privilege and responsibility as President of the United States. May God bless the United States of America, and God bless all those who seek peace and justice. Thank you very much. (Applause.)
END
U.S. DEFENSE DEPARTMENT CONTRACTS FOR FEBRUARY 6, 2014
FROM: DEFENSE DEPARTMENT
CONTRACTS
ARMY
Sauer Inc., Jacksonville, Fla., was awarded a $56,038,640 contract to build an operational readiness training complex at Fort Hunter Liggett, Calif. Fiscal 2014 military construction funds in the amount of $56,038,640 were obligated at the time of the award. Estimated completion date is April 30, 2016. Bids were solicited via the Internet with 22 received. Work will be performed at Fort Hunter Liggett. Army Corps of Engineers, Louisville, Ky., is the contracting activity (W912QR-14-C-0006).
Sundt Construction Inc., Tempe, Ariz., was awarded a $25,750,000 firm-fixed-price contract to design and construct a battalion headquarters complex. Fiscal 2013 military construction funds in the amount of $25,750,000 were obligated at the time of the award. Estimated completion date is Aug. 14, 2015. Bids were solicited via the Internet with 22 received. Work will be performed at Fort Campbell, Ky. Army Corps of Engineers, Louisville, Ky., is the contracting activity (W912QR-14-C-0007).
Gearhart Brothers Services*, Lancaster, Pa, was awarded an $8,629,223 firm-fixed-price contract to provide sand, stone and gravel to Aberdeen Proving Ground. Funds and work location will be determined with each order. Estimated completion date is Feb. 9, 2017. Bids were solicited via the Internet with seven received. Army Contracting Command, Aberdeen Proving Ground Md., is the contracting activity (W56ZTN-14-D-0001).
DEFENSE LOGISTICS AGENCY
Produce One Inc.*, Dayton, Ohio, has been awarded a maximum $36,000,000 fixed-price with economic-price-adjustment, indefinite-quantity contract for fresh fruit and vegetable support. This contract is a competitive acquisition and three offers were received. This is an 18-month base contract with two 18-month option periods. Location of performance is Ohio with an Aug. 5, 2015 performance completion date. Using military services are non-Department of Defense, Department of Agriculture school customers. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.; (SPE300-14-D-S608).
DEFENSE THREAT REDUCTION AGENCY
Northern Arizona University, Flagstaff, Ariz, is being awarded a $6,988,284 cost-reimbursable contract for the characterization of antibody responses to melioidosis in humans and in animal models for the Defense Threat Reduction Agency in support of the Research and Development Enterprise. Bids were solicited and nine received. Work will be performed in Flagstaff, Ariz., and Darwin, Australia, and is expected to be completed February 2019. The contracting activity is Defense Threat Reduction Agency, Fort Belvoir, Va, (HDTRA1-14-C-0022).
*Small Business
CONTRACTS
ARMY
Sauer Inc., Jacksonville, Fla., was awarded a $56,038,640 contract to build an operational readiness training complex at Fort Hunter Liggett, Calif. Fiscal 2014 military construction funds in the amount of $56,038,640 were obligated at the time of the award. Estimated completion date is April 30, 2016. Bids were solicited via the Internet with 22 received. Work will be performed at Fort Hunter Liggett. Army Corps of Engineers, Louisville, Ky., is the contracting activity (W912QR-14-C-0006).
Sundt Construction Inc., Tempe, Ariz., was awarded a $25,750,000 firm-fixed-price contract to design and construct a battalion headquarters complex. Fiscal 2013 military construction funds in the amount of $25,750,000 were obligated at the time of the award. Estimated completion date is Aug. 14, 2015. Bids were solicited via the Internet with 22 received. Work will be performed at Fort Campbell, Ky. Army Corps of Engineers, Louisville, Ky., is the contracting activity (W912QR-14-C-0007).
Gearhart Brothers Services*, Lancaster, Pa, was awarded an $8,629,223 firm-fixed-price contract to provide sand, stone and gravel to Aberdeen Proving Ground. Funds and work location will be determined with each order. Estimated completion date is Feb. 9, 2017. Bids were solicited via the Internet with seven received. Army Contracting Command, Aberdeen Proving Ground Md., is the contracting activity (W56ZTN-14-D-0001).
