tv Treasury Secretary Testifies on State of International Finance System CSPAN July 29, 2017 4:59am-8:02am EDT
>> the meeting comes toorder. the chair is authorized to call recess at any time and members have five days to submit records. the hearing is for the purpose of receiving the secretary of treasuries annual report on the state of the international financial system. before proceeding to that report, i will give you a report on the hollings worth family. joseph albert holingsworth arrived this morning weighing in at 7 pound, 15 ounces. mother and baby are doing well. husband and father is a total
wreck but congratulations to our colleague tray hollingsworth. [applause] >> we will give him an excused absence from this morning. we welcome secretary treasury steven mnuchin. as we know this system rest heavily upon your u.s. financial system and that system clearly needs improvement. fortunately, president trump has outlined a bold, forward looking plan to tackle the serious problems facing hard working american families who have seen their pay checks stagnant and dreams diminish. the economy is nut not close to reaching its potential.
americans remined stuck in the slowest recovery in generations. our economy grew at a measly 1.6% when the historic norm is twice that. clearly, eight years of obama numics has taken a toll. one place it has taken a toll is the competitiveness of our capit capitol markets. if the united states dropped to 17th in a recent world ranking of economic freedom. a historic low for nation. this is based on investment freedom and financial freed and economic freedom. the economic freedom of a number of international competitors have grown. z have faith in the spirit of american entrepreneurs and
businesses to make necessary risks in growth but to-do so the unaccountable washington burr must be held accountable. our economy will grow healthier for all. the president's executive order establishing the score principles for regulating the u.s. financial system is vitally important to us all. as the report nets, we have nut empowered americans to mick independent decisions in the marketplace. save for retirement or build individual wealth. we have not mirrored companies to be familiar with foreign mshth markets.
from helping in bank bailout, to tailing regulations for community banks and credit unions, your recommendations help craft a better regulatory system. the steps you are taking to make sure the competitiveness of the financial system is a welcome containing -- change one i fully support. i now yield four minutes to the ranking member for an opening statement. >> thank you very much, mr. chairman. welcome, secretary mnuchin. as secretary, you have a wide range of spikts that are of great importance to the economy and american people.
these range from safeguarding our financial system and regarding u.s. values internationally. it collects and helps law enforcement curtail the activity. it is critical for the american public to learn the extent for which president trump, his immediately family, and his associates colluded with russia to influence the outcome of last year's elections. serious questions have been
raised about suspicious arrangements and involvement with russian government officials, oligarchs and organized crime leaders as the committee of jurisdiction has their own share. you as secretary will assist the committee in fulfilling oversight in assessing president trump's entanglements are russia even though you indicatedia do take requests from members of congress seriously you did not respond to a may 23 rd letter from me and my democratic colleagues requesting copies of all railroad -- records related to the business ties to russia
as well as those of his family members and associates. i understand your staff did call yesterday afternoon while preparing for the herring but i am looking forward to hearing directly fromia about thisimateer today. there are also other areas where i have serious concerns. in june, the treasury released a report that recommendations that largely mirrored the wrong chase act and you recommended gutting the consumer protection bureau and rolling back dodd-frank reforms including rules in place to ensure the stability of our financial systems like stress tests and living wills. these recommendations are deeply harmful and short sided giving the progress we have made. one west foreclosed over 36,000
families in california, this president has selected numerous one west officials including you to fill government posts for example joseph outing, affin a former west employee has been hired. democrats are concern said about a justice department settlement with one west. i look forward to hearing from you and what you have to share with us today. i yield back the balance of the tim. >> the chair recognizes the gentlemen from kentucky, mr. bar, chairman of our subcommittee for two minutes.
>> secretary mnuchin, thank you for your service and welcome it your first hearing on the state of the nnl financial system. as chairman of the monetary policy and trade subcommittee which has jurisdiction over international institutions, sanctions and monetary policy, i think you are off to a great start. a bill was passed to empower treasury to give much-feneeded reform. i thank your staff for having worked with us so effectivery on this legislation. we're also looking forward to the positive impact you can have. i would urge you as lead member of s-sock to address the extent to which monetary policy and the four and a half trillion balance sheet continued to distort
decisions and enjoying a faster and complete recovery. robert caplin recently wrote there is a cost to excessive accommodation in terms of limiting returns and creating distortions and investigating and hiring decisions. monetary policy accommodation is not costly. perhaps the greatest threats we face are the threats from terrorism around the wormed. i hope to continue to work on key proposals that thwart violent extremism and counter states like north korea and iran. i want to applaud your work in the june treasury report. these reforms allow firms to land an additional 2 trillion in the economy. again, thank you, and i look
forward to your testify. i yield back. >> the chair now recognizes the agenda gentle lady from wisconsin, ms. moore, for one minute. >> i am so disappointed you and the trump administration disclose the dodd-frank and the treasury fined the agency for a crooked deal while secretary tillerson was the ceo. i heard from state officials that section 1502 conflicts provisions were working just fine.
i look forward to your testimony. >> young lady yields back. today we will welcome the testimony of the honorable steven mnuchin. since this is a new administration and the first time that we have had a cabinet level official testify before our committee i thought it would be prudent to review the committee and house rules on decorum. members are required under the rules of the house to observe the principles of decorum and courtesy set forth in rule 17 and related provisions in jefferson's manual included by speaking and acting respect ffuy and refraining from language including applying a lack of intelligence. and i would add over the last
two years my colleagues on the other side of the aisle have expanded upon the principles on the record to say that no administration witness should be quote unquote badgered or subject to quote i got you politics. the ranking member and other democrats on the committee have also said no administration witness should be talked quote to badly, no administration witness should be interrupted, every administration witness should be quote treated fairly, every administration witness has quote right to be able to respond and finally my democratic colleagues every administration witness should be treated with quote acceptable standards of dignity, propriety, courtesy and decorum. steven turner mnuchin -- >> i have a parliamentary inquiry. >> i would like to know if the
witness would like to be sworn in? >> it is not our custom to swear in administrative witnesses and we didn't with the obama administration. >> mr. chairman, since you took time to talk about how we should conduct ourselves today i would like to remind you and your colleagues how you treated mr. cord ray and i never heard you take time out to talk about how members should conduct themselv themselves. i would like to make sure i understand you do not wish to swear in this witness? >> i believe in my tenure we have sworn in one witness.
>> this is the first time steven turner mnuchin has appeared. he was sworn in as the secretary of treasury. he was born and raised in new york city and holds a bachelor's degree from yale university. he has retail and banking experience which he brings to the office in which he now holds. without objections, the witness written statement will be made part of the record. secretary mnuchin, welcome to the first appearance before the committee. you are recognized for five minutes to give oral testimony. >> thank you very much. chairman hensarling, ranking member waters, and members of the committee i am pleased to be
here today and look forward to discussing the important issues for the american people. i would like to begin by addressing treasury's national advisory committee report. treasury uses its leadership role in international financial institutions to help ensure they are carrying out the core amendments. the treasury is focused on keeping the international financial institutions as cost eeffective as possible. we press on the need to investigate global imbalances. this holds the ims administrative budget hardly flat in real terms.
where it micks sense we will retain a top donor and share holder while addressing priorities across other parts of the government. we will continue to promet access to economic opportunities to eliminate poverty and build shared prosperity. when the world is prosperous and stable, america reaps the benefits. i would like to hospital our domestic reform agenda. let me begin by congratulating the committee on its passage of the choice act. the administration supported house passage of this legislation and we will work with congress to reform the financial regulatory system. years passed since the financial
crisis and this has given us time to see what has worked and what has not. the administration is committed to robust financial system with a free flow of credit that fuels the engine of american growth. this means allowing community financial institutions, friends and small businesses access to barrowing. in june, treasury released the first in a series of reports in response to this executive order. our first report showed economic
growth and the report focused on regulatory action that can be taken by the executive branch it included a number of legislative recommendations to appropriately align the government institution with the president's core financial institution. one is tailoring requirements for small, mid-size and regional banks that pose little or no risk to the financial system.
the third is a regular to the complex vocal rule. fourth is statutorctutory chang make the bureau more accountable. we can implement regulatory reforms and legislative remedies for the benefits of community banks and mid-size institutions. this isn't sustainable and leaves taxpayers at risk. our housing finance policy should be clear and designed the
other critical component is tax refirm. we have gone too long without addressing our tax system. our business rate is one of the most highest in the world and makes businesses less competitive and we are committed to changing that. lowering the rate and bringing back trillions allows business to invest in this country spurring economic growth. another important comment of strong and robust systems is stopping bad actors and those who finance them. i would like to acknowledge the combat effort to finance trim. our weapons that are needed to combat them have changed. our office of financial intelligence is ready to work with this committee and i am looking forward to working with
chairman pierce and ranking member to create historic opportunities for american people. i look forward to working with you. thank you. >> senator yields himself five minutes for questions. mr. secretary, you are probably familiar with infrl reserve report in 2016 dealing with the rule that equity of the bond increas increased. you know the director of monetary and capital market provided another critique of the rule saying it can impact the ability of institutions to supply credit. we have a recent study conducted by the bank of england saying in their stress simulation material increase in spreads in the corporate bond market and in the extreme corporate bond market
dislocation threatens the markets. as head of f-sock, what are your current concerns on the state of bond market liquidity in general and in specific? >> thank you very much for that question. let me acknowledge i see you have the debt clock and hopefully i get out before it knows to $20 trillion. as it relates to your question about the rule, i do share your concerns. i think the biggest problem with the rule is it is complexity and regulatory overlap. it is our attempt not to have proprietary trading with banks, we need to make sure banks understand how the regulation work. rece
recently i was at a g20 meeting and we had economists that came and talked to us and said every trading desk needs a psychiatrist and lawyer to determine how to apply the rule. in any event, as my role of chair this is one issue i am working on and pleased to report we have done preliminary work on it. the regulators also share these concerns. we have it on our agenda tomorrow for the meeting and we will be addressing how we can deal with the regulatory overlap also mr. chairman as you do know in our report on the executive order to the president we also made concern suggestions for legislative changes to that. thank you. >> mr. secretary, particularly those on this side of the aisle, we very much deplore what is
happening to your community banks and credit unions. i know some on the other aisle say there is no regulatory problem but in your report and testimony today you mention the term tayloring. whau are you considering that you can do in the administration to better taylor rules to your community banks and credit unions? >> mr. chairman, thank you for that question. let me first say, we are very fe focused in making sure community and regional banks grow. they account for 50% of the assets in the american financial markets and that is problematic. what we want foodo is make sure there is robust lending, particularly in community banks. i have met with many people, these are not republicans or democrats. these are hard working business
people particularly in agricultural communities, particularly in small manufacturing communities that constantly complain that the community banks are nut able to lend because they are over burdened by regulatory issues. and i firmly believe that community banks no how to make loans. let me say they should be regulated and can't strive. we are very focused on raising the burden and look forward to working with the community on it. the treasury report recommended raising the threshold for the
application of the standards raising it from its current 50 billion threshold to an unspecified amount. it appears that changes can be accomplished without legislation. what did you believe the threshold could be increased to? do we have your commitment to imelement these changes? >> mr. chairman, my understanding is there has been bipartisan discussions in raising the limit in the previous administration. i hope this is something we should accomplish quickly. i think it should be raised substantially to at least 250-300 billion. i would go further saying that
and be exement. they will be regulated by properly. >> i yield five minutes to the ranking member. >> secretary mnuchin, i want to mock sure that even though you are not sworn in do you realize you are under oath? >> i do. thank you. >> thank you very much. are you familiar with the may 23rd letter i sent to you along with several of my democratic colleagues on this committee? >> yes, i am. >> do you understand this committee oversees the financial crimes? >> yes. >> given we obtain these records
and your departments statements that the agency takes responsiveness to congressional request seriously and is considered to providing appropriate responses from members is there some reason why i did nut get a response to the letter i sent may 23rd? >> so, ranking member waters, first of all let me thank you for your service to california. being a resident of california, i appreciate everything. >> thank you very much. >> i don't want to take my time. reclaiming my time. >> the time belongs to the gentlelady from california. >> i don't want to waste my time on me. i want to know about the may
23rd letter. yun about -- you know about it. why didn't you respond? >> mr. chairman, i thought when you read the rules you acknowledged i should not be interrupted. >> what he failed to tell you is when you are on my claim i can reclaim it. he left it out. i am reclaiming my time. please, respond to the question of why i did not get a response, me and my colleagues to the may 23rd letter. >> i was going to tell you. >> just tell me. >> let me say the department of treasury has co-operatcooperate the senate intel committee. >> reclaiming my time. >> mr. secretary, the time belongs to the gentlelady from
california. >> perhaps mr. chairman i don't understand the rules. >> please explain the rules and do not take that away from time. >> we will give the gentlelady adequate time. i read statements of the ranking member and democrating colleagues on how administration witnesses should be treated not necessarily the way they will be treated. so the time belongs to the gentlelady from california but i assure you majority members will allow you to answer the questions when it is our time. ....
>> day have received reports of suspicious activity of potential violations of sanctions involving president trump would you share it with the justice department the special counsel or other officials are wait until you receive a request from law-enforcement ?. >> i cannot comment any specific actions because they are confidential but donald trump is no different than anybody else. >> and with this special counsel and other officials injuries a request and to
respond to those situations and to cooperate extensively with those three other committees. >> if a close advisor of the president is investigated for money laundering with your department would accurately seek from foreign financial intelligence with the way until a specific law enforcement request came in?. >> i will not comment on a hypothetical situation but it is no different than any other situation. >> respectfully request to ask for in additional five
minutes to read printed. >> and asking for specificity but the way you would handle these questions and i have presented year. i will continue as a treasury department employee are you aware of concerns the of the relationship between president trump and russia?. >> no. nobody has expressed those concerns. >> if you're the finance chair of those illegal in kind contributions will you recuse yourself?. >> i amado where nor have i recused myself on anything at the moment.
>> with that red line on his investigations president trump made it clear he considered any investigation by robert mueller and a red line that should not be crossed so have you had any conversation with the president or any official at the white house that it was directly stated or implied with any investigation in some way be crossing a line?. >>. >> president trompe made it clear he considered any investigation into the personal finances daybed line that should not be crossed? have you had any conversations with the officials at the white house that it was stated or implied supporting
investigation would be crossing the line?. >>. >> with that foreign investment committee. >> so that evaluates those u.s. businesses to determine whether that undermines the national security. from jeff sessions to robert mulally two --- robert mahler to do is call me so how do day preview those assets to the foreign entities by the top administration officials? with the sale of assets by the committee shares director with the
president's son and what -- sudden loss so in the event that indicates the foreign entity may seek to unduly influence u.s. policy even if doing so may jeopardize our position as secretary? director will assure you i take this position and seriously i have not have anybody in any way to force me in that position in nor would i let them. and i use my judgment. >> as i understand it to have not matter under consideration. >> so i think those that all
actions are confidential that is inappropriate for me to comment one way or another. >> is that true he was considered for a position in the administration but he could not go for word but now he is in the administration to influence that decision?. >> i wanted to a knowledge i am not making a comment but alsace was aware he was ever considered within the administration for a position. >> i yield back the balance
of my time. >> mr. chairman and secretary mnuchin welcome to the committee. we sent you a letter last week with the ongoing comprehensive battle with china to ask you to address mark asked -- access issues lifting the equity caps although the chinese banks have no restrictions but those that unfairly disadvantage american firms. what is the next step you plan to you take to lift from american companies?.
>> so i have had the opportunity to meet with president trump and the president of china twice and we just finished the conference of economic dialogue president chub is very focused on having a more balanced economic relationship with china and to make that very clear in to see in the of press release that it is the shared goal to fix the trade deficit united states has a significant competitive advantage with those services in general one of the areas of the trade surplus and it is extremely
unfair that the chinese companies are said to subject to security reviews but as you have said our companies in china that we have seen most recently that apple will share the i cloud business the key part with a chinese joint venture partner. this administration is fully committed to make sure american companies and workers are on a level playing field. >>. >> and with that equity in with respect to the efforts that they have engaged in
and that implementation the treasury department despite the fact those associated services that only spell-out warranty maintenance and repair services. what also those treasury department authorizes u.s. banks to finance the sale of the aircraft's. so this airline flew from that j.p. co pay day as an airlift of the korean regime atrocities so can use certified today that iran air has ceased all activities and if not will they be designated the airline that has been
allowed under the jpcoa?. >> specifically on i ran with this public format i know what to comment specifically we do have intelligence information to share with you in a private setting. but what i would say that to be responsible for granting licenses with boeing and airbus and that is under review under the national security review under the jpcoa. >> mr. secretary i asked your predecessor end with those liquidity departments into undermine the financial system. in to say that is a market
structure do you agree disagree with your predecessor?. >> but i do have a firsthand experience in the trading and advisement markets and absolutely i agree with you that the local in particular cater -- in particular has liquidated the liquidity and that is something i very focused on. >> your time has expired now we recognize to republicans in their row. >> before getting into my observations my friend from california that the
questions were edging towards of violation of the psa. and then to release that natalie releases up process but again it looks very close to a violation. i appreciate your willingness to hold that position with a delicate balance. so those that our real threats to the nation so even with these major threats you don't lose sight of the of mission talking about the financial system
that fuels the engine of america. and at the end of the day that is what you are here for. but you are not losing sight of what makes this country work. >> their work with congress and the president and the of military the major activity is shutting off of funds for number three and and iran but also the financial activities and evaluated and
then to step up and says how do we modernizer update and with the robust movement. and how we keep ahead of that threat. >> first of all, i do of knowledge your concerns. my number one focus is economic growth on tax reform and the number two focus is 50 percent of my time on sanctions with the terrorist financing issues and using technology is very important we will use all the tools in the toolbox to set up a terrorist financing unit working with the arab
partners and i firmly believe it works with iran. causally working with secretary teller said - - secretary to lessen the with the approach to stop terrorism. >> what can we do more here? so tell me what we need if we need resources?. >> we do need more money for the terrorist financing center but we can talk about that later. >> mr. secretary you wanted to make responses earlier we can go into depth when
secretary am deeply concerned about terrorism of financing during the confirmation hearing the agreed the anti-a money laundering efforts is a challenge. en those that utilize the financial system that could be a real vulnerability with that actors that can exploit. so if you are willing to work with congress and those that impacted and then to address that challenge. >> we are reducing a bipartisan bill with the
corporate transparency act requiring companies do you disclose at the time the company is formed and viscerally be available for law-enforcement and financial institutions but if my it is the treasury responsibility as a backup. so reduce support requiring companies to disclose at the time the company is formed with suggested legislation?. >> thank give very much for that. now and the stand this issue much better than my initial confirmation i have spent a lot of time looking at this internally it is a concern
that the g-7. but the european partners are concerned i am looking forward to working with you on a solution and i hope this could be bipartisan. it is complicated. en to seeing how that has maintained after all in the ownership has moved one hour later they and somewhat concerned up of treasury to be the era of - - to be the repository for crowfoot spirit we have numerous in this issue came from law-enforcement and
certainly lead is a tremendous step to combat terrorist financing which is a huge concern to the entire country. also asking about the debt ceiling will fade back to whatever the of uh political drama and ted has substantially raised with the short-term borrowing in treasury and though short-term treasurys at that time because of the shift toward the government money market funds is that causing
distortions of the market and to bar what bill lowest possible rate. >> and i.m. very focused i'm encouraged like this before anybody leaves office said yesterday in my testimony of alerting congress the special powers will be extended. >> my time is almost up. and treasury were to reach the debt limit of the government obligations would this be a default? the but i have no choice to prioritize again rigid honor all the obligations.
>> the gentleman from missouri. >> faq for being here. and also it was a tremendous effort and no one to follow up on my initial question with regards to basically those of her systemically important in because of the problem with the arbitrary nature of the process i am still perplexed but for now. but h.r. 3122 with that designation the bill removes
that $50 billion threshold that was discussed with you a moment ago there reflects the systemic importance. and that does the analysis of this assays times and effort -- effort to monitor ready is part. some of these big community banks still leave a more risk-based analysis?. >> fox of we have the floor that is not subjective and
with that risk analysis. >> we will pledge chart of here with cybersecurity and that reminds me of the toy that i had is a kid that gives you a headache to look at but mr. secretary you ed dressed that subjects with those different agencies and to stop that duplicity of the regulators but i wonder as the chairman that is a great position to bring all this together in then to do pac that regulatory relief
for the banks would you like to comment?. >> and then to see this in more detail i share their concerns. and with the cybersecurity already working with the regulators have to consolidate their resources and cybersecurity is one of those biggest risks to make sure they consolidate those resources in a way but not for the lifetime independently with the bank. >> with those guidelines and principles is a good place to start some of the banks get a mixed message.