DEFENSE LOGISTICS AGENCY
Produce One Inc.*, Dayton, Ohio, has been awarded a maximum $36,000,000 fixed-price with economic-price-adjustment, indefinite-quantity contract for fresh fruit and vegetable support. This contract is a competitive acquisition and three offers were received. This is an 18-month base contract with two 18-month option periods. Location of performance is Ohio with an Aug. 5, 2015 performance completion date. Using military services are non-Department of Defense, Department of Agriculture school customers. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.; (SPE300-14-D-S608).
DEFENSE THREAT REDUCTION AGENCY
Northern Arizona University, Flagstaff, Ariz, is being awarded a $6,988,284 cost-reimbursable contract for the characterization of antibody responses to melioidosis in humans and in animal models for the Defense Threat Reduction Agency in support of the Research and Development Enterprise. Bids were solicited and nine received. Work will be performed in Flagstaff, Ariz., and Darwin, Australia, and is expected to be completed February 2019. The contracting activity is Defense Threat Reduction Agency, Fort Belvoir, Va, (HDTRA1-14-C-0022).
*Small Business
CYCLONE EDILSON THREATENS RODRIGUES ISLAND AND MAURITIUS
FROM: NASA
Tropical Cyclone Edilson Birth Caught By NASA's Aqua Satellite
The thirteenth tropical cyclone of the Southern Pacific Ocean season formed into a tropical storm named Edilson on February 5 shortly before NASA's Aqua satellite passed overhead. Edilson is threatening several land areas.
A Class I Cyclone Warning is now in effect for Rodrigues Island and a Class II Cyclone Warning is in effect for Mauritius. Edilson formed to the northern of Mauritius and is moving south.
At 09:50 UTC/4:50 a.m. EST on February 5, NASA's Aqua satellite passed over Edilson and the Moderate Resolution Imaging Spectroradiometer or MODIS instrument captured a visible image of the storm. The MODIS image showed a large broken band of thunderstorms to the north, and a large band of storms from the east, wrapping into the low-level center of circulation. Edilson's center was to the northeast of the islands of Mauritius and La Reunion, and Edilson's eastern quadrant had spread clouds over Rodrigues Island of the Republic of Mauritius.
The Atmospheric Infrared Sounder or AIRS instrument also aboard NASA's Aqua satellite captured infrared data on Edilson at the same time that showed strong thunderstorms with heavy rain potential around and north of the center. Cloud top temperatures in those areas were in excess of -63F/-52C.
On February 5 at 1500 UTC/10 a.m. EST, Edilson had maximum sustained winds near 40 knots/46 mph/73 kph. The center of the tropical storm was about 297 nautical miles/341.8 miles/550 km northeast of Saint Denis, La Reunion Island, near 18.9 south latitude and 60.0 east longitude. Edilson is moving to the south at 8 knots/9.2 mph/14.8 kph.
Edilson is moving along the western edge of a mid-layered subtropical ridge (elongated area) of high pressure situated to the east of the tropical storm. As Edilson continues tracking along the high, it will begin to move more southward over the coming days.
The Joint Typhoon Warning Center expects Edilson to intensify to hurricane force briefly before weakening.
NEW DRUG FUNDED TO FIGHT BIOTERRORISM, ANTIMICROBIAL-RESISTANT INFECTIONS
FROM: HEALTH AND HUMAN SERVICES
HHS funds drug for bioterrorism, antimicrobial-resistant infections
A new drug to help protect the public against two bioterrorism threats and provide a new option to treat antibiotic-resistant infections will advance in development under a public-private partnership, the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response (ASPR) announced today.
“Antibiotic resistance adversely impacts our nation’s ability to respond effectively to a bioterrorism attack and to everyday public health threats,” said Robin Robinson, Ph.D., director of ASPR’s Biomedical Advanced Research and Development Authority (BARDA), which will oversee the project. “By partnering with industry to develop novel antimicrobial drugs against biothreats that also treat drug-resistant bacteria, we can address health security and public health needs efficiently.”
BARDA will support the development of Carbavance under a five-year cost-sharing agreement with Rempex Pharmaceuticals Inc. (a wholly owned subsidiary of The Medicines Company) in San Diego. The agreement includes an initial commitment from BARDA of $19.8 million and can be extended to provide up to $90 million over the five years.
The two bioterrorism threats are melioidosis and glanders. With existing antibiotic treatments, approximately 40 percent of people who become ill from these bacteria die from the illness, and up to 90 percent die if not treated.
Melioidosis, also called Whitmore's disease, can be mistaken for other diseases such as tuberculosis and common forms of pneumonia. The bacteria that cause melioidosis can be found in water and soil, and cause infection when a person touches or inhales the bacteria. The infection is common in parts of Southeast Asia and Australia.
Glanders is a respiratory disease that can affect people, although it is primarily found in animals. The bacteria that cause glanders can affect skin, blood, lungs, or muscles, and may be transmitted through direct contact with infected animals or by inhaling contaminated aerosols or dust.
Melioidosis and glanders can become resistant to existing antibiotics.
In addition to showing promise as a treatment for melioidosis and glanders in a bioterrorism event, Carbavance potentially could be used commercially to treat complicated urinary tract infections, hospital-acquired pneumonia, ventilator-acquired pneumonia, and carbapenem-resistant Enterobacteriaceae (CRE), all of which can be resistant to existing antibiotics.
CRE are a family of bacteria that have been called nightmare bacteria because the bacteria are resistant to all or nearly all antibiotics, kill up to half of people who get serious infections with them, and can spread their resistance to other bacteria. CRE infections have been detected in nearly every state, and the incidence has risen sharply over the past five years.
Patients whose care requires devices such as ventilators, urinary (bladder) catheters, or intravenous (vein) catheters, and patients who are taking long courses of certain antibiotics are most at risk for CRE infections.
The project includes preclinical and clinical studies, manufacture of enough of the drug for clinical studies, and other manufacturing-related activities needed to apply for U.S. Food and Drug Administration approval of the drug.
The project with Rempex is the latest in a BARDA program that supports development of broad-spectrum antimicrobials, technologies and platforms for biodefense needs that simultaneously address other public health challenges, such antibiotic-resistant infections.
BARDA is seeking additional proposals for advanced development of novel antimicrobials to treat illness caused by biological threat agents and that also could address the growing threat of antimicrobial resistance. Proposals are accepted through the Broad Agency Announcement BARDA-BAA-13-100-SOL-00013 at https://www.fbo.gov.
BARDA utilizes a comprehensive, integrated portfolio approach to support the advanced research and development, innovation, acquisition, and manufacturing of vaccines, drugs, therapeutics, diagnostic tools, and non-pharmaceutical products for public health emergency threats. These threats include chemical, biological, radiological, nuclear threats, pandemic influenza, and emerging infectious diseases.
HHS is the principal federal agency for protecting the health of all Americans and providing essential human services, especially for those who are least able to help themselves. ASPR is an HHS leader in preparing the nation to respond to and recover from adverse health effects of emergencies, supporting communities’ ability to withstand adversity, strengthening health and response systems, and enhancing national health security.
HHS funds drug for bioterrorism, antimicrobial-resistant infections
A new drug to help protect the public against two bioterrorism threats and provide a new option to treat antibiotic-resistant infections will advance in development under a public-private partnership, the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response (ASPR) announced today.
“Antibiotic resistance adversely impacts our nation’s ability to respond effectively to a bioterrorism attack and to everyday public health threats,” said Robin Robinson, Ph.D., director of ASPR’s Biomedical Advanced Research and Development Authority (BARDA), which will oversee the project. “By partnering with industry to develop novel antimicrobial drugs against biothreats that also treat drug-resistant bacteria, we can address health security and public health needs efficiently.”
BARDA will support the development of Carbavance under a five-year cost-sharing agreement with Rempex Pharmaceuticals Inc. (a wholly owned subsidiary of The Medicines Company) in San Diego. The agreement includes an initial commitment from BARDA of $19.8 million and can be extended to provide up to $90 million over the five years.