>> i can assure you we are working on that. >> this is something we're dealing with for a long time are you familiar?. >> for those own set of values to match up with their own and i am concerned quite frankly and to back off on this problem for a while and your commitment to worker was something with us and you'll try to stop the nonsense but there is another administration down the road there is a set of
guidelines in place. would you help us. >> absolutely i commit to working with you. >> we now recognize the gentlelady from new york. >> for merck secretary lew imparted legislation with those necessary tools to restructure and prior to his departure that it was important to continue that situation for puerto rico successful recovery. logos are the policies initiative but in fact,
left the island in the last ten years. we have three doctors leaving the island every day. i am happy they are coming to florida and ohio. politically speaking it will be good for democrats. but i want to give the option for the people of puerto rico to stay there if they chose to. puerto rico is under territory cross. it means it is a colony. we, the united states congress, have the responsibility. i want you to commit yourself that you will guide your staff to look at the viable options c including the use of the funds to help breach puerto rico's immediate needs. >> i am not going to commit to use any specific tools such as the exchange fund. but i can commit to you easily because i have done nis and will continue to do it.
we are working closely with lots of people on this. as i said, it is a very complicated issue. so we are trying to balance what a solution would be that is appropriate. >> so, i was a member of the task force on puerto rico to promote coming growth. would you assign a stop or provide a stop that has been assigned to monitor this equation? >> i do. we are happy to follow-up up and have them meet and get your thoughts. thank you. we wrote a letter encouraging you and president trump to
reconsider decisions. in june 2017, your own pressure report states that they are often the only source of credit on financial services in low income urban and eliminating the funds. >> thank you for asking me. i had there opportunity to talk to the senate about the same issue. according to the cdfi program, i think it has been effective. having said that, dwi had to make difficult decisions in the context and there overall was to get to a balanced budget and fund military expansion which is much-need. this was just a difficult
prioritization we made within the program. as part of the finance record, we recommended a review of the community investment act and make sure we meet with consumer advocates and community members to ensure that money is being used properly in communities. the chairman recognizes the chairman of the market subcommittee. >> secretary mnuchin, appreciate you coming and being in front of this committee. as tempting as it is you see others don't want to talk anything other than the economy and it is tempting to talk about samantha power or hillary clinton's illegal use of e-mail as secretary of state or director comey illegally releasing classified documents or ukraine medling in the
election and i think it is a waste of time. i am wondering what do you view as the most urgent priorities needed to address and restore confidant and create more opportunities in our economy with our capital market system being chairman of the capitol market committee. interested in that and effects of dodd-frank. >> i would just say as part of dodd-frank our focus is community and regional banks.
i think the other is reform and making sure banks that make good mortgages and want to keep them on the balance sheet they can. and i think the role is a big concern in that we can have property monitoring of eliminating proprietary trading with managing liquidity. >> and i know you laid out various items. anything specifically in dodd-frank you think as a committee we need to address? >> the long list we outlined. the number one thing is probably to raise the limit as we talked about. >> that is helpful. >> as has been expressed by a few others, i believe the rule is partially to blame for the diminished liquidity in the market.
this is 900 pages and just over 300,000 words. it is not an easily digestible. i know you have a heart playing out a number of things, 19 thinks that could be used for improving the rule. we repeal that and that is my preference. there are 11 regulatory suggestions for providing immediate relief and that is from the federal reserve, the fbi ic, cftc, and the albeit alphabet soup of regulators.
how soon can we expect to see relief without the legislation backing it up but from the regulators themselves? >> well, i mean i think as you mentioned in your legislation you have repealing it and we don't object to that if that is what congress wants to do. i don't think the rule is what created or the lack of it is what created the financial crisis. we are focused on how to fix it and these are active discussions on what the financial regulators about what we can get a consensus to depict. they have the immediate ability to flip a switch and we are hoping to do that.
chairman bar talked about the iranian exports and the former chair of that committee in the last term and i am curious if there have been other financial institutions that have been in contact with treasury with respect to aircraft exports to iran? i can't comment on the specifics that are private but i can assure you we are on top of this. >> the chair recognizes the gentlemen from california, mr. sherman, for five minutes. >> i want to get one thing clear for the record. mr. chairman you began by quoting people saying we should be nice to witnesses and i think it is important the record reflect that no comment about being nice to democratic or republican witnesses every came
from me. you talk about small companies being able to make business loans. that is not a reason for us to take the giant banks off the hook for regulation. it is there near collapse that nearly collapsed the economy. it is the reason for you to deal with the occ which is under your jurisdiction and have them when they audit banks and those banks have a prime plus four or prime plus five loan to a company that is just a little shaky that they have a reserve of just an extra 1-2 percent rather than 30-50%. you, mr. secretary, could do more than any of us to get small business loans made by local banks. the debt clock has been behind you.
you commented on that. i would hope any tax reform would not increase the debt and we just voted in the house not to cut the cbo because they are the umpire in washington to determine what increases and decreases the deficit. i hope you use your power to break up the too big to fail banks. the debt limit is just over the horizon. i hope you use your voice to know it isn't enough to deal with measures. the harder it is to your economy now because investigators have to price the risk america will default on its debt. you probably didn't think you would be dealing with armenian.
your department needs an allocate one taxpayer lawyer for a few weeks. in making the decision to allocate for a few projects, you will be told you should make the decision based upon the size of the business transactions with that country. i hope you direct your department to add two more criteria. the first is whether the other country is ready to use the u.s. model treaty. if they are willing to sign on our bottom line you don't have to commit much in the way of resources to negotiating the treaty and you build momentum internationally for other countries accepting the u.s. model and second i hope you listen to the state department when they testified before the committee foreign affairs just yesterday that it is important gop-politically we have this treaty.
i will get you the letter from the government of armenian saying they are willing to sign the bottom line the united states presented. i have questions. is china a currency manipulator? >> on armenian we are happy to follow-up on your office. i stay on top of issues but that is not one what i am top of. >> i look forward to working with you. is china a currency manipulator? >> we did not label china a currency manipulator at this time but have been in the past. >> are you in favor of tariffs or other actions to recoup for america the jobs we lost when they were a currency manipulator? or is it as long as what they
did in the past we will not respond? >> i can assure you president trump is focused on the economic and trade issues with china. all tools will be on the table. >> one more question and that is your department finds mobile for violating our sanctions against russia. are you confidant your department made the right decision and why aren't you holding any individuals responsible since a corporation is an inadamant construct? individual people undermine our sanctions. >> let me first comment that obviously i am highly aware of the situation and decision.
>> thank you, secretary, for being here. it was not rex tillerson that opened up the button but hillary clinton. it was romney who said russia was our greatest threat but barack obama wanted to foreign policy back. and it was bill clinton >> just reminding my -- >> state your inquirer. >> my inquirer is whether or not this particular discourse violates the rules you articulated earlier?
>> the gentlemen's questions violated no house or committee rule. the time belongs to the gentlemen from wisconsin. >> it wasn't melania trump who received half a million to a speech to an investment company that was tied to the kremlin. we have folks on the other part of the aisle part of the impeach trump movement as my friends are talking about russia across the aisle, do you have any idea what is being talked about in wisconsin? 13,000 new jobs and a 10 billion investment from fox com to build the most manufacturing plant in the united states and for the first time and i cannot remember how long to build tv screens.
congratulations to wisconsin. i know it is a competitive with other states and that will be a big deal for that economy. >> we are talking about jobs and economic growth and industries that my friends on the other side of the aisle have written off. under my boss and to your governor, $10 billion investment in 3-13,000 jobs in the great state of wisconsin. that is what people care about. >> that doesn't include the construction jobs and creation of what i think you are calling our wis con valley. >> maybe that is why my friends across the aisle lost a
thousands seats across government. i think if we have going to have more fox com, we third the top rates might not go going down but may be going up. do you want to give us clarification on your view of taxes and where they should go to make america competitive again. >> we have been working closely with the leadership of the house and senate to create a unified plan. our objectives are simple on the person side. we want to cut down the number of practs, simplify taxes and 95% of americans will do taxes on a giant post card that will make by job overseeing the irs simpler. on the business side, we want to
tran scission from a world wide system where we allowed company to defer and leave it offshore that will bring back trillions of dollars and huge amounts of jobs and capital to the county. i would not that i don't think this is a partisan issue and i would hope both sides come together and work on tax reforms and hopefully we won't have to craft bills that have to go through this. i have concern about the eu-u.s. agreement. the president talked a lot about
bad deals being negotiates. this deal was announced a week before president trump was sworn into office. we sent you a letter, pointed outb sef seven things we have concerned about, i do have a concern we don't have an ex change of letters that everyone is agreeing to to clar my what this means. my time expired but i want to make sure we get the power of yourself and mr. trump to make thur the deal works for american insurers and state based model. >> the time of the gentlemen has inspired. >> the chair recognizes the gentlemen from new york, mr. meeks.