The two bioterrorism threats are melioidosis and glanders. With existing antibiotic treatments, approximately 40 percent of people who become ill from these bacteria die from the illness, and up to 90 percent die if not treated.
Melioidosis, also called Whitmore's disease, can be mistaken for other diseases such as tuberculosis and common forms of pneumonia. The bacteria that cause melioidosis can be found in water and soil, and cause infection when a person touches or inhales the bacteria. The infection is common in parts of Southeast Asia and Australia.
Glanders is a respiratory disease that can affect people, although it is primarily found in animals. The bacteria that cause glanders can affect skin, blood, lungs, or muscles, and may be transmitted through direct contact with infected animals or by inhaling contaminated aerosols or dust.
Melioidosis and glanders can become resistant to existing antibiotics.
In addition to showing promise as a treatment for melioidosis and glanders in a bioterrorism event, Carbavance potentially could be used commercially to treat complicated urinary tract infections, hospital-acquired pneumonia, ventilator-acquired pneumonia, and carbapenem-resistant Enterobacteriaceae (CRE), all of which can be resistant to existing antibiotics.
CRE are a family of bacteria that have been called nightmare bacteria because the bacteria are resistant to all or nearly all antibiotics, kill up to half of people who get serious infections with them, and can spread their resistance to other bacteria. CRE infections have been detected in nearly every state, and the incidence has risen sharply over the past five years.
Patients whose care requires devices such as ventilators, urinary (bladder) catheters, or intravenous (vein) catheters, and patients who are taking long courses of certain antibiotics are most at risk for CRE infections.
The project includes preclinical and clinical studies, manufacture of enough of the drug for clinical studies, and other manufacturing-related activities needed to apply for U.S. Food and Drug Administration approval of the drug.
The project with Rempex is the latest in a BARDA program that supports development of broad-spectrum antimicrobials, technologies and platforms for biodefense needs that simultaneously address other public health challenges, such antibiotic-resistant infections.
BARDA is seeking additional proposals for advanced development of novel antimicrobials to treat illness caused by biological threat agents and that also could address the growing threat of antimicrobial resistance. Proposals are accepted through the Broad Agency Announcement BARDA-BAA-13-100-SOL-00013 at https://www.fbo.gov.
BARDA utilizes a comprehensive, integrated portfolio approach to support the advanced research and development, innovation, acquisition, and manufacturing of vaccines, drugs, therapeutics, diagnostic tools, and non-pharmaceutical products for public health emergency threats. These threats include chemical, biological, radiological, nuclear threats, pandemic influenza, and emerging infectious diseases.
HHS is the principal federal agency for protecting the health of all Americans and providing essential human services, especially for those who are least able to help themselves. ASPR is an HHS leader in preparing the nation to respond to and recover from adverse health effects of emergencies, supporting communities’ ability to withstand adversity, strengthening health and response systems, and enhancing national health security.
RECENT U.S. AIR FORCE PHOTOS
FROM: U.S. DEFENSE DEPARTMENT
Air Force F-15E Strike Eagle aircraft taxi into position for an inspection before a training mission during Red Flag 14-1 on Nellis Air Force Base, Nev., Jan. 29, 2014. The pilots are assigned to the 391st Fighter Squadron. U.S. Air Force photo by Lorenz Crespo.
A KC-135 Stratotanker aircraft prepares to refuel an F-22 Raptor over the Nevada Test and Training Range during Red Flag 14-1 on Nellis Air Force Base, Nev., Jan. 28, 2014. U.S. Air Force photo by Staff Sgt. Veronica Montes.
DEFENSE SECRETARY HAGEL CONCERNED ABOUT ETHICAL LAPSES
FROM: DEFENSE DEPARTMENT
Press Secretary: Ethical Lapses Have Hagel’s Full Attention
By Jim Garamone
American Forces Press Service
WASHINGTON, Feb. 5, 2014 – Cheating on proficiency tests at an Air Force missile base and at the Navy’s nuclear propulsion school have Defense Secretary Chuck Hagel concerned that systemic issues may be threatening the health of the force and they have his full attention, Pentagon Press Secretary Rear Adm. John Kirby said today.
"He is concerned about the health of the force and the health of the strong culture of accountability and responsibility that Americans have come to expect from their military," Kirby told Pentagon reporters.
Surveys have shown that the military is among the most respected professions in the United States, and these ethical lapses work against that perception. In his weekly meeting with the service secretaries and service chiefs, the secretary told them that ethical behavior will be on the agenda for these meetings from now on, Kirby said. The secretary believes military and Defense Department leaders must take a step back and put renewed emphasis on developing moral character and courage in the force, he added.
Hagel gave the service leaders those marching orders just days after Air Force Secretary Deborah Lee James reported systemic problems with ICBM launch officers, Kirby said, but before the Navy reported instances of cheating on tests at the Navy Nuclear Propulsion School in Charleston, S.C.
Senior defense leaders have begun work on a plan to fix any systemic issues, the press secretary said. A group co-chaired by officials from the Joint Staff and the Office of the Undersecretary of Defense for Policy is set to deliver a report to Hagel within 60 days. "He has made it clear he would certainly welcome the work sooner than that," Kirby said.
In addition, Hagel has asked retired Air Force Gen. Larry Welch and retired Navy Adm. John Harvey to lead an independent review of the military’s nuclear enterprise. "They will offer their views on the quality and effectiveness of the action plan, and they will also provide their insights and recommendations on addressing any systemic personnel problems," the admiral said.
Hagel is concerned about what he doesn't know about the problem, Kirby added.
“What worries the secretary,[is] that maybe he doesn't have the full grasp of the depth of the issue. And he wants to better understand it and to the degree that there are systemic issues, he wants to attack them."
Kirby gave reporters a shorthand definition for what moral courage and moral character mean in the military. "That's doing the right thing when nobody is looking," he said. "That's treating people the right way even when they can't do anything for you. It's about the basic ideas of strapping on this uniform every day. And it's what, frankly, keeps a lot of us in."
Press Secretary: Ethical Lapses Have Hagel’s Full Attention
By Jim Garamone
American Forces Press Service
WASHINGTON, Feb. 5, 2014 – Cheating on proficiency tests at an Air Force missile base and at the Navy’s nuclear propulsion school have Defense Secretary Chuck Hagel concerned that systemic issues may be threatening the health of the force and they have his full attention, Pentagon Press Secretary Rear Adm. John Kirby said today.
"He is concerned about the health of the force and the health of the strong culture of accountability and responsibility that Americans have come to expect from their military," Kirby told Pentagon reporters.
Surveys have shown that the military is among the most respected professions in the United States, and these ethical lapses work against that perception. In his weekly meeting with the service secretaries and service chiefs, the secretary told them that ethical behavior will be on the agenda for these meetings from now on, Kirby said. The secretary believes military and Defense Department leaders must take a step back and put renewed emphasis on developing moral character and courage in the force, he added.
Hagel gave the service leaders those marching orders just days after Air Force Secretary Deborah Lee James reported systemic problems with ICBM launch officers, Kirby said, but before the Navy reported instances of cheating on tests at the Navy Nuclear Propulsion School in Charleston, S.C.
Senior defense leaders have begun work on a plan to fix any systemic issues, the press secretary said. A group co-chaired by officials from the Joint Staff and the Office of the Undersecretary of Defense for Policy is set to deliver a report to Hagel within 60 days. "He has made it clear he would certainly welcome the work sooner than that," Kirby said.
In addition, Hagel has asked retired Air Force Gen. Larry Welch and retired Navy Adm. John Harvey to lead an independent review of the military’s nuclear enterprise. "They will offer their views on the quality and effectiveness of the action plan, and they will also provide their insights and recommendations on addressing any systemic personnel problems," the admiral said.
Hagel is concerned about what he doesn't know about the problem, Kirby added.
“What worries the secretary,[is] that maybe he doesn't have the full grasp of the depth of the issue. And he wants to better understand it and to the degree that there are systemic issues, he wants to attack them."