>> mr. secretary, let me ask first, when you became the secretary of the treasury you had to take an oath of office, correct? >> that is correct. >> and was the oath of the office to the u.s. and constitution or to the president of the united states? >> it was to uphold the constitution? >> and you are aware of the current events? the attorney general is told he should protect the president as opposed to the constitution. most folks, democrats and republicans believe that maybe the attorney general did the right thing by recusing himself from any investigation that dealt with russia. my question is given the president wants loyalty and
protection because he said the people, his administration is not protecting him and that in matters that are serious to the department of treasury, are you going to protect the president of the united states or are you going do -- to uphold the constitution of the united states? >> i think in many cases it is one in the same. >> no, you think it is one of the same? >> that gives me concern. >> the time belongs to the gentlemen. >> that gives me serious concerns because the are many allegations about conflicts of interest by the president of the united states and there is an ongoing investigation against the president of the united states about his involvement in russia and if there is someone
that tells me you believe that your obligations, even if the president, because i thought no person was above the law. let me just be clear. my obligation is to uphold the law. >> you know the united states congress has huge responsibilities also. i am concerned because the united states congress, what they have done, bipartisan, we are about to implement a sanctions bill against russia and in that sanctions bill, there is some authority that ovat has to enforce certain protections. do you believe, mr. secretary, that there is corruption in russia? yes or no? >> yes, i am sure there is
corruption in russia. now, if you believe there is corruption in russia and have you head or understand the sanction bill that we are doing in a bipartisan way in the united states congress, both the house and the senate? >> of course. >> have you made plans on how you would implement the sanction bill and how the treasury bill implements the bill? in regard to russia? >> have you thought about how you would do planning to go against the corruption taking place in russia? how the treasury department would protect the people of the united states? the constitution, not the president. have you thought about implementing that or can you do
that on your own or must you get clearance from somebody else? >> i don't need to get clearance from anybody else. i do have concern sed. when i see others doing their job and it the president tweets something. quickly about the debt ceiling for example. you said the debt ceiling should be clean. the administration said you should be able to include some increases in changes. what is your position now? should there be a clean debt ceiling? or other things added to it? >> the president has been clear that i am responsible for the debt ceiling and my position has been i believe there should be a clean debt ceiling.
>> i am representing the administration on this. >> the chairizes the gentlelady from missouri, chairman wagoner. >> thank you, mr. secretary. welcome and thank you for appearing before this committee. i dearly and sorely want to get back to the purpose of the hearing which is to talk about treasury and the state of the international financial system. i first want to commend you regarding the treasury report you recently released focusing on regulatory burden. and i was honored to be there
and many go a long way toward relieving overburden especially for community, financial institutions so that lending and economic growth can continue and another thing i am concerned about particularly with my role also on the capital market cub committee is we now have about half as mini public companies in the united states as we did 20 years ago. additionalal there has been a deklein in ipo or initial public offers without a deklein in startups. i understand treasury is going to issue a capple report this year. that report focused on the issue of declining number of companies and ipos.
why should we care about this trend? >> as you said, we care about creation of businesses. we want to make sure there is not too much consolidation and job creation. >> what are some of the other impediments that are chilling the ipo market or accessing capital in the public market? >> well, i think as you know, there are a lot of issues and we will address those in the rep t
report. >> i am more focused on the broadening of the economy than i necessari necessarily am individual investors. i would say broadening the economy it gets back to jobs. we are very focused on getting to 3% gdp which we think is critical. the difference between 2-3% is trillions. >> we have not been there for a long time. we haven't but over a long period of time it is important. >> how did a healthy public market impact small company growth and what impacts does it have on job creation? >> limited capital to industries, limits job creation and investment.
but your response to that has been that congress should act and then you say you keep providing as with the nebulous deadline sometime after december -- september we both know the market's worst enemy is uncertainty. not just about the debt limit the plays a role in what the fed does and keeping the sterling credit rating all around the world is what has sustained us and is the of backbone of what keeps our country the number one financial system. so i will just ask q. can you commit today that within one week you could follow
the example of your predecessor with your best estimate when we will reach the debt limit?. >> p.s.. they give for the question i am very familiar with the markets that i have been involved in over the last 35 years i do understand the issue very well. i have been very clear publicly i have the answer the question i'm comfortable we confront the government through the end of september based on my information at this time that is subject to change i have said that publicly. the. >> canal saudia to the other question and i want you to know that this upper and concern on this committee
with president chomp in this connection there was of movie called the french connection. and with the efforts is not a democratic bill long position. working with democrats and republicans friends on both sides of the aisle and is a growing consensus of the republican members of congress to owe it to the american people to come clean he is not bigger than america. this is not about president trump but the american people.
i love this country. i was born in the middle of a tobacco field in south carolina. but i made it all go way up through the wharton school of finance in not only that to serve on the executive board of directors at the university of pennsylvania school of business and fine canseco because i come from a poor family. i want you to know in this nation to know that we deserve to know what it is that president trumpet is hiding that he is willing to turn the federal government the justice department is
not about him no more. about coming to confidence and truth that we can restore the respect and the power and the authority of our nation. first through the american people and to the world. >> the of gentleman but you can take the floor. >> good to see if mr. secretary in following up i would like to thank you for your commitment with that job creator in the united states and i was very
pleased to see the u.s. covered the agreement to live across the finish line because that means billions of dollars of savings that kid be reinvested in the economy and i also appreciate your commitment to the equity caps for the u.s. financial-services in china. i was hoping you could update us and have the chinese side reacts when we push them on that issue could we win on this front?. >> i don't know how they will react but this is a yes no answer i don't care how they react but when they
tell us that there is no cap i and my interest in going from 49 or 52% but i want no cap. >> bad is my attitude. >> do want to of knowledge mr. scott i do share a great love for this country and it is extraordinary with your accomplishments. >> on the topic of housing finance reform to make it very clear that the conservative your -- conservator ship to deal with fannie and freddie through legislation but as we work towards reform in this committee and senate we cannot lose sight by the previous there are benefits no other country has that
creates the duopoly and among those benefits are tax exempt status with the special sec exempted announced securities and the ability for the fed through the monetary policy operations with a perpetual line of credit and above all else the a government guaranteed it comes to the charter to give them the ability to go below market rates. as someone who was concerned about the of moral hazard, itt secretary mnuchin you understand can
you do these about legislation in with you agree reconstituting freddie and they any should be avoided at all cost?. >> i do look forward to working with you as i have said previous solution that has a pretty for the housing market and doesn't put taxpayers at risk. and that does not put taxpayers at risk. as a huge part of the economy and leaving them been considered -- conservatorship doesn't make sense. >> so given the of past experience of the gse do you
agree your, that fannie mae and freddie mac should not be reprivatized as privately owned as the government backed institutions?. >> implicitly?. >> in other words, under any circumstances to be reprivatized as privately-owned and government-backed?. >> if there is something it should be explicit and pay for or should be very clear there is an implicit government backing. >> the chair now recognizes the gentlemen in the dashing pink suit and from misery. [laughter] -- missouri.
>> thanks for being here. with a democracy once those rules for politeness but in that regard the ranking member was talking and i am simply hoping that as we move along that you would respond to letters of communication. >> it is impractical for you to respond to every letter that we send it to you with each member on the
democratic side. so i am just hoping in the future that the legislators have responded in a timely fashion. >> unless you want to respond to that?. >> first of all, we have over 58 we have responded to that we will fully cooperate with you to the extent you are asking for this aid information i would ask you to coordinate with information you have already received we are fully ready to rule commit as responsive as we have been. >> i could argue with that. but with the development of
that legislation it is a turbulent time. and i will it mitt -- admit that there was a destabilizing component in that legislation as it relates to this small community banks with 22 percent of them of this small community banks have declined or evaporated over time. this is troublesome. twenty-five% say anticipate merging with another bank. so the larger banks are getting even larger. i think that helps a little
bit from that tournament meant that however i am asking you blooded vice would you give us on how we can quickly remove the burden from the small lakes? i don't know anybody on this side that believes we ought to continue to allow the burden against small community banks. >> so what can we do to remove diverted quickly?. >> thank you every look forward to working with you and i hope we could do this on a bipartisan basis as it relates to do community and regional banks. so to have this balanced report the regulators have agreed.
we have a long list of regulations and their more than happy to follow up those specific legislative ones. >> see with that with the chair and other ranking member to work out those recommendations to provide that relief?. >> to that extent we are more than happy to do that. >> i am hoping that will happen. like every other member of community banks and small banks that are struggling. it did save a little frustrating to me that all be have to do is change the legislation and we don't do. >> i share your frustration and this is the biggest single issue since community banks know how to lead. -- clint.
>> i wear pink so you can find me quickly. >> your the best mail addressed in the room. >> the gentleman from oklahoma. >> secretary mnuchin thanks for being here today i serve on the ag committee carrying about derivatives are similar instruments to help constituents manage risks of what to discuss margin requirements. first i was pleased is your recent report suggested excluding the margin from the derivatives is the supplemental ratio and thanks for coming to that conclusion as the regulation reduces the clearing options for customers. i hope that it is reviewed and remedied soon. second come my want to ask
you with the of rules that have established internal transactions but the thinking regulators have not it raises concerns that only because it creates of patchwork of the fax with the approach of the of baking regulators is inconsistent. having said that you have any comments from those banking regulators to level the playing field. >> we look forward to working with you on that first issue that should be accounted for and that is one of the issues. >> so to reduce the options
that they manage the risk to sell those commodities to secure their resources so that approach taken by cftc that we're in a position to redress that our like you to commit your department of the of all leverage guidance much of the energy industry it is harder to obtain capital if you briefly tell the committee why your department suggested withdrawing a the guidance in a better fashion?. >> we think that would help wending significantly that doesn't mean they should have properly under write
the loans but we do support a blanket across-the-board approach that cuts off leveraged lending. >> indicates some of the energy industry they have the proven ability to you deliver and continue their business creating a situation we have pushed them over the edge that seems counter productive. i appreciate that with that i yield back the balance of my time. >>. >> will come again mr. secretary. i was relieved to hear you
saying negative you are going to be very vigilant on line and time monday wandering -- money laundering. so to find out if that investment activity tie-ins scrutiny for regulators and law-enforcement? so of course, our president and his family has engaged in. and those that are convicted of crimes is that problematic? yes or no. >> it sounds that way. >> i can be specific what about the so whole project.
>> but i cannot comment. >> is this where it cygnet: negative is that problematic?. >>. >> i am not connecting this to a terrorist financing. >> i could consume all my time but i would just bring to your attention that there have been comedies are not secret to it is in the news for everybody to read about the partnerships the trump family has with those convicted of crime and associated with russian activity. is that problematic?. >> that is not part of my job to commit one way or another.
>> your secretary of treasury with the foreign corrupt practices act. >> i have knowed jurisdiction over. >> i mentioned in my opening statement to talk about conflict of minerals and those disclosures which you supported so those judgments to support those eliminating disclosures for those in distant -- industries? so i will give you examples as exxon mobile fines of four corrupt dealings are you familiar with have a
horrific civil war and how the groups took control of the mine and use those proceeds and they ended up in the u.s. consumer market we have been dead for in the fund did the killing so upon what judgment did you rely we don't a these provisions provisions?. >> it was gone day of violation that we think there is a lot of problems to be more than happy to follow up to talk about this issue. >> alibi to yield the last minute. >> the queue for delving
into those issues walking through relationships president of the united states with those who have been jailed or been involved in criminal activity and the treasurer was asking you what you think about that and they're real question is whether or not your responsibility to protect the people of that country as it appears for those in his cabinet or others and
that is the question. >>. >> thank you very much. secretary mnuchin i appreciate you being here today for more than six years i have been fighting for a group of heroes that were once held captive. february 13 with of the department of defense contractors as they were shot down by the revolutionary armed forces of colombia a designated terrorist organization that controls more than 95% of the world's cocaine business
e capt >> severely tortured for more than five and a half years until they were rescued by the colombian army. these americans in the janus family attained a federal judgment in 2010 under the anti-terrorism act for damages against spark to compensate them for farc's acts of terrorism and the execution of one american. however, there are no farc assets in the united states except for drug monies of farc agents, the traffickers and money launderers. and these assets are frozing under the -- frozen under the foreign narcotics kingpin designation act. under current law, victims cannot access frozen assets
under the kingpin act. i believe the victims of the foreign terrorist organizations which profit and fuel other activity with drug community should be compensated from theld drug money that we've secured. in the 114th congress, i introduced legislation titled the clarifying amendment to provide victims equity act or captive act is the acronym to change that law. my bill passed the house by unanimous consent last year but was stalled in the senate when the office of foreign assets control raised concerns about the bill that they never mentioned to us in the house. i introduced the legislation this congress, and i'm hoping to bring the bill to the floor soon. the situation right now is that the former hostages have been
waiting 14 years for justice, and so far they've received absolutely zilch help from the u.s. government that they served so heroically because of the office of foreign assets control. i'd like to get a commitment from you to work with me to find a solution to make these brave americans whole again. ing do you think we can work together in that regard? >> absolutely. let me first comment, and it sounds like it was a horrible situation, and i'm not familiar with any of the details of what ofac's concerns are, but i'm more than happy to work with you and your office on the legislation and understand it. >> yeah. your predecessor gave us all kinds of song and dance, but he seemed relatively unconcerned. i appreciate your concern and look forward to -- >> we'll follow up with you. >> thank you very much. i yield back. >> gentleman yields back. the chairman now recognizes the gentleman from minnesota, mr. ellison. >> let me thank the chairman,
ranking member. secretary mnuchin, one of the worst experiences i a faced is the financial foreclosure collapse of 2008. i don't ever want to see it again, i'm sure you agree with me about that. so i'm concerned about your approach to supervising the mortgage market and making sure that banks that are engaged in an issue of mortgages arege upholding high standards of ethics. so to that degree, could you explain to me how one west, of which you were the ceo, was able to engage in 5600 violations of foreclosure sale auctions including back dating in nearly all of the 35,000 foreclosures of homes that you all engaged in? >> first of all, let me assure you that i did not make one
mortgage during or prior to the mortgage crisis. i took over three banks from the fdic, one of which was the worst originator in the entire world. i'm very proud of the fact that we started loan modifications at indy mac under the fdic's control which we then did. so i take great offense to anybody who calls me the foreclosure king -- >> well, let me tell you -- >> whatever -- [inaudible] >> reclaiming my time.>> >> whatever issues there were -- >> you know how that goes. sir -- or. >> secretary, the time belongs to the gentleman from -- >> look, i don't have a problem with you answering, but you did answer, so i'm not going to let you filibuster. that's what i won't do.ll >> i'm not filibustering -- >> there's no question before the -- >> okay, wasn't there a rule -- >> there is no question before the secretary at this point.
so the vice president, secretary, robo signs documents per week. was she under your supervision? >> not directly. >> was she under -- when you were the ceo, was she employed under you? >> she was employed at the bank. >> she said in testimony that she robo signed as many as 6,000 foreclosure-related documents a week.r week she, and what's your position on robo signing? >> you know, i've answered this extensive -- >> you're about to answer it now, sir. >> i'm going to, and you have the listen to me. >> no, i don't. no, i don't have to listen to you. >> okay, well -- >> i asked you a direct question --ld >> you're not going to listen to me -- >> are you willing to answer the question or not? >> repeat your question. >> what is your position on robo signing -- >> again, i don't think you even know the definition of --
>> you don't know what i know. >> how about this? do you deny robo signing -- [inaudible conversations]] >> i have reported before it was not robo signing concern. >> right so you deny it for the record. thank you. >> for the record, i've denied it before. >> right. and you're denying that also for the record and under direct testimony person under your supervision admitted to it. for people watching, i'll just let you know, robo signing is when you have a -- when you're signing documents to get a loan to purchase a home and you have to review the document, you have an obligation to review them ane to just sign them as you are going through without reviewing them is not proper and is illegal because you're swearing that you've reviewed those documents. and under the secretary's supervision, which he claims i don't know anything about robo signing, that happened to a very
severe degree while he was the ceo of one west. here's another question for you, sir. one west was nine times as likely to foreclose on a homeowner living in a community of color as originating a mortgage to a borrower living in other communities. are you concerned about the disproportionate number of people who found themselves in foreclosure at the hands of your company who were persons of color? are you, where are you at on making sure that there's an equal administration of justice for companies as they engage in foreclosure? >> let me assure you that we upheld to the strictest amount the rules and regulations as was reviewed by the occ, the fed and the consumer protection bureau, and we did not and would not discriminate in any way. >> well, we'll see.
>> the time of the gentleman has expired -- >> parliamentary inquiry. >> for what purpose does the --- >> mr. chairman, would -- thank you. would you like to give the secretary an opportunity to apologize to mr. ellison for -- >> not a, that is not a proper parliamentary inquire. >> would you like to give him that opportunity -- >> the time now, the time now belongs to the gentleman from illinois, recognized for five minutes. >> thank you, mr. secretary.oi >> sir, perhaps could i borrow -- >> yes, absolutely. i was going to offer you that. >> i'd like the record to state that one west bank was the only bank that concluded the independent foreclosure review. and every single loan was reviewed and was properly compensated. we were also, okay, the only bank to have done all those loan modifications. and i take great offense in anybody who calls me a
foreclosure king or anything else.e and ranking member, i've had the opportunity to talk about with you many times before, and this is nothing new, and i'm very proud of one west's record. and i'm not apologizing to anybody, because robo signing is not a legal term, and i was being harassed.bo >> you're under oath. >> thank you. >> the time does not belong to the ranking member. the time belongs to the n gentleman from illinois. the time -- [inaudible conversations]man frm the time belongs to the gentleman from illinois. he may proceed. >> thanks, mr. chairman. thank you, mr. secretary, for being here. the treasury department's june 12th report makes a number of recommendations regarding the harmonization of our cybersecurity framework. specifically, the report recommends further coordination on two fronts. one, financial regulatory agencies should work to harmonize regulations, two, to work to harmonize interpretations and
implementation of specific rule and guidance around cybersecurity framework. i believe both of these are very important goals. i wonder if you could just talk briefly on how the treasury department mans to facilitate these rts and is there anything we can do to help support this work. >> yes, we look forward to working with you. it's very critical. cybersecurity is a very, very important issue, and we're working closely with all the regulators on it. >> please let us know, again, how we can provide assistance -- >> thank you. >> we just know so much -- the importance of confidence of consumers -- >> thank you. >> -- in security. so thank you. i know you touched on a little bit the volcker rule. i want to go a little bit more into that. venture funds and capital companies are the job creation engines of our innovation. page 77 recommends changes to the volcker rule as covered funds provisions to assist in the formation of venture and other capital that's critical to fund economic growth opportunities.
wondered, mr. secretary, have you discussed this specific provision of the volcker rule with agencies that have authority the make amendments? if so, what feedback have you received? and then a follow-up on that,en how does the treasury department plan to pursue amendments that could conform to existing laws? how would you encorning the regulators with rulemaking authority to undertake this important work?it >> again, there's a two-part process we're going through. one part is working with the regulators where we can clarifyi the regulatory issues, make clear definitions so, again, people can follow the volcker rule but follow it appropriatela and understand it. and then also we'd be more than happy to work with you and congress on certain legislative changes to further help that. >> good. thank you. i believe it is important. we want to help. on the june 12th report, again, states significant adjustments that should be made to the calculation of the supplementary leverage ratio. particularly, deductions from the denominator should be made
including for cash or deposit with central banks. i certainly agree with this recommendation, and i've worked closely with members of this committee such as ceept and bill foster to get some regulators to understand our concerns. how do you plan to work with the fed, pdic and occ -- factor dica if e possible would you share the timeline. >> overa specific timeline, but we're working very closely with them and, again, we're hopeful that we can make progress on that. thank you. >> i hope so as well, and we'd love to be helpful there. last minute, maybe one more question. i understand the administration has been putting together ideas on comprehensive tax reform. absolutely agree that we need a more efficient tax code and it would greatly contribute to economic growth. outside the work on this committee, i'm also focused on fighting for tax-exempt status of municipal bonds. i believe this local decision is
working. it's insuring that we build the roads, schools, bridges and police stations that our communities really need and some 160 members of the house of representatives agreed with that by seening a letter that myself -- signing a letter passed around. have you considered how this existing piece of the tax code fits in with the administration's plan for comprehensive tax reform? if not, would love to follow up with you a little wit more on -- bit more on the importance of municipal finance. >> yeah. so, again, we very much appreciate the importance of knew misa pal finance, we want to make sure that state and local entities can continue to access that market in an efficient way, and we look forward to working with you. >> thanks, mr. secretary. thank you for your service. >> time of the gentleman has expired. chair now recognizes the gentleman from colorado, mr. perlmutter. >> hi, mr. secretary. thank you for being here today -- >> thank you. >> thanks for your testimony today.