Kirby gave reporters a shorthand definition for what moral courage and moral character mean in the military. "That's doing the right thing when nobody is looking," he said. "That's treating people the right way even when they can't do anything for you. It's about the basic ideas of strapping on this uniform every day. And it's what, frankly, keeps a lot of us in."
EXPORT CONTROL REFORM: REMARKS BY STATE DEPARTMENT OFFICIAL
FROM: U.S. STATE DEPARTMENT
The Path Forward on Export Control Reform
Remarks
Tom Kelly
Acting Assistant Secretary, Bureau of Political-Military Affairs
Center for Strategic and International Studies
Washington, DC
February 4, 2014
Good morning, great to the here with you today. As Acting Assistant Secretary for Political-Military Affairs, I lead the Bureau charged with implementing most of the State Department’s part of the Export Control Reform initiative.
When it comes to implementing ECR, the Administration is focused on creating an export control system that keeps pace with new technologies and supply chain globalization. At the same time, we don’t want this process to sacrifice critical national security and foreign policy objectives, from nonproliferation to supporting human rights.
ECR will streamline U.S. Government decision-making on strategic exports and create a more transparent, predictable system. What it will not do is alter the primacy of foreign policy in the decision-making process for arms exports. Our Foreign Military Sales program, Direct Commercial Sales authorizations, and all exports of munitions from the U.S. will continue to be authorized based on a coordinated review of the foreign policy risks and rewards associated with the transaction. Our newly revised and publicly available Conventional Arms Transfer Policy guides this review. It affirms that the U.S. does not simply allow arms to flow from its borders in response to global demand; we authorize exports that support U.S. foreign policy and national security objectives.
Over the past four months we achieved the first milestones in implementing ECR. In October 2013, the first major revisions to our export control lists went into effect, transferring controls on certain aircraft and gas turbine engines as well as their parts and components from the control of the Department of State to the Department of Commerce. These two categories potentially represent more than $20 billion in annual exports. And this January, new controls on military vehicles and ships went into effect.
Our allies and partners are responding positively to these changes and see many of their concerns related to security of supply addressed by these reforms. The U.S. defense export community is also supportive.
I do want to take this opportunity to – once again – dispel the myth that ECR equals decontrol of arms exports. Any item that is no longer controlled on the U.S. Munitions List is now controlled on the Commerce Control List.
The goal is an agile, dynamic export control regime responsive to today’s and tomorrow’s national security and foreign policy challenges. These new controls reduce bureaucracy, accelerate goods to market for our close allies and security partners, and still maintain a high level of scrutiny over arms exports. Though the full measure of success remains ahead of us, we’re confident that we are on the right path.
The Path Forward on Export Control Reform
Remarks
Tom Kelly
Acting Assistant Secretary, Bureau of Political-Military Affairs
Center for Strategic and International Studies
Washington, DC
February 4, 2014
Good morning, great to the here with you today. As Acting Assistant Secretary for Political-Military Affairs, I lead the Bureau charged with implementing most of the State Department’s part of the Export Control Reform initiative.
When it comes to implementing ECR, the Administration is focused on creating an export control system that keeps pace with new technologies and supply chain globalization. At the same time, we don’t want this process to sacrifice critical national security and foreign policy objectives, from nonproliferation to supporting human rights.
ECR will streamline U.S. Government decision-making on strategic exports and create a more transparent, predictable system. What it will not do is alter the primacy of foreign policy in the decision-making process for arms exports. Our Foreign Military Sales program, Direct Commercial Sales authorizations, and all exports of munitions from the U.S. will continue to be authorized based on a coordinated review of the foreign policy risks and rewards associated with the transaction. Our newly revised and publicly available Conventional Arms Transfer Policy guides this review. It affirms that the U.S. does not simply allow arms to flow from its borders in response to global demand; we authorize exports that support U.S. foreign policy and national security objectives.
Over the past four months we achieved the first milestones in implementing ECR. In October 2013, the first major revisions to our export control lists went into effect, transferring controls on certain aircraft and gas turbine engines as well as their parts and components from the control of the Department of State to the Department of Commerce. These two categories potentially represent more than $20 billion in annual exports. And this January, new controls on military vehicles and ships went into effect.