let's start with you being a californian and me being a coloradan, okay? and i want to talk about marijuana and banking just for k second. because we now are 28 states plus the district of columbia have some level of marijuana use. and then if you add all of the states that allow for cannabis oil to try to deal with seizures, that's another 16 states. and so mostly it's a statement to you, sir, that i'd like to make, and california, colorado having fully legalized marijuana that it is important that the treasury department and the justice department really continue to focus on this. because in colorado unless we have banking services, the amount of cash just becomes a huge magnet for crime. and it's very important that we
allow businesses that are legal in their states to be able to have checking accounts and credit card accounts and payroll accounts. and i would just impress on you, sir, we need to get this handles. and i don't know exactly where -- handled. and i don't know exactly where you are, i'm not going to ask you on the record, but i just want to make sure you understand this is now way more than half the states of the country, and i would suggest to you that you talk to mr. mulvaney and the administration the try to come up with some ideas so we can have banking for legitimate businesses in those states that have some level of marijuana use. >> yeah. well, let me just comment. when i was a banker, i was familiar with this issue, and we were very concerned for the regulatory issues of banking, those types of clients despite the fact that it was legal. i don't have a view, but we're
happy -- i do understand the issue, we're happy to work with you, and we do need to figure out the regulatory session. >> and i thank you for that, and if you'd work with me and -- >> be more than happy to. >> -- we have a number of republicans, we would really like to work with you in the department -- >> thank you. >> thank you. second question. or statement, i guess. you used the words cutting off the money early on about sanctions and the way that that can work, and i think you were directing that towards iran, but it also applies to north korea and it applies to russia, would you not agree? >> yeah. and it applies to venezuela where we just launched sanctions yesterday to 13 people and will continue to do more. >> i appreciate that and i thank you for that. i guess where i'm coming from the is, again, with respect to sanctions, we have because of aggressive actions taken by the
russians in ukraine and elsewhere, that the department continue to apply those where appropriate, where lawful and where necessary. so one of the things i serve on the terrorism and illicit finance with mr. pierce, and it's a really good committee, and we appreciate your department working with us. and one of the places where it's very important is oncurrency crypto-currencies. and it appears that the russians are very adept at making opaque a lot of transactions. and we would ask you and your department to continue to work with us to make sure we're able to pierce those crypto-currencies so that they aren't using block chain or whatever other kinds of things. would you agree to work with wuss f us? >> i would, and i would also tell you i share your concerns about bitcoin and others and
them being used for illicit activity. we just announced a major action against a bitcoin operator. so i share your concerns, and this is going to be a big priority of ours. >> all right. last thing i'd like to talk about and then i'll yield some time to the my friend, mr. ellison, is on the 23 therd of july -- 23rd of july there's an article called the future of banking by p.s. gupta which really talks about the technological changes that are occurring within the banking world. and i just give you -- well, i don't have much time. what do you see happening in, with respect to banks given all the technological changes that are occurring? >> there's no question banking has changed substantially. most people don't go into banks anymore, and we need to address that as we think of changes in technology and regulation. >> if i could, i'd like to introduce this in the record.
>> without objection. time of the gentleman has expired, the chair now recognizes the gentleman from florida, mr. ross, for move minutes ghsms thank you, mr. chairman. in the reading and listening to your opening comment, i laud you on one of your priorities. the other central component is the passage of comprehensive tax reform. you've expressed how important it is for us to have tax reform if we're going to grow our economy. now, we are the number one and the oecd with the highest tax rate. i think, in fact, i believe that at 39.08% we have the highest corporate tax rate of any developed nation. at the same time, our effective tax rate is, hovers around 20%, and we are 21st in terms of taxing revenue as a share of g, the p. business -- gdp. businesses make decisions to avoid suffering under the full burden of our tax system, and in
my opinion, i think that what we have to look at is what impact this has had on our economy. in other words, if we can lower the corporate tax rate just alone, we can change the equation for how american businesses benefit the american economy. and what i mean by that is we need to look at how they shelter their income. are they paying 35% up here, but the effective rate is 21 down here, what's happening to that 14%? are they putting their money overseas in order to take advantage of shelter? are they looking at choice of form to be able to determine where they locate their business? are they looking at what type of entity are they going to have? even who they're going to hire because of our corporate tax structure? so i guess my question to you is would you agree that if -- because we're having a little bit of an issue here in congress trying to do comprehensive stuff right now whether it be health care or anything else. and if we come back here in september and we talk tax reform, if we're only able to do
corporate tax reduction, would you not agree that just lowering the tax revenue -- and you take into consideration how businesses affect their tax planning by tax shelters, by where they want to locate physically whether in the united states or not, that that lowering of the taxes would more than make up for what any anticipated loss of revenues that the cbo may assess from going from 35 to 15%. >> yes, i agree with you completely. this is not just about lowering the rate, this is about comprehensive tax reform, about changing from a worldwide system to a territorial system -- >> and we're the only ones. >> -- broadening the base. >> correct. >> and as you've pointed out, although to our stated rate is 35%, most international companies pay significantly less because they can defer income and sometimes not even pay any tax on it. >> and as a matter of fact, as we lower the rate, we broaden the base --
>> we do, indeed. >> and raise our revenues. do you disagree with those who say we will never be able to achieve gdp growth over the anemic 1-2% we've seen after the recession? >> i disagree. i am very committed to get to 3% gdp, and we will. >> as an insurance person, i have to ask you, in pio -- fio. mccarron ferguson, i think, has been a very good thing for insurance companies, for solvency and protections for consumers. my concern with fio is while i understand its role to be a facilitator, especially in international negotiations, do you feel there's any need for it ever to be a regulator? >> again, what i'd say is we fundamentally believe in the state-based system, and we support that. so the intent is not for it to be a regulator. i don't know if at hi and some
points -- at any and some points this may be issues they need to deal with, but we're not looking for federal regulation of insurance. >> thank you, that's somewhat comforting. i yield back the balance of my time. >> chair now recognizes the gentleman from connecticut, mr. himes. ing. >> thank you, mr. chairman, and thank you, is mr. secretary, for being here. like my colleague on the republic side, i want to deviate a little bit from the jurisdictional area of this committee because i agree with him we are presented with a really terrific opportunity for comprehensive tax reform, and it really want to make one point and then ask you a question. appearances to the contrary, there is actually strong bipartisan agreement on the need for comprehensive tax reform. there are elements of that that are very, very important to this side of the aisle, those elements amongst others include maintaining distribution aleck bity in the code.
it may surprise you to know that it includes for a lot of us a sense of revenue neutrality both inside and outside the budget window, something that is not revenue neutral, of course, poses a threat to programs like medicare and social security. but really -- and i guess i'll point to my question here. what's really important to us is a process that is regular order and that starts in a bipartisan fashion. and i can draw sort of a dramatic contrast with the way health care was brought forward just in the last six months. it was a process using reconciliation designed to exclude democrats particularly in the senate. in fact, the senate majority leader noted that failure would mean having to work with the democrats. so i really do think process is important here. hearings, inviting this side of the aisle in early rather than at the end. so my question to you is, is the white house and is the treasury
prepared to really push that this process designed forr bipartisanship and all of the possible durability associated with that, or is, are we going a toed sadly see something more akin to what we've seen in the health care realm? >> well, again, i'd like to hope it's bipartisan because, as you point out, many of these aspects, i think we have shared values and objectives and goals. and i personally sat down with many democrats already to solicit views and get feedback, and i look forward to continuing to do that. >> i think a lot of the debate right now is on the republican side of the aisle over big issues around revenue neutrality, around border adjustment tax, deductibility of interest. i think your and mr. cohn's voice will be very strong here on those issues, and i just, you know, i see the president in his tweets sort of blaming the democrats in the senate for
being obstructionist when the process at least on health care was designed to exclude them. and i know your previous career, i know the president's previous career. you haven't been in town that long. there really are signals and processes that you can set up that will set the stage for bipartisanship in the way it wasn't on the health care issue. so i just hope, again, i think we all recognize that durability relies to some extent ongn bipartisan cooperation. we've certainly seen that in the health care realm. and i would note, you were probably following at the time, simes the democrats under obama were accused of having a process that excluded the republicans in '09. that's simply not true. there were months and months of efforts, hearing after hearing after hearing, earth toss attract republican senator that is ultimately did not bear fruit. i would just note those attempts were made, and i think the country could benefit from the white house could commit itself the a process that starts out in
bipartisan fashion. >> thank you. >> thank you. mr. chairman, i'll yield backing the balance of my time. >> gentleman yields back. the chair now recognize it is gentleman from north carolina, mr. pittinger, for five minutes. >> thank you, mr. chairman. good to see you, mr. secretary. >> nice to see you too. >> mr. secretary, i want the thank you for your understanding of the role and importance of community banks. i did serve on the bank of a family bank, and i can tell you in north carolina we've lost 50% of our banks since 2010. i serve eight counties, seven of which are rural. it's had a devastating impact onsets to capital crept, so appreciate your efforts there. i'm currently working on a cfius reform bill with senator cornyn. we hope to introduce it sometime this fall. one of our primary goals is recognizing the alarming transfer of our new and emerging military applicable technologies
that have gone from the united states to the chinese. and we want to see greater oversight with that that. chinese investments here in the united states have grown by 350% from 2015 to 2016. and we believe that cfius, of course, needs a greater teeth and greater reforms. the defense department has spoken out on this, our military's technological superiority is at risk due to this well-coordinated effort by the chinese and a number of officials have spoken out including the secretary of defense, the director of national intelligence, the director of the c irk a, the director of the nsa, commander of the u.s. cyber command and the chairman of the joint chiefs of staff. i would like to have your clarity on this issue and understanding and really what you believe is necessary in reference to an update in the reforms of cfius. >> well, thank you. and as you know, i take my role very seriously there, and i look forward to working with you and others. again, i hope this is something we can definitely do on a
bipartisan basis. there are some obvious changes we need to make to cfius, one of which is cfius doesn't cover joint ventures. but as we've had the opportunity to talk about and we look bard to working with you finish forward to working with you and others, there's a laundry list of changes that we look forward to making with you. >> thank you, sir. >> thank you. >> reference to terrorism finance which i do serve on that committee, i have some real concerns to date regarding qatar. be i've had several meetings with the emir and with the ambassador regarding concerns that i have, yet to receive any reports of anyone that they've prosecuted for terrorism finance-related issues. they have certainly been involved in financiers who reside there and work there. hamas works there with impunity. they have been known to pay significant amounts of ransoms
out on the market, and even the emir said to me that in his efforts to depose assad, that he worked very closely and supported with al-qaeda. and in that regard he said i'll take care of al-qaeda later. i'd really like to get your input regarding the concerns relative to qatar, and have they been complicit, and what's the best way to work with themsome. >> so we've worked very closely with them. i can tell you that they are cooperating with us and that they take this very seriously. they most recently signed a memorandum of understanding in making certain commitments, and we are committed to working with them and making sure that there is not terrorist financing. >> yes, sir. i appreciate your diligence on that. additionally, i would like to ask you one other matter that i've given a significant amount of effort to, and that's relative to the section 314 of the patriot act.