Our allies and partners are responding positively to these changes and see many of their concerns related to security of supply addressed by these reforms. The U.S. defense export community is also supportive.
I do want to take this opportunity to – once again – dispel the myth that ECR equals decontrol of arms exports. Any item that is no longer controlled on the U.S. Munitions List is now controlled on the Commerce Control List.
The goal is an agile, dynamic export control regime responsive to today’s and tomorrow’s national security and foreign policy challenges. These new controls reduce bureaucracy, accelerate goods to market for our close allies and security partners, and still maintain a high level of scrutiny over arms exports. Though the full measure of success remains ahead of us, we’re confident that we are on the right path.
SECRETARY KERRY, HAITIAN PRESIDENT MARTELLY MAKE REMARKS BEFORE MEETING
FROM: STATE DEPARTMENT
Remarks With Haitian President Martelly Before Their Meeting
Remarks
John Kerry
Secretary of State
Treaty Room
Washington, DC
February 5, 2014
SECRETARY KERRY: It is a great pleasure for me to welcome President Michel Martelly from Haiti, and really with great respect for the road that he has put Haiti on and the enormous commitment that he has made to transition from reconstruction into a long-term development program. And under his leadership, elections are now on the horizon, which could for the first time provide the filling out of all of the electoral positions to Haiti and begin to stabilize and hopefully build on the progress that he has achieved with respect to economic development, the improvement of the economy, the improvement of health. The indicators have gone up, and that’s the direction that we want to see it going.
So as I was telling the president a minute ago, I had the privilege of representing Massachusetts for many years as senator. We have a very large and proud Haitian population in and around Boston and throughout the state, and so there was huge concern when the earthquake took place. I remember personally attending a mass, a service, prayer service at the cathedral, and all of us trying to signal how important it was that this recommitment to Haiti was going to be different from the past.
We still have the opportunity to fulfill that promise. And so I’m very happy to welcome the president here and I look forward to our conversation.
Thank you, sir.
PRESIDENT MARTELLY: Thank you, Mr. Secretary. I am very happy to be with you here, me and my delegation.
I’d like to take a minute to thank the people of the United States, you, your government, for always supporting Haiti, particularly at the time of big struggle. Today, I am here to talk to you about this new Haiti, a Haiti who wants to distance itself from aid and prioritize investment so we can create jobs, wealth, and (inaudible).
SECRETARY KERRY: Okay. Thank you very, very much. Looking forward to our conversation. Thank you.
QUESTION: Can you just shake hands, please?
SECRETARY KERRY: What?
QUESTION: Shake hands, please.
SECRETARY KERRY: Of course we can. (Laughter.) He was telling me he misses being a musician, and I was telling him I’m an occasional guitar guy, so we’re –
PRESIDENT MARTELLY: So most likely sometime we will get together. (Laughter.)
SECRETARY KERRY: All right. (Laughter.)
Remarks With Haitian President Martelly Before Their Meeting
Remarks
John Kerry
Secretary of State
Treaty Room
Washington, DC
February 5, 2014
SECRETARY KERRY: It is a great pleasure for me to welcome President Michel Martelly from Haiti, and really with great respect for the road that he has put Haiti on and the enormous commitment that he has made to transition from reconstruction into a long-term development program. And under his leadership, elections are now on the horizon, which could for the first time provide the filling out of all of the electoral positions to Haiti and begin to stabilize and hopefully build on the progress that he has achieved with respect to economic development, the improvement of the economy, the improvement of health. The indicators have gone up, and that’s the direction that we want to see it going.
So as I was telling the president a minute ago, I had the privilege of representing Massachusetts for many years as senator. We have a very large and proud Haitian population in and around Boston and throughout the state, and so there was huge concern when the earthquake took place. I remember personally attending a mass, a service, prayer service at the cathedral, and all of us trying to signal how important it was that this recommitment to Haiti was going to be different from the past.
We still have the opportunity to fulfill that promise. And so I’m very happy to welcome the president here and I look forward to our conversation.