i'd like to know your assessment of the current process. we've had a number of meetings with the major banks relative to the transfer of data, the sharing of data between financial institutions and with our government. and regarding the sars reports, and what can be done to enable the financial institutions to have closer access to data that allow -- from the government that'll allow them to really hone in on those concerns welows really have apart from looking at the broad spectrum of the reports? this, it seems to me, would directly help our concerns to regarding privacy and matters for the american people in the data that the financial institutions have on them. so i would like to get your perspective on this particular bill and what can be done. >> well, we look forward to
working with you on the bill. i will tell you when i was a banker and we filed sars, you know, we always thought hay just went into a big black hole and wondered if anything actually happened with them. i can assure you the first thing i did when i got here, i asked that question.wh we do use the sars very effectively, but we do look forward to working with you. >> the chair recognize it is gentleman from illinois, mr. foster. >> thank you, secretary mnuchin, for coming here today. i'd like to focus on one of the sparse or areas of potentially bipartisan agreement, namely the response to any future currency manipulation by our trading partners.. as a manufacturing businessman and someone who's co-founded in our basement a company that now manufactures most of the theater lighting equipment in the u.s. and exports a good fraction of what it manufactures, i've been long concerned about the currency manipulation by foreign nations that creates an unlevel playing field favoring their domestic manufacturers. as you're aware, treasury has
been charged by congress with making periodic reports on currency manipulation. to that end, treasury's developed a quantitative three-part test where i believe because -- which i believe was done very well. i believe you correctlyor concluded that six country, including china, should be put on the watch list for violating two out of the three criteria but, at present, no country satisfies all three criteria. the difficulty, of course, is if in the future any country is designated a currency manipulator, the only mandatory response could be charitably described as toothless jawboning. there is an alternative which is for the united states to unilaterally declare, as a matter of national policy, that whenever any country is designate a currency manipulator, we would engage in countervailing currency manipulation. simply put, if one of our trading partners intervened in currency markets to depress the value of their currency for competitive advantage, the u.s. would engage in an equal and
opposite currency intervention to cancel this effect. dr. fred berg son of the peterson institute has long advocated for the countervail aring currency intervention approach.in he recently published a book on this with very specific proposals for this. and while there is some authority under current law to respond in this manner against a designated currency manipulator, it could obviously be strengthened with legislation. so my question is, what specifie actions are you considering against possible future currency manipulation if it occurs, and would you be open to considering countervailing currency intervention or other approaches as in a response? >> well, thank you. and we look forward to working with you on this. and i can tell you we have recently studied this internally.is as it relates to nafta where we're going to be going through a renegotiation process, this is one of the issues we're going to look at adding into the agreement. and i think --
>> excuse me. but in the case of nafta, i believe, you know, in north america currency intervention, you know, manipulation's not been a major issue. >> i understand that. i'm just saying it's only come up because of the legislation and us looking at what we use going forward many trade agreements. so we are focused. i do agree with you, if someone is a currency manipulator and labeledded and determined as such, there should be an impact of what that means and not just talk. the idea that you've cited may be one of many. i surely wouldn't want to be required to have to do that, because the countervailing size and scale may be quite large. but we do need to have an impact. if someone does manipulate their currency and impacts american companies and american workers, there needs to be an impact and a result. >> well, the advantage of an equal and opposite intervention. if they intervene in the market by x dollars, we intervene by x
dollars of their currency and so equal and opposite's a well dined and appropriate response -- defined and appropriate response to nullify this. secondly, i'd like to ask you what your reaction is to the idea of a permanently repealing the debt limit. you know, there was a very interesting "wall street journal" editorial by a very prominent -- jason furman, prominent members of both parties advocating for this. among other points they made, democrats are currently using the debt limit as leverage to increase spending. so i was wondering what your reaction would be and what the reaction of the administration would be to the idea of just saying let's have ab appropriate budget -- an appropriate budget process instead of arguing about whether or not we should pay for a meal after we've eaten it. >> well, i think we've got to look at this, and i agree that there should be a change going forward. we're obviously not going to address this now.
but we have a debt limit, we have a budget process, and we have an appropriations process. i'm all for there should be very strict controls of spend ising money. -- spending money. but once we've agreed to spend the money, we should make sure that the government can pay for it. >> right. so the idea of the debt limit as a mechanism is not something you're enthusiastic about it. >> i'm not. >> all right, thank you. well, i look forward to working with you. >> thank you. >> time of the gentleman has expired. the chair wishes to add vise all members that the chair currently anticipates clearing four more members before excusing the witness at the agreed-upon departure time at 1:00. i anticipate clearing mr. roth, mr. delaney, mr. tipton and mr. heck at this time. the gentleman from pennsylvania is recognized for five minutes. >> thank you, mr. chairman. secretary mnuchin, what -- over here. finish over here. there you go. one of my priorities is to make certain that the regulations
that banking agencies implement are tailored to the risks they address. the regulatory concern of custody banks, and i want to join my colleague from illinois in highlighting this issue. i applaud the treasury report that calls for exempting cash deposits from the denominator of the supplementary lev rang ratio. as you know, this is particularly important for banks due to their role as safe haven for cash in times of financial market stress. my concern is that the i unique aspects of the custody banking sector have not been considers this previous rule makings. in addition to the treasury report, chair yellen, governor powell and former governor tarullo that all recognized it should be revised, but so far no action has been taken. i have introdisabused a bill -- introduced a bill, the pension endowment and mutual fund access to banking act, which has 14 bipartisan cosponsors, many of whom to who serve on this committee to address the issue.
i say all this to emphasize the broad-based course to address this issue, and i ask you keep the committee informed of progress. can you say where we can expect action prior to the january 1, 2018, effective date for the slr? >> i can't commit whether there will be action or not, but i agree with you particularly as it relates to custody banks. the thought that banks could turn away cash in a financial crisis doesn't seem to make sense. >> thank you. as you're aware, a number of us on this committee have expressed concerns about the u.s./e.u. covered agreement which chairman duffy mentioned earlier in the process of negotiating future agreemented. they can be a useful mechanism for achieving equivalency, but we need to make sure we accommodate elements of the u.s. insurance system that help to foster a robust insurance marketplace; namely, the state-based system of regulation. what are some ways that covered agreement negotiations can be improved and made more transparent? >> so, again, we spent a lot of
time looking at the cover agreement. we did negotiate a side letter which we're comfortable with and is going to be adhered to, and we look forward to to working with you further on these issues. >> we have heard in a number of hearings and meetings with banker, i'm going to touch on the stars which you mentioned -- sars which you mentioned. with respect to sar filing requirements that they're more often focused on checking boxes rather than providing useful, targeted data to -- should the sar process reformed to make compliance easier and increase the value of information conveyed in reports? >> well, i think it should be looked at. i don't know whether it should be reformed or shouldn't be, but it should be hook at. again, i can assure you, it is very useful getting these reports, but it's one of the things that we will continue to look at. >> thank you. my colleague, representative
moore of wisconsin, and i have introduced bipartisan legislation that would fix the unintended consequences of an sec rule that destroyed stable value money market funds as a source of low cost variable rate borrowing for businesses and state and local governments. the effect has been to limit investment options, reduce short-term liquidity and significantly increase the cost of business and infrastructure investment. our bill, h.r.2319, would restore stable value funds, reversing many of these negative effects. i think this is very much in keeping with the president's executive order on core principles for regulating the financial system. it would empower americans to make independent financial decisions, prevent taxpayer-funded bailouts, promote american competitiveness both at home and abroad and make regulation efficient, effective and appropriately tailored. i understand that the treasury department will be issuing additional reports on the executive order to the president and the congress in the coming months. i would ask that you give appropriate consideration to our proposal as part of those efforts. >> will do, thank you.
>> with that, i'd yield today the chairman if he has any -- >> well, i thank the gentleman for yielding. some ground that, mr. secretary, i don't think we've plowed yet, the treasury report recommends the frequency of section 165 resolution plan submissions to two-year cycles. i think that both federal reserve governor powell and fdic chair greenberg have testified that they supported it or were at least considering the two-year cycle. i think this is, again, something that can be accomplished administratively. is that something that you anticipate? >> it is something we're working on and something we think makes sense. >> well, i'm glad to hear that, and it certainly makes sense to a lot of us on this committee, and i'd encourage you to do that, mr. secretary. time of the gentleman has now expired. the chair now recognizes the gentleman from maryland, mr. delaney. >> thank you, mr. secretary.
i wanted to go back to tax reform for a minute. obviously, you're working hard, i'm sure, on comprehensive tax reform which are involve adjusting rates, adjusting deductions, hopefully doing it in a way that's pro-growth, more simple and doesn't affect negatively the long-term trajectory of the country. let's assume for the purposes of my question that a you're ultimately not successful in getting that done. which i know you won't want to acknowledge today just, but for purposes of my assumption, let's assume you're not. would you then consider ab approach whereby you pursued international-only tax reform and paired that with the kind of long-promised infrastructure program? because that approach, which i quite frankly think would, in many way, be more beneficial to the u.s. economy than just tax reform by itself without any infrastructure, but that approach has had very
significant bipartisan support in the congress. at least 40 members on each side of the aisle have supported a specific proposal, and i won't ask you on the specific proposal, to do that. but it involves changing the international tax system, eliminating deferral, lowering the rates so that it's more competitive on a go-forward basis, also lowering the rates on all the cash that's over there now and creating a way for that to repatriate back to the country. and as most people know, and i'm sure you do, that approach would generate revenues to the treasury, for your department. and what we've proposed to do is allocate that to pay for large scale infrastructure program. so assuming your comprehensive tax reform is ultimately not successful for any of the hundred reasons people think it may not be successful -- and we all hope it is, by the way -- but if it's not, would you consider that approach as kind of your plan b? >> i wouldn't. i mean, i think that infrastructure is very important, and i think we're
already working on infrastructure. and the idea is to come out with an infrastructure plan shortly. i think, as you know, the president is very focused on a trillion dollars of infrastructure spending between the federal government and the states. but my own opinion is putting things together only makes the issues more complicated. but in any event, we look forward to working with you on tax reform and infrastructure. >> so how are you thinking about paying for infrastructure in the plan that you're working on? >> again, we've allocated infrastructure spending in the president's budget as it is. i mean, at the end of the day, all these things have to balance. you can move the money around. >> right. >> but we have to look at the cost of it in its entirety. >> but if you do it she sequentially, which is what you're proposing, and tax reform -- let's assume now, switching hypotheticals, let's assume tax reform is completed -- >> thank you, i like that assumption. >> -- are you envisioning setting aside money to pay for
infrastructure spending? as part of that tax reform? >> well -- >> i guess my question is how do you propose to pay for it if you don't do it as part of tax reform. >> well, again, if we can get the economy to 3% growth, there's an additional $2 trillion of revenues, and that pays for a lot of things. >> right. but we won't know, obviously, let's assume tax reform were to get done, are you proposing to wait five, six, seven years before you -- >> no, not at all. and i don't think it'll take three, i don't think it'll take five years, and i think we should pass infrastructure spending which will be spent over time. >> so when do you envision passing infrastructure spending? >> i hope that's something that we consider later this year. >> so if your tax reform gets done and then you tee up infrastructure spending and you have a proposal in the congress at the end of this year, how do do you propose in that specific proposal for infrastructure to pay for it? assuming the congress is not supportive of approving
unpaid-for spending, how would you propose -- >> i think it has to be paid for through growth that people buy into. >> but growth doesn't work in the models we run here -- >> yeah, it duds. the joint tax uses growth in their assumptions. >> do they use growth for spending programs or just tax reform in the way it's. >> current rule -- >> the current rule is tax reform. >> correct. >> assuming you're operating under the current rules of the house, how would you pay for it, because you can't use growth? >> well, at the end of the day, you've got to look at all of these things in the context of the overall budget. i guess that's the -- >> so if tax reform failed and there was birt partisan support to do international taxing and infrastructure, you would not support that? >> again, i'm not making hypotheticals. again, i'm happy to work with congress and everything else. again, i'm hopeful we get tax reform and infrastructure both done. they're both incredibly important the economy. >> it just feels like with your approach you're not going to to have any money left for infrastructure, but i yield back.
>> the chair now recognizes the gentleman from colorado, mr. tipton. >> thank you, mr. chairman. thank you, secretary, for taking the time to be able to be here. >> thank you. >> i represent rural colorado. and one of the issues that we're really seeing in our state is a tale of two economies where our metropolitan areas are doing reasonably well, some of our resort areas. but as we move out into the rural areas, we are not seeing the recovery happening. and one of the challenges that we're hearing from our community banks throughout the west slopes of colorado over to pueblo, colorado, is the ability to be able to make loans. and one of the concerns that we've had expressed was actually addressed in the treasury report when you were looking at the objectives in terms of making sure that the interests of the united states are not undercut by outsourcing our regulatory requirements to the global community. could you maybe speak a little bit in terms of what you're looking at for the community banks when we are looking at ate
some of the capital regimes for community banks in regards to, say, baas sell iii, how to be able to address that so our local banks can make those loans? >> yeah, i don't -- i'm not concerned that community banks are going to be limited by basel iii. obviously, it hasn't passed, and we're generally supportive of reaching resolutions. a lot of basel iii is about bringing european capital standards to ours so that there's a level playing field between international banks and ours. but i'm not overly concerned about the impact of that on community banks. i'm more focused on our own regulatory issues. >> great. and when we're talking about those regulatory issues in our concerns, we just look at some of the outcomes in rural colorado where a good example of this. the lowest labor participation rate in decades. more small businesses that are shutting down than new business start-ups. and we have had testimony that has come in regularly in regards
to where banks are not able to make loans that they would like to be able to make. >> that's true. >> and what do you see as a solution to that? >> again, i firmly believe in proper regulation. but in many cases particularly for community and regional banks we have overregulation, and we're addressing that. >> i think that's going to be important. we had the opportunity to have chair yellen in as well, and i'm glad to see the focus coming out of the fsoc for those community banks simply because we've heard about the trickle-down effect. the best practices and how that's impacting those local communities and their ability to actually be able to make those loans and to be able to get the economy moving at the local level. would you maybe speak a little bit, we've had several questions in regards to bsa/aml/sars reports that are going on. do you see those needing to be tailoredded as well for small community banks?
>> you know, again, i think the bsa, aml process should be reviewed. but whatever we ultimately do, i think it should be the same standards on small banks as big banks, because if people are money laundering, whether they're going through a small bank or a big bank, there should be the same standards. >> thank you, sir. and i would like to be able to yield a little bit of my time to my colleague, mr. williams, out of texas. >> thank you. >> thank you, congressman. and i'd just be brief. i'm a small business other than from texas, been in business 45 years. family business for almost 80 years. tax reform is a big deal to me. we've got to get to our tax rates down, and i just want to say this. when i came to congress, i picked -- i heard terms i never heard of before. one was revenue neutral. i never heard that in the private sector. pay-fors i never heard in the private sector. i think that a lot of people are not believing in main street america enough. main street america is ready to have a huge impact on this economy if they can get regulations and burdens off of them. and i would just reinforce a lot
of what you've said, is that the economic growth that will happen with true tax reforms, some of the things we've all been talking about, i think, is going to be unbelievable. and that is going to to be your pay-for. i just want to reiterate the fact that i appreciate the path that you're on and not be confused with terms that are not ever used in the private sector that nobody heard of until they got to washington. so i thank you for your service, and i appreciate you being here today. >> thank you. >> i yield back. >> thank you, mr. chairman. unless you have an additional question, i'm going to yield back. >> quickly, mr. secretary, in the treasury report you indicate indicated that the cfpb is a source, has an unaccountable structure, unduly broad regulatory powers that have led to predictable regulatory abuses. are are there any changes that you foresee in the bureau that could happen without congressional approval at this time? >> i think that's mostly going to require congressional approval.
>> time of the gentleman has just expired. chair now recognizes the gentleman from washington, mr. heck, for five minutes. >> thank you, mr. chairman. mr. secretary, thanks for being here. my colleague from north carolina, mr. pittenger, mentioned the committee on foreign investment in the u.s., cfius, as we call it. i've also read the department of defense report that he alluded to which discusses how our strategic competitors are seeking to access critical resources and technology. and with the chair's permission, i'd like to enter it into the record, if i may. >> without objection. >> as is common with government reports, mr. secretary, the authors evaluate a no-action alternative or what happens if we do nothing. but they note the cost of doing nothing is extraordinarily high, citing estimates of $300 billion in intellectual property stolen
every year and $300 billion in sales to u.s. companies lost as a result of ip theft. economic activity that could have supported approximately 2.1 million jobs every single year. so, mr. secretary, here are my questions. do you think we can afford to do nothing? >> no. >> will you and your staff commit to work with congressman pittenger and myself and other members of congress who share an interest in this issue to act on the recommendations the dod report? >> yes. >> do you agree with us in our strongly-held belief that this issue is pressing? >> yes. >> i understand that will have already been some proposals shared between our staffs and yours. if we keep at this through the recess, do you believe that we can have a bill ready that you can support before congress comes back in september? >> that sounds aggressive by congressional time, so i want to be careful not to go out on a limb on that.
but we'll be fully available. we're not going away. >> it's not a question of congress being aggressive, it's a question of the department of treasury being aggressive -- >> we've, we're happy to work with you and others. we have given our views on various proposals. >> thank you, sir. lastly, i would like to associate myself with the remarks of my friend from colorado, mr. perlmutter, with respect to the regulatory framework for access to banking services in states that have legally allowed marijuana consumption. my state is also one of those. and if there's anything that a you take away from today's hearing, i hope you will write this down, this name down. thank you, sir. travis mason. mr. secretary, travis mason was a 23-year-old marine veteran served his country honorably. he was a husband and the father of three small children, set of twins in there. he was studying to be a law enforcement officer and helping pay his way through that by
acting as a security guard at a marijuana retail establishment in colorado. criminals entered the establishment, understandably concluding that it was all cash because of our broken regulatory framework, and travis mason lost his life that day and left his wife a widow and his three children without a father. that's on us. there was no need for that. the regulatory framework has failed. this is, first and foremost, a public safety issue. and travis mason is exhibit a in that regard. we're not going to turn back the clock, despite what some people may be saying, despite what trial balloons some people are floating with respect to the legalization of marijuana. first, medical use, then adult recreational use, also the use of oils for other kinds of medical illness. it has been an inexorable -- an
unrelating march -- unrelenting march forward. we're not going back. what we need is your help, sir, to make sure there isn't another travis mason. the cole memorandum first from doj and the fincen parallel memorandum sets forth critical, fundamental principles here that we proceed if and only if we do not provide access to minors and that we do not allow cash to get into the hands of gangs and cartels and then several other conditions. but those, first and foremost. that's what we do in states like mine, washington state, where we have a well-regulated marijuana market. it is the safest thing to do, to enable those businesses where now hundreds of millions, hundreds of millions of dollars in my state alone have been invested in these businesses. we need your help, sir.
we ask for your help. travis mason. with that, i yoald back my time -- yield back my time, mr. chair. >> gentleman yields back. i wish to thank the secretary for his testimony today. without objection, all members will have five legislative days within which to submit additional written questions for the witness to the chair which will be forwarded to the witness for his response. i ask that our witness would please respond as promptly as you are able. this hearing stands adjourned. [inaudible conversations]
>> you're watching booktv on c-span2 with top nonfiction books and authors every weekend. booktv, television for serious readers. >> and this weekend on booktv on our "after words" program, connecticut representative rosa delauro talks about her congressional work on social programs. her book is "the least among us: waging the the battle for the vulnerable." also this weekend, dr. kurt newman, president and ceo of children's national medical center, offers his thoughts on the current state of health care. founder of prospect magazine, david goodhart, talks about the values divide in england that led to brexit. and john cheney lip el takes a