Thank you, sir.
PRESIDENT MARTELLY: Thank you, Mr. Secretary. I am very happy to be with you here, me and my delegation.
I’d like to take a minute to thank the people of the United States, you, your government, for always supporting Haiti, particularly at the time of big struggle. Today, I am here to talk to you about this new Haiti, a Haiti who wants to distance itself from aid and prioritize investment so we can create jobs, wealth, and (inaudible).
SECRETARY KERRY: Okay. Thank you very, very much. Looking forward to our conversation. Thank you.
QUESTION: Can you just shake hands, please?
SECRETARY KERRY: What?
QUESTION: Shake hands, please.
SECRETARY KERRY: Of course we can. (Laughter.) He was telling me he misses being a musician, and I was telling him I’m an occasional guitar guy, so we’re –
PRESIDENT MARTELLY: So most likely sometime we will get together. (Laughter.)
SECRETARY KERRY: All right. (Laughter.)
CVS REMOVES TOBACCO FROM STORES, HHS SECRETARY SEBELIUS MAKES STATEMENT
FROM: HEALTH AND HUMAN SERVICE DEPARTMENT
Statement by Health and Human Services Secretary Kathleen Sebelius on CVS Tobacco Announcement
The Department of Health and Human Services applauds CVS Caremark Corp. for their leadership in helping to make the next generation tobacco-free.
CVS Caremark’s announcement that CVS/pharmacy stores will no longer sell cigarettes and other tobacco products is an unprecedented step in the retail industry. We also commend CVS Caremark on their new national smoking cessation program. With more than 7,600 CVS/pharmacy locations, this private sector health leader’s new policy will have considerable impact.
Last month, I called on all sectors of the United States – from businesses to local and state governments to the faith community – to join in the Obama Administration’s sustained effort to make the next generation tobacco-free. Smoking takes an enormous toll on our friends, families and communities. As we know from the recently released 50th Anniversary Surgeon General Report on smoking and health, nearly 500,000 Americans die early each year due to smoking, and smoking costs us $289 billion annually. Each day, more than 3,200 youth under age 18 in the United States try their first cigarette and more than 700 kids under age 18 become daily smokers. If we fail to reverse course, 5.6 million American children alive today will die prematurely due to smoking. This is unacceptable.
We need an all-hands-on-deck effort to take tobacco products out of the hands of America’s young generation, and to help those who are addicted to quit. Today’s CVS Caremark announcement helps bring our country closer to achieving a tobacco-free generation. I hope others will follow their lead in this important new step to curtail tobacco use.
Additional recent tobacco-related announcements from the Department of Health and Human Services:
Statement by Health and Human Services Secretary Kathleen Sebelius on CVS Tobacco Announcement
The Department of Health and Human Services applauds CVS Caremark Corp. for their leadership in helping to make the next generation tobacco-free.
CVS Caremark’s announcement that CVS/pharmacy stores will no longer sell cigarettes and other tobacco products is an unprecedented step in the retail industry. We also commend CVS Caremark on their new national smoking cessation program. With more than 7,600 CVS/pharmacy locations, this private sector health leader’s new policy will have considerable impact.
Last month, I called on all sectors of the United States – from businesses to local and state governments to the faith community – to join in the Obama Administration’s sustained effort to make the next generation tobacco-free. Smoking takes an enormous toll on our friends, families and communities. As we know from the recently released 50th Anniversary Surgeon General Report on smoking and health, nearly 500,000 Americans die early each year due to smoking, and smoking costs us $289 billion annually. Each day, more than 3,200 youth under age 18 in the United States try their first cigarette and more than 700 kids under age 18 become daily smokers. If we fail to reverse course, 5.6 million American children alive today will die prematurely due to smoking. This is unacceptable.
We need an all-hands-on-deck effort to take tobacco products out of the hands of America’s young generation, and to help those who are addicted to quit. Today’s CVS Caremark announcement helps bring our country closer to achieving a tobacco-free generation. I hope others will follow their lead in this important new step to curtail tobacco use.
Additional recent tobacco-related announcements from the Department of Health and Human Services:
